According to the Supreme Court Executive Information Platform, Lotus Health Industry Group Co., Ltd. (hereinafter referred to as “Lotus Health”, now referred to as “*ST Lotus”) was listed as a breach of trust by the Xiangcheng People’s Court of Henan Province. The case number is ( 2019) Yu 1681 was held at No. 1017, and the execution was based on the number (2017) Yu 1681, No. 2326. The performance of the person subject to execution is all unfulfilled, and the specific circumstances of the act of the person who is untrustworthy are the ability to perform and refuse to perform the obligation to determine the legal instrument in force. The untrustworthy information was released on May 16, 2019.

Lotus Health has not issued an announcement on the letter of loss. On the afternoon of May 28, the director of the Lotus Health Department told the Beijing News that Lotus Health was listed as a letter of distrust by the court and a dispute over the construction of China Metallurgy. The two sides reached a settlement agreement before, and Lotus Health also pressed The agreement was repaid, but in the near future, due to the lack of funds, it was not able to repay the loan on time, resulting in loss of trust. The current amount of the remaining arrears is about several million yuan. The secretary-general said that Lotus Health is currently communicating with the other side to see how to resolve the problem.

According to the data, Lotus Health was formerly known as Henan Lianhua MSG Co., Ltd., which was founded in 1983 and listed on the Shanghai Stock Exchange in August 1998. Lotus Health has formed a product structure based on MSG, chicken essence, and a combination of seasoning series, compound fertilizer series, vegetable protein series and wheat flour series.

The former "King of MSG" lotus health has long been no longer high. Since the audited net profit in 2017 and 2018 is negative, and the audited net assets at the end of 2018 are negative, Lotus Health will resume trading on the delisting risk warning on April 29, and the stock abbreviation has been changed to *ST Lotus".

According to the 2018 annual report of Lotus Health, the company's operating income during the reporting period was 1.729 billion yuan, down 6.70% from the same period of the previous year; the net profit attributable to shareholders of listed companies was -33 million yuan, compared with -103 million yuan in the same period of last year. The net cash flow from operating activities was -24,079,800 yuan, compared with -31,812,200 yuan in the same period last year. The reason for the change in the net cash flow from operating activities was mainly due to the year-on-year decrease in operating activities.

In addition, as of the end of 2018, the net assets of Lotus Health attributable to shareholders of listed companies were -298 million yuan, compared with 34.142 million yuan in the same period of last year; total assets were 1.709 billion yuan, compared with 1.889 billion yuan in the same period last year.

In its annual report, Lotus Health said that due to the fact that the company’s debt burden and heavy staff have not been completely solved, the funds are extremely tight and unable to transform the existing production lines. These factors seriously restrict the company’s daily production and operation, leading to the company’s main business. The business has long-term losses and its financial situation is not good.

The debt led to a high financial cost of Lotus Health. Its annual report shows that the company's 2018 annual interest cost is 46.747 million yuan. Lotus Health once responded to the Shanghai Stock Exchange last year's letter of concern for its 2017 annual report, saying that the company's high interest costs directly affect the company's profitability, further exacerbating the company's financial constraints.

In its 2018 annual report, Lotus Health stated that it intends to actively create conditions, strive to negotiate with debtors, and strive to resolve historical debts. In accordance with relevant laws and regulations, properly resettle the company's surplus personnel and fully resolve historical issues such as debt and redundancy. Effectively reduce the burden on the enterprise.

The non-standard opinion audit report issued by Zhongxing Caiguanghua Certified Public Accountants on the 2018 Annual Report of Lotus Health shows that the healthy asset debt ratio of Lotus is 128.97%, the current liabilities are higher than the current assets of 153,905,100,000, and the company's operating cash flow continues to be negative. Unable to repay the debt due. This indicates a significant uncertainty that may lead to significant doubts about Lotus's ability to continue to operate sustainably. Although Lotus Health has put forward a response plan for its ability to continue operations, there is a possibility that the plan will not be implemented smoothly as planned.

At the same time as the business is unfavorable, Lotus Health is also facing personnel changes. On May 10th, the Lotus Health Notice stated that the company's chief financial officer, Zhu Yi, had resigned as the company's chief financial officer for personal reasons. After resigning, he no longer held any positions in the company; the company will hire a new financial controller as soon as possible in accordance with legal procedures.

In addition to the aforementioned litigation cases that caused Lotus Health to be listed as untrustworthy, Lotus Health also faces many other lawsuits.

According to the company's announcement on April 24, Lotus Health recently received the "Notice of Responding to the People's Court of Xiangcheng City, Henan Province" (2019 Henan 1681, No. 2132), civil complaints and other relevant filing materials. Due to contract disputes, the Xiangcheng Land and Resources Bureau of Henan Province submitted a civil complaint to the Xiangcheng People's Court of Henan Province, requesting that the total amount of losses to be paid by Lotus Health to the total amount of 106.557 million yuan. The court has now accepted it.

The debt and litigation risks disclosed in the Lotus Health Annual Report show that most of the company's borrowings have been overdue for many years, and a large number of creditors have filed suits in the people's courts, and they have alleged that the company has assumed the corresponding repayment of principal and interest obligations. Some of the company's assets have been pledged or mortgaged. There is a risk that the underlying asset will be enforced. According to the annual report, Lotus Health and its subsidiaries have at least 28 lawsuits and arbitrations in progress.

Lotus Health’s Secretary-General acknowledged that the company is currently under pressure. First, it will stabilize production and operation, and prepare to sell some idle land and other assets, obtain funds to solve personnel problems and debt problems, and also to local The government reported that "as long as the historical debts and redundant problems are solved, Lotus Health is still making money."