THIS 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 (the “ 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.

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) PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

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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 7 to 37 of this circular. A notice convening the extraordinary general meeting of the Company (“ EGM ”) to be held at 21/F., Grand Millennium Plaza, 181 Queen’s Road Central, Sheung Wan, Hong Kong on Friday, 29 July 2022 at 3:00 p.m. is set out from pages EGM-1 to EGM-4 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 Wednesday, 27 July 2022 or not later than 48 hours before the time appointed for any adjourned meeting of the EGM 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.cstl.com.hk and the website of the Stock Exchange at www.hkexnews.hk on the “Latest Listed Company Information” 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 at the EGM, including:

compulsory body temperature checks and health declarations
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.

8 July 2022

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

— iv —

DEFINITIONS

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

“Administrative Parties”

SERICA AGENCY LIMITED as agent, security agent and custodian
“Agent”

SERICA AGENCY LIMITED

“Arranger” Captain Source Limited, a company managed and controlled by Gaw Capital
“Board”

the board of Directors

“Borrower” the Company
“Business Day”

a day (other than a Saturday, Sunday and public or statutory holiday) on which licensed banks are open for general business throughout their normal business hours in Hong Kong

“Chargors” collectively the Company and the Guarantors and “Chargor” shall mean any of them
“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)
“Composite Debenture”

the debenture dated 30 March 2022 entered into between the Chargors as chargors and the Security Agent as chargee, which is one of the documents that expresses and provides security for the Green Loan Facility from the Company

“connected person(s)”

has the meaning as ascribed to it in the GEM Listing Rules

“Cornerstone Contracting Party”
Cornerstone EV Charging Service Limited or any of the other Obligor parties to the Composite Debenture
“Cornerstone EV Charging Contracting Limited”
a wholly owned subsidiary of the Company that is incorporated in Hong Kong with company registration number 3130714 and its registered office at Office Units 1107-11, 11th Floor, New East Ocean Centre, No. 9 Science Museum Road, Kowloon, Hong Kong
“Cornerstone EV Charging Service Limited”
collectively owned subsidiary of the Company that is incorporated in Hong Kong with company registration number 2720096 and its registered office at Office Units 1107-11, 11th Floor, New East Ocean Centre, No. 9 Science Museum Road, Kowloon, Hong Kong

— 1 —

DEFINITIONS

“Cornerstone EV Holdings Limited”
a wholly owned subsidiary of the Company that is incorporated under the laws of the British Virgin Islands with limited liability, with company number 1981819 and its registered office at 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands
“Cornerstone EV International Limited”
a wholly owned subsidiary of the Company that is incorporated under the laws of the British Virgin Islands with limited liability, with company number 2090342 and its registered office at 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands
“Cornerstone EV International Trading Limited”
a wholly owned subsidiary of the Company that is incorporated in Hong Kong with company registration number 3130719 and its registered office at Office Units 1107-11, 11th Floor, New East Ocean Centre, No. 9 Science Museum Road, Kowloon, Hong Kong
“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 Agreements; (ii) the Supplemental Agreements; and (iii) the Specific Mandate for the issuance and allotment of the Tranche 1 Warrant Shares and the transactions contemplated thereunder
“Gaw Capital”
Gaw Capital Partners
“GEM”
GEM operated by the Stock Exchange
“GEM Listing Rules”

the Rules Governing the Listing of Securities on GEM

“Green Facility Agreement”
the green facility agreement dated 30 March 2022 for the term facility of HK$150,000,000 entered into amongst the Company as borrower, Captain Source Limited as the Lender, the Arranger and the Green Loan Advisor, the Guarantors, and the Security Agent
“Green Loan Advisor”
Captain Source Limited
“Green Loan Facility”
the term loan facility in an aggregate amount of HK$150,000,000 made available under the Green Facility Agreement
“Group”

the Company and its subsidiaries

— 2 —

DEFINITIONS

“Guarantors” collectively Cornerstone EV Holdings Limited, Cornerstone EV Charging Service Limited, Mass Bright Technology Limited, Cornerstone EV Charging Contracting Limited, Cornerstone EV International Limited and Cornerstone EV International Trading Limited
“Head Contract” a contract for engaging the services of the Cornerstone Contracting Party as contractor for the installation works of EV charging-enabling infrastructure and associated installations in car parks approved by the Environmental Protection Department of the Government of Hong Kong to be eligible for the subsidy under the “EV-charging at Home Subsidy Scheme” established by the Government of Hong Kong
“HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Third third party(ies) independent of and not connected with the Party(ies)” Company and its connected persons and their respective associates
“Latest Practicable Date” 5 July 2022 “Last Trading Day” 30 March 2022, being the date of the Subscription Agreements “Lender” Captain Source Limited “Listing Committee” the Listing Committee of the Stock Exchange “Loan” a loan made or to be made under the Green Loan Facility “Long Stop Date” 30 June 2022 or such other date as the Company and the Subscribers may mutually agree in writing
“Mass Bright Technology a wholly owned subsidiary of the Company that is incorporated in Limited” Hong Kong with company registration number 2945640 and its registered office at Office Units 1107-11, 11th Floor, New East Ocean Centre, No. 9 Science Museum Road, Kowloon, Hong Kong
“Obligors” collectively the Borrower and the Guarantors and “Obligor” means each one of them

— 3 —

DEFINITIONS

“Security Agent” SERICA AGENCY LIMITED
“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 to be approved by the Shareholders at the EGM which authorises the Directors to allot, issue and deal with the Tranche 1 Warrant Shares upon full exercise of the Tranche 1 Warrants
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscribers” collectively Subscriber A and Subscriber B, companies managed and controlled by Gaw Capital
“Subscriber A” Steady Flake Limited, a company incorporated in the Cayman Islands which is managed and controlled by Gaw Capital, the principal activity of which is investment holding
“Subscriber A Warrants”
an aggregate of 153,000,000 warrants, comprising the Tranche 1 Warrants and Tranche 2 Warrants, conferring rights to subscribe for 153,000,000 Subscriber A Warrant Shares to be issued by the Company to Subscriber A pursuant to the terms and conditions of the Subscription Agreement A and the warrants instrument
“Subscriber A Warrant Shares”
up to initially an aggregate of 153,000,000 new Shares to be allotted and issued upon exercise of the subscription rights attaching to all the Subscriber A Warrants in full under the Subscription Agreement A
“Subscriber B”

Seed Lock Limited, a company incorporated in the British Virgin Islands which is managed and controlled by Gaw Capital, the principal activity of which is investment holding

“Subscriber B Warrants”
27,000,000 warrants conferring rights to subscribe for 27,000,000 Subscriber B Warrant Shares to be issued by the Company to Subscriber B pursuant to the terms and condition of the Subscription Agreement B and the warrants instrument
“Subscriber B Warrant Shares”

up to initially an aggregate of 27,000,000 new Shares to be allotted and issued upon exercise of the subscription rights attaching to all the Subscriber B Warrants in full under the Subscription Agreement B

— 4 —

DEFINITIONS

“Subscriptions”
collectively Subscription A and Subscription B
“Subscription A”
the subscription for the Subscriber A Warrants by Subscriber A upon the terms and subject to the conditions of the Subscription Agreement A
“Subscription Agreements” collectively the Subscription Agreement A and the Subscription Agreement B, and “Subscription Agreement” shall mean any of them
“Subscription Agreement A”
the subscription agreement dated 30 March 2022 entered into between the Company and Subscriber A in relation to the issue of Subscriber A Warrants
“Subscription Agreement B” the subscription agreement dated 30 March 2022 entered into between the Company and Subscriber B in relation to the issue of Subscriber B Warrants
“Subscription B” the subscription for the Subscriber B Warrants by Subscriber B upon the terms and subject to the conditions of the Subscription Agreement B
“Subscription Period” the five-year period commencing from the date of issue of the Warrants
“Supplemental Agreement (1)”
the supplemental agreement dated 24 May 2022 entered into between the Company and Subscriber A in relation to the suspension of the Tranche 2 Warrants of the Subscriber A Warrants
“Supplemental Agreement the supplemental agreement dated 24 May 2022 entered into (2)” between the Company and Subscriber B in relation to suspending the issue of Subscriber B Warrants
“Supplemental Agreement (3)”
the supplemental agreement dated 24 May 2022 entered into amongst the Company as borrower, Captain Source Limited as the Lender, the Arranger and the Green Loan Advisor, the Guarantors, and the Security Agent in relation to the Green Facility Agreement
“Supplemental Agreements” collectively, Supplemental Agreement (1), Supplemental Agreement (2) and Supplemental Agreement (3)
“Tranche 1 Warrant Shares”
up to initially an aggregate of 120,000,000 new Shares to be allotted and issued upon exercise of the subscription rights attaching to all the Tranche 1 Warrants in full under the Subscription Agreement A

— 5 —

DEFINITIONS

“Tranche 2 Warrant Shares” up to initially an aggregate of 33,000,000 new Shares to be allotted and issued upon exercise of the subscription rights attaching to all the Tranche 2 Warrants in full under the Subscription Agreement A
“Tranche 1 Warrants”
120,000,000 warrants conferring rights to subscribe for 120,000,000 Tranche 1 Warrant Shares to be issued by the Company to the Subscriber A pursuant to the terms and conditions of the Subscription Agreement A and the warrants instrument
“Tranche 2 Warrants”
33,000,000 warrants conferring rights to subscribe for 33,000,000 Tranche 2 Warrant Shares to be issued by the Company to Subscriber A pursuant to the terms and conditions of the Subscription Agreement A and the warrants instrument
“Warrants” collectively the Subscriber A Warrants and the Subscriber B Warrants
“Warrant Shares”
collectively the Subscriber A Warrant Shares and the Subscriber B Warrant Shares and “ Warrant Share ” shall mean any of them
“Warrant Subscription Price” an initial exercise price of HK$0.50 per Warrant Share (subject to adjustment) at which holder of the Warrants may subscribe for the Warrant Share(s)
“Warrants Transaction collectively, amongst others, the Subscription Agreements, Documents” warrant instrument and any other documents relating to the transactions contemplated therein
“Warrantholder(s)” person(s) who is or are for the time being registered as the holder or joint holders of a Warrant
“%”
per cent

— 6 —

LETTER FROM THE BOARD

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 (Co-Chairman) Mr. Li Man Keung Edwin (Vice Chairman) Mr. Sam Weng Wa Michael Mr. Lau Wai Yan Lawson Mr. Pan Wenyuan

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

Non-executive Director:

Mr. Wu Jianwei (Co-Chairman)

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

Head Office and Principal Place of Business in Hong Kong: Office Units 1107-11, 11th Floor, New East Ocean Centre, No. 9 Science Museum Road, Kowloon, Hong Kong

8 July 2022

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the announcements of the Company dated 31 March 2022 and 24 May 2022, in relation to, among other matters, the proposed issue of an aggregate of 120,000,000 Warrants (as revised by Supplemental Agreement (1) and Supplemental Agreement (2)) conferring the rights to subscribe for an aggregate of 120,000,000 Warrant Shares at the initial Warrant Subscription Price of HK$0.50 per Warrant Share (subject to adjustment).

— 7 —

LETTER FROM THE BOARD

In view of complying with GEM Listing Rule 21.02(1), the Company and Gaw Capital has agreed to suspend indefinitely the issue and allotment of Tranche 2 Warrants and Subscriber B Warrants. Accordingly, on 24 May 2022 (after trading hours), the Company has entered into the Supplemental Agreements to revise the terms of the Green Facility Agreement and the Subscription Agreements.

The purpose of this circular is to provide you with (i) information relating to the Subscription Agreements, the Supplemental Agreements, the issue of the Tranche 1 Warrants, and the issue and allotment of the Tranche 1 Warrant Shares and the transactions contemplated thereunder; (ii) other information as required under the GEM Listing Rules; and (iii) the notice of the EGM.

PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE

The Board is pleased to announce that, in consideration of the granting of the Green Loan Facility by the Lender to the Company (Borrower), the Company on 30 March 2022 (after trading hours), has entered into the following Subscription Agreements:

(1) the Subscription Agreement A with Subscriber A, a company managed and controlled by Gaw Capital, pursuant to which the Company agreed to issue to Subscriber A an aggregate of 153,000,000 Subscriber A Warrants comprising Tranche 1 Warrants and Tranche 2 Warrants conferring the rights to subscribe for an aggregate of 153,000,000 Subscriber A Warrant Shares at the initial Warrant Subscription Price of HK$0.50 per Warrant Share (subject to adjustment);
(2) the Subscription Agreement B with Subscriber B, a company managed and controlled by Gaw Capital, pursuant to which the Company agreed to issue to Subscriber B 27,000,000 Subscriber B Warrants conferring the rights to subscribe for an aggregate of 27,000,000 Subscriber B Warrant Shares at the initial Warrant Subscription Price of HK$0.50 per Warrant Share (subject to adjustment),

and on 24 May 2022 (after trading hours), the Company has entered into the following Supplemental Agreements;

(1) Supplemental Agreement (1) with Subscriber A, pursuant to which the parties, amongst other things, that the obligations of the parties for the issue and subscription of 33,000,000 Warrants (Tranche 2 Warrants) shall be suspended indefinitely and the issue and subscription of 33,000,000 Warrants (Tranche 2 Warrants) shall not proceed; and
(2) Supplemental Agreement (2) with Subscriber B, pursuant to which the parties, amongst other things, that the obligations of the parties for the issue and subscription of 27,000,000 Warrants (Subscriber B Warrants) shall be suspended indefinitely and the issue and subscription of 27,000,000 Warrants (Subscriber B Warrants) will not proceed.

— 8 —

LETTER FROM THE BOARD

Principal terms of the Subscription Agreements (as supplemented by Supplemental Agreement (1) and Supplemental Agreement (2)) are set out below:

THE SUBSCRIPTION AGREEMENTS

Date : 30 March 2022 (after trading hours) Parties : (i) the Company, as the issuer in respect of each Subscription Agreement; (ii) Subscriber A, as the subscriber in respect of the Subscription Agreement A; and (iii) Subscriber B, as the subscriber in respect of the Subscription Agreement B. Issuer of Warrants : the Company Number of Warrants : Pursuant to the Subscription Agreements: (i) an aggregate of 153,000,000 Subscriber A Warrants comprising: (a) Tranche 1 Warrants: 120,000,000 Subscriber A Warrants conferring rights to subscribe for 120,000,000 Subscriber A Warrant Shares to be issued by the Company to Subscriber A pursuant to the terms and conditions of the Subscription Agreement A and the warrants instrument; (b) Tranche 2 Warrants: 33,000,000 Subscriber A Warrants conferring rights to subscribe for 33,000,000 Subscriber A Warrant Shares to be issued by the Company to Subscriber A pursuant to the terms and conditions of the Subscription Agreement A and the warrants instrument to Subscriber A in respect of the Subscription Agreement A; and (ii) an aggregate of 27,000,000 Subscriber B Warrants conferring rights to subscribe for 27,000,000 Subscriber B Warrant Shares to be issued by the Company to Subscriber B pursuant to the terms and conditions of the Subscription Agreement B and the warrants instrument to Subscriber B in respect of the Subscription Agreement B.

— 9 —

LETTER FROM THE BOARD

Pursuant to Supplemental Agreement (1) and Supplemental Agreement (2), the Tranche 2 Warrants and Subscriber B Warrants are suspended indefinitely and shall not proceed. Only the Tranche 1 Warrants, being 120,000,000 Subscriber A Warrants conferring rights to subscribe for 120,000,000 Subscriber A Warrant Shares to be issued by the Company to Subscriber A pursuant to the terms and conditions of the Subscription Agreement A Supplemental Agreement (1) and the warrants instrument, subject to adjustment in accordance with the terms stated under the section headed “Adjustments of the Warrant Subscription Price” in this Circular and the terms and conditions endorsed on the Warrant certificate, shall proceed in the mean time.
Initial Warrant : HK$0.50 per Warrant Share Subscription Price
Subscription Period : Each Warrant carries the right to subscribe for one (1) Warrant Share at the initial Warrant Subscription Price. The subscription rights attaching to the Warrants may be exercised at any time during the five-year period commencing from the date of issue of the Warrants.
Warrant Shares : The Warrant Shares will be issued under the Specific Mandate to be sought at the EGM.
Adjustment to Warrant : The Warrant Subscription Price will be subject to adjustments in Subscription Price the following events:
i. consolidation, subdivision or re-classification of Shares;
ii. capitalization of profits or reserves; and
iii. distributions.
Listing of Warrants : No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges.
Transferability : The Warrants shall be transferable in integral multiples of 1,000,000 Warrants (or if at the time of transfer, the outstanding number of Warrants is less than 1,000,000 units, the whole but not in part of the outstanding Warrants) to third parties who are independent of and not connected with the Company or any of its connected persons other than a competitor of the Company. Any transfer of the Warrants to connected persons of the Company shall be subject to the Company’s written consent and compliance with the GEM Listing Rules and applicable regulations.

— 10 —

LETTER FROM THE BOARD

Winding up of the : If the Company is wound up, all subscription rights attached to Company the Warrants which have not been exercised in accordance with the terms and conditions of the Warrant Transaction Documents following the passing of such resolution shall lapse and Warrant certificate shall cease to be valid for any purpose. Rights of the : Warrantholder shall not be entitled to attend and vote at the Warrantholders general meetings of the Company by reason of only being a Warrantholder. A Warrantholder shall not have the right to participate in any distributions and/or offers of further securities made by the Company by reason of only being a Warrantholder.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Subscribers and their respective ultimate beneficial owner(s) are independent third parties of the Company and its connected persons.

Conditions Precedent

Tranche 1 Warrants

Completion of the issue of Tranche 1 Warrants is conditional upon the following conditions precedent being fulfilled (or waived where applicable) to the satisfaction of Subscriber A under the Subscription Agreement A (“ Tranche 1 Conditions Precedent ”):

(a) the Company having obtained all necessary consents, authorisations and approvals in relation to the issue of the Tranche 1 Warrants, the relevant Warrants Transaction Documents and the transactions contemplated thereunder and such consents, authorisations and approvals shall remain in full force and effect and shall not have been revoked or amended in a manner not acceptable to Subscriber A;
(b) the Stock Exchange having approved the issue of the Tranche 1 Warrants;
(c) the Stock Exchange having granted or agreeing to grant a listing of and permission to deal in the Tranche 1 Warrant Shares to be issued upon an exercise of the subscription rights attaching to the Tranche 1 Warrants (and such listing and permission not being subsequently revoked);
(d) the relevant Warrants Transaction Documents relating to the subscription of Tranche 1 Warrants and transactions contemplated thereunder and the Specific Mandate having been approved by the Shareholders in accordance with the GEM Listing Rules and the articles of association of the Company;
(e) at the date of completion, (i) the warranties under the Subscription Agreement A remaining true, accurate and not misleading at, and as if made on, such date; and (ii) the Company shall have performed all of its obligations under the relevant Warrants Transaction Documents expressed to be performed on or before such date, and no breach of any provision of any relevant Warrants Transaction Documents by the Company; and

— 11 —

LETTER FROM THE BOARD

(f) all issued Shares remaining listed on, and not having been withdrawn from, the Stock Exchange and save for any temporary suspension of not more than ten consecutive trading days or any suspension pending clearance of any announcement or in connection with any announcement required to be made under the GEM Listing Rules (in each case, excluding any suspension in the trading of the Shares on the Stock Exchange pending the clearance or release of any announcement or circular relating to the transactions contemplated under the Subscription Agreement A), the Stock Exchange not having indicated that it will object to the listing status of the Shares and there being no events or circumstances existing based on which the Stock Exchange could reasonably be expected to raise such objection or that will adversely affect the listing status of the Shares.

Tranche 2 Warrants and Subscriber B Warrants

Completion of the issue of Tranche 2 Warrants and Subscriber B Warrants are conditional upon the following conditions precedent being fulfilled (or waived where applicable) to the satisfaction of the relevant Subscriber (“ Tranche 2 and Subscriber B Conditions Precedent ”, together with the Tranche 1 Conditions Precedent, the “ Conditions Precedent ”):

(a) the Company and/or its subsidiaries having executed 25 Head Contracts;
(b) the Company having obtained all necessary consents, authorisations and approvals in relation to the issue of the relevant Warrants, the relevant Warrants Transaction Documents and the transactions contemplated thereunder and such consents, authorisations and approvals shall remain in full force and effect and shall not have been revoked or amended in a manner not acceptable to the relevant Subscribers;
(c) the Stock Exchange having approved the issue of the relevant Warrants;
(d) the Stock Exchange having granted or agreeing to grant a listing of and permission to deal in the relevant Warrant Shares to be issued upon an exercise of the subscription rights attaching to the relevant Warrants (and such listing and permission not being subsequently revoked);
(e) the relevant Warrants Transaction Documents relating to the subscription of the relevant Warrants and transactions contemplated thereunder and the Specific Mandate having been approved by the Shareholders in accordance with the GEM Listing Rules and the articles of association of the Company;
(f) at the date of the relevant completion, (i) the warranties under the relevant Subscription Agreement remaining true, accurate and not misleading at, and as if made on, such date; and (ii) the Company shall have performed all of its obligations under the relevant Warrants Transaction Documents expressed to be performed on or before such date, and no breach of any provision of any relevant Warrants Transaction Documents by the Company; and

— 12 —

LETTER FROM THE BOARD

(g) all issued Shares remaining listed on, and not having been withdrawn from, the Stock Exchange and save for any temporary suspension of not more than ten consecutive trading days or any suspension pending clearance of any announcement or in connection with any announcement required to be made under the GEM Listing Rules (in each case, excluding any suspension in the trading of the Shares on the Stock Exchange pending the clearance or release of any announcement or circular relating to the transactions contemplated under the relevant Subscription Agreement), the Stock Exchange not having indicated that it will object to the listing status of the Shares and there being no events or circumstances existing based on which the Stock Exchange could reasonably be expected to raise such objection or that will adversely affect the listing status of the Shares.

The Company shall use its best endeavours to procure and ensure due fulfilment of each and all of the Conditions Precedent. The relevant Subscriber may, to such extent as it thinks fit and is legally entitled to do so, at any time waive in writing any of the Conditions Precedent on such terms as they may decide (save for the paragraphs (a), (b) and (c) above of the Tranche 1 Conditions Precedent, and the paragraphs (b), (c) and (d) above of the Tranche 2 and Subscriber B Conditions Precedent, respectively, which cannot be waived). If any of the Conditions Precedent referred to above is not fulfilled (or waived, as the case may be) at or before the Long Stop Date, unless otherwise agreed between the Company and the relevant Subscriber in writing, the relevant Subscription Agreement, together with any transaction contemplated hereunder, shall terminate and be of no force and effect and no parties to such relevant Subscription Agreement shall have any liability to the other party, save in respect of any antecedent breaches.

Save for the condition precedent of “the Company and/or its subsidiaries having executed 25 Head Contracts” in paragraph (a) above of the Tranche 2 and Subscriber B Conditions Precedent, the Tranche 1 Conditions Precedent and Tranche 2 and Subscriber B Conditions Precedent are mirrored.

The three-tranche structure was initially proposed as (i) the Company does not have sufficient share capital to issue all of the Warrants Shares; and (ii) the Company wants to restrict Gaw Capital from exiting the investment before the full execution of the 25 Head Contracts. Whereas the determination of executing 25 Head Contracts being one of the conditions precedent was arrived after arm’s length negotiations between the Company and Gaw Capital. Pursuant to the Supplemental Agreements, the Tranche 2 Warrants and Subscriber B Warrants shall not proceed.

The Warrant Shares

Assuming the subscription rights attaching to the Subscriber A Warrants are exercised in full, no more than 153,000,000 Subscriber A Warrant Shares will be allotted and issued under the Specific Mandate, which represent

(i) approximately 21.81% of the total issued share capital of the Company as at the Latest Practicable Date; and
(ii) approximately 18.62% of the total issued share capital of the Company as enlarged by the allotment and issue of the Subscriber A Warrant Shares in full (assuming there will be no change in the issued share capital of the Company between the Latest Practicable Date and immediately prior to the allotment and issue of the Subscriber A Warrant Shares).

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LETTER FROM THE BOARD

The Subscriber A Warrant Shares have (i) an aggregate nominal value of approximately HK$1,530,000, and (ii) a market value of HK$140.8 million, based on the closing price of HK$0.92 per Share on the Last Trading Day.

Assuming the subscription rights attaching to the Subscriber B Warrants are exercised in full, no more than 27,000,000 Subscriber B Warrant Shares will be allotted and issued under the Specific Mandate, which represent

(i) approximately 3.85% of the total issued share capital of the Company as at the Latest Practicable Date; and
(ii) approximately 3.29% of the total issued share capital of the Company as enlarged by the allotment and issue of the Subscriber B Warrant Shares in full (assuming there will be no change in the issued share capital of the Company between the Latest Practicable Date and immediately prior to the allotment and issue of the Subscriber B Warrant Shares).

The Subscriber B Warrant Shares have (i) an aggregate nominal value of approximately HK$270,000, and (ii) a market value of HK$24.8 million, based on the closing price of HK$0.92 per Share on the Last Trading Day.

Pursuant to the Supplemental Agreements, the Tranche 2 Warrants and Subscriber B Warrants shall not proceed, assuming the subscription rights attaching to the Tranche 1 Warrants are exercised in full, no more than 120,000,000 Tranche 1 Warrant Shares will be allotted and issued under the Specific Mandate, which represent

(i) approximately 17.10% of the total issued share capital of the Company as at the Latest Practicable Date; and
(ii) approximately 14.60% of the total issued share capital of the Company as enlarged by the allotment and issue of the Tranche 1 Warrant Shares in full (assuming there will be no change in the issued share capital of the Company between the Latest Practicable Date and immediately prior to the allotment and issue of the Tranche 1 Warrant Shares).

The Tranche 1 Warrant Shares have (i) an aggregate nominal value of approximately HK$1,200,000, and (ii) a market value of HK$110.4 million, based on the closing price of HK$0.92 per Share on the Last Trading Day.

The Initial Warrant Subscription Price

The initial Warrant Subscription Price of HK$0.50 represents:

(a) a discount of approximately 35.76% to the prior 30 trading days’ volume-weighted average price upon the signing of the Subscription Agreements;
(b) a discount of approximately 45.65% to the closing price of HK$0.92 per Share as quoted on the Stock Exchange on the Last Trading Day; and

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LETTER FROM THE BOARD

(c) a discount of approximately 44.44% to the average closing price of approximately HK$0.90 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to the date immediately preceding the Last Trading Day.

The initial Warrant Subscription Price above was determined after arm’s length negotiations between the Company and the Subscribers with reference to the prevailing market price of the Shares, current market sentiment, the Group’s financial position, the historical Share price, liquidity of the Shares in the market and the market conditions. The Directors (including all independent non-executive Directors) consider that the initial Warrant Subscription Price is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

When determining the Warrant Subscription Price, the Directors have reviewed the closing prices and the trading volume of the Shares during the period from 1 October 2021 to 30 March 2022 being the date of the Subscription Agreements (the “ Review Period ”). The Directors consider that the Review Period covering 6 months prior to the date of the Subscription Agreements represents a reasonable and sufficient period to provide a general and fair overview of the recent trend of the Share price free from the influence of, if any short term market volatility, when assessing the Warrant Subscription Price.

The following chart illustrates the trend of the closing prices of the Shares during the Review Period:

==> picture [417 x 273] intentionally omitted <==

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

Closing price of the Shares during the Review Period
1.2
1
0.8
0.6
0.4
0.2
0
4 October 4 November 4 December 4 January 4 February 4 March
2021 2021 2021 2022 2022 2022
Date
Historical Closing Price Warrant Subscription Price
HK$
----- End of picture text -----

Source: the website of the Stock Exchange

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LETTER FROM THE BOARD

The following table sets out (a) the average daily trading volume of the Shares during the Review Period; and (b) the percentage of the average daily trading volume of the Shares in proportion to the total number of issued Shares as at the end of the month during the Review Period:

				Percentage of
				average daily
				trading
				volume to
				total number
			Average daily	of issued
	Total trading		trading	Shares as at
	volume of the	Number of	volume of the	the end of the
Month	Shares	trading days	Shares	month
	Number of		Number of
	Shares		Shares	%
October	1,588,000	18	88,222	0.01%
November	760,000	22	34,545	0.01%
December	916,001	22	41,636	0.01%
January	1,244,000	21	59,238	0.01%
February	544,000	17	32,000	0.01%
March (up to 30 March, 2022)	3,190,000	22	145,000	0.02%

Source: the website of the Stock Exchange

Notwithstanding that the Warrant Subscription Price represents a discount to the closing prices of the Shares as disclosed above, the Directors consider that the Warrant Subscription Price and the terms of the Subscription Agreements are fair and reasonable based on the current market conditions and that the Subscription is in the interests of the Company and the Shareholders as a whole for the reasons set forth below:

(a) having considered (i) the general downward trend of the closing price of the Shares during the Review Period (ranged from the lowest of HK$0.69 per Share on 14 March 2022 to the highest of HK$1.02 per Share on 4 October 2021); (ii) the relatively low liquidity of the Shares during the Review Period (the monthly average daily trading volume in proportion to the total number of issued Shares ranged from approximately 0.01% to 0.02%); and
(b) due to the reasons disclosed in the paragraph headed “Information on the Parties and the Reasons and the Benefits of Entering into the Subscription Agreements”, introducing Gaw Capital as a strategic investor would further expand the Company’s EV-charging business due to Gaw Capital’s resources.

The Company has engaged a valuer, AP Appraisal Limited (the “ Valuer ”), to assess the fair value of the Warrants by using binomial option pricing model based on (i) the terms of the Warrants, in particular, the Warrant Subscription Price and 5-year exercise period, (ii) the expected stock price volatility of the Company of approximately 119.16%, (iii) the risk free rate of 1.44% and (iv) the dividend yield of 0.00%. According to the valuation, the unit Warrant value was HK$0.47 and the total value of the Warrants is approximately HK$84.8 million.

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LETTER FROM THE BOARD

The Valuer, while assessing the fair value of the Warrants has adopted the following major assumptions:

(a) there will be no major changes in existing political, legal, fiscal or economic conditions in the country or district where the business is in operation;
(b) there will be no major changes in the current taxation law in the areas in which the Company carries on its business, that the rate of tax payable remains unchanged and that all applicable laws and regulations will be complied with;
(c) the inflation, interest rates and currency exchange rate will not differ materially from those presently prevailing;
(d) the Company will retain its key management and technical personnel to maintain its ongoing operation;
(e) the Company and/or its subsidiaries have executed 25 Head Contracts that are for engaging the services of the Cornerstone Contracting Party as contractor for the installation works of EV charging-enabling infrastructure and associated installations in car parks approved by the Environmental Protection Department of the Government of Hong Kong to be eligible for subsidy under the “EV-charging at Home Subsidy Scheme” established by the Government of Hong Kong;
(f) the Company will remain free from claims and litigation against the business or its customers that will have a material impact on value;
(g) the Company are unaffected by any statutory notice and the operation of the business gives, or will give, no rise to a contravention of any statutory requirements;
(h) the businesses are not subject to any unusual or onerous restrictions or encumbrances;
(i) the potential bad debt of the Company will not materially affect their business operations;
(j) the financial projections in respect of the Company have been prepared on a reasonable basis, reflecting estimates that have been arrived at after due and careful consideration by the management of the Company and the underlying companies; and
(k) economic condition will not deviate significantly from economic forecasts.

Pursuant to the Supplemental Agreements, the Valuer has assessed the fair value of the Tranche 1 Warrants by using binomial option pricing model based on (i) the terms of the Tranche 1 Warrants, in particular, the Warrant Subscription Price and 5-year exercise period, (ii) the expected stock price volatility of the Company of approximately 117.63%, (iii) the risk free rate of 2.59% and (iv) the dividend yield of 0.00%. According to the valuation, the unit Tranche 1 Warrant value was HK$0.463 and the total value of the Tranche 1 Warrants is approximately HK$55.6 million. The difference in the unit Tranche 1 Warrant value being HK$0.463 and the unit Warrant Value being

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LETTER FROM THE BOARD

HK$0.470 was mainly attributable to the different valuation dates. The unit Warrant Value was valued as at 30 March 2022, being the date of the Subscription Agreements, while the unit Tranche 1 Warrant value was valued as at 24 May 2022, being the date of the Supplemental Agreements, therefore causing a difference in the risk free rate; expected stock price volatility; and stock price.

Pursuant to the Supplemental Agreements, the Tranche 2 Warrants and Subscriber B Warrants shall not proceed, hence the Valuer, while assessing the fair value of the Tranche 1 Warrants has adopted the same major exceptions as the major assumptions used for assessing the fair value of the Warrants save for the following:

the Company and/or its subsidiaries have executed 25 Head Contracts that are for engaging the services of the Cornerstone Contracting Party as contractor for the installation works of EV charging-enabling infrastructure and associated installations in car parks approved by the Environmental Protection Department of the Government of Hong Kong to be eligible for subsidy under the “EV-charging at Home Subsidy Scheme” established by the Government of Hong Kong;

as the above major assumption is only applicable to the Tranche 2 Warrants and Subscriber B Warrants.

Further, the monetary value of the Warrants was not the sole factor considered by the Board. The issue price of the Warrants (which is nil) and the Warrant Subscription Price were determined after arm’s length negotiations between the Company and the Subscribers with reference to the prevailing market price of the Shares, current market sentiment, the Group’s financial position, the historical Share price, liquidity of the Shares in the market and the market conditions. The following factors have also been taken into account:

the benefits of introducing Gaw Capital, being a reputable institutional investor, as strategic investor of the Company and strengthening the investor portfolio of the Company, which may in turn bring a positive image to the Group and confidence of the public in the long run;
the introduction of Gaw Capital as strategic investor shall empower the Group’s access to their global resources in business development and financing;
the investment from Gaw Capital will provide confidence to other renowned investment fund with focus in the real estate industry and would possibly be an appropriate mean of fund raising for the Company in the future, which is essential for the Company’s expansion in the EV Charging Business;
the Warrants would align the interest of Gaw Capital (as holder of the Warrants) with that of the Company and its Shareholders and establish a cooperative relationship between the Company and Gaw Capital. The Warrants will serve as an incentive for Gaw Capital to promote the value of the Company by introducing and procuring business opportunities of higher quality and financial return to the Company in the course of the exercise period of the Warrants in the future;

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LETTER FROM THE BOARD

the grant of the Green Loan Facility under the Green Facility Agreement and the issue of Warrants are a packaged deal, the Group can enjoy the availability of financial resources resulting from the Green Loan Facility to proceed with its new or existing Green Project(s);
ESG investment has become a key investment theme recently. By following the Green Financing Framework, and endorsed by Gaw Capital, the Company can establish itself as a green investment and attract other related ESG-themed investment fund;
in addition to the financial resources received by the Company under the Green Loan Facility, with Gaw Capital taking a stake in the Company, the Company may install EV charging-enabling infrastructure for carparks managed and controlled by Gaw Capital;
the willingness of the Subscribers to subscribe for the Warrants despite the current challenging market conditions;
although no proceed will be raised from the initial subscription of the Tranche 1 Warrants, the Company will receive a large sum of money in the future if the subscription rights to the Tranche 1 Warrants are exercised in full (i.e. if the Tranche 1 Warrants are fully exercised, the Group will have an additional amount of working capital of HK$60.0 million), which can strengthen the capital base of the Company and strengthen the Company’s financial position to better equip the Group with financial flexibility and enable the Group to further develop its business (including opportunities arising from the cooperation with Gaw Capital and the EHSS);
the Warrants is not expected to have liquid market as they are unlisted Warrants;
the issue of the Warrants does not have any immediate dilution impact on the shareholdings of the existing Shareholders;
with the loan facility from Gaw Capital branded as a green loan under the Green Facility Agreement, it would help promote the Company’s awareness and better corporate perception towards environmental protection, one of the fundamental priorities in the investment considerations of asset managers and global investors; and
despite the current challenging market conditions, i.e. the Covid-19 pandemic and the Company having difficulties in seeking financing, the subscription by subscriber A shows the confidence of a reputable institutional investor in the Company’s EV charging business prospects, which would positively impact the Company’s brand image and attract other reputable institutional investors.

The Directors are of the view that the above non-monetary value derived from the Subscriptions far exceed the monetary value of the Warrants.

The Directors (including all independent non-executive Directors), after considering the above factors, and the importance of introducing Gaw Capital as a strategic investor significantly outweighs the dilution impact and terms and conditions compromised by the Company (i.e. issuing Warrants at nil consideration). Hence the Directors (including all independent non-executive Directors) are of the view that the Subscriptions are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Adjustments of the Warrant Subscription Price

The Warrant Subscription Price will be subject to adjustments in the following events:

(a) Consolidation, subdivision or re-classification: If and whenever there shall be any consolidation, subdivision or re-classification, the Warrant Subscription Price in force immediately prior thereto shall be adjusted by multiplying it by the following fraction:

A

where:

A = the number of issued Shares immediately before such alteration; and
B = the number of issued Shares immediately after such alteration.

Each such adjustment shall be effective from the close of business on the Business Day immediately preceding the date on which the relevant consolidation, subdivision or re-classification (as the case may be) becomes effective, provided that , where the subscription date in respect of a particular exercise of any of the Subscription Rights attaching to a Warrant shall fall on or before the said Business Day but the Company shall not by the close of business on the said Business Day have allotted the relative Shares in accordance with its obligations hereunder, such adjustment shall, for the purpose of determining the number of Shares to be allotted to the Warrantholder exercising the said subscription rights, be deemed to have become effective before such subscription date.

(b) Capitalisation of profits or reserves:
(i) If and whenever the Company shall issue (other than pursuant to a scrip dividend scheme in lieu of a cash dividend) any Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund), the Warrant Subscription Price in force immediately prior to such issue shall be adjusted by multiplying it by the following fraction:

C

C + D

where:

C = the aggregate amount of the share capital of the Shares in issue immediately before such issue; and
D = the aggregate amount of the ordinary capital issued in connection with and as a result of such capitalisation,

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LETTER FROM THE BOARD

provided that if the relevant issue of Shares is made as part of an arrangement involving a reduction of capital, the Warrant Subscription Price shall be adjusted in such manner as an approved merchant bank or the Auditors (as the case may be) shall certify to be appropriate, having regard to the relative interests of the persons affected thereby taken as a whole and such other matters as the approved merchant bank or the auditors (as the case may be) shall consider relevant.

Each such adjustment shall be effective (if appropriate retroactively) from the commencement of the day next following the record date for such issue.

(ii) If and whenever the Company shall issue any Shares pursuant to a scrip dividend scheme in lieu of a cash dividend where an amount of the share capital of the Shares so issued is capitalised and the market value of such Shares in aggregate is more than 120% of the amount of dividend which holders of Shares could elect to or would otherwise receive in cash (for which purpose the market value of a Share shall mean the average of the closing prices on the Stock Exchange for the five (5) consecutive dealing days on each of which there is a closing price ending on the last such dealing day immediately preceding the day on or as of which holders of Shares may, pursuant to such scrip dividend scheme, elect to receive or (as the case may be) not to receive the relevant dividend in cash), the Warrant Subscription Price in force immediately prior to such issue shall be adjusted by multiplying it by the following fraction:

A+B A+C

where:

A = the aggregate nominal amount of the issued Shares immediately before such issue:
B = the aggregate nominal amount of Shares issued pursuant to the scrip dividend scheme multiplied by a fraction of which (i) the numerator is the amount of the dividend which holders of Shares could elect to or would otherwise receive in cash and (ii) the denominator is the market value of the Shares issued in aggregate pursuant to the scrip dividend scheme; and
C = the aggregate nominal amount of Shares issued pursuant to the scrip dividend scheme.

or by making such other adjustment as an approved merchant bank or the auditors (as the case may be) shall certify to be fair and reasonable.

Such adjustment shall become effective on the date of issue of such Shares or if a record date is fixed therefor, immediately after such record date.

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LETTER FROM THE BOARD

(c) Distributions: If and whenever the Company shall make (whether on a reduction of capital or otherwise) any capital distribution to holders of Shares (in their capacity as such) (including, but not limited to, such a distribution by way of cash dividend (other than pursuant to a scrip dividend scheme), or such a distribution pursuant to a reduction or redemption of share capital, share premium account or capital redemption reserve fund or otherwise) or shall grant to such holders rights to acquire for cash assets of the Company or any of its subsidiaries, the Warrant Subscription Price in force immediately prior to such capital distribution or grant shall be adjusted by multiplying it by the following fraction:

==> picture [30 x 21] intentionally omitted <==

where:

E = the closing price per Share on the Stock Exchange on the dealing day immediately preceding the date on which the capital distribution or, as the case may be, the grant is announced (whether or not such capital distribution or grant is subject to the approval of the holders of Shares or other persons) or (if there is no such announcement) immediately preceding the date on which the Share is traded ex such capital distribution or, as the case may be, the grant (or, where there is no closing price on such dealing day, the closing price on the dealing day on which there was a closing price immediately preceding the relevant date); and
F = the portion of the fair market value attributable to one Share with such amount calculated by dividing the fair market value on the day of such announcement or (as the case may require) the day immediately preceding the date on which the Share is traded ex such capital distribution or, as the case may be, the grant, as determined in good faith by an approved merchant bank or the Auditors (as the case may be), of such capital distribution or of such rights by the number of Shares participating in such capital distribution or, as the case may be, in the grant of such rights,

provided that:

(i) if in the opinion of the relevant approved merchant bank or the auditors (as the case may be), the use of the fair market value as aforesaid produces a result which, having regard to the relative interests of the persons affected thereof taken as a whole, is significantly inequitable, it may instead determine (and in such event the above formula shall be construed as if F meant) the portion of the said closing price which should, in its opinion, properly be attributed to the value of the relevant capital distribution or rights in question; and
(ii) the provisions of this paragraph (c) shall not apply in relation to the issue of Shares credited as fully paid or partly paid out of profits or reserves and issued in lieu of a cash dividend (i.e. the scrip dividend scheme).

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LETTER FROM THE BOARD

Each such adjustment shall be effective (if appropriate retroactively) from the commencement of the day next following the Record Date for the relevant capital distribution or grant.

Ranking of the Warrant Shares

The Warrant 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 Warrant Shares.

Completion

Completion of the issue of Tranche 1 Warrants shall take place on the second Business Day following the date on which the Tranche 1 Conditions Precedent are fulfilled (or waived, as the case may be) or such other date as may be agreed between the Company and Subscriber A.

Completion of the issue of Tranche 2 Warrants and the Subscriber B Warrants shall take place on the earlier of (i) the second Business Day following the date on which the Tranche 2 and Subscriber B Conditions Precedent are fulfilled (or waived, as the case may be) and (ii) 30 March 2023, being twelve (12) months from the date of the relevant Subscription Agreement, or such other date as may be agreed between the Company and the relevant Subscriber.

The Subscribers may, to such extent as it thinks fit and is legally entitled to do so, at any time waive in writing any of the Conditions Precedent on such terms it may decide save for the Tranche 1 Conditions Precedent (a), (b) and (c) and the Tranche 2 and Subscriber B Conditions Precedent (b), (c) and (d) set out above.

The Company may agree other completion dates of the Warrants and/or the Long Stop Date if the Conditions Precedent are not completed or satisfied within the time span. If all the Conditions Precedent are not completed on or before the Long Stop Date, the Company and the Subscribers may delay the Long Stop Date subject to the terms and conditions set out in the Subscription Agreements.

Key Undertakings by the Company

The Company undertakes to the Subscribers, in each of their respective Subscription Agreement, that during the period between the date of the Subscription Agreements until the earlier of (i) the expiry of the Subscription Period of the relevant Warrants; and (ii) all of the relevant Warrants being transferred to a third party independent of the Subscribers, unless the consent is obtained from the relevant Subscriber, it shall procure that the Board shall at all times have authority, and shall keep available sufficient ordinary share capital and authorised share capital, to grant the relevant Warrants on the relevant respective date of completion and to issue the relevant Warrant Shares on exercise of any subscription right attaching to the relevant Warrants, in each case, in accordance with the terms of the relevant Subscription Agreement, the warrants instrument and the applicable regulations (including but not limited to the minimum amount of issued Shares as at the date of issue of the Warrants under Rule 21.02(1) of the GEM Listing Rules) and free of any pre-emption rights.

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LETTER FROM THE BOARD

INFORMATION ON THE PARTIES AND THE REASONS FOR AND THE BENEFITS OF ENTERING INTO THE SUBSCRIPTION AGREEMENTS

The Company is incorporated in the Cayman Islands with limited liability and its shares are listed on GEM of the Stock Exchange. The Group is principally engaged in the provision of printing, typesetting and translation services and electric vehicle charging business in Hong Kong.

The Lender, Subscriber A and Subscriber B are managed and controlled by Gaw Capital and are owned by a consortium led by GAW GROWTH EQUITY FUND I, LPD (“ Growth Fund ”) and Gaw Capital. The Growth Fund is a fund principally engaged in long term investment in private equity markets in the Asia Pacific region. Gaw Capital is a private equity fund management company focusing on real estate and private equity markets in Asia Pacific and other high barrier-to-entry markets globally. Gaw Capital’s investments span the entire spectrum of real estate sectors, including carparks, residential development, offices, retail malls, hospitality, logistics warehouses and Internet data centre projects.

In consideration of the Lender agreeing to enter into the Green Facility Agreement with the Company, the Company has agreed to issue the Warrants to the Subscribers under the Subscription Agreements. The Directors considered that on the basis that (i) the link up with Gaw Capital will provide the Group the opportunity to access into global resources and financing and to supply and install EV charging-enabling infrastructure for carparks managed and controlled by Gaw Capital; (ii) the strengthening of shareholder base through Gaw Capital as institutional investor holding an equity interest in the Company from the exercise of the Warrants as well as considering (iii) the issue of the Warrants will not cause immediate dilution to the shareholdings of existing Shareholders, the issue of the Warrants will be beneficial to the Company.

The Board has considered the following factors and is of the view that the Green Facility Agreement and the Subscriptions are a win-win situation which align with the interest of Gaw Capital with that of the Company:

i. Since the Green Facility Agreement and the Warrants are a packaged deal, the Green Facility Agreement entered into between Gaw Capital and the Company would enable Gaw Capital to enjoy an interest income at a fair rate. At the same time, through the Green Facility Agreement, the Company would sooth the tight cashflow situation for conducting the Head Contracts and enjoy the benefits and opportunities brought by the EV-charging at Home Subsidy Scheme (“ EHSS ”).

Whereas, a Head Contract refers to a contract for engaging the services of the Company as contractor for the installation works of EV charging-enabling infrastructure (“ EVCEI ”) in car parks approved by the Environmental Protection Department (“ EPD ”) to be eligible for the subsidy under the EHSS. For a typical Head Contract, the installation will be funded by the Company at its own costs initially and subsequently the Hong Kong Government will reimburse the contract sum in accordance to the tender to the Company. The Head Contract mentioned is awarded through tender, with Gaw Capital providing the loan under the Green Facility Agreement, the Company will have sufficient capital upfront to bid tenders and carry out operations in relation to EHSS projects.

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LETTER FROM THE BOARD

ii. The Head Contracts to be performed by the Company may be situated in the car parks controlled or managed by Gaw Capital. Upon completion of such contracts, it is anticipated to increase the attractiveness of those carparks with the increasing prevalence of EVs in Hong Kong, which would in turn increase Gaw Capital’s revenue stream generated from those carparks.
iii. The loan under the Green Facility Agreement was the only debt financing the Company was able to acquire after numerous talks with other financial institutions. That being said, the Company is of the view that the interest rate of 10% per annum and subsequently increased to 20% after 15 months from the date of Supplemental Agreement (3) was acceptable by the Company as the return from capturing the exciting growth opportunities brought by EHSS far outweighs the current interest rate of the loan, hence the Company believes that the interest rate of the loan under the Green Facility Agreement (as supplemented by Supplemental Agreement (3)) shall be the best terms available in the meantime and is fair and reasonable.
iv. The Warrants provide Gaw Capital with the options to become a strategic investor of the Company which allows Gaw Capital to enjoy the benefits brought by the Company’s future expansion. In addition, the Company will receive a large sum of money in the future if the Warrants are exercised in full, which can strengthen the capital base of the Company and strengthen the Company’s financial position to better equip the Group with financial flexibility and enable the Group to further develop its business.

As discussed above, apart from the Head Contracts to be performed by the Company which have a high chance to be cooperating with Gaw Capital, as disclosed in the voluntary announcement published by the Company on 9 September 2021, an indirectly wholly-owned subsidiary of the Company (the “ Subsidiary ”) had entered into multiple exclusive license agreements (the “ Exclusive License Agreements ”) with 民坊 People’s Place. 民坊 People’s Place was established by Gaw Capital and officially operates 29 assets and facilities near the public estates. Under the Exclusive License Agreements, the Subsidiary has been granted a five-year exclusive right mainly for the development, design and installation of the EV charging facilities in the car parks and provision of EV charging and support services, installation, and repair and maintenance of EV charging equipment for the landlords and/or tenants of the parking spaces.

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LETTER FROM THE BOARD

Set out below are the details of the existing car parks in relation to the Exclusive License Agreements.

		Number of
Car parks	Location	Parking Lots
Ming Tak Car Park（明德商場）	10 Pui Shing Lane Tseung Kwan O	300
Yau Oi Car Park（友愛停車場）	1 Yau Oi Rd, Tuen Mun, N.T.	686
Yung Shing Car Park（雍盛商場）	22 Wah Ming Road, Fanling, N.T.	262
On Ting Car Park（安定停車場）	2A Tuen Mun Heung Sze Wui Road,	485
	Tuen Mun, N.T.
Kam Tai Car Park（錦泰商場）	31 Ning Tai Rd, Ma On Shan, N.T.	718
Kwai Shing East Car Park（葵盛東商場）63 Kwai Shing Circuit, Kwai Chung,		468
	N.T.
Shan King Car Park（山景商場）	1 Ming Kum Road Tuen Mun, N.T.	541

The abovementioned car parks are not eligible for the subsidy under EHSS, as Gaw Capital owns more than 40% interest of the car parks which is in conflict with one of the requirements of the EHSS eligibility, therefore GAW Capital could not apply for EHSS for the abovementioned car parks. Pursuant to the Exclusive License Agreements, the Company invested in the capital costs of the EV charging infrastructure of the abovementioned car parks and acted as the asset-owner of the invested EVCEI, the Company then earns recurring subscription income for the period specified in the Exclusive License Agreements. The Exclusive License Agreements set forth a typical business model of the Company where the Company invests with its own resources, EV charging infrastructure and EV chargers in the target car parks to earn the recurring subscription income for the period specified in the executed operating agreement with the respective owners of car parks for payback and profit.

The contracts under EHSS (i.e. a Head Contract) differs from the subscription income business model above, where the Company acts as the main contractor of the EHSS Project whose role entails project management, coordination and implement of the site works to be provided by subcontractors according to its past rich experience of EV-charging related projects. A contract under EHSS (i.e. a Head Contract) is a construction contract for engineering works engaging the services of the Company as contractor for the installation works of EVCEI in car parks only. Under a Head Contract, the Company is not subject to any recurring subscription income.

The Company intends to use the proceeds of the Loan under the Green Loan Facility to finance payments of the contract price for the sub-contract agreement(s) to be entered into by a Cornerstone Contracting Party as contractor and the sub-contractor for the installation of EVCEI and associated installations for the car parks approved by the EPD of the Government of Hong Kong under the EHSS established by the Government of Hong Kong (i.e. entering into a Head Contract). Under a typical Head Contract, the Company undergoes the tendering process in the website of EHSS (https://www.evhomecharging.gov.hk/tc/). The Company first decides whether to submit a tender after a preliminary evaluation of the target car park. After determining the expected total costs of installing the EVCEI in the target car park, the Company would then submit the tender on the EHSS website. If the Company is awarded the tender, the Company would sign

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LETTER FROM THE BOARD

an agreement with the incorporation of owners of the target car park to set out the terms of the Company’s services. Upon signing the agreement, the Company would be subject to a down payment which is approximately at 40% of the total costs of installing the EVCEI in the target car park (i.e. the amount specified in the tender submitted). The Company would then draw down from the Green Loan Facility the total costs required for the entire Head Contract upon signing the agreement to pay for the down payment and other costs in relation to the Head Contract.

The amount of the Green Loan Facility, being HKD 150 million, was set after arm’s length negotiations. During the negotiations with Gaw Capital, it was initially anticipated that the costs of a typical Head Contract would be approximately HKD 6.0 million in average, and that the Company would be able to win tenders of approximately 25 car parks approved by the EPD under the EHSS (i.e. 25 Head Contracts). In return of the Green Loan Facility as well as the Exclusive License Agreements, the Company has agreed to issue the Tranche 1 Warrants. The number of the Tranche 1 Warrants were arrived after arm’s length negotiations, and was set at 120,000,000 Warrants so that the Company is entitled to the Green Loan Facility at the interest rate of 10% for the first 15 months and interest rate of 20% for the 3 months thereafter, which would allow the Company to bid tenders under EHSS as discussed above.

Given that the Green Loan Facility is the only available financing option of the same sort in the mean time, the Company is eager to capture the opportunities under EHSS, and it is anticipated that the EHSS segment will represent a significant revenue stream to the Company. The Directors are of the view that the terms and conditions of the packaged deal of the Green Facility Agreement and the Subscription is in the best interests of the Company and its shareholders.

In view of the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Subscription Agreements and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

SUPPLEMENTAL AGREEMENT (1)

Pursuant to Subscription Agreement A, and as disclosed above, the Company shall issue an aggregate of 153,000,000 Warrants comprising 120,000,000 Warrants (Tranche 1 Warrants) and 33,000,000 Warrants (Tranche 2 Warrants) to Steady Flake Limited (Subscriber A).

On 24 May 2022 (after trading hours), the Company as issuer entered into Supplemental Agreement (1) with Subscriber A as subscriber pursuant to which the parties have agreed, amongst other things, that the obligations of the parties for the issue and subscription of 33,000,000 Warrants (Tranche 2 Warrants) shall be suspended indefinitely and the issue and subscription of 33,000,000 Warrants (Tranche 2 Warrants) will not proceed.

Save and except the above amendments, and for the avoidance of doubt, all terms and conditions contained in Subscription Agreement A in respect of the issue and subscription of 120,000,000 Warrants (Tranche 1 Warrants) remain unchanged in all material aspects and in full force and effect.

— 27 —

LETTER FROM THE BOARD

SUPPLEMENTAL AGREEMENT (2)

Pursuant to Subscription Agreement B, and as disclosed above, the Company shall issue an aggregate of 27,000,000 Warrants (Subscriber B Warrants) to Seed Lock Limited (Subscriber B).

On 24 May 2022 (after trading hours), the Company as issuer entered into Supplemental Agreement (2) with Subscriber B as subscriber pursuant to which the parties have agreed, amongst other things, that the obligations of the parties for the issue and subscription of 27,000,000 Warrants (Subscriber B Warrants) shall be suspended indefinitely and the issue and subscription of 27,000,000 Warrants (Subscriber B Warrants) will not proceed.

The Revised Warrant Shares

In view of complying with GEM Listing Rules 21.02(1), the Company would only issue and allot the Tranche 1 Warrants, and the Company would not proceed with Tranche 2 Warrants and Subscriber B Warrants for the time being.

Assuming the subscription rights attaching to the Tranche 1 Warrants are exercised in full, no more than 120,000,000 Tranche 1 Warrant Shares will be allotted and issued under the Specific Mandate, which represent (i) approximately 17.10% of the total issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 14.60% of the total issued share capital of the Company as enlarged by the allotment and issue of the Subscriber A Warrant Shares in full (assuming there will be no change in the issued share capital of the Company between the Latest Practicable Date and immediately prior to the allotment and issue of the Subscriber A Warrant Shares).

SUPPLEMENTAL AGREEMENT (3)

On 24 May 2022 (after trading hours), the Company as borrower, Captain Source Limited, a company managed and controlled by Gaw Capital, as lender, Arranger and Green Loan Advisor, the Guarantors, and the Administrative Parties, entered into Supplemental Agreement (3) to revise, amongst other things, the term relating to the rate of interest in the Green Facility Agreement.

Pursuant to the Green Facility Agreement, and as disclosed above, the rate of interest on each Loan under the Green Loan Facility shall be 10% per annum. Under Supplemental Agreement (3), the rate of interest on each Loan under the Green Loan Facility will be raised to 20% per annum 15 months from the date of Supplemental Agreement (3).

Save and except the above amendment, all other terms and conditions contained in the Green Facility Agreement shall remain unchanged and in full force and effect.

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LETTER FROM THE BOARD

REASONS FOR ENTERING INTO SUPPLEMENTAL AGREEMENT (1), SUPPLEMENTAL AGREEMENT (2) AND SUPPLEMENTAL AGREEMENT (3)

If, the subscription rights attaching to all the 120,000,000 Warrants (Tranche 1 Warrants) are exercised in full under Subscription Agreement A, an aggregate of 120,000,000 Warrant Shares will be issued by the Company under the Specific Mandate, representing approximately 17.10% of the issued share capital of the Company as at the Latest Practicable Date. However, if, the subscription rights attaching to all the 33,000,000 Warrants (Tranche 2 Warrants) and 27,000,000 Warrants (Subscriber B Warrants) are exercised in full under the Subscription Agreements, a further 60,000,000 Warrant Shares will need to be issued by the Company under the Specific Mandate, totaling 180,000,000 Warrant Shares, representing approximately 25.65% of the issued share capital of the Company and exceeding the prescribed limit stipulated by Rule 21.02(1) of the GEM Listing Rules as at the Latest Practicable Date.

In order to address the above scenario where the proposed issue of the Tranche 2 Warrants and Subscriber B Warrants will result in non-compliance of Rule 21.02(1) of the GEM Listing Rules, the Company had various discussions with Gaw Capital and, in the end, the parties entered into Supplemental Agreement (1) and Supplemental Agreement (2) pursuant to which the parties agreed not to proceed with Tranche 2 Warrants and Subscriber B Warrants for the time being to avoid any non-compliance of Rule 21.02(1) of the GEM Listing Rules.

Given that the Green Facility Agreement and the Subscription is a packaged deal between the Company and Gaw Capital, in view of the absence of the issue of Tranche 2 Warrants and Subscriber B Warrants, and in order to satisfy Gaw Capital’s internal investment requirement, it was agreed between Gaw Capital and the Company that the rate of interest on each Loan under the Green Loan Facility will be raised to 20% per annum 15 months from the date of Supplemental Agreement (3) to compensate Gaw Capital for the decrease in the number of Warrants to be subscribed by the Subscribers from 180,000,000 Warrants to 120,000,000 Warrants.

The Company did not seek other alternative methods to the loan under the Green Facility Agreement (as supplemented by Supplemental Agreement (3)), as the Board is of the view that the increase in the rate of interest on each Loan under the Green Loan Facility from 10% per annum to 20% per annum after 15 months is reasonable due to the following:

(i) the availability period of the Loan is 18 months after the date of the Green Facility Agreement or any extended period as agreed between the Borrower and the lender, therefore any drawdown pursuant to the Green Facility Agreement is only subject to the increased rate of interest of 20% per annum for 3 months;
(ii) the main purpose of the Green Facility Agreement is to provide upfront capital for the Company to acquire tenders under the EHSS, while the Directors expect that a typical Head Contract under the EHSS takes approximately 6-9 months to complete and receive earnings from the Head Contract, therefore the Directors are of the view that the cost of interest from drawdowns from the Green Facility Agreement will not be affected significantly;
(iii) the Company expects the revenue earned from a Head Contract under EHSS would be able to cover the total costs including the increased rate of interest under Supplemental Agreement (3), creating profitability for the Company from undergoing a Head Contract under EHSS;

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LETTER FROM THE BOARD

(iv) prior to the execution of the Green Facility Agreement and the Subscription Agreements, the Directors had negotiations with various financial institutions to explore the possibilities in granting the Company debt or equity financing for operational support including funding the pipeline projects on hand as well as the upcoming project financing under EHSS. Given the Company’s business model of self-investment of EVCEI for earning a future recurring subscription fees and revenue generated from the project awarded under EHSS is subject to winning tenders, the timeline of the Company’s revenue model is too remote and uncertain for the various financial institutions, hence they didn’t proceed further. Only one financial institution was willing to provide debt financing to the Company which was at a rate of interest of 18% - 24% per annum, subject to the actual drawdown amount and loan period, at a much lesser amount than the Green Loan Facility and less favourable terms, while other financial institutions were unwilling to provide financing as the Company is currently in a loss-making stage, and they were not confident that the Company could be awarded tenders under the EHSS then.

In such harsh market conditions (the US Federal Reserve increasing its interest rates and the continuing global pandemic of Covid-19) when seeking financing, only Gaw Capital was willing to provide financing at such large amount and in favourable terms i.e. Green Loan Facility. The Directors after considering the upcoming urgency of acquiring funds to bid tenders under EHSS, and the costs and benefits of the Green Loan Facility and the Supplemental Agreement (3), believe that the deal of the Green Loan Facility and Subscription with Gaw Capital is the best available option to the Company in acquiring capital to capture the opportunities under EHSS.

The Directors are of the view that even if other financial institutions are willing to lend, assuming there is no guarantee by others, it is anticipated that the estimated interest rate for debt financing for the Group would be at least 18-24% per annum, and that the loan amount will not reach HK$150 million as provided by the Green Loan Facility. If the Group were to lend the amount of the Green Loan Facility from other financial institutions, the total interest expense is expected to be HK$40.5 million – HK$ 54.0 million. Whereas, under the Green Loan Facility, the maximum amount of interest expense is expected to be approximately HK$ 26.3 million, achieving a cost saving of approximately HK$ 14.2 million - HK$ 27.7 million. However, in reality, as the Company would only request a drawdown from the Green Loan Facility for a contract under EHSS which typically takes 6-9 months, the Company would not be subject to the maximum interest expense of approximately HK$ 26.3 million.

In consideration of Gaw Capital providing the Green Loan Facility of HK$ 150 million, which no other financial institution was willing to lend such amount to the Company, as well as the fact that Gaw Capital may provide other resources such as car parks for the Company to manage, as demonstrated by the Exclusive Licensing Agreements, the Company in return will offer the Tranche 1 Warrants to Subscriber A. Furthermore, the Company would receive proceeds in the amount of HK$ 60 million once the Tranche 1 Warrants are fully exercised, which will allow the Company to have more capital to grow its EV-charging business. Please refer to the paragraph headed “Intended Use of Proceeds” in this Circular for more details on the intended use of proceeds from the Subscription.

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LETTER FROM THE BOARD

In addition, the amount of the Green Loan Facility represents 7.5% of the total initial funding of EHSS (i.e. HK$2 billion), which was an evaluation by Gaw Capital of what the Company can achieve in terms of the market share of EHSS. The total funding of EHSS was further increased to HK$ 3.5 billion by the Hong Kong government, which means the amount of the Green Loan Facility currently represents 4.3% market share of EHSS (after the increase in the funding of EHSS). The Directors are of the view that the 7.5% market share of EHSS is a prudent evaluation by Gaw Capital as EHSS was in the preliminary stage at the time of negotiating and executing the Green Facility Agreement and the Subscription Agreements and no tenders were awarded then. On the other hand, the Directors believe that the Company is in a great position to be winning more tenders under EHSS as demonstrated by the Company being awarded the first tender under EHSS on 6 May 2022, which is the largest scale tender awarded yet, as described below. As at the Latest Practicable Date, there are 4 tenders being tabled and 3 tenders have been awarded to the contractors under EHSS. The tender awarded to the Company is the first tender under the EHSS awarded to a contractor and includes 302 parking lots which exceeds the aggregate parking lots of the other 2 tenders being 85 parking lots, making the tender awarded to the Company the largest scale tender awarded yet. The Directors are of the view that the Company’s prospects under EHSS projects are very high and will be able to exceed the market share of 7.5% under EHSS, therefore the Green Loan Facility and the Subscription and other fundraising activity would be a significant contribution to the Company to expand its business under EHSS; and

(v) with Gaw Capital as a strategic investor, it will empower the Group’s brand image as well as its access to Gaw Capital’s global resources in business development and financing.

As disclosed in the announcement of the Company dated 27 June 2022, the Company has raised capital of approximately HK$ 19.5 million through the subscription of new Shares by Golden Ponder Holdings Limited (“ Golden Ponder ”), a company incorporated in the Cayman Islands and the shares of which are listed on the Main Board of the Stock Exchange (stock code: 1783) (the “ Golden Ponder Subscription ”). The Company intends to use the proceeds from the Golden Ponder Subscription in the following manner:

Use of proceeds Particulars EV-charging business Project deployment for the projects on hand and upcoming pipeline including various available tenders Equipment and stock ordering Working capital Administrative expenses, including staff costs, and other corporate expenses etc. Total of net proceeds	Net proceeds to be used Expected timing of use of net proceeds HK$9,000,000 6-12 months HK$4,500,000 6-12 months HK$6,000,000 6-12 months HK$19,500,000

— 31 —

LETTER FROM THE BOARD

Pursuant to the circular of the Company dated 21 March 2022, the Company has entered into a placing agreement on 30 September 2021, whereas the placing agent was engaged to place up to 87,000,000 Shares at the placing price of HK$ 0.62 (the “ Placing ”). The Company was expecting approximately HK$53.9 million raised from the Placing. However, as disclosed in the announcement of the Company dated 31 May 2022, only 39,520,000 Shares were successfully placed, amounting to approximately HK$24.5 million raised by the Company and is short of approximately HK$29.4 million from what the Company was expecting from the Placing. Given that the Placing did not raise enough capital, the Company had to undergo additional fund raising activities. The Company would continue to raise capital in the future, if necessary, to expand and maximise the Company’s market share in the emerging EV-charging market in Hong Kong and the south-east Asia region. Despite receiving the proceeds from Golden Ponder, it will still be necessary for the Company to issue the Tranche 1 Warrants in order to receive the first drawdown from the Green Loan Facility, which is to primarily fund projects under EHSS. The Directors are of the view that given the Green Loan Facility are the only financing option of the same sort and the positive prospects of EHSS, the Green Loan Facility and Subscription are in the interests of the Company and Shareholders as a whole.

The Board is pleased to announce that on 6 May 2022, the Company has won the first tender under EHSS and has subsequently commenced the engineering works on 17 May 2022. The Company wishes to continue to grasp the exciting opportunities arising from EHSS through obtaining capital from the Green Facility Agreement for future tenders under EHSS. It is expected that the Group shall obtain its first drawdown from the Green Facility Agreement shortly after all conditions precedent therein is satisfied.

In view of the above, the Directors consider that the terms of each of Supplemental Agreement (1), Supplemental Agreement (2) and Supplemental Agreement (3) are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Based on the fact that, (i) the 20% interest per annum is only applicable for the final 3 months of the availability period of the Green Facility Agreement; (ii) Gaw Capital will become a strategic investor of the Company; (iii) the Company requires upfront capital to bid and win tenders under EHSS immediately in order to maximise the Company’s market share in relation to EHSS and other carparks for future recurring subscription income; and (iv) the Company will still be profitable from EHSS projects after the increase in the rate of interest, the Directors consider that the increased rate of interest is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

INTENDED USE OF PROCEEDS

Upon the exercise of the subscription rights attaching to the Tranche 1 Warrants in full, the proceeds from the Subscription are expected to be approximately HK$60,000,000. It is intended that the proceeds received by the Company will be utilized for funding electric vehicle charging installation projects and general working purposes of the Group.

The following table sets forth the details of use of the proceeds:

Use of proceeds Particulars EV-charging business Project deployment for the projects on hand and upcoming pipeline including various available tenders Equipment and stock ordering Working capital Administrative expenses, including staff costs, and other corporate expenses etc. Total of net proceeds	Net proceeds to be used Expected timing of use of net proceeds HK$49,500,000 6-12 months HK$4,500,000 6-12 months HK$6,000,000 6-12 months HK$60,000,000

APPLICATION FOR LISTING

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Tranche 1 Warrant Shares which may fall to be allotted and issued upon exercise of the subscription rights attaching to the Tranche 1 Warrants.

— 33 —

LETTER FROM THE BOARD

EFFECT OF THE ISSUE OF THE TRANCHE 1 WARRANT SHARES ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the Latest Practicable Date, the Company has 701,671,399 Shares in issue. Set out below are the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon the allotment and issue of the Tranche 1 Warrant Shares.

Shareholders Golden Fortune Global Limited_(Note 1) Glorytwin Limited(Note 2) Mr. Pan Wenyuan Mr. Wu Jianwei(Note 1) Cornerstone Wealth Holdings Limited (Note 3) Tanner Enterprises Group Limited (Note 2) Mr. Liang Zihao(Note 1) Mr. Lau Wai Yan Lawson(Note 3) Mr. Yip Shiu Hong Mr. Li Man Keung Edwin(Note 2)_ Mr. Ng Sze Chun Subscriber A – Tranche 1 Public Shareholders Total	Shareholding as at the Latest Practicable Date Number of Shares held Approximately % of Shares in issue 235,603,225 33.58% 81,000,000 11.54% 27,096,000 3.86% 24,192,000 3.45% 22,802,703 3.25% 17,392,000 2.48% 13,708,000 1.95% 7,500,000 1.07% 5,997,905 0.86% 5,912,613 0.84% 2,998,953 0.43% – – 257,468,000 36.69% 701,671,399 100.00%	Shareholding immediately upon the allotment and issue of the Tranche 1 Warrant Shares Number of Shares held Approximately % of Shares in issue 235,603,225 28.67% 81,000,000 9.86% 27,096,000 3.30% 24,192,000 2.94% 22,802,703 2.78% 17,392,000 2.12% 13,708,000 1.67% 7,500,000 0.91% 5,997,905 0.73% 5,912,613 0.72% 2,998,953 0.37% 120,000,000 14.60% 257,468,000 31.33% 821,671,399 100.00%	Shareholding immediately upon the allotment and issue of the Tranche 1 Warrant Shares Number of Shares held Approximately % of Shares in issue 235,603,225 28.67% 81,000,000 9.86% 27,096,000 3.30% 24,192,000 2.94% 22,802,703 2.78% 17,392,000 2.12% 13,708,000 1.67% 7,500,000 0.91% 5,997,905 0.73% 5,912,613 0.72% 2,998,953 0.37% 120,000,000 14.60% 257,468,000 31.33% 821,671,399 100.00%
			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 and Co-Chairman of the Board, and as to 49% by Mr. Liang Zihao, the executive Director and Co-Chairman of the Board. Mr. Wu Jianwei also directly holds 24,192,000 Shares and Mr. Liang Zihao also directly holds 13,708,000 Shares.
(2) 81,000,000 Shares are held by Glorytwin Limited which is wholly owned by Mr. Li Man Keung Edwin, executive Director and Vice Chairman of the Board. 17,392,000 Shares are held by Tanner Enterprises Group Limited which is wholly owned by Mr. Li Man Keung Edwin. Mr. Li Man Keung Edwin also directly holds 5,912,613 Shares. The aggregate Shares beneficially owned by Mr. Li Man Keung Edwin is 104,304,613 Shares.
(3) 22,802,703 Shares are held by Cornerstone Wealth Holdings Limited which is wholly owned by Mr. Lau Wai Yan Lawson, the executive Director. Mr. Lau Wai Yan Lawson also directly holds 7,500,000 Shares. The aggregate Shares beneficially owned by Mr. Lau Wai Yan Lawson is 30,302,703 Shares.

— 34 —

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 of	Actual use of
announcement	activity	raised	net proceeds	net proceeds
27 June 2022	Subscription of	Approximately	EV-charging	Approximately
	32,320,000 new	HK$19.5 million	business	HK$8.8 million
	Shares under		development and	has been utilized
	general mandate		general working	in accordance with
			capital	the intended use
29 November 2021	Subscription of	Approximately	Working capital and	HK$4.92 million
and 6 December	8,000,000 new	HK$4.92 million	general corporate	were fully utilized
2021	Shares under		purposes	in accordance with
	general mandate			the intended use
30 September 2021,	Placing of	Approximately	EV-charging	HK$23.3 million
4 October 2021,	39,520,000 new	HK$23.3 million	business	were fully utilized
7 October 2021,	Shares under		development,	in accordance with
9 November 2021,	specific mandate		commercial and	the intended use
30 December 2021,			financial printing
13 January 2022,			business operation
21 March 2022 and			and as general
31 May 2022			corporate
			purposes

Save as disclosed above, the Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the Latest Practicable Date.

GEM LISTING RULES IMPLICATIONS

Pursuant to Rule 21.02(1) of the GEM Listing Rules, the Warrant Shares to be issued on the exercise of the Warrants must not, when aggregated with all other equity securities remain to be issued on the exercise of any other subscription rights, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 20% of the issued share capital of the Company at the time the Warrants are issued. Options granted under share option schemes which comply with Chapter 23 of the GEM Listing Rules are excluded for the purpose of such limit.

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LETTER FROM THE BOARD

Exercise of subscription rights attaching to all the Tranche 1 Warrants in full

As at the Latest Practicable Date, assuming the exercise of the subscription rights attaching to all the Tranche 1 Warrants in full under the Subscription Agreement A, an aggregate of 120,000,000 Tranche 1 Warrant Shares will be issued, representing approximately 17.10% of the issued share capital of the Company in compliance with Rule 21.02(1) of the GEM Listing Rules.

As at the Latest Practicable Date, the Company does not have any equity securities with subscription rights outstanding and not yet exercised and which are required to be aggregated with the Tranche 1 Warrant Shares in accordance with Rule 21.02(1) of the GEM Listing Rules.

The Tranche 1 Warrant Shares will be issued and allotted under the Specific Mandate to be sought at the EGM.

COMPETING INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS

As at the Latest Practicable Date, the Company did not have any controlling Shareholder and so far as the Directors are aware, none of the Directors or any of their respective associate(s) had any interest in a business which causes or may cause, either directly or indirectly, any significant competition with the business of the Group.

EGM

A notice convening the EGM to be held at 21/F., Grand Millennium Plaza, 181 Queen’s Road Central, Sheung Wan, Hong Kong on Friday, 29 July 2022 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 Shareholders to consider and, if thought fit, approve, among other things, the issue of the Tranche 1 Warrants, the Specific Mandate and the transactions contemplated thereunder.

To the best of the knowledge, information and belief of the Directors and having making all reasonable enquiries, Subscriber A and its respective ultimate beneficial owner are Independent Third Parties. Accordingly, no shareholder will be required to abstain from voting on the resolutions to be proposed at the EGM.

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LETTER FROM THE BOARD

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.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Tuesday, 26 July 2022 to Friday, 29 July 2022, both dates inclusive, during which period no transfer of shares will be registered, for the purpose of ascertaining Shareholders’ entitlement to attend and vote at the EGM. In order to be eligible to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the office of the share registrar of the Company, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Monday, 25 July 2022.

RECOMMENDATION

The Board (including members of the Independent Board Committee) considers that the terms of the Subscription Agreements and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends all Shareholders to vote in favour of the relevant resolution to be proposed at the EGM.

WARNING OF THE RISKS OF DEALING IN THE SHARES

Completion of the Subscription for Tranche 1 Warrants is subject to the fulfillment of the conditions precedent set forth in the Subscription Agreements. As the Subscription for Tranche 1 Warrants 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

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NOTICE OF EGM

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 21/F., Grand Millennium Plaza, 181 Queen’s Road Central, Sheung Wan, Hong Kong on Friday, 29 July 2022 at 3:00 p.m. for the following purposes. Unless otherwise indicated, capitalized terms used herein shall have the same meanings as those defined in the circular of the Company dated 8 July 2022 (the “ Circular ”).

ORDINARY RESOLUTION

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

“THAT:

(a) the Subscription Agreements dated 30 March 2022 as supplemented by the Supplemental Agreements dated 24 May 2022 (a copy of the Subscription Agreements and Supplemental Agreements have been produced to the meeting and marked “A” and initialed by the chairman of the meeting for identification purpose) in relation to the issue of an aggregate of 120,000,000 Tranche 1 Warrants, which entitle the holder(s) thereof to convert the same into an aggregate of 120,000,000 Tranche 1 Warrant Shares in accordance with the terms of the Subscription Agreements and the Supplemental Agreements at the initial subscription price of HK$0.50 (subject to adjustments) per Tranche 1 Warrant 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 Tranche 1 Warrant Shares prior to settlement of the Tranche 1 Warrant Shares, the directors of the Company (the “ Directors ”) be and are hereby granted a specific mandate to allot and issue the Tranche 1 Warrant Shares in accordance with the terms of the Subscription Agreements and the Supplemental Agreements, 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

— EGM-1 —

NOTICE OF EGM

(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 Agreements, the Supplemental Agreements and the transaction contemplated thereunder, including, without limitation, the allotment and issue of the Tranche 1 Warrant Shares under the relevant specific mandate.”

By Order of the Board Cornerstone Technologies Holdings Limited LIANG Zihao Co-Chairman and Executive Director

Hong Kong, 8 July 2022

Registered Office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive Office Units 1107-11, 11th Floor, P.O. Box 2681 New East Ocean Centre, Grand Cayman No. 9 Science Museum Road, KY1-1111 Kowloon, Hong Kong Cayman Islands

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

Executive Directors: Mr. LIANG Zihao (Co-Chairman) Mr. LI Man Keung Edwin (Vice Chairman) Mr. SAM WENG WA Michael Mr. LAU Wai Yan Lawson Mr. PAN Wenyuan 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 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 Wednesday, 27 July 2022) 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 Tuesday, 26 July 2022 to Friday, 29 July 2022 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 Monday, 25 July 2022.
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.
If a tropical cyclone warning signal No.8 or above is hoisted or “extreme conditions” caused by super typhoons or a black rainstorm warning signal is in force at any time after 1:00 p.m. on the date of the EGM, the EGM will be postponed. The Company will post an announcement on the respective websites of the Hong Kong Exchanges and Clearing Limited and the Company to notify members of the date, time and venue of the rescheduled meeting.
Due to the recent development of the epidemic COVID-19, the Company will implement the following precautionary measures at the EGM against the epidemic to protect the Shareholders from the risk of infection: (i) compulsory body temperature check will be conducted for every Shareholder or proxy at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius will not be admitted to the venue; (ii) every Shareholder or proxy is required to (a) fill in health declaration form with information including travelling record and health condition; and (b) wear surgical facial mask throughout the meeting. Any person who refuses to follow the aforesaid will not be admitted to the venue; (iii) every Shareholder or proxy who has travelled from jurisdictions, which according to the Department of Health of Hong Kong would render such person subject to a quarantine order, within 14 days of the date of EGM will not be admitted to the venue; and (iv) no refreshments will be served and no gift/voucher will be distributed at the EGM.

Furthermore, the Company wishes to strongly advise the Shareholders, particularly those who are unwell or subject to quarantine in relation to COVID-19, that they may appoint any person or the chairman of the EGM as a proxy to vote on the resolutions, instead of attending the EGM in person.

— EGM-3 —

NOTICE OF EGM

If you have any queries on the above, please contact the Company’s Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong from 9:00 a.m. to 5:00 p.m. (Monday to Friday, excluding Hong Kong public holidays) by email to is-enquiries@hk. tricorglobal.com or telephone hotline at (852) 2980 1333.

The Company is closely monitoring the impact of COVID-19 in Hong Kong. Should any changes be made to the EGM arrangements, the Company will publish further announcement(s) to notify the Shareholders.

— EGM-4 —

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Cornerstone Technologies Holdings Limited — Proxy Solicitation & Information Statement 2022

51420_rns_2022-07-08_e9bd4a7b-faf3-417e-a196-8e81f7be06f0.pdf

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

(1) PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE AND (2) NOTICE OF EXTRAORDINARY GENERAL MEETING

PRECAUTIONARY MEASURES FOR THE EGM

Voting by proxy in advance of the EGM

Precautionary measures at the EGM

PRECAUTIONARY MEASURES FOR THE EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

(1) PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

PROPOSED ISSUE OF UNLISTED WARRANTS UNDER SPECIFIC MANDATE

THE SUBSCRIPTION AGREEMENTS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Conditions Precedent

Tranche 1 Warrants

LETTER FROM THE BOARD

Tranche 2 Warrants and Subscriber B Warrants

LETTER FROM THE BOARD

The Warrant Shares

The Initial Warrant Subscription Price

LETTER FROM THE BOARD

Adjustments of the Warrant Subscription Price

A

C

A+B A+C

provided that:

LETTER FROM THE BOARD

Ranking of the Warrant Shares

Completion

Key Undertakings by the Company

INFORMATION ON THE PARTIES AND THE REASONS FOR AND THE BENEFITS OF ENTERING INTO THE SUBSCRIPTION AGREEMENTS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

SUPPLEMENTAL AGREEMENT (1)

SUPPLEMENTAL AGREEMENT (2)

The Revised Warrant Shares

SUPPLEMENTAL AGREEMENT (3)

REASONS FOR ENTERING INTO SUPPLEMENTAL AGREEMENT (1), SUPPLEMENTAL AGREEMENT (2) AND SUPPLEMENTAL AGREEMENT (3)

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INTENDED USE OF PROCEEDS

APPLICATION FOR LISTING

EFFECT OF THE ISSUE OF THE TRANCHE 1 WARRANT SHARES ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

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

GEM LISTING RULES IMPLICATIONS

Exercise of subscription rights attaching to all the Tranche 1 Warrants in full

COMPETING INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS

EGM

RESPONSIBILITY STATEMENT

CLOSURE OF REGISTER OF MEMBERS

RECOMMENDATION

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

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTION

“THAT:

NOTICE OF EGM

NOTICE OF EGM

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Cornerstone Technologies Holdings Limited Proxy Solicitation & Information Statement 2022