Huazhang Technology : SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold or transferred all your shares in Huazhang Technology Holding Limited (the "Company"), you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

This circular together with a form of proxy will remain on the website of the Company at http://www.hzeg. com.

A notice convening the EGM to be held at Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 28 April 2021, at 9:30 a.m. is set out on pages 18 to 20 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company's Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

13 April 2021

PRECAUTIONARY MEASURES FOR THE EGM

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing novel coronavirus (COVID-19) pandemic and recent requirements for prevention and control of its spread, the Company will implement the following preventive measures at the EGM to protect attending Shareholders, staff and other stakeholders from the risk of infection:

1. While at the EGM: Attendees at the EGM should also note the following precautions and control measures adopted by the Company at the EGM:

1. all attendees will be subject to compulsory body temperature check at the entrance of the EGM venue. Anyone with a body temperature of over 37.5 degree Celsius will not be admitted to the EGM venue;
2. all attendees will be required to wear surgical face mask before entering the EGM venue and during their attendance of the EGM;
3. attendees are asked to maintain appropriate social distancing at all time when attending the EGM;
4. attendees may be asked if (i) he/she has travelled outside of Hong Kong within 14 days immediately before the EGM; (ii) he/she is subject to any Hong Kong Government prescribed quarantine requirement; and (iii) he/she has any flu-like symptoms or has been in close contact with any person under quarantine or with recent travel history. Any person who responds positively to any of these questions will be denied entry into the EGM venue and will not be allowed to attend the EGM; and
5. no refreshments will be served.

The Company's staff and representatives at the EGM venue will assist with crowd control to ensure appropriate social distancing. Please follow their instructions. If anyone disobeys these instructions, the Company reserves the right to refuse such person's admission to the EGM venue or, if such person has already entered the EGM venue, to eject the person from the EGM venue. The EGM venue will be partitioned in accordance with the requirement under the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Chapter 599G of the Laws of Hong Kong).

2. Due to the constantly evolving COVID-19 pandemic situation, the Company may implement further changes and precautionary measures in relation to the EGM arrangements at short notice to comply with the requirements of the Hong Kong Government. Members should check the Company's website at regular intervals for further announcements and updates on the EGM arrangements. For the avoidance of doubt, the Company reserves the right to change the conditions in relation to the EGM in the event of changes in government regulations and non-adherence to any government regulations and/or precautionary measures in relation to the EGM arrangements by attendees at the EGM.

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CONTENTS
	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

- ii -

DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions have the following meanings:

"Board"	the board of Directors
"Bonds"	the 12.0% convertible bonds due 2021 in an aggregate principal
	amount of HK$100,000,000 issued by the Company
"Business Day(s)"	any day (excluding Saturday, Sunday or public holiday) in Hong
	Kong or the Cayman Islands
"CB Announcements"	the announcements dated 1 December 2020 and 28 December 2020
	made by the Company in relation to the issuance of Bonds
"Company"	Huazhang Technology Holding Limited, a company incorporated
	in the Cayman Islands with limited liability and the issued Shares
	of which are listed on the Stock Exchange (stock code: 1673)
"Completion"	the completion of the Subscription pursuant to the Subscription
	Agreement
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"Creation Best"	Creation Best International Limited, a company incorporated in
	Hong Kong with limited liability, which is the holder of the Bonds
"Director(s)"	director(s) of the Company
"Dubai Recycling Project"	the project to establish solid waste-recycling plant(s) in Dubai
	which is being initiated and implemented by Mr. Fang AK and
	members of management team appointed by him
"Dubai Shareholders' Agreement"	the agreement entered into between the Company and Mr. Fang
	AK to establish the joint venture to develop the Dubai Recycling
	Project, further details of which is set out in the announcement
	dated 26 May 2020
"EGM"	the extraordinary general meeting of the Company to be held at
	Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road,
	Tsim Sha Tsui, Kowloon, Hong Kong on 28 April 2021 at 9:30 a.m.
"EGM Notice"	the notice convening the EGM set out on pages 18 to 20 of this
	circular

- 1 -

	DEFINITIONS
"Environmental Resources"	Hua Zhang Environmental Resources Investment Limited, a
	company incorporated in Hong Kong
"Fine Global"	Fine Global Enterprises Limited, a company incorporated in the
	British Virgin Islands
"Group"	the Company and its subsidiaries
"HeHe Resources"	HeHe Resources FZE, a company incorporated in the Jebel Ali
	Free Zone, Dubai, United Arab Emirates
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"	Hong Kong Special Administrative Region of the People's
	Republic of China
"Latest Practicable Date"	12 April 2021, being the latest practicable date prior to the printing
	of this circular for ascertaining certain information in this circular
"Listing Committee"	the Listing Committee of the Stock Exchange
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange
"Mr. Fang AK"	Mr. Fang Ankong, the father of Mr. Fang Hui
"Mr. Fang Hui"	Mr. Fang Hui, the ultimate beneficial owner of the Subscriber and
	Creation Best
"Nomination Committee"	the nomination committee of the Company
"PRC"	the People's Republic of China (for the purpose of this circular
	excluding Hong Kong, Macau Special Administrative Region of
	the People's Republic of China and Taiwan)
"Share(s)"	share(s) of HK$0.01 each in the share capital of the Company
"Shareholder(s)"	holder(s) of the Share(s)
"Specific Mandate"	the specific mandate to be granted by the Shareholders to the
	Board at the EGM for the allotment and issue of the Subscription
	Shares
"Stock Exchange"	The Stock Exchange of Hong Kong Limited

- 2 -

	DEFINITIONS
"Subscriber"	Dao He Investment Limited, a company incorporated in the British
	Virgin Islands with limited liability
"Subscription"	the subscription for the Subscription Shares by the Subscriber
	pursuant to the Subscription Agreement
"Subscription Agreement"	the subscription agreement dated 2 March 2021 entered into
	between the Company and the Subscriber in respect of the
	subscription of 153,846,153 Subscription Shares
"Subscription Price"	HK$0.65 per Subscription Share
"Subscription Shares"	an aggregate of 153,846,153 new Shares to be allotted and issued
	by the Company to the Subscriber under the Subscription
"%"	per cent.

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LETTER FROM THE BOARD

華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

Executive Directors:	Registered office:
Mr. Zhu Gen Rong (Chairman)	Cricket Square
Mr. Wang Ai Yan (Chief Executive Officer)	Hutchins Drive
Mr. Liu Chuan Jiang	P.O. Box 2681
Mr. Jin Hao	Grand Cayman
	KY1-1111
Independent Non-executive Directors:	Cayman Islands
Mr. Kong Chi Mo
Mr. Heng, Keith Kai Neng	Principal place of business in
Mr. Yao Yang Yang	Hong Kong:
	Room 805A, 8/F,
	Tower 1, South Seas Centre
	75 Mody Road
	Kowloon
	Hong Kong
	13 April 2021
To the Shareholders
Dear Sir or Madam

SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the announcement published on 2 March 2021 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement pursuant to which the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for, an aggregate of 153,846,153 Subscription Shares at the Subscription Price of HK$0.65 per Subscription Share.

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LETTER FROM THE BOARD

The Subscription Shares will be allotted and issued under the Specific Mandate. Completion is subject to the fulfillment of all the conditions precedent as set out in the Subscription Agreement, among other things, the Shareholders' approval at the EGM and the listing approval to be granted by the Stock Exchange. The purpose of this circular is to provide you with, among other things, (i) details of the Subscription Agreement involving the allotment and issue of Subscription Shares under the Specific Mandate to be sought at the EGM; (ii) a notice convening the EGM; and (iii) other information as required under the Listing Rules.

THE SUBSCRIPTION AGREEMENT

On 2 March 2021 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, the principal terms of which are set out as follows:

Date:

2 March 2021 (after trading hours)

Parties: (i) the Company, as issuer

1. the Subscriber, as subscriber

Mr. Fang Hui, the ultimate beneficial owner of the Subscriber, was a director of Environmental Resources, an indirect wholly-owned subsidiary of the Company, between 18 September 2019 and 1 September 2020. Environmental Resources is wholly-owned by Fine Global which is the proposed joint venture company under the Dubai Shareholders' Agreement, which has lapsed as announced by the Company's announcement dated 1 September 2020. Environmental Resources in turn is the sole beneficial owner of the entire equity interest in HeHe Resources. HeHe Resources is the vehicle which Mr. Fang AK used to secure the licenses for the Dubai Recycling Project. From their respective date of incorporation until the Latest Practicable Date, none of Fine Global, Environmental Resources nor HeHe Resources has conducted any business. As such, these subsidiaries are insignificant subsidiaries of the Group as at the Latest Practicable Date and Mr. Fang Hui is not regarded as a connected person of the Company for the purpose of Chapter 14A of the Listing Rules. Mr. Fang Hui is also the ultimate beneficial owner of Creation Best, which is the holder of the Bonds. As at the Latest Practicable Date, Creation Best has not exercised the conversion right to convert any Bonds, in whole or in part, into Shares and is not regarded as a connected person of the Company. For further information on the issuance of Bonds, please refer to the Company's announcements dated 1 December 2020 and 28 December 2020. As at the Latest Practicable Date, Mr. Fang Hui owns approximately 1.02% of the issued share capital of the Company.

Save as disclosed above, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, the Subscriber and its ultimate beneficial owner are independent of and not connected with the Company and its connected persons.

Subscription Shares

Pursuant to the Subscription Agreement, the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for an aggregate of 153,846,153 Subscription Shares.

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LETTER FROM THE BOARD

The total number of 153,846,153 Subscription Shares to be allotted and issued under the Subscription represents (i) approximately 20.99% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 17.35% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming there will be no other changes in the issued share capital of the Company between the Latest Practicable Date and the Completion).

Immediately upon Completion, the Subscriber will become a substantial shareholder of the Company. The Subscription Shares will be issued under the Specific Mandate to be granted by the Shareholders in the EGM.

Subscription Price

The Subscription Price of HK$0.65 per Subscription Share represents:

1. a discount of approximately 22.62% to the closing price of HK$0.840 per Share as quoted on the Stock Exchange on the date of the Subscription Agreement;
2. a discount of approximately 23.17% over the average closing price of approximately HK$0.846 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of the Subscription Agreement;
3. a discount of approximately 22.62% over the average closing price of approximately HK$0.840 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to the date of the Subscription Agreement;
4. a discount of approximately 64.86% to the closing price of HK$1.85 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
5. a discount of approximately 29.8% to the audited consolidated net asset value of the Group of approximately RMB0.78 per Share as at 30 June 2020 (equivalent to approximately HK$0.93 based on the exchange rate on the Latest Practicable Date) and calculated based on the audited consolidated net assets of the Group of approximately RMB570,975,104 as at 30 June 2020 as extracted from the annual report of the Company for the year of 2020 and the number of issued Shares as at the Latest Practicable Date); and
6. a discount of approximately 33.0% to the unaudited consolidated net asset value of the Group of approximately RMB0.82 per Share as at 31 December 2020 (equivalent to approximately HK$0.97 based on the exchange rate on the Latest Practicable Date) and calculated based on the unaudited consolidated net assets of the Group of approximately RMB601,560,069 as at 31 December 2020 as extracted from the interim report of the Company for the six months ended 31 December 2020 and the number of issued Shares as at the Latest Practicable Date).

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LETTER FROM THE BOARD

The aggregate amount from the Subscription will be HK$100,000,000, is estimated to be HK$0.65 per Subscription Share. The aggregate Subscription Price will be payable by the Subscriber in cash at the Completion. The aggregate nominal value of the Subscription Shares will be HK$1,538,461.53.

The Board noted that after the publication of the announcement regarding the Subscription, the closing price of the Shares has increased to HK$1.27 per Share on 3 March 2021 (being the first trading day after the publication of the aforesaid announcement) as compared to that of HK$0.84 per Share on the date of the Subscription Agreement while the trading volume of the Shares also increased to approximately 18,592,000 Shares. During the period commencing from 2 March 2021 to the Latest Practicable Date, the Shares fluctuated within a wide range from HK$0.84 per Shares to HK$1.85 per Shares. Save for the announcement of the Subscription, the Directors were not aware of any other reasons that led to the surge in the Share price and the large fluctuation in the closing price of the Shares within a short period of time after the aforesaid announcement.

The Subscription Price was arrived at after arm's length negotiations between the Company and the Subscriber with reference to the trading performance and the trading volume of the Shares for the period between the subscription of Bonds and the Subscription, as well as the existing financial position of the Group. At the time when the Company and Subscriber negotiated the terms of Subscription, trading price of the Shares was in a decreasing trend. Since 2 December 2020 (the day after the subscription agreement of the Bonds was entered into between the Company and Creation Best) until 2 March 2021 (the date of the Subscription Agreement), the Shares had been traded at low liquidity within the range of HK$0.94 per Share (highest average closing price per Share on 25 February 2021) and HK$0.54 (lowest average closing price per Share on 28 December 2020), and the average closing price was approximately HK$0.72 per Share during the period. From 2 December 2020 to 2 March 2021, the average trading volume is ranged from approximately 234,200 Shares to approximately 5,323,714 Shares, representing approximately 0.0320% to 0.7264% of the number of Shares in issue as at the end of the relevant month/period. The Subscription Price is within the range of average closing price per Share between 2 December 2020 and 2 March 2021.

The Directors further considered that the Company's cash and cash equivalent of approximately RMB39.7 million as at 31 December 2020 and the Group's borrowings amounted to approximately RMB110.2 million out of which RMB74.2 million is repayable within one year which it is anticipated that with the high gearing ratio and the existing cash and cash equivalent of the Group may not be sufficient to maintain the daily operation as well as to fund any potential projects.

Having considered and balanced (i) that the Subscription Price is considered to be determined on reasonable bases after consideration of the historical trading prices one year immediately before the date of the Subscription Agreement; (ii) that the financial and liquidity positions of the Group will be improved immediately upon the completion of the Subscription; (iii) that the net proceeds from the Subscriptions will be utilised for the purposes of pursuing business opportunity identified and strengthening the financial and liquidity positions of the Company; and (iv) the strategic consideration of the Subscription, the Directors are of the view that the dilution effect of the Subscription on the shareholding interests of the existing public Shareholders is not excessive. Assuming that no Bonds are converted, and no other Shares are issued and/or repurchased by

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LETTER FROM THE BOARD

the Company from the Latest Practicable Date up to and including the date of the Completion, shareholding interests of the existing public Shareholders will be diluted by 8.06% from 46.47% to 38.41% and the Subscription will result in a theoretical value dilution effect (as defined under Rule 7.27B of the Listing Rules) of approximately 4.02%. The Directors also consider that the Subscription Price and the terms of the Subscription Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Comparable issue analysis

For comparison purpose, based on a best-effort search on the Stock Exchange's website, excluding the H shares and companies listed on GEM of the Stock Exchange, it identified the subscription of shares under specific mandate for the last six-month period immediately before and including the date of the Subscription Agreement (i.e. 2 March 2021) (which list is exhaustive):

			Premium/(discount) of	Premium/(discount) of the
			the subscription price	subscription price over/
			over/to the closing price	to the last five consecutive
			per share on the date of	trading days immediately
			agreement in relation to	prior to/prior to and
Date of		the respective subscription	including the respective
Announcement	Company name (stock code)	of new shares (%)	date of announcement (%)
1 March 2021	Culturecom Holdings Limited (343)	(34.78)	9.49
23	February 2021	Miko International Holdings Limited (1247) - by placing	6.67	1.27
16	February 2021	China Automotive Interior Decoration Holdings	(8.6)	(8.6)
		Limited (48)
27	November 2020	Wai Chun Group Holdings Limited (1013)	8.18	(5)
(note 1)
26	November 2020	Wai Chun Bio-Technology Limited (660)	(5)	(5)
(note 2)
27	October 2020	Aidigong Maternal & Child Health Limited (286)	7.84	5.35
22	October 2020	Kiu Hung International Holdings Limited (381)	11.11	41.64
11	September 2020	Amber Hill Financial Holdings Limited (33)	(23.66)	(27.55)
10	September 2020	Powerlong Commercial Management Holdings Limited	0	(2.39)
		(9909)
8 September 2020	Koolearn Technology Holding Limited (1797)	(7.3)	(12.8)
7 September 2020	Yunfeng Financial Group Limited (376)	(5.93)	(7.31)
		Maximum	8.18	41.64
		Minimum	(34.78)	(27.55)
		Average	(4.68)	(0.99)
		The Company	(22.62)	(23.17)

Notes:

1. The subscription agreement was terminated on 30 November 2020.
2. The subscription agreement was terminated on 6 January 2021.

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LETTER FROM THE BOARD

Based on the research above, the Board has noted that the subscription price was ranged from a premium of 8.18% to a discount of 34.78% to the closing price per shares on the date of the agreement, and the Company's discount of 22.62% is at the lower end of the premium/ discount of the comparable issues but within the range for the last six months period. The average premium/discount of the comparable issues was on a discount of approximately 4.68%. The Board has considered various factors including the market price, trading volume, financial positions and funding needs of the comparable issues as disclosed in their respective announcements and circulars, as well as market conditions at the time of the issue of share which may affect the determination of the subscription price of the shares.

Taking into account that (i) the decreasing trend of market price of the Shares before the date of Subscription Agreement; (ii) the trading volume of Shares is relatively thin which was approximately 0.0320% to 0.7264% of the number of Shares in issue per month/period between 2 December 2020 and 2 March 2021; (iii) the funding needs and expansion plan for Dubai Recycling Project which it is expected the project will resume normal by end of 2021; (iv) the current available resources and borrowing capacity to fund the projects; (v) the benefits of the strategic investment by Mr. Fang Hui in the Company as disclosed in the paragraph headed "Reasons for the Subscription and Use of Proceeds" below; and (vi) the current global economic conditions, the Board is of the view that the Subscription Price is within the range of the premium/discount of the comparable issues and is fair and reasonable.

Ranking of the Subscription Shares

The Subscription Shares, when allotted and issued, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Subscription Shares.

Conditions precedent

Completion is conditional upon the satisfaction of the following conditions:

1. the Listing Committee having granted (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber reasonably objects) listing of, and permission to deal in, the Subscription Shares and the Listing Committee not having withdrawn or revoked such listing and permission on or before the Completion;
2. the Shares remaining listed and traded on the Main Board of the Stock Exchange at all times from the date of the Subscription Agreement to the date of the Completion, save for any temporary trading halt or suspension in trading for no longer than three
3. 1. consecutive trading days (or such longer period as the Subscriber may agree in writing), and there being no indication from the Stock Exchange that the listing of the Shares on the Stock Exchange will be suspended, revoked or withdrawn at any time before or after the Completion, whether in connection with any of the transactions contemplated by the Subscription Agreement or otherwise;

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LETTER FROM THE BOARD

1. the passing by the Shareholders who are entitled to vote and not required to be abstained from voting under the Listing Rules in the EGM to be held and convened of resolution(s) to approve the Subscription Agreement, and the transactions contemplated thereunder, including the allotment and issue of the Subscription Shares;
2. each of the Company's representations, warranties and undertakings under the Subscription Agreement remaining true, complete and accurate and not misleading at the Completion as if repeated at the Completion and at all times between the date of the Subscription Agreement and the Completion;
3. the Company having obtained from or made to (as the case may be) all relevant authorities all applicable approvals and filings in connection with the Subscription;
4. the Company having duly performed and observed all of the obligations, undertakings, covenants and agreements required to be performed and observed by it prior to the Completion under the Subscription Agreement;
5. the Subscriber receiving from the Company all of the documents pursuant to the Subscription Agreement, in form and substance satisfactory to the Subscriber;
6. there shall not be in effect any applicable laws restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby and by the other transaction documents;
7. no action shall have been commenced by or before any governmental authority against any party hereto, seeking to restrain or materially and adversely alter the transactions contemplated hereby and by the other transaction documents which, in the reasonable, good faith determination of the Subscriber, is likely to render it impossible or unlawful to consummate such transactions; and
8. each of the Subscriber's representations, warranties and undertakings under the Subscription Agreement remaining true, complete and accurate in all material respects and not misleading in any material respect at the date of the Completion as if repeated at the date of the Completion and at all times between the date of the Subscription Agreement and the date of the Completion.

The Subscriber may waive all or any of the above conditions (save for the conditions (a), (c) and (h)) at any time by notice in writing to the Company. The Company may not unilaterally waive any of the above conditions other than condition (j). In the event that any of the above conditions of the Subscription are not fulfilled (or waived, if applicable) prior to 31 May 2021 (or such later date as the Company and the Subscriber may agree in writing), the Subscription Agreement shall terminate and cease to be of any effect. Neither of the parties shall have any claim against each other save for any liability arising out of any antecedent breach. As at the Latest Practicable Date, the Subscriber has no intention to waive any of the above conditions, and none of the above conditions have been fulfilled.

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LETTER FROM THE BOARD

Appointment of Directors

As part of the Subscription, the Company has agreed to appoint two persons to be nominated by the Subscriber to the Board. Each such person must fulfill the necessary requirements of the Listing Rules and such appointment will be approved by the Nomination Committee of the Company. If the Subscription does not proceed and if requested by the Board, such person shall resign from office without any compensation for loss of office. It is expected that one of the persons to be nominated to the Board (subject to the approval of the Nomination Committee) will be Mr. Fang Hui however as at the Latest Practicable Date, the Subscriber has yet to nominate any candidates to Board. Further announcement will be made by the Company upon such persons being appointed to the Board.

Pursuant to Article 83(3) of the Company's articles of association, the Directors shall have the power to at any time to appoint any person as a Director either to fill a casual vacancy on the Board or as an addition to the existing Board. The right granted to the Subscriber was a one-off right to nominate two persons acceptable to the Nomination Committee to the Board. Such nominated Directors will have to vacate their position at the next annual general meeting, subject to re-election by the shareholders. The Company believes that a strategic investor, such as Mr. Fang Hui and his affiliates, who is prepared to invest HK$200 million (by way of the Subscription and subscription of Bonds) deserves the opportunity to be represented in the Board and such a request is not uncommon for transactions of the same nature. Taking into account also that not only does the Subscription give the Company the necessary funding to further grow its waste recycling business, it also gives the Company an opportunity to negotiate with Creation Best for extension/conversion of the Bonds, if no new funding can be sourced at reasonable terms upon the expiry of the Bonds, the Company believe that the granting of the nomination right is fair and reasonable and is in the interest of the Company and its shareholders as a whole.

Completion of the Subscription

Completion of the Subscription shall take place on a day falling no later than fourteen days from the fulfillment of all the conditions precedent (or such later date, subject to the approval of the Stock Exchange, as may be agreed between the parties in writing). It is expected that the Subscription will be completed by 30 April 2021.

Specific Mandate to issue the Subscription Shares

The issue of the Subscription Shares is subject to the Shareholders' approval. The Subscription Shares will be issued and allotted pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

Application for listing

The Company will apply to the Listing Committee for the listing of, and permission to deal in, the Subscription Shares on the Stock Exchange.

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LETTER FROM THE BOARD

Shareholders and potential investors should note that Completion is subject to the fulfillment or waiver of conditions under the Subscription Agreement and may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

REASONS FOR THE SUBSCRIPTION AND USE OF PROCEEDS

The Board has considered the followings factors when entering into the Subscription Agreement:

1. Potential investment opportunities

Starting in early 2018, the Government of China began the process of banning the import of foreign waste materials (including recyclable plastics, waste paper and scrap metal) for recycling and until recently, the Government of China implemented a complete ban of import of solid wastes. For decades, China was the world's largest importer of waste. The import ban policy caused the world's major waste-exporting countries to scramble for alternative destinations and for investors to consider getting in on recycling business in both developed and emerging countries.

As one of the Group's major segments, the Group's "Environmental Products" segment provides comprehensive treatment for wastewater, sludge, and solid waste produced in paper-making companies. The Company considers that the waste recycling is not a new business segment for the Company and the potential market for this business is considerably large given the amount of global waste. Hence, for some years, the Company has been looking to expand the Group's environmental services business by investing in and establishing waste recycling plants outside China using the existing skills, technology and expertise of the Group. As announced by the Company on 7 October 2019, the Government of Dubai has given its approval to establish a zero-waste metal recycling project in the Jebel Ali Free Zone, Dubai, United Arab Emirates. Such approval obtained by HeHe Resources does not have an expiry date.

Due to travel restrictions imposed by COVID-19, no further progress has been made in relation to the implementation of this project. Assuming no material adverse changes to the conditions for the implementation of the project after COVID-19, the Company's expected financial commitment for the Dubai Recycling Project will be approximately HK$330 million and the Company expects the entire net proceeds from the issue of the Subscription Shares of HK$100 million will be utilised towards the costs of purchasing and leasing plants and machineries for the project immediately once travel conditions return to normality. Given the roll-out of COVID-19 vaccines and as a number of countries has launched large scale COVID-19 vaccine injection programs, it is expected that the market conditions will be gradually resumed in the second half of 2021 and the Dubai Recycling Project will commence again in the second half of 2021. It is estimated that the Group will start to use the proceeds from the Subscription after the commencement of Dubai Recycling Project and the proceeds will be fully utilised in early 2022. In the event that the Dubai project proved no longer to be suitable, the entire net proceeds will be used to fund other similar investment projects, including but not limited to setting up a joint venture and establishment of zero-waste recycling plant, to be identified by the Company in another jurisdiction. As at the Latest Practicable Date, the Company has not identified other similar projects in another jurisdiction and will use its best endeavours to reactivate the Dubai Recycling Project. The Board will issue further announcement(s) to update the investors in the event that there is any change of use of proceeds.

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LETTER FROM THE BOARD

The Company expects that Mr. Fang Hui to spearhead the investment in waste recycling plants outside China. Mr. Fang AK is a pioneer of comprehensive utilisation of recyclable metal resources in China and a leading industry figure in the field of metals recycling. Mr. Fang AK founded Chiho-Tiande Group Limited (now known as Chiho Environmental Group Limited), a company listed on the Stock Exchange (stock code: 00976) ("Chiho"), once the largest and most profitable metal recycling business in China. After leaving Chiho in 2015, Mr. Fang AK and Mr. Fang Hui spent the next few years working on the blueprint to design and operate large scale integrated waste management parks serving customers globally. They were the first to convince the Government of Dubai to license the establishment of a zero-waste recycling plant in Dubai. The Board values the experience of Mr. Fang AK and Mr. Fang Hui and believe that they will add value to further strengthen the Group's environmental services business. Without the international experience of both Mr. Fang, the Company's foray into zero-waste recycling would be much riskier.

1. Alternate fund raising methods

The Directors have considered various fund raising methods including debt financing and equity financing, and believed that the Subscription is an appropriate and efficient means to raise funds, for the reasons that (a) the Subscription can strengthen the capital base of the Company without burdening the Group with principal repayment, interests expenses and other potential stringent financing terms; (b) the Subscription can enable the Company to maintain positive cash position for the Group's operations; (c) debt financing requires the Group to retain a portion of Group's cash balance for principal and interests repayment, which may limit the Group's flexibility and capability to use cash for further business development and to timely capture business opportunities that may arise from time to time; and (d) the Subscription and further debt financing are not mutually exclusive and the Group may have a better position to bargain for more favourable terms from debt financiers if the Group has a larger equity base after completion of the Subscription.

With respect to the debt financing, it is noted that and also as disclosed in the latest interim report of the Company for the six months ended 31 December 2020 (the "Interim Report"), as at 31 December 2020, (a) the Group's borrowings amounted to approximately RMB110.2 million out of which RMB74.2 million is repayable within one year. In addition, as disclosed in the CB Announcements, the maturity date of Bonds issued by the Company is 30 November 2021 and Creation Best may request for the early redemption of the Bonds by the Company after 1 June 2021.

With respect to other equity financing, such as a rights issue and open offer, the Company considered that such other equity financing methods usually involves a lengthy implementation timeline with the relevant application and administrative procedures, as well as various costs including underwriting fees, professional parties fee and administration costs (e.g. printing and mailing costs).

Having considered that (i) the difficulties in obtaining the debt financing without any collaterals and (ii) other equity financing may take a longer time to complete, the Company considers it is more flexible and time-saving for entering into the Subscription Agreement. Hence, the Subscription is considered a preferred means to raise funds and broaden Shareholders base than other forms of equity or debt financing which may involve longer time and higher administrative costs or finance costs.

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LETTER FROM THE BOARD

Having considered the factors above, the Directors consider that the terms of the Subscription Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY DURING THE PAST 12 MONTHS

The Company has conducted the following fund-raising activities in the past 12 months before the Latest Practicable Date:

Date of	Fund raising	New proceeds	Intended use of	Actual use of
announcement	activity	(approximately)	proceeds	proceeds
1 December 2020	Issue of the Bonds	HK$100,000,000	Repayment of the bonds	Repayment of
			of HK$100,000,000	the bonds of
			due on 29 September	HK$100,000,000
			2020	due on 29
				September 2020

Saved as disclosed above, the Company has not conducted any equity fund raising activities in the past 12 months immediately preceding the Latest Practicable Date.

EFFECT OF THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following table illustrates the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) upon Completion (assuming no conversion of the Bonds and no other Shares are issued and/or repurchased by the Company from the Latest Practicable Date up to and including the date of the Completion); and (iii) upon Completion (assuming fully conversion of the Bonds but no other Shares are issued and/or repurchased by the Company from the Latest Practicable Date up to and including the date of the Completion):

					(ii) Upon Completion		(iii) Upon Completion
	(i) As at the Latest	(assuming that no	(assuming fully conversion
	Practicable Date	conversion of the Bonds)		of the Bonds)
	Number of	Approximate	Number of	Approximate		Number of	Approximate
Shareholders	Shares	%	Shares	%		Shares	%
Florescent Holdings Limited
(Note 1)	295,422,000	40.31%		295,422,000	33.32%	295,422,000	28.75%
Subscriber and its associates
(Note 2)	7,440,000	1.02%		161,286,153	18.19%	302,131,223	29.40%
Shi Chenghu	89,452,000	12.20%		89,452,000	10.08%	89,452,000	8.71%
Public Shareholders	340,581,225	46.47%		340,581,225	38.41%	340,581,225	33.14%
Total	732,895,225	100%		886,741,378	100%	1,027,586,448	100%

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LETTER FROM THE BOARD

Notes:

1. Florescent Holdings Limited, a company owned as to 77.90% by Lian Shun Limited, which in turn is beneficially owned as to 61.31% by Mr. Zhu Gen Rong, as to 20.74% by Mr. Wang Ai Yan and as to 17.95% by Mr. Liu Chuan Jiang, being the executive Directors and the substantial Shareholders. Florescent Holdings Limited holds 295,422,000 Shares representing approximately 40.31% of the issued share capital of the Company as at the Latest Practicable Date. Mr. Zhu Gen Rong and Mr. Wang Ai Yan respectively hold 2,044,000 Shares representing approximately 0.28% of the issued share capital of the Company and 368,000 Shares representing approximately 0.05% of the issued share capital of the Company as at the Latest Practicable Date. Reference is made to the announcement of the Company dated 10 January 2021 regarding the winding- up petition against the Florescent Holdings Limited. The hearing for the winding-up petition before the High Court has been adjourned to 28 April 2021.
2. The Subscriber and Creation Best are investment holding companies incorporated in British Virgin Islands which are beneficially owned by Mr. Fang Hui. Creation Best will hold 140,845,070 new Shares assuming the Bonds will be fully converted into Shares and upon Completion, the Subscriber will own 153,846,153 Shares. As at the Latest Practicable Date, Mr. Fang Hui holds 7,440,000 Shares.

INFORMATION ON THE SUBSCRIBER

The Subscriber is an investment holding company incorporated in the British Virgin Islands.

Mr. Fang Hui, the ultimate beneficial owner of the Subscriber, was a director of Environmental Resources, an indirect wholly-owned subsidiary of the Group, between 18 September 2019 and 1 September 2020. Mr. Fang Hui is also the ultimate beneficial owner of Creation Best, the holder of the Bonds and as at the Latest Practicable Date, none of the Bonds have been converted into Shares. As at the Latest Practicable Date, Mr. Fang Hui holds 7,440,000 Shares, representing approximately 1.02% of the Company's total Shares in issue.

As announced in the Company's announcement dated 7 October 2019, the Government of Dubai gave its approval for a venture, under Mr. Fang AK's stewardship, to establish the Dubai Recycling Project in the Jebel Ali Free Zone, Dubai, United Arab Emirates. Mr. Fang AK is the father of Mr. Fang Hui. The Board then announced in the Company's announcement dated 26 May 2020 that the Company entered into the Dubai Shareholders' Agreement with Mr. Fang AK to develop the Dubai Recycling Project, subject to the Company raising at least RMB300 million (equivalent to approximately HK$327.1 million). Nonetheless, as the Company was unable to raise the agreed funding by the long stop date, being 31 August 2020, the Dubai Shareholders' Agreement lapsed as announced by the Company's announcement dated 1 September 2020.

Environmental Resources is wholly-owned by Fine Global which is the proposed joint venture company under the Dubai Shareholders' Agreement. Environmental Resources in turn is the sole beneficial owner of the entire equity interest in HeHe Resources. HeHe Resources is the vehicle which Mr. Fang AK used to secure the licenses for the Dubai Recycling Project. From their respective date of incorporation until the Latest Practicable Date, none of Fine Global, Environmental Resources nor HeHe Resources has conducted any business. As such, these subsidiaries are insignificant subsidiaries of the Group for the purpose of Rule 14A.09(1) of the Listing Rules and the Subscriber and its ultimate beneficial owner is consequently not a connected person.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As the Subscription Shares will be allotted and issued under the Specific Mandate to be obtained at the EGM, the Subscription is subject to the Shareholders' approval. The EGM will be convened for the purpose of considering and, if thought fit, approving, among other things, (i) the grant of the Specific Mandate; and (ii) the Subscription Agreement and the transactions contemplated thereunder.

EGM

The Subscription Shares will be issued under the Specific Mandate to be sought at the EGM and is therefore subject to the Shareholders' approval.

As Mr. Fang Hui holds 7,440,000 Shares, representing approximately 1.02% of the issued share capital of the Company as at the Latest Practicable Date and he is the ultimate beneficial owner of the Subscriber, Mr. Fang Hui and his associates will abstain from voting at the EGM or any adjournment thereof in respect of each of the resolutions on these matters. Save as disclosed in this paragraph, to the best knowledge of the Directors, no other Shareholder is required to abstain from voting at the EGM in respect of the resolution(s) regarding the Subscription. The EGM will be convened and held for the purposes of considering and, if thought fit, approving, inter alia, the Subscription Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate for the allotment and issue of the Subscription Shares.

A notice of convening the EGM to be held at the Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 28 April 2021, (Wednesday) at 9:30 a.m. is set out on pages 18 to 20 of this circular.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar in Hong Kong, Tricor Investor Services Limited of Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so wish.

Pursuant to the Listing Rules and the Articles, any vote of Shareholders at EGM must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. An announcement on the poll results will be published by the Company after the EGM in the manner prescribed under the Listing Rules.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors are of the opinion that the proposed ordinary resolutions for (i) the approval of the Subscription Agreement and the transactions contemplated thereunder; and (ii) the granting of the Specific Mandate are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

Yours faithfully

On behalf of the Board

HUAZHANG TECHNOLOGY HOLDING LIMITED

Zhu Gen Rong

Chairman

- 17 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting of Huazhang Technology Holding Limited (the "Company") will be held at Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 28 April 2021, at 9:30 a.m. for the following purposes:

ORDINARY RESOLUTIONS

"THAT:

1. the subscription agreement dated 2 March 2021 (the "Subscription Agreement") (a copy of which is marked "A" now produced to the meeting and initialed by the chairman of the meeting for the purpose of identification) entered into between the Company and Dao He Investment Limited (the "Subscriber") in respect of the subscription of 153,846,153 new shares of the Company (the "Subscription Share(s)") by the Subscriber at the subscription price of HK$0.65 per Subscription Share and the transactions contemplated thereunder be and are hereby ratified, confirmed and approved;
2. the directors of the Company (the "Directors") be and are hereby granted a specific mandate (the "Specific Mandate") to exercise the powers of the Company to allot and issue the Subscription Shares pursuant to the terms and conditions of the Subscription Agreement (subject to the fulfillment of the conditions precedent set out in the Subscription Agreement); and THAT the Subscription Shares, when issued and fully paid, shall rank pari passu among themselves in all respects and with all fully paid ordinary shares of the Company in issue as at the date of allotment and issue; and THAT the Specific Mandate is in addition to, and shall not prejudice nor revoke any general or other special mandate(s) which has/have been granted or may from time to time be granted to the Directors prior to the passing of this resolution; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

1. any one Director be and is hereby authorised to execute all documents and to do all such things and take all such other steps which, in his/her opinion, may be necessary, desirable or expedient to give effect to or in connection with the Subscription Agreement or any transactions contemplated thereunder."

By order of the Board

HUAZHANG TECHNOLOGY HOLDING LIMITED

Chan So Kuen

Company Secretary

Hong Kong, 13 April 2021

Notes:

1. Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (if such member is the holder of two or more shares) to attend and to vote instead of them. A proxy need not be a member of the Company.
2. Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.
3. A form of proxy for use at the meeting is enclosed.
4. To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority, must be deposited at the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or adjourned meeting. Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or adjourned meeting.
5. For the purpose of ascertaining shareholders' entitlement to attend and vote at the EGM, the register of members of the Company will be closed from 23 April 2021 (Friday) to 28 April 2021 (Wednesday), both days inclusive, during which period no transfer of shares will be effected. In order to be eligible to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration no later than 4:30 p.m. on 22 April 2021 (Thursday).
6. According to Rule 13.39(4) of the Listing Rules, the voting at the EGM will be taken by poll.
7. Taking into account of the recent development of the epidemic caused by Novel Coronavirus ("COVID-19"), the Company will implement the following prevention and control measures at the meeting against the epidemic to protect the members from the risk of infection:
8. 1. Compulsory body temperature check will be conducted for every member or proxy at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius will not be admitted to the venue;
   2. Every member or proxy is required to wear surgical facial mask throughout the meeting;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

1. Member or proxy may be asked if (i) he/she has travelled outside of Hong Kong within 14 days immediately before the EGM; (ii) he/she is subject to any Hong Kong Government prescribed quarantine requirement; and
2. 1. he/she has any flu-like symptoms or has been in close contact with any person under quarantine or with recent travel history. Any person who responds positively to any of these questions will be denied entry into the EGM venue and will not be allowed to attend the EGM; and
3. No refreshment will be served.

Furthermore, the Company wishes to advise the members, particularly the members who are subject to quarantine in relation to COVID-19, that they may appoint any person or the chairman of the meeting as a proxy to vote on the resolutions, instead of attending the meeting in person.

As at the date of this notice, the executive Directors of the Company are Mr. Zhu Gen Rong, Mr. Wang Ai Yan, Mr. Liu Chuan Jiang and Mr. Jin Hao, and the independent non-executive Directors are Mr. Kong Chi Mo, Mr. Heng, Keith Kai Neng and Mr. Yao Yang Yang.

- 20 -