Hualu Holdings: Controlling subsidiary loses in second-instance lawsuit, expected to impact net profit.

Hualik Corporation announced that its controlling subsidiary, Shangrun Capital, lost a lawsuit as the appellant in the case numbered Lu 03 Min Zhong 1100, and the second-instance judgment upheld the original judgment. The amount involved is 51.8 million yuan plus late interest losses and related litigation costs. Shangrun Capital is jointly liable for the debts such as the overdue capital contribution owed by Chuanfu No. 1 Fund. The company has already provisionally recognized a portion of the expected liabilities, and will subsequently recognize losses and set up liabilities based on the progress of the judgment, enforcement, and recovery. Although the recoverable rights and assets may cover the expected losses, this lawsuit is still expected to have a negative impact on the company's current and future net profits.