Huaxun Fangzhou Co.Ltd(000687) : Huaxun Fangzhou Co.Ltd(000687) announcement on the progress of litigation involving the company

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-011

Huaxun Fangzhou Co.Ltd(000687)

Announcement on the progress of litigation involving the company

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.

Huaxun Fangzhou Co.Ltd(000687) (hereinafter referred to as “the company”) received the civil judgment (2021) Yue 03 min Chu No. 5885) of Shenzhen intermediate people’s Court of Guangdong Province (hereinafter referred to as “Shenzhen intermediate people’s court”) on January 21, 2022. According to the above judgment, Shenzhen Branch of Guangdong Development Bank Co., Ltd. (hereinafter referred to as “Shenzhen Branch of Guangdong Development Bank“) and the company The Shenzhen intermediate people’s court has made a judgment on the dispute over financial loan contracts such as Hebei Huaxun ark Equipment Technology Co., Ltd. and Guorong Technology Co., Ltd. The relevant information is hereby announced as follows:

1、 Basic information of the case

(I) disputes over financial loan contracts between Shenzhen Branch of Guangdong Development Bank and the company, Hebei Huaxun Fangzhou Equipment Technology Co., Ltd., Guorong Technology Co., Ltd

On September 14, 2021, the company received the Shenzhen intermediate people’s court’s (2021) Yue 03 min Chu No. 5885 notice of response. According to the notice of response, Guangdong Development Bank Shenzhen Branch, due to disputes with the company, Hebei Huaxun ark Equipment Technology Co., Ltd., Guorong Technology Co., Ltd. and other financial loan contracts, sued the company, Hebei Huaxun ark Equipment Technology Co., Ltd Guorong Technology Co., Ltd. filed a lawsuit. See the announcement on major litigation (Announcement No.: 2021-113) disclosed by the company on September 16, 2021 for details. 2、 Progress of this lawsuit

1. Parties to the case

Plaintiff: Shenzhen Branch of Guangdong Development Bank Co., Ltd

Defendants: Huaxun Fangzhou Co.Ltd(000687) , Hebei Huaxun ark Equipment Technology Co., Ltd., Guorong Technology Co., Ltd., Huaxun ark Technology Co., Ltd., Nanjing Huaxun ark communication equipment Co., Ltd. and Wu Guangsheng. 2. Shenzhen intermediate people’s Court (2021) Yue 03 min Chu No. 5885 civil judgment mainly includes:

1、 The defendant Huaxun Fangzhou Co.Ltd(000687) shall repay the principal of 79997740.83 yuan, the interest during the contract period of 128333.35 yuan and the overdue default interest to the Shenzhen Branch of the plaintiff Guangfa Bank Co., Ltd. within 15 days from the effective date of this judgment Compound interest (including default interest and compound interest from November 3, 2020 to March 20, 2021 totaling 2660743 yuan, with principal of 79997740.83 yuan and interest from March 21, 2021)

RMB 128333.35 is the base, and the default interest and compound interest are calculated and paid at the annual interest rate of 8.6625% until the date of full payment);

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-011

2、 Shenzhen Branch of the plaintiff Guangfa Bank Co., Ltd. against the defendant Hebei Huaxun ark Equipment Technology Co., Ltd., located in the north of Weiyi Road, Xushui District, Baoding City, Hebei Province The land use rights of the two lands in the east of jingshisan Road [real property right certificate No.: Ji (2019) real property right No. 0003419, Xushui District, Baoding City, and Ji (2019) real property right No. 0003420, Xushui District, Baoding city] enjoy the mortgage right, and have the right to receive priority compensation within the limit of 80 million yuan for the proceeds from the disposal of the above mortgaged property; After the defendant Hebei Huaxun ark Equipment Technology Co., Ltd. assumes the mortgage guarantee liability, it has the right to recover from the defendant Huaxun Fangzhou Co.Ltd(000687) within the scope of liability; 3、 The defendants Hebei Huaxun ark Equipment Technology Co., Ltd., Guorong Technology Co., Ltd., Huaxun ark Technology Co., Ltd., Nanjing Huaxun ark communication equipment Co., Ltd. and Wu Guangsheng shall be jointly and severally liable for the debts of the defendant Huaxun Fangzhou Co.Ltd(000687) confirmed in Item 1 of this judgment. After the above defendants bear the liability for repayment, they have the right to recover from the defendant Huaxun Fangzhou Co.Ltd(000687) ;

4、 Reject other litigation claims of Shenzhen Branch of the plaintiff Guangfa Bank Co., Ltd.

If the obligation to pay money is not fulfilled within the period specified in this judgment, the debt interest during the period of delayed performance shall be doubled in accordance with Article 260 of the Civil Procedure Law of the people’s Republic of China. The acceptance fee is 466905.96 yuan and the preservation fee is 5000 yuan. The Shenzhen Branch of the plaintiff Guangfa Bank Co., Ltd. shall bear the acceptance fee of 9369.22 yuan, and the defendant Huaxun Fangzhou Co.Ltd(000687) , Hebei Huaxun ark Equipment Technology Co., Ltd., Guorong Technology Co., Ltd., Huaxun ark Technology Co., Ltd., Nanjing Huaxun ark communication equipment Co., Ltd. and Wu Guangsheng shall bear the acceptance fee of 457536.74 yuan The premium is 5000 yuan. The plaintiff Guangfa Bank Co., Ltd. Shenzhen Branch has paid the above amount in advance, and the court will refund the acceptance fee of 457536.74 yuan and preservation fee of 5000 yuan. The defendant Huaxun Fangzhou Co.Ltd(000687) , Hebei Huaxun ark Equipment Technology Co., Ltd., Guorong Technology Co., Ltd., Huaxun ark Technology Co., Ltd., Nanjing Huaxun ark communication equipment Co., Ltd. and Wu Guangsheng shall pay the case acceptance fee of 457536.74 yuan and preservation fee of 5000 yuan to the court within 15 days from the effective date of this judgment. If they refuse to pay, the court shall enforce it according to law.

If you are not satisfied with this judgment, you can submit a petition of appeal to this court within 15 days from the date of service of the judgment, submit copies according to the number of opposite parties, and appeal to the higher people’s Court of Guangdong Province.

3、 Other undisclosed litigation and arbitration matters

As of the date of this announcement, the total amount involved in other small claims that did not meet the disclosure standards of the company was 14.4608 million yuan, accounting for 0.94% of the absolute value of the latest audited net assets of the company. In addition, the company has not received other legal documents, and there are no other litigation and arbitration matters that should be disclosed but not disclosed.

4、 Possible impact of litigation and arbitration matters announced in this announcement on the company’s current profits or later profits

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-011

As of the disclosure date of this announcement, the loan interest and default interest involved in the above cases will have an impact on the company’s current profits. The debt interest during the subsequent delay in performance will be accrued by the company according to the accrual basis, which will have an impact on the company’s later profits.

The company will negotiate solutions with creditors, strive to reach an agreement with creditors on debt solutions, and fully raise debt repayment funds by accelerating the recovery of accounts receivable and disposal of assets. In addition, due to the shortage of funds of the company and its subsidiaries, the company and its subsidiaries have failed to pay bank loans, project funds, supplier loans, restricted stock repurchase funds, etc. in time. At present, the company and its subsidiaries have faced more judicial proceedings. The subsidiary Hebei Equipment Co., Ltd. was applied for enforcement because it failed to fulfill its repayment obligations in time, and the relevant mortgaged and seized assets were at risk of further judicial auction. Please invest rationally and pay attention to investment risks.

5、 Documents for future reference

1. It is hereby announced that the intermediate people’s Court of Shenzhen, Guangdong Province (2021) Yue 03 min Chu No. 5885 civil judgment.

Huaxun Fangzhou Co.Ltd(000687) board of directors

January 25, 2022

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