Roo Hsing : The Company is to hold press briefing concerning material information

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Provided by: ROO HSING CO., LTD
SEQ_NO	1	Date of announcement	2022/07/25	Time of announcement	22:02:09
Subject	The Company is to hold press briefing concerning material information
Date of events	2022/07/25	To which item it meets	paragraph 51
Statement	1.Date of occurrence of the event:2022/07/25 2.Company name:ROO HSING CO., LTD 3.Relationship to the Company (please enter "head office" or "subsidiaries"):head office 4.Reciprocal shareholding ratios:N/A 5.Cause of occurrence:The Company is to hold press briefing concerning material information at 19:00 on July 25,2022. 6.Countermeasures: In order to solve the chaos caused by the absence of the Chairman and the position of President being held by Chang Sun (phonetic), a person who has been staying overseas for a long time due to the warrant issued by the R.O.C. judicial authority, an interim board of directors' meeting was convened on July 15, 2022 under the unanimous consent of the five directors, and Mr. Shao-Hua Weng was elected as the Chairman and President of Roo Hsing Co., Ltd. (the "Company"), in the hope of bringing the Company's corporate governance and operation back on track. After being elected as the Chairman and President of the Company, Mr. Shao-Hua Weng immediately assumed office at the Company in the evening of July 15, 2022, and entrusted professional experts to conduct a thorough investigation of the Company's operation and financial condition. Surprisingly, it was found that the Company was already in major financial difficulties and had almost no cash on hand. Moreover, since the end of 2021, many resolutions adopted were absurd, and the manner of operating the Company was bizarre and abnormal, violating the normal practice of corporate governance. Therefore, the situation is severe and close to disorder. Please find the investigation process and the results set forth as follows: In the Financing Agreement signed between the former management team led by the former Chairman, Mr. Shoei-Jiang Chang, and the former President, Mr. Chang Sun, with EnTie Commercial Bank ("EnTie Bank") on May 25, 2022, there is a bizarre clause stipulating that EnTie Bank could accelerate repayment by the Company if Chang Sun no longer serves as the Company's President. This secret clause is clearly an intent to manipulate the Company's operation and has a high risk of causing serious damage to the rights and interests of the shareholders. Unfortunately, neither the competent authorities or any of the shareholders knew of this clause, which has led to a series of crises: On May 25, 2022, the former management team of the Company signed a facility agreement in the amount of US$18.4 million with EnTie Bank. Paragraph 2 of Article 8 of said facility agreement stipulates that "The Company shall repay the loan early in the event of a change of the Company's management team (change of position for the President, Chang Sun)." As mentioned earlier, such restriction is unconventional and contrary to fairness and common practice. As we all know, under the normal operation of listed companies, it is impossible for a specific person to be the president. What is even more absurd is that when the Company signed the facility agreement with EnTie Bank, Chang Sun, who was the President at the time, was already wanted by the R.O.C. judicial authorities and was also staying overseas and refused to appear in court. In other words, such a clause actually intended for "the President of the Company to always be Mr. Chang Sun, who is a wanted criminal, and cannot be replaced." Therefore, once Mr. Sun is removed from the position of President, EnTie Bank can force the Company to make an early repayment. With such a clause, there is sufficient reason for the prosecution authority to intervene and investigate. Since the Company dismissed Mr. Chang Sun from his position as the President on July 15, 2022 and appointed Mr. Shao-Hua Weng as the President at the same time, EnTie Bank immediately froze all available funds of the Company because the Company triggered the early repayment condition as mentioned earlier, and the loan is deemed to be matured. Mr. Weng discovered the unreasonable clause of the facility agreement upon his appointment and therefore took the initiative to approach EnTie Bank on the morning of July 18, 2022, and held several negotiations in hopes of seeking the possibility of changing the unconventional financing term noted above. Moreover, Mr. Weng earnestly requested EnTie Bank to refrain from freezing the funds at this time, as this would further exacerbate the Company's financial situation. Unfortunately, EnTie Bank not only held on to its position strongly, but also issued a legal attest letter (No. 001779) to the Company, informing the Company of the maturity of the debt and further freezing all available funds. Although the Company has continued to actively negotiate with EnTie Bank in the past few days, still, a fair and reasonable response has yet to be received from EnTie Bank. Therefore, the Company sent a legal attest letter to EnTie Bank on July 21, 2022, clearly stating that the Company intends to seek support for a win-win situation and re-emphasizing the unreasonableness of the stipulation for early repayment, and that EnTie Bank should not freeze all the Company's available funds, which has resulted in a major financial crisis for the Company. However, as of now, EnTie Bank continues to freeze the Company's receivables deposited by the Company in the bank account and insists that the Company must make the early repayment. EnTie Bank even told the financial officer of the Company that it would only resume negotiation if Mr. Chang Sun, the wanted criminal, is on the management team. The Company borrowed US$499,978 by issuing a letter of credit facility with Taiwan Cooperative Bank, which will expire on July 29, 2022. In addition, the previous financial facility with Taiwan Business Bank of US$236,960.76 will expire in mid-August. The Company's original plan was to settle the aforementioned loan with the amount frozen by EnTie Bank. However, the Company currently has no available short-term funds due to the outrageous action of EnTie Bank arbitrarily freezing all of the Company's available funds under the unreasonable agreement clause. The normal operating income of the Company was withheld by the Mainland subsidiaries, including Changzhou Tooku Garments Co. Ltd. (常州東奧服裝有 限公司), due to the unconventional operation and practices violating corporate governance practices. Such normal Transfer of such operating income back to Taiwan was rejected: Since all of the Company's normal operating income for the first half of the year was withheld by its subsidiaries in China, it is incomprehensible that when the Company needed funds during the time when former Chairman Chang was chairman and when he was serving as chairman illegally, the chairman of the parent company had to "request for" funds from the former President, Chang Sun, the person who is staying overseas and wanted by the judicial authority, to remit money back to the parent company. Such unconventional, absurd practice against corporate governance is the main reason why the Company does not have any available funds today. The Company is currently investigating whether its former Chairman and the former President (perhaps by conspiracy?) had together withheld the Company's working capital in the Mainland subsidiaries for use by specific persons and thus completely disregarding the Company's financial rules as well as the sound and sustainable operation of the Company. Any person involved in any unlawful act will be held legally responsible. Furthermore, the current management team led by Chairmen Weng will dispatch personnel to take over all overseas subsidiaries so that the profits of the overseas subsidiaries can be returned to the parent company in Taipei. However, such a takeover cannot be accomplished overnight and may not be sufficient to alleviate the severe financial crisis faced by the Company at the time. Thus, Chairman Weng will continue the amicable negotiation with EnTie Bank, Taiwan Cooperative Bank, Taiwan Business Bank, and Chang Hwa Bank in hopes of alleviating the pressure on the Company in the shortest possible time and helping the Company to overcome this crisis. Instead of trying to have the profits from normal operations returned to the Company, the former Chairman, Shoei-Jiang Chang, continued to sell the Company's significant assets to cover up the crisis: Due to the improper operation of the former management team, the Company's normal operating income was retained in its Mainland subsidiaries. Faced with this strange, disorderly practice that is in contravention to corporate governance practice, the former Chairman was not only reluctant to adjust but instead tried to cover by continuously selling the Company's significant assets. The majority of the Company's board of directors strongly disapprove of such a barbaric act of creating a false appearance and arbitrary disposal of the Company's assets, which caused damages to the Company's operation foundation. As a result, we have begun investigating the rationality and legality of the previous asset sale transactions and whether there is an improper transfer of benefits that may harm the shareholders' rights and interests. As for whether the former Chairman, Shoei-Jiang Chang, played a leading role in the sales of the assets, whether all the benefits from the disposal of the assets were returned to the Company, or whether specific persons used them, the Company will conduct a thorough investigation. Any violation of the law will be held accountable to the end. Please find the description as follows: In just one week of the new management team entering the Company, we discovered that the former Chairman had sold the Company's land in Cambodia for US$20.5 million on January 11, 2022. Moreover, in May 2022, without the authority to act on behalf of the Company, the former Chairman also disposed of the entire shareholding of Operadora International De Zonas Francas (Managua), Sociedad Anonima, the Company's subsidiary in Nicaragua. The current management team of the Company solemnly emphasizes that the disposal of assets in exchange for capital by the management team of the former Chairman is clearly contrary to the normal practice of corporate governance. The Company does not approve and agree at all with such business model. Concerning the compliance of the procedure and reasonableness of the appraisal thereof, the Company will re-examine accordingly. Any violation or breach of laws or any damage to the Company's interests will be held accountable, and the Company will seek its rights and claims as accorded by law. . As for the aforementioned Cambodia land case, the buyer will pay the second installment of US$4 million on September 25, 2022, and the third installment of US$5 million on December 25, 2022, along with the delivery of a cheque with a face value of US$10.5 million and a maturity day on June 25, 2023. Such an amount may be a chance for the Company to overcome the crisis. Therefore, the Company will immediately contact the buyer to seek the opportunity for advance payment of the land. Some directors of the Company disregarded the Company's interests and continued to interfere with the proceeding of the board meeting: Chairman Weng convened an emergency board meeting at 2 pm on July 15, 2022, to report the severe financial crisis faced by the Company to all directors and seek solutions, which is the Company's priority. However, when the board meeting was held at 4 pm on July 22, 2022, Director Chang Sun, Director Zong-Ming Ji (reappointed by Hsing-Niu-Yi Investment Co., Ltd. (phonetic)(興牛一投資股份有限公司)), and Mr. Zhong-Xian Chou (phonetic), who trespassed into the online meeting, delayed the meeting from the beginning with self-interests issues including the argument of operation rights and rights to convene the board meeting, completely ignoring the current financial crisis faced by the Company. Chairman Weng and other directors were frustrated by the continued disruption and interference of the meeting agenda as initially planned. The current difficulties encountered by the Company had already been described in the reports originally delivered by the Company. The majority of the directors present at the meeting had received the meeting material. Since the directors were clearly informed and fully aware of the Company operating difficulties, Chairman Weng, therefore, announced the closing of the board meeting and immediately went to EnTie Bank for further negotiation until the evening. Given the Company's current significant financial crisis, Chairman Weng believes it is critical to report to all shareholders, the investing public, and relevant authorities. The Company is seeking all possible solutions to help overcome this major crisis. The full support of all shareholders and investing public is hereby earnestly requested for the Company to survive such a difficult time. Regarding the Company's recent change of director: Wei Hao Investment Limited ("Wei Hao") was impressed by Chairman Weng's competence in administrative management and resource pooling at the beginning of this year and thus asked Mr. Weng to serve as Director of the Company, to which Mr. Weng accepted. The replacement and appointment letter was delivered to the Company on February 24, 2022. However, Roo-Hsing at that time never provided notice for the taking of office or issued material information announcement. Wei Hao issued a formal letter on March 21, 2022, requesting Roo-Hsing's management team at the time to make material information announcement and proceed with relevant registration change procedures with regard to the replacement and appointment of director in accordance with the laws. Director Weng believed that Roo-Hsing would not persist with inaction, and Wei Hao repeatedly followed up and urged Roo-Hsing's team to proceed. Therefore, Director Weng continued to wait for further news from Roo-Hsing. When it was discovered that former Chairman Chang was still convening shareholders' meeting unlawfully, Director Weng deemed the matter to be serious and started to prepare the relevant information and personnel. After consultation with legal and financial experts, an emergency board meeting was convened on July 15, 2022 under the unanimous consent of the five directors to resolve the absurd situation of lack of Chairman for the Company and a criminal that is wanted by judicial authorities acting as President. Regarding the discovery of the original copies of the appointment and replacement letter issued by Wei Hao and its letter dated March 21, 2022 in the file cabinets of CFO Hsu, this has been explained to the public by material information announcement issued by the Company on July 20, 2022. At the same time, a report has also been made at the local police station. Former Chairman Chang was clearly aware that he was no longer director and chairman of the Company but still concealed such fact and continued to regard himself as the chairman and failed to urge the Company's personnel to publish the material information and proceed with relevant registration change procedures for replacement and appointment of director. Former Chairman Chang shall bear the most responsibility thereof. Since Mr. Shoei-Jiang Chang is no longer the Company's director and chairman as of February 24, 2022, he did not have the power to convene board meetings and shareholders' meetings. The current management team of the Company will not upend the validity of the financial report. However, if after study by experts or correction by the competent authority that retroactive approval is required, or after due diligence of the various disposal of assets, it is found that that there is material effect to shareholder equity, or that the materiality threshold has been reached and the financial report shall be restated, correction procedures will be proceeded immediately. As already emphasized several times by the Company's new management team, the protection of the interest of the investing public and compliance with corporate governance shall be the first priority going forward. As noted above, since Mr. Shoei-Jiang Chang had no right to convene board meetings and shareholders' meetings, there was no election of Mr. Chou as independent director by the shareholders' meeting. When Mr. Chou sent a letter on July 18, 2022 asking for an extraordinary shareholders' meeting to be called in accordance with the Company Act, the Company issued a formal reply letter in the afternoon of the same day stating that "the request is without ground under the law and is confirmed to be improper." The relevant competent authority was also copied in the reply. However, Mr. Chou pressured the Company's personnel in the stock affair department by email on July 21, 2022, demanding the Company to convene an extraordinary shareholders' meeting in accordance with his request. To this unreasonable and unlawful request, the Company repeated its position by email reply. However, when the Company sent the formal reply letter to Mr. Chou at the sender's address indicated on the letter sent by Mr. Chou, the Company's letter was returned on July 22, 2022 with a stamp noting that there is no such person, which is puzzling. During the interim board meeting held on July 15, 2022, Mr. Shoei-Jiang Chang unexpectedly attended the meeting as director appointed by Hsing-Niu-Yi Investment Co., Ltd.. Furthermore, Mr. Zong-Ming Ji, who was replaced and discharged by Wei Hao and thus lost his position as director, attended the interim board meeting held on July 22, 2022 as director appointed by Hsing-Niu-Yi Investment Co., Ltd., while Mr. Chou, claiming to be independent director, was nominated by Hsing-Niu-Yi Investment Co., Ltd.. While the company is in major financial distress, directors of the Company, Mr. Chang Sun and Mr. Zong-Ming Ji actually had the leisure to boycott the agenda of the interim board meeting on July 22, 2022 with respect to the issue of whether Mr. Chou is able to convene an extraordinary shareholders' meeting. Whether there are unscrupulous characters that are coveting the Company's management right and continue to resort to actions that is a waste of social resources and harming the rights and interests of the Company and the shareholders, the current management team of the Company hopes that the competent authority, the media and the public will keep this under close scrutiny. Chairman Weng has formerly been the independent director of Jian Sin Industrial Co., Ltd., a company listed on the Taipei Exchange. Furthermore, Chairman Weng also has his own company that is currently in operation and had an initial blueprint as to how to help Roo-Hsing enter the next phase of development in response to the fast-paced technology development. However, during the short time that he has assumed office, various abnormal corporate governance practice and operations have been discovered. Furthermore, with the EnTie Bank harshly freezing all of Roo-Hsing's available funds, Roo-Hsing now has no funds available for use. With these obstacles, the foremost mission of Chairman and President Weng is to stabilize Roo-Hsing and attempt to break the stalemate with legal and proper means. It is hereby earnestly requested for the public, the competent authority and the correspondent financial institutions to provide support and strength. The Company's board of directors have adopted a resolution by majority to discharge Mr. Chang Sun as President of the Company, which solves the issue of the position of the Company's President being held by a wanted criminal. However, Mr. Chang Sun is currently still a director of the board of the Company. According to the Company's board meeting minutes from the last few board meetings, Mr. Sun attended the board meetings via video conference and often expressed his views during the meetings. Further, given that the repayment acceleration clause that requires Mr. Chang Sun to be President of the Company and that when the Company is lacking in funds, former Chairman Chang had to ask for funds from former President Sun, these indicate that former President Sun was actually involved in the operation of the Company during the time when former Chairman Chang was in office. Furthermore, the Company has also recently learned that the former President Mr. Chang Sun, used his position as the president of the parent company as well as the president of the subsidiary, J.D.United Manufacturing Corporation Ltd., to arbitrarily use the assets of Bai Cheng Shi Mei Da Garments Co. Ltd. (白城市美達服裝有限公司) as collateral for Ms. Xiu-Lan Li (phonetic), who is the mother of Chang Sun, as well as for "Jilin Province Textiles Imp. & Exp. Co., Ltd.," a company in which Ms. Li has shareholding. Such asset was subject to enforcement by the creditors before the Intermediate People's Court of Changchun City of Jilin Province (as attached). How could the Company's asset be arbitrarily disposed of or encumbered in the personal interest of the former President? Moreover, when becoming the Company's Chairman on November 21, 2021, did Mr. Shoei-Jiang Chang not take any measures to control or effectively prevent such unlawful conduct when he knew that the disposing and withholding of the Company's assets and operating income by Mr. Sun might involve a major illegal act? The serious deviations from corporate governance conducted by Mr. Shoei-Jiang Chang and Mr. Chang Sun were the main reasons for this significant financial crisis currently faced by the Company. Given the actions of Mr. Chang Sun, who is still a director of the Company, the Company hereby calls for Mr. Sun, being a director of the Company, to act in compliance with the law as well as for the benefit of the Company, the employees, and all shareholders. Furthermore, in the event of any matters carried out as a director to the detriment of the Company and its shareholders, the management team led by Mr. Weng will not condone any illegal acts! As for Mr. Shi-Xiu Chen (phonetic), who had served as the Company's Chairman and resigned his position as the director and Chairman of the Company at the end of 2021, Mr. Chen was no longer a member of the board of directors of the Company since last year. When Chairman and President Weng is in charge of operation of the Company, it did not require Mr. Chen's involvement in the Company's operation. Also, based on Chairman Weng's understanding, Mr. Chen was not involved in the Company's operation during the time when former Chairman Shoei-Jiang Chang was in office. Concerning the several judicial cases currently under trial, Mr. Chen must deal with them personally. Unless required by the relevant judicial authorities for the assistance of the Company, the Company will not interfere or intervene in Mr. Chen's personal trials. Regarding the issue of the Company's funds being frozen by EnTie Bank, the latest development is as follows: This morning (July 25, 2022), Chairman and President Weng communicated with Manager Wei of EnTie Bank by phone and message. Chairman and President Weng inquired: "If I were not the President, would EnTie Bank still freeze the Company's funds? Would EnTie Bank refrain from forcing the Company to repay the loan early?" Manager Wei of EnTie Bank answered: "Then please negotiate for change of the terms immediately." In order to resolve the issue of Roo-Hsing not having funds available for use, and given that it is alleged that Mr. Ji, director of the Company and legal representative of the Company's major shareholder, Hsing-Niu-Yi Investment Co., Ltd., has good relations with EnTie Bank and other financial institutions, Chairman and President Weng sent an email and Weibo message to Mr. Ji around noon today asking Mr. Ji for a discussion in the interest of the Company. Mr. Weng met with Mr. Ji at around 4pm. Mr. Ji indicated that with respect to the financial distress faced by Roo-Hsing, he and others have already made arrangements. Mr. Ji also indicated that he has good relations with financial institutions. As such, Chairman and President Weng asked Mr. Ji directly that in order to stabilize Roo-Hsing, whether Mr. Ji would be willing to become President of the Company through legal and lawful procedures, given that he has good relations with EnTie Bank and other financial institutions and has also made arrangements. However, a reply has not yet been received from Mr. Ji. Finally, we would like to report to everyone, Roo-Hsing Co., Ltd. is currently in significant financial distress, and this is due to the improper management of former Chairman Chang and former President Sun, as well as the unreasonable measures of En-Tie Commercial Bank. Now that Chairman and President Weng has assumed office at the Company, Chairman Weng and his management team will not evade. Roo-Hsing will face the obstacles with determination. The Roo-Hsing now will handle the crisis legally and in compliance with the laws. It is hereby earnestly requested of the shareholders, the competent authority, the financial institutions and the public to give Roo-Hsing a chance. We will do our utmost to protect the rights and interests of the Company and all shareholders and lead Roo-Hsing on the correct path! 7.Any other matters that need to be specified:None.