Huazhang Technology : (1) PROPOSED EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS (2) ALLOTMENT AND ISSUANCE OF NEW SHARES UNDER SPECIFIC MANDATE AND (3) 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 your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Huazhang Technology Holding Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank manager, licensed securities dealer or registered institution in securities 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.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares or other securities of Huazhang Technology Holding Limited.

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)

1. PROPOSED EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS
2. ALLOTMENT AND ISSUANCE OF NEW SHARES UNDER SPECIFIC MANDATE
   AND
3. NOTICE OF EXTRAORDINARY GENERAL MEETING

Capitalised terms defined in the section headed "Definitions" of this circular have the same meanings when used in this cover page, unless the context otherwise requires.

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 20 December 2019 (Friday) at 2 p.m. is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to 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 as soon as possible and in any event not later than 48 hours (i.e. 2 p.m. on 18 December 2019 (Wednesday)) before the time appointed for the holding of the EGM or any adjourned meeting (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 at any adjourned meeting thereof (as the case may be) if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked. This circular is published on the website of The Stock Exchange of Hong Kong Limited at http://www.hkexnews.hk and on the website of the Company at http://www.hzeg.com.

3 December 2019

	CONTENTS
	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
NOTICE OF THE EGM. . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .EGM-1

- i -

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the meanings set out below:

"Board"	the board of Directors
"Bonds"	the unlisted 5.0% convertible bonds due 29 March 2019, and
	extended to mature on 29 September 2019, in an aggregate
	principal amount of HK$100,000,000 issued by the Company on
	29 March 2017
"Bondholder"	Creation Best International (創日國際有限公司), an investment
	holding company incorporated in Hong Kong with limited liability,
	which as at the Latest Practicable Date was the registered holder
	of the Bonds and is not a connected person of the Group
"Bond Instrument"	the bond instrument executed by the Company on 29 March 2017
	which created the Bonds
"Company"	Huazhang Technology Holding Limited, a company incorporated
	under the laws of the Cayman Islands with limited liability and
	the shares of which are listed on the Main Board of the Stock
	Exchange (Stock code: 1673)
"Connected Person(s)"	has the meaning given to it in the Listing Rules
"Conversion Date"	the conversion date in respect of the Bonds
"Conversion Price"	the price per Share at which the New Shares will be issued upon
	conversion of the Bonds, with the initial conversion price being
	HK$2.50 per New Share (subject to adjustments)
"Conversion Rights"	the rights of the Bondholder to convert, in whole or in part, the
	Bonds into New Shares pursuant to the terms and conditions of the
	Bonds
"Current Market Price"	in respect of a Share at a particular date, the arithmetic average
	of the closing price for one Share (being a Share carrying a full
	entitlement to dividends) as quoted on the Stock Exchange for the
	20 consecutive trading days ending on the trading day immediately
	preceding such date
"Director(s)"	the director(s) of the Company

- 1 -

	DEFINITIONS
"EGM"	the extraordinary general meeting of the Company to be convened
	and held at Room 805A, 8/F, Tower 1, South Seas Centre,
	75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 20
	December 2019 (Friday) at 2 p.m. for considering, and if thought
	fit, approving the Proposed Extension and the allotment and issue
	of New Shares under the Specific Mandate
"Group"	the Company and its subsidiaries from time to time
"Hong Kong"	Hong Kong Special Administrative Region of the PRC
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Independent Third Party"	a person independent of the Company and its Connected Persons
	and their respective associates
"Initial Bondholder"	Kaiser Asset Management Limited (金盛資產管理有限公司), a
	company incorporated under the laws of the British Virgin Islands
	with limited liability
"Issue Date"	29 March 2017, being the date of issue of the Bonds by the
	Company
"Last Trading Day"	27 September 2019, being the last trading day preceding the
	date of the announcement on the Proposed Extension dated 29
	September 2019
"Latest Practicable Date"	28 November 2019, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained herein
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange
"Maturity Date"	29 September 2019, being the six months after the Prior Maturity
	Date
"New Shares"	the new Shares to be allotted and issued by the Company to the
	Bondholder upon conversion of the Bonds
"PRC"	People's Republic of China (excluding Hong Kong, Macau and
	Taiwan)

- 2 -

	DEFINITIONS
"Previous General Mandate"	the general mandate granted to the Directors at the annual general
	meeting of the Company held on 11 November 2016 to allot, issue
	and deal with up to 20% of the total number of issued Shares as at
	the date of such annual general meeting
"Prior Maturity Date"	29 March 2019, being the second anniversary of the Issue Date
"Proposed Extension"	the proposed extension of the maturity date of the Bonds for 12
	months after the Maturity Date
"RMB"	Renminbi, the lawful currency of the PRC
"Proposed Maturity Date"	28 September 2020, being the twelve months after the Maturity
	Date
"Share(s)"	ordinary share(s) of the Company
"Shareholder(s)"	holder(s) of the Share(s)
"Specific Mandate"	the specific mandate to be sought from the Shareholders at the
	EGM to allot and issue the New Shares upon conversion of the
	Bonds
"Supplemental Deed"	on 29 September 2019, a supplemental deed executed on 29
	September 2019 in relation to extend the Bonds
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"subsidiary"	shall have the meaning given to it in the Listing Rules
"Subscription Agreement"	the subscription agreement dated 29 March 2017 entered into
	between the Company and the Initial Bondholder in respect of the
	subscription of the Bonds
"%"	per cent.

- 3 -

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 in the Cayman Islands:
Mr. ZHU Gen Rong (Chairman)	Cricket Square, Hutchins Drive
Mr. WANG Ai Yan (Chief Executive Officer)	P.O. Box 2681
Mr. LIU Chuan Jiang	Grand Cayman, KY1-1111
Mr. JIN Hao	Cayman Islands
Independent Non-executive Directors:	Principal place of business in Hong Kong:
Mr. DAI Tian Zhu	Room 805A, 8th Floor
Mr. KONG Chi Mo	Tower 1, South Seas Centre
Mr. Heng, Keith Kai Neng	75 Mody Road, Tsim Sha Tsui
	Kowloon
	Hong Kong
	Hong Kong, 3 December 2019
To the Shareholders
Dear Sir or Madam,

1. PROPOSED EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS
2. ALLOTMENT AND ISSUANCE OF NEW SHARES UNDER SPECIFIC MANDATE
   AND
3. NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to:

1. the announcements of the Company dated 29 March 2017 and 30 March 2017 respectively, in relation to the issue of the Bonds under the Previous General Mandate to the Bondholder;
2. the announcements of the Company dated 25 March 2019 and 26 March 2019, respectively and the circular of the Company dated 30 April 2019, in relation to the proposed extension of the maturity date of the Bonds for six months after the Maturity Date; and
3. the announcements of the Company dated 29 September 2019, in relation to proposed extension of the maturity date of the Bonds for 12 months after the Maturity Date.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details of the Proposed Extension, the grant of the Specific Mandate, the notice convening the EGM and other information as required under the Listing Rules.

BACKGROUND INFORMATION OF THE BONDS

On 29 March 2017, the Company and the Initial Bondholder entered into the Subscription Agreement. On the same date, the Bonds were created and issued to the Initial Bondholder. The principal terms of the Bonds were arrived at after arm's length negotiations between the Company and the Initial Bondholder and had been summarised and disclosed in the Company's announcement dated 29 March 2017.

The Bondholder

On 13 June 2019, the Initial Bondholder transfered the Bonds in its entirety to the Bondholder pursuant to the terms of the Bond Instrument upon which the Bondholder became the sole beneficial owner of the Bonds. The Bondholder is an investment holding company incorporated in Hong Kong with limited liability and its ultimate beneficial owner is Mr. Fang Hui. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Bondholder was not a connected person of the Group at the time of the transfer. On 18 September 2019, Mr. Fang Hui was appointed as a director of Hua Zhang Environmental Resources Investment Limited, a wholly- owned subsidiary of the Group. As the total assets, profits and revenue of the subsidiary compared to that of the Group were less than 5% under the percentage ratios for the year ended 30 June 2019, the subsidiary was an insignificant subsidiary of the Group for the purpose of Rule 14A.09(1) of the Listing Rules and the Bondholder is consequently not a connected person. As at the Latest Practicable Date, Mr. Fang holds 7,440,000 Shares, representing 1.01% of the total Shares.

Conversion Price

The initial conversion price of HK$2.50 per New Share was determined after arm's length negotiations between the Company and the Initial Bondholder at the time when the Subscription Agreement was entered into in March 2017 with reference to the then market prices and performance of the Shares, the then market conditions and the historical financial performance and the business prospects of the Group.

New Shares

Based on the initial Conversion Price and assuming full conversion of the Bonds, the Bonds would be convertible into 40,000,000 New Shares. The New Shares were initially intended to be allotted and issued under the Previous General Mandate.

Use of proceeds

As disclosed in the announcement of the Company dated 29 March 2017, the net proceeds from the subscription of the Bonds pursuant to the Subscription Agreement, after deduction of all relevant costs and expenses, were estimated to be approximately HK$99,500,000. The Company intended to use the net proceeds to fund new intergraded solution projects that the Company

- 5 -

LETTER FROM THE BOARD

undertook and for general working capital. The intergraded solution projects refer to the project contracting services provided by the Group to its customer. The services mainly includes system integration of complete-setpaper-making equipments. By working with financing lease companies, the Group provides clients with "design, production, and services". The Group used the net proceeds of the payment as the working capital for these projects. The project contracting services generated revenue of approximately RMB152.5 million, approximately RMB242.6 million, RMB215.9 million and RMB261.3 million for the years ended 30 June 2016, 2017, 2018 and 2019, respectively.

As at the Latest Practicable Date, the net proceeds from the subscription of the Bonds had been fully utilised. As intended and disclosed, out of the HK$99,500,000, approximately HK$79,600,000 had been used for the Group's new intergraded solution projects and approximately HK$19,900,000 had been used for the Group's general working capital in relation to project contracting services.

PRIOR EXTENSION

The Bonds were issued to the Initial Bondholder on 29 March 2017. Pursuant to the terms and conditions of the Bonds, among others, (a) unless previously converted or cancelled under the terms and conditions of the Bonds, the maturity date of the Bonds would be 29 March 2019, being the second anniversary of the Issue Date; and (b) the Initial Bondholder has an option to extend the maturity date for one additional year after the Maturity Date subject to the agreement of the Company.

On 25 March 2019, the Company received a notice from the Initial Bondholder requesting to extend the maturity date of the Bonds for 6 months after the Prior Maturity Date, i.e., to 29 September 2019 under the same terms and conditions of the Bonds. The Company agreed to the extension and the extension was approved by the Shareholders by way of poll at an EGM on 21 May 2019.

As at the Latest Practicable Date, (i) the Bondholder had not exercised any of its Conversion Rights; (ii) no New Shares had been allotted and issued; and (iii) the Bonds in the principal amount of HK$100,000,000 had remained outstanding.

PROPOSED EXTENSION

On 29 September 2019, the Supplemental Deed in relation to the Bonds was executed by the Company to amend certain terms and conditions of the Bond Instrument, pursuant to which:

1. the Maturity Date was further extended to 28 September 2020; and
2. the Bondholder has an option to extend the maturity date of the Bonds for one additional year after the Maturity Date, which is subjected to agreement from the Company, under the same terms and conditions of the Bonds.

- 6 -

LETTER FROM THE BOARD

Principal terms and conditions of the Bonds

Save for the Proposed Extension, all other material terms and conditions of the Bonds have remained unchanged and are in full force and effect. The principal terms and conditions of the Bonds (as revised to give effect to the Proposed Extension) are summarised below:

Issuer	:	The Company.
Principal amount	:	HK$100,000,000.
Maturity Date	:	Unless previously converted or cancelled, each Bond will be
		redeemed at 100% of the principal amount outstanding on the
		Proposed Maturity Date.
Issue price	:	100% of the principal amount of the Bonds
Coupon	:	5.0% per annum from the Issue Date to the Proposed Maturity
		Date, payable in cash on a semi-annual basis in arrears. Default
		interest shall be payable on late payments at 5.0% per annum
		above the coupon rate.
Conversion	:	Subject to the condition that no bondholder may require the
		transfer of a bond to be registered (i) during the period of seven
		days ending on (and including) the dates for payment of any
		principal; or (ii) after a conversion notice has been delivered
		with respect to the Bonds, and the Proposed Extension becoming
		effective, the Bondholder has the right to convert its Bonds into
		New Shares at the Conversion Price at any time on and after
		the 30th day after the date on which the Proposed Extension
		becomes effective up to the close of business (at the place where
		the certificate evidencing such Bond is deposited for conversion)
		on the 30th day prior to the Proposed Maturity Date (both days
		inclusive) (but, except as provided in the terms and conditions of
		the Bonds, in no event thereafter).
		The number of New Shares to be issued on conversion of a Bond
		will be determined by dividing the principal amount of the Bond
		to be converted by the Conversion Price in effect at the relevant
		Conversion Date.

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LETTER FROM THE BOARD

Conversion Price	:	The price at which New Shares will be issued upon conversion
		shall initially be HK$2.50 per New Share.
		The Conversion Price is subject to adjustment for, among other
		things, consolidation, subdivision or reclassification of Shares,
		capitalisation of profits or reserves, distributions, rights issues of
		Shares or options over Shares, rights issues of other securities,
		issues at less than Current Market Price, other issues at less than
		Current Market Price, other offers to Shareholders and other
		dilutive events as described in the Bond Instrument.
		The Conversion Price may not be reduced so that, on conversion
		of the Bonds, New Shares would fall to be issued at a discount to
		their par value.
Ranking of New Shares	:	The New Shares will be fully paid and will in all respects rank
		pari passu with the fully paid Shares in issue on the date the name
		of the holder of record of the number of Shares issuable upon
		conversion are registered as such in the register of members of the
		Company.
Redemption at maturity	:	Unless previously converted or cancelled, the Company will
		redeem each Bond at 100% of its principal amount on the Proposed
		Maturity Date.
Transferability	:	The Bonds will be freely transferable, subject to the condition
		that no bondholder may require the transfer of the Bonds to be
		registered (i) during the period of seven days ending on (and
		including) the dates for payment of any principal; or (ii) after a
		conversion notice has been delivered with respect to the Bonds.
Voting rights	:	The Bonds do not carry any voting rights.
Form and denomination	:	The Bonds are issued in registered form in the denomination of
		HK$10,000,000 and integral multiples of HK$5,000,000 in excess
		thereof each.
Status	:	The Bonds constitute direct, unsubordinated, unconditional and
		(subject to the negative pledge) unsecured obligations of the
		Company and shall at all times rank pari passu and without any
		preference or priority among themselves. The payment obligations
		of the Company under the Bonds shall, save for such exceptions
		as may be provided by mandatory provisions of applicable law and
		subject to the negative pledge, at all times rank at least equally
		with all of its other present and future senior, unsecured and
		unsubordinated obligations.

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	LETTER FROM THE BOARD
Listing	: No listing of the Bonds will be sought from the Stock Exchange or
	any other stock exchanges.
	An application will be made by the Company to the Stock
	Exchange for the listing of, and permission to deal in, the New
	Shares on the Stock Exchange.
Events of default	: The Bondholder by a special resolution may give notice to the
	Company that the Bonds are, and they shall accordingly thereby
	become, immediately due and repayable at the principal amount of
	the Bonds together with interest accrued but unpaid to such date
	(subject as provided below and without prejudice to the right of
	Bondholder to exercise the Conversion Right) if:
	(i)	Non-payment: a default is made in the payment of any
		principal, premium, interest or any other amount due in
		respect of the Bonds and such default is not remedied within
		15 days from the due date thereof;
	(ii)	Breach of other obligations: the Company does not perform
		or comply with one or more of its other obligations in
		the Bonds which default is incapable of remedy or, if
		in the opinion of the Bondholder, capable of remedy, is
		not remedied within 30 days or such longer period as the
		Bondholder may permit after written notice of such default
		shall have been given to the Company by the Bondholder;
	(iii)	Failure to deliver Shares: any failure by the Company to
		deliver any Shares as and when the Shares are required to
		be delivered following conversion of the Bonds and such
		failure is not remedied within 15 days from the due date
		thereof;

- 9 -

LETTER FROM THE BOARD

1. Insolvency: the Company or any of its principal subsidiaries is (or is, or could be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of (or all of a particular type of) its debts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of the Company or any of its principal subsidiaries; an administrator or liquidator of the Company or any of its principal subsidiaries or the whole or any material part of the assets and turnover of the Company or any of its principal subsidiaries is appointed (or application for any such appointment is made);
2. Cross-default: (a) any other present or future indebtedness (whether actual or contingent) of the Company or any of its subsidiaries for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of any actual or potential default, event of default or the like (howsoever described); or (b) any such indebtedness is not paid when due or, as the case may be, within any applicable grace period; or (c) the Company or any of its subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised, provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in the Bond Instrument have occurred equals or exceeds RMB500 million or its equivalent (as determined on the basis of the middle spot rate for the relevant currency against Renminbi as quoted by an independent investment bank on the day on which such amount becomes due and payable or is not paid) in any other currency on the day on which such indebtedness becomes due and payable or is not paid or any such amount becomes due and payable or is not paid under any such guarantees or indemnity;
3. Enforcement proceedings: a distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued out on or against any material part of the property, assets or turnover of the Company or any of its principal subsidiaries and is not discharged or stayed within 90 days;

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LETTER FROM THE BOARD

1. Winding-up: an order is made or an effective resolution passed for the winding-up or dissolution or administration of the Company or any of its principal subsidiaries (except for a members' voluntary solvent winding up of a principal subsidiary), or the Company or any of its principal subsidiaries ceases or threatens to cease to carry on all or substantially all of its business or operations (other than the occurrence of an event set out in the Bond Instrument), except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation
2. 1. on terms approved by a special resolution of the Bondholder; or (b) in the case of a principal subsidiary, whereby the undertaking and assets of such principal subsidiary are transferred to or otherwise vested in the Company or another of its principal subsidiaries;
3. Security enforced: an encumbrance takes possession or an administrative or other receiver or an administrator or other similar officer is appointed of the whole or a material part of the property, assets or turnover of the Company or any of its principal subsidiaries (as the case may be) and is not discharged within 90 days;
4. Nationalisation: any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or a material part of the assets of the Company or any of its subsidiaries; and
5. Illegality: it is or will become unlawful for the Company to perform or comply with any one or more of its obligations under any of the Bonds.

From the Maturity Date to the Latest Practicable Date, no event of default has been triggered. The Bondholder did not request the repayment of any outstanding amounts of the Bonds up to the Latest Practicable Date and has agreed not to demand repayment of any outstanding amount under the Bonds prior to the date of the EGM.

Conversion Price

The initial Conversion Price, which was determined when the Subscription Agreement was entered into in March 2017, represents:

1. a discount of approximately 21.88% to the closing price of HK$3.2 per Share as quoted on the Stock Exchange on the Last Trading Day;

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LETTER FROM THE BOARD

1. a discount of approximately 19.61% to the closing price of HK$3.11 per Share as quoted on the Stock Exchange as at the Latest Practicable Date;
2. a discount of approximately 24.52% to the average closing price of approximately HK$3.31 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to and including the Last Trading Day;
3. a discount of approximately 25.73% to the average closing price of approximately HK$3.37 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to and including the Last Trading Day; and
4. a premium of approximately 146.56% over the audited net asset value per Share of approximately RMB0.89 per Share (equivalent to approximately HK$1.01, at the exchange rate of HK$1.00 = RMB0.8797) based on the audited net asset value of the Company as at 30 June 2019 and 733,857,225 Shares in issue as at the Latest Practicable Date.

Considering (i) the initial Conversion Price was determined when the Subscription Agreement was entered into in March 2017 with reference to the then market prices of the Shares, (ii) the Proposed Extension is the best interest of the Group and its shareholders as a whole for reasons set forth in the section "Reason for the and benefits of the Proposed Extension" and (iii) any renegotiations of the Conversion Price will likely significantly delay the Proposed Extension, the Directors are of the view that the Proposed Extension at the initial Conversion Price is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

New Shares

Based on the initial conversion price of HK$2.50 per New Share (subject to adjustment), a maximum number of 40,000,000 New Shares may fall to be allotted and issued upon exercise in full of the Conversion Rights attached to the Bonds, representing approximately 5.45% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.17% of the issued share capital of the Company as enlarged by the issue of the New Shares.

The New Shares to be allotted and issued upon full conversion of the Bonds at the Conversion Price of HK$2.50 (subject to adjustments) will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

Conditions

The Proposed Extension to the Bond Instrument set out in the Supplemental Deed are subject to the fulfillment of the following conditions precedent:

1. the Stock Exchange approving the Proposed Extension pursuant to Rule 28.05 of the Listing Rules;

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LETTER FROM THE BOARD

1. the approval by the Shareholders of the Proposed Extension and the allotment and issue of the New Shares upon full conversion of the Bonds under the Specific Mandate having been obtained; and
2. the Listing Committee of the Stock Exchange having granted the listing of and permission to deal in the New Shares.

As at the Latest Practicable Date, all of the conditions precedents are not yet satisfied.

Save for the aforesaid, all other terms and conditions of the Bonds will remain in full force and effect.

REASONS FOR AND BENEFITS OF THE PROPOSED EXTENSION

The Group is principally engaged in the research and development, manufacture and sale of industrial products, project contracting services, environmental products, and the provision of supporting services in the PRC.

The Bonds are set to mature on 29 September 2019. Unless the Maturity Date is extended, the Company would be required to repay the outstanding principal amount of the Bonds (together with all unpaid interests accrued thereon up to and including the date of actual payment) to the Bondholder on 29 September 2019.

As disclosed in the Company's annual results announcement for the year ended 30 June 2019 published on 25 September 2019, the Group has planned to develop waste recycling projects overseas. It may involve setting up a waste recycling plant overseas and adopting advanced technology to dismantle metal solid waste, which may require a significant amount of capital commitment. From the Company's perspective, the Proposed Extension, which was proposed by the Bondholder, will provide reasonable buffer time and flexibility to the Company's deployment of its financial resources to fund its operation and development as well as to plan its working capital and cash flow arrangement.

In light of the recent uncertain economic conditions, the Directors believe that (i) it may not be beneficial to the Group as a whole to allocate its financial resources to repay the Bonds and the extension grants the Company flexibility to manage its capital and financial resources; (ii) any placing of new bonds to new investors at a conversion price to be determined with reference to the recent market prices of the shares of the Company (which have much increased since the Issue Date) may not be successful; and (iii) additional expenses and management attention is needed to place new bonds. Considering the financial resources presently available to the Group, the Group has and will have sufficient financial resources to repay the redemption monies when the Bonds become due. In the circumstances, based on the above considerations, the Directors are of the view that the Proposed Extension is in the best interests of the Group and its Shareholders as a whole.

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LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE

The following table sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately upon exercise in full of the conversion rights attached to the Bonds (based on the Conversion Price without any adjustment, and assuming there being no other change in the shareholding structure and share capital of the Company immediately after the Latest Practicable Date):

						Immediately upon exercise in
		As at the date of this		full of the conversion rights
		announcement		attached to the Bonds
				Approximate					Approximate
		Number of	percentage of		Number of	percentage of
	Shares held	the total issued Shares held	the total issued
	directly or	share capital of directly or	share capital of
Name	indirectly	the Company	indirectly	the Company
Mr. Zhu Gen Rong ("Mr.
Zhu"),
Mr. Wang Ai Yan ("Mr.
Wang") and Mr. Liu Chuan
Jiang ("Mr. Liu") (Note)	416,772,000	56.79%		416,772,000		53.86%
Bondholder		-		-	40,000,000		5.17%
Public Shareholders	317,085,225	43.21%	317,085,225	40.97%
Total	733,857,225	100.00%	773,857,225	100.00%

Note: Mr. Zhu, Mr. Wang and Mr. Liu are our executive Directors. Out of the 416,772,000 Shares, 414,658,000 Shares are held by Florescent Holdings Limited, which is beneficially owned as to 77.9% by Lian Shun Limited, which in turn is beneficially owned as to 61.31% by Mr. Zhu, 20.74% by Mr. Wang and 17.95% by Mr. Liu. The remaining 1,760,000 Shares and 354,000 Shares are held by Mr. Zhu and Mr. Wang respectively. Mr. Zhu, Mr. Wang and Mr. Liu are parties acting in concert.

FUND RAISING ACTIVITIES IN THE PAST TWELVE-MONTH PERIOD

The Company did not engage in any fund raising activities in the past 12 months from the Latest Practicable Date.

LISTING RULES IMPLICATIONS

Stock Exchange's approval

Pursuant to Rule 28.05 of the Listing Rules, any alterations in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alterations take effect automatically under the existing terms of such convertible debt securities.

- 14 -

LETTER FROM THE BOARD

As the Proposed Extension involves the Bondholder exercising its option and requires the agreement from the Company, it is not regarded to be taking effect automatically under the existing terms of the Bonds. The Proposed Extension is regarded as a new arrangement of the Company. The Company will make an application to the Stock Exchange for the approval for the Proposed Extension.

Specific mandate

Pursuant to Rule 13.36(6) of the Listing Rules, an issuer may not issue securities convertible into new shares of the issuer for cash consideration pursuant to a general mandate given under Rule 13.36(2)(b) of the Listing Rules, unless the initial conversion price is not lower than the benchmarked price (as defined in Rule 13.36(5) of the Listing Rules) of the shares at the time of the placing (in the case of the Company, at the time of the new arrangement, i.e., the Proposed Extension).

In addition, as the initial conversion price of HK$2.50 is lower than the benchmarked price (as defined under Rule 13.36(5) of the Listing Rules), the Company would be required by the Stock Exchange to obtain a specific mandate from the Shareholders pursuant to Rule 13.36(6) of the Listing Rules.

THE EGM

The 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 20 December 2019 (Friday) at 2 p.m. is set out on pages EGM-1 to EGM-2 of this circular. An ordinary resolution will be proposed to the Shareholders at the EGM to consider and, if thought fit, approve the grant of the Specific Mandate. The votes on the resolution proposed to be approved at the EGM will be taken by poll and an announcement will be made by the Company after the EGM on the results of the EGM.

A member entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her behalf. A form of proxy for use at the EGM is accompanied with this circular. A proxy need not be a member of the Company. Whether or not you intend to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company's branch share registrar in Hong Kong, 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 should you so wish.

To the best of the knowledge, information and belief of the Directors, and having made all reasonable enquiries, no Shareholder has material interest in the granting of the Specific Mandate and no Shareholder would be required to abstain from voting at the EGM.

- 15 -

LETTER FROM THE BOARD

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 Group. 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 is not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the opinion that the Proposed Extension is fair and reasonable, and the granting of the Specific Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend that all Shareholders should vote in favour of the resolutions to be proposed at the EGM.

Yours faithfully,

By Order of the Board

Huazhang Technology Holding Limited

ZHU GEN RONG

Chairman and Executive Director

- 16 -

NOTICE OF THE EGM

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 IS HEREBY GIVEN THAT an extraordinary general meeting (the "Meeting") of Huazhang Technology Holding Limited (the "Company") will be held at Room 805A, 8th Floor, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on Friday, 20 December 2019 at 2 p.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following ordinary resolution of the Company.

ORDINARY RESOLUTION

"THAT:

1. the directors of the Company be and are hereby approved, confirmed and ratified the supplemental deed entered into on 29 September 2019 in relation to the unlisted 5.0% convertible bonds due 29 September 2019 in an aggregate principal amount of HK$100,000,000 issued by the Company on 29 March 2017 (the "Bonds"), which key terms are including (i) the maturity date was further extended to 28 September 2020, and (ii) the Bondholder has an option to extend the maturity date of the Bond for one additional year after the maturity date as of 29 September 2019, which is subjected to agreement from the Company, under the same terms and conditions of the Bonds;
2. the extension of the maturity date of the Bonds to 28 September 2020 (the "Proposed Extension") and the revision of the terms and conditions of the Bonds to give effect to the Proposed Extension be and are hereby approved, confirmed and ratified;
3. the directors of the Company be and are hereby granted a specific mandate to allot and issue new shares of the Company (the "New Shares") upon exercise of the conversion rights attached to the Bonds; and
4. the directors of the Company be and are hereby authorised to do all such acts and things and execute all such documents which they consider necessary, desirable or expedient for the purpose of, or in connection with, the Proposed Extension and the allotment and issue of the New Shares."

Yours faithfully,

By Order of the Board

Huazhang Technology Holding Limited

ZHU GEN RONG

Chairman and Executive Director

Hong Kong, 3 December 2019

- EGM-1 -

NOTICE OF THE EGM

Registered office in Cayman Islands:

Cricket Square, Hutchins Drive

P.O. Box 2681

Grand Cayman, KY1-1111

Cayman Islands

Principal place of business in Hong Kong:

Room 805A, 8th Floor

Tower 1, South Seas Centre

75 Mody Road, Tsim Sha Tsui

Kowloon

Hong Kong

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 17 December 2019 (Tuesday) to 20 December 2019 (Friday), 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 share registrar 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 16 December 2019 (Monday).
6. According to Rule 13.39(4) of the Listing Rules, the voting at the EGM will be taken by poll.

As at the date of this notice, the executive Directors 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. Dai Tian Zhu, Mr. Kong Chi Mo and Mr. Heng, Keith Kai Neng.

- EGM-2 -