Securities code: 600237 Securities abbreviation: Tongfeng Electronic Number: Lin 2020-063

Anhui Tongfeng Electronics Co., LTD
Notice of litigation matters concerning Sun Holding Company

The board of directors and all the directors of the Company warrant that there is no false record, misleading statement or material omission in the content of this announcement, and bear individual and joint liability for the authenticity, accuracy and completeness of the content.

Important content Tips:

●The stage of the case: not yet decided

●The plaintiff is the company holding Sun Company Tongling Tongfeng Precision Technology Co., LTD

●The amount involved in the lawsuit: 17,030,800 yuan

●Whether it will have a negative impact on the company's profit and loss: The case has not been decided yet, so it is impossible to accurately judge the impact on current and future profits.

Tongling Tongfeng Precision Technology Co., LTD. (hereinafter referred to as "Tongfeng Precision"), the company's holding company, filed a civil lawsuit with Tongguan District People's Court of Tongling City (hereinafter referred to as "Tongguan District Court") in August 2020 on the ground that its shareholder Kunshan Longmeng Electronic Technology Co., LTD. (hereinafter referred to as "Longmeng Electronics") had harmed the interests of the company. The case has been heard in Tongguan District Court on December 9, 2020, and has yet to be decided. The lawsuit is hereby announced as follows:

I. Introduction to the background of this lawsuit

In March 2017, Tongling Tongfeng Optoelectronic Technology Co., LTD. (hereinafter referred to as "Tongfeng Optoelectronic"), a wholly-owned subsidiary of the company, and Jiangsu Jinglian Electronic Technology Co., LTD jointly funded the establishment of Tongfeng Precision, with Tongfeng Optoelectronic accounting for 85.42% of the registered capital. On July 3, 2019, in order to further expand the business scale, after deliberation and approval at the fourth meeting of the eighth Board of Directors of the company, Tongfeng Precision introduced its shareholder Longmeng Electronics in the way of capital increase and share increase. Longmeng Electronics invested 15 million yuan with fixed assets and acquired 27.72% of the equity after the capital increase. Upon completion of the capital increase, Tongfeng OptoElectronics holds 61.74% of the equity of Tongfeng Precision (for details, please refer to the Company's announcements published in designated information disclosure media on March 11, 2017 and July 4, 2019).

According to the Cooperation Agreement signed by "Tongfeng Precision" and "Longmeng Electronics", after the completion of the above capital increase, the customer relationship of "Longmeng Electronics" will be gradually transferred to "Tongfeng Precision". Since the transfer of customer relationship takes time, in order to ensure the continuity and stability of customer orders during the process of customer relationship transfer, in September 2019, after deliberation and approval at the sixth meeting of the eighth Board of Directors of the Company, "Tongfeng Precision" decided to continue to entrust "Longmeng Electronics" to supply to the original customer. All sales prices are priced according to the fair market price (for details, see the Company's announcement published in the designated information disclosure media on September 18, 2019).

Later, due to the fact that the proceeds of Longmeng Electronic sales were not fully refunded to Tongfeng Precision, the accumulated debt amounted to 19 million yuan by July 31, 2020, and the amount due was 17,030,800 yuan. In August 2020, Tongfeng Precision filed a lawsuit with Tongguan District Court on the grounds that Longmeng Electronics harmed the interests of the company. Longmeng Electronics filed an appeal on the grounds of objection to jurisdiction during the filing of the defense. In November 2020, Tongguan District Court rejected Longmeng Electronics' appeal request to transfer the case to Kunshan People's Court for trial with the civil decision No. 57 (2020) Wan 07 People's Jurisdiction Final decision, and upheld the original ruling.

2. Facts of the case, contents of the claim and reasons for the action

1. All parties to the lawsuit

Plaintiff: Tongling Tongfeng Precision Technology Co., LTD

Address: No. 399, West Section of Cuihu Third Road, Tongling Economic and Technological Development Zone

Defendant: Kunshan Longmeng Electronic Technology Co., LTD

Address: No.1285, Chengbei Foxconn Road, Yushan Town, Kunshan City, Jiangsu Province

Cause of action: Liability dispute for damage to the interests of the company

2. Request matters

(1) The defendant shall pay back the amount of RMB 17,030,800 owed to the plaintiff.

(2) The defendant shall bear the litigation costs.

Fact and grounds: Since June 2019, the defendant has purchased connector products from the Plaintiff company for external sales, but not all of the sales proceeds have been returned to the Plaintiff Company. By July 31, 2020, the accumulated amount of arrears reached 19 million yuan, among which the amount due is 17,030,800 yuan.

On August 19, 2020, the plaintiff held a meeting of three shareholders and asked the defendant to return the payment in time, but the defendant voted against it. The defendant's behavior violated the provisions of Article 21 of the Company Law and damaged the fundamental interests of the company. According to the provisions of the Company law and relevant judicial interpretation, we hereby file a lawsuit with Tongguan District Court.

Tongfeng Precision at the same time to Tongguan District court filed a lawsuit preservation application, request to Kunshan Longmeng invested in Tongfeng Precision 15 million shares of capital property to be sealed and frozen.

Iii. The impact of this lawsuit on the Company's current and subsequent profits

The Board of Directors of the Company will pay close attention to and attach great importance to this matter, and will strengthen the management of accounts receivable of the Company and its subsidiaries, enhance risk awareness and formulate preventive measures to effectively safeguard the interests of the Company and shareholders.

As this litigation case has not yet been decided, there is a certain uncertainty. The company will timely disclose the progress of the case in accordance with relevant regulations in accordance with the law. Meanwhile, investors should pay attention to the investment risk.

This is to announce.