Crypto Flow Technology Limited — Capital/Financing Update 2021

Sep 6, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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Loto Interactive Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8198)

DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE COMPANY

THE SHAREHOLDERS AGREEMENT

The Board is pleased to announce that on 6 September 2021 (after trading hours), Brighten Express, a wholly-owned subsidiary of the Company, and the JV Partner entered into the Shareholders Agreement in respect of the formation of the JV Company, which is proposed primarily to be engaged in the construction and operation of the Project.

Pursuant to the Shareholders Agreement, the total investment amount of the JV Company will not be more than US$4 million (equivalent to approximately HK$31.09 million), which will be contributed in form of cash and/or in kind and beneficially owned as to 51% by Brighten Express and 49% by the JV Partner. Brighten Express will contribute a total amount of not more than US$2.04 million (equivalent to approximately HK$15.85 million), which will be funded by the Group’s internal and/ or external resources, and the JV Partner will contribute a total amount of not more than US$1.96 million (equivalent to approximately HK$15.24 million).

IMPLICATIONS UNDER THE GEM LISTING RULES

As one or more of the applicable percentage ratios (as set out in Rule 19.07 of the GEM Listing Rules) for the capital commitment payable by the Group in respect of the Shareholders Agreement exceed 5% but all are less than 25%, the entering into of the Shareholders Agreement constitutes a discloseable transaction on the part of the Company under Chapter 19 of the GEM Listing Rules.

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THE SHAREHOLDERS AGREEMENT

The Board is pleased to announce that on 6 September 2021 (after trading hours), Brighten Express, a wholly-owned subsidiary of the Company, and the JV Partner entered into the Shareholders Agreement relating to the formation of the JV Company, which is proposed primarily to be engaged in the construction and operation of the Project.

Set out below are the summary of the principal terms of the Shareholders Agreement:

Date: 6 September 2021 (after trading hours)

Parties: (i) Brighten Express; and

• (ii) the JV Partner.

Brighten Express is a direct wholly-owned subsidiary of the Company and is principally engaged in, among other things, the business of big data centre operation.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the JV Partner and its ultimate beneficial owners is an Independent Third Party.

Principal Business of the JV Company

The principal business of the JV Company will be construction and operation of the Project which involves the construction of the infrastructure (including facility centres and equipment) and operation of a big data centre in Kazakhstan.

Capital Contribution

Pursuant to the Shareholders Agreement, the total investment amount of the JV Company will not be more than US$4 million (equivalent to approximately HK$31.09 million), which shall be contributed by the Parties as follows:

	Amount	Proportion
	(US$)	(approx. %)
Brighten Express	2,040,000	51
JV Partner	1,960,000	49
Total	4,000,000	100

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The Parties will contribute the said sum in the form of cash and/or in kind. The Parties further agree that if the Capital Contribution be payable in the form of assets, the price will be determined and agreed by the Parties after further negotiation.

Within three (3) Business Days after the bank account of the JV Company has been opened, the Parties shall pay the Initial Capital Contribution according to their respective shareholding. As such, Brighten Express shall pay US$510,000 (equivalent to approximately HK$3,964,000 and the JV Partner shall pay US$490,000 (equivalent to approximately HK$3,808,000).

The remaining balance of the Capital Contribution shall be made according to the financial needs of the JV Company, as determined by its board of directors of the JV Company, which would primarily be dependent on the progress of construction of the Project.

The JV Company will become a subsidiary of the Company. As a result, the financial results of the JV Company will be consolidated with the Group’s financial statements.

The amount of capital contribution as share capital of the JV Company was determined after arm’s length negotiations between the JV Partner and Brighten Express by reference to the fund required for establishment and operation of the JV Company for the Project.

Organisational Structure of the JV Company

Pursuant to the Shareholders Agreement, assuming that no changes will be made to the respective shareholdings of the Parties in the JV Company, (i) Brighten Express will be entitled to appoint two (2) directors to the JV Company, one of whom shall also act as the chairman of the board of directors; and (ii) the JV Partner will be entitled to appoint one (1) director to the JV Company, who shall also act as the vice chairman of the board of directors.

Distribution of Profit of the JV Company

The profit of the JV Company will be shared by the Parties in accordance with their respective shareholding in the JV Company.

Restrictions on Equity Transfers

Unless compliance with the requirements as provided under the Shareholders Agreement, no shareholder of the JV Company shall transfer or pledge all or part of the shares of the JV Company or otherwise create any encumbrances over such shares.

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INFORMATION ON THE JV PARTNER

As advised by the JV Partner, the JV Partner is a limited company incorporated in Kazakhstan and an experienced service provider that runs data centres located in the Uralsk region of West Kazakhstan. The JV Partner is principally engaged in, among other things, the hosting of applications and related activities.

As advised by the JV Partner, the ultimate beneficial owners of the JV Partner are (i) Mr. Liu Dong, who has extensive experience in China’s international trade with Russia and Kazakhstan; (ii) Mr. Liu Tie, who is an electrical engineer and highly experienced in the power-related companies in China and Kazakhstan; and (iii) Mr. Ulykbanov Yermek, who has extensive experience in the management of trading and engineering businesses, mature experience in corporate governance, and extensive network in Kazakhstan.

To the best of the directors’ knowledge, information and belief having made all reasonable enquiry, the JV Partner and its ultimate beneficial owners are Independent Third Parties.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SHAREHOLDERS AGREEMENT

The Group is principally engaged in (i) provision of data analysis and storage services (the “ Big Data Centre Services ”); (ii) proprietary cryptocurrency mining; and (iii) money lending business in Hong Kong.

The Directors have been continuing in exploring suitable business opportunities to diversify the geographical scope of its Big Data Centre Services. As disclosed above, the JV Partner is experienced in providing facilities and equipment maintenance to blockchain technology focused companies. With its rich local knowledge and reputation in the region, the Directors consider that the cooperation between Brighten Express and the JV Partner will strengthen the development capabilities of the JV Company and broaden the Company’s operational reach in Kazakhstan, thus generating revenue for the Group for the benefit of the Company and its shareholders as a whole. The establishment of JV Company could provide an opportunity to the Company to expand its Big Data Centre Services in Kazakhstan.

The Directors consider that the terms and conditions of the Shareholders Agreement are fair and reasonable and are in the interest of the Company and its shareholders as a whole.

IMPLICATIONS UNDER THE GEM LISTING RULES

As one or more of the application percentage ratios (as set out in Rule 19.07 of the GEM Listing Rules) for the capital commitment payable by the Group in respect of the Shareholders Agreement exceed 5% but all are less than 25%, the entering into of the Shareholders Agreement constitutes a discloseable transaction on the part of the Company under Chapter 19 of the GEM Listing Rules.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

• “Board” the board of Directors “Brighten Express” Brighten Express Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

• “Business Days” a day (other than Saturday, Sunday or public holiday) on which the banks of Kazakhstan, China and Hong Kong are open for normal business

• “Capital Contribution” total capital contribution in the JV Company, in the aggregate sum of not more than US$4 million (equivalent to approximately HK$31.09 million)

• “Company” Loto Interactive Limited, a company incorporated in the Cayman Islands and the Shares of which are listed on the GEM (stock code: 8198)

• “Director(s)” director(s) of the Company “GEM” GEM operated by the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM of the Stock Exchange

• “Group” the Company and its subsidiaries from time to time “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Third any person or company and their respective ultimate Party” beneficial owner(s), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons

• “Initial Capital the initial capital contribution to the JV Company to be Contribution” collectively contributed by the Parties in the aggregate sum of US$1 million (equivalent to approximately HK$7.77 million), which shall form part of the Capital Contribution

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“JV Company”	a company, subject to the approval by the relevant authority
	of Kazakhstan with limited liability to be incorporated in
	Kazakhstan, to be held as to 51% by Brighten Express and
	49% by the JV Partner
“JV Partner”	LLY Agro-Energy, a company incorporated in Kazakhstan
	with limited liability and an Independent Third Party
“Parties”	collectively, Brighten Express and the JV Partner, each a
	“Party”
“PRC”	the People’s Republic of China which, for the purposes of
	this announcement, excludes Hong Kong, Macau Special
	Administrative Region of the PRC and Taiwan
“Project”	Kazakhstan Big Data Centre Project which involves the
	construction of the infrastructure (including facility centres
	and equipment) and operation of a big data centre in
	accordance with the terms of the Shareholders Agreement
“Share(s)”	ordinary share(s) of HK$0.1 each in the issued share capital
	of the Company
“Shareholders	the shareholders’ agreement dated 6 September 2021 entered
Agreement”	into between Brighten Express and the JV Partner in relation
	to the formation of the JV Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“U.S.”	the United States of America
“US$”	U.S. dollar(s), the lawful currency of the United States of
	America
“%”	per cent

By Order of the Board Loto Interactive Limited Yan Hao

Chief Executive Officer and Executive Director

Hong Kong, 6 September 2021

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As at the date of this announcement, the Board of Directors comprises Ms. Zhang Jing (Chairman), Mr. Yan Hao[#] (Chief Executive Officer), Ms. Huang Lilan[#] , Mr. Yang Xianfeng, Dr. Lu Haitian[+] , Mr. Lin Sen[+] and Mr. Huang Jian[+] .

• Executive Director

• Non-executive Director

• • Independent Non-executive Director

In this announcement, translation of US$1 into HK$ is based on the exchange rate of US$1: HK$7.772. No representation is made that any amounts in US$1 and HK$ can be or could have been converted at the above exchange rate or any other rates. In this announcement, translated English names of Chinese entities for which no official English translation exists are unofficial translations for identification purposes only, and in the event of any inconsistency between the Chinese names and their English translation, the Chinese names shall prevail. If there is any inconsistency in this announcement between the Chinese and English versions, the English version shall prevail.

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

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for a minimum period of 7 days from the date of its publication and on the Company’s website at www.lotoie.com.

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