Chen Guangxiong agreed to acquire 50.01% stake in Hubei JZX Sports Industry Development Co., Ltd. from Guirenniao Co., Ltd. (SHSE:603555) for approximately CNY 300 million on December 11, 2018. Guirenniao Co. will transfer 50.01% stake in Hubei JZX Sports Industry Development Co., Ltd. to Chen Guangxiong in two separate transfers. In the first transfer, Guirenniao will transfer 20% stake and Chen Guangxiong must pay CNY 120 million and in the second transfer, Guirenniao must transfer 30.01% stake and Chen Guangxiong must pay CNY 180.06 million. The first transfer was approved by Guirenniao's Board on December 11, 2018 and by the shareholders on December 27, 2018. The second transfer was approved by Guirenniao's Board on October 29, 2019. On May 27, 2020, Chen Guangxiong completed the payment of the balance of the first equity transfer of CNY 7.9 million. As per all the payment settlements that are needed to be paid by September 30, 2020 and if the payables are not paid by September 30, 2020, Guirenniao Co., Ltd. will pursue the breach of contract and other liabilities for breach of contract. However, as of October 10, 2020, Guirenniao did not receive CNY 26.06 million of the first phase of equity transfer payment from Chen Guangxiong for the second equity transfer and according to the Supplementary agreement, it is necessary to pay CNY 27 million for the second equity transfer to the company in stages before September 30, 2020. At present, Guirenniao's attorneys have begun to prepare relevant litigation documents. In the near future, they will file a lawsuit against Chen Guangxiong in the court to hold him accountable for breach of contract in order to safeguard and protect the rights and interests of Guirenniao. If after adopting the above arrangement, Chen Guangxiong still refuses to fulfill the payment obligation, or fails to reach any settlement or litigation results in favor of the listed company, Guirenniao will immediately take judicial measures to claim the performance compensation obligation of 30.01% of the original shareholders of Hubei JZX Sports. Chen Guangxiong cancelled the acquisition of 50.01% stake in Hubei JZX Sports Industry Development Co., Ltd. from Guirenniao Co., Ltd. (SHSE:603555) on December 11, 2019.