Fibocom Wireless Inc. (00638) increased its capital in its holding subsidiary Shanghai Guangyi through a debt-to-equity swap, terminated its equity incentive plan, and sold its equity.

Fibocom Wireless Inc. (00638) announced that at the 29th meeting of its fourth board of directors held on August 20, 2026, it reviewed and approved the proposal on increasing capital for its controlling subsidiary through debt-to-equity conversion, terminating its equity incentive plan, and selling its equity. Due to the significant research and development investment in the intelligent networked solution business operated by its controlling subsidiary, Shanghai Guangyi Intelligent Technology Co., Ltd. (Shanghai Guangyi), which is still in the stage of business scale expansion and capability enhancement, the company is planning a change of control for Shanghai Guangyi to focus on the development of its main business. The board of directors agreed to increase capital for Shanghai Guangyi through the debt-to-equity conversion, terminate its equity incentive plan, and sell all shares held by the company and the employee stock ownership platform. As of June 30, 2026 (the debt settlement date), the company has provided a total loan of 278.8117 million yuan to Shanghai Guangyi. To effectively reduce Shanghai Guangyi's overall debt scale and facilitate the smooth completion of the change of control, the board of directors agreed to increase capital for Shanghai Guangyi through the debt-to-equity method, with this increase amounting to 275 million yuan. The funds for this increase will come from the company's pre-existing debts owed by Shanghai Guangyi, converting these debts into equity for the increase. The employee stock ownership platform of Shanghai Guangyi, namely Ningbo Guangyi Enterprise Management Partnership (Limited Partnership) and Ningbo Guangxing Enterprise Management Partnership (Limited Partnership), will waive their preemptive subscription rights. After the debt-to-equity conversion is completed, the company's investment in Shanghai Guangyi will increase from 20 million yuan to 295 million yuan, raising its direct shareholding in Shanghai Guangyi from 77.00% to 98.02%. Due to the planned change of control at Shanghai Guangyi, according to the relevant provisions of the "Equity Incentive Plan (Draft) of Shanghai Guangyi Intelligent Technology Co., Ltd." (the incentive plan draft), the board of directors agreed to terminate the implementation of the equity incentive plan at Shanghai Guangyi, with unvested equity not being vested; the already vested equity will be exited amicably after the completion of this transaction's delivery in accordance with the relevant provisions/agreements of the incentive plan draft and the equity incentive grant agreement, with the exit amount not exceeding the provisions/agreements of the incentive plan draft and the equity incentive grant agreement; the employee stock ownership platform of Shanghai Guangyi will deregister after the completion of this transaction. The board of directors agreed that the company and its wholly-owned subsidiary Shenzhen Fibocom Wireless Inc. Investment Development Co., Ltd., as the executing partner of Shanghai Guangyi's employee stock ownership platform, will sign the "Equity Transfer Agreement Regarding the Acquisition of 100% Equity of Shanghai Guangyi Intelligent Technology Co., Ltd." with Luxshare Precision Industry Co., Ltd. (Luxshare Precision Industry). The company and the two enterprise management partnerships agreed to sell the total 100% equity of Shanghai Guangyi (after the shareholding ratio post-debt-to-equity conversion) to Luxshare Precision Industry, with a base transfer price of 120 million yuan. The final transfer price will be adjusted according to the net assets of Shanghai Guangyi on the delivery date (if the net assets on the delivery date are greater than or equal to 60.9 million yuan, the final transfer price will be the base transfer price; if the net assets on the delivery date are less than 60.9 million yuan, the final transfer price will be the base transfer price minus the difference between 60.9 million and the net assets on the delivery date). The relevant equity transfer agreement was completed and signed on August 20, 2026. This debt-to-equity conversion and termination of the equity incentive plan are prerequisites for the transfer of equity of the controlling subsidiary. This transaction will lead to a change in the scope of the company's consolidated financial statements. After the completion of this transaction, the company will no longer hold equity in Shanghai Guangyi, and Shanghai Guangyi and its subsidiaries will no longer be included in the company's consolidated financial statements. Within two years from the date of delivery of this transaction, the company and its branches, wholly-owned subsidiaries, and controlling subsidiaries shall not directly or indirectly engage with any relevant customers of Shanghai Guangyi in any business that has direct or indirect competition or potential competition with the industrial handheld business. Shanghai Guangyi Intelligent Technology Co., Ltd. mainly engages in ODM of industrial handheld terminals. Since its establishment in 2020, it has continuously invested in product R&D, technology accumulation, and market expansion. Due to the stage of business development and prior R&D investments, Shanghai Guangyi is still in the stage of business scale expansion and capability enhancement. In recent years, the company has also vigorously expanded its Internet of Things solution business. To further optimize resource allocation and focus on the development of its main business, after careful consideration, the company plans to increase capital for Shanghai Guangyi through debt-to-equity conversion, terminate its equity incentive plan, and sell all shares held by the company and the employee stock ownership platform. The acquirer of this transaction, Luxshare Precision Industry, has strong advantages in precision manufacturing, intelligent manufacturing, supply chain management, automated production, and global delivery. In the future, Shanghai Guangyi will leverage these strengths to achieve complementary advantages in product R&D and market expansion in the industrial handheld terminal ODM business, which will help promote the continuous development of Shanghai Guangyi's related businesses. Within two years from the date of delivery of this transaction, the company and its branches, wholly-owned subsidiaries, and controlling subsidiaries shall not directly or indirectly engage with any relevant customers of Shanghai Guangyi in any business that has direct or indirect competition or potential competition with the industrial handheld business. The arrangements related to this transaction conform to commercial practices. This transaction is beneficial for the company to integrate resources and focus on the development of its main business, improve the overall operational efficiency of the company, aligns with the company's long-term development strategy, and is in the overall interests of the company and its shareholders, with no harm to the interests of the company and its shareholders, especially minority shareholders. The completion of this transaction is expected to optimize the company's operational performance for the year, with the final data subject to audit results. After the completion of this transaction, the company will no longer hold equity in Shanghai Guangyi, and Shanghai Guangyi and its subsidiaries will no longer be included in the company's consolidated financial statements.