City Coolxuan Company Limited released a supplemental announcement providing additional context on the global non-exclusive Distribution Agreement signed on 18 March 2026 and outlining remedial steps after timing-related non-compliance with GEM Listing Rules 20.32 and 20.33.
The company reiterated that the annual caps for the connected transaction remain structured to stay below the 25 % threshold that would trigger independent-shareholder approval. For the financial years ending 31 March 2027 and 31 March 2028, the aggregate consideration payable under the Distribution Agreement will be capped at HK$10.00 million per year, while the cap for the period to 31 March 2026 was set with reference to actual transactions booked in January-February 2026.
Under the agreement, the Licensee purchases usage rights of the Licensor’s applications only when matching back-to-back orders exist from sub-distributors or merchants. Commercial activity under the arrangement has been suspended since March 2026 as City Coolxuan develops its own SaaS platform for offline retailers. The board expects the Distribution Agreement to be terminated once the in-house system is operational, after which the current annual caps will lapse.
Management acknowledged that the late execution of a written agreement and delayed disclosure arose because the company’s monthly reporting cycle failed to flag that cumulative January-February 2026 transactions had crossed the 5 % de-minimis threshold. The lapse was compounded by the Chinese New Year holiday period. City Coolxuan stressed that the issue related solely to disclosure timing, not to omission of information.
To prevent recurrence, the group has implemented several internal-control enhancements: 1. A contract-management system providing real-time classification, consolidation and threshold monitoring of connected transactions, with automatic alerts. 2. Adoption of a Connected Transactions and Notifiable Transactions Management Policy in June 2026, detailing responsibilities, approval flow and disclosure requirements. 3. Monthly reporting of actual connected-transaction values to the finance department, with board escalation when utilisation reaches 80 % of any cap. 4. Mandatory cross-checking of system data by designated senior accounting officers at both group and subsidiary levels. 5. Annual GEM Listing Rules training for directors and key accounting personnel; the first session was completed in mid-August 2026.
The board confirmed that city-wide compliance training has been completed and that further announcements will be made in accordance with GEM Listing Rules, particularly upon the anticipated termination of the Distribution Agreement.