Cornerstone Technologies Holdings Limited — Proxy Solicitation & Information Statement 2022

Mar 21, 2022

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 PLACING OF NEW SHARES IN TRANCHES UNDER SPECIFIC MANDATE;

(2) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE CEO;

(3) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE COO;

(4) CONNECTED TRANSACTION IN RELATION TO SETTLEMENT OF LOAN THROUGH SUBSCRIPTION OF SHARES;

(5) REFRESHMENT OF THE SCHEME MANDATE LIMIT UNDER THE SHARE OPTION SCHEME;

AND

(6) NOTICE OF EXTRAORDINARY GENERAL MEETING

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 44 of this circular. A notice convening the extraordinary general meeting of the Company (“ EGM ”) to be held virtually on Monday, 11 April 2022 at 3:00 p.m. is set out from pages EGM-1 to EGM-3 of this circular.

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

SPECIAL ARRANGEMENT FOR THE EGM

In view of the current COVID-19 situation in Hong Kong, the Company hereby announces that the EGM will be conducted virtually via electronic means. The Shareholders and/or their proxies will not be able to attend the EGM in person. Please see pages ii to iii of this circular for information on the special arrangement for the EGM.

Shareholders must appoint the chairman of the meeting as their proxy to vote on the relevant resolution(s) at the meeting should they wish to exercise their voting rights at the EGM.

21 March 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 —

SPECIAL ARRANGEMENT FOR THE EGM

In light of the directions in relation to the Prevention and Control of Disease (Requirements and Directions) (business and Premises) Regulation (Chapter 599F, Laws of Hong Kong) issued by the Hong Kong Government on 9 February 2022 which has become effective on 10 February 2022, physical general meetings of companies are prohibited. The Company hereby announces that, in view of the current COVID-19 situation in Hong Kong:

• If a member of the Company (whether individual or corporate) wishes to exercise his/her/its voting rights at the EGM, he/she/it must appoint the chairman of the EGM as his/her/its proxy to vote on his/her/its behalf at the EGM.

• In appointing the chairman of the EGM as proxy, a member of the Company (whether individual or corporate) must give specific instructions as to voting in the proxy form, the duly completed and signed proxy form must be deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, at the office of 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 not later than 3:00 p.m. on Saturday, 9 April 2022 (being not less than forty-eight (48) hours before the EGM), failing which the appointment will be treated as invalid.

• The EGM will be held by way of electronic means and a member of the Company will be able to observe the proceedings of the EGM through ZOOM Meeting or listen to the meeting proceedings. Shareholders can view and listen to the EGM through a live webcast of the EGM from 2:30 p.m. on Monday, 11 April 2022 on a computer, tablet or any browser enabled device. Shareholders will need to complete the following steps to be able to access the live webcast of the EGM:–

Accessing Proceedings of the EGM By Zoom

For Shareholders who would like to view and listen to the EGM live webcast, you will need to register by sending an email to is-enquiries@hk.tricorglobal.com no later than 5:00 p.m. on Friday, 1 April 2022 to provide a valid email address and a valid contact telephone number to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited (“ Tricor ”). A request form will be provided by Tricor, to such Shareholders via email, which shall be completed and returned to Tricor, by 5:00 p.m. on Wednesday, 7 April 2022, for the purpose of verifying the identity of the relevant Shareholder.

– Following authentication of his/her/its status as members of the Company, authenticated members of the Company will receive an email instruction on how to join the ZOOM Meeting to observe the proceedings of the EGM by Friday, 8 April 2022. Shareholders MUST NOT forward the link to other persons who are not the Shareholders and who are not entitled to attend the EGM.

— ii —

SPECIAL ARRANGEMENT FOR THE EGM

• For non-registered Shareholders whose Shares are held in the Central Clearing and Settlement System through banks, brokers, custodians or Hong Kong Securities Clearing Company Limited, they can also view and listen to the EGM as well as speak and submit questions online. In this regard, they should consult directly with their banks, brokers or custodians (as the case may be) for the necessary arrangements.

• A member of the Company who wishes to express their views by asking questions may submit questions in relation to the business of the EGM in advance. Any shareholder who would like to submit questions in relation to the business of the EGM in advance can send questions by 3:00 p.m. on Saturday, 9 April 2022 by email to 8391gm-queries@elegancehk.com or telephone hotline at (852) 2283 2202 of the Company or submit questions during the EGM through the live webcast dialogue function. The Board will arrange for answering the questions raised to the extent possible at the 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.

— iii —

CONTENTS

	Page
CHARACTERISTICS OF GEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
SPECIAL ARRANGEMENT FOR THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . 45
LETTER FROM DL SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
APPENDIX I — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

— iv —

DEFINITIONS

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

• “associate(s)”

has the meaning ascribed to it in the GEM Listing Rules

• “Board”

the board of Directors

• “Business Day(s)” any day on which the Stock Exchange is open for business to deal in securities

• “CEO”

Chief Executive Officer

• “CEO Emolument Shares”

• a signing bonus of 5,997,905 new Shares, being 1% of the total number of Shares as at the date of the CEO Service Contract

• “CEO Emolument Shares Specific Mandate”

• the specific mandate approved by the Shareholders at the EGM which authorises the Directors to allot, issue and deal with the CEO Emolument Shares

• “CEO Service Contract”

• the service contract dated 7 October 2021 entered into between Mr. Yip and the Company in relation to Mr. Yip’s appointment as the CEO of the Company with no fixed term

• “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)

• “connected person(s)”

has the meaning ascribed to it under the GEM Listing Rules

• “COO”

• Chief Operating Officer

• “COO Emolument Shares”

• a signing bonus of 2,998,953 new Shares, being 0.5% of the total number of Shares as at the date of the COO Service Contract

• “COO Emolument Shares Specific Mandate”

• the specific mandate approved by the Shareholders at the EGM which authorises the Directors to allot, issue and deal with the COO Emolument Shares

• “COO Service Contract”

the service contract dated 5 November 2021 entered into between Mr. Ng and the Company in relation to Mr. Ng’s appointment as the COO of the Company with no fixed term

— 1 —

DEFINITIONS

• “Creditor (A)”

• Mr. Wu Jianwei, a non-executive Director and a substantial shareholder of the Company

• “Creditor (A)’s Loan Agreement”

• the agreement dated 20 December 2021 entered into between Creditor (A) and the Company in respect of Debt (A)

• “Creditor (B)” Mr. Liang Zihao, an executive Director, a substantial shareholder and co-chairman of the Company

• “Creditor (B)’s Loan Agreement”

• the agreement dated 20 December 2021 entered into between Creditor (B) and the Company in respect of Debt (B)

• “Creditor (C)”

• Mr. Li Man Keung Edwin, an executive Director

• “Creditor (C)’s Loan Agreement”

• the agreement dated 20 December 2021 entered into between Creditor (C) and the Company in respect of Debt (C)

• “Creditor (D)”

• Mr. Pan Wenyuan, an executive Director

• “Creditor (D)’s Loan Agreement”

• the agreement dated 20 December 2021 entered into between Creditor (D) and the Company in respect of Debt (D)

• “Creditors”

• collectively Creditor (A), (B), (C) and (D)

• “Debt (A)”

• the principal amount owing to Creditor (A) by the Company in the amount of HK$15,000,000 pursuant to the Creditor (A)’s Loan Agreement

• “Debt (B)” the principal amount owing to Creditor (B) by the Company in the amount of HK$8,500,000 pursuant to the Creditor (B)’s Loan Agreement

• “Debt (C)” the principal amount owing to Creditor (C) by the Company in the amount of HK$2,600,000 pursuant to the Creditor (C)’s Loan Agreement

• “Debt (D)” the principal amount owing to Creditor (D) by the Company in the amount of HK$2,000,000 pursuant to the Creditor (D)’s Loan Agreement

• “Deed” the deed of settlement of debt dated 30 December 2021 entered into between the Company and the Creditors for the issue and subscription of the Subscription Shares at the Subscription Price

• “Director(s)” director(s) of the Company

— 2 —

DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be held to approve, among other things, (i) the Placing Agreements; (ii) the Placing Specific Mandate; (iii) the CEO Emolument Shares Specific Mandate; (iv) the COO Emolument Shares Specific Mandate; (v) the Deed and the Subscription; and (vi) refreshment of the Scheme Mandate Limit under the Share Option Scheme and the transactions contemplated thereunder

“EV” electric vehicle “First Supplemental Placing the supplemental placing agreement dated 9 November 2021 and Agreement entered into between the Company and the Placing Agent in relation to the Placing “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “GEM” GEM operated by the Stock Exchange “Group” the Company and its subsidiaries “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 an independent committee of the Board comprising all the Board Committee” independent non-executive Directors

“Independent Financial DL Securities (HK) Limited, a licensed corporation to conduct Advisor” or “DL Securities” Type 1 (Dealing in Securities), Type 4 (Advising on Securities) and Type 6 (Advising on Corporate Finance) regulated activities under the SFO and independent financial adviser to the Independent Board Committee and Independent Shareholders in relation to the Deed, the Subscription and the transactions contemplated thereunder

“Independent Shareholders” Shareholder(s) other than those that are required under the GEM Listing Rules to abstain from voting on the resolution(s) to be proposed at the EGM

— 3 —

DEFINITIONS

• “Independent Third Party(ies)” any person or company and their respective ultimate beneficial owner(s) (if applicable) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of and not connected with the Group, its connected persons and their respective associates and not acting in concert with any substantial shareholder (as defined under the GEM Listing Rules) of the Company within the meaning of The Codes on Takeovers and Mergers and Share Buy-backs issued by the Securities and Futures Commission of Hong Kong

• “Latest Practicable Date” 18 March 2022, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

• “Listing Committee” The Listing Committee of the Stock Exchange

• “Loan Agreements” collectively Creditor (A)’s Loan Agreement, Creditor (B)’s Loan Agreement, Creditor (C)’s Loan Agreement and Creditor (D)’s Loan Agreement

• “Long Stop Date” 31 May 2022 (as revised by the Third Supplemental Placing Agreement)

• “Mr. Ng” Mr. Ng Sze Chun

• “Mr. Yip” Mr. Yip Shiu Hong

• “Option(s)” the option(s) granted or to be granted to the eligible grantees to subscribe for the share on terms determined by the Directors pursuant to the Share Option Scheme and for the time being subsisting

• “Placee(s)” any person or entity, who is professional, institutional or other investors, procured by the Placing Agent or its agent(s) to subscribe for any Placing Shares pursuant to the Placing Agreement

• “Placing” the placing, on a best effort basis, of up to 87,000,000 Placing Shares in up to two or more tranches subject to the terms and condition set out in the Placing Agreement and as supplemented by the First Supplemental Placing Agreement and Second Supplemental Placing Agreement

• “Placing Agent” VBG Capital

— 4 —

DEFINITIONS

• “Placing Agreement”

• the placing agreement dated 30 September 2021 and entered into between the Company and the Placing Agent in relation to the Placing

• “Placing Agreements” collectively, the Placing Agreement, First Supplemental Placing Agreement, Second Supplemental Placing Agreement and Third Supplemental Placing Agreement

• “Placing Completion Date(s)” the date of completion of each tranche of the Placing Shares which shall fall on a date after the date of fulfilment of all the conditions in Clause 3.1.1 to 3.1.4 of the Placing Agreement

• “Placing Completion” completion of each tranche of the Placing Shares in accordance with the Placing Agreements

• “Placing Period” in respect of each and every tranche of the Placing Shares, the period commencing on the day after the EGM and expiring on 31 May 2022 (both days inclusive) or on such later date which the Company and the Placing Agent may agree in writing, but in any event not later than the Long Stop Date (as revised by the Third Supplemental Placing Agreement)

• “Placing Price” HK$0.62 per Placing Share (as revised by the Second Supplemental Placing Agreement and exclusive of any brokerage, SFC transaction levy and Stock Exchange trading fee as may be payable)

• “Placing Share(s)”

• a total of up to 87,000,000 new Shares (as revised by the First Supplemental Placing Agreement) to be placed by the Placing Agent pursuant to the Placing Agreements and to be issued and allotted under general mandate, and each a “Placing Share”

• “Placing Specific Mandate”

• the specific mandate approved by the Shareholders at the EGM which authorises the Directors to allot, issue and deal with the Placing Shares

• “Scheme Mandate Limit”

• the maximum number of Shares which may be issued upon the exercise of all Options to be granted under the Share Option Scheme

• “Second Supplemental Placing the supplemental placing agreement dated 29 November 2021 and Agreement entered into between the Company and the Placing Agent in relation to the Placing

— 5 —

DEFINITIONS

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

• “Share(s)” ordinary share(s) of par value of HK$0.01 each in the share capital of the Company

• “Share Option Scheme” the share option scheme adopted by the Company on 19 April 2018

• “Shareholder(s)” holder(s) of the issued Share(s)

• “Shareholders’ Loan” the total outstanding amount owing to the Creditors by the Company in respect of the Loan Agreements in the aggregate amount of approximately HK$28,100,000 as at the date of the Deed

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subscription” the subscription of the Subscription Shares by the Creditors pursuant to the Deed

• “Subscription Completion” completion of the Subscription in accordance with the terms and conditions of the Deed

• “Subscription Price” HK$0.62 per Subscription Share

• “Subscription Shares” an aggregate of 45,316,000 Shares to be issued and allotted by the Company to the Creditors pursuant to the Deed

• “Subscription Specific Mandate”

• the specific mandate to be sought from the Independent Shareholders at the EGM and to be granted to the Board for the allotment and issue of the Subscription Shares

• “Third Supplemental Placing Agreement”

• the supplemental placing agreement dated 13 January 2022 and entered into between the Company and the Placing Agent in relation to the Placing

• “VBG Capital”

VBG Capital Limited, an indirect wholly-owned subsidiary of Hatcher Group Limited (stock code: 8365), a licensed corporation which is principally engaged in type 1 regulated activity (dealing in securities) and type 6 regulated activity (advising on corporate finance) under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

“%” per cent

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

— 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: 2402, China Merchants Tower Shun Tak Centre 168-200 Connaught Road Central Hong Kong

21 March 2022

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED PLACING OF NEW SHARES IN TRANCHES UNDER SPECIFIC MANDATE; (2) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE CEO;

(3) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE COO;

(4) CONNECTED TRANSACTION IN RELATION TO SETTLEMENT OF LOAN THROUGH SUBSCRIPTION OF SHARES;

(5) REFRESHMENT OF THE SCHEME MANDATE LIMIT UNDER THE SHARE OPTION SCHEME AND

(6) NOTICE OF EXTRAORDINARY GENERAL MEETING

— 7 —

LETTER FROM THE BOARD

INTRODUCTION

Reference is made to the announcements of the Company dated 30 September 2021, 4 October 2021, 7 October 2021, 9 November 2021, 29 November 2021, 30 December 2021 and 13 January 2022 respectively, in relation to, among other matters, the Placing of new Shares in tranches under the Placing Specific Mandate, the issue and allotment of the CEO Emolument Shares and COO Emolument Shares under the CEO Emolument Shares Specific Mandate and COO Emolument Shares Specific Mandate, and the connected transaction in relation to settlement of the Shareholders’ Loan through the Subscription respectively.

The purpose of this circular is to provide you with (i) information relating to the Placing Agreements, the Placing of new Shares in tranches under the Placing Specific Mandate, the issue and allotment of the CEO Emolument Shares and the COO Emolument Shares under the CEO Emolument Shares Specific Mandate and COO Emolument Shares Specific Mandate, the connected transaction in relation to settlement of the Shareholders’ Loan through the Subscription and the refreshment of the Scheme Mandate Limit under the Share Option Scheme and the transactions contemplated thereunder; (ii) other information as required under the GEM Listing Rules; and (iii) the notice of the EGM.

The Placing, the granting of CEO Emolument Shares, the granting of COO Emolument Shares, the Subscription and the refreshment of the Scheme Mandate Limit are not inter-conditional upon each other.

I. PLACING OF NEW SHARES UNDER SPECIFIC MANDATE

Pursuant to the Placing Agreement and as supplemented by the First Supplemental Placing Agreement, the Second Supplemental Placing Agreement and the Third Supplemental Placing Agreement, the Placing Agent jointly and severally agree, as agent of the Company, to procure on a best effort basis not less than six (6) Placees who and whose ultimate beneficial owners shall be Independent Third Parties to subscribe for up to 87,000,000 Placing Shares at the Placing price of HK$0.62 per Placing Share in up to two or more tranches within the Placing Period subject to the terms and conditions set out in the Placing Agreement.

THE PLACING AGREEMENT

The principal terms of the Placing Agreement (as supplemented by the First Supplemental Placing Agreement, the Second Supplemental Placing Agreement and the Third Supplemental Placing Agreement) are set out below.

Date: 30 September 2021 Parties: Issuer: The Company Placing Agent: VBG Capital Limited

— 8 —

LETTER FROM THE BOARD

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are third parties independent of the Company and its connected persons. It is currently expected that each Placee will be placed for less than 10% of the Placing Shares.

Number of Placing Shares

The 87,000,000 Placing Shares (as revised by the First Supplemental Placing Agreement) to be issued and allotted under the Placing Agreements represent:

• (i) approximately 14.50% of the existing issued share capital of the Company as at the date of the First Supplemental Placing Agreement;

• (ii) approximately 12.67% of the issued share capital of the Company immediately upon completion of Placing (assuming there is no change in the issued share capital of the Company from the date of the First Supplemental Placing Agreement and up to the date of completion of all the Placing Shares) as enlarged by the allotment and issue of all the Placing Shares;

• (iii) approximately 14.31% of the existing issued share capital of the Company as at the Latest Practicable Date; and

• (iv) approximately 12.52% of the issued share capital of the Company immediately upon completion of Placing (assuming there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the date of completion of all the Placing Shares) as enlarged by the allotment and issue of all the Placing Shares.

The Placing Shares will be issued and allotted pursuant to the Placing Specific Mandate to be sought from the Shareholders at the EGM. The aggregate amount of the Placing will be HK$53,940,000.

Placing Price

On 29 November 2021, the Second Supplemental Placing Agreement was entered into between the Company and the Placing Agent, where the Placing Price was revised downward from HK$0.70 per Placing Share to HK$0.62 per Placing Share.

The Placing Price of HK$0.62 per Placing Share (as revised by the Second Supplemental Placing Agreement) represents:

• (i) a discount of approximately 19.48% to the closing price of HK$0.77 per Share as quoted on the Stock Exchange on 29 November 2021, being the last full trading day immediately before the execution of the Second Supplemental Placing Agreement;

• (ii) a discount of approximately 19.48% to the average closing price of approximately HK$0.77 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Second Supplemental Placing Agreement;

— 9 —

LETTER FROM THE BOARD

• (iii) a premium of approximately 485.2% to the audited consolidated net asset value per Share attributable to the Shareholders as at 31 December 2020 of approximately HK$0.106 per Share calculated based on the audited consolidated net assets of the Group attributable to the Shareholders of approximately HK$63,456,000 as at 31 December 2020 as set out in the annual report of the Company for the year ended 31 December 2020 and 599,790,541 Shares in issue as at the date of the Second Supplemental Placing Agreement; and

• (iv) a premium of approximately 311.6% to the unaudited consolidated net asset value per Share attributable to the Shareholders as at 30 June 2021 of approximately HK$0.151 per Share calculated based on the unaudited consolidated net assets of the Group attributable to the Shareholders of approximately HK$90,349,000 as at 30 June 2021 as set out in the interim report of the Company for the six months ended 30 June 2021 and 599,790,541 Shares in issue as at the date of the Second Supplemental Placing Agreement.

The Placing Price was arrived after arm’s length negotiations between the Company and the Placing Agent with reference to the prevailing market price and the recent trading performance of the Shares.

When determining the Placing Price, the Directors have reviewed the closing prices and the trading volume of the Shares during the period from 1 June 2021 to 29 November 2021 being the date of the Second Supplemental Placing Agreement (the “ Review Period ”). The Directors consider that the Review Period covering 6 months prior to the date of the Second Supplemental Placing Agreement 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 Placing Price.

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

==> picture [313 x 182] intentionally omitted <==

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

Share price performance during the Review Period
$1.40
$1.20
$1.00
$0.80
$0.60 Stock price
Placing price
$0.40
$0.20
$0.00
7/6/2021 14/6/2021 21/6/2021 28/6/2021 5/7/2021 12/7/2021 19/7/2021 26/7/2021 2/8/2021 9/8/2021 16/8/2021 23/8/2021 30/8/2021 6/9/2021 13/9/2021 20/9/2021 27/9/2021 4/10/2021 11/10/2021 18/10/2021 25/10/2021 1/11/2021 8/11/2021 15/11/2021 22/11/2021 29/11/2021
----- End of picture text -----

— 10 —

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/period during the Review Period:

				Percentage
				of average
				daily
				trading
				volume to
				total
				number of
			Average	issued
	Total		daily	Shares as at
	trading	Number of	trading	the end of
	volume of	trading	volume of	the month/
Month/period	the Shares	days	the Shares	period
	Number of		Number of
	Shares		Shares	%
June	4,628,000	21	220,381	0.037%
July	4,044,000	21	192,571	0.032%
August	1,024,000	22	46,545	0.008%
September	1,932,000	21	92,000	0.015%
October	1,588,000	18	88,222	0.015%
November (up to the
date of the Second
Supplemental
Placing Agreement)	760,000	21	36,190	0.006%

Source: the website of the Stock Exchange

Given the importance of fundraising activity, the Directors have been constantly monitoring the Share Price, and have noticed the following:

• (a) after entering into the Placing Agreement, there was a general downward trend of the closing price of the Shares during the period between the date of the Placing Agreement and the Second Supplemental Placing Agreement (closing price of HK$1.01 on 30 September 2021 and closing price of HK$0.77 on 29 November 2021); and

• (b) the relatively low liquidity of the Shares during the period between the date of the Placing Agreement and the Second Supplemental Placing Agreement, the percentage of average daily trading volume for October being 0.015% and for November (up to 29 November 2021) being 0.006%.

— 11 —

LETTER FROM THE BOARD

In view of the above, and to capture the rapid growth of market opportunity given by the support of government in launching correlated subsidy scheme to upgrade the existing car parking spaces with EV charging facilities, the Directors consider that the price change of HK$0.70 per Placing Share to HK$0.62 per Placing Share are fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

Notwithstanding that the Placing Price represents a discount to the closing prices of the Shares as disclosed above, the Directors consider that the Placing Price and the terms of the Placing Agreements are fair and reasonable based on the current market conditions and that the Placing 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$0.77 per Share on 19 November 2021 to the highest of HK$1.23 per Share on 28 June 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 0.006% to 0.037%); and (iii) the urgency for fundraising activity due to the Company’s business model and nature of being capital intensive as to the need to invest in multiple sites to earn recurring subscription income as well as the need to engage research and development activities to maintain competitiveness, the Directors are of the view that it is reasonable and necessary to set the Placing Price at a discount to the recent market price so as to attract the investors to participate in the Placing; and

• (b) due to the reasons disclosed in the paragraph headed “Placing of New Shares under Specific Mandate — Reasons for the Placing”, funding is required by the Group in order to fully implement its development strategy to further expand its EV-charging business.

Save for the equity fund raising activities disclosed in the section headed “Equity Fund Raising Activities of the Company in the Past Twelve Months”, during the past 12 months, immediately preceding the date of this circular, the Company had not undertaken any other equity fund raising activities. The Placing under the Placing Specific Mandate on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 2.44% represented by the theoretical diluted price of approximately HK$0.751 to the benchmarked price of approximately HK$0.77 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the Second Supplemental Placing Agreement of HK$0.77 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the Second Supplemental Placing Agreement of HK$0.77 per Share).

Ranking of the Placing Shares

The Placing 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 Placing Shares.

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LETTER FROM THE BOARD

Conditions of the Placing

Placing Completion shall be conditional upon:

• (i) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, the Placing Shares and such approval has not been revoked prior to Placing Completion;

• (ii) the passing of the resolution(s) at the EGM by the Shareholders to approve the Placing Agreement and the transactions contemplated thereunder, including the grant of the Placing Specific Mandate relating to Placing to issue and allot the Placing Shares;

• (iii) the Shares remaining listed on GEM of the Stock Exchange, and that the listing status of the Shares not being subject to or threatened with any revocation, suspension, withdrawal or cancellation at any time prior to the Long Stop Date; and

• (iv) each of the Company and the Placing Agent having obtained all necessary consents and approvals in respect of the Placing Agreement and the transactions contemplated thereunder.

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

As at the Latest Practicable Date, none of the conditions to the Placing Agreements have been fulfilled.

The Placing Specific Mandate to issue the Placing Shares

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

Completion

Upon fulfilment of all the conditions precedent set out in (i) to (iv) above, Placing Completion shall take place, in respect of the relevant tranche of the Placing Shares, by no later than 4:00 p.m. on each Placing Completion Date or such later time and date as the Placing Agent and the Company may agree in writing but in any event not later than the Long Stop Date.

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LETTER FROM THE BOARD

Pursuant to the Third Supplemental Placing Agreement, (i) the Long Stop Date has been changed from 31 March 2022 to 31 May 2022; and (ii) the expiry date of the Placing Period has been changed from the 19 January 2022 to 31 May 2022. Though both the Long Stop Date and Placing Period were extended, in the event where the approval for the Placing is granted in the EGM, it is expected that the completion of Placing would be completed within one month. Should the Placing fail to complete within one month from the date of the grant of the Placing Specific Mandate, a separate general meeting will be convened to approve the specific mandate for the Placing again.

REASONS FOR THE PLACING

The Company is an investment holding company and its subsidiaries are principally engaged in the provision of printing, typesetting and translation services and electric vehicle charging business in Hong Kong. As disclosed in the interim report of the Company for the six months ended 30 June 2021 (the “ 2021 Interim Report ”), the Hong Kong Roadmap of Popularisation of Electric Vehicles was issued by the Environmental Protection Department in March 2021 (the “ Roadmap ”) (website: https://www.evhomecharging.gov.hk/) , which unveiled an initiative to drive Hong Kong towards the vision of “Zero Carbon Emissions — Clean Air — Smart City”, and target to achieve carbon neutrality before 2050 which will adopt key measures including i) E-private cars, ii) E-commercial vehicles, iii) government fleet, iv) charging network, v) maintenance services, and vi) battery recycling. For private charging facilities, the government targeted to have at least 150,000 parking spaces in private and commercial buildings equipped with EV-charging infrastructure before 2025, to support mainly EV and certain e-light goods vehicles. In particular, the HK$2 billion EVcharging at Home Subsidy Scheme (“ EHSS ”) aimed at assisting car park of private residential buildings to install EV-charging-enabling infrastructure (“ EVCEI ”) covering 60,000 parking spaces opened for application in October 2020. The responses to the EHSS are overwhelming. Up to May 2021, the total amount of subsidies reserved for applications received has reached the ceiling of the total funding of EHSS. The received applications cover not less than 74,000 parking spaces.

Furthermore, for public charging facilities, the government target to have at least 5,000 public chargers by 2025, and planning to double in the future. According to the Roadmap, as at the end of 2020, more than 1,100 public chargers were offered by the government. A sum of HKS120 million was allocated by the government to increase the number of medium chargers to 1,800 at government car parks by 2022.

The Directors are of the view that base on the support by the government policy, the government is eager to promote the usage of electric vehicles by developing a sophisticated EV-charging network and therefore the business prospects for EV-charging business is encouraging and sustainable. As the EV-charging business demands innovative technology, the Group focuses on research and development activities to adapt the constant fast-changing technology market to strengthen the Company’s competitiveness in the industry. The Group targeted to enhance the coverage of the private car parking spaces supported by our EV integrated charging solutions to capture the opportunities arising from the potential growth in EV-charging business.

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LETTER FROM THE BOARD

Meanwhile, apart from the funding of research and development activities in the EVcharging business, along with our existing projects as mentioned below as well as enlargement of the coverage of our charging points within Hong Kong, it is highly capital intensive to invest in the infrastructure and EV chargers to various awarded private car park spaces to be supported by our EV integrated charging solutions and to capture the opportunities arising from the inevitable growth in the demand of EV-charging business according to the government policies and the current market trend.

Pursuant to the 2021 Interim Report, the Group had cash and bank balances of approximately HK$19.7 million, represent a decrease of 40.5% from 31 December 2020. After the Board’s consideration on the Company’s intention to develop the EV-charging business and the estimated costs of the Group to maintain its normal business operations in the forthcoming twelve-month period, the Directors consider that the Placing will provide immediate funding to the Company to (i) invest in research and development activities in EV-charging business; (ii) capture future investment opportunities in the EV-charging business sector which would, by nature, involve substantial amount of cash to undertake acquisitions of assets/business and/or in capital expenditures; (iii) sustain commercial and financial printing business operation; and (iv) serve as the working capital and general corporate purposes for the Group.

The investment opportunities in the EV-charging business sector abovementioned would ride on our existing businesses and the allocated net proceeds to the EV-charging business development shall fund our existing projects.

Prior to the entering of the Placing Agreement, the Directors had considered other fundraising alternatives available to the Group, such as debt financing, rights issue and open offer.

Regarding the possibility of debt financing, as the Company is currently operating in a loss-making stage and the ability to repay any debt is in doubt, the Directors have enquired with the Company’s long-term relationship bank and the bank is observing our business performance and offered only to provide the required debt financing once our profitability has been improved. Further given the current financial state of the Company, the Directors are of the view that the Company may not enter into favourable terms with a bank for debt financing. In light of the above, the Directors considered that bank borrowing was not the most favourable financing means to the Company. Whereas, the Placing as compared to bank facilities, carries no payment obligation to the Group and at the same time is able to enlarge the Company’s capital base for its business development. The Placing will also act as a possible option in matching with our current investment of the infrastructure built for our EV charger solution as well as the required research and development activities. Hence, the Placing is able to widen the Company’s shareholders’ structure and enlarge the Company’s capital base for its business development.

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LETTER FROM THE BOARD

In addition, fund raising activities conducted through rights issue or open offer generally are more time-consuming compared to Placing due to the involvement of the issue of listing documents together with other application and extensive administrative procedures (e.g. trading arrangements), which would usually take additional two to three months to complete as compared to Placing. Rights issue or open offer is also less cost-effective than Placing due to the additional costs incurred by the engagement of professionals i.e. reporting accountants, lawyers and/or brokerage agent(s) for the purpose of compiling and issuing the listing document which is estimated to be at least HK$1 million. Based on the above, the Directors consider that the issue of Placing Shares under the Placing Specific Mandate is a more desirable solution for the business development of the Group.

In view of the above, notwithstanding that the shareholding of the existing Shareholders will be diluted upon the Placing Completion, after taking into account: (a) the Group’s imminent need to raise sufficient funds for the abovementioned purposes; (b) the Placing being the most feasible, favourable and cost-effective financing method to raise sufficient funds as compared to debt financing, rights issue, and open offer; and (c) the Directors’ assessment of the fairness and reasonableness of the Placing Price as stated under the section headed “The Placing of New Shares under Specific Mandate — Placing Price” above, the Directors consider that the Placing and its terms and conditions are fair and reasonable so far as the Company and the Shareholders are concerned.

Save for the above and as at the Latest Practicable Date, the Company does not have any current intention or plans to undertake any fundraising plans. However, the Directors will not rule out any fundraising activities they may consider when it is reasonably necessary for the Group to raise fund to meet its operational needs or for future development. The Directors will carefully consider the likely impact on the Shareholders before they will proceed on any fundraising exercises. The Directors believe that the net proceeds received from the Placing would satisfy the Company’s expected funding needs for the next 6-12 months based on their assessment of the Company’s current financial status.

INTENDED USE OF PROCEEDS

Assuming all the Placing Shares are fully placed, the aggregate gross proceeds from the Placing are expected to be HK$53.9 million. After deducting related professional fees and all related expenses of approximately HK$2.7 million to be borne by the Company under the Placing, the net proceeds of the Placing will amount to approximately HK$51.2 million. The Company intends to apply the aggregate net proceeds from the Placing for as follows:

• (i) as to approximately 80% of the net proceeds, for EV-charging business development;

• (ii) as to approximately 10% of the net proceeds, for commercial and financial printing business operation; and

• (iii) as to approximately 10% of the net proceeds, as working capital and general corporate purposes for the Group.

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LETTER FROM THE BOARD

The following table sets forth the details of use of the net proceeds from the Placing:

Use of proceeds Particulars EV-charging business Project deployment for the projects on hand and upcoming pipeline Operating expenses including the new rented office located at New East Ocean Centre (for further details, please refer to the announcement of the Company on 9 November 2021) and funding of research and development activities Equipment and stock ordering Sub-total Financial printing business Operating expenses including the office relocation to Grand Millennium Plaza and recruitment of experienced sales and operation staff 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 $17,935,050 6-12 months $15,372,900 6-12 months $7,686,450 6-12 months $40,994,400 $5,124,300 6-12 months $5,124,300 6-12 months $51,243,000

II. PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE CEO

The Company has entered into a service contact on 7 October 2021 with Mr. Yip in relation to his appointment as the CEO of the Company with no fixed term. Mr. Yip will be entitled to a remuneration package comprising the following:

• (1) a basic salary of HK$250,000 per month subject to annual review;

• (2) a signing bonus of 5,997,905 new Shares, being 1% of the total Shares of the Company as at the date of the CEO Service Contract; and

• (3) other bonuses that involve the issue of Shares subject to the performance targets stated in the CEO Service Contract.

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LETTER FROM THE BOARD

As at the date of the announcement of the Company dated 7 October 2021, Mr. Yip does not (i) hold any other positions in the Company or any of its subsidiaries; (ii) have other relationship with any directors, senior management, substantial shareholders or controlling shareholders (as defined in the GEM Listing Rules) of the Company; (iii) hold any directorships in any other listed companies on the Stock Exchange and any other stock exchange or other major appointments during the three years preceding the date of this circular; and (iv) have other major appointments or professional qualifications save as disclosed.

ALLOTMENT AND ISSUE OF THE CEO EMOLUMENT SHARES UNDER THE CEO EMOLUMENT SHARES SPECIFIC MANDATE

Subject to the terms and conditions of the CEO Service Contract with Mr. Yip, the Company has agreed conditionally to allot and issue a total of 5,997,905 CEO Emolument Shares (equivalent to an aggregate value of approximately HK$5,997,905 based on the average closing price of HK$1.00 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the signing date of CEO Service Contract (the “ CEO Emolument Shares Reference Closing Price ”)) to Mr. Yip. Accordingly, the CEO Emolument Shares that form part of Mr. Yip’s remuneration will be allotted and issued under the CEO Emolument Shares Specific Mandate, which is, subject to the approval by the Shareholders.

The key terms of the proposed issue of CEO Emolument Shares are set out below.

Number of CEO

• Emolument Shares:

A total of 5,997,905 Shares, representing 1% of the existing total issued Shares of the Company and approximately 0.99% of the total issued Shares of the Company as enlarged by the issue of the CEO Emolument Shares.

• Value of CEO approximately HK$5,997,905 in aggregate based on the CEO Emolument Shares: Emolument Shares Reference Closing Price of HK$1.00, and approximately HK$5,877,947 based on the closing price of HK$0.98 per Share as quoted on the Stock Exchange on the date of the CEO Service Contract. The aggregate nominal value of the CEO Emolument Shares is approximately HK$59,979.

• Conditions and schedule of issue:

• The issue of the CEO Emolument Shares will be subject to the Shareholders’ approval and the Stock Exchange granting approval for the listing of, and permission to deal in, the CEO Emolument Shares.

• Status of the CEO Emolument Shares:

The CEO Emolument Shares, when issued and fully paid, shall rank pari passu among themselves and with those Shares in issue, with the right to receive all dividends and other distributions declared, made or paid on or after the date of allotment.

• Lock-up period:

48 months from the date of issue or later than any other date as stated in the CEO Service Contract.

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LETTER FROM THE BOARD

The proposed issue of the CEO Emolument Shares on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 0.98% represented by the theoretical diluted price of approximately HK$0.99 to the benchmarked price of approximately HK$1.00 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the CEO Service Contract of HK$0.98 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the CEO Service Contract of HK$1.00 per Share).

REASONS FOR THE ISSUE OF THE CEO EMOLUMENT SHARES

The proposed issue of the CEO Emolument Shares represents part of the emolument to Mr. Yip for his appointment as the CEO of the Company. Pursuant to the terms and conditions of the CEO Service Contract, the CEO Emolument Shares are a signing bonus that is not subject to any performance target which is payable within two months from the signing date, subject to the Stock Exchange’s and/or regulatory approval.

Qualification and Experience of CEO

Mr. Yip graduated from Keble College of the University of Oxford in 2000 with a Master’s degree in Engineering and Computer Science. He has over 10 years of management experience. Prior to join the Group, Mr. Yip started working for McKinsey & Company, Inc in 2000, and subsequently promoted to associate principal. In 2011, Mr. Yip co-founded Malvern College International (Asia Pacific), a British-styled boarding school with campuses in Mainland China and Hong Kong, he acted as a management board member and steered the overall direction of the school. He joined the G2000 (Apparel) Limited, a leading apparel retailer based in Hong Kong with 1,000 point-of-sales in China and 13 countries across Asia, as group CEO in between 2015 and 2018. From 2018 to 2021, Mr. Yip was then appointed as the CEO of K11 Cultural Enterprise Business by New World Development Company Limited (stock code: 0017). He was responsible for managing an ecosystem of family and children related business under the New World Group including family-focused shopping malls and education platforms.

The Directors believe that the qualification and experience of Mr. Yip, as equipped with the managerial experience of multi-national company and familiarity with the business model of retail business, is invaluable to the Company in driving the current EV-charging business.

The Board’s Consideration

The terms of the CEO Service Contract and the number of the CEO Emolument Shares were determined by the remuneration committee of the Company and the Board with reference to his duties and responsibilities of the Company, his qualifications and experience, the Company’s remuneration policy and the prevailing market rate. The prevailing market rate refers to the CEO Emolument Shares Reference Closing Price, whereas the remuneration committee reviewed the closing price of the Company up to the date of the CEO Service Contract and is of the view that the CEO Emolument Shares are fair and reasonable as a signing bonus for the appointment of Mr. Yip as CEO and the remuneration package for Mr. Yip as disclosed above, is fair and reasonable given his qualifications and experience in management. The Board is of the view that the terms of the CEO Service Contract (including the issue of the CEO Emolument Shares) are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

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LETTER FROM THE BOARD

During the negotiations between the Company and Mr. Yip on the terms and conditions of the CEO Service Contract, the Directors had considered other alternative awards as remuneration such as cash and share options. However, pursuant to the 2021 Interim Report, the Group had cash and bank balances of approximately HK$19.7 million, after paying cash to Mr. Yip as a signing bonus, it will result in a decrease in the Group’s cash and bank balances of approximately HK$13.7 million, representing approximately a 30.5% decrease, leaving the Group at a vulnerable position in terms of cash. In terms of share options, as at the Latest Practicable Date, there are outstanding 27,464,000 Options. The Company may only grant 16,536,000 Options pursuant to the Share Option Scheme. The Directors consider that upon granting the share options to Mr. Yip, the Company will lack flexibility in making new grants of Options under the Share Option Scheme. Further, the CEO Emolument Shares are locked up and will be vested in 48 months after granting to Mr. Yip which the valuation of the CEO Emolument Shares is linked with the business performance and the market capitalisation of the Company, so as to provide a long-term incentive to his performance as well as benefit to the Company’s shareholders. The Directors believe that issuing and allotting the CEO Emolument Shares to Mr. Yip will provide incentive for his commitment and contribution to the Group in the future.

After taking into account of the above, the Directors and the remuneration committee are of the view that it is of the best interest of the Company and the Shareholders to issue the CEO Emolument Shares and appoint Mr. Yip as the CEO of the Company.

III. PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE FOR THE COO

The Company has entered into a service contract on 5 November 2021 with Mr. Ng in relation to his appointment as the COO of the Company with no fixed term. Mr. Ng will be entitled to a remuneration package comprising the following:

• (1) a fixed sum of basic salary subject to annual review;

• (2) a signing bonus of 2,998,953 new Shares, being 0.5% of the total Shares of the Company as at the date of the COO Service Contract; and

• (3) other performance bonuses that involve cash and the issue of Shares subject to the performance targets stated in the COO Service Contract.

As at the date of the announcement of the Company dated 5 November 2021, Mr. Ng does not (i) hold any other positions in the Company or any of its subsidiaries; (ii) have other relationship with any directors, senior management, substantial shareholders or controlling shareholders (as defined in the GEM Listing Rules) of the Company; (iii) hold any directorships in any other listed companies on the Stock Exchange and any other stock exchange or other major appointments during the three years preceding the date of this circular; and (iv) have other major appointments or professional qualifications save as disclosed.

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LETTER FROM THE BOARD

ALLOTMENT AND ISSUE OF THE COO EMOLUMENT SHARES UNDER THE COO EMOLUMENT SHARES SPECIFIC MANDATE

Subject to the terms and conditions of the COO Service Contract with Mr. Ng, the Company has agreed conditionally to allot and issue a total of 2,998,953 COO Emolument Shares (equivalent to an aggregate value of approximately HK$2,441,148 based on the average closing price of HK$0.81 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the signing date of COO Service Contract (the “ COO Emolument Shares Reference Closing Price ”)) to Mr. Ng. Accordingly, the COO Emolument Shares that form part of Mr. Ng’s remuneration will be allotted and issued under the COO Emolument Shares Specific Mandate, which is, subject to the approval by the Shareholders.

The key terms of the proposed issue of COO Emolument Shares are set out below.

• Number of COO

• Number of COO A total of 2,998,953 Shares, representing 0.5% of the existing Emolument Shares: total issued Shares of the Company and approximately 0.5% of the total issued Shares of the Company as enlarged by the issue of the COO Emolument Shares.

• Value of COO approximately HK$2,441,148 in aggregate based on the COO Emolument Shares: Emolument Shares Reference Closing Price of HK$0.81, and approximately HK$2,519,121 based on the closing price of HK$0.84 per Share as quoted on the Stock Exchange on the date of the COO Service Contract. The aggregate nominal value of the COO Emolument Shares is approximately HK$29,990.

• Conditions and schedule of issue:

• The issue of the COO Emolument Shares will be subject to the Shareholders’ approval and the Stock Exchange granting approval for the listing of, and permission to deal in, the COO Emolument Shares.

• Status of the COO Emolument Shares:

• The COO Emolument Shares, when issued and fully paid, shall rank pari passu among themselves and with those Shares in issue, with the right to receive all dividends and other distributions declared, made or paid on or after the date of allotment.

Lock-up period:

• 48 months from the date of issue or later than any other date as stated in the COO Service Contract.

The proposed issue of the COO Emolument Shares on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 0.49% represented by the theoretical diluted price of approximately HK$0.836 to the benchmarked price of approximately HK$0.840 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the COO Service Contract of HK$0.840 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the COO Service Contract of HK$0.810 per Share).

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LETTER FROM THE BOARD

REASONS FOR THE ISSUE OF THE COO EMOLUMENT SHARES

The proposed issue of the COO Emolument Shares represents part of the emolument to Mr. Ng for his appointment as the COO of the Company. Pursuant to the terms and conditions of the COO Service Contract, the COO Emolument Shares are a signing bonus that is not subject to any performance target which is payable within two months from the signing date, subject to the Stock Exchange’s and/or regulatory approval.

Qualification and Experience of COO

Mr. Ng graduated from The University of Hong Kong with a Bachelor degree in Science, and is a fellow member of the Hong Kong Institute of Certified Public Accountants and an associate member of The Chartered Institute of Management Accountants.

Mr. Ng has over 10 years of management experience. Prior to joining the Company, he worked for K11 Cultural Enterprises Business Group as Head of New Business and was appointed in managerial roles for C.K. Hutchison (stock code: 0001), CROCS (NASDAQ: CROX), Wang On Group (stock code: 1222) and IATS Group. He is experienced on formulating business strategy and managing overall business operation for businesses across variety of industries and markets.

The Directors believe that the qualification and experience of Mr. Ng, as equipped with the managerial experience of formulating business strategy of emerging industries and familiarity with the operation of retail business, is invaluable to the Company in driving the current EV-charging business.

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LETTER FROM THE BOARD

The Board’s Consideration

The terms of the COO Service Contract and the number of the COO Emolument Shares were determined by the remuneration committee of the Company and the Board with reference to his duties and responsibilities of the Company, his qualifications and experience, the Company’s remuneration policy and the prevailing market rate. The prevailing market rate refers to the COO Emolument Shares Reference Closing Price, whereas the remuneration committee reviewed the closing price of the Company up to the date of the COO Service Contract and is of the view that the COO Emolument Shares are fair and reasonable as a signing bonus for the appointment of Mr. Ng as COO and the remuneration package for Mr. Ng as disclosed above, is fair and reasonable given his qualifications and experience in management. The Board is of the view that the terms of the COO Service Contract (including the issue of the COO Emolument Shares) are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

During the negotiations between the Company and Mr. Ng on the terms and conditions of the COO Service Contract, the Directors had considered other alternative awards as remuneration such as cash and share options. However, pursuant to the 2021 Interim Report, the Group had cash and bank balances of approximately HK$19.7 million, after paying cash to Mr. Ng as a signing bonus, it will result in a decrease in the Group’s cash and bank balances of approximately HK$17.3 million, representing approximately a 12.2% decrease with reference to the COO Emolument Shares Reference Closing Price, leaving the Group at a vulnerable position in terms of cash. In terms of share options, as at the Latest Practicable Date, there are outstanding 27,464,000 Options. The Company may only grant 16,536,000 Shares Options pursuant to the Share Option Scheme. The Directors consider that upon granting the share options to Mr. Yip, the Company will lack flexibility in making new grants of Options under the Share Option Scheme. Further, the COO Emolument Shares are locked up and will be vested in 48 months after granting to Mr. Ng which the valuation of the COO Emolument Shares is linked with the business performance and the market capitalisation of the Company, so as to provide a long-term incentive to his performance as well as benefit to the Company’s shareholders. The Directors believe that issuing and allotting the COO Emolument Shares to Mr. Ng will provide incentive for his commitment and contribution to the Group in the future.

After taking into account of the above, the Directors and the remuneration committee are of the view that it is of the best interest of the Company and the Shareholders to issue the COO Emolument Shares and appoint Mr. Ng as the COO of the Company.

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LETTER FROM THE BOARD

IV. CONNECTED TRANSACTION IN RELATION TO SETTLEMENT OF LOAN THROUGH SUBSCRIPTION OF NEW SHARES

On 20 December 2021, each of the Creditors separately entered into a loan agreement with the Company with no fixed term, interest rate and security. The principal terms of the loan agreements are as follows:

Creditor (A)’s Loan Agreement

Date: 20 December 2021 Parties: Company as the borrower Creditor (A) as the lender Loan amount: HK$15,000,000 Term: No fixed term Purpose: To support the working capital of the EV-charging business of the Company Interest Rate: nil

Creditor (B)’s Loan Agreement

Date: 20 December 2021 Parties: Company as the borrower Creditor (B) as the lender Loan amount: HK$8,500,000 Term: No fixed term Purpose: To support the working capital of the EV-charging business of the Company Interest Rate: nil

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LETTER FROM THE BOARD

Creditor (C)’s Loan Agreement

Date: 20 December 2021 Parties: Company as the borrower Creditor (C) as the lender Loan amount: HK$2,600,000 Term: No fixed term Purpose: To support the working capital of the EV-charging business of the Company Interest Rate: nil

Creditor (D)’s Loan Agreement

Date: 20 December 2021 Parties: Company as the borrower Creditor (D) as the lender Loan amount: HK$2,000,000 Term: No fixed term Purpose: To support the working capital of the EV-charging business of the Company Interest Rate: nil

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LETTER FROM THE BOARD

Deed of Settlement of Debt

As at the date of the Deed, the Company as debtor is indebted to the Creditors in an aggregate amount of HK$28.1 million.

On 30 December 2021, the Company as debtor entered into the Deed with the Creditors, pursuant to which the Company has conditionally agreed to issue and allot to the Creditors (or their nominee(s)) an aggregate of 45,316,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by the Creditors under the Deed shall be satisfied by capitalizing the entire amount of the Shareholders’ Loan due to the Creditors from the Company. Details of the terms of the Deed are summarized below:

Date: 30 December 2021 Parties: (1) Issuer/debtor: the Company; and (2) Creditors: Mr. Wu Jianwei as Creditor (A) Mr. Liang Zihao as Creditor (B) Mr. Li Man Keung Edwin as Creditor (C) Mr. Pan Wenyuan as Creditor (D)

Subscription Shares

Pursuant to the Deed:

• (1) the Company has conditionally agreed to issue and allot to Creditor (A) (or its nominee(s)) 24,192,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (A) shall be satisfied by capitalizing the amount of Debt (A) due to Creditor (A) from the Company;

• (2) the Company has conditionally agreed to issue and allot to Creditor (B) (or its nominee(s)) 13,708,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (B) shall be satisfied by capitalizing the amount of Debt (B) due to Creditor (B) from the Company;

• (3) the Company has conditionally agreed to issue and allot to Creditor (C) (or its nominee(s)) 4,192,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (C) shall be satisfied by capitalizing the amount of Debt (C) due to Creditor (C) from the Company;

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LETTER FROM THE BOARD

• (4) the Company has conditionally agreed to issue and allot to Creditor (D) (or its nominee(s)) 3,224,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (D) shall be satisfied by capitalizing the amount of Debt (D) due to Creditor (D) from the Company; and

• (5) the aforementioned subscriptions are bundled together into the same Deed and the Subscription Shares are to be issued under the same Subscription Specific Mandate, where its approval is to be sought from the Independent Shareholders at the EGM and to be granted to the Board for the allotment and issue of the Subscription Shares.

Number of Subscription Shares

The 45,316,000 Subscription Shares represent (i) approximately 7.46% of the issued share capital of the Company as at the date of the Deed; and (ii) approximately 6.94% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares, assuming that there will be no change in the authorised share capital and issued share capital of the Company between the date of the Deed and the date of Subscription Completion. The aggregate nominal value of the Subscription Shares is HK$453,160.

The Subscription Shares will be allotted and issued under the Subscription Specific Mandate to be sought for approval from the Independent Shareholders at the EGM.

Subscription Price

The Subscription Price is HK$0.62 per Subscription Share, and the aggregate Subscription Price of all the Subscription Shares of HK$28,095,920 payable by the Creditors shall be settled by way of capitalisation of the Shareholders’ Loan, and the remaining balance of the loan of HK$4,080.00 will be settled by cash by the Company in due course.

The Subscription Price of HK$0.62 per Subscription Share represents:

• (i) a discount of approximately 24.4% to the closing price of HK$0.82 per Share as quoted on the Stock Exchange on the date of the Deed; and

• (ii) a discount of approximately 22.1% to the average closing price of approximately HK$0.796 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Deed.

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LETTER FROM THE BOARD

The Subscription under the Subscription Specific Mandate on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 1.69% represented by the theoretical diluted price of approximately HK$0.806 to the benchmarked price of approximately HK$0.82 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the Deed of HK$0.82 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the Deed of HK$0.796 per Share).

The Subscription Price was determined, among others, with reference to (i) the prevailing market price of the Shares and the market conditions; and (ii) the funding needs and financial position of the Group and was negotiated on an arm’s length basis between the Company and the Creditors. When determining the Subscription Price, the Directors have reviewed the closing prices and the trading volume of the Shares during the period from 1 July 2021 to 30 December 2021 being the date of the Deed (the “ Subscription Review Period ”). The Directors consider that the Subscription Review Period covering 6 months prior to the date of the Deed 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 Subscription Price.

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

==> picture [324 x 194] intentionally omitted <==

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

Stock Price Share Price performance during the Subscrip�on Review Period
1.2
1.0
0.8
0.6
Stock Price
0.4 Subscrip�on Price
0.2
0.0
Date
28/6/2021 5/7/2021 12/7/2021 19/7/2021 26/7/2021 2/8/2022 9/8/2021 16/8/2021 23/8/2021 30/8/2021 6/9/2021 13/9/2021 20/9/2021 27/9/2021 4/10/2021 11/10/2021 18/10/2021 25/10/2021 1/11/2021 8/11/2021 15/11/2021 22/11/2021 29/11/2021 6/12/2021 13/12/2021 20/12/2021 27/12/2021
----- End of picture text -----

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LETTER FROM THE BOARD

The following table sets out (a) the average daily trading volume of the Shares during the Subscription 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/period during the Subscription Review Period:

				Percentage
				of average
				daily
				trading
				volume to
				total
				number of
			Average	issued
	Total		daily	shares as at
	trading	Number of	trading	the end of
	volume of	trading	volume of	the month/
Period	Shares	days	the Shares	period
July	4,044,000	21	192,571	0.032%
August	1,024,000	22	46,545	0.008%
September	1,932,000	21	92,000	0.015%
October	1,588,000	18	88,222	0.015%
November	760,000	22	34,545	0.006%
December (up to the date
of the Deed)	888,001	21	42,286	0.007%

Source: the website of the Stock Exchange

The Board (including members of the Independent Board Committee) considers that the Subscription Price and the terms of the Deed are fair and reasonable based on the current market conditions and the financial status of the Company for the reasons set forth below:

• (a) having considered (i) the general downward trend of the closing price of the Shares during the Subscription Review Period (ranged from the lowest of HK$0.73 per Share on 6 December 2021 to the highest of HK$1.15 per Share on 7 July 2021); (ii) the relatively low liquidity of the Shares during the Subscription Review Period (the monthly average daily trading volume in proportion to the total number of issued Shares ranged from approximately 0.007% to 0.032%); and (iii) the current financial situation of the Company, the Board (including the members of the Independent Board Committee) are of the view that the Subscription Price is reasonable; and

• (b) due to the reasons disclosed in the paragraph headed “Connected Transaction in relation to Settlement of Loan through Subscription of New Shares — Reasons and Benefits for the Loan Capitalisation Through Subscription of New Shares under Specific Mandate”, it would be beneficial for capitalising the Shareholders’ Loan through the Subscription.

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LETTER FROM THE BOARD

Conditions Precedent for the Subscription of Subscription Shares for Capitalizing the Entire Amount of Debts

Completion is conditional upon the fulfilment or waiver (as the case may be) of the following conditions:

• (a) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, the Subscription Shares and such approval has not been revoked prior to Completion;

• (b) the necessary consents and approvals in relation to the Deed and the transactions contemplated thereunder having been obtained; and

• (c) the representation and warranties of the Company remaining true and accurate in all material respects and are not misleading as at the date of the Deed and the date of Subscription Completion.

The Creditors may waive any conditions, except the condition referred to in (a) above which may not be waived by any party to the Deed. If the above conditions are not fulfilled or waived (as the case may be) by 5:00 p.m. on 30 June 2022 (or such other date as the parties to the Deed may agree in writing), the Deed will be automatically terminated and lapsed and none of the parties to the Deed shall have any claim against the other in respect of the Subscription, save for any antecedent breaches thereof. As at the Latest Practicable Date, none of the conditions to the Deed have been fulfilled.

Completion

Subscription Completion shall take place within ten (10) Business Days after the date of fulfillment of the conditions precedent set out in the Deed. The subscription amount payable by the Creditors shall be satisfied by capitalizing the entire amount of the Shareholders’ Loan due to the Creditors from the Company.

Information of the Group and the Creditors

As at the date of the Deed, Creditor (A) is a substantial shareholder, interested in approximately 235,603,225 Shares, representing approximately 38.76% of the total number of issued Shares of the Company, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

As at the date of the Deed, Creditor (B) is a substantial shareholder, interested in approximately 235,603,225 Shares, representing approximately 38.76% of the total number of issued Shares of the Company, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

As at the date of the Deed, Creditor (C) is an executive Director, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

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LETTER FROM THE BOARD

As at the date of the Deed, Creditor (D) is an executive Director, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

The Company is an investment holding company and its subsidiaries are principally engaged in the provision of printing, typesetting and translation services and electric vehicle charging business in Hong Kong.

Reasons and Benefits for the Loan Capitalisation Through Subscription of New Shares under Specific Mandate

On 20 December 2021, each of the Creditors separately entered into a loan agreement with the Company, pursuant to which the Creditors each granted a loan with an aggregate principal amount of HK$28.1 million to the Company. The parties agreed that the amount of HK$28,095,920 of the Shareholders’ Loan shall be capitalized as part of the consideration for the Subscription upon Subscription Completion. Accordingly, the remaining balance under the Shareholders’ Loan (after the loan capitalised through subscription of new Shares) will be settled by cash by the Company pursuant to the terms of the Shareholders’ Loan as supplemented by the Deed.

As the Group has a low cash balance position in September, whereas during the period from October to December, the Group has, amongst others, been funding 11 EV-charging projects, which amounted to approximately HK$4.6 million, and paid other expenses for the Group’s operations, and due to upcoming expenses such as the expected amount of HK$4.0 million for the decoration of the Group’s new office, the Directors believed that funding was required for the Group’s operating expenses. Therefore, on 30 September 2021, the Company has engaged the Placing Agent to raise funds for the Company (for more details please refer to the section headed “ Placing of New Shares under Specific Mandate ”), however due to procedures for approving the issuance of Placing Shares as well as uncertainties of the timeline of the Placing such as potential difficulty in seeking Placees for the Placing, the Group was unable to receive immediate funding. Pursuant to the Third Supplemental Placing Agreement, the Placing Period has been postponed for 4 months and the Long Stop Date has been postponed for 2 months, there is no guarantee that the Placing would be able to be completed within the revised Placing Period and may be subject to further delay.

As disclosed in the section headed “ Placing of New Shares under Specific Mandate - Reasons for the Placing ”, the EV-charging industry is capital intensive for investment in charging infrastructure and research and development activities. According to the Company’s assessment and objectives for the next twelve months and the Group’s current financial situation, the Directors believe that the Company does not have sufficient cash for operation to deploy the charging facilities in pipeline and expansion plans for marketing campaigns and therefore requires immediate funding. In light of the uncertainties in the timeline from financing through issuing Shares such as subscription and placing, the Creditors, after taking into consideration of their respective positions of the Company, (i.e. Directors and substantial shareholders) believe that they were committed to the business development of the Company and obliged to “step-up” as leaders of the Company to offer

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LETTER FROM THE BOARD

the immediate funding and to support the Company through the current financial situation by providing additional funding of HK$28.1 million in instalments since mid-September without any interest nor collateral. The Creditors started injecting cash into the Group from mid-September to provide upfront cash for the Group’s expenses, and the Loan Agreements were executed in December after negotiations and when the Board is of the view that the injection from the Creditors were sufficient for the time being. The Board believes that obtaining a loan would be more suitable than other financing methods (i.e. placing and subscription) given their uncertainties in timeline and the Company’s current financial situation. According to the Group’s management accounts (unaudited), the cash balance of the Group was approximately HK$8.6 million as at 1 September 2021 and the cash balance of the Group was approximately HK$17.5 million as at 30 November 2021, while the Creditors provided additional fundings of approximately HK$16.1 million from midSeptember 2021 to 30 November 2021, without the Shareholders’ Loan, the Group would have had insufficient cash for the Group’s operations from mid-September 2021 to 30 November 2021.

Pursuant to Rule 20.88 of the GEM Listing Rules, as the Shareholders’ Loan is conducted on terms better than normal commercial terms (i.e. no repayment schedule, no interest and no collateral), the Shareholders’ Loan is fully exempted from the disclosure obligations under Chapter 20 of the GEM Listing Rules.

As disclosed in the paragraph headed “Placing of New Shares under Specific Mandate — Reasons for the Placing”, the Company has long been in a loss position and has been looking for opportunities to raise funds through means such as placing and subscription as well as the fact that the Group has a low cash balance. The Board and the Creditors understood the lack of cash of the Company and may cause burden to the Group should the Creditors request the Group to repay the Shareholders’ Loan, and the urgency to raise funds to meet the Company’s operational needs or for future development, the Creditors were therefore willing to settle the principal amount of the Shareholders’ Loan through capitalisation by way of the Subscription. The Creditors together with the Board believe that this will show the Creditors’, as their respective positions, commitment and confidence to reverse the Company’s loss position and future prospects.

It shows the confidence and support of the substantial shareholders and Directors towards the long-term development of the Company. Further, given current financial position of the Company, it is not favourable from bank’s prospective if we raised as a shareholders’ loan. It shows commitment to external financial institutions by converting as share as well as enhancement of capital base of the Company.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, HK$28.1 million has been utilised from the proceeds from the Shareholders’ Loan for the operating expenses for the EV-charging business i.e. staff costs, rent and inventory costs.

V. REFRESHMENT OF THE SCHEME MANDATE LIMIT UNDER THE SHARE OPTION SCHEME

The Company adopted the Share Option Scheme pursuant to a written resolution of the Shareholders passed on 19 April 2018 and will remain in force for a period of 10 years. The purpose of the Share Option Scheme is to enable the Company to grant options to selected participants as incentives or rewards for their contribution to the Group. As stated therein, the Share Option Scheme allows the Board to grant options to any individual who is an employee of our Group (including directors) or any consultant, adviser, distributor, contractor, supplier, agent, customer, business partner, services provider of the Company who has or will contribute to our Company as approved by the Board on the basis of their contribution to the development and growth of our Group (“ Eligible Persons ”). Save for the Share Option Scheme, the Company has not adopted any other share option scheme.

Pursuant to the GEM Listing Rules and the principle terms of the Share Option Scheme, the total number of Shares which may be issued upon the exercise of all Options to be granted under the Share Option Scheme and any other schemes of the Company must not exceed 10% of the Shares in issue as at the date of adoption of the Share Option Scheme. Subject to prior Shareholders’ approval, the Company may refresh the Scheme Mandate Limit provided that the Scheme Mandate Limit so refreshed must not exceed 10% of the Shares in issue at the date of the approval of the refreshment by the Shareholders.

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LETTER FROM THE BOARD

During the period from the date of adoption of the Share Option Scheme to the Latest Practicable Date, 28,428,000 share options were granted to the Eligible Persons under the Share Option Scheme. The table below shows a breakdown of share options that were granted to each category of the Eligible Persons:

					Number of
					existing shares
				Exercise	that the
Category of				price	grantee may
Grantees	Date of Grant	Validity period	Vesting schedule	per share	subscribe for
				(HK$)
Executive Directors
— Liang Zihao	28 January 2021	10 years from the	Vested on, and	0.54	4,400,000
		date of grant	exercisable from,
			the sixth month of
			the date of grant
— Sam Weng Wa	28 January 2021	10 years from the	Vested on, and	0.54	440,000
Michael		date of grant	exercisable from,
			the sixth month of
			the date of grant
— Li Man Keung	28 January 2021	10 years from the	Vested on, and	0.54	4,400,000
Edwin		date of grant	exercisable from,
			the sixth month of
			the date of grant
— Lau Wai Yan	28 January 2021	10 years from the	Vested on, and	0.54	1,100,000
Lawson		date of grant	exercisable from,
			the sixth month of
			the date of grant
	28 January 2021	10 years from the	Vested on, and	0.54	3,300,000
		date of grant	exercisable from,
			the third month
			of meeting his
			performance target as
			determined by
			the Company

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LETTER FROM THE BOARD

					Number of
					existing shares
				Exercise	that the
Category of				price	grantee may
Grantees	Date of Grant	Validity period	Vesting schedule	per share	subscribe for
				(HK$)
Non-executive Director
— Wu Jianwei	28 January 2021	10 years from the	Vested on, and	0.54	4,400,000
		date of grant	exercisable from,
			the sixth month of
			the date of grant
Independent non-executive Directors
— Tam Ka Hei	28 January 2021	10 years from the	Vested on, and	0.54	440,000
Raymond		date of grant	exercisable from,
			the sixth month of
			the date of grant
— Yuen Chun Fai	28 January 2021	10 years from the	Vested on, and	0.54	440,000
		date of grant	exercisable from,
			the sixth month of
			the date of grant
— Zhu Xiaohui	28 January 2021	10 years from the	Vested on, and	0.54	440,000
		date of grant	exercisable from,
			the sixth month of
			the date of grant
Employees	28 January 2021	10 years from the	Vested on, and exercisable	0.54	2,108,000
		date of grant	from,
			the sixth month of the
			date of grant
	28 January 2021	10 years from the	Vested on, and	0.54	4,284,000
		date of grant	exercisable from,
			the third month
			of meeting his
			performance target
			as determined by the
			Company
Consultant	28 January 2021	10 years from the	Vested on, and	0.54	1,760,000
		date of grant	exercisable from,
			the sixth month of
			the date of grant

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LETTER FROM THE BOARD

The Company granted share options to the directors and employees of the Group to reward their past contribution and provide incentives for their continued commitment and contribution to the Group in the future. Share options were granted to the consultant of the Group as he i) assisted in the due diligence work on the target company in relation to the acquisition in August 2020 (the “ Target Company ”) as disclosed in the announcements and circulars dated 21 February 2020, 30 June 2020 and 4 August 2020; ii) advising on the corporate governance of the Target Company after the acquisition in August 2020; and iii) advising on applicable government funding schemes for the Group. The Directors consider that the consultant has contributed significantly in the business development of the Group and wish to incentivize and reward his past and future contribution. The amount of share options granted to the Directors, employees and the consultant was based on their contribution to the Group as well as taking into account their future impact to the Group, and was decided after the discussion between the Directors and their consideration in the merits and conditions of each grant on a case-by-case basis.

Given that the Company’s business development requires the long-term and sustainable business relationships with persons including adviser, consultant, distributor, contractor, supplier, agent, customer, business partner or service provider of any member of the Group, our Directors are of the view that granting share options for these adviser, consultant, distributor, contractor, supplier, agent, customer, business partner or service provider of any member of the Group would result in them providing better services to the Company, attracting and retaining experienced and qualified personnel, optimizing performance efficiency and benefitting the long-term growth of the Company. In addition, rewarding these adviser, consultant, distributor, contractor, supplier, agent, or service provider of any member of Group with share options would reduce their professional fees which would result in minimizing the cash outflow. Furthermore, the Board believes that rewarding customers and business partners of any member of the Group would act as an incentive to continue their existing relationship with our Group as well as encouraging them to introduce potential business opportunities or other business partners to the Group, hence benefiting the long-term development of the Group.

The Board considers that the Share Option Scheme will motivate more people to contribute to the Group’s development and hence will grant share options to Eligible Persons as incentives and rewards according to their contribution or potential contribution to the development and the growth of the Group. Furthermore, the Board considers that the Eligible Persons will share the same interests and objectives with the Group upon their exercise of the Share Options, which will be beneficial to the long-term development of the Group. Due to the aforesaid reasons, the Company will continue offer share options as rewards and incentives, subject to the Board’s discretion, to the Eligible Persons to encourage them to provide more valuable recommendation and service for the sake of the interest of the Group.

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LETTER FROM THE BOARD

The Scheme Mandate Limit has not been refreshed since the adoption of the Share Option Scheme on 19 April 2018. The Company has granted 28,428,000 Options on 28 January 2021 under the Share Option Scheme. As at the Latest Practicable Date, 964,000 Options were lapsed and no Options had been exercised or cancelled. Since the adoption of Share Option Scheme and up to the Latest Practicable Date, there are outstanding 27,464,000 Options, entitling the holders thereof to subscribe for 27,464,000 Shares, which is approximately 4.52% of the number of issued Shares of the Company as at the Latest Practicable Date. The total number of shares which the Company may issue under the Share Option Scheme adopted on 19 April 2018 must not exceed 44,000,000 Shares, which is approximately 7.24% of the Shares in issue as at the Latest Practicable Date. Unless the Scheme Mandate Limit is refreshed, the Company may only grant 16,536,000 Shares Options pursuant to the Share Option Scheme, representing less than 2.72% of the Shares in issue as at the Latest Practicable Date. The Directors consider that it is in the best interest of the Company to refresh the Scheme Mandate Limit to permit the grant of further Options to provide incentives to the grantees.

As at the Latest Practicable Date, the total number of Shares in issue is 607,790,541. If the Scheme Mandate Limit is refreshed, the Board will be able to grant Options for subscription of up to 60,779,054 Shares, being 10% of the Shares in issue as at the EGM date based on 607,790,541 Shares in issue and assuming that no further Shares are issued or repurchased prior to the EGM. For the avoidance of doubt, Options previously granted under the Share Option Scheme and any other schemes of the Company (including those outstanding, cancelled, lapsed or exercised options) will not be counted for the purpose of calculating the Scheme Mandate Limit as refreshed.

The Board wishes to maximise the flexibility in making new grants of Options under the Share Option Scheme. The Directors consider that the refreshment of the Scheme Mandate Limit is in the interests of the Group and the Shareholders as a whole as it enables the Company to provide incentives or rewards to participants for their contribution to the Group. As at the Latest Practicable Date, the Board do not have a plan to grant any Options immediately before or after the refreshment of Scheme Mandate Limit.

As at the Latest Practicable Date, there are outstanding 27,464,000 Options that were granted but not exercised. After the refreshment of the Scheme Mandate Limit, the Board will be able to grant Options for subscription of up to 60,779,054 Shares. The aggregate Options for subscription of after the refreshment will amount to 88,243,054 Shares, which is approximately 14.52% of the total Shares in issue as at the EGM date and assuming that no further Shares are issued or repurchased prior to the EGM. As such the Company will not exceed the 30% limit as required under Rule 23.03(3) of the GEM Listing Rules. The Company further confirms that no Options shall be granted under the Share Option Scheme or any schemes of the Company if this will result in the 30% limit as required under Rule 23.03(3) of the GEM Listing Rules being exceeded. As at the Latest Practicable Date, such 30% was the equivalent of 182,337,162 Shares. The Directors will ensure that the requirements under Chapter 23 of the GEM Listing Rules will be fully complied with from time to time.

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LETTER FROM THE BOARD

As required by the Share Option Scheme and the GEM Listing Rules, an ordinary resolution will be proposed at the EGM to approve the refreshment of the Scheme Mandate Limit such that the total number of Shares which may be issued upon exercise of all options to be granted under the refreshed Scheme Mandate Limit must not exceed 10% of the total number of the Shares in issue as at the date of approval of the refreshed Scheme Mandate Limit.

The refreshment of the Scheme Mandate Limit is conditional upon (a) the Shareholders passing an ordinary resolution to approve the refreshment of the Scheme Mandate Limit at the EGM; and (b) the Stock Exchange granting the approval of the listing of, and permission to deal in, the new Shares (representing 10% of the Shares in issue as at the date of passing the relevant resolution at the EGM) to be issued pursuant to the exercise of any options granted under the refreshed Scheme Mandate Limit. Application will be made to the Stock Exchange for granting the listing of, and permission to deal in, the new Shares which may fall to be issued upon the exercise of the Options that may be granted under the refreshed Scheme Mandate Limit.

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the Latest Practicable Date, the Company has 607,790,541 Shares in issue. Set out below are the shareholding structures of the Company (i) as at the Latest Practicable Date and (ii) under the following four scenarios arising from different acceptance ratios of the Placing and the issue of the Emolument Shares (for illustrative purpose only):

• (i) shareholding immediately upon completion of the Placing assuming no issue and allotment of the CEO Emolument Shares and COO Emolument Shares and no completion of the Subscription (“ Scenario I ”);

• (ii) shareholding immediately upon the issue and allotment of the CEO Emolument Shares assuming no completion of the Placing; no issue and allotment of the COO Emolument Shares; and no completion of the Subscription (“ Scenario II ”);

• (iii) shareholding immediately upon the issue and allotment of the COO Emolument Shares assuming no completion of the Placing; no issue and allotment of the CEO Emolument Shares; and no completion of the Subscription (“ Scenario III ”);

• (iv) shareholding immediately upon the completion of the Subscription assuming no completion of the Placing and no issue and allotment of the CEO Emolument Shares and COO Emolument Shares (“ Scenario IV ”); and

• (v) shareholding immediately upon the completion of the (i) Placing; (ii) the issue and allotment of the CEO Emolument Shares and the COO Emolument Shares; and (iii) the completion of the Subscription (“ Scenario V ”).

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LETTER FROM THE BOARD

Shareholding as at the	Latest Practicable Date Scenario I Scenario II Scenario III Scenario IV Scenario V	Approximate Approximate Approximate Approximate Approximate Approximate	Number of % of Shares Number of % of Shares Number of % of Shares Number of % of Shares Number of % of Shares Number of % of Shares	Shareholders Shares held in issue Shares held in issue Shares held in issue Shares held in issue Shares held in issue Shares held in issue	Global Fortune Global Limited	(Note 1) 235,603,225 38.76% 235,603,225 33.91% 235,603,225 38.39% 235,603,225 38.57% 235,603,225 36.07% 235,603,225 31.45%	Glorytwin Limited 81,000,000 13.33% 81,000,000 11.66% 81,000,000 13.19% 81,000,000 13.26% 81,000,000 12.40% 81,000,000 10.81%	Lau Wai Yan Lawson_(Note 2)_ 30,302,703 4.99% 30,302,703 4.36% 30,302,703 4.94% 30,302,703 4.96% 30,302,703 4.64% 30,302,703 4.05%	Pan Wenyuan 23,872,000 3.93% 23,872,000 3.44% 23,872,000 3.89% 23,872,000 3.91% 27,096,000 4.15% 27,096,000 3.62%	Li Man Keung Edwin 19,112,613 3.14% 19,112,613 2.75% 19,112,613 3.11% 19,112,613 3.13% 23,304,613 3.57% 23,304,613 3.11%	Wu Jianwei – – – – 24,192,000 3.70% 24,192,000 3.23%	Liang Zihao – – – – 13,708,000 2.10% 13,708,000 1.83%	Yip Shiu Hong – – 5,997,905 0.98% – – 0.00% 5,997,905 0.80%	Ng Sze Chun – – – 2,998,953 0.49% – 0.00% 2,998,953 0.40%	Public Shareholders	Placees – 87,000,000 12.52% – – – – 87,000,000 11.61%	Other public shareholders 217,900,000 35.85% 217,900,000 31.36% 217,900,000 35.50% 217,900,000 35.68% 217,900,000 33.37% 217,900,000 29.09%	Total 607,790,541 100.00% 694,790,541 100.00% 613,788,446 100.00% 610,789,494 100.00% 653,106,541 100.00% 749,103,399 100.00%		Note:	(1) 235,603,225 Shares are held by Global Fortune Global Limited which is owned as to 51% by Mr. Wu Jianwei, the non-executive Director of the Company, and as to 49% by	Mr. Liang Zihao, the executive Director and Co-Chairman of the Board of the Company.	(2) As at the Latest Practicable Date, 22,802,703 Shares are held by Cornerstone Wealth Holdings Limited which is wholly-owned by Mr. Lau Wai Yan Lawson, the executive	Director of the Company.

— 39 —

LETTER FROM THE BOARD

• (i) the shareholding of public Shareholders is expected to be diluted from 35.85% as at the Last Practicable Date to 31.36% upon completion of Scenario I of the total issued Shares.

• (ii) the shareholding of public shareholders is expected to be diluted from 35.85% as at the Last Practicable Date to 35.50%% upon completion of Scenario II of the total issued Shares.

• (iii) the shareholding of public shareholders is expected to be diluted from 35.85% as at the Last Practicable Date to 35.68% upon completion of Scenario III of the total issued Shares.

• (iv) the shareholding of public shareholders is expected to be diluted from 35.85% as at the Last Practicable Date to 33.37% upon completion of Scenario IV of the total issued Shares.

• (v) the shareholding of public shareholders is expected to be diluted from 35.85% as at the Last Practicable Date to 29.09% upon completion of Scenario V of the total issued Shares. Upon completion of Scenario V, the theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) would be approximately 7.91% represented by the theoretical diluted price of approximately HK$0.921 to the benchmarked price of approximately HK$1.00 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the CEO Service Contract of HK$0.98 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the CEO Service Contract of HK$1.00 per Share).

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	Intended use	Actual use of
announcement	activity	raised	of net	proceeds	net proceeds
15 December	Placing of	Approximately	(i)	EV-charging	Fully utilised in
2020 and	49,625,000 new	HK$19.35		business	accordance
4 January 2021	Shares under	million		development;	with the
	general				intended use
	mandate		(ii)	commercial
				and financial
				printing
				business
				operation;
				and
			(iii)	working
				capital and
				general
				corporate
				purposes

— 40 —

LETTER FROM THE BOARD

Date of	Fund raising	Net proceeds	Intended use	Intended use	Actual use of
announcement	activity	raised	of net	proceeds	net proceeds
15 December	Subscription of	Approximately	(i)	EV-charging	Fully utilised in
2020,	69,625,000 new	HK$27.8		business	accordance
22 January 2021,	Shares under	million		development;	with the
10 February	specific mandate				intended use
2021 and			(ii)	commercial
10 March 2021				and financial
				printing
				business
				operation;
				and
			(iii)	working
				capital and
				general
				corporate
				purposes
29 November	Subscription of	Approximately	Working capital and		HK$0.4
2021 and	8,000,000	HK$4.92	general corporate		million is
6 December	new Shares	million	purposes		utilised in
2021	under general				accordance
	mandate				with the
					intended
					use

The aggregate Shares issued amounted to 127,250,000 Shares pursuant to the equity fund raising activities for the past twelve months disclosed above, therefore resulted in a dilution effect of approximately 4.68% from 22.35% to 17.67% for the public Shareholders prior to the equity fund raising activities for the past twelve months and a dilution effect of approximately 8.01% from 22.35% to 14.34% after the completion of Scenario V, assuming there is no change of Shares for the public Shareholders prior to the equity fund raising activities for the past twelve months.

The aggregate Shares issued amounted to 201,941,000 Shares pursuant to (i) the subscription of 69,625,000 new Shares under specific mandate as disclosed in the announcement of the Company dated 15 December 2020 (the “ 2020 Subscription ”); (ii) the Placing; and (iii) the Subscription therefore resulted in a cumulative theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 5.52%, which is below 25% as required under Rule 10.44A of the GEM Listing Rules.

APPLICATION FOR LISTING

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

— 41 —

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As the Placing Shares, CEO Emolument Shares and COO Emolument Shares will be allotted and issued under the Placing Specific Mandate, CEO Emolument Shares Specific Mandate and COO Emolument Shares Specific Mandate, respectively, to be obtained at the EGM, the Placing and the issue and allotment of the CEO Emolument Shares and COO Emolument Shares are subject to the Shareholders’ approval.

As at the Latest Practicable Date, the Creditors are either substantial shareholders or Directors of the Company, and are therefore connected persons of the Company under Chapter 20 of the GEM Listing Rules. Accordingly, the Subscription will constitute a connected transaction for the Company and is subject to the announcement, reporting and Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

As at the Latest Practicable Date, (i) Creditor (A) and Creditor (B) are interested in 235,603,225 Shares, representing 38.76% of the total Shares, through Global Fortune Global Limited which is owned as to 51% to Creditor (A) and 49% to Creditor (B); (ii) Creditor (C) is interested in a total of 19,112,613 Shares, representing 3.14% of the total Shares, where 13,200,000 Shares are held through Tanner Enterprises Group Limited, a company wholly owned by Creditor (C) and 5,912,613 Shares are directly held by Creditor (C); and (iii) Creditor (D) is interested in 23,872,000 Shares, representing 3.93% of the total Shares, through Silver Rocket Limited, a company wholly owned by Creditor (D). When the Deed and the Subscription and the transactions contemplated thereunder were presented to the Board for its approval, Mr. Wu Jianwei, Mr. Liang Zihao, Mr. Li Man Keung Edwin and Mr. Pan Wenyuan were abstained from voting on the Board resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder. In accordance with the GEM Listing Rules and after the Board’s discussion, the Creditors have a material interest in the Subscription and therefore the Creditors, namely, Mr. Wu Jianwei, Mr. Liang Zihao, Mr. Li Man Keung Edwin and Mr. Pan Wenyuan and their respective associates are required to abstain from voting on the resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder at the EGM. As the Subscription Shares will be issued and allotted under the Subscription Specific Mandate to be obtained at the EGM, the grant of the Subscription Specific Mandate for the issuance and allotment of the Subscription Shares is subject to the Independent Shareholders’ approval at the EGM. Save as disclosed above, to the best of the knowledge, information and belief of the Directors, no other Shareholder has a material interest in the transactions contemplated under the Deed and the Subscription and will be required to abstain from voting on the resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder at the EGM.

EGM

A notice convening the EGM to be held virtually on Monday, 11 April 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 (i) the Placing Agreements; (ii) the Placing Specific Mandate; (iii) the CEO Emolument Shares Specific Mandate; (iv) the COO Emolument Shares Specific Mandate; (v) the Deed and the Subscription; and (vi) refreshment of the Scheme Mandate Limit under the Share Option Scheme and the transactions contemplated thereunder. As disclosed in the section above headed “Connected Transaction in Relation to

— 42 —

LETTER FROM THE BOARD

Settlement of Loan Through Subscription of New Shares”, the Creditors are connected persons of the Company under Chapter 20 of the GEM Listing Rules, and shall be required to abstain from voting on the resolution(s) of the Company approving the Deed and the grant of the Subscription Specific Mandate for the issuance and allotment of the Subscription Shares at the EGM.

Save as disclosed above and to the best of the knowledge, information and belief of the Directors and having making all reasonable enquiries, no other Shareholders have a material interest in (i) the Placing Agreements; (ii) the Placing Specific Mandate; (iii) the CEO Emolument Shares Specific Mandate; (iv) the COO Emolument Shares Specific Mandate; (v) the Deed and the Subscription; and (vi) refreshment of the Scheme Mandate Limit under the Share Option Scheme. Accordingly, no other shareholder will be required to abstain from voting on the resolutions to be proposed at the EGM.

If a member of the Company (whether individual or corporate) wishes to exercise his/her/its voting rights at the EGM, he/she/it must appoint the chairman of the EGM as his/her/its proxy to attend, speak and vote on his/her/its behalf at the EGM. In appointing the chairman of the EGM as proxy, a member of the Company (whether individual or corporate) must give specific instructions as to voting in the proxy form, the duly completed and signed proxy form must be deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, at the office of 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 not later than 3:00 p.m. on Saturday, 9 April 2022 (being not less than forty-eight (48) hours before the EGM), failing which the appointment will be treated as invalid. A form of proxy for use at the EGM is enclosed with this circular. For further information please refer to the section headed “Special Arrangement for the EGM” set out on pages ii to iii of this circular.

INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Tam Ka Hei Raymond, Mr. Yuen Chun Fai and Ms. Zhu Xiaohui, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and the reasonableness of the terms of the Deed and the Subscription and as to how to vote at the EGM. DL Securities has been appointed as Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate). The Independent Board Committee, having taken into account the advice and recommendation of the Independent Financial Adviser, consider that the terms of the the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. While the Subscription and the grant of the Subscription Specific Mandate are not in the ordinary and usual course of business of the Group, they are in the interests of the Company and the Shareholders as a whole, and accordingly recommends the Independent Shareholders to vote in favour of the relevant ordinary resolution(s) which will be proposed at the EGM for approving, inter alia, the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate). The text of the letter from the Independent Board Committee is set out on pages 45 to 46 of this circular while the text of the letter from the Independent Financial Adviser containing its advice is set out on pages 47 to 64 of this circular.

— 43 —

LETTER FROM THE BOARD

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 6 April 2022 to Monday, 11 April 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, 4 April 2022.

RECOMMENDATION

You are advised to read carefully the letter from the Independent Board Committee of this circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, the text of which is set out on pages 47 to 64 of this circular, consider that the terms of the Subscription are on normal commercial terms, fair and reasonable and, although the Subscription are not conducted in the ordinary and usual course of business of the Group, in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the allotment and issue of the Subscription Shares pursuant to the Deed.

The Board (including members of the Independent Board Committee) considers that the terms of the (i) the Placing Agreements; (ii) the Placing Specific Mandate; (iii) the CEO Emolument Shares Specific Mandate; (iv) the COO Emolument Shares Specific Mandate; (v) the Deed and the Subscription; and (vi) refreshment of the Scheme Mandate Limit under the Share Option Scheme are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends the 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 Placing is subject to the fulfillment of the conditions precedent set forth in the Placing Agreement. As the Placing 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

— 44 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

21 March 2022

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)

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SETTLEMENT OF LOAN THROUGH SUBSCRIPTION OF SHARES

We refer to the circular of the Company dated 21 March 2022 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

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

DL Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these respects. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 47 to 64 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 7 to 45 of the Circular and the additional information set out in the Appendix I to this Circular.

— 45 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

Yours faithfully, on behalf of

Independent Board Committee of

Cornerstone Technologies Holdings Limited

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

— 46 —

LETTER FROM DL SECURITIES

The following is the full text of the letter of advice from the Independent Financial Advisor, DL Securities (HK) Limited, to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

==> picture [45 x 45] intentionally omitted <==

==> picture [111 x 45] intentionally omitted <==

Unit 2801, Vertical Square 28 Heung Yip Road Wong Chuk Hang, Hong Kong

21 March 2022

• To: the Independent Board Committee and

the Independent Shareholders of Cornerstone Technologies Holdings Limited

Dear Sirs and Madams,

CONNECTED TRANSACTION IN RELATION TO SETTLEMENT OF LOAN THROUGH SUBSCRIPTION OF SHARES

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the independent Shareholders in relation to the connected transaction in relation to settlement of the Shareholders’ Loan through the Subscription and the transactions contemplated thereunder (“ Connected Transaction ”), details of which are set out in the letter from the Board (the “ Letter from the Board ”) in the circular issued by the Company to the Shareholders dated 21 March 2022 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Reference is made to the announcements of the Company dated 30 December 2021 and 5 January 2022 (the “ Announcements ”) in relation to, among others, the Connected Transaction.

On 20 December 2021, each of the Creditors separately entered into a loan agreement with the Company in an aggregate amount of HK$28.1 million, with no fixed term, interest rate and security.

On 30 December 2021, the Company as debtor entered into the Deed with the Creditors, pursuant to which the Company has conditionally agreed to issue and allot to the Creditors (or their nominee(s)) an aggregate of 45,316,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by the Creditors under the Deed shall be satisfied by capitalizing the entire amount of the Shareholders’ Loan of approximately HK$28,100,000 due to the Creditors from the Company.

— 47 —

LETTER FROM DL SECURITIES

LISTING RULE IMPLICATION

As at the Latest Practicable Date, the Creditors are either substantial shareholders or Directors of the Company, and are therefore connected persons of the Company under Chapter 20 of the GEM Listing Rules. Accordingly, the Subscription are not in the ordinary and usual course of the Company but will constitute a connected transaction for the Company and is subject to the announcement, reporting and Independent Shareholder’s approval requirements under Chapter 20 of the GEM Listing Rules.

As at the Latest Practicable Date, (i) Creditor (A) and Creditor (B) are interested in 235,603,225 Shares, representing 38.76% of the total Shares, through Global Fortune Global Limited which is owned as to 51% to Creditor (A) and 49% to Creditor (B); (ii) Creditor (C) is interested in a total of 19,112,613 Shares, representing 3.14% of the total Shares, where 13,200,000 Shares are held through Tanner Enterprises Group Limited, a company wholly owned by Creditor (C) and 5,912,613 Shares are directly held by Creditor (C); and (iii) Creditor (D) is interested in 23,872,000 Shares, representing 3.93% of the total Shares, through Silver Rocket Limited, a company wholly owned by Creditor (D). When the Deed and the Subscription and the transactions contemplated thereunder were presented to the Board for its approval, Mr. Wu Jianwei, Mr. Liang Zihao, Mr. Li Man Keung Edwin and Mr. Pan Wenyuan were abstained from voting on the Board resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder. In accordance with the GEM Listing Rules and after the Board’s discussion, the Creditors have a material interest in the Subscription and therefore the Creditors, namely, Mr. Wu Jianwei, Mr. Liang Zihao, Mr. Li Man Keung Edwin and Mr. Pan Wenyuan and their respective associates are required to abstain from voting on the resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder at the EGM. As the Subscription Shares will be issued and allotted under the Subscription Specific Mandate to be obtained at the EGM, the grant of the Subscription Specific Mandate for the issuance and allotment of the Subscription Shares is subject to the Independent Shareholders’ approval at the EGM. Save as disclosed above, to the best of the knowledge, information and belief of the Directors, no other Shareholder has a material interest in the transactions contemplated under the Deed and the Subscription and will be required to abstain from voting on the resolution(s) to approve the Deed and the Subscription and the transactions contemplated thereunder at the EGM.

INDEPENDENT BOARD COMMITTEE

An Independent Board Committee comprising Mr. Tam Ka Hei Raymond, Mr. Yuen Chun Fai and Ms. Zhu Xiaohui, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and the reasonableness of the terms of the Deed and the Subscription and as to how to vote at the EGM.as to whether the terms of the Deed and the transactions contemplated thereunder are (i) fair and reasonable; (ii) on normal commercial terms; (iii) in the interests of the Company and its shareholders as a whole; and (iv) how the independent Shareholders should vote in favor of the Subscription. None of the members of the Independent Board Committee has any material interest in the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate).

— 48 —

LETTER FROM DL SECURITIES

In our capacity as the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders for the purpose of the Listings Rules, our role is to give an independent opinion to advise the Independent Board Committee and the independent Shareholders as to whether the terms of the Deed, the Subscription and the transactions contemplated thereunder are (i) fair and reasonable; (ii) on normal commercial terms; (iii) in the interests of the Company and its shareholders as a whole; and (iv) how the independent Shareholders should vote in favour of the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate).

OUR INDEPENDENCE

In the last two years, we did not have any engagement with the Group as an independent financial adviser. As at the Latest Practicable Date, we did not have any relationships or interests with the Group or any other parties that could reasonably be regarded as relevant to the independence of us. Apart from normal professional fees payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the captioned transactions, and therefore we are considered to be eligible to give independent advice on the terms of the Deed, the Subscription and the transactions contemplated thereunder (including the grant of the Subscription Specific Mandate).

BASIS OF OUR OPINION

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

— 49 —

LETTER FROM DL SECURITIES

We consider that we have been provided with, and we have reviewed sufficient information to reach an informed view, to justify relying on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion. We have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors and the Management. We have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Company or its future prospects.

Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Subscription, as referred to in Rule 17.92 of the GEM Listing Rules (including the notes thereof) in formulating our opinion and recommendation. This letter is issued for the information for the Independent Board Committee and the independent Shareholders solely in connection with their consideration of the terms of the Deed, the Subscription and the transactions contemplated thereunder, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASON CONSIDERED

In arriving at our opinion to the Independent Board Committee and the independent Shareholders in respect of the Subscription, we have considered the following principal factors and reasons:

1. Background Information of the Group

1.1 Principal business of the Group

According to the Letter from the Board and the Management, the Group is principally engaged in the provision of printing, typesetting and translation services and electric vehicle charging business in Hong Kong.

1.2 Financial information of the Group

Referring to the announcement of the Company dated 11 December 2020, the Company has resolved to change the financial year end date of the Company from 31 March to 31 December. Accordingly, the following is a summary of the financial information of the Group for the nine months ended 31 December 2020 and the year ended 31 March 2020 as extracted from the 2020 Annual Report, and for the six months ended 30 June 2021 and 30 June 2020 as extracted from 2021 Interim Report:

— 50 —

LETTER FROM DL SECURITIES

Consolidated income statement

(i) Financial performance for the year ended 31 December 2020

	For the nine	For the
	months ended	year ended
	31 December	31 March
	2020	2020
	HK$’000	HK$’000
	(audited)	(audited)
Revenue	40,909	64,278
– Printing business	40,338	64,278
– Electric vehicle charging business	571	–
Loss before tax	32,058	17,268
Loss and total comprehensive expense
for the period/year	30,471	16,283

During the year ended 31 December 2020 (“ FY2020 ”), the Group recorded a revenue of approximately HK$40.9 million for the nine months ended 31 December 2020 and approximately HK$64.3 million for the year ended 31 March 2020. The revenue of the Group for the nine months ended 31 December 2020 was generated by the printing business of approximately HK$40.3 million and electric vehicle charging business of approximately HK$0.6 million. The decrease in revenue of the Group was mainly attributable to (i) change the financial year end date of the Company from 31 March to 31 December; and (ii) the decrease in revenue of printing business from approximately HK$64.3 million for the year ended 31 March 2020 to approximately HK$40.3 million for the nine months ended 31 December 2020. The net loss of the Company increased by 87.1% to approximately HK$ 30.5 million for the nine months ended 31 December 2020 from approximately HK$16.3 million for the year ended 31 March 2020.

(ii) Financial performance for the six months ended 30 June 2021

	For the six months ended	For the six months ended
	30 June
	2021	2020
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Revenue	33,717	27,749
– Printing business	30,721	27,749
– Electric vehicle charging business	2,996	–
Loss before tax	(26,847)	(14,782)
Loss and total comprehensive expense
for the period	(26,504)	(13,980)

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LETTER FROM DL SECURITIES

The Group recorded a revenue growth of approximately 21.5%, from approximately HK$27.7 million for the six months ended 30 June 2020 (“ HY2020 ”) to HK$33.7 million for the six months ended 30 June 2021 (“ HY2021 ”). The revenue growth was mainly attributable to (i) the increase in revenue of printing business from approximately HK$27.7 million for HY2020 to approximately HK$30.7 million for HY2021 representing an increase of approximately 10.7%; and (ii) the revenue generated by new set-up charging business of approximately HK$3.0 million for HY2021. The net loss of the Company increased by approximately 90.0% to approximately HK$26.5 million for HY2021 from approximately HK$14.0 million for HY2020.

(iii) Financial position as of 30 June 2021

	As at	As at
	30 June	31 December
	2021	2020
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Non-current assets	85,002	89,892
Current assets	47,412	49,571
Non-current liabilities	17,678	28,441
Current liabilities	24,387	47,566
Net assets	90,349	63,456
Bank balance and cash	19,742	33,205

The Group recorded the total assets of approximately HK$132.4 million as at 30 June 2021, representing a decrease of approximately 5.1%, as compared to approximately HK$139.5 million as at 30 June 2020. The decrease in total assets of the Group as at 30 June 2021 was mainly attributable to (i) the decrease in right-of-use assets from approximately HK$25.2 million as at 31 December 2020 to approximately HK$19.3 million as at 30 June 2021; and (ii) the bank balances and cash decreased from approximately HK$33.2 million as at 31 December 2020 to approximately HK$20.0 million as at 30 June 2021, whilst trade and other receivable increased of approximately HK$11 million compared to 31 December 2020. The total liabilities of the Group was approximately HK$42.1 million as at 30 June 2021, representing a decrease of approximately 44.7%, as compared to approximately HK$76.0 million as at 30 June 2020. The decrease in total liabilities of the Group was mainly attributable to (i) the decrease in trade and other payable from approximately HK$35.1 million as at 31 December 2020 to approximately HK$12.4 million as at 30 June 2021; (ii) the decrease in lease liabilities from approximately HK$18.9 million as at 31 December 2020 to approximately HK$13.5 million as at 30 June 2021; and (iii) the redemption of the promissory note of

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approximately HK$5 million on 24 March 2021. The net asset value were approximately HK$90.3 million as at 30 June 2021, representing an increase of approximately 42.4% as compared to approximately HK$63.5 million as at 30 June 2020. As at 30 June 2021, the cash and bank balance of the Group amounted to approximately HK$20.0 million.

1.3 Information of the Creditors

As at the Latest Practicable Date, Creditor (A) is a substantial shareholder and a non-executive Director, interested in approximately 235,603,225 Shares, representing approximately 38.76% of the total number of issued Shares of the Company, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

As at the Latest Practicable Date, Creditor (B) is a substantial shareholder and an executive Director, interested in approximately 235,603,225 Shares, representing approximately 38.76% of the total number of issued Shares of the Company, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

As at the Latest Practicable Date, Creditor (C) is an executive Director, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

As at the Latest Practicable Date, Creditor (D) is an executive Director, and is therefore a connected person of the Company under Chapter 20 of the GEM Listing Rules.

2. Reasons for and benefits of the Loan Capitalisation Through Subscription of New Shares under Specific Mandate

On 20 December 2021, each of the Creditors separately entered into a loan agreement with the Company, pursuant to which the Creditors each granted a loan with an aggregate principal amount of HK$28.1 million to the Company. The parties agreed that the amount of HK$28,095,920 of the Shareholders’ Loan shall be capitalized as part of the consideration for the Subscription upon Subscription Completion. Accordingly, the remaining balance under the Shareholders’ Loan (after the loan capitalised through subscription of new Shares) will be settled by cash by the Company pursuant to the terms of the Shareholders’ Loan as supplemented by the Deed. As at the Latest Practicable Date, HK$28.1 million has been utilised from the proceeds from the Shareholders’ Loan as for the operating expenses for the EV-charging business i.e. staff costs, rent and inventory costs.

As set out in the Letter from the Board, as the Group has a low cash balance position in September 2021, whereas during the period from October to December 2021, the Group has, amongst others, been funding 11 EV-charging projects, which amounted to approximately HK$4.6 million, and paid other expenses for the Group’s operations, and due to upcoming

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expenses such as the expected amount of HK$4.0 million for the decoration of the Group’s new office, the Directors believed that funding was required for the Group’s operating expenses. Therefore, the Company has engaged the Placing Agent to raise funds for the Company on 30 September 2021, however due to procedures for approving the issuance of Placing Shares as well as uncertainties of the timeline of the Placing such as potential difficulty in seeking Placees for the Placing, the Group was unable to receive immediate funding. The Placing Period has been extended for 4 months and the Long Stop Date has been extended for 2 months pursuant to the Third Supplemental Placing Agreement, there is no guarantee that the Placing would be able to be completed within the revised Placing Period and may be subject to further delay. As disclosed in the section headed “Placing of New Shares under Specific Mandate – Reasons for the Placing” in the Letter from the Board, the EV-charging industry is capital intensive for investment in charging infrastructure and research and development activities. According to the Company’s assessment and objectives for the next twelve months and the Group’s current financial situation, the Directors believe that the Company does not have sufficient cash for operation to deploy the charging facilities in pipeline and expansion plans for marketing campaigns and therefore requires immediate funding. In light of the uncertainties in the timeline from financing through issuing Shares such as subscription and placing, the Creditors, after taking into consideration of their respective positions of the Company, (i.e. Directors and substantial shareholders) believe that they were committed to the business development of the Company and obliged to “step-up” as leaders of the Company to offer the immediate funding and to support the Company through the current financial situation by providing additional funding of HK$28.1 million in instalments since mid-September without any interest nor collateral. The Creditors started injecting cash into the Group from midSeptember 2021 to provide upfront cash for the Group’s expenses, and the Loan Agreements were executed in December 2021 after negotiations and when the Board is of the view that the injection from the Creditors were sufficient for the time being. The Board believes that obtaining a loan would be more suitable than other financing methods (i.e. placing and subscription) given their uncertainties in timeline and the Company’s current financial situation. According to the Group’s management accounts, the cash balance of the Group was approximately HK$8.6 million as at 1 September 2021 and the cash balance of the Group was approximately HK$17.5 million as at 30 November 2021, while the Creditors provided additional fundings of approximately HK$16 million from mid-September 2021 to 30 November 2021, without the Shareholders’ Loan of approximately HK$16 million, the Group would have almost run out of/low level of cash for the Group’s operations from midSeptember 2021 to 30 November 2021.

As set out in the Letter from the Board, the Company has long been in a loss position and has been looking for opportunities to raise funds through means such as placing and subscription as well as the fact that the Group has a low cash balance. The Board and the Creditors understood the lack of cash of the Company and may cause burden to the Group should the Creditors request the Group to repay the Shareholders’ Loan, and the urgency to raise funds to meet the Company’s operational needs or for future development, the Creditors were therefore willing to settle the principal amount of the Shareholders’ Loan through capitalisation by way of the Subscription. The Creditors together with the Board believe that this will show the Creditors’, as their respective positions, commitment and confidence to reverse the Company’s loss position and future prospects.

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LETTER FROM DL SECURITIES

The Board is of the view that entering into the Deed is in the interests of the long-term development of the Company and shows commitment to external financial institutions by converting as share as well as enhancement of capital base of the Company.

We note that the Company entered into the Loan Agreements with the Creditors on 20 December 2021 and announced the loan capitalisation through the Subscription as stipulated in the Deed on 30 December 2021 (the “ Arrangement ”). In assessing the fairness and reasonableness of the Arrangement, we have enquired the Management on the Arrangement and reviewed the Shareholders’ Loan schedule provided by the Company which indicated that although the Company entered into the Loan Agreements with the Creditors on 20 December 2021, the Creditors provided their additional fundings of HK$28.1 million in instalments since 14 September 2021. The Management’s decision to enter into the Deed with the Creditors was made after considering the financial situation of the Group; and the urgency of the Group’s funding needs. Therefore, we concluded that the Arrangement is fair and reasonable and in the interest of the Shareholders and the Company as a whole.

As shown in the section headed “1. Background information of the Group – 1.2 Financial information of the Group” above in this letter, according to the 2020 Annual Report and the 2021 Interim Report, the Group has been suffering from (i) continuous loss for the past 5 years; (ii) a significant decrease in cash and bank balances of approximately HK$13.5 million, representing a decrease of approximately 40.5%, from approximately HK$33.2 million as at 31 December 2020 to approximately HK$19.7 million as at 30 June 2021. We also reviewed the following documents provided by the Company (i) the actual cashflow of the Group for the period from 1 September 2021 to 30 November 2021; (ii) the unaudited management account of the Group as at 31 August 2021 and 30 November 2021; and (iii) the cashflow forecast of the Group in year 2022. Based on the abovementioned documents, we note that (i) the Group recorded a cash balance of the Group of approximately HK$8.6 million as at 1 September 2021; (ii) the Group recorded a cash balance of the Group of approximately HK$17.5 million as at 30 November 2021; (iii) the Creditors provided additional fundings of approximately HK$16 million from mid-September 2021 to 30 November 2021. In conclusion, we believed that (i) the Company would have been almost run of cash/low level of cash if the Creditors have not provided the additional fundings of approximately HK$16 million from mid-September 2021 to 30 November 2021; and (ii) the Company may not have sufficient cash for operation for the next twelve months and requires immediate funding for general working capital, taking into account the abovementioned financial difficulties of the Group, we are of the view and concur with the Directors’ view that the loan capitalisation through Subscription under Subscription Specific Mandate enables the Group to (i) settle the Shareholders’ Loan without depleting its existing financial resources and avoid cash outflow; and (ii) strengthen the financial position of the Group.

According to the Management and with reference to the section headed “Management Discussion and Analysis” in the 2020 Annual Report, the Group has commenced electric vehicle charging business by the completion of the acquisition of Cornerstone EV-charging Service Limited on 4 August 2020. As discussed with the Management, the Creditors provided funding as well as to grasp the opportunity of developing electric vehicle charging business which the electric vehicle charging industry is encouraging by Hong Kong Government currently. The electric vehicle charging business is highly capital intensive to

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invest in the infrastructure and EV chargers to various awarded private car park spaces to be supported by the Group EV integrated charging solutions. We reviewed the cashflow forecast of the EV-charging business of the Group in year 2022, the operating cash outflow forecast and the site investment of EV-charging business for the Group in 2022 will be of approximately HK$60 million and HK$53 million, respectively, which are significantly high. Based on the above, we are of the view and concur with the Directors’ view that it is impracticable to settle the Shareholders’ Loan from the Creditors and settle the billings to develop the EV-charging business.

According to the Management, they had explored and evaluated other settlement methods as alternative means of settling the Shareholders’ Loan and working capital of electric vehicle charging business, such as by way of debt financing and other equity financing such as placing of Shares, open offer and rights issue other than loan capitalisation. Given (i) on 30 September 2021, the Company has engaged the Placing Agent to raise funds for the Company (for more details please refer to the section headed “Placing of New Shares under Specific Mandate” in the Letter from the Board) and has not completed yet; and (ii) financial performance and position of the Group as stated under the paragraph headed “1.2. Financial information of the Group” above in this letter, the Directors expect that they would have difficulties to obtain bank borrowings with favourable terms and conduct one more fund-raising activity. We enquired the Management on the debt financing and other equity financing, we note that (i) the Company has approached three banks in Hong Kong, however, the Company was rejected by those banks given the continuous loss of the Group for the past 5 years and the Group’s inability to provide sufficient collateral; and (ii) the Company also tried to initiate other equity financing, however, the Company did not receive any positive feedback as at the Latest Practicable Date. Based on the above and the Company’s goal to obtain immediate funding for general working capital and development of electric vehicle business, we are of the view and concur with the Directors’ view that bearing additional liabilities to settle the Shareholders’ Loan is not in the interests of the Company and the Shareholders as a whole.

Having considered (i) the loan capitalisation will settle the Shareholders’ Loan and reduce the Group’s gearing level without depleting its existing financial resources; (ii) the challenging financial position of the Group in which the developing electric vehicle charging business is capital intensive as mentioned above; (iii) the Management expects that the Group would not be able to obtain favourable terms for debt financing which would also increase finance costs of the Group; and (iv) other equity financing methods such as placing of shares, rights issue and open offer may have the difficulties to attract investors to subscribe new shares (given the existing Placing of new Shares under Placing Specific Mandate of the Company has not completed yet) as mentioned above, we are of the view and concur with the Directors’ view that the loan capitalisation through the Subscription under Subscription Specific Mandate is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM DL SECURITIES

3. Principal terms of the Deed

On 30 December 2021, the Company as debtor entered into the Deed with the Creditors, pursuant to which the Company has conditionally agreed to issue and allot to the Creditors (or their nominee(s)) an aggregate of 45,316,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by the Creditors under the Deed shall be satisfied by capitalizing the entire amount of the Shareholders’ Loan due to the Creditors from the Company. Details of the terms of the Deed are summarized below:

Date: 30 December 2021 Parties: (1) Issuer/debtor: the Company; and (2) Creditors: Mr. Wu Jianwei as Creditor (A) Mr. Liang Zihao as Creditor (B) Mr. Li Man Keung Edwin as Creditor (C) Mr. Pan Wenyuan as Creditor (D)

Subscription Shares

Pursuant to the Deed:

• (1) the Company has conditionally agreed to issue and allot to Creditor (A) (or its nominee(s)) 24,192,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (A) shall be satisfied by capitalizing the amount of Debt (A) due to Creditor (A) from the Company;

• (2) the Company has conditionally agreed to issue and allot to Creditor (B) (or its nominee(s)) 13,708,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (B) shall be satisfied by capitalizing the amount of Debt (B) due to Creditor (B) from the Company;

• (3) the Company has conditionally agreed to issue and allot to Creditor (C) (or its nominee(s)) 4,192,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (C) shall be satisfied by capitalizing the amount of Debt (C) due to Creditor (C) from the Company;

• (4) the Company has conditionally agreed to issue and allot to Creditor (D) (or its nominee(s)) 3,224,000 Subscription Shares at the Subscription Price of HK$0.62 per Subscription Share. The subscription amount payable by Creditor (D) shall be satisfied by capitalizing the amount of Debt (D) due to Creditor (D) from the Company; and

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LETTER FROM DL SECURITIES

• (5) the aforementioned subscriptions are bundled together into the same Deed and the Subscription Shares are to be issued under the same Subscription Specific Mandate, where its approval is to be sought from the Independent Shareholders at the EGM and to be granted to the Board for the allotment and issue of the Subscription Shares.

Please refer to the “Letter from the Board” set out in the Circular for further details of the Deed and the full list condition precedents to the Deed.

Number of Subscription Shares

The 45,316,000 Subscription Shares represent (i) approximately 7.46% of the issued share capital of the Company as at the date of the Deed; and (ii) approximately 6.94% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares, assuming that there will be no change in the authorised share capital and issued share capital of the Company between the date of the Deed and the date of Subscription Completion. The aggregate nominal value of the Subscription Shares is HK$453,160.

The Subscription Shares will be allotted and issued under the Subscription Specific Mandate to be sought for approval from the Independent Shareholders at the EGM.

Subscription Price

The Subscription Price of HK$0.62 per Subscription Share represents:

• (i) a discount of approximately 24.4% to the closing price of HK$0.82 per Share as quoted on the Stock Exchange on the date of the Deed;

• (ii) a discount of approximately 22.1% to the average closing price of approximately HK$0.796 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Deed; and

• (iii) a discount of approximately 20.5% to the closing price of HK$0.78 per Share as quoted on the Stock Exchange as at the Latest Practicable Date.

The Subscription under the Subscription Specific Mandate on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 1.69% represented by the theoretical diluted price of approximately HK$0.806 to the benchmarked price of approximately HK$0.62 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the Deed of HK$0.82 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the Deed of HK$0.796 per Share).

As stated in the Letter from the Board, the Subscription Price was determined, among others, with reference to (i) the prevailing market price of the Shares and the market conditions; and (ii) the funding needs and financial position of the Group and was negotiated on an arm’s length basis between the Company and the Creditors. Please refer to the “Letter from the Board” set out in the Circular for further details of the determination of the Subscription Price.

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LETTER FROM DL SECURITIES

In order to assess the fairness and reasonableness of the Subscription Price, we compared with reference to the recent price performance and trading liquidity of the Shares and comparable analysis on the Subscription Price as follows:

Recent price performance and trading liquidity of the Shares

We have reviewed the closing prices and the trading liquidity of the Shares during the twelve-month period from 31 December 2020, up to and including 30 December 2021, being the date of the Deed (the “ Review Period ”). We consider that an approximate period of twelve months is a fair, reasonable and sufficient period to provide a general overview of the recent price movements and liquidity of the Shares free from the influence of, if any, short term market volatility for conducting a reasonable comparison between the closing price of the Shares and the Subscription Price.

Daily closing price of the Shares during the Review Period

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Closing price Subscription Price
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Source: The Stock Exchange

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LETTER FROM DL SECURITIES

Monthly trading volume of Shares during the Review Period

					Approximate
					% of average
					daily trading
					volume to
					the then
				Number of	total number
				issued	of issued
	Total			Shares as at	Shares as at
	volume of		Average	end of the	end of
	the Shares	Number of	Daily	period/	the period/
	traded	trading days	Volume	month	month
				(Note 2)
2020
December_(Note 1)_	40,000	1	40,000	480,540,541	0.0083%
2021
January	5,010,000	20	250,500	530,165,541	0.0472%
February	4,334,000	18	240,778	530,165,541	0.0454%
March	3,504,001	23	152,348	599,790,541	0.0254%
April	9,774,000	19	514,421	599,790,541	0.0858%
May	28,621,500	20	1,431,075	599,790,541	0.2386%
June	4,628,000	21	220,381	599,790,541	0.0367%
July	4,044,000	21	192,571	599,790,541	0.0321%
August	1,024,000	22	46,545	599,790,541	0.0078%
September	1,932,000	21	92,000	599,790,541	0.0153%
October	1,588,000	18	88,222	599,790,541	0.0147%
November	760,000	22	34,545	599,790,541	0.0058%
December (up to the
date of the Deed)	888,001	21	42,286	607,790,541	0.0070%

Source: The Stock Exchange

Notes:

1. The Review Period commenced on 31 December 2020 and ended on 30 December 2021.

2. Based on the total number of issued Shares as at end of the period/month.

As shown in the chart of daily closing price of the Shares above, the daily closing price of the Shares during the Review Period ranged from the lowest of HK$0.52 per Share on 26 January 2021 to the highest of HK$1.4 per Share on 20 May 2021. The average closing price of Shares within the Review Period was approximately HK$0.859 per Share. We noted that the Subscription Price represents (i) a discount of approximately 24.4% to the closing price of HK$0.82 per Share as quoted on the Stock Exchange on the date of the Deed; and (ii) a discount of approximately 22.1% to the average closing price of approximately HK$0.796 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Deed.

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LETTER FROM DL SECURITIES

Regarding the liquidity of the Shares, as shown in the table above, the highest average daily volume was approximately 1,431,075 Shares in May 2021, representing approximately 0.2386% of the total number of Shares at the end of May 2021. We also notice that the average daily trading liquidity of the Shares were very thin during the Review Period, with all months less than 0.3% to the then total number of issued Shares as at the end of their respective period/month. As such, the relatively low trading volume suggests that it would be difficult for the Company to pursue sizeable equity financing alternatives in the stock market without providing considerable discount and/or underwriting fees as an incentive.

Based on the above, (i) the Subscription Price is within the range of the closing price of the Shares from the lowest of HK$0.52 per Share to the highest of HK$1.4 per Share during the Review Period; and (ii) the relative low average daily trading volume of the Shares during the Review Period, the Company should provide a relative high discount as an incentive. We are of the view and concur with the Directors’ view that the Subscription Price is fair and reasonable from the perspective of historical trend of the closing price of Share and the average daily trading volume of the Shares.

Comparable analysis on the Subscription Price

In assessing whether the Subscription Price is fair and reasonable, on an exhaustive bases, we carried out a comparable analysis of issue, placing or subscription of new shares for fund raising by companies listed on the Stock Exchange (the “ Subscription Comparable(s) ”), based on the criteria that (i) the respective issue, placing or subscription of shares were initially announced by the Subscription Comparables during the six-month period from 1 July 2021 to 30 December 2021 (i.e. being the date of the Deed); and (ii) the shares were issued or to be issued for subscription or placing under specific mandate of the respective companies.

Based on the aforesaid criteria and to the best of our knowledge, we have identified fifteen Subscription Comparables which we consider to be exhaustive. Independent Shareholders should note that the businesses, operations, financial positions and prospects of the Company may not be identical to the Subscription Comparables. Although the companies involved in the Subscription Comparables are not identical to the Company in terms of principal business, operating scale and financial position, we consider that the Subscription Comparables could provide a general understanding on share subscription and placing in the Hong Kong stock market because the Subscription Comparables of the respective companies are under the latest market environment, market sentiment and are therefore considered to be reasonable reference on the recent market practice and conditions regarding the Subscription. We have not conducted any independent investigation with regards to the businesses, operations, financial positions and prospects of the companies but it shall not affect our analysis as we are comparing the general trend of subscription of new shares for specific use of proceeds in the market.

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Our findings and analysis on the Subscription Comparables are set out below:

Subscription Comparables

									Premium/
									(Discount) of
									subscription
									price over/(to)
									the average
								Premium/	closing price
								(Discount) of	per share for
								subscription	the last five
								price over/(to)	consecutive
								closing price	trading days
								per share on	immediately
								the last trading	prior to the
							Average closing	day prior to/on	date of
							price per share	the date of	respective
						Closing price	for the last	respective	announcements/
				Amount of		per share	five consecutive	announcements/	subscription
				fund raised		on the last	trading days	subscription	agreements
				in each		trading day	immediately	agreements in	in relation
				subscription		prior to/on	prior to the	relation to	to the
				or placing		the date of	date of	the respective	respective
	Date of initial		Stock	(approximately)	Respective	respective	respective	subscription	subscription
No.	Announcement	Company name	code	(HK$’000)	issue price	announcements	announcement	of shares(%)	of shares(%)
1	19 July 2021	Elife Holdings Limited	223	7,975	0.055	0.052	0.0534	5.8	3.0
2	20 July 2021	Persta Resources Inc. (“Persta”)	3395	8,000	0.800	0.450	0.486	78.0	64.0
3	17 August 2021	Man Sang International Limited	938	228,000	1.600	1.520	1.570	5.3	1.9
4	4 October 2021	Coolpad Group Limited	2369	840,000	0.280	0.340	0.344	(17.8)	(18.6)
5	19 October 2021	Tong Kee (Holding) Limited	8305	6,500	0.100	0.125	0.129	(20.0)	(22.5)
6	26 October 2021	Aux International Holdings Limited	2080	74,340	0.630	0.620	0.616	1.6	2.3
7	8 November 2021	Sun Cheong Creative Development
		Holdings Limited (“Sun Cheong”)	1781	80,000	0.1646	1.830	1.832	91.0	91.0
8	14 November 2021	China Nuclear Energy Technology
		Corporation Limited	611	475,347	0.882	0.940	0.874	(6.2)	0.9
9	16 November 2021	King Stone Energy Group Limited	663	98,940	0.250	0.430	0.446	(41.9)	(43.9)
10	22 November 2021	InvesTech Holdings Limited	1087	49,500	1.500	1.880	1.860	(20.2)	(19.4)
11	23 November 2021	Guangzhou Rural Commercial Bank
		Co., Ltd. (“Guangzhou Rural”)	1551	2,189,900	7.180	3.000	2.980	139.3	140.9
12	24 November 2021	Grand Talents Group Holdings Limited	8516	30,500	0.535	0.760	0.764	(29.6)	(30.0)
13	28 November 2021	iDreamSky Technology Holdings
		Limited	1119	194,500	5.920	6.53	6.44	(9.3)	(8.1)
14	8 December 2021	Kirin Group Holdings Limited	8109	8,319	0.220	0.200	0.1998	10.00	10.11
15	10 December 2021	China Saite Company Group Limited	153	312,000	0.100	0.104	0.1028	(3.8)	(2.7)
		Average_(note)_						(10.5)	(10.6)
		Maximum_(note)_						10.0	10.1
		Minimum_(note)_						(41.9)	(43.9)
		Company						(24.4)	(22.1)

Note: the calculation excluded the figures of Persta, Sun Cheong and Guangzhou Rural due to the extreme price premiums.

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LETTER FROM DL SECURITIES

As demonstrated by the above table, we note that the average premiums of the Subscription Comparables were, to a large extent, attributable to the extreme price premiums recorded by Persta, Guangzhou Rural and Sun Cheong. We consider that the average figures calculated should not be significantly affected by any individual comparable transaction, and thus, we did not consider the extreme price premiums recorded by Persta, Guangzhou Rural and Sun Cheong. Taking into account (i) the number of Subscription Comparables covered in the review period which reflects the recent and latest market practice, market conditions and sentiments; and (ii) the average figures calculated are not likely to be significantly affected by any individual comparable transaction (given the figures of Persta, Guangzhou Rural and Sun Cheong are excluded), we consider the Subscription Comparables to be sufficient, fair and representative. The subscription price or placing price of the relevant Subscription Comparables ranged from (i) a premium of approximately 10.0% to a discount of approximately 41.9% to the respective closing price per share on the last trading day prior to/on the date of respective initial announcements/placing agreements/subscription agreements in relation to the respective placing/subscription of shares (the “ Market Range ”); and (ii) a premium of approximately 10.1% to a discount of approximately 43.9% to the respective average closing price per share for the last five consecutive trading days immediately prior to the date of respective initial announcements/placing agreements/ subscription agreements in relation to the respective placing/subscription of shares (the“ 5Days Range ”). We note that both (i) the discount of the Subscription Price to the closing price on the last trading day on the date of Deed (i.e. 24.4%); and (ii) the discount of the Subscription Price to the average closing price for the last five trading days immediately prior to the date of the Deed (i.e. 22.1%) are within the range of the Market Range and the 5-Days Range. We also note that the Subscription Price is equal to the Placing Price per Placing Share offering to the Placee(s), and thus, comparing to Placees, the Creditors are unlikely to find favour. Although the discount of the Subscription Price (i.e. 24.4% and 22.1%) are slightly higher than the average discount of the Market Range and the 5-Days Range (i.e. 10.5% and 10.6%), we consider the Subscription enables the Group to (i) settle the Shareholders’ Loan without depleting its existing financial resources and avoid cash outflow; and (ii) the strengthen the financial position of the Group, this imply that the benefits of the Subscription outweighs the abovementioned result. Based on the above, we are of the view and concur with the Directors’ view that the Subscription Price is fair and reasonable as compared to those of the Subscription Comparables.

Theoretical dilution effect

As stated in the Letter from the Board, the Subscription under the Subscription Specific Mandate on its own would result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 1.69% represented by the theoretical diluted price of approximately HK$0.806 to the benchmarked price of approximately HK$0.82 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the last full trading day immediately before the execution of the Deed of HK$0.82 per Share and the average closing price of the Shares for the last five consecutive trading days immediately preceding the date of the Deed of HK$0.796 per Share), having taken into account the reasons for and benefits of the Subscription, in particular the current financial position of the Group and the lack of alternative means of financings, as stated above, we are of the view that the potential dilution effect on the shareholding interests of the public Shareholders to be acceptable.

— 63 —

LETTER FROM DL SECURITIES

Other terms of the Deed

We have reviewed other terms of the Deed (including but not limited to conditions precedent and completion). In order to review whether the aforesaid other terms of the Deed are reasonable or not, we compared it with (i) the terms of Subscription Comparables from their relevant published announcements; and (ii) other transactions which involved issue of shares that conducted by other companies listed on the Stock Exchange of our previous works, we are of the view that the remaining terms of the Deed are the standard terms of normal subscription agreements which we have reviewed before. Accordingly, we consider and concur with the view of the Management that the terms of the Deed are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

4. Possible financial effects of the Subscriptions

Upon completion of the Subscription, assuming other factors remain constant, the Shareholders’ Loan is expected to be set off against the Subscription Shares and the Subscription Shares will be recognised entirely as equity of the Company which in turn will enlarge the capital base and the gearing level and financial position of the Group is expected to improve.

RECOMMENDATION

Notwithstanding the entering into the Deed are not in the ordinary and usual course of business of the Company, having considered the aforementioned principal factors and reasons, we are of the view that (i) the Subscription is in the interests of the Company and the Shareholders as a whole; (ii) the terms of the Deed, the Subscription and the transactions contemplated thereunder (including the allotment and issue of the Subscription Shares under the Subscription Specific Mandate) are on normal commercial terms and are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders, and advise the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the resolution(s) to be proposed at the EGM to approve the Deed, the Subscription and the transactions contemplated thereunder (including the allotment and issue of the Subscription Shares under the Subscription Specific Mandate).

Yours faithfully Yours faithfully For and on behalf of For and on behalf of DL Securities (HK) Limited DL Securities (HK) Limited Don Yau Tommy Cheng Managing Director Managing Director Corporate Finance Division Corporate Finance Division

Mr. Tommy Cheng and Mr. Don Yau are licensed persons under the SFO to carry out Type 6 (advising on corporate finance) regulated activity under the SFO and regarded as responsible officers of DL Securities (HK) Limited. Mr. Tommy Cheng and Mr. Don Yau have over 11 and 5 years of experience in corporate finance industry, respectively.

— 64 —

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particular given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and is not misleading or deceptive and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

• (I) Directors’ and Chief Executives’ Interests and/or Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation

As at Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “ SFO ”)), which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) pursuant to Section 352 of the SFO, to be recorded in the register referred therein; or (c) pursuant to Rule 5.46 of the GEM Listing Rules to be notified to the Company and the Stock Exchange, were as follows:

(i) Long position in shares or underlying shares of the Company

			Percentage	Percentage
		Number of shares	of issued
		or underlying		share
Name of Director	Capacity	shares held		capital
Mr. Wu Jianwei	Interest of controlled	235,603,225		38.76%
(“Mr. Wu”)	corporation
(Note 1)	Beneficial owner	4,400,000_(Note 6)_		0.72%
Mr. Liang Zihao	Interest of controlled	235,603,225		38.76%
(“Mr. Liang”)	corporation
(Note 2)	Beneficial owner	4,400,000_(Note 6)_		0.72%
Mr. Lau Wai Yan	Beneficial owner/	30,302,703		4.99%
Lawson	Interest of controlled
(“Mr. Lau”)	corporation
(Note 3)	Beneficial owner	4,400,000_(Note 6)_		0.72%

— I-1 —

APPENDIX I

GENERAL INFORMATION

			Percentage
		Number of shares	of issued
		or underlying	share
Name of Director	Capacity	shares held	capital
Mr. Pan Wenyuan	Interest of controlled	23,872,000	3.93%
(“Mr. Pan”)	corporation
(Note 4)
Mr. Li Man Keung	Beneficial owner/	19,112,613	3.14%
Edwin (“Mr. Li”)	Interest of controlled
(Note 5)	corporation
	Beneficial owner	4,400,000_(Note 6)_	0.72%
Mr. Sam Weng Wa	Beneficial owner	440,000_(Note 6)_	0.07%
Michael
Mr. Tam Ka Hei	Beneficial owner	440,000_(Note 6)_	0.07%
Raymond
Mr. Yuen Chun Fai	Beneficial owner	440,000_(Note 6)_	0.07%
Ms. Zhu Xiaohui	Beneficial owner	440,000_(Note 6)_	0.07%

Notes:

1. Mr. Wu owns 51% of the issued share capital of Global Fortune Global Limited (“ Global Fortune ”). Mr. Wu is deemed to be interested in the Shares in which Global Fortune is interested under the SFO.

2. Mr. Liang owns 49% of the issued share capital of Global Fortune. Mr. Liang is deemed to be interested in the Shares in which Global Fortune is interested under the SFO.

3. Mr. Lau owns 100% of the issued share capital of Cornerstone Wealth Holdings Limited (“ Cornerstone Wealth ”). Mr. Lau is deemed to be interested in the Shares in which Cornerstone Wealth is interested under the SFO.

4. Mr. Pan owns 100% of the issued share capital of Silver Rocket Limited (“ Silver Rocket ”). Mr. Pan is deemed to be interested in the Shares in which Silver Rocket is interested under SFO.

5. Mr. Li owns 100% of the issued share capital of Tanner Enterprises Group Limited (“ Tanner Enterprises ”). Mr. Li is deemed to be interested in the Shares in which Tanner Enterprises is interested under the SFO.

6. These shares were the shares which would be allotted and issued upon exercise in full of the share options granted to such Director under the share option scheme of the Company.

— I-2 —

GENERAL INFORMATION

APPENDIX I

• (ii) Long position in shares or underlying shares of associated corporations

	Name of		Number of	Percentage
Name of	associated		share(s)	of issued
Directors	corporation	Capacity	held	share capital
Mr. Wu Jianwei	Global Fortune	Beneficial owner	51	51%
(Note 1)
Mr. Liang Zihao	Global Fortune	Beneficial owner	49	49%
(Note 2)
Mr. Pan Wenyuan	Silver Rocket	Beneficial owner	1	100%
(Note 4)
Mr. Lau Wai Yan	Cornerstone	Beneficial owner	1	100%
Lawson_(Note 3)_	Wealth
Mr. Li Man Keung	Tanner	Beneficial owner	1	100%
Edwin_(Note 5)_	Enterprises

Notes:

1. Global Fortune is legally and beneficially owned as to 51% by Mr. Wu. Therefore by virtue of the SFO, Mr. Wu is deemed to have the interest owned by Global Fortune.

2. Global Fortune is legally and beneficially owned as to 49% by Mr. Liang. Therefore Mr Liang is deemed to be interested in the Shares in which Global Fortune is interested under the SFO.

3. Cornerstone Wealth is legally and beneficially owned as to 100% by Mr. Lau. Therefore by virtue of the SFO, Mr. Lau is deemed to have the interest owned by Cornerstone Wealth.

4. Silver Rocket is legally and beneficially owned as to 100% by Mr. Pan. Therefore by virtue of the SFO, Mr. Pan is deemed to have the interest owned by Silver Rocket.

5. Tanner Enterprises is legally and beneficially owned as to 100% by Mr. Li. Therefore by virtue of the SFO, Mr. Li is deemed to have the interest owned by Tanner Enterprises.

Save as disclosed above, as at Latest Practicable Date, none of the Directors or chief executive of the Company had any interest or short position in Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which was required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) pursuant to Section 352 of the SFO, to be recorded in the register referred therein; or (c) pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules to be notified to the Company and the Stock Exchange.

— I-3 —

GENERAL INFORMATION

APPENDIX I

(II) Substantial Shareholders’ Interests and Short Positions in Shares and Underlying Shares of the Company

As at Latest Practicable Date, the interests and short positions of the substantial shareholders of the Company (other than the Directors and chief executives of the Company) in the shares and underlying shares of the Company which were required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required, pursuant to Section 336 of the SFO, to be entered in the register to therein, were as follows:

Name of	Long/			Percentage of
substantial	short		Number of	issued share
shareholder	position	Capacity	shares held	capital
Global Fortune	Long position	Beneficial owner	235,603,225	38.76%
		(Note 1)	shares
Glorytwin Limited	Long position	Beneficial owner	81,000,000	13.33%
(“Glorytwin”)		(Note 2)	shares
Colorful Bay Limited	Long position	Deemed interest,	81,000,000	13.33%
(“Colorful Bay”)		Interest in	shares
		controlled
		corporation_(Note 2)_

Note:

1. Global Fortune is legally and beneficially owned as to 51% and 49% by Mr. Wu and Mr. Liang respectively. Therefore by virtue of the SFO, Mr. Wu and Mr. Liang are deemed to have the interest owned by Global Fortune.

2. Glorytwin is legally and beneficially owned as to 100% by Colorful Bay. Therefore by virtue of the SFO, Colorful Bay is deemed to have the interest owned by Glorytwin. Colorful Bay is legally and beneficially owned as to 100% by Mr. So Wing Keung (“ Mr. So ”). Therefore by virtue of the SFO, Mr. So is deemed to have the interest owned by Colorful Bay.

Save as disclosed above, as at Latest Practicable Date, the Directors were not aware of any other persons/entities (other than the Directors and chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

3. C O M P E T I N G I N T E R E S T S O F D I R E C T O R S A N D C O N T R O L L I N G 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.

— I-4 —

GENERAL INFORMATION

APPENDIX I

4. DIRECTORS’ SERVICE CONTRACTS

Each of the executive Directors has entered into a service contract with the Company for a term of three years, which are determinable by not less than three months’ notice in writing served by either party on the other and is subject to termination provisions therein and in the Articles.

Pursuant to the letters of appointment between the Company and the independent non-executive Directors, the independent non-executive Directors have been appointed for a term of three years, which are determinable by either party by giving three months’ written notice.

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group (excluding contracts expiring or determinable by the Group within one year without payment of compensation, other than statutory compensation).

5. DIRECTORS’ INTEREST IN ASSETS, CONTRACTS AND ARRANGEMENTS

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

6. LITIGATION

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

7. EXPERT AND CONSENT

The following is the qualification of the expert who has given its opinion or advice contained in this circular:

Name	Qualification
DL Securities (HK) Limited	licensed corporation to conduct Type 1 (Dealing in
	Securities), Type 4 (Advising on Securities) and Type 6
	(Advising on Corporate Finance) regulated activities
	under the SFO

— I-5 —

GENERAL INFORMATION

APPENDIX I

DL Securities has given and has not withdrawn its written consent to the issue of this circular with inclusion of its letter and references to its name in the form and context in which they are included.

As at the Latest Practicable Date, DL Securities was not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group. In addition, DL Securities did not have any interest, either directly or indirectly, in any assets which have been, since 31 December 2020 (being the date to which the latest published audited consolidated financial statements of the Company were made up), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

8. MATERIAL ADVERSE CHANGE

References are made to the annual report, profit warning announcements, first quarterly report and interim report of the Company dated 31 March 2021, 11 August 2021, 12 May 2021 and 13 August 2021, respectively published on the websites of the Stock Exchange and the Company regarding the increase in consolidated net loss for the nine months ended 31 December 2020 and for the six months ended 30 June 2021, as compared to the year ended 31 March 2020 and six months ended 30 June 2020, respectively. As disclosed in the aforementioned announcements and reports, such increase was primarily attributable to (i) the stagnation in the orders from customers for printing services resulting from the increasing concern on environment protection, the popularity of digitalization of information, the rise of online marketing, social media and globalization; (ii) the stagnation in revenue due to the unfavorable economic environment and the extreme market and operating conditions caused by the outbreak of novel coronavirus pandemic during 2020; and (iii) the additional cost incurred in the newly acquired electric vehicle charging solution and system services business since August 2020.

Due to the outbreak of the novel coronavirus (COVID-19) pandemic since early 2020 and the unsettled Sino-U.S. trade war which has caused uncertainty on the global economic outlook, the Board believes that the current economy will have an adverse impact on the number of new listing application, which may lead to a weak demand for commercial printing and financial printing services. Moreover, as proposed in the consultation paper published by the Stock Exchange on 24 July 2020 together with the Guidance Letter HKEXGL86-16 updated on 24 July 2020, a paperless listing and subscription regime and producing simplified listing documents will be introduced, the Board believes that it will shrink the scope of services provided by the Group. As the provision of printing services is one of the major sources of income for the Group, the simplification of the listing documents may lead to the decrease in demand on typesetting and translation services for listing documents. The Board expects that the importance and/or the potential growth of revenue for the Group from preparing listing documents will decline and the negative impact of coronavirus epidemic will last for the next 12 to 24 months at least. The Group will continue to pay close attention on the market trend and cautiously tighten the control over operating expenses by ongoing review on the operation model to maintain our profitability and competitiveness in the market.

— I-6 —

GENERAL INFORMATION

APPENDIX I

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

9. DOCUMENTS ON DISPLAY

Copies of the following documents will be displayed from (a) 9:30 a.m. to 5:30 p.m., Monday to Friday, except the public holiday, at the office of the Company, Room 2402, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong; (b) on the website of the Company (www.cstl.com.hk); and (c) on the website of HKEX (http://www.hkexnews.hk) from the date of this circular up to and including the date of the EGM:

• (a) the letter from the Board, the text of which is set out from pages 5 to 20 of this circular;

• (b) the annual reports of the Company for the year ended 31 March 2020 and for the nine months ended 31 December 2020;

• (c) the interim report of the Company for the six months ended 30 June 2021;

• (d) the Placing Agreement;

• (e) the First Supplemental Placing Agreement;

• (f) the Second Supplemental Placing Agreement;

• (g) the Third Supplemental Placing Agreement;

• (h) the CEO Service Contract;

• (i) the COO Service Contract;

• (j) the Deed;

• (k) the Share Option Scheme; and

• (l) this circular.

10. MISCELLANEOUS

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

— I-7 —

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 virtually on Monday, 11 April 2022 at 3:00 p.m. for the following purposes:

ORDINARY RESOLUTION

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

1. “THAT

• (a) (i) the placing agreement dated 30 September 2021 entered into between the Company and VBG Capital Limited (“ Placing Agent ”); (ii) the supplemental placing agreement dated 9 November 2021 entered into between the Company and the Placing Agent; and (iii) the supplemental placing agreement dated 29 November 2021 entered into between the Company and the Placing Agent (collectively, the “ Placing Agreements” ) (a copy of the Placing 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 Placing of 87,000,000 new ordinary shares of HK$0.01 each in the share capital of the Company (the “ Placing Shares ”) by the Placees at the Placing price of HK$0.62 per Placing Share in up to two or more tranches 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 Placing Shares prior to settlement of the Placing Shares, the directors of the Company (the “ Directors ”) be and are hereby granted a specific mandate to allot and issue the Placing Shares in accordance with the terms of the Placing 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 Placing Agreements and the transaction contemplated thereunder, including, without limitation, the allotment and issue of the Placing Shares under the relevant specific mandate.”

2. “THAT

• (a) the service contract entered into between the Company and Mr. Yip Shiu Hong (the “ CEO Service Contract ”) in relation to the appointment of Mr. Yip Shiu Hong as the chief executive officer of the Company (a copy of the CEO Service Contract has been produced to the meeting and marked “B” and initialed by the chairman of the meeting for identification purpose) upon which the Directors have agreed 5,997,905 Shares are to be allot and issued to Mr. Yip Shiu Hong as a signing bonus (the “ CEO Emolument Shares ”), and the transaction contemplated thereunder be and are hereby approved, confirmed and ratified;

• (b) conditional upon the Listing Committee of the Stock Exchange granting and not having withdrawn or revoked the approval for the listing of, and permission to deal in the CEO Emolument Shares prior to settlement of the CEO Emolument Shares, the Directors be and are hereby granted a specific mandate to allot and issue the CEO Emolument Shares in accordance with the terms of the CEO Service Contract, provided that this specific mandate shall be in addition to, and shall not prejudice nor revoke any existing or such other general or specific mandates which may from time to time be granted to the Directors prior to the passing of this resolution; and

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

3. “THAT

• (a) the service contract entered into between the Company and Mr. Ng Sze Chun (the “ COO Service Contract ”) in relation to the appointment of Mr. Ng Sze Chun as the chief operating officer of the Company (a copy of the COO Service Contract has been produced to the meeting and marked “C” and initialed by the chairman of the meeting for identification purpose) upon which the Directors have agreed 2,998,953 Shares are to be allot and issued to Mr. Ng Sze Chun as a signing bonus (the “ COO Emolument Shares ”), and the transaction contemplated thereunder be and are hereby approved, confirmed and ratified;

— EGM-2 —

NOTICE OF EGM

• (b) conditional upon the Listing Committee of the Stock Exchange granting and not having withdrawn or revoked the approval for the listing of, and permission to deal in the COO Emolument Shares prior to settlement of the COO Emolument Shares, the Directors be and are hereby granted a specific mandate to allot and issue the COO Emolument Shares in accordance with the terms of the COO Service Contract, provided that this specific mandate shall be in addition to, and shall not prejudice nor revoke any existing or such other general or specific mandates which may from time to time be granted to the Directors prior to the passing of this resolution; and

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

4. “THAT

• (a) the deed of settlement of debt (the “ Deed ”) dated 30 December 2021 entered into between the Company as issuer and (i) Mr. Wu Jianwei; (ii) Mr. Liang Zihao; (iii) Mr. Li Man Keung Edwin; and (iv) Mr. Pan Wenyuan, collectively, as subscribers (the “ Subscribers ”) in relation to, the proposed subscription of 45,316,000 Shares (the “ Subscription Shares ”) at the subscription price of HK$0.62 per Subscription Share to, among other things, capitalize the aggregate amount owed by the Group to the Subscribers of HK$28,100,000 as at the date of the Deed on and subject to the terms and conditions thereof (a copy of the Deed marked “D” and signed by the chairman of the EGM for identification purpose has been tabled at the EGM), and the transactions contemplated thereunder be and are hereby approved, ratified and confirmed;

• (b) conditional upon the Listing Committee of the Stock Exchange granting and not having withdrawn or revoked the approval for the listing of, and permission to deal in the Subscription Shares prior to settlement of the Subscription Shares, the Directors be and are hereby granted a specific mandate to allot and issue the Subscription Shares in accordance with the terms of the Deed, provided that this specific mandate shall be in addition to, and shall not prejudice nor revoke any existing or such other general or specific mandates which may from time to time be granted to the Directors prior to the passing of this resolution; and

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

— EGM-3 —

NOTICE OF EGM

5. “THAT

• (a) subject to and conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the shares to be issued upon exercise of any options to be granted under the Refreshed Limit (as defined below) pursuant to the share option scheme (“ Share Option Scheme ”) of the Company adopted by the resolution of the shareholders of the Company passed on 19 April 2018, the existing limit on the grant of options under the Share Option Scheme and any other schemes of the Company be refreshed so that the aggregate nominal amount of share capital of the Company to be allotted and issued upon exercise of any options to be granted under the Share Option Scheme and any other schemes of the Company (excluding options previously granted, outstanding, cancelled, lapsed or exercised under the Share Option Scheme and any other schemes of the Company) shall not exceed 10% of the total number of the issued share capital of the Company in issue as at the date of the passing of this resolution (“ Refreshed Limit ”) and that the Directors of the Company be and are hereby authorized to grant options up to the Refreshed Limit and to exercise all the powers of the Company to allot, issue and deal with shares of the Company under the Refreshed Limit pursuant to the exercise of such options.”

By Order of the Board Cornerstone Technologies Holdings Limited LIANG Zihao

Co-Chairman and Executive Director

Hong Kong, 21 March 2022 Registered Office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive 2402, China Merchants Tower P.O. Box 2681 Shun Tak Centre Grand Cayman 168-200 Connaught Road Central KY1-1111 Hong Kong Cayman Islands As at the date of this notice, the Directors are as follows: Executive Directors: Mr. LIANG Zihao (Co-Chairman) Mr. 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-4 —

NOTICE OF EGM

Notes:

1. 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.

2. 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.

3. 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.

4. 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 Saturday, 9 April 2022) or any adjournment thereof.

5. For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 6 April 2022 to Monday, 11 April 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, 4 April 2022.

6. 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.

7. In compliance with the GEM Listing Rules, the resolution to be proposed at the EGM will be voted by way of poll.

8. The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

9. In light of the directions in relation to the Prevention and Control of Disease (Requirements and Directions) (business and Premises) Regulation (Chapter 599F, Laws of Hong Kong) issued by the Hong Kong Government on 9 February 2022 which has become effective on 10 February 2022, physical general meetings of companies are prohibited. The Company hereby announces that, in view of the current COVID-19 situation in Hong Kong:

10. If a member of the Company (whether individual or corporate) wishes to exercise his/her/its voting rights at the EGM, he/she/it must appoint the chairman of the EGM as his/her/its proxy to vote on his/her/its behalf at the EGM.

11. In appointing the chairman of the EGM as proxy, a member of the Company (whether individual or corporate) must give specific instructions as to voting in the proxy form, the duly completed and signed proxy form must be deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, at the office of 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 not later than 3:00 p.m. on Saturday, 9 April 2022 (being not less than forty-eight (48) hours before the EGM), failing which the appointment will be treated as invalid.

— EGM-5 —

NOTICE OF EGM

• The EGM will be held by way of electronic means and a member of the Company will be able to observe the proceedings of the EGM through ZOOM Meeting or listen to the meeting proceedings. Shareholders can view and listen to the EGM through a live webcast of the EGM from 2:30 p.m. on Monday, 11 April 2022 on a computer, tablet or any browser enabled device. Shareholders will need to complete the following steps to be able to access the live webcast of the EGM:–

Accessing Proceedings of the EGM By Zoom

For Shareholders who would like to view and listen to the EGM live webcast, you will need to register by sending an email to is-enquiries@hk.tricorglobal.com no later than 5:00 p.m. on Friday, 1 April 2022 to provide a valid email address and a valid contact telephone number to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited (“ Tricor ”). A request form will be provided by Tricor, to such Shareholders via email, which shall be completed and returned to Tricor, by 5:00 p.m. on Wednesday, 7 April 2022, for the purpose of verifying the identity of the relevant Shareholder.

• Following authentication of his/her/its status as members of the Company, authenticated members of the Company will receive an email instruction on how to join the ZOOM Meeting to observe the proceedings of the EGM by Friday, 8 April 2022. Shareholders MUST NOT forward the link to other persons who are not the Shareholders and who are not entitled to attend the EGM.

– For non-registered Shareholders whose Shares are held in the Central Clearing and Settlement System through banks, brokers, custodians or Hong Kong Securities Clearing Company Limited, they can also view and listen to the EGM as well as speak and submit questions online. In this regard, they should consult directly with their banks, brokers or custodians (as the case may be) for the necessary arrangements.

• A member of the Company who wishes to express their views by asking questions may submit questions in relation to the business of the EGM in advance. Any shareholder who would like to submit questions in relation to the business of the EGM in advance can send questions by 3:00 p.m. on Saturday, 9 April 2022 by email to 8391gm-queries@elegancehk.com or telephone hotline at (852) 2283 2202 of the Company or submit questions during the EGM through the live webcast dialogue function. The Board will arrange for answering the questions raised to the extent possible at the 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-6 —