THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Cornerstone Technologies Holdings Limited (the “ Company ”), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) 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 purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8391)

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE; AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Vinco Capital Limited

Capitalised terms used in this cover page have the same meanings as those defined in this circular

A letter from the Board is set out from pages 6 to 17 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out from pages 18 to 19 of this circular. A letter from the Independent Financial Adviser containing its recommendation to the Independent Board Committee and the Independent Shareholders is set out from pages 20 to 42 of this circular.

A notice convening the extraordinary general meeting of the Company (“ EGM ”) to be held at 2402, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Wednesday, 10 February 2021 at 3:00 p.m. is set out from pages EGM-1 to EGM-3 of this circular.

Whether or not you are able 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 and deposit the same by 3:00 p.m. (Hong Kong time) on Monday, 8 February 2021 or not later than 48 hours before the time appointed for any adjourned meeting of the EGM (i.e. not later than 3:00 p.m. on Monday, 8 February 2021) 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. 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 and in such event, the form of proxy previously submitted shall be deemed to be revoked.

This circular will remain on the website of the Company at www.elegance.hk and the website of GEM of the Stock Exchange at www.hkgem.com on the “Latest Company Announcements” page for at least seven days from the date of its posting.

PRECAUTIONARY MEASURES FOR THE EGM

Please see pages ii to iii of this circular for measures being taken to try to prevent and control the spread of the COVID-19 pandemic at the EGM, including:

compulsory body temperature checks

• requirement of wearing a surgical face mask for each attendee • no distribution of corporate gift or refreshment Any person who does not comply with the precautionary measures or is subject to any Hong Kong Government prescribed quarantine may be denied entry into the meeting venue. The Company reminds Shareholders that they may appoint the chairman of the meeting as their proxy to vote on the relevant resolution(s) at the meeting as an alternative to attending the meeting in person.

22 January 2021

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

— i —

PRECAUTIONARY MEASURES FOR THE EGM

The Board has made reference to the “Joint Statement in relation to General Meetings in light of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation” jointly issued by the Stock Exchange and the Securities and Futures Commission of Hong Kong on 1 April 2020 in relation to the arrangement of the EGM.

Voting by proxy in advance of the EGM:

The Company does not in any way wish to diminish the opportunity available to the Shareholders to exercise their rights and to vote, but is conscious of the pressing need to protect the Shareholders from possible exposure to the COVID-19 pandemic. For the health and safety of the Shareholders, the Company would like to encourage Shareholders to exercise their right to vote at the EGM by appointing the chairman of the EGM as their proxy instead of attending the EGM in person. Physical attendance is not necessary for the purpose of exercising Shareholders’ rights. Completion and return of the proxy form will not preclude the Shareholders from attending and voting in person at the EGM or any adjournment thereof should they subsequently so wish.

Precautionary measures at the EGM

The Company will implement the following precautionary measures at the EGM to safeguard the health and safety of the attending Shareholders, staff and other stakeholders:

(i) Compulsory body temperature checks will be conducted on every attendee at the entrance of the EGM venue. Any person with a body temperature of over 37.5 degrees Celsius will be requested to stay in an isolated place for completing the voting procedures.
(ii) Every attendee will be required to wear a surgical face mask throughout the EGM. Please note that no masks will be provided at the EGM venue and attendees should bring and wear their own masks.
(iii) If the number of attendees at the EGM exceeds 20 persons or the upper limited stipulated by the relevant government authorities on the date of the EGM, the attendees will be separated in different rooms or partitioned areas, each accommodating not more than 20 persons or the upper limited stipulated by the relevant government authorities on the date of the EGM.

— ii —

PRECAUTIONARY MEASURES FOR THE EGM

(iv) Seating at the EGM will be arranged so as to reduce interaction between participants.
(v) No refreshments will be served and there will be no corporate gifts.

To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue so as to ensure the health and safety of the attendees at the EGM.

The Company will closely monitor the development of the COVID-19 pandemic and any regulations or measures introduced or to be introduced by the Government in relation to the COVID-19 pandemic. The Company will ensure that the EGM will be conducted in compliance with the regulations or measures of the Government and Shareholders will not be deprived of their right of voting on the resolution to be proposed at the EGM. Further announcements will be made by the Company as soon as possible if there is any update to the preventive measures as mentioned above.

If the Shareholders have any questions relating to the EGM, please contact Tricor Investor Services Limited, the Company’s branch share registrar and transfer office in Hong Kong, as follows:

Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

— iii —

	Page
CHARACTERISTICS OF GEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
PRECAUTIONARY MEASURES FOR THE EGM. . . . . . . . . . . . . . . . . . . . . . ii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . 18
LETTER FROM VINCO CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
APPENDIX I — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . I-1
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

— iv —

DEFINITIONS

In this circular, the following expressions have the following meanings, unless the context otherwise required:

“associate(s)”
has the meaning ascribed to it in the GEM Listing Rules
“Board”

the board of Directors

“Business Day(s)”
any day on which the Stock Exchange is open for business to deal in securities
“Company”
Cornerstone Technologies Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose issued Shares are listed on GEM (stock code: 8391)
“Completion” completion of the Subscription in accordance with the Subscription Agreement
“Completion Date” the date falling within fifteen (15) Business Days after the date of fulfillment of all the conditions set out in the Subscription Agreement
“connected person(s)” has the meaning as ascribed to it in the GEM Listing Rules
“Director(s)” director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be held to approve, among other things, (i) the Subscription Agreement; and (ii) the Specific Mandate for the issuance and allotment of the Subscription Shares and the transactions contemplated thereunder
“EV” electric vehicle
“GEM” GEM operated by the Stock Exchange
“GEM Listing Rules”

the Rules Governing the Listing of Securities on GEM

“Group”

the Company and its subsidiaries

— 1 —

DEFINITIONS

“Hong Kong”
Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board an independent committee of the Board established in Committee” compliance with the GEM Listing Rules to advise the Independent Shareholders as regards the terms of the Subscription Agreement and the transactions contemplated thereunder
“Independent Financial Vinco Capital Limited, a corporation licensed to carry Adviser” or “Vinco out type 1 (dealing in securities) and type 6 (advising Capital” on corporate finance) regulated activities under the SFO, being the independent financial adviser engaged by the Company to advise the Independent Board Committee and the Independent Shareholders in connection with the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate)
“Independent Third any person or company and their respective ultimate Party(ies)” beneficial owner(s) (if applicable) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of and not connected with the Group, its connected persons and their respective associates and not acting in concert with any substantial shareholder (as defined under the GEM Listing Rules) of the Company within the meaning of The Codes on Takeovers and Mergers and Share Buy-backs issued by the Securities and Futures Commission of Hong Kong
“Independent Shareholders”
Shareholders other than those who are required to abstain from voting on the resolution(s) of the Company approving the Subscription Agreement and the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares at the EGM
“Latest Practicable Date”
20 January 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
“Listing Committee”

The Listing Committee of the Stock Exchange

— 2 —

DEFINITIONS

“Long Stop Date”
31 March 2021 or such later date as the Company and the Subscribers may agree in writing
“Placee(s)” any person or entity, who is professional, institutional or other investors, who and whose ultimate beneficial owners are Independent Third Parties, to be procured by the Placing Agent or its agent(s) to subscribe for any Placing Shares pursuant to the Placing Agreement
“Placing” the placing, on a best effort basis, of up to 49,625,000 Placing Shares on and subject to the terms and condition set out in the Placing Agreement
“Placing Agents” collectively VBG Capital and Wealth Link Securities and the term “ Placing Agent ” shall mean any of them
“Placing Agreement” the placing agreement dated 15 December 2020 and entered into between the Company and the Placing Agents in relation to the Placing
“Placing Price” HK$0.40 per Placing Share (exclusive of any brokerage, SFC transaction levy and Stock Exchange trading fee as may be payable)
“Placing Share(s)” a total of up to 49,625,000 new Shares to be placed by the Placing Agents pursuant to the Placing Agreement and to be issued and allotted under general mandate, and each a “ Placing Share ”
“Share(s)”
ordinary share(s) in the share capital of the Company
“Shareholder(s)”
holder(s) of the issued Share(s)
“Specific Mandate”
the specific mandate approved by the Independent Shareholders at the EGM which authorises the Directors to allot, issue and deal with the Subscription Shares
“Stock Exchange”

The Stock Exchange of Hong Kong Limited

— 3 —

DEFINITIONS

“Subscribers”
collectively Wu Changxian（吳長顯）, Wu Yanyan（吳燕燕）, Wei Shu Wen（衛淑文）, Huang Lijuan（黃麗娟）, Huang BaMei（黃八妹）and Lau Wai Yan Lawson （劉偉恩）, and the term “ Subscriber ” shall mean any of them. Since the Subscribers are associates of Mr. Wu Jianwei, relatives of Mr. Liang Zihao, and the executive Director of the Company, the Subscribers are therefore the connected persons of the Company
“Subscription” the subscription for the Subscription Shares by the Subscribers upon the terms and subject to the conditions of the Subscription Agreement
“Subscription Agreement” the subscription agreement dated 15 December 2020 entered into between the Company and the Subscribers in relation to the Subscription
“Subscription Amount”
the aggregate cash consideration payable by the Subscriber(s) for the Subscription Shares at the Subscription Price
“Subscription Price” HK$0.40 per Subscription Share
“Subscription Shares” 69,625,000 new Shares to be allotted and issued by the Company to the Subscribers under the Specific Mandate and pursuant to the Subscription Agreement on the Completion Date
“VBG Capital” VBG Capital Limited, an indirect wholly-owned subsidiary of VBG International Holdings Limited (stock code: 8365), a licensed corporation which is principally engaged in type 1 regulated activity (dealing in securities) and type 6 regulated activity (advising on corporate finance) under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

— 4 —

DEFINITIONS

“Wealth Link Securities”	Wealth Link Securities Limited, a direct wholly-owned
	subsidiary of VBG International Holdings Limited (stock
	code: 8365), a licensed corporation which is principally
	engaged in type 1 regulated activity (dealing in securities)
	and type 4 regulated activity (advising on securities) under
	the Securities and Futures Ordinance (Cap. 571 of the Laws
	of Hong Kong)
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent

Certain figures set out in this circular have been subject to rounding adjustments. Accordingly, figures shown as the percentage equivalents may not be an arithmetic sum of such figures. Any discrepancy in any table between totals and sums of amounts listed in this circular is due to rounding.

— 5 —

LETTER FROM THE BOARD

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CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8391)

Executive Directors: Mr. Liang Zihao (Chief Executive Officer) Mr. Sam Weng Wa Michael Mr. Li Man Keung Edwin Mr. Lau Wai Yan Lawson

Non-executive Directors: Mr. Wu Jianwei

Independent Non-Executive Directors: Mr. Tam Ka Hei Raymond Mr. Yuen Chun Fai Ms. Zhu Xiaohui

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head Office and Principal Place of Business in Hong Kong: 2402, China Merchants Tower Shun Tak Centre 168-200 Connaught Road Central Hong Kong

22 January 2021

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

INTRODUCTION

Reference is made to the announcement of the Company dated 15 December 2020 in relation to, among others, the Subscription Agreement entered into between the Company and the Subscribers, pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue 69,625,000 new Shares at the Subscription Price of HK$0.40 per Subscription Share.

— 6 —

LETTER FROM THE BOARD

The purpose of this circular is to provide you with (i) information relating to the Subscription Agreement and the transactions contemplated thereunder; (ii) the letter of advice from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iv) other information as required under the GEM Listing Rules; and (v) the notice of the EGM.

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

On 15 December 2020 (after trading hours), the Company and the Placing Agents entered into the Placing Agreement, pursuant to which the Placing Agents jointly and severally agree, as agents of the Company, to procure on a best effort basis not less than six (6) Placees who and whose ultimate beneficial owners shall be Independent Third Parties to subscribe for up to 49,625,000 Placing Shares at the Placing Price of HK$0.40 per Placing Share. The completion of the Placing took place on 4 January 2021 in accordance with the terms and conditions of the Placing Agreement, where an aggregate of 49,625,000 Shares were successfully placed to no less than six placees, who, together with their respective ultimate beneficial owners, to the best of the knowledge, information and belief of the Directors, are third parties independent of the Company and are not connected persons of the Company. The Placing Shares were issued under the general mandate granted by the Shareholders to the Directors at the annual general meeting of the Company held on 21 August 2020.

On the same date as the Placing Agreement, the Company entered into the Subscription Agreement with the Subscribers, pursuant to which the Subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 69,625,000 new Shares at the Subscription Price of HK$0.40 per Subscription Share.

THE SUBSCRIPTION AGREEMENT

The principal terms of the Subscription Agreement are set out below.

Date: 15 December 2020 (after trading hours)

Parties: (i) the Company (as issuer); and (ii) Wu Changxian（吳長顯）(as subscriber); (iii) Wu Yanyan（吳燕燕）(as subscriber);

(iv) Wei Shu Wen（衛淑文）(as subscriber);

— 7 —

LETTER FROM THE BOARD

(v) Huang Lijuan（黃麗娟）(as subscriber);
(vi) Huang BaMei（黃八妹）(as subscriber); and
(vii) Lau Wai Yan Lawson（劉偉恩）(as subscriber).

Subscriber (ii) is father of Mr. Wu Jianwei (“ Mr. Wu ”), the non-executive Director of the Company; Subscriber (iii) is sister of Mr. Wu; Subscriber (iv) is cousin of Mr. Liang Zihao (“ Mr. Liang ”), the executive Director, Co-Chairman of the Board and Chief Executive Officer of the Company; each of Subscribes (v) and (vi) is aunt of Mr. Liang; and subscriber (vii) is the executive Director of the Company as at the Latest Practicable Date.

The proposed issue of Subscription Shares to six (6) Subscribers are inter-conditional upon each other.

Subscription Shares

The Subscription Shares to be issued and allotted under the Subscription Agreement represent:

(i) approximately 13.13% of the existing issued share capital of the Company as at the Latest Practicable Date; and
(ii) approximately 11.61% of the issued share capital of the Company immediately upon Completion of the Subscription (assuming there is no change in the issued share capital of the Company from the date of this circular and up to the date of Completion of the Subscription) as enlarged by the allotment and issue of the Subscription Shares

The Subscription Shares will be issued and allotted pursuant to the Specific Mandate to be sought from the Independent Shareholders at the EGM. The aggregate amount of the Subscription will be HK$27,850,000.

Subscription Price

The Subscription Price of HK$0.40 per Subscription Share represents:

(i) a discount of approximately 16.7% to the closing price of HK$0.480 per Share as quoted on the Stock Exchange on 15 December 2020, being the last full trading day immediately before the execution of the Subscription Agreement;

— 8 —

LETTER FROM THE BOARD

(ii) a discount of approximately 17.9% to the average closing price of approximately HK$0.487 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Subscription Agreement;
(iii) a discount of approximately 34.4% to the closing price of HK$0.610 per Share as quoted on the Stock Exchange on 20 January 2021, being the Latest Practicable Date;
(iv) a premium of approximately 110.1% to the net asset value per Share of approximately HK$0.190 (based on the unaudited net asset value of the Group as at 30 September 2020 of approximately HK$81.60 million, adjusted by the net proceeds of approximately HK$19.35 million from the placing of 49,625,000 new Shares of the Company completed on 4 January 2021 and the total number of issued Shares as at the Latest Practicable Date); and
(v) a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of a discount of approximately 2.1% represented by the theoretical diluted price of approximately HK$0.477 to the benchmarked price of approximately HK$0.487 per Share (as defined under Rule 10.44A of the GEM Listing Rules), taking into account the higher of the closing price on the date of the Subscription Agreement of HK$0.480 per Share and the average closing prices of the Shares as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Subscription Agreement of HK$0.487 per Share.

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscribers with reference to the recent market prices of the Shares and current market conditions. The Directors (including the independent non-executive Directors but excluding Mr. Wu Jianwei, Mr. Liang Zihao and Mr. Lau Wai Yan Lawson who have abstained from voting on the relevant Board resolutions) consider that the Subscription Price and the terms of the Subscription Agreement are normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Ranking of the Subscription Shares

The Subscription Shares, when issued and allotted, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Subscription Shares.

— 9 —

LETTER FROM THE BOARD

Conditions of the Subscription

Completion of the Subscription is conditional upon the fulfilment of the following conditions:

(a) the Board having approved the Subscription Agreement and the transactions contemplated thereunder;
(b) passing of the necessary resolution(s) at the EGM by the Independent Shareholders to approve the Subscription Agreement, the Specific Mandate for the issuance and allotment of the Subscription Shares and the transactions contemplated thereunder;
(c) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, the Subscription Shares and such approval has not been revoked prior to Completion of the Subscription;
(d) each of the Company and the Subscribers having obtained all necessary consents and approvals in respect of the Subscription Agreement and the transactions contemplated thereunder; and
(e) there not having come to the attention of the Subscribers at any time prior to Completion of the Subscription (i) any breach of, or any event rendering untrue, incorrect or misleading in any respect, any of the representations, warranties or undertakings made by the Company referred to in the Subscription Agreement; or (ii) any breach of, or failure to perform, any of the other obligations of the Company as required to be performed at or before Completion of the Subscription.

If, any of the conditions precedent referred to above is not fulfilled at or before 4:00 p.m. (Hong Kong time) on or before the Long Stop Date, the Subscription Agreement will terminate automatically and all rights, obligations and liabilities of the parties to the Subscription Agreement shall cease and terminate and none of the parties to the Subscription Agreement shall have any claim against any other in respect of the Subscription, save for any antecedent breaches thereof.

Taking into account (i) additional time may be required to prepare and finalise the relevant information for inclusion in the circular; (ii) longer notice period for preparing and convening the EGM in light of the COVID-19; and (iii) the prolonged Long Stop Date could provide greater flexibility to the completion of Subscription, the Company and the Subscribers agreed with the Long Stop Date as 31 March 2021, or later date as the Company and the Subscribers may agree in writing.

— 10 —

LETTER FROM THE BOARD

Specific Mandate to issue the Subscription Shares

The Subscription Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Independent Shareholders at the EGM. The Specific Mandate, if approved, will be valid until the completion of the Subscription or termination of the Subscription Agreement.

Completion

Completion of the Subscription will take place on a date falling within fifteen (15) Business Days after the date of fulfillment of all the conditions referred to above.

Taking into account the administrative arrangements and Subscription settlement by the Subscribers would take time to complete, a reasonable timeframe shall be given to the Company and the Subscribers after the fulfillment of all conditions. As such, the Company and the Subscribers have agreed the Completion Date as falling within fifteen (15) Business Days after the fulfillment of all conditions.

Application for listing

An application will be made by the Company to the Stock Exchange for the listing of, and the permission to deal in, the Subscription Shares.

REASONS FOR THE SUBSCRIPTION

The Company is an investment holding company and together with its subsidiaries are principally engaged in the provision of printing, typesetting and translation services in Hong Kong. The Company also engaged in EV charging business through a business acquisition completed in August 2020.

As disclosed in the interim report of the Company for the six months ended 30 September 2020 (the “ 2020/2021 Interim Report ”), the Directors considered that the business prospects for EV charging business is encouraging and sustainable. As the EV charging business involves high and new technology, for the purposes of strengthening the Company’s competitiveness in the industry, the Group focuses on research and development activities to adapt the constant fast-changing technology market. In order to capture the opportunities arising from the potential growth in EV charging business, the Group targeted to enhance the coverage of the private car parking spaces supported by our EV integrated charging solutions.

— 11 —

LETTER FROM THE BOARD

Pursuant to the 2020/2021 Interim Report, the Group had cash and bank balances of approximately HK$26.3 million, represent a decrease of 46.1% from 31 March 2020. Taking into consideration of the Board’s intention to develop the EV charging business and the estimated costs of the Group to maintain its normal business operations in the forthcoming twelve-month period, the Directors consider that the Placing and the Subscription will provide immediate funding to the Company to (i) invest in research and development activities in EV charging business; (ii) undertake future investment opportunities in the EV charging business sector would, by nature, involve substantial amount of cash to undertake acquisitions of assets/business and/or in capital expenditures; (iii) sustain commercial and financial printing business operation; and (iv) serve as the working capital and general corporate purposes for the Group.

INTENDED USE OF PROCEEDS

Assuming all the Subscription Shares are fully subscribed, the aggregate gross proceeds from the Subscription are expected to be HK$27.85 million. After deducting related professional fees and all related expenses of approximately HK$0.08 million to be borne by the Company under the Subscription, the net proceeds of the Subscription will amount to approximately HK$27.77 million. The Company intends to apply the net proceeds from the Subscription as follows:

(i) as to approximately 70% of the net proceeds, for EV charging business development;
(ii) as to approximately 20% of the net proceeds, for commercial and financial printing business operation;
(iii) as to approximately 10% of the net proceeds, as working capital and general corporate purposes for the Group.

— 12 —

LETTER FROM THE BOARD

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

Assuming that there will be no change in the number of Shares from the Latest Practicable Date up to completion of the Subscription, the shareholding structure of the Company as at the Latest Practicable Date and immediately after completion of the Subscription is set out as below:

Shareholders Global Fortune Global Limited_(Note 1) Glorytwin Limited Mr. Lau Wai Yan Lawson(Note 2)_ Mr. Li Man Keung Edwin Public Shareholders	Shareholding as at the Latest Practicable Date Number of Shares held Approximate % of Shares in issue 235,603,225 44.44% 81,000,000 15.28% 22,802,703 4.30% 19,112,613 3.61% 171,647,000 32.38%	Shareholding as at the Latest Practicable Date Number of Shares held Approximate % of Shares in issue 235,603,225 44.44% 81,000,000 15.28% 22,802,703 4.30% 19,112,613 3.61% 171,647,000 32.38%	Shareholding immediately upon completion of the Subscription Number of Shares held Approximate % of Shares in issue 235,603,225 39.28% 81,000,000 13.50% 30,302,703 5.05% 19,112,613 3.19% 233,772,000 38.98%	Shareholding immediately upon completion of the Subscription Number of Shares held Approximate % of Shares in issue 235,603,225 39.28% 81,000,000 13.50% 30,302,703 5.05% 19,112,613 3.19% 233,772,000 38.98%
— Wu Changxian — Wu Yanyan — Wei Shu Wen — Huang Lijuan — Huang BaMei — The Placees — Otherpublic shareholders	— — 8,104,000 5,416,000 1,100,000 49,625,000 107,402,000	— — 1.53% 1.02% 0.21% 9.36% 20.26%	18,750,000 18,750,000 21,854,000 13,416,000 3,975,000 49,625,000 107,402,000	3.13% 3.13% 3.64% 2.24% 0.66% 8.27% 17.91%
Total	530,165,541	100.00%	599,790,541	100.00%

Note:

(1) 235,603,225 Shares are held by Global Fortune Global Limited which is owned as to 51% by Mr. Wu Jianwei, the non-executive Director of the Company, and as to 49% by Mr. Liang Zihao, the executive Director, Co-Chairman of the Board and Chief Executive Officer of the Company.
(2) As at the Latest Practicable Date, 22,802,703 Shares are held by Cornerstone Wealth Holdings Limited which is wholly-owned by Mr. Lau Wai Yan Lawson, the executive Director of the Company.

— 13 —

LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS

The following is the equity fund raising activity conducted by the Company in the past 12 months immediately before the Latest Practicable Date:

Date of Fund raising Net proceeds Intended use Actual use announcement activity raised of net proceeds of net proceeds 15 December Placing of Approximately (i) EV charging Unutilised 2020 and 49,625,000 new HK$19.35 business 4 January 2021 Shares under million development; general mandate (ii) commercial and financial printing business operation; and

(iii) working capital and general corporate purposes

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Mr. Wu Jianwei is the non-executive Director of the Company, Mr. Liang Zihao is the executive Director, Co-Chairman of the Board and Chief Executive Officer of the Company and Mr. Lau Wai Yan Lawson is the executive Director of the Company. Since the Subscribers are associates of Mr. Wu Jianwei, relatives of Mr. Liang Zihao, and the executive Director of the Company, the Subscribers are therefore the connected persons of the Company under the GEM Listing Rules, the Subscription will constitute a connected transaction for the Company, and is subject to the reporting, announcement, circular and Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules. As the Subscription Shares will be issued and allotted under the Specific Mandate to be obtained at the EGM, the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares is subject to the Independent Shareholders’ approval at the EGM.

— 14 —

LETTER FROM THE BOARD

EGM

A notice convening the EGM to be held at 2402, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Wednesday, 10 February 2021 at 3:00 p.m. is set out from pages EGM-1 to EGM-3 of this circular. At the EGM, ordinary resolution will be proposed to the Independent Shareholders to consider and, if thought fit, approve (i) the Subscription Agreement; (ii) the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares and the transactions contemplated thereunder. Mr. Wu Jianwei, Mr. Liang Zihao and the Subscribers, directly or indirectly holding an aggregate of 273,025,928 Shares which is approximately 51.50% of the issued share capital of the Company as at the Latest Practicable Date (for their respective shareholding, please refer to the section above headed “EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY” in this letter), shall be required to abstain from voting on the resolution(s) of the Company approving the Subscription Agreement and the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares at the EGM.

Save as disclosed above and to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no other Shareholder has a material interest in the Subscription and is required to abstain from voting on the resolution(s) of the Company approving the Subscription Agreement and the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not the Shareholders are able to attend at the EGM, they are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company 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 no later than 48 hours (excluding any part of a day that is a public holiday) before the time appointed for holding the EGM (i.e. not later than 3:00 p.m. on Monday, 8 February 2021) or any adjournment thereof. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting in person at the EGM or any adjournment thereof if they so wish.

As Mr. Lau Wai Yan Lawson is the executive Director of the Company, and each of the other Subscribers is an associate of Mr. Wu Jianwei and relatives of Mr. Liang Zihao, Mr. Lau Wai Yan Lawson, Mr. Wu Jianwei and Mr. Liang Zihao are considered to have a material interest in the Subscription, they did not participate in the Board’s deliberations on the Subscription and had abstained from voting on the Board’s resolution approving the Subscription Agreement. Save as disclosed, no other Director has a material interest in the Subscription and therefore has abstained from voting on the Board’s resolution approving the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

— 15 —

LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Tam Ka Hei Raymond, Mr. Yuen Chun Fai and Ms. Zhu Xiaohui, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and the reasonableness of the terms of the Subscription Agreement and the grant of the Specific Mandate and as to how to vote at the EGM.

Vinco Capital Limited has been appointed as Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

The Independent Board Committee, having taken into account the advice and recommendation of the Independent Financial Adviser, consider that the terms of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. While the Subscription and the grant of the Specific Mandate are not in the ordinary and usual course of business of the Group, they are in the interests of the Company and the Shareholders as a whole, and accordingly recommends the Independent Shareholders to vote in favour of the relevant ordinary resolution(s) which will be proposed at the EGM for approving, inter alia, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

The text of the letter from the Independent Board Committee is set out on pages 18 to 19 of this circular while the text of the letter from the Independent Financial Adviser containing its advice is set out on pages 20 to 42 of this circular.

RECOMMENDATION

You are advised to read carefully the letter from the Independent Board Committee of this circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, the text of which is set out on pages 20 to 42 of this circular, consider that the terms of the Subscriptions are on normal commercial terms, fair and reasonable and, although the Subscriptions are not conducted in the ordinary and usual course of business of the Group, in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the allotment and issue of the Subscription Shares pursuant to the Subscription Agreement.

— 16 —

LETTER FROM THE BOARD

The Board (including members of the Independent Board Committee) considers that the terms of the Subscriptions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM (including the grant of the Specific Mandate).

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out from pages 18 to 19 of this circular, the letter from the Independent Financial Adviser to the Independent Board Committee and Independent Shareholders set out from pages 20 to 42 of this circular, and the additional information as set out in the Appendix I to this circular.

WARNING OF THE RISKS OF DEALING IN THE SHARES

Completion of the Subscription is subject to the fulfillment of the conditions precedent set forth in the Subscription Agreement. As the Subscription may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

Yours faithfully

On behalf of the Board

Cornerstone Technologies Holdings Limited LIANG Zihao

Co-Chairman and Executive Director

— 17 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8391)

22 January 2021

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

We refer to the circular of the Company dated 22 January 2021 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise the Independent Shareholders as to whether, in our opinion, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

Vinco Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these respects. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 20 to 42 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 6 to 17 of the Circular and the additional information set out in the Appendix I to this Circular.

— 18 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms and conditions of the Subscription Agreement and the principal factors and reasons considered by, and the advice and recommendation of the Independent Financial Adviser, we concur with its views and consider that the terms of the Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms although it is not conducted in the ordinary and usual course of business of the Company, and that the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution(s) to be proposed at the EGM to approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

Yours faithfully, on behalf of

Independent Board Committee of

Cornerstone Technologies Holdings Limited

TAM Ka Hei Raymond YUEN Chun Fai ZHU Xiaohui Independent non-executive Independent non-executive Independent non-executive Director Director Director

— 19 —

LETTER FROM VINCO CAPITAL

The following is the full text of the letter from the Independent Financial Adviser which sets out its advice to the Independent Board Committee and Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) which have been prepared for the purpose of incorporation in this circular.

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Vinco Capital Limited Unit 2610, 26/F., The Center 99 Queen’s Road Central, Hong Kong

22 January 2021

To the Independent Board Committee and the Independent Shareholders of Cornerstone Technologies Holdings Limited

Dear Sirs,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate), details of which are set out in the “Letter from the Board” (the “ Board Letter ”) in the circular (the “ Circular ”) issued by the Company to the Shareholders dated 22 January 2021 of which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context otherwise requires.

— 20 —

LETTER FROM VINCO CAPITAL

As at the Latest Practicable Date, Mr. Wu Jianwei is the non-executive Director of the Company, Mr. Liang Zihao is the executive Director, co-chairman of the Board and chief executive officer of the Company and Mr. Lau Wai Yan Lawson is the executive Director of the Company. Since the Subscribers are associates of Mr. Wu Jianwei, relatives of Mr. Liang Zihao, and the executive Director of the Company, the Subscribers are therefore the connected persons of the Company under the GEM Listing Rules, the Subscription will constitute a connected transaction for the Company, and is subject to the reporting, announcement, circular and Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules. As the Subscription Shares will be issued and allotted under the Specific Mandate to be obtained at the EGM, the grant of the Specific Mandate for the issuance and allotment of the Subscription Shares is subject to the Independent Shareholders’ approval at the EGM.

— 21 —

LETTER FROM VINCO CAPITAL

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising Mr. Tam Ka Hei Raymond, Mr. Yuen Chun Fai and Ms. Zhu Xiaohui (all being independent non-executive Directors) has been established to advise the Independent Shareholders as to whether, in their opinion, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and are in the ordinary and usual course of business of the Group that they are in the interests of the Company and the Shareholders as a whole.

OUR INDEPENDENCE

In our capacity as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of the GEM Listing Rules, our role is to give an independent opinion as to whether, among other things, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and are in the ordinary and usual course of business of the Group that they are in the interests of the Company and the Shareholders as a whole. We, Vinco Capital has been appointed and approved by the Board as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As the Latest Practicable Date, we are not connected with the Directors, chief executive and substantial shareholders of the Company or any of their respective subsidiaries or their respective associates and, as the Latest Practicable Date, did not have any shareholding, directly or indirectly, in any of their respective subsidiaries or their respective associates and, as at the Latest Practicable Date, did not have any shareholding, directly or indirectly, in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group. We were not aware of any relationships or interests between us and the Company or any other parities that could be reasonably be regarded as hindrance to our independence as defined under Rule 17.96 of the GEM Listing Rule to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

— 22 —

LETTER FROM VINCO CAPITAL

Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we will receive any fees from the Company, its subsidiaries, its associates or their respective substantial shareholders or associates. We are not aware of the existence of or change in any circumstances that would affect our independence.

During the past two years, we were appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders of the Company in respect of the mandatory unconditional cash offer by VBG Capital for and on behalf of Global Fortune Global Limited to acquire all the issued Shares of the Company (formerly known as Elegance Commercial and Financial Printing Group Limited). Details of the relevant offer is set out in the circular of the Company dated 23 December 2019. The normal professional fees in connection with the past appointment has been fully settled and we are not aware of the existence of or change in any circumstances that would affect our independence. Accordingly, we consider that we are eligible to give independent advice on, among other things, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate).

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate), we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries. We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete as at the date of the Circular and that all expectations and intentions of the Directors, the management of the Company and its subsidiaries, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors and the management. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed.

— 23 —

LETTER FROM VINCO CAPITAL

We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information, opinions or representations given or made by or on behalf of the Company, nor conducted any independent in-depth investigation into the business affairs, assets and liabilities or future prospects of the Company, their respective subsidiaries or associates (if applicable) or any of the other parties involved in the transactions, nor have we considered the taxation implication on the Group or the Shareholders as a result of the transactions. The Company has been separately advised by its own professional advisers with respect to the transactions and the preparation of the Circular (other than this letter).

We have assumed that the transactions will be consummated in accordance with the terms and conditions set forth in the Circular without any waiver, amendment, addition or delay of any terms or conditions. We have assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents as required for the transactions, no delay, limitation, condition or restriction will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the transactions. In addition, our opinion is necessarily based on the financial, market, economic, industry-specific and other conditions as they existed on, and the information made available to us as at the Latest Practicable Date.

We consider that we have reviewed all currently available information and documents, among others: (i) the annual report of the Company for the year ended 31 March 2020 (the “ 2020 Annual Report ”), (ii) the interim report of the Company for the six months ended 30 September 2020 (the “ 2020/2021 Interim Report ”); (iii) the announcement of the Company dated 15 December 2020 in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); (iv) the Subscription Agreement; and (v) the basis and assumptions of the transactions contemplated under the Subscription Agreement which are made available to us and enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) as referred to in Rule 17.92 of the GEM Listing Rules (including the notes thereto).

— 24 —

LETTER FROM VINCO CAPITAL

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in respect of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole in part, nor shall this letter be used for any other purposes, without our prior written consent.

In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate), we have taken into account the following principal factors:

1. Background Information

1.1 Review of the Group’s business

With reference to the Board Letter, the Company is an investment holding company and together with its subsidiaries are principally engaged in the provision of printing, typesetting and translation services in Hong Kong. The Company also engaged in EV charging business through a business acquisition completed in August 2020.

— 25 —

LETTER FROM VINCO CAPITAL

Set out below is a summary of consolidated financial information on the Group for each of the two years ended 31 March 2020 and the six months ended 30 September 2020 (with comparable figures of 2019) as extracted from the 2020 Annual Report and 2020/2021 Interim Report:

	For the	For the
	six months	six months		For the	For the
	ended 30	ended 30	Period	year ended	year ended	Year
	September	September	on period	31 March	31 March	on year
	2020	2019	change	2020	2019	change
	HK$’000	HK$’000	%	HK$’000	HK$’000	%
	(unaudited)	(unaudited)		(audited)	(audited)
Revenue
— Commercial printing
services	14,706	21,914	(33)	36,096	46,543	(22)
— Financial printing services	14,095	13,808	2	24,987	26,262	(5)
— Other services	511	844	(39)	3,195	1,171	173
Printing business	29,312	36,566	(20)	64,278	73,976	(13)
— Sales of electric vehicle
charging systems	54	—	N/A	—	—	—
— Subscription fee income	17	—	N/A	—	—	—
Electric vehicle charging
business	71	—	N/A	—	—	—
Gross profit	7,328	8,360	(12)	9,349	20,180	(54)
Loss for the year	(12,331)	(4,159)	196	(16,283)	(7,569)	115

As depicted from the above table, the Group recorded decrease in revenue, gross profit and increase in loss for the year ended 31 March 2020 (“ FY 2020 ”) as compared to those for the year ended 31 March 2019 (“ FY 2019 ”) and those for the six months ended 30 September 2020 (“ 6M 2020/2021 ”) as compared to those for the six months ended 30 September 2019 (“ 6M 2019/2020 ”). According to the financial information of the Group, the Group recorded gross profit of HK$20.2 million with gross profit margin of 27.3% for FY 2019 and recorded gross profit of HK$9.3 million with gross profit margin of 14.5% for FY 2020. The decrease in gross profit margin from 27.3% for FY 2019 to 14.5 % for FY 2020 was primarily attribute to the keen competition and the increase in subcontracting costs due to the transitional arrangement during the period of preparation of relocating factory in early 2020.

— 26 —

LETTER FROM VINCO CAPITAL

With reference to the Company’s 2020/2021 Interim Report, on 4 August 2020, the Group acquired a 100% equity interest in Cornerstone EV Charging Service Limited, which is principally engaged in supplying electric vehicle integrated charging solutions, including supply and installation of EV chargers, developing EV charging-enabling infrastructure, central management system, hub for e-payment, load management system and license plate recognition system to electric vehicles and smart parking. Since the completion of the acquisition, the revenue from EV charging business, which can be classified into (i) sales of electric vehicle charging system to customers directly; and (ii) subscription fee income for rental of electric vehicle charger at public and private carparks, amounted to approximately HK$71,000 from 4 August 2020 to 30 September 2020, accounted for approximately 0.2% of the total revenue of the Group for 6M 2020/2021. Also, the acquisition was made as part of the Group’s strategy to explore new sustainable business opportunities. Further details will be disclosed in the sub-section headed “1.6 Reasons for the Subscription” in this letter.

According to the latest published financial information of the Company, for 6M 2020/2021, except for the financial printing services segment and the new segments of electric vehicle charging business mentioned above, all other segments of the Group recorded decrease in segment revenue. The financial printing services segment has been the Group’s second largest revenue contributor for FY 2019, 6M 2019/2020, FY 2020 and 6M 2020/2021, which generated approximately 39% and 48% of the Group’s revenue for FY 2020 and 6M 2020/2021 respectively (FY 2019 and 6M 2019/2020: approximately 36 % and 38 % respectively). With reference to the 2020 Annual Report, the Group recognised revenue from provision of financial printing services on IPO projects through over time by reference to the progress of satisfaction of performance obligations of each project at the reporting date. The progress is determined based on actual inputs, such as staff costs and other printing costs, deployed on each project and the respective input costs comparing to the estimated total service costs of each project by tracing to the contracts signed with respective customers. The customers for commercial printing include reputable banks, insurance companies, corporate customers and their advertising agents and fund houses. Commercial printing service refers to printing services for customers’ needs of commercial paper printing products and the book publisher’s needs of textbooks and leisure reading materials (such as novels, essays and articles). With reference to the prospectus of the Company, the printing business has been established since April 1980 and the Company obtained the first contract from a long-established customer, which is the Hong Kong branch of one of the world’s largest banking and financial services organisations serving customer worldwide, that we are of the view that the Company is very experienced in providing the financial printing services. The decrease in revenue from commercial printing services segment and other

— 27 —

LETTER FROM VINCO CAPITAL

segments are mainly due to the decrease in sales order, as there is increasing concern on environmental protection, the popularity of digitalisation of information, the rise of online marketing, social media and globalisation, and the impact cause by the outbreak of COVID-19 since the first quarter of 2020. As discussed with the management of the Company, the current economy has an adverse impact on the number of new listing application which may lead to a weak demand for printing services. Moreover, the introduction of paperless listing and subscription regime would shrink the scope of services provided by

the Group.

With reference to the 2020/2021 Interim Report, the management of the Company intended to explore new sustainable business opportunities to diversify its revenue for the interests of the Company and its Shareholders as a whole. To capture the opportunities arising from the potential growth, the Group targeted to enhance the coverage of the EV integrated charging solutions and expected that not less than 3,000 private car parking spaces will be supported by the Group’s EV integrated charging solutions from about the third quarter of 2021 (subject to the progress of the application of EVcharging at Home Subsidy Scheme (the “ EHSS ”) till the end of the EHSS. The application of EHSS has commenced from 21 October 2020 and would run for about 3 years pursuant to the news issued by the Environmental Protection Department of the government of the Hong Kong Special Administrative Region (the “ Hong Kong Government ”) (https://www.epd.gov.hk/epd/ english/environmentinhk/air/prob_solutions/promotion_ev.html). Moreover, according to the circular of the Company dated 30 June 2020 in relation to the acquisition of the entire issued share capital and the shareholder’s loan of Cornerstone EV Charging Service Limited (the “ Acquisition Circular ”) and as confirmed by the Company, the number of parking spaces with EV charging enabling facilities is based on the estimated market share of approximately 5.9% and the subsidies granted by the government which will bring a potential increment of approximately 60,000 EV charging systems in the market. The estimated market share in the EV charging subscription service sector is based on the coverage of such business in the market under Cornerstone EV Charging Service Limited as of February 2020 as referred to the Acquisition Circular. The Company adopted a prudent approach in the preparation of its 10-year expansion plan which prolonged the period for entitling the expected increment from 2 years to 10 years. The management of the Group targeted the increment of the EV charging systems installed to be approximately 900 by the year ending 2022, and the increment will gradually increase to approximately 3,000 by the year ending 2025 and then approximately 3,700 by the year ending 2028, and expects it to remain unchanged for the year ending 2029 and beyond. Hence, the management considered that the business prospect for EV charging business acquired in August 2020 is encouraging and sustainable.

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LETTER FROM VINCO CAPITAL

1.2 The Group’s financial resources and liquidity

The table below summarises the Group’s unaudited financial resources and liquidity as at 30 September 2020 as extracted from the 2020/2021 Interim Report:

	As at	As at
	30 September	31 March
	2020	2020
	HK$’000	HK$’000
	(unaudited)	(audited)
Total assets
— non-current assets	96,938	58,780
— current assets	42,890	67,916
Total liabilities
— non-current liabilities	30,495	29,830
— current liabilities	27,737	21,790
Net current assets	15,153	46,126
Net assets	81,596	75,076

As at 30 September 2020, the non-current assets of the Group amounted to approximately HK$96.94 million, which mainly consisted of goodwill and right-of-use assets in the amount of approximately HK$33.79 million and HK$32.63 million respectively. The current assets of the Group as at 30 September 2020 amounted to approximately HK$42.89 million, which mainly include cash and bank balances of approximately HK$26.29 million, as well as trade and other receivables of approximately HK$13.60 million. As at 30 September 2020, the current liabilities of the Group amounted to approximately HK$27.74 million, which mainly consisted of trade and other payables of HK$15.09 million, while the non-current liabilities of the Group amounted to approximately HK$30.50 million, which mainly consisted of lease liabilities of approximately HK$21.60 million. The net assets of the Group were approximately HK$81.60 million as at 30 September 2020, which was higher than that of approximately HK$75.08 million as at 31 March 2020 by approximately 8.7%.

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LETTER FROM VINCO CAPITAL

1.3 Information on the Subscribers

With reference to the Board Letter, the Subscribers include Wu Changxian （吳長顯）, is father of Mr. Wu Jianwei (“ Mr. Wu ”), the non-executive Director of the Company; Wu Yanyan（吳燕燕）is sister of Mr. Wu; Wei Shu Wen （衛淑文）is cousin of Mr. Liang Zihao (“ Mr. Liang ”), the executive Director, co-chairman of the Board and chief executive officer of the Company; Huang Lijuan（黃麗娟）and Huang BaMei（黃八妹）are aunt of Mr. Liang; and Lau Wai Yan Lawson（劉偉恩）is the executive Director of the Company as at the Latest Practicable Date. On 15 December 2020, the Company entered into the Subscription Agreement with the Subscribers, pursuant to which the Subscribers have conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 69,625,000 new Shares at Subscription Price of HK$0.40 per Subscription Share.

1.4 Historical share price movement and the daily trading volume

The chart below sets forth the historical Share price movement from 16 December 2019 to 15 December 2020 (the “ Subscription Date ”) (both dates inclusive), being approximately one year up to and including the date of Subscription Agreement (the “ Review Period ”), to illustrate the general trend and level of movement of the closing prices of the Shares:

==> picture [365 x 173] intentionally omitted <==

----- Start of picture text -----

Historical daily closing price per share
0.8
0.7
0.6
0.5
0.4
0.3
0.2 Closing price
0.1
0 Subscription Price
Date
Closing Price
2019/12/16 2019/12/24 2020/01/06 2020/01/14 2020/01/22 2020/02/03 2020/02/11 2020/02/19 2020/02/27 2020/03/06 2020/03/16 2020/03/24 2020/04/01 2020/04/09 2020/04/21 2020/04/29 2020/05/11 2020/05/19 2020/05/27 2020/06/04 2020/06/12 2020/06/22 2020/07/02 2020/07/10 2020/07/20 2020/07/28 2020/08/05 2020/08/13 2020/08/21 2020/08/31 2020/09/08 2020/09/16 2020/09/24 2020/10/06 2020/10/15 2020/10/23 2020/11/03 2020/11/11 2020/11/19 2020/11/27 2020/12/07 2020/12/15
----- End of picture text -----

Source: The Stock Exchange’s website

— 30 —

LETTER FROM VINCO CAPITAL

During the Review Period, the highest and lowest closing prices of the Shares as quoted on the Stock Exchange were HK$0.76 on 27 October 2020 and HK$0.34 per Share recorded on 30 December 2019 and 22 January 2020 respectively, while the average closing price of the Shares was approximately HK$0.45 during the Review Period. The Subscription Price of HK$0.40 per Subscription Share represents (i) a discount of approximately 47% to the highest closing price of the Shares, (ii) a premium of approximately 18% to the lowest closing price of the Shares and (iii) a discount of approximately 11% to the average closing price of the Shares. Also, we noted from the above chart that the market price of the Shares had been moving between HK$0.34 and HK$0.57 up to the middle of October 2020. Thereafter, the Share price had been moving persistently upward. Pursuant to the discussion with the management of the Company, the Company is not aware of any reason for the share price surge since October 2020. After reaching the ceiling at HK$0.76 on 27 October 2020, the market price dropped slightly yet stayed at above HK$0.50 until the beginning of December 2020. Since 8 December 2020, the Share price had fallen to price not higher than HK$0.48 and closed at HK$0.48 per Share on the Subscription Date. Overall speaking, we noted that the Subscription Price of HK$0.40 is within the range of the closing prices of the Shares as quoted on the Stock Exchange during the Review Period.

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LETTER FROM VINCO CAPITAL

Set out below are (i) the number of trading days; and (ii) the percentage of the Shares’ average daily trading volume (the “ Average Volume ”) as compared to the then total number of issued Shares as at the end of the period/month:

							Approximate
							% of average
							daily trading
							volume to
							the then
						Number	total number
						of issued	of issued
						Shares as	Shares as at
			Total volume		Average	at the end of	the end of
			of the	Number of	Daily	the period/	the period/
Period			Shares traded	trading days	Volume	month	month
					(Shares)	(Shares)	(Note 3)
2019
December	(Note	1)	3,080,000	10	308,000	440,000,000	0.07%
2020
January			7,668,000	20	383,400	440,000,000	0.09%
February			6,524,000	20	326,200	440,000,000	0.07%
March			24,856,000	22	1,129,818	440,000,000	0.26%
April			2,806,000	19	147,684	440,000,000	0.03%
May			5,312,000	20	265,600	440,000,000	0.06%
June			3,184,000	21	151,619	440,000,000	0.03%
July			6,548,400	22	297,655	440,000,000	0.07%
August			1,112,000	21	52,952	480,540,541	0.01%
September			3,476,000	22	158,000	480,540,541	0.03%
October			19,540,000	18	1,085,556	480,540,541	0.23%
November			18,852,000	21	897,714	480,540,541	0.19%
December	(Note	2)	5,816,000	11	528,727	480,540,541	0.11%

Source: The Stock Exchange

Notes:

The Review Period commenced on 16 December 2019.
The Review Period ended on 15 December 2020.
Based on the total number of issued Shares as at end of the period/month.

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LETTER FROM VINCO CAPITAL

Regarding the liquidity of the Shares, as shown in the table above, the highest average volume was approximately 24.9 million Shares in March 2020, representing approximately 0.26% of the total number of Shares in March 2020. We also notice that the average daily trading volume of the Shares was thin during the Review Period, with all months less than 1% to the then total number of issued Shares as at the end of their respective period/month. Given the relatively low trading liquidity of the Shares during the Review Period, we consider that it is reasonable for the Subscription Price to be set at a discount to the prevailing historical closing prices of the Shares. To assess the fairness and reasonableness of the level of discount, we further performed comparable analysis, details of which are set out in the section headed “Comparison with recent connected subscription transactions” in this letter.

1.5 Introduction of a paperless listing & subscription regime

Based on our independent research, all IPOs must be paperless by 5 July 2021 and documents put on display to support listings and transactions, must be made available online from 4 October 2021. Further details regarding this regulatory announcement published by the Stock Exchange on 18 December 2020 can be found on (https://www.hkex.com.hk/News/RegulatoryAnnouncements/2020/201218news?sc_lang=en). As a result, the cost would be eased as minimising the paper consumption and enhancing the customer services. However, this would also cause impact on the revenue of printing services, which are one of the major sources of income for the Group. As disclosed in the 2020/2021 Interim Report, the Board believes it will shrink the scope of services provided by the Group that the simplification of the listing documents may lead to the decrease in demand on typesetting and translation services for listing documents. The Board also expects that the importance and/or the potential growth of revenue for the Group from preparing listing documents will decline and the negative impact of coronavirus epidemic will last for the next 12 to 24 months at least. In light of the uncertainties in financial printing business, the management of the Company intended to explore new sustainable business opportunities to diversify its revenue for the interests of the Company and the Shareholders as a whole.

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LETTER FROM VINCO CAPITAL

1.6 Reasons for the Subscription

As foresaid, the introduction of paperless listing and subscription regime and producing simplified listing documents will shrink the scope of services provided by Group, especially the major sources of income for the Group, such as the provision of printing services. According to the 2020/2021 Interim Report, the Directors considered that the business prospects for EV charging business is encouraging and sustainable. As the EV charging business involves high and new technology, for the purposes of strengthening the Company’s competitiveness in the industry, the Group focuses on research and development activities to adapt the constant fast-changing technology market. In order to capture the opportunities arising from the potential growth in EV charging business, the Group targeted to enhance the coverage of the private car parking spaces supported by its EV integrated charging solutions in Hong Kong.

Pursuant to the 2020/2021 Interim Report, the Group had cash and bank balances of approximately HK$26.3 million, represent a decrease of 46.1% from 31 March 2020. We are of the view that the Subscription is a good opportunity to enable the Company to maintain a sufficient positive cash position for the Group’s operation. Furthermore, taking into consideration of the Board’s intention to develop the EV charging business and the estimated costs of the Group to maintain its normal business operations in the forthcoming twelve-month period, we concur with the view of the Directors that the Subscription will provide immediate funding to the Company to (i) invest in research and development activities in EV charging business; (ii) undertake future investment opportunities in the EV charging business sector would, by nature, involve substantial amount of cash to undertake acquisitions of assets/business and/or in capital expenditures; (iii) sustain commercial and financial printing business operation; and (iv) serve as the working capital and general corporate purposes for the Group.

Given that the pilot subsidy scheme, i.e. the EHSS, has been opened for application in October 2020 according to the reference of 2020/2021 Interim Report. The EHSS will run for about three years with a view to covering roughly 60,000 private car parking spaces. It is expected that the relevant scheme imposed by the government will bring a potential increment of approximately 60,000 EV charging systems in the market. The Company as an early mover in the market would be benefited by such scheme due to the stimulation of demand for the EV charging business. To capture the

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LETTER FROM VINCO CAPITAL

opportunities arising from the potential growth, the Group targeted to enhance the coverage of the EV integrated charging solutions and expected that not less than 3,000 private car parking spaces will be supported by our EV integrated charging solutions by the end of the EHSS.

Based on our independent research, the Environmental Protection Department of the Hong Kong Government has been promoting the use of EVs by including but not limited to below measures, (i) offering tax concession until 31 March 2024, (ii) allowing 100% profits tax deduction for the capital expenditure on EV for enterprises; (iii) putting a new energy transport fun in place; (iv) allocating HK$180 million for franchised bus companies to purchase EV and (v) preparing for a HK$2 billion pilot subsidy scheme (which includes EHSS) to promote installation of electric vehicle charging-enabling infrastructure in car parks of existing private residential buildings (Details of the above research is located at https://www.epd.gov.hk/epd/english/environmentinhk/ air/prob_solutions/promotion_ev.html). According to the article in relation to the Hong Kong EV Sales to expand in 2020 despite rising risks (https://www. fitchsolutions.com/corporates/autos/hong-kong-ev-sales-expand-2020-despiterising-risks-11-06-2020) published by Fitch Solutions, the leading credit rating agency, on 11 June 2020, the favourable incentives from the Hong Kong government through concession on first registration taxes on new EV sales and a scrappage scheme are supportive of rapid EV adoption for Hong Kong in 2020. It forecasts the measures would result in EV sales expanding by 25.6% to reach 4,163 units in 2021 followed by a 24.8% increase in 2022 to reach 4,546 units. Therefore, we are of the view that such measures would encourage the use of EV and hence the demand of EV charging would be elevated in the market and hence it is crucial for the Company to receive immediate funding from the Subscription for the EV charging business operation.

Upon our enquiry, the Directors advised us that the Company considered a number of financing possibilities, such as bank loan, issue of bonds and equity financing and had contacted various bankers to explore other fundraising methods. We understand from the Company that the bank loan which could be offered by banks are either minimal in size or conditional such as requiring personal guarantee or pledged assets while some showed no interest in such engagement. Pre-emptive equity fundraising (such as rights issue and open offer) was also not considered as a favourable approach because the pre-emptive fundraising arrangement will incur extra costs and time such as involving extra administrative work, longer offer period, appointment of underwriter, and cost for the trading arrangements in relation to the nil-paid rights sold in rights issue. In view of the above, the finance management team

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LETTER FROM VINCO CAPITAL

of the Company recommended issuing of new share through Placing Agents to the public and/or by direct selling to associates of connected persons who are more willing to invest in the Company in comparison with the general public would be the best option available to the Company. Also, with reference to the 2020/2021 Interim Report, (i) the Group’s gearing ratio were 47.4% and 47.8% as at 30 September 2020 and 31 March 2020 respectively; (ii) the Group’s current ratio was approximately 1.5 times as at 30 September 2020, representing a significant decrease of approximately 51.6% as compared to that as at 31 March 2020 (approximately 3.1 times as at 31 March 2020); and (iii) the Group’s total borrowings, including bank borrowings, promissory note and finance lease obligations, increased by approximately 7.8% from approximately HK$35.9 million as at 31 March 2020 to HK$38.7 million as at 30 September 2020. As such, we are of the view that debt and bank financing or pre-emptive fundraising is not an optimal financing method taking into account of the financial position of the Company, cost of various fundraising approaches and the time required for alternative financing possibilities. In light of the above, we considered that the Subscription is an appropriate mean of fund raising.

With reference to the Board Letter, the net proceeds from the Subscription are expected to be approximately HK$27.77 million (the “ Net Proceeds ”) and is expected to be applied by the Company as to approximately 70% for EV charging business development, as to approximately 20% for commercial and financial printing business operation, and as to approximately 10% for working capital and general corporate purposes for the Group. We have obtained the working capital forecast of the printing business and EV charging business for the year ending 31 December 2021 from the Company and understand the assumptions and reasonableness of the proposed fundraising amount under the Subscription Agreement. We noted that the working capital forecast is based on the historical expenses of the Company since August 2020 after taking the cost control on certain items (mainly payroll expenses) into consideration and we found that the proposed fundraising amount under the Subscription Agreement together with the aggregate net proceeds from the Placing is sufficient for the estimated cost of EV charging business development and commercial and financial printing business operation for the coming twelve months.

Taking into account the above reasons for the Subscription, we concur with the Directors that the Subscription together with the proposed issue and allotment of the Subscription Shares under the Subscription Agreement are in the interests of the Company and the Shareholders as a whole although they are not conducted in the ordinary and usual course of business of the Group.

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LETTER FROM VINCO CAPITAL

2. Principal terms of the Subscription Agreement

The below table illustrates the key terms of the Subscription Agreement dated 15 December 2020 as extracted from the Board Letter:

Parties:

(i) the Company (as issuer); (ii) Wu Changxian（吳長顯） (as subscriber); (iii) Wu Yanyan（吳燕燕） (as subscriber); (iv) Wei Shu Wen（衛淑文） (as subscriber); (v) Huang Lijuan（黃麗娟） (as subscriber); (vi) Huang BaMei（黃八妹） (as subscriber); and (vii) Lau Wai Yan Lawson（劉偉恩） (as subscriber).

Number of Subscription 69,625,000 Subscription Shares Shares:

Subscription Price: HK$0.40 per Subscription Share

The Subscription Price

The Subscription Price of HK$0.40 per Subscription Share represents:

(i) a discount of approximately 16.7% to the closing price of HK$0.480 per Share as quoted on the Stock Exchange on 15 December 2020, being the last full trading day immediately before the execution of the Subscription Agreement;
(ii) a discount of approximately 17.9% to the average closing price of approximately HK$0.487 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Subscription Agreement;
(iii) a discount of approximately 34.4% to the closing price of HK$0.610 per Share as quoted on the Stock Exchange on 20 January 2021, being the Latest Practicable Date;
(iv) a premium of approximately 110.1% to the net asset value per Share of approximately HK$0.190 (based on the unaudited net asset value of the Group as at 30 September 2020 of approximately HK$81.60 million, adjusted by the net proceeds of approximately HK$19.35 million from the placing of 49,625,000 new Shares of the Company completed on 4 January 2021 and the total number of issued Shares as at the Latest Practicable Date); and

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LETTER FROM VINCO CAPITAL

(v) a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of a discount of approximately 2.1% represented by the theoretical diluted price of approximately HK$0.477 to the benchmarked price of approximately HK$0.487 per Share (as defined under Rule 10.44A of the GEM Listing Rules), taking into account the higher of the closing price on the date of the Subscription Agreement of HK$0.480 per Share and the average closing prices of the Shares as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Subscription Agreement of HK$0.487 per Share.

With reference to the Board Letter, the Subscription Price of HK$0.40 per Subscription Share was arrived at after arm’s length negotiations between the Company and the Subscribers with reference to the recent market prices of the Shares and current market conditions.

Review on the prevailing closing prices of the Shares

Referring to the sub-section headed “Historical Share price movement and the daily trading volume” of this letter of advice, the market price of the Shares had been moving between HK$0.34 and HK0.76 for the period from 16 December 2019 to the Subscription Date and closed at HK$0.48 per share on the Subscription Date. As highlighted above, not only the Subscription Price falls within the range of the closing price of the Shares within the Review Period but it is also close to the prevailing market share price.

Comparison with recent connected subscription transactions

As part of our analyse, we have also identified, on a non-exclusive basis, transactions in relation to the subscription of new shares by connected persons (excluding issues under share award or restructuring scheme or for emolument or acquisition purposes, the “ Comparables ”) conducted by companies listed on the Stock Exchange during the period from 1 June 2020 to the Subscription Date. We consider that the sixmonth Comparison Period is appropriate in providing a general reference for the recent market practice in relation to the key terms of the Comparables under similar market conditions. To the best of our knowledge and as far as we are aware of, we found 13 transactions which met the said criteria. We consider that the Comparables are exhaustive and can provide a fair and representative reference of the recent (i.e. within six months before the Subscription Date) market practices in relation to subscription of new shares by connected persons conducted by companies listed on the Stock Exchange. However, Shareholders should note that the businesses, operations and prospects of the Company are not the same as the Comparables.

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LETTER FROM VINCO CAPITAL

Summarised below is our relevant finding:

				Premium/(discount)
			Premium/(Discount)	over/of the
			over/of the	Subscription Price
			Subscription Price	to average closing
			to closing price	price per share for
			per share on	the last five trading
			the last trading day	days up to and
			prior to/on the	including/prior to the
			date of the respective	date of the respective
Date of announcement	Company name	Stock code	announcement	announcement
15 December 2020	Kinergy Corporation Ltd.	3302	(17.8)%	(19.8)%
11 December 2020	Bank of Gansu Co., Ltd.	2139	14.6%	15.5%
24 November 2020	Zensun Enterprises Limited	185	(4.2)%	(0.9)%
9 October 2020	China LotSynergy Holdings	1371	(9.6)%	(10.1)%
	Limited
11 September 2020	Amber Hill Financial	33	(23.7)%	(27.6)%
	Holdings Limited
10 September 2020	Powerlong Commercial	9909	0.00%	(2.4)%
	management Holdings
	Limited
8 September 2020	Koolearn Technology	1797	(7.3)%	(12.8)%
	Holding Limited
7 September 2020	Yunfeng Financial Group	376	(5.9)%	(7.3)%
	Limited
2 September 2020	China Uptown Group	2330	47.1%	38.1%
	Company Limited

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LETTER FROM VINCO CAPITAL

				Premium/(discount)
			Premium/(Discount)	over/of the
			over/of the	Subscription Price
			Subscription Price	to average closing
			to closing price	price per share for
			per share on	the last five trading
			the last trading day	days up to and
			prior to/on the	including/prior to the
			date of the respective	date of the respective
Date of announcement	Company name	Stock code	announcement	announcement
24 July 2020	Aceso Life Science Group	474	(13.8)%	(15.3)%
	Limited (formerly known
	as Hao Tian Development
	Group Limited)
13 July 2020	51 Credit Card Inc.	2051	(24.1)%	(1.6)%
6 July 2020	China Jinmao Holdings Group	817	(6.6)%	(0.6)%
	Limited
3 July 2020	China Technology industry	8111	58.7%	56.3%
	Group Limited
Maximum			58.7%	56.3%
Minimum			(24.1)%	(27.6)%
Average			0.6%	0.9%
Median			(6.6)%	(2.4)%
The Subscription			(16.7)%	(17.9)%

As shown by the above table, the subscription prices of the Comparables ranged from discount of approximately 24.1% to premium of approximately 58.7%, with a median discount of approximately 6.6%, to/over the closing price of their shares on the last trading day prior to/on the date of the respective subscription announcement. The discount of approximately 16.7% to the closing price of the Shares on the Subscription Date as represented by the Subscription Price fall within the range of the general market practice.

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LETTER FROM VINCO CAPITAL

Despite that the discount of the Subscription Price to the closing price of the Shares on the date of Subscription Agreement and the discount of the Subscription Price to the average closing price of the Shares for the last five trading days up to and including the date of Subscription Agreement are deeper than the average/median of the (discount)/premium market ranges, having considered that

(i) the Subscription represents a valuable opportunity for the Company to raise fund to further strengthen its capital base and financial position, thereby laying down a more solid foundation for the Company to further its business development especially for the EV charging business;
(ii) given the low liquidity of the Shares during the Review Period, it is reasonable to offer discount to the Subscribers for the Subscription so as to promote the attractiveness of the Subscription Price; and
(iii) the discount of the Subscription Price to the closing price of the Shares on the date of Subscription Agreement and the discount of the Subscription Price to the average closing price of the Shares for the last five trading days up to and including the date of Subscription Agreement fall within the (discount)/ premium market ranges.

We consider the Subscription Price to be fair and reasonable, and thus is in the interests of the Company and the Shareholders as a whole.

3. Potential effect on the shareholding structure after the Subscription

With reference to the shareholding table in the section headed “EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY” of the Board Letter, the shareholding interests of the public Shareholders would increase from approximately 32.38% to 38.98% immediately upon Completion (while the shareholding interest of the public Shareholders would decrease from approximately 29.62% before the Completion to approximately 26.18% after the Completion without including the Subscribers). We noted that the increase in shareholding interests of the public Shareholders is mainly due to the subscription by certain Subscribers. In this regard, taking into account (i) the reasons for and benefits of the Subscription; and (ii) the terms of the Subscription being fair and reasonable, we are of the view that the said level of change to the shareholding interests of the public Shareholders as a result of the Subscription is justifiable.

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LETTER FROM VINCO CAPITAL

4. Possible financial effects of the Subscription

The Subscription Shares, when allotted and issued, will be recognised entirely as equity of the Company which in turn will enlarge the capital base and enhance the net asset position of the Company. Moreover, as extracted from the 2020/2021 Interim Report, the gearing ratio of the Group (defined as the ratio of all borrowings including bank borrowings, promissory note and finance lease obligations to total equity) was 47.4% as at 30 September 2020. Assuming the Group’s total borrowings would remain at the similar level whilst the total equity of the Group would be enlarged upon Completion, it is expected that Subscription would reduce the gearing ratio of the Group to approximately 30.1%.

It should be noted that the above analyses are for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon Completion.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Subscription together with the proposed issue and allotment of the Subscription Shares under the Specific Mandate are in the interests of the Company and the Shareholders as a whole although they are not conducted in the ordinary and usual course of business of the Group. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Subscription, and we recommend the Independent Shareholders to vote in favour of the resolution in this regard.

Yours faithfully, For and on behalf of Vinco Capital Limited Alister Chung Managing Director

Note: Mr. Alister Chung is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Vinco Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has participated in the provision of independent financial advisory services for various transactions involving companies listed in Hong Kong for over 10 years.

— 42 —

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particular given in compliance with the GEM 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.

2. DISCLOSURE OF INTERESTS

(i) Interests of Directors and Chief Executive

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive officers of the Company or any of their associates in the Shares, underlying Shares and debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be recorded in the register maintained by the Company referred to therein; or (iii) pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules to be notified to the Company and the Stock Exchange were as follows:

			Approximate
			percentage of the
	Number of		total issued share
	Shares held		capital of the
Name of Director	(Note 1)	Capacity	Company(Note 2)
Mr. Wu Jianwei	235,603,225 (L)	Interest of corporation	44.44%
		controlled by him_(Note 3)_
Mr. Liang Zihao	235,603,225 (L)	Interest of corporation	44.44%
		controlled by him_(Note 4)_
Mr. Lau Wai Yan	22,802,703 (L)	Interest of corporation	4.30%
Lawson		controlled by him_(Note 5)_
Mr. Li Man Keung	19,112,613 (L)	Beneficial owner and interest	3.61%
Edwin		of corporation controlled
		by him_(Note 6)_

— I-1 —

GENERAL INFORMATION

APPENDIX I

Notes:

(1) The letter “L” represents the long position in the Shares and underlying Shares of the Company.
(2) As at the Latest Practicable Date, the entire issued share capital of the Company was 530,165,541 ordinary Shares of HK$0.01 each.
(3) Mr. Wu Jianwei owns 51% of the issued share capital of Global Fortune Global Limited. Mr. Wu Jianwei is deemed to be interested in the Shares in which Global Fortune Global Limited is interested under the SFO.
(4) Mr. Liang Zihao owns 49% of the issued share capital of Global Fortune Global Limited. Mr. Liang Zihao is deemed to be interested in the Shares in which Global Fortune Global Limited is interested under the SFO.
(5) Mr. Lau Wai Yan Lawson owns 100% of the issued share capital of Cornerstone Wealth Holdings Limited. Mr. Lau Wai Yan Lawson is deemed to be interested in the Shares in which Cornerstone Wealth Holdings Limited is interested under the SFO.
(6) Mr. Li Man Keung Edwin holds 5,912,613 Shares as beneficial owner and is deemed to be interested in 13,200,000 Shares beneficial owned by Tanner Enterprises Group Limited, a corporation wholly-owned by Mr. Li Man Keung Edwin.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive officer of the Company nor their respective associates had or was deemed to have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which had been recorded in the register required to be kept by the Company pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO and section 352 of the SFO, or which had been notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules.

Mr. Wu Jianwei, the non-executive Director of the Company, and Mr. Liang Zihao, the executive Director, Co-Chairman of the Board and Chief Executive Officer of the Company, are also the directors of Global Fortune Global Limited. Save as disclosed above, as at the Latest Practicable Date, none of the other Directors or proposed Director was a director or employee of a company which had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

— I-2 —

GENERAL INFORMATION

APPENDIX I

(ii) Interests of the substantial shareholders of the Company

As at the Latest Practicable Date, so far as being known to the Directors or chief executive officer of the Company, the following persons or corporations (other than a Director or chief executive of the Company) had or were deemed or taken interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or were directly or indirectly, interested in 10% or more of the issued voting shares of any other member of the Group:

			Approximate
	Number		percentage of the
	of Shares		total issued share
Name of substantial	interested		capital of the
shareholder	(Note 1)	Capacity	Company(Note 2)
Global Fortune Global	235,603,225 (L)	Beneficial Owner	44.44%
Limited
Glorytwin Limited	81,000,000 (L)	Beneficial owner	15.28%
Colorful Bay Limited	81,000,000 (L)	Interest of corporation	15.28%
		controlled_(Note 3)_
Mr. So Wing Keung	81,000,000 (L)	Interest of corporation	15.28%
		controlled_(Note 4)_

Notes:

The letter “L” represents the long position in the Shares and underlying Shares of the Company.
As at the Latest Practicable Date, the entire issued share capital of the Company was 530,165,541 ordinary Shares of HK$0.01 each.
Colorful Bay Limited owns 90% of the issued share capital of Glorytwin Limited. Colorful Bay Limited is deemed to be interested in the Shares in which Glorytwin Limited is interested under the SFO.
Mr. So Wing Keung owns 100% of the issued share capital of Colorful Bay Limited. Mr. So Wing Keung is deemed to be interested in the Shares in which Colorful Bay Limited is interested under the SFO.

— I-3 —

APPENDIX I

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors) who had, or was deemed to have, interests or short positions in the shares or underlying shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

3. COMPETING INTERESTS OF COMPLIANCE ADVISER, DIRECTORS AND CONTROLLING SHAREHOLDERS

As at the Latest Practicable Date, so far as the Directors are aware, none of Dakin Capital Limited, the compliance adviser of the Company (the “ Compliance Adviser ”), and its directors, employees and close associates nor the Directors nor the controlling shareholders of the Company or any of their respective close associate(s) had any interests or business which competes or may compete, either directly or indirectly, with the business of the Group, or any other conflicts of interest with the Group which would be required to be disclosed under the Rule 11.04 and Rule 20.68(15) of the GEM Listing Rules.

4. INTERESTS OF THE COMPLIANCE ADVISER AND ITS DIRECTORS, EMPLOYEES AND CLOSE ASSOCIATES

As confirmed by the Compliance Adviser, none of the Compliance Adviser or its directors, employees or close associates had any interests in relation to the Company which was required to be disclosed pursuant to Rule 6A.32 of the GEM Listing Rules as at the Latest Practicable Date.

5. DIRECTORS’ SERVICES CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries which is not expiring or determinable within one year without payment of compensation (other than statutory compensation).

— I-4 —

GENERAL INFORMATION

APPENDIX I

6. DIRECTORS’ INTEREST IN ASSETS, CONTRACTS AND ARRANGEMENTS

Pursuant to the announcement of the Company dated 4 August 2020, Mr. Wu Jianwei, Mr. Liang Zihao, Mr. Lau Wai Yan Lawson and Mr. Li Man Keung Edwin had direct interests in Cornerstone EV Charging Service Limited (the “ Target Company ”). Prior to the completion of the acquisition, the Target Company was directly owned (1) as to approximately 28.12% by Cornerstone Wealth Holdings Limited, which is wholly-owned by Mr. Lau Wai Yan Lawson, and (2) as to approximately 71.88% by Norenex Limited, which is indirectly owned as to approximately 33.33% by each of Mr. Wu Jianwei, Mr. Liang Zihao and Mr. Li Man Keung Edwin. As a result of the completion of the acquisition, the Group has paid the aggregate consideration of HK$35,000,000, satisfied (i) by way of the allotment and issue of an aggregate of 40,540,541 consideration Shares at the issue price of HK$0.37 per consideration Shares and credited as fully paid; (ii) in cash in the total sum of HK$15,000,000 for the cash consideration; and (iii) by the Company issuing the promissory note in the sum of HK$5,000,000 for the sale loan. Following the completion of the acquisition on 4 August 2020, the Target Company became an indirect wholly-owned subsidiary of the Company and the financial results of the Target Company will be consolidated with those of the Group.

Save as disclosed above, none of the Directors had any direct or indirect interest in any assets which had been, since 31 March 2020 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and none of the Directors was materially interested in any contract or arrangement subsisting as at the date of this circular which is significant in relation to the business of the Group.

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or claims of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

— I-5 —

GENERAL INFORMATION

APPENDIX I

8. EXPERT AND CONSENT

The qualification of the experts who have given opinions and advice in this circular is as follows:

Name

Qualification

Vinco Capital Limited a licensed corporation permitted to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance

The above expert has given and has not withdrawn its written consent to the issue of this circular with the incorporation herein of their letters, reports, advice and/or references to its name, in the form and context in which it appears in this circular.

As at the Latest Practicable Date, the above expert did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of the Group.

As at the Latest Practicable Date, the above expert did not have any interest, either directly or indirectly, in any assets which have been since 31 March 2020 (being the date to which the latest published audited consolidated financial statements of the Group were made up) acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

— I-6 —

GENERAL INFORMATION

APPENDIX I

9. MATERIAL ADVERSE CHANGE

References are made to the annual report, profit warning announcements, first quarterly report and interim report of the Company dated 22 June 2020, 7 August 2020, 4 November 2020, 14 August 2020 and 13 November 2020, respectively published on the websites of the Stock Exchange and the Company regarding the increase in consolidated net loss for the year ended 31 March 2020 and for the six months ended 30 September 2020, as compared to the year ended 31 March 2019 and six months ended 30 September 2019, respectively. As disclosed in the aforementioned announcements and reports, such increase was primarily attributable to (i) the reduction in the orders from customers for printing services resulting from the increasing concern on environment protection, the popularity of digitalization of information, the rise of online marketing, social media and globalization; (ii) the decrease in revenue due to the unfavorable economic environment and the extreme market and operating conditions caused by the outbreak of novel coronavirus pandemic during 2020; (iii) incurrence of additional administrative and other operating expenses due to factory relocation in April 2020; and (iv) the additional cost incurred in the newly acquired electric vehicle charging solution and system services business since August 2020.

Due to the outbreak of the novel coronavirus (COVID-19) pandemic since early 2020 and the unsettled Sino-U.S. trade war which has caused uncertainty on the global economic outlook, the Board believes that the current economy will have an adverse impact on the number of new listing application, which may lead to a weak demand for commercial printing and financial printing services. Moreover, as proposed in the consultation paper published by the Stock Exchange on 24 July 2020 together with the Guidance Letter HKEX-GL86-16 updated on 24 July 2020, a paperless listing and subscription regime and producing simplified listing documents will be introduced, the Board believes that it will shrink the scope of services provided by the Group. As the provision of printing services is one of the major sources of income for the Group, the simplification of the listing documents may lead to the decrease in demand on typesetting and translation services for listing documents. The Board expects that the importance and/or the potential growth of revenue for the Group from preparing listing documents will decline and the negative impact of coronavirus epidemic will last for the next 12 to 24 months at least. The Group will continue to pay close attention on the market trend and cautiously tighten the control over operating expenses by ongoing review on the operation model to maintain our profitability and competitiveness in the market.

— I-7 —

APPENDIX I

GENERAL INFORMATION

Save as disclosed above, the Directors have confirmed that as at the Latest Practicable Date, they were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2020, being the date of which the latest published audited consolidated financial statements of the Group were made up.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection from 9:30 a.m. to 5:30 p.m., Monday to Friday, except the public holiday, at the office of the Company, Room 2402, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong from the date of this circular up to and including the date of the EGM:

(a) the letter from the Board, the text of which is set out from pages 6 to 17 of this circular;
(b) the letter from the Independent Board Committee, the text of which is set out from pages 18 to 19 of this circular;
(c) the letter from the Independent Financial Adviser, the text of which is set out from pages 20 to 42 of this circular;
(d) the annual reports of the Company for each of the two years ended 31 March 2019 and 2020;
(e) the interim report of the Company for the six months ended 30 September 2020;
(f) the written consents referred to in the section headed “Expert and Consent” in this appendix;
(g) the Subscription Agreement; and
(h) this circular.

11. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text in the case of any inconsistency.

— I-8 —

NOTICE OF THE EGM

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CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8391)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (“ EGM ”) of Cornerstone Technologies Holdings Limited (the “ Company ”) will be held at 2402, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong on Wednesday, 10 February 2021 at 3:00 p.m. for the following purposes:

Shareholders should note that the proposed issue of Subscription Shares to six (6) Subscribers are inter-conditional upon each other.

ORDINARY RESOLUTION

To consider and, if thought fit, pass with or without amendments the following resolution as ordinary resolution:

“ THAT

(a) the subscription agreement dated 15 December 2020 (the “ Subscription Agreement ”) entered into between the Company and the Subscribers (a copy of the Subscription Agreement has been produced to the meeting and marked “A” and initialed by the chairman of the meeting for identification purpose) in relation to the subscription of 69,625,000 new ordinary shares of HK$0.01 each in the share capital of the Company (the “ Subscription Shares ”) by the Subscribers at the subscription price of HK$0.40 per Subscription Share and the transaction contemplated thereunder be and are hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting and not having withdrawn or revoked the approval for the listing of, and permission to deal in the Subscription Shares prior to settlement of the Subscription Shares, the directors of the Company (the “ Directors ”) be and are hereby granted a specific mandate to allot and issue the Subscription

— EGM-1 —

NOTICE OF THE EGM

Shares in accordance with the terms of the Subscription Agreement, provided that this specific mandate shall be in addition to, and shall not prejudice nor revoke any existing or such other general or specific mandates which may from time to time be granted to the Directors prior to the passing of this resolution; and

(c) any one of the Directors be and is hereby authorised to take any action and execute such other documents as he/she considers necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the Subscription Agreement and the transaction contemplated thereunder, including, without limitation, the allotment and issue of the Subscription Shares under the relevant specific mandate.”

By Order of the Board Cornerstone Technologies Holdings Limited LIANG Zihao

Co-Chairman and Executive Director

Hong Kong, 22 January 2021

Registered Office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive 2402, China Merchants Tower P.O. Box 2681 Shun Tak Centre Grand Cayman 168-200 Connaught Road Central KY1-1111 Hong Kong Cayman Islands

As at the date of this notice, the Directors are as follows:

Executive Directors: Mr. LIANG Zihao (Co-Chairman) Mr. SAM WENG WA Michael Mr. LI Man Keung Edwin Mr. LAU Wai Yan Lawson Non-executive Director: Mr. WU Jianwei (Co-Chairman) Independent non-executive Directors: Mr. TAM Ka Hei Raymond Mr. YUEN Chun Fai Ms. ZHU Xiaohui

— EGM-2 —

NOTICE OF THE EGM

Notes:

A member entitled to attend and vote at the EGM (or at any adjournment thereof) is entitled to appoint one or (if he holds two or more shares) more proxies to attend and vote in his stead. A proxy need not be a member of the Company.
The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing, or if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.
Where there are joint registered holders of any shares, any one of such persons may vote at the EGM (or at any adjournment thereof), either personally or by proxy, in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders be present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
In order 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 notarially certified copy of that power of attorney or authority (such certification to be made by either a notary public or a solicitor qualified to practise in Hong Kong), must be deposited with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited, Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for holding the EGM (i.e. not later than 3:00 p.m. on Monday, 8 February 2021) or any adjournment thereof.
For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Friday, 5 February 2021 to Wednesday, 10 February 2021, both dates inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the EGM, unregistered holders of shares shall ensure that all transfer documents accompanied by the relevant share certificates must be lodged with 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 for registration not later than 4:30 p.m. on Thursday, 4 February 2021.
Completion and return of the form of proxy will not preclude a member from attending and voting in person at the EGM or any adjourned meeting (as the case may be) should he so wish and in such event, the proxy form previously served will be deemed to be revoked.
In compliance with the GEM Listing Rules, the resolution to be proposed at the EGM will be voted by way of poll.
The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

— EGM-3 —

AI assistant

Cornerstone Technologies Holdings Limited — Proxy Solicitation & Information Statement 2021

51420_rns_2021-01-21_b0aa4df1-6bc2-4032-9653-5032244d8418.pdf

CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE; AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

Vinco Capital Limited

CHARACTERISTICS OF GEM

Voting by proxy in advance of the EGM:

Precautionary measures at the EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

INTRODUCTION

LETTER FROM THE BOARD

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

THE SUBSCRIPTION AGREEMENT

LETTER FROM THE BOARD

Subscription Shares

Subscription Price

LETTER FROM THE BOARD

Ranking of the Subscription Shares

Conditions of the Subscription

Specific Mandate to issue the Subscription Shares

Completion

Application for listing

REASONS FOR THE SUBSCRIPTION

LETTER FROM THE BOARD

INTENDED USE OF PROCEEDS

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

EGM

INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

WARNING OF THE RISKS OF DEALING IN THE SHARES

Cornerstone Technologies Holdings Limited LIANG Zihao

CORNERSTONE TECHNOLOGIES HOLDINGS LIMITED 基石科技控股有限公司

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

Independent Board Committee of

Cornerstone Technologies Holdings Limited

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES INVOLVING CONNECTED PERSONS UNDER SPECIFIC MANDATE

INTRODUCTION

LETTER FROM VINCO CAPITAL

THE INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

LETTER FROM VINCO CAPITAL

BASIS OF OUR OPINION AND RECOMMENDATION

LETTER FROM VINCO CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background Information

1.1 Review of the Group’s business

1.2 The Group’s financial resources and liquidity

1.3 Information on the Subscribers

1.4 Historical share price movement and the daily trading volume

LETTER FROM VINCO CAPITAL

1.5 Introduction of a paperless listing & subscription regime

1.6 Reasons for the Subscription

2. Principal terms of the Subscription Agreement

Parties:

The Subscription Price

LETTER FROM VINCO CAPITAL

Review on the prevailing closing prices of the Shares

Comparison with recent connected subscription transactions

LETTER FROM VINCO CAPITAL

3. Potential effect on the shareholding structure after the Subscription

4. Possible financial effects of the Subscription

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(i) Interests of Directors and Chief Executive

(ii) Interests of the substantial shareholders of the Company

Cornerstone Technologies Holdings Limited Proxy Solicitation & Information Statement 2021