To meet the needs of the company's future business development, optimize the company's organizational structure and improve the efficiency of the company's operation and management. From January 1, 2023, Jiangsu Huaxin New Materials Co., Ltd. integrates the existing assets and businesses, invests in the establishment of a wholly-owned subsidiary -- Jiangsu Huaxin High-Tech New Materials Co., LTD., and transfers the inventory, fixed assets, intangible assets and related claims and debts related to the production and operation of the parent company to the newly established subsidiary according to book value. The company's qualifications related to production and operation will be changed to the newly established subsidiary, and personnel placement will be carried out in accordance with the principle of "people follow the business".
This investment to establish a subsidiary is to adjust the corporate structure and implement business integration within the scope of the consolidated statement of the company, which is conducive to optimize the allocation of resources and contribute to the future business development of the company. This transfer does not involve changes in the scope of the company's consolidated statements, has no significant impact on the company's financial position and operating results, and does not harm the legitimate interests of the listed company and shareholders.