Board of Directors' Explanation on Company Stock Price Fluctuation Before Disclosure of Major Restructuring Information

Shenzhen Huafeng Communication & Navigation Co., Ltd. Board of Directors' Explanation on Company Stock Price Fluctuation Before Disclosure of Major Restructuring Information

Shenzhen Huafeng Communication & Navigation Co., Ltd. (hereinafter referred to as the "Company") intends to acquire a 37.16% equity interest in Shenzhen Haisheng Electronics Co., Ltd. (hereinafter referred to as the "Target Company" or "Haisheng Electronics") by paying cash, and to control the Target Company through an acting-in-concert agreement (hereinafter referred to as the "Transaction"). Upon completion of the Transaction, Haisheng Electronics will become a controlling subsidiary of the Company.