On December 9, Gelonghui announced that fujikon ind (00927.HK) has issued a notice stating that in order to maintain a long-term business relationship and strengthen future business cooperation, discussions were initiated with the customer on December 2, 2024, to amicably resolve the quality issue of the audio headphones. Accordingly, a settlement agreement was signed on December 7, 2024. The customer informed that the main cause of the quality issue was a battery fault supplied by the vendor. According to the settlement agreement, both parties agreed (including) that the group would compensate the customer in the following ways: (i) through multiple installments of cash totaling $11,650,000 to be paid by October 30, 2025; (ii) a total of $500,000 in crediting related to the group's non-recurring development project costs granted by the customer for future projects until December 31, 2035; and (iii) extending the due date of any payments owed by the customer to the group for 180 days after receiving the relevant invoice and transferring the commodity ownership, until September 30, 2026. Regarding the battery, the group and the customer agreed to collaborate on replacing the battery provided by another supplier, with the related costs borne by the group. The customer will provide free (a) support from their engineering and quality teams; and (b) necessary components. The customer agreed to order the relevant audio headphones, valued at approximately $3,500,000.
Through the signing of the settlement agreement and after the group fulfills part of its cash payment responsibilities (approximately $7,130,000 in total) by May 2025, the group and the customer agreed that all claims made by the customer regarding the audio headphones quality issue against the group are irrevocably permanently resolved and released.
As of the date of this announcement, the group has continuously received orders from the customer for other commodities. It is expected that the group and the customer will continue to cooperate on future projects.
