Hubei Feilihua Quartz Glass Co.Ltd(300395) : Announcement on the capital increase of subsidiaries to invest in the new project with an annual output of 20000 tons of ultra-high purity quartz sand and related party transactions

Securities code: 300395 securities abbreviation: Hubei Feilihua Quartz Glass Co.Ltd(300395) Announcement No.: 2022-09

Hubei Feilihua Quartz Glass Co.Ltd(300395)

About the subsidiary’s capital increase for investment in the new project with an annual output of 20000 tons of ultra-high purity quartz sand

And related party transactions

The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.

Important content: Hubei Feihua Rongjian Technology Co., Ltd. (hereinafter referred to as “subsidiary” or “Rongjian technology”) is the holding subsidiary of Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) quartz glass material Co., Ltd. (hereinafter referred to as “Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) ), a wholly-owned subsidiary of Hubei Feilihua Quartz Glass Co.Ltd(300395) (hereinafter referred to as” company “or” company “), which plans to increase capital and shares due to the needs of business development, The registered capital was increased by 51.851851 million yuan and the raised capital was 70 million yuan. After the capital increase, the registered capital of Rongjian technology is RMB 61851851, and the company’s wholly-owned subsidiary Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) holds 70% of the equity of Rongjian technology. The capital increase and share expansion will not lead to the change of the scope of the company’s consolidated statements. This capital increase is a joint investment with the minority shareholders of the company’s subsidiaries. According to the Shenzhen Stock Exchange GEM Listing Rules and other relevant provisions, this capital increase constitutes a related party transaction, but does not constitute a major asset reorganization specified in the administrative measures for major asset reorganization of listed companies. It does not need to be submitted to the general meeting of shareholders of the company for deliberation or approved by relevant departments. 1、 Transaction overview

Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) , a wholly-owned subsidiary of the company, holds 51% of the equity of Rongjian technology. According to the company’s development strategy and future planning, Rongjian technology plans to increase capital and shares to invest in the new “ultra-high purity quartz sand project with an annual output of 20000 tons”, expand the production scale of high-purity quartz sand and improve the security of the company’s supply chain, Meet the market demand for high-purity quartz sand. The total investment of the project is 300 million yuan. The project is constructed in two phases. The construction scale of the first phase is 10000 tons per year, and the investment amount is 100 million yuan. The total amount of this capital increase is 70 million yuan, the registered capital increased by 51.851851 million yuan, and the rest is included in the capital reserve. The shareholders of Rongjian technology, Hubei Yongshao Technology Co., Ltd. (hereinafter referred to as “Yongshao technology”) and Donghai Huakai quartz products Co., Ltd. (hereinafter referred to as “Huakai quartz”) give up the right to increase capital in the same proportion. Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) contributed RMB 51.565 million to subscribe for the new registered capital of Rongjian technology of RMB 38.1962 million, Yongshao technology contributed RMB 12.785 million to subscribe for the new registered capital of Rongjian technology of RMB 9.47037 million, and Huakai quartz contributed RMB 5.65million to subscribe for the new registered capital of Rongjian technology of RMB 4.1851 million. After the capital increase is completed, the registered capital of Rongjian technology is RMB 61851851, and Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) holds 70% of the equity of Rongjian technology. The capital increase and share expansion will not lead to public interest

The capital increase constitutes a joint investment with the minority shareholders Yongshao technology and Huakai quartz of the company’s subsidiaries. The minority shareholders Yongshao technology and Huakai quartz are the related parties of the company. According to the Shenzhen Stock Exchange GEM Listing Rules and other relevant regulations, the capital increase constitutes a related party transaction, However, major asset restructuring that does not constitute the provisions of the measures for the administration of major asset restructuring of listed companies does not need to be submitted to the general meeting of shareholders for deliberation and approval of relevant departments.

The company held the 16th meeting of the 5th board of directors on February 23, 2022, deliberated and approved the proposal on capital increase of subsidiaries for investment in new projects with an annual output of 20000 tons of ultra-high purity quartz sand and related party transactions, and agreed to increase the capital of Rongjian technology for investment and construction of the “project with an annual output of 20000 tons of ultra-high purity quartz sand”. There is no related director who needs to avoid voting in this proposal. The independent directors of the company have issued prior approval opinions and independent opinions on the proposal.

2、 Introduction to related parties

(I) Hubei Yongshao Technology Co., Ltd

Unified social credit Code: 91429005722032792b

Company type: joint stock company

Legal representative: Jia Hongping

Registered capital: 12 million yuan

Date of establishment: June 16, 2000

Company domicile: Hongqi Avenue, Jianghan Salt Chemical Industrial Park, Qianjiang City

Business scope: Environmental Science and technology research and development, technology transfer, technical consultation and technical services; Collection, storage, disposal and utilization of hazardous wastes; Collection, storage, disposal and utilization of solid waste; Road transport of dangerous goods; Remediation of contaminated soil; Environmental protection monitoring; Operation and management of sewage treatment and facilities; Technical development, technical consultation and technical services of sewage recycling; Design and construction of environmental protection engineering; Production and sales of special glass additives; Wholesale of hydrochloric acid (2057), sulfuric acid (1302), hydrofluoric acid (1650), fluorosilicic acid (740), nitric acid (2285), acetic acid (2630) and liquid alkali (1669) (no storage); Design, manufacture, sales, installation and technical services of environmental protection equipment; R & D, production and sales of chemical products (excluding hazardous chemicals, precursor chemicals and monitored and controlled chemicals), quartz glass and its products and water treatment agents; Production and sales of chemical reagents and additives (excluding hazardous chemicals, precursor chemicals and MCCs); Sales of building materials (excluding hazardous chemicals); Manufacture and sales of cement products and new sintered bricks; Advertising design, production, agency and release. (if the project involves licensed operation, it can be operated only after obtaining the permission of relevant departments)

Ownership structure:

No. name of shareholder contribution amount (10000 yuan) total proportion of contribution (%)

1 Wang Yongjin 840 70

2 Jia Hongping 240 20

3 Wang Xiaohe 120 10

Total 1200 100

Related relationship: the shareholder of Rongjian technology, a wholly-owned subsidiary of the company, Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) holding company.

Main financial data: as of December 31, 2021, the total unaudited assets of Yongshao technology were 81.7334 million yuan and the net assets were 50.6932 million yuan; In 2021, the operating income was 36.2138 million yuan and the net profit was 12.504 million yuan.

Upon inquiry, China executive information disclosure network( http://zxgk.court.gov.cn./ ), as of the disclosure date of this announcement, Yongshao technology is not a dishonest executee.

(II) Donghai Huakai quartz products Co., Ltd

Unified social credit Code: 91320722682174533f

Company type: limited liability company

Legal representative: Zhang Daoying

Registered capital: 20 million yuan

Date of establishment: November 18, 2008

Company domicile: Jiangsu Lianyungang Port Co.Ltd(601008) No. 389, hailing East Road, Donghai Development Zone, Donghai County, Donghai City

Business scope: production of crystal and quartz products; Sales of chrome ore products; Self operated and acting as an agent for the import and export business of various commodities and technologies (except for the commodities and technologies restricted or prohibited by the state). (for projects subject to approval according to law, business activities can be carried out only after approval by relevant departments) general projects: Sales of mechanical equipment (except for projects subject to approval according to law, business activities can be carried out independently according to law with business license)

Ownership structure:

No. name of shareholder subscribed capital contribution (10000 yuan) in the proportion of total capital contribution (%)

1 Li Bin 1000 50

2 pieces of Daoying 1000 50

Total 2000 100

Related relationship: the shareholder of Rongjian technology, a wholly-owned subsidiary of the company, Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) holding company.

Main financial data: as of December 31, 2021, the total unaudited assets of Huakai quartz were 10.7752 million yuan and the net assets were 3.5161 million yuan; In 2021, the operating income was 28.834 million yuan and the net profit was 795600 yuan.

Upon inquiry, China executive information disclosure network( http://zxgk.court.gov.cn./ ), as of the disclosure date of this announcement, Huakai quartz is not a dishonest executee.

3、 Basic information of the investor Rongjian Technology

(I) basic information

Name: Hubei Hubei Feilihua Quartz Glass Co.Ltd(300395) Rongjian Technology Co., Ltd

Unified social credit Code: 91429005ma498ymj4e

Enterprise type: other limited liability companies

Registered capital: 10 million yuan

Registered address: No. 16, Hongqi Avenue, Jianghan Salt Chemical Industrial Park, Qianjiang City

Date of establishment: April 30, 2019

Legal representative: Chen Youjie

Business scope: production and sales of quartz glass raw materials, quartz glass products and equipment.

Upon inquiry, China executive information disclosure network( http://zxgk.court.gov.cn./ ), as of the disclosure date of this announcement, Rongjian technology is not a dishonest executee.

(II) equity structure before and after capital increase:

Ratio of registered capital contribution of shareholders to registered capital contribution after capital increase before and after capital increase (10000 yuan) example (%) (10000 yuan) (%)

Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) quartz glass material Co., Ltd. 510.0000 51.00 4329.6296 70.00

Hubei Yongshao Technology Co., Ltd. 290.0000 29.00 1237.0370 20.00

Donghai Huakai quartz products Co., Ltd. 200.0000 20.00 618.5185 10.00

Total 1000.0000 100.00 6185.1851 100.00

(III) main financial data:

As of December 31, 2020, the audited total assets of Rongjian technology were 16.1608 million yuan and the net assets were 11.4912 million yuan; In 2020, the operating income was 16.5179 million yuan and the net profit was 1.5522 million yuan.

As of September 30, 2021, the unaudited total assets of Rongjian technology were 18.5672 million yuan and the net assets were 13.4849 million yuan; From January to September 2021, the operating income was 15.2934 million yuan and the net profit was 1.9401 million yuan.

4、 Pricing policy and basis

The capital increase is based on the unaudited net assets of Rongjian technology of 13485767.83 yuan as of December 31, 2021. After negotiation between the trading parties, the full value of Rongjian technology is valued at 13.5 million yuan, and the newly increased registered capital of Rongjian technology of 51851851 yuan is subscribed at the capital increase price of 1.35 yuan / share. The part exceeding the registered capital is included in the capital reserve. The price of this connected transaction follows the market-oriented principle of openness, fairness and impartiality, and is determined through consultation with related parties. The pricing is fair and reasonable. There is no behavior that damages the interests of the listed company by using the relationship between related parties, nor does it damage the legitimate interests of the company and transfer interests to related parties.

5、 Basic information of investment projects

(I) project name: 20000T / a ultra-high purity quartz sand project

(II) total investment and capital source of the project: the total investment of the project is estimated to be 300 million yuan, and the investment amount of phase I is 100 million yuan. The source of funds is self raised by the company.

(III) project construction site: Jianghan Salt Chemical Industrial Park, Qianjiang City, Hubei Province.

(IV) project construction period: the project is divided into two phases, with a construction period of 3 years. The construction period of phase I project is planned to be 12 months, and the project is planned to be completed in 4 months (the specific commencement time and completion time shall be subject to the actual construction situation).

(V) project construction contents: sand making workshop, purification workshop, production plant, class E warehouse, solid waste warehouse (including class B warehouse), class E tank farm, comprehensive office building, public works building (including fire pump room and power distribution room), water treatment area, fire pool, etc.

6、 Main contents of capital increase agreement

Party A: Qianjiang Hubei Feilihua Quartz Glass Co.Ltd(300395) quartz glass material Co., Ltd

Party B: Hubei Yongshao Technology Co., Ltd

Party C: Donghai Huakai quartz products Co., Ltd

Party A, Party B and Party C are hereinafter collectively referred to as “parties”.

“Company” in the capital increase agreement refers to Hubei Hubei Feilihua Quartz Glass Co.Ltd(300395) Rongjian Technology Co., Ltd.

(I) according to the resolution of the shareholders’ meeting of the company, it is decided to increase the registered capital of the company from RMB 10 million to RMB 61.851851 million, of which the newly increased registered capital is RMB 51.851851 million.

(II) the price of this capital increase is 1.35 yuan per registered capital. The company takes the unaudited net assets of 13485767.83 yuan as the pricing basis for this capital increase as of December 31, 2021. After negotiation, the total value of the company is 13.5 million yuan (corresponding to 1.3 yuan of registered capital)

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