THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your Shares in Life Concepts Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s) or to the bank manager, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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 only and does not constitute an invitation or offer to Shareholders or any other persons to acquire, purchase, or subscribe for securities of Life Concepts Holdings Limited.

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L I F E C O N C E P T S Life Concepts Holdings Limited 生活概念控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8056)

(1) PROPOSED CHANGE OF DOMICILE; (2) PROPOSED ADOPTION OF MEMORANDUM OF CONTINUANCE AND NEW BYE-LAWS;

(3) PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT; (4) PROPOSED CAPITAL REORGANISATION; (5) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE; AND (6) NOTICE OF EGM

Financial adviser to the Company

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

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Underwriter to the Rights Issue

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

A letter from the Board is set out on pages 13 to 38 of this circular and a letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 39 to 40 of this circular. A letter from the Independent Financial Adviser containing its recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 41 to 65 of this circular.

The Rights Issue is only underwritten on a best effort and non-fully underwritten basis. In the event of under-subscription, any Rights Shares not taken up by the Qualifying Shareholders whether under PAL(s) or EAF(s), or transferees of nil-paid Rights Shares, and not subscribed by subscribers procured by the Underwriter (or either of them, whichever shall be appropriate) will not be issued, and hence, the size of the Rights Issue will be reduced accordingly. There are no requirements for minimum levels of subscription in respect of the Rights Issue. The Rights Issue is conditional upon the Underwriting Agreement having become unconditional and the Underwriting Agreement contains provisions granting the Underwriter the right to terminate the obligations of the Underwriter thereunder on the occurrence of certain events including force majeure at or prior to the latest time for the Rights Issue to become unconditional (which is currently expected to be 4:00p.m. on Tuesday, 11 October 2022). If the Underwriting Agreement does not become unconditional at or prior to the latest time for the Rights Issue to become unconditional, the Rights Issue will not proceed.

It should be noted that the Shares will be dealt in on an ex-rights basis from Wednesday, 14 September 2022. Dealings in the Rights Shares in nil-paid form are expected to take place from Tuesday, 27 September 2022 to Wednesday, 5 October 2022 (both days inclusive). If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the Underwriter, the Rights Issue will not proceed. Any person contemplating dealing in the nil-paid Rights Shares during the period from Tuesday, 27 September 2022 to Wednesday, 5 October 2022 (both days inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and/or may not proceed. Any person contemplating dealing in the Shares and/or the Rights Shares in their nil-paid form are recommended to consult his/her/its/their own professional advisers.

A notice convening the EGM to be held at 10:00 a.m. on Monday, 1 August 2022 at A505, Parkview Green, No. 9 Dongdaqiao Road, Chaoyang District, Beijing, the People’s Republic of China is set out on pages EGM-1 to EGM-5 of this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit it with Boardroom Share Registrars (HK) Limited, the branch share registrar of the Company in Hong Kong, at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the meeting (i.e. 10:00 a.m. on Saturday, 30 July 2022) or any adjournment thereof.

28 June 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 of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

−i −

CONTENTS

	Page
PRECAUTIONARY MEASURES FOR THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
TERMINATION OF THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . .	39
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . .	41
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . .	I-1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III — SUMMARY OF THE MEMORANDUM OF CONTINUANCE
AND THE NEW BYE-LAWS AND DIFFERENCES WITH
THE MEMORANDUM AND THE ARTICLES . . . . . . . . . . . . . .	III-1
APPENDIX IV — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

−ii −

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing COVID-19 epidemic and recent requirements for prevention and control of its spread, the Company will implement necessary preventive measures at the EGM to protect attending Shareholders, proxy and other attendees from the risk of infection, including:

(i) Compulsory body temperature check will be conducted on every Shareholder, proxy and other attendees at the entrance of the EGM venue. Any person with a body temperature of over 37.2 degrees Celsius may be denied entry into the EGM venue or be required to leave the EGM venue.
(ii) Attendees are required to prepare their own surgical face masks and wear the same inside the EGM venue at all times, and to maintain a safe distance between seats.
(iii) No corporate gifts will be distributed and no refreshments will be served.

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

In the interest of all attendees’ health and safety, the Company wishes to advise the Shareholders to appoint the Chairman of the EGM as their proxy to vote on the relevant resolutions at the EGM as an alternative to attending the EGM in person.

The proxy form, which can also be downloaded from the website of the Stock Exchange (www.hkexnews.hk) and the Company’s website (www.lifeconcepts.com), is enclosed to this circular. If you are not a registered Shareholder (i.e., if your Shares are held via banks, brokers, custodians or Hong Kong Securities Clearing Company Limited), you should consult directly with your banks or brokers or custodians (as the case may be) to assist you in the appointment of proxy.

−1 −

DEFINITIONS

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

“Announcement”

the announcement of the Company dated 28 April 2022 in relation to, among other things, the Rights Issue

“acting in concert”

has the meaning ascribed thereto under the Takeovers Code

“Adjusted Share(s)”
ordinary share(s) of US$0.001 each in the share capital of the Company immediately upon the Capital Reorganisation becoming effective
“Adoption of Memorandum of Continuance and New Bye-laws”
the proposed adoption of the Memorandum of Continuance and the New Bye-laws in compliance with the laws of Bermuda to replace, respectively, the Memorandum and the Articles
“Articles”
the existing articles of association of the Company
“associates”
has the meaning ascribed thereto under the GEM Listing Rules
“Board”
the board of Directors
“Business Day(s)”
a day (excluding Saturday, Sunday and any day on which a tropical cyclone warning signal no. 8 or above is hoisted or remains hoisted between 9:00 a.m. and 12:00 noon and is not lowered at or before 12:00 noon or on which a “black” rainstorm warning is hoisted or remains in effect between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are open for general business
“Capital Reduction”
the proposed reduction of the issued share capital of the Company through a cancellation of the paid-up capital of the Company to the extent of US$0.009 on each of the issued Shares such that the nominal value of each issued Share will be reduced from US$0.01 to US$0.001
“Capital Reorganisation”
the proposed reorganisation of the share capital of the Company involving the Capital Reduction and the Share Subdivision
“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC

−2 −

DEFINITIONS

“Change of Domicile” the proposed change of domicile of the Company from the Cayman Islands to Bermuda by way of de-registration of the Company in the Cayman Islands and continuation of the Company as an exempted company under the laws of Bermuda
“Companies Act” the Companies Act 1981 (as amended) of Bermuda
“Companies Law” the Companies Act (as revised) of the Cayman Islands
“Company” Life Concepts Holdings Limited (生活概念控股有限公司), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the GEM (stock code: 8056)
“Contributed Surplus Account” the account designated as the contributed surplus account of the Company within the meaning of the Companies Act upon the Change of Domicile becoming effective
“connected person(s)” has the meaning ascribed thereto under the GEM Listing Rules
“controlling shareholders” has the meaning ascribed thereto under the GEM Listing Rules
“Director(s)” director(s) of the Company
“EAF(s)”

the form(s) of application for use by the Qualifying Shareholders who wish to apply for excess Rights Shares, being in such form as may be agreed between the Company and the Underwriter

“EGM”
the extraordinary general meeting of the Company to be convened and held to consider, among others, the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account, the Capital Reorganisation and the Rights Issue (including the Underwriting Agreement)

“Excess Rights Shares” any nil-paid Rights Share(s) provisionally allotted but not accepted by any of the Qualifying Shareholders or otherwise subscribed for by transferees of nil-paid Rights Shares prior to the Latest Time for Acceptance, any entitlements of the Excluded Shareholders provisionally allotted to a nominee of the Company which are left unsold, and shall include any of the Rights Shares created from the aggregation of fractions of the Rights Shares

−3 −

DEFINITIONS

“Excluded Shareholder(s)”

“Extreme Conditions”

“GEM”
“GEM Listing Rules”
“Group”
“HK$”
“HKSCC”
“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser” or “Opus Capital”
“Independent Shareholders”
“Independent Third Party(ies)”

those Overseas Shareholder(s) whom the Directors, based on legal opinions provided by the Company’s legal advisers, consider it necessary or expedient not to offer the Rights Shares to such Shareholders on account either of restrictions under the laws of the relevant place or the requirements of a relevant regulatory body or stock exchange in that place

the extreme conditions as announced by any Hong Kong governmental department or body or otherwise, whether or not under or pursuant to the revised “Code of Practice in Times of Typhoons and Rainstorms” issued by the Labour Department in July 2021, in the event of serious disruption of public transport services, or government services, extensive flooding, major landslides or large-scale power outrage after typhoons or incidents similar in seriousness or nature

GEM operated by the Stock Exchange

the Rules Governing the Listing of Securities on GEM

the Company and its subsidiaries

Hong Kong dollars, the lawful currency of Hong Kong Hong Kong Securities Clearing Company Limited

the Hong Kong Special Administrative Region of the PRC

the independent board committee of the Company comprising all the independent non-executive Directors formed for the purpose of providing recommendations to the Independent Shareholders in respect of the Rights Issue (including the Underwriting Agreement)

Opus Capital Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue (including the Underwriting Agreement)

any Shareholder(s) who are not required to abstain from voting at the EGM under the GEM Listing Rules

third party(ies) independent of and not connected (as defined under the GEM Listing Rules) with the Company and connected person(s) of the Company

−4 −

DEFINITIONS

“Latest Practicable Date”
“Last Trading Day”
“Latest Time for Acceptance”
“Latest Time for Termination”
“Memorandum”
“Memorandum of Continuance”
“Mr. James Lu”
“Ms. Li”
“New Bye-laws”
“Overseas Shareholder(s)”
“PAL(s)”
“PRC”
24 June 2022, being the latest practicable date before the printing of this circular for the purpose of ascertaining certain information contained herein
28 April 2022, being the last trading day of the Shares on the Stock Exchange before the release of the Announcement
4:00 p.m. on Monday, 10 October 2022 or such later time or date as may be agreed between the Underwriter and the Company, being the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus Documents
4:00 p.m. on Tuesday, 11 October 2022, following Business Day after the Latest Time for Acceptance or such later time or date as may be agreed between the Underwriter and the Company, being the latest time to terminate the Underwriting Agreement
the existing memorandum of association of the Company
a memorandum of continuance of the Company proposed to be adopted by the Company and to take effect upon continuation of the Company in Bermuda
James Fu Bin Lu, an executive Director and the spouse of Ms. Li
Li Qing Ni, an executive Director and the spouse of Mr. James Lu
a new set of bye-laws of the Company proposed to be adopted by the Company and to take effect upon continuation of the Company in Bermuda
Shareholder(s) whose name(s) appear on the register of members of the Company on the Record Date and whose address(es) as shown on such register is/are in a place(s) outside Hong Kong
the provisional allotment letter(s) to be used in connection with the Rights Issue in such form as the Company may approve
the People’s Republic of China, and for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan

−5 −

DEFINITIONS

“Prospectus”

the prospectus to be despatched to the Shareholders containing details of the Rights Issue

“Prospectus Documents”

the Prospectus, the PAL and the EAF

“Prospectus Posting Date”

Friday, 23 September 2022 or such other date as the Company may determine in writing for the despatch of the Prospectus Documents

“Qualifying Shareholders”
“Record Date”

Shareholder(s), other than the Excluded Shareholder(s), whose name(s) appear on the register of members of the Company as at the close of business on the Record Date the date by reference to which entitlements under the Rights Issue are expected to be determined, which is currently scheduled to be on Thursday, 22 September 2022 or such later date as announced by the Company

“Reduction of Share Premium Account”
“Registrar”
the proposed reduction of the entire amount standing to the credit of the share premium account of the Company to nil the branch share registrar and transfer office of the Company in Hong Kong, being Boardroom Share Registrars (HK) Limited, at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong
“Rights Issue”
“Rights Share(s)”

the proposed issue by way of rights on the basis of three (3) Rights Shares for every two (2) Adjusted Shares held by the Qualifying Shareholders on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents the new Adjusted Share(s) proposed to be allotted and issued by the Company pursuant to the Rights Issue

“SFC”
the Securities and Futures Commission of Hong Kong
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)” ordinary share(s) in issue and unissued share capital of the Company
“Share Subdivision” the proposed sub-division of each of the authorised but unissued Share of US$0.01 each into 10 unissued Adjusted Shares of US$0.001 each

−6 −

DEFINITIONS

“Shareholder(s)”

the holder(s) of the issued Shares, and/or the Adjusted Share(s), as the case may be

“Specified Event”

an event occurring or matter arising on or after the date of execution of the Underwriting Agreement and prior to the Latest Time for Termination which, if it had occurred or arisen before the date of execution of the Underwriting Agreement, would have rendered any of the warranties contained in the Underwriting Agreement untrue or incorrect in any material respect

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Strong Day”

Strong Day Holdings Limited, a company incorporated in the British Virgin Islands with limited liability

“Subscription Price”

HK$0.04 per Rights Share

“substantial shareholder”

has the meaning ascribed to it under the GEM Listing Rules

“Takeovers Code”
The Code on Takeovers and Mergers of Hong Kong
“Underwriter”

Canfield Securities Company Limited, a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO whose ordinary course of business includes underwriting of securities

“Underwriting Agreement”
the underwriting agreement dated 28 April 2022 entered into between the Company and the Underwriter in relation to the underwriting arrangement in respect of the Rights Issue
“Underwritten Share(s)”
all the Rights Shares to be underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement
“Untaken Shares”
all those Underwritten Shares not taken up by the Qualifying Shareholders on or before the Latest Time for Acceptance
“US$” “%”
United States dollars, the lawful currency of the United States per cent.

For the purpose of illustration only and unless otherwise stated, conversion of US$ into Hong Kong dollars in this circular is based on the exchange rate of HK$1 to US$7.78. Such conversion should not be construed as a representation that any amount has been, could have been, or may be, exchanged at this or any other rate.

−7 −

EXPECTED TIMETABLE

Set out below is the expected timetable for the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation which is indicative only:

Event

2022

Despatch date of this circular with notice and form of proxy for the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 28 June Latest time for lodging transfers of shares to qualify for attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Tuesday, 26 July Closure of register of members of the Company for attending and voting at the EGM (both days inclusive) . . . . . . . . . . . . . . Wednesday, 27 July to Monday, 1 August Latest time for lodging forms of proxy for the purpose of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Saturday, 30 July Record date for determining attendance and voting at the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 1 August Expected date and time of the EGM . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday, 1 August Announcement of poll results of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 1 August

The following events are conditional on the fulfilment of the conditions for the implementation of the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation:

Expected effective date of the Change of Domicile and
the Adoption of Memorandum of Continuance and
New Bye-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . on or after Monday, 22 August
	(Bermuda time)/
	on or after Tuesday, 23 August
Expected effective date of the Reduction of Share
Premium Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	on or after Monday, 22 August
	(Bermuda time)/
	on or after Tuesday, 23 August
Expected effective date and time of the Capital
Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00	a.m. on Tuesday, 13 September
First day of free exchange of share certificates of the
Shares into new share certificates for Adjusted Shares . . . . . . . . . . . . . . Tuesday, 13 September
Commencement of dealings in Adjusted Shares . . . . . . . . . . . 9:00	a.m. on Tuesday, 13 September
Last day and time for free exchange of existing share
certificates for new share certificates of Adjusted
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., on Tuesday, 18 October

−8 −

EXPECTED TIMETABLE

Set out below is the expected timetable for the Rights Issue which is indicative only and has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled:

Event	Year 2022
Latest time for lodging transfers of shares to qualify for
attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Tuesday, 26 July
Closure of register of members of the Company for
attending and voting at the EGM (both days inclusive) . . . . . . . . . . . . . .	Wednesday, 27 July to
	Monday, 1 August
Latest time for lodging forms of proxy for the purpose
of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Saturday, 30 July
Record date for determining attendance and voting at the
EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . Monday, 1 August
Expected date and time of the EGM. . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday, 1 August
Announcement of poll results of the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 1 August
Last day of dealings in Adjusted Shares on a cum-rights
basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 13 September
First day of dealings in the Adjusted Shares on an
ex-rights basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 14 September
Latest time for lodging transfer of Adjusted Shares in
order to qualify for the Rights Issue . . . . . . . . . . . . . . . . . 4:30 p.m. on	Thursday, 15 September
Register of members of the Company closes
(both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Friday, 16 September to
	Thursday, 22 September
Record Date for determining entitlements to the Rights
Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Thursday, 22 September
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . . . . Friday, 23 September
Despatch of Prospectus Documents (in the case of
Excluded Shareholders, the Prospectus only) . . . . . . . . . . . . . . . . . . . . . . . Friday, 23 September
First day of dealing in nil-paid Rights Shares . . . . . . . . . . . . 9:00 a.m. on Tuesday, 27 September
Latest time for splitting of the PAL . . . . . . . . . . . . . . . . . . . 4:30 p.m. on	Thursday, 29 September
Last day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . .	. Wednesday, 5 October

−9 −

EXPECTED TIMETABLE

Latest Time for Acceptance of and payment for the Rights Shares and application and payment for excess Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 10 October

Latest Time for Termination of the Underwriting Agreement and for the Rights Issue to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 11 October

Announcement of allotment results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 17 October

Despatch of certificates for fully-paid Rights Shares and refund cheques, if any (if the Rights Issue is terminated and in respect of unsuccessful or partially successful application for excess Rights Shares) . . . . . . . . . . . . . . . . . . . . . Tuesday, 18 October

Expected first day of dealings in fully-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Wednesday, 19 October

Designated broker starts to stand in the market to provide matching services for odd lots of Shares . . . . . . . . 9:00 a.m. on Wednesday, 19 October
Designated broker ceases to stand in the market to provide matching services for odd lots of Shares . . . . . . . 4:00 p.m. on Wednesday, 9 November

All time and dates in this circular refer to Hong Kong local time and dates. The dates or deadlines specified in the expected timetable above are indicative only and may be extended or varied. Should there be any changes to the above expected timetable, the Company will notify the Shareholders by way of announcement as and when appropriate.

EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

The latest time for acceptance of and payment for the Rights Shares will not take place if there is a tropical cyclone warning signal no. 8 or above, or a “black” rainstorm warning and/or Extreme Conditions caused by super typhoons announced by the government of Hong Kong:

(i) in force in Hong Kong at any local time before 12: 00 noon and no longer in force after 12:00 noon on Monday, 10 October 2022. Instead, the latest time for acceptance of and payment for the Rights Shares will be extended to 5:00 p.m. on the same Business Day; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Monday, 10 October 2022. Instead, the latest time for acceptance of and payment for the Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

If the latest time for acceptance of and payment for the Rights Shares does not take place on or before 4:00 p.m. on Monday, 10 October 2022, the dates mentioned in this section may be affected. An announcement will be made by the Company in such event.

−10 −

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

If, prior to the Latest Time for Termination:

(i) in the reasonable opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of the Underwriter materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of the Underwriter materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(ii) any material adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction on trading in securities) occurs which in the reasonable opinion of the Underwriter is likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(iii) any material change in the circumstances of the Company or any member of the Group which in the reasonable opinion of the Underwriter will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or
(iv) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion or unrest, fire, flood, explosion, epidemic, pandemic, terrorism, strike or lock-out which would, in the reasonable opinion of the Underwriter materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole; or
(v) in the reasonable opinion of the Underwriter, there occurs any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or

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TERMINATION OF THE UNDERWRITING AGREEMENT

(vi) any matter which, had it arisen or been discovered immediately before the Prospectus Posting Date and not having been disclosed in the Prospectus Documents, would have constituted, in the reasonable opinion of the Underwriter, a material omission in the context of the Rights Issue; or
(vii) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than twenty (20) consecutive trading days otherwise than due to or in connection with or in relation to the Underwriting Agreement and/or the Rights Issue and excluding any suspension in connection with the clearance of the announcement or other matters in connection with the Underwriting Agreement and/or the Rights Issue, or
(viii) the Prospectus Documents when published contains information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the GEM Listing Rules or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company and which may in the reasonable opinion of the Underwriter be material to the Group as a whole upon completion of the Rights Issue and is likely to affect materially and adversely the success of the Rights Issue.

The Underwriter shall be entitled by a notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

If the Underwriter terminates the Underwriting Agreement, the Rights Issue will not proceed. A further announcement would be made by the Company if the Underwriting Agreement is terminated by the Underwriter.

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LETTER FROM THE BOARD

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L I F E C O N C E P T S

Life Concepts Holdings Limited 生活概念控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8056)

Executive Directors: Registered office: Mr. James Fu Bin Lu Windward 3 (Chairman and Chief Executive Officer) Regatta Office Park Mr. Long Hai PO Box 1350 Ms. Li Qing Ni Grand Cayman KY1-1108 Cayman Islands

Independent non-executive Directors:

Mr. Lu Cheng Principal place of business in Hong Kong: Mr. Shi Kangping Suites 1701-3, 17th Floor Mr. Kim Jin Tae Chinachem Hollywood Centre 1,3,5,7,9,11 and 13 Hollywood Road Central, Hong Kong 28 June 2022

To the Qualifying Shareholders, and for information only, to the Excluded Shareholders,

Dear Sir or Madam,

(1) PROPOSED CHANGE OF DOMICILE; (2) PROPOSED ADOPTION OF MEMORANDUM OF CONTINUANCE AND NEW BYE-LAWS;

(3) PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT;

(4) PROPOSED CAPITAL REORGANISATION; (5) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE; AND (6) NOTICE OF EGM

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the proposed Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account, the Capital Reorganisation and the Rights Issue.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further details of the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account, the Capital Reorganisation and the Rights Issue (including the Underwriting Agreement); (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue (including the Underwriting Agreement); (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue (including the Underwriting Agreement); and (iv) the notice of EGM.

PROPOSED CHANGE OF DOMICILE

The Board proposes to change the domicile of the Company from the Cayman Islands to Bermuda by way of de-registration of the Company in the Cayman Islands and continuation of the Company as an exempted company under the laws of Bermuda. The Board also proposes to implement the Capital Reorganisation upon the Change of Domicile becoming effective, details of which are set out in the section headed “Proposed Capital Reorganisation” below.

Conditions of the Change of Domicile

The Change of Domicile is conditional upon:

(i) the passing of the necessary special resolution(s) by the Shareholders at the EGM to approve the Change of Domicile and the Adoption of Memorandum of Continuance and New Bye-laws;
(ii) compliance with the relevant requirements under the GEM Listing Rules and the relevant legal procedures and requirements under the laws of the Cayman Islands and the laws of Bermuda in respect of the Change of Domicile; and
(iii) the obtaining of all necessary approvals from the relevant regulatory authorities or otherwise as may be required in respect of the Change of Domicile, if required.

The Change of Domicile is not conditional upon the Capital Reorganisation becoming effective. However, the Capital Reorganisation is conditional upon the Change of Domicile becoming effective.

Effect of the Change of Domicile

Other than the expenses to be incurred, the Change of Domicile will not alter the underlying assets, investments, management or financial position of the Company nor the proportionate interests of the Shareholders. The Company’s legal advisers as to the laws of the Cayman Islands and Bermuda are of the view that the continuation of the Company in Bermuda does not create a new legal entity or prejudice or affect the continuity of the Company. The Company will continue to maintain a principal place of business in Hong Kong.

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LETTER FROM THE BOARD

The Change of Domicile also will not involve the formation of a new holding company, or the withdrawal of listing of the existing Shares, any issue of new existing Shares, any transfer of assets of the Company or any change in the existing shareholding of the Company. Implementation of the Change of Domicile will not affect the listing status of the Company on the Stock Exchange. The existing share certificates for the Shares will continue to be valid and effective as documents of title and for trading and settlement purpose after the Change of Domicile becoming effective.

Reasons for the Change of Domicile

As advised by the Company’s legal advisers as to the laws of the Cayman Islands, if the Company proceeds with the Capital Reorganisation under the laws of the Cayman Islands, which includes, amongst other things, the Capital Reduction in the Cayman Islands, the sanction by the Grand Court of the Cayman Islands (the “ Court ”) would be required, and such sanction cannot be obtained in a commercially expedient time frame.

The process for effecting a reduction of capital in the Cayman Islands is lengthy, which involves, among others, the following procedures: (i) applying to the Court by way of petition; (ii) obtaining the approval of the proposed capital reduction by the Directors; (iii) authorising a person to provide the necessary affirmation or affidavit in support of the petition; (iv) convening an extraordinary general meeting, in which a special resolution must be passed to approve the capital reduction; (v) filing the special resolution by the Company with the Cayman Registrar of Companies within 15 days of its passing; and (vi) applying to the Court to confirm the special resolution. The above process may take up to 12 weeks from the date of the EGM to complete assuming that (i) the Shareholders can be assembled for the passing of the special resolution to approve the capital reduction at ease; and (ii) an inquiry as to creditors is not ordered. The timeframe will also depend on the state of the Court list.

On the other hand, if the Capital Reorganisation will be effected by way of change of domicile of the Company from the Cayman Islands to Bermuda through de-registration of the Company in the Cayman Islands and continuation of the Company in Bermuda, the Company’s legal advisers as to the laws of the Cayman Islands and Bermuda advised that no court order is required in the Cayman Islands or Bermuda for the Change of Domicile and the Capital Reorganisation after de-registration of the Company in the Cayman Islands and its continuation in Bermuda. The process for effecting the deregistration in the Cayman Islands and continuation in Bermuda requires making the relevant filings and applications with the Cayman Registrar of Companies, Bermuda Registrar of Companies and obtaining approval from the Bermuda Monetary Authority. The timeframe required will be around three weeks from the date of the EGM. Once the Change of Domicile becomes effective, the process for effecting a capital reduction in Bermuda can be commenced. It generally requires Shareholders’ approval, publication of notice and making filings with the Bermuda Registrar of Companies but does not require court approval. A notice should be published in an appointed newspaper in Bermuda not more than thirty (30) days and not less than fifteen (15) days before the date from which the capital reduction is to have effect and the filing must be completed within thirty (30) days of the effective date of the capital reduction.

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LETTER FROM THE BOARD

Accordingly, the Board considers that it would save the Company’s time for carrying out the Capital Reorganisation in Bermuda by first implementing the Change of Domicile, which will take only approximately three weeks from the date of the EGM and the Capital Reorganisation could be effective in approximately three weeks from the effective date of the Change of Domicile, as compared to carrying out the capital reduction in the Cayman Islands, which is subject to the sanction by the Court, which would take up to 12 weeks from the date of the EGM and is subject to the availability of the Court. Hence, there is uncertainty as to the time required for proceeding capital reduction in the Cayman Islands. Give the above, the Board believes that the Change of Domicile is beneficial to and in the interests of the Company and the Shareholders as a whole.

PROPOSED ADOPTION OF MEMORANDUM OF CONTINUANCE AND NEW BYE-LAWS

In connection with the Change of Domicile, the Company proposes to adopt the Memorandum of Continuance and the New Bye-laws in compliance with Bermuda laws to replace, respectively, the Memorandum and the Articles.

A summary of the Memorandum of Continuance and the New Bye-laws and differences with the Memorandum and the Articles are set out in Appendix III to this circular.

Conditions of the Adoption of Memorandum of Continuance and New Bye-laws

The Adoption of Memorandum of Continuance and New Bye-laws is conditional upon the passing of a special resolution by the Shareholders to approve the Adoption of Memorandum of Continuance and New Bye-laws at the EGM and the registration of the Memorandum of Continuance by the Registrar of Companies in Bermuda.

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT

Where the Company issues Shares at a premium, a sum equal to the aggregate amount or value of the premiums on those Shares are transferred to an account called the share premium account, to which the provisions of the Companies Act relating to a reduction of share capital of the Company shall apply as if the share premium account was paid up share capital of the Company except that the share premium account may be applied by the Company (i) in paying up unissued Shares of the Company to be issued to members of the Company as fully paid bonus shares; (ii) in writing off: (aa) the preliminary expenses of the Company; or (bb) the expenses of, or the commission paid or discount allowed on, any issue of Shares or debentures of the Company; or (iii) in providing for the premiums payable on redemption of any Shares or of any debentures of the Company.

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LETTER FROM THE BOARD

The Board proposes to reduce the entire amount standing to the credit of the share premium account of the Company to nil and to transfer the credits arising from such reduction to the Contributed Surplus Account upon the Change of Domicile becoming effective. The Contributed Surplus Account includes proceeds arising from donated Shares, credits resulting from the redemption or conversion of Shares at less than the amount set up as nominal capital and donations of cash and other assets to the Company and is considered a distributable reserve of the Company provided that no dividend shall be paid or distribution made out of the Contributed Surplus Account if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than its liabilities. As the Company would be able to make distributions or declare dividends out of the Contributed Surplus Account without obtaining Shareholders’ approval as required in the share premium account, the transfer of credit from the share premium account to the Contributed Surplus Account will provide the Directors the flexibility in declaring dividends and to set off the accumulated losses as and when required. Based on the advice of the Company’s legal advisers as to the Cayman Islands and Bermuda laws, the Company considers that the Reduction of Share Premium Account (and in particular the transfer of the credits from the share premium account of the Company to the Contributed Surplus Account) are in compliance with the laws of the Cayman Islands and Bermuda and will not have any material adverse impact to the interests of the Shareholders.

Conditions of the Reduction of Share Premium Account

The Reduction of Share Premium Account is conditional upon:

(i) the Change of Domicile becoming effective;
(ii) passing of a special resolution by the Shareholders approving the Reduction of Share Premium Account at the EGM; and
(iii) the compliance with the relevant legal procedures and requirements under the laws of Bermuda to effect the Reduction of Share Premium Account.

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LETTER FROM THE BOARD

PROPOSED CAPITAL REORGANISATION

The Company proposes to implement the Capital Reorganisation upon the Change of Domicile becoming effective which will involve the following:

(i) the issued share capital of the Company be reduced through a cancellation of the paid-up capital of the Company to the extent of US$0.009 on each of the issued Shares such that the nominal value of each issued Share will be reduced from US$0.01 to US$0.001;
(ii) immediately following the Capital Reduction, each of the authorised but unissued Shares of US$0.01 each will be sub-divided into 10 Adjusted Shares of US$0.001 each;
(iii) the credit arising in the books of the Company from the Capital Reduction in the amount of US$7,292,250 be credited to the Contributed Surplus Account; and
(iv) the amount standing to the credit of the Contributed Surplus Account be applied by the Board to set off the accumulated losses of the Company in full or by the amount of such credits and be applied in any other manner as may be permitted under the New Bye-laws and all applicable laws of Bermuda.

Effects of the Capital Reorganisation

As at the Latest Practicable Date, the authorised share capital of the Company is US$100,000,000 divided into 10,000,000,000 Shares, of which 810,250,000 Shares have been issued and are fully paid or credited as fully paid.

Assuming there will be no change in the issued share capital of the Company from the Latest Practicable Date up to the date on which the Capital Reorganisation becomes effective, the share capital structure of the Company will be as follows:

		Immediately upon the
	As at the Latest	Capital Reorganisation
	Practicable Date	becoming effective
Nominal or par value	US$0.01 per Share	US$0.001 per Adjusted Share
Authorised share capital	US$100,000,000	US$100,000,000
Number of authorised shares	10,000,000,000	100,000,000,000
Amount of the issued share capital	US$8,102,500	US$810,250
Number of issued shares	810,250,000 Shares	810,250,000 Adjusted Shares

The new Adjusted Shares in issue and to be issued immediately following the Capital Reorganisation becoming effective will rank pari passu in all respects with each other and the Capital Reorganisation will not result in any change in the relative rights of the Shareholders.

Under the laws of Bermuda, the Directors may apply the contributed surplus in any manner permitted by the laws of Bermuda and the bye-laws of the Company in effect from time to time.

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LETTER FROM THE BOARD

Any credit arising as a result of the Capital Reduction will be transferred to the Contributed Surplus Account which, together with the amount already in the Contributed Surplus Account as a result of the Reduction of Share Premium Account, will then be applied by the Board to set off against the accumulated losses of the Company in full or by the amount of such credits on the date of the Capital Reorganisation becoming effective. As at 30 September 2021, the share premium and total accumulated losses of the Company were approximately HK$28,785,000 and HK$202,830,000, respectively, as shown in the unaudited consolidated financial statements of the Company for the six months ended 30 September 2021. Assuming that there will be no change in the equity attributable to owners of the Company from the Latest Practicable Date up to the date(s) on which the Reduction of Share Premium Account and the Capital Reorganisation becoming effective, the estimated accumulated losses of the Company after the Reduction of Share Premium Account and the Capital Reorganisation would be reduced, by the outstanding share premium of approximately HK$28,785,000 and the credit from the Capital Reduction of US$7,292,250 (equivalent to approximately HK$56,734,000), to approximately HK$117,311,000.

Implementation of the Capital Reorganisation will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests of the Shareholders, except for the payment of the related expenses. The Board believes that the Capital Reorganisation will not have any material adverse effect on the financial position of the Group and that on the date the Capital Reorganisation is to be effected, there are no reasonable grounds for believing that the Company is, or after the Capital Reorganisation would be, unable to pay its liabilities as they become due. No capital will be lost as a result of the Capital Reorganisation and, except for the expenses involved in relation to the Capital Reorganisation which are expected to be insignificant in the context of the total assets of the Company, the equity value of the Company will remain unchanged before and after the Capital Reorganisation becoming effective. The Capital Reorganisation does not involve any diminution of any liability in respect of any unpaid capital of the Company or the repayment to the Shareholders of any paid-up capital of the Company nor will it result in any change in the relative rights of the Shareholders.

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional upon the following conditions being fulfilled:

(i) the Change of Domicile and the Adoption of New Memorandum of Continuance and New Bye-laws becoming effective;
(ii) the passing of the necessary special resolution(s) by the Shareholders approving the Capital Reorganisation at the EGM;
(iii) the Stock Exchange granting the listing of, and permission to deal in, the Adjusted Shares to be issued upon the Capital Reorganisation becoming effective;
(iv) compliance with the relevant procedures and requirements under the laws of Bermuda and the GEM Listing Rules to effect the Capital Reorganisation; and
(v) the obtaining of all necessary approvals from the regulatory authorities or otherwise as may be required in respect of the Capital Reorganisation.

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LETTER FROM THE BOARD

For the avoidance of doubt, the Capital Reorganisation is not conditional on the Reduction of Share Premium Account and will proceed even if the resolution in relation to the Reduction of Share Premium Account is voted down by the Shareholders at the EGM.

The requirements of section 46(2) of the Companies Act include (i) publication of a notice in relation to the Capital Reduction in an appointed newspaper in Bermuda on a date not more than thirty (30) days and not less than fifteen (15) days before the effective date of the Capital Reduction; and (ii) that the Directors are satisfied that on the effective date of the Capital Reduction, there are no reasonable grounds for believing that the Company is, or after the effective date of the Capital Reduction would be, unable to pay its liabilities as they become due.

Subject to the above conditions being fulfilled, the Capital Reorganisation is currently expected to be effective on Tuesday, 13 September 2022.

Application for listing of the Adjusted Shares

An application will be made by the Company to the Stock Exchange for the listing of, and the permission to deal in, the Adjusted Shares upon the Capital Reorganisation becoming effective.

Subject to the granting of the listing of, and permission to deal in, the Adjusted Shares on the Stock Exchange upon the Capital Reorganisation becoming effective, the Adjusted Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Adjusted Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements will be made for the Adjusted Shares to be admitted into CCASS established and operated by HKSCC.

None of the Shares are listed or dealt in on any other stock exchange other than the Stock Exchange, and at the time the Capital Reorganisation becoming effective, the Adjusted Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

Reasons for the Capital Reorganisation

The Board is of the opinion that the Capital Reorganisation will provide the Company with greater flexibility in possible fund raisings in the future. Further, the credit in the Contributed Surplus Account arising from the Capital Reduction will enable the Company to set off its accumulated losses and may be applied in the future for distribution to the Shareholders or in any manner permitted by the laws of Bermuda and the bye-laws of the Company in effect from time to time.

The Board considers that the Capital Reorganisation is beneficial to and in the interests of the Company and the Shareholders as a whole.

−20 −

LETTER FROM THE BOARD

Free exchange of share certificates

Subject to the Capital Reorganisation becoming effective, the Shareholders may, on or after Tuesday, 13 September 2022 until Tuesday, 18 October 2022 (both days inclusive), submit share certificates for the existing Shares to the Registrar, at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong, to exchange, at the expense of the Company, for new share certificates for the Adjusted Shares. Thereafter, each existing share certificate will be accepted for exchange only on payment of a fee of HK$2.50 (or such other amount as may from time to time be specified by the Stock Exchange) by the Shareholders for each share certificate for the Shares submitted for cancellation or each new share certificate issued for the Adjusted Shares, whichever the number of certificates cancelled/issued is higher.

After 4:00 p.m. on Tuesday, 18 October 2022, existing share certificates for the Shares will only remain effective as documents of title and may be exchanged for share certificates for the Adjusted Shares at any time but will not be accepted for delivery, trading and settlement purposes.

The new share certificates for the Adjusted Shares will be issued in orange colour in order to distinguish them from existing share certificates for the existing Shares which are in light blue colour.

PROPOSED RIGHTS ISSUE

The Company proposes to implement the Rights Issue on the basis of three (3) Rights Shares for every two (2) Adjusted Shares held on the Record Date at the Subscription Price of HK$0.04 per Rights Share, to raise up to approximately HK$48.6 million (before expenses) by issuing up to 1,215,375,000 Rights Shares to the Qualifying Shareholders assuming there will be no change in the issued share capital of the Company from the Latest Practicable Date up to the Record Date.

On 28 April 2022 (after trading hours), the Company entered into the Underwriting Agreement with the Underwriter, pursuant to which the Underwriter has conditionally agreed to underwrite, on a best effort and non-fully underwritten basis, up to 1,215,375,000 Underwritten Shares, subject to the terms and conditions set out in the Underwriting Agreement, in particular the fulfilment of the conditions precedent contained therein. Details of the major terms and conditions precedent of the Underwriting Agreement are set out in the section headed “The Underwriting Agreement” in this circular.

Further details of the Rights Issue are set out below:

Issue statistics

Basis of the Rights Issue

: three (3) Rights Shares for every two (2) Adjusted Shares held on the Record Date
Subscription Price : HK$0.04 per Rights Share

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LETTER FROM THE BOARD

Number of Adjusted Shares in : 810,250,000 Adjusted Shares (assuming no change in the issue upon the Capital share capital of the Company on or before the Record Date) Reorganisation becoming effective

Number of Rights Shares : Up to 1,215,375,000 Rights Shares (assuming no change in the share capital of the Company on or before the Record Date) Aggregate nominal value of : Up to US$1,215,375 (assuming no change in the share the Rights Shares (after capital of the Company on or before the Record Date) completion of the Capital Reorganisation) Number of Adjusted Shares : Up to 2,025,625,000 Adjusted Shares (assuming no change as enlarged by the in the share capital of the Company on or before the Record allotment and issue of the Date) Rights Shares

Maximum funds to be raised : Up to approximately HK$48.6 million (assuming no change before expenses in the share capital of the Company on or before the Record Date)
Right of excess applications : Qualifying Shareholders may apply for Rights Shares in excess of their provisional allotment

The Company does not have any options outstanding under any share option scheme of the Company or any other derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares as at the Latest Practicable Date.

Assuming no change in the share capital of the Company on or before the Record Date, 1,215,375,000 Rights Shares to be issued pursuant to the terms of the Rights Issue represents (i) 150% of the total number of issued Adjusted Shares immediately upon the Capital Reorganisation becoming effective; and (ii) 60% of the issued share capital of the Company immediately upon the Capital Reorganisation becoming effective and as enlarged by the allotment and issue of the Rights Shares.

As at the Latest Practicable Date, the Company has not received any information from any Shareholders of their intention to take up the Rights Shares to be provisionally allotted to them under the Rights Issue.

The Rights Issue is only underwritten on a best effort and non-fully underwritten basis. Pursuant to the Company’s constitutional documents and the Companies Act, there are no requirements for minimum levels of subscription in respect of the Rights Issue. Subject to fulfilment or satisfaction of the conditions precedent of the Rights Issue, the Rights Issue shall proceed regardless of its the ultimate subscription level.

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LETTER FROM THE BOARD

In the event of under-subscription, any Rights Shares not taken up by the Qualifying Shareholders whether under PAL(s) or EAF(s), or transferees of nil-paid Rights Shares, and not subscribed by subscribers procured by the Underwriter (or either of them, whichever shall be appropriate) will not be issued, and hence, the size of the Rights Issue will be reduced accordingly. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

Subscription Price

The Subscription Price is HK$0.04 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of the Rights Shares and, where applicable, application for Excess Rights Shares under the Rights Issue or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

The Subscription Price represents:

(i) a discount of 20% to the closing price of HK$0.05 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 6.98% to the closing price of HK$0.043 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 13.04% to the average of the closing price of approximately HK$0.0460 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 28.57% to the average of the closing price of approximately HK$0.0560 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day;
(v) a discount of approximately 61.94% to the average of the closing price of approximately HK$0.1051 per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day;
(vi) a discount of approximately 2.91% to the theoretical ex-rights price of approximately HK$0.0412 per Share as adjusted for the effect of the Rights Issue, based on the closing price of HK$0.043 per Share as quoted on the Stock Exchange on the Last Trading Day;
(vii) a premium of approximately HK$0.163 over the unaudited net deficits per Share of approximately HK$0.119 as at 31 December 2021, based on the unaudited net deficits attributable to the Shareholders of approximately HK$96.7 million as at 31 December 2021 and 810,250,000 issued Shares as at the Latest Practicable Date;
(viii) a premium of approximately HK$0.136 over the audited net deficits per Share of approximately HK$0.092 as at 31 March 2021, based on the audited net deficits attributable to the Shareholders of approximately HK$74.9 million as at 31 March 2021 and 810,250,000 issued Shares as at the Latest Practicable Date; and

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LETTER FROM THE BOARD

(ix) a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 9.28%, being the discount of the theoretical diluted price of approximately HK$0.0430 per Share to the benchmarked price of approximately HK$0.0474 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the higher of the closing price on the Last Trading Day of HK$0.043 per Share and the average of the closing prices of the Shares as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the Last Trading Day of approximately HK$0.0474 per Share).

The net price per Rights Share (i.e. Subscription Price less cost and expenses incurred in the Rights Issue) upon full acceptance of the provisional allotment of Rights Shares will be approximately HK$0.038.

The Subscription Price was set at a discount to the recent closing prices of the Shares aiming at lowering the further investment cost of the Shareholders so as to encourage them to take up their entitlements to maintain their shareholdings in the Company, thereby minimising dilution impact. The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to, among other things, (i) the market price of the Shares under the prevailing market conditions, which demonstrated a general decreasing trend since the beginning of 2022; (ii) the latest business performance and financial position of the Group, being loss making for the five years ended 31 March 2021 and the six months ended 30 September 2021 and with a net deficit of approximately HK$70.4 million as at 30 September 2021, indicating that the Group has been under stringent liquidity pressure and facing uncertainty in relation to going concern; and (iii) the reasons for and benefits of Rights Issue as discussed in the section headed “Reasons for and benefits of the Rights Issue” in this circular, in particular the imminent funding needs to improve its financial position and the limitation in adopting alternative fund raising methods, which includes the interest burden and difficulty in obtaining favorable terms for debt financing, and the smaller fund raising scale for placing of Shares. The Board is aware that during the period of the 30 consecutive trading days up to and including the Last Trading Day, the closing price of the Shares has dropped significantly from a maximum of HK$0.17 to a minimum of HK$0.043, and the Subscription Price represented a discount of approximately 76.47% and 6.98% to the maximum and minimum closing price of the Shares respectively during the period, and the Subscription Price also represented a relatively deep discount of approximately 61.94% to the average of the closing prices for the 30 consecutive trading days up to and including the Last Trading Day. On the other hand, the Directors also noted that during the period from the Last Trading Day up to the Latest Practicable Date, the closing price of the Shares ranged from HK$0.042 to HK$0.051, and the Subscription Price represented a discount of approximately 21.57% and 4.76% to the maximum and minimum closing price of the Shares respectively during the period. The Directors consider the recent closing prices of the Shares better reflect the financial performance and position of the Group. Given the deteriorating financial performance and position of the Group, the decreasing trend of the Share closing price and the lower discounts of the Subscription Price to the closing prices of the Shares in the most recent periods, the Directors consider that the Subscription Price to be fair and reasonable.

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LETTER FROM THE BOARD

The Directors (including the members of the Independent Board Committee) consider the terms of the Rights Issue, including the Subscription Price, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole, after taking into account that (i) the Qualifying Shareholders who do not wish to take up their provisional entitlements under the Rights Issue are able to sell the nil-paid rights in the market; (ii) the Rights Issue allows the Qualifying Shareholders to subscribe for their pro-rata Rights Shares for the purpose of maintaining their respective existing shareholding interests in the Company and apply for Excess Rights Shares subject to the level of acceptance; (iii) the proceeds from the Rights Issue can fulfil the working capital requirement of the Group; and (iv) the Subscription Price was determined with reference to the prevailing market prices and the recent financial performance and position of the Group.

Qualifying Shareholders

The Company will send the Prospectus Documents to the Qualifying Shareholders only. For the Excluded Shareholders, the Company will send copies of the Prospectus to them for their information only, but no PAL and EAF will be sent to the Excluded Shareholders. To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company and not be an Excluded Shareholder on the Record Date.

Shareholders whose Shares are held by nominee companies (or which are deposited in CCASS) should note that the Board will regard a nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Shareholders with their Shares held by nominee companies (or which are deposited in CCASS) are advised to consider whether they would like to arrange for registration of the relevant Adjusted Shares in the name of the beneficial owner(s) prior to the Record Date. Shareholders and investors of the Company should consult their professional advisers if they are in doubt.

In order to be registered as members of the Company on the Record Date, a Shareholder must lodge the relevant transfer(s) of Adjusted Share(s) (with the relevant share certificates) with the Registrar at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong by 4:30 p.m. on Thursday, 15 September 2022.

The last day of dealing in the Adjusted Shares on cum-rights basis is Tuesday, 13 September 2022. The Adjusted Shares will be dealt with on an ex-rights basis from Wednesday, 14 September 2022.

Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and Excluded Shareholders should note that their shareholdings in the Company will be diluted.

Rights of Overseas Shareholders

The Prospectus Documents are not intended to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholder(s) may not be eligible to take part in the Rights Issue as explained below.

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LETTER FROM THE BOARD

In compliance with the necessary requirements of the GEM Listing Rules, the Company will make enquiries regarding the feasibility of extending the Rights Issue to the Overseas Shareholder(s) (if any). If based on legal opinions provided by the legal advisers to the Company, the Directors consider that it is necessary or expedient not to offer the Rights Shares to the Overseas Shareholder(s) on account either of the legal restrictions under the laws of the relevant place(s) or the requirements of the relevant regulatory body or stock exchange in that (those) place(s), the Rights Issue will not be extended to such Overseas Shareholder(s). As at the Latest Practicable Date, there is no Overseas Shareholder.

The basis for excluding the Excluded Shareholder(s), if any, from the Rights Issue will be set out in the Prospectus. The Company will send the Prospectus only (without the PAL and the EAF) and a letter explaining the circumstances in which the Excluded Shareholders are not permitted to participate in the Rights Issue to the Excluded Shareholders for their information only.

Arrangements will be made for Rights Shares which would otherwise have been provisionally allotted to the Excluded Shareholder(s) to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses and stamp duty, of more than HK$100 will be paid pro rata to the relevant Excluded Shareholder(s). The Company will retain individual amounts of HK$100 or less for the benefit of the Company. Any unsold entitlement of Excluded Shareholder(s) to the Rights Shares and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders will be made available for excess applications by Qualifying Shareholders under the EAF(s).

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue subject to the results of the enquiries made by the Company pursuant to the GEM Listing Rules. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company.

Closure of register of members

The register of members of the Company will be closed from Friday, 16 September 2022 to Thursday, 22 September 2022 (both dates inclusive) for determining the Shareholders’ entitlements to the Rights Issue.

No transfer of Adjusted Shares will be registered during the above book closure periods

Basis of provisional allotments

The basis of the provisional allotment shall be three (3) Rights Shares for every two (2) Adjusted Shares in issue and held by the Qualifying Shareholders at the close of business on the Record Date at the Subscription Price payable in full on acceptance and otherwise on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents.

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LETTER FROM THE BOARD

Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by lodging a duly completed PAL and a cheque or a banker’s cashier order for the sum payable for the Rights Shares being applied for with the Registrar on or before the Latest Time for Acceptance. Any holdings (or balance of holdings) of less than two (2) Shares will not entitle their holders to be provisionally allotted a Rights Share. Please refer to the arrangement as referred to in the paragraph headed “Fractional entitlements of the Rights Shares” below.

Fractional entitlements of the Rights Shares

In any event, fractions of the Rights Shares will not be provisionally allotted to any of the Qualifying Shareholders. Fractional entitlements will be rounded down to the nearest whole number of Rights Shares. Any Rights Shares created from the aggregation of fractions of the Rights Shares will be made available for excess application by the Qualifying Shareholders as described in the paragraph headed “Application for Excess Rights Shares” below. Should there be no excess application by the Qualifying Shareholders, those Rights Shares created from the aggregation of fraction of the Rights Shares may or may not be taken up by the Underwriter (or either of them, whichever shall be appropriate).

Status of the Rights Shares

The Rights Shares, when allotted and issued, shall rank pari passu in all respects with the Adjusted Shares then in issue. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date of allotment of the Rights Shares in their fully-paid form.

Share certificates and refund cheques for the Rights Issue

Subject to the fulfillment of the conditions of the Rights Issue, certificates for all fully paid Rights Shares are expected to be posted to those entitled thereto by ordinary post at their own risk on or before Tuesday, 18 October 2022. Refund cheques in respect of wholly or partially unsuccessful applications for Excess Rights Shares (if any) are expected to be posted on or before Tuesday, 18 October 2022 by ordinary post to the applicants at their own risk, to their registered addresses.

Application for Excess Rights Shares

The Company shall make the Excess Rights Shares available for subscription by the Qualifying Shareholders by means of EAF, and the Excess Rights Shares represent:

(i) any nil-paid Rights Shares provisionally allotted but not accepted by any of the Qualifying Shareholders or otherwise subscribed for by transferees of nil-paid Rights Shares prior to the Latest Time for Acceptance;
(ii) subject to the provisions of the Underwriting Agreement, any entitlements of the Excluded Shareholders provisionally allotted to a nominee of the Company which are left unsold; and
(iii) any of the Rights Shares created from the aggregation of fractions of the Rights Shares.

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LETTER FROM THE BOARD

Application for Excess Rights Shares can be made by the Qualifying Shareholders only and by duly completing and signing an EAF (in accordance with the instructions printed therein) and lodging the same with a separate remittance for the Excess Rights Shares being applied for with the Registrar no later than 4:00 p.m. on Monday, 10 October 2022.

The Directors will, upon consultation with the Underwriter, allocate any Excess Rights Shares at their discretion on a fair and equitable basis on the following principles:

(i) any Excess Rights Shares will be allocated to Qualifying Shareholders who apply for them on a pro rata basis by reference to the number of the Excess Rights Shares applied for;
(ii) reference will only be made to the number of Excess Rights Shares being applied for but no reference will be made to the Rights Shares subscribed through applications by PALs or the existing number of Shares held by Qualifying Shareholders;
(iii) if the aggregate number of Rights Shares not taken up by the Qualifying Shareholders and/or transferees of nil-paid Rights Shares under the PALs is greater than the aggregate number of Excess Rights Shares applied for through the EAFs, the Company will allocate to each Qualifying Shareholder who applies for Excess Rights Shares in full application; and
(iv) no preference will be given to topping up odd-lots to whole board lots.

Shareholders with their Shares held by a nominee company (or which are deposited in CCASS) should note that the Board will regard such nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to the relevant beneficial owners individually save and except for the beneficial owner(s) which the Company may permit in its absolute discretion. Shareholders with their Shares held by a nominee company (or which are held in CCASS) are advised to consider whether they would like to arrange for the registration of the relevant Shares under their own names on or prior to the Record Date for the purpose of the Rights Issue. Shareholders who would like to have their names registered on the register of members of the Company on the Record Date, must lodge all necessary documents with the Registrar for registration by no later than 4:30 p.m. on Thursday, 15 September 2022. Shareholders and investors of the Company should consult their professional advisers if they are in doubt as to their status.

Arrangement on odd lots trading

In order to facilitate the trading of odd lots (if any) of the Adjusted Shares, the Company will appoint a designated broker to arrange for matching service on a best effort and non-fully underwritten basis regarding the sale and purchase of odd lots of the Adjusted Shares for a limited period of time. Shareholders should note that matching of the sale and purchase of odd lots of the Adjusted Shares is not guaranteed. Any Shareholder who is in any doubt about the odd lots arrangement is recommended to consult his/her/its own professional advisers. Further details in respect of the odd lots trading arrangement will be set out in the Prospectus.

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LETTER FROM THE BOARD

Application for listing of the Rights Shares

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares, in both their nil-paid and fully-paid forms.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement dates of the dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates as may be determined by HKSCC.

Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Dealing in the Rights Shares in both their nil-paid and fully-paid forms which are registered in the register of members of the Company in Hong Kong will be in the board lots of 5,000 Rights Shares and will be subject to the payment of stamp duty, Stock Exchange trading fee, SFC transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.

Shareholders are advised to consult their professional advisers if they are in doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the fully-paid Rights Shares and, regarding Excluded Shareholders, their receipt of the net proceeds, if any, from sales of the nil-paid Rights Shares on their behalf.

Condition of the Rights Issue

The Rights Issue is conditional upon (i) the Capital Reorganisation having become effective; and (ii) the Underwriting Agreement having become unconditional and not being terminated in accordance with the terms thereof.

THE UNDERWRITING AGREEMENT

The Underwriting Agreement

On 28 April 2022 (after trading hours), the Company entered into the Underwriting Agreement with the Underwriter, pursuant to which the Underwriter has conditionally agreed to underwrite, on a best effort and non-fully underwritten basis, up to 1,215,375,000 Underwritten Shares (assuming no change in the share capital of the Company on or before the Record Date), subject to the terms and conditions set out in the Underwriting Agreement, in particular the fulfilment of the conditions precedent contained therein.

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LETTER FROM THE BOARD

Principal terms of the Underwriting Agreement

Date : 28 April 2022 (after trading hours) Underwriter : Canfield Securities Company Limited Number of Rights Shares to : Up to 1,215,375,000 Rights Shares (assuming no change in be underwritten the share capital of the Company on or before the Record Date) underwritten by the Underwriter on a best effort and non-fully underwritten basis pursuant to the terms and conditions of the Underwriting Agreement

Underwriting Commission

: 1.0% of the aggregate Subscription Price in respect of such number of the Rights Shares procured by the Underwriter for subscription pursuant to the Underwriting Agreement

The Underwriter is a company incorporated in Hong Kong with limited liability and a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO whose ordinary course of business includes underwriting of securities. To the best of the Directors’ knowledge, information and belief, the Underwriter and its ultimate beneficial owner(s) are Independent Third Parties.

The Rights Issue is underwritten by the Underwriter on a best effort and non-fully underwritten basis on the terms of the Underwriting Agreement.

The Underwriter may enter into sub-underwriting arrangement with sub-underwriter(s) on its behalf for the purpose of arranging for the subscription of the Underwritten Shares with selected subscribers with such authority and rights as the Underwriter have pursuant to its appointment under the Underwriting Agreement.

The terms of the Underwriting Agreement, including the underwriting commission rate, were determined after arm’s length negotiation between the Company and the Underwriter with reference to the existing financial position of the Group, the size of the Rights Issues, and the current and expected market condition. The Directors (including the members of the Independent Board Committee) consider the entering into of the Underwriting Agreement with the Underwriter and the terms of the Underwriting Agreement (including the underwriting commission) to be fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Save for the Underwriting Agreement, the Company has not entered into any agreement, arrangement, understanding or undertaking in regard of the Rights Issue with the Underwriter or any of its connected persons and their respective associate.

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LETTER FROM THE BOARD

Conditions of the Underwriting Agreement

The Underwriting Agreement is conditional upon the following conditions being fulfilled or waived (as appropriate):

(i) completion of the Capital Reorganisation;
(ii) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the approval for the listing of, and permission to deal in, the Rights Shares (in their nil-paid and fully-paid forms) prior to the Latest Time for Termination;
(iii) the filing and registration of all the Prospectus Documents (together with any other documents required by applicable law or regulation to be annexed thereto) with the Registrar of Companies in Hong Kong by no later than the Prospectus Posting Date;
(iv) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus to the Excluded Shareholders for information only, if any, by no later than the Prospectus Posting Date;
(v) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms hereof on or before the Latest Time for Termination;
(vi) there being no breach of the undertakings and obligations of the Company under the terms of the Underwriting Agreement at the Latest Time for Termination;
(vii) the Company having complied with all applicable laws and regulations;
(viii) each party having obtained all necessary consent and/or approval for entering into the Underwriting Agreement or the transactions contemplated herein;
(ix) the entering into of binding agreements by the Underwriter with certain subscriber(s) procured by the Underwriter and/or sub-underwriter(s), which shall be Independent Third Parties, for placing and/or sub-underwriting the Rights Shares, such that neither the Underwriter nor any of the subscriber(s) procured by the Underwriter and/or sub-underwriter(s) and/or party or parties acting in concert (having the meaning as set out in the Takeovers Code) with the respective subscribers or any of the connected persons or associates of the respective subscribers shall be interested in 30% or more of the issued share capital of the Company as enlarged by the Rights Issue;
(x) each condition to enable the Rights Shares in their nil-paid or fully-paid forms to be admitted as eligible securities for deposit, clearance and settlement in CCASS having been satisfied on or before the Business Day prior to the commencement of trading of the Rights Shares (in their nil paid and fully-paid forms, respectively) and no notification having been received by the Company from HKSCC by such time that such admission or facility for holding and settlement has been or is to be refused;

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LETTER FROM THE BOARD

(xi) there being no Specified Event occurring on or before the Latest Time for Termination; and
(xii) the Underwriter having received from the Company all the documents required under the Underwriting Agreement in such form and substance satisfactory to the Underwriter.

Save for the conditions (vi) and (xii) which can be waived by the Underwriter and the Company jointly, none of the above conditions can be waived. If any of the conditions referred to above is not fulfilled, or waived (where applicable) by the Latest Time for Termination, the Rights Issue will not proceed. As at the Latest Practicable Date, none of the above conditions to the Underwriting Agreement has been fulfilled or waived.

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE

The Group is principally engaged in (i) operating a variety of cuisines, mainly Asian, Western, Italian and Chinese, targeting different customer segments with mid to high spending power; (ii) provision of interior design proposals, engaging subcontractors to carry out fitting-out works and coordinating, managing and supervising the fitting-out works in the PRC; (iii) provision of consulting services in relation to organic vegetables research and development, plantation and sales in the PRC; and (iv) provision of financial institution intermediation services in the PRC. For the year ended 31 March 2021 and the nine months ended 31 December 2021, revenue generated from operation of restaurants accounted for approximately 64.3% and 81.2% of the Group’s total revenue, respectively.

Circumstances leading to the Rights Issue

Revenue of the Group decreased by approximately 52.6% from approximately HK$452.1 million for the year ended 31 March 2020 to approximately HK$214.3 million for the year ended 31 March 2021, primarily attributable to the decrease in revenue generated from restaurant operations as the Hong Kong government imposed travel restriction, several restrictions in relation to catering business and prohibition on group gathering during the year, which severely disrupted the local food and beverage business. To cope with the impact of the pandemic, the Group adopted cost control measures including but not limited to the disposal and closure of certain loss-making restaurants and reduction of headcounts during the year. Combined with the one-off government subsidies of HK$20.2 million and profit of approximately HK$7.3 million generated from the provision of financial institution intermediation services, the Group recorded reduction of loss attributable to the Shareholders from approximately HK$130.9 million for the year ended 31 March 2020 to approximately HK$64.4 million for the year ended 31 March 2021.

For the nine months ended 31 December 2021, the operating results of the Group’s restaurants slightly recovered from the pandemic as the Hong Kong government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme to boost local consumption, with revenue generated from restaurant operations increased from approximately HK$108.5 million for the nine months ended 31 December 2020 to approximately HK$118.0 million. In addition, as the Group gradually developed its financial institution intermediation services business after the start-up stage, the Group generated revenue of approximately HK$25.1 million from this segment during the period. The Directors consider that there would be growing demand from small and medium-sized enterprises in the PRC for the Group’s one-stop and professional financial services

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LETTER FROM THE BOARD

platform to fulfill their financing needs, and hence are optimistic about the prospects of this business. Due to the combined effect of the above, the Group recorded an increase in revenue by approximately 31.7% from approximately HK$110.4 million for the nine months ended 31 December 2020 to approximately HK$145.3 million for the nine months ended 31 December 2021. The Group recorded a decrease in loss attributable to the Shareholders from approximately HK$33.5 million for the nine months ended 31 December 2020 to approximately HK$17.9 million for the nine months ended 31 December 2021.

Due to the continuous unsatisfactory financial performance, the financial position of the Group also deteriorated. As at 30 September 2021, the Group had (i) cash and cash equivalents of approximately HK$4.1 million; (ii) net current liabilities of approximately HK$193.1 million; and (iii) net deficit attributable to the Shareholders of approximately HK$84.7 million. While the Group had restricted bank deposits of approximately HK$61.0 million as at 30 September 2021, such deposits were used to secure the Group’s obligations under certain operating leases and service agreements in relation to the provision of financial institution intermediation services in the PRC, and could not be released until the termination of the relevant service agreements which is expected to be beyond one year from 30 September 2021. On the other hand, as at 30 September 2021, the Group had (i) trade and other payables of approximately HK$32.3 million, primarily representing trade payables, accrued staff salaries, franchise and licensing fee payables, payable for repair and maintenance and accrued loan referral expenses, which shall be due within one year; (ii) bank borrowing of HK$1.2 million which shall be repayable within one year; (iii) loan from non-controlling shareholder of a subsidiary of approximately HK$73.3 million which shall mature on 31 July 2022; and (iv) amounts due to directors of approximately HK$78.3 million which shall mature on 31 July 2022. All these indicate the Group is currently under liquidity pressure and facing a material uncertainty in relation to going concern.

In light of the stringent liquidity position and to improve its financial performance, the Group has taken or will take the following measures, including but not limited to: (i) adopting a series of measures to control costs and to enhance cash flow and operational efficiency, including implementing salary reduction for staff, closing and disposing of certain underperforming restaurants, obtaining rent concessions from the landlords on the leases of certain restaurants of the Group and tightening expenditures; and (ii) raising additional capital, as and when needed, by carrying out fund raising activities, to finance the operations of the Group.

Taking into account the Group’s material uncertainty in relation to going concern due to its loss-making position and current financial position, the Directors (including the members of the Independent Board Committee) consider that there is an imminent need for the Company to conduct the Rights Issue to ease the liquidity pressure and improve the financial position of the Group as well as replenishing working capital to its businesses to get over the downturn caused by the pandemic.

Alternative means of fund raising

The Directors have considered other alternative means of fund raising, such as debt financing/ bank borrowings and placing of new Shares, before resolving to the Rights Issue. The Company has considered the pros and cons of different fund-raising options. In respect of debt financing, the Directors consider it is difficult to obtain any debt financing at terms that are acceptable to the Company given its current financial performance and financial position. In addition, the Company does not consider debt financing to be desirable given the requirement of interest payments and the impact on the Group’s gearing position.

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LETTER FROM THE BOARD

As for equity fund raising, such as placing of new Shares, it would lead to immediate dilution in the shareholding interest of existing Shareholders without offering them the opportunity to participate in the enlarged capital base of the Company, which is not the intention of the Company. As for open offer, while it is similar to a rights issue by offering qualifying shareholders to participate, it does not allow free trading of rights entitlements in the open market.

In comparison, the Rights Issue is pre-emptive in nature, allowing Qualifying Shareholders to maintain their respective pro-rata shareholding through their participation in the Rights Issue. The Rights Issue allows the Qualifying Shareholders to (i) increase their respective interests in the shareholding of the Company by acquiring additional rights entitlement in the open market (subject to the availability); or (ii) reduce their respective interests in the shareholding of the Company by disposing of their rights entitlements in the open market (subject to the market demand). As an open offer does not allow the trading of rights entitlements, rights issue is preferred. Accordingly, the Directors (including the members of the Independent Board Committee) consider that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, other than the Rights Issue, the Company did not have any intention or plan (initial or concrete) to undertake any equity fund raising or other corporate action or arrangement that may affect the trading in the Shares in the next 12 months.

INTENDED USE OF PROCEEDS

As at 31 March 2022, the Group had unaudited trade and other payables of approximately HK$26.8 million, which primarily comprised payable to suppliers of the catering business, accrued staff salaries, franchise and licensing fee payables, payable for repair and maintenance and payable for utilities and consumables. Among the trade and other payables as at 31 March 2022, approximately HK$21.4 million was overdue. As at 31 March 2022, save for the trade and other payables, the Group has other indebtedness which included, among others, the amount due to a Director of approximately HK$100.9 million and the amount due to the non-controlling shareholder of a subsidiary of approximately HK$77.2 million, which will either mature on 31 July 2022 or repayable on demand. As at the Latest Practicable Date, the Company was in negotiation with the non-controlling shareholder of the subsidiary for the further extension on repayment of the debts and the Director has agreed to further extend the repayment of the amount due to him.

Assuming full subscription under the Rights Issue, the net proceeds from the Rights Issue after deducting the expenses are estimated to be approximately HK$46.2 million (assuming no change in the number of Shares in issue on or before the Record Date). The Company intends to apply the net proceeds from the Rights Issue as to (i) 46.3% (i.e. approximately HK$21.4 million) for the settlement of overdue trade and other payables in full; and (ii) 53.7% (approximately HK$24.8 million) for the settlement of the amount due to a Director and the non-controlling shareholder of the subsidiary as stated above. In the event that there is an under-subscription of the Rights Issue, the Group intends to apply the net proceeds from the Rights Issue on the repayment of overdue trade and other payable first, and any remaining proceeds will be utilised for the partial settlement of amount due to a Director and the non-controlling shareholder of the subsidiary. The Group will use its best endeavour to negotiate with the amount due to the non-controlling shareholder of the subsidiary for the further extension on repayment of his debts.

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LETTER FROM THE BOARD

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE RIGHTS ISSUE

For illustration purposes only, assuming there is no change in the share capital of the Company on or before the Record Date and after taking into account the effect of the Capital Reorganisation, the shareholding structure of the Company as at the Latest Practicable Date, and the effect on the shareholding structure of the Company upon completion of the Rights Issue in the manner contemplated under the Underwriting Agreement, is as follow:

						Immediately upon completion
						of the Rights Issue (assuming
						none of the Qualifying
			Immediately upon	completion		Shareholders have taken up
			of the Rights Issue (assuming			any entitled Rights Shares and
			all Qualifying Shareholders			all Untaken Shares were
	As at the Latest	Practicable	have taken up all the		entitled	subscribed for by or through
	Date		Rights Shares)			the Underwriter)
	Number of	Approximate	Number of	Approximate		Number of Approximate
	Adjusted Shares	%	Adjusted Shares		%	Adjusted Shares %
Name of the shareholders
Strong Day (Note 1)	407,600,000	50.31	1,019,000,000		50.31	407,600,000 20.12
Wong Man Hin Max	171,550,000	21.17	428,875,000		21.17	171,550,000 8.47
The Underwriter and/or its
subscriber(s) procure by
it (Note 2)	—	—	—		—	1,215,375,000 60.00
Other public Shareholders	231,100,000	28.52	577,750,000		28.52	231,100,000 11.41
Total	810,250,000	100.00	2,025,625,000		100.00	2,025,625,000 100.00

Notes:

Strong Day is a company incorporated in the British Virgin Islands with limited liability and is owned as to 29.90% by Ms. Li, an executive Director and the spouse of Mr. James Lu. The Shares held by Strong Day has been pledged to Excel Precise International Limited, a company incorporated in Hong Kong and is owned as to 25% by Mr. Law Fei Shing and as to 73.50% by True Promise Investments Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Law Fei Shing.
Pursuant to the Underwriting Agreement, the Underwriter has undertaken to the Company that (i) it shall use its best endeavours to procure that each of the subscribers of the Untaken Shares procured by it (including any direct and indirect sub-underwriters) shall be a third party independent of, not acting in concert with and not connected with the Directors, chief executive or substantial shareholders of the Company (within the meaning of the GEM Listing Rules) or any of its subsidiaries and their respective associates; (ii) it will procure each and any of the subscribers of the Untaken Shares procured by it (including any direct and indirect sub-underwriters) not to, together with any party acting in concert (within the meaning of the Takeovers Code) with it or its associates, hold in aggregate thirty per cent (30%) or more of the voting rights of the Company immediately upon completion of the Rights Issue; (iii) it will underwrite solely on a best effort basis, and not in a fully underwritten basis. In any event, the Underwriter will not underwrite to the extent, together with any party acting in concert (within the meaning of the Takeovers Code) or its associates, hold thirty per cent (30%) or more of the voting rights of the Company immediately upon completion of the Rights Issue; and (iv) in the event that there is insufficient public

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LETTER FROM THE BOARD

float of the Company within the meaning of the GEM Listing Rules immediately upon completion of the Rights Issue solely because of the Underwriter’s performance of its obligations under the Underwriting Agreement, it agrees to take appropriate steps together with the other sub-underwriters as may be reasonably required to maintain the minimum public float for the Shares in compliance with Rule 11.23 of the GEM Listing Rules.

Shareholders and investors should note that the above shareholding changes are for illustration purposes only and the actual changes in the shareholding structure of the Company upon completion of the Rights Issue are subject to various factors, including the results of acceptance of the Rights Issue.

FUND RAISING ACTIVITIES INVOLVING ISSUE OF SECURITIES IN THE PAST 12 MONTHS

The Company has not conducted any fund-raising activities involving issue of its securities in the past 12 months immediately preceding the date of the Announcement.

GEM LISTING RULES IMPLICATIONS

The Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation are subject to, among other things, the passing of the relevant resolutions by the Shareholders approving the same at the EGM. No Shareholder is required to abstain from voting in respect of the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation at the EGM.

Since the Rights Issue will increase the issued share capital of the Company by more than 50%, in accordance with Rule 10.29(1) of the GEM Listing Rules, the Rights Issue must be made conditional on, among other things, the approval by the Independent Shareholders in general meeting by a resolution at which any controlling shareholders and their respective associates or, where there are no controlling shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Rights Issue.

As at the Latest Practicable Date, as Strong Day, Mr. James Lu and Ms. Li are the controlling Shareholders, Strong Day, Mr. James Lu, Ms. Li and their respective associates shall abstain from voting in favour of the resolution(s) to approve the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder at the EGM.

The Company has not conducted any rights issue, open offer or specific mandate placings within the 12-month period immediately preceding the date of the Announcement, or prior to such 12-month period where dealing in respect of the Shares issued pursuant thereto commenced within such 12-month period, nor has it issued any bonus securities, warrants or other convertible securities as part of any rights issue, open offer and/or specific mandate placings within such 12-month period.

The Rights Issue will not result in a theoretical dilution effect of 25% or more. As such, the theoretical dilution impact of the Rights Issue is in compliance with Rule 10.44A of the GEM Listing Rules.

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LETTER FROM THE BOARD

GENERAL

The EGM will be convened for the Shareholders to consider and, if thought fit, approve the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account, the Capital Reorganisation and the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder. The notice convening the EGM to be held at 10:00 a.m. on Monday, 1 August 2022 at A505, Parkview Green, No. 9 Dongdaqiao Road, Chaoyang District, Beijing, the People’s Republic of China is set out on pages EGM-1 to EGM-5 of this circular.

A form of proxy for use at the EGM is also enclosed and such form of proxy is also published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (https://www.lifeconcepts.com). Whether or not you intend to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Registrar at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM (i.e. 10:00 a.m. on Saturday, 30 July 2022, Hong Kong time) or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

Subject to the approval of the Rights Issue by the Independent Shareholders at the EGM, the Prospectus containing further information regarding, among other things, the Rights Issue, including information on acceptances of the Rights Shares and other information in respect of the Group, and PAL(s) and EAF(s) are expected to be despatched to the Qualifying Shareholders on Friday, 23 September 2022.

RECOMMENDATION

The Independent Board Committee comprising all the independent non-executive Directors has been established to provide recommendations to the Independent Shareholders in connection with the Rights Issue (including the Underwriting Agreement). Opus Capital has been appointed as the Independent Financial Adviser with the approval of the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Rights Issue (including the Underwriting Agreement), and as to voting at the EGM.

Your attention is drawn to the letter from the Independent Board Committee set out on pages 39 to 40 of this circular which contains its recommendation to the Independent Shareholders in relation to the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder, and the letter from Opus Capital set out on pages 41 to 65 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders.

The Board is of the view that the terms of the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole. The Directors (including the members of the Independent

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LETTER FROM THE BOARD

Board Committee) consider that the terms of the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors (including the members of the Independent Board Committee) recommend the Shareholders to vote in favour of the resolutions approving the Change of Domicile, the Adoption of Memorandum of Continuance and New Bye-laws, the Reduction of Share Premium Account and the Capital Reorganisation and the transactions contemplated thereunder at the EGM, and recommend the Independent Shareholders to vote in favour of the resolution approving the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder to be proposed at the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

WARNING OF THE RISKS OF DEALING IN SHARES AND THE NIL PAID RIGHTS SHARES

Shareholders and potential investors of the Company should note that the Rights Issue is conditional upon, among others, the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the section headed “Termination of the Underwriting Agreement” in this circular). Accordingly, the Rights Issue may or may not proceed.

The Adjusted Shares are expected to be dealt in on an ex-rights basis from Wednesday, 14 September 2022. Dealings in the Rights Shares in nil-paid form are expected to take place from Tuesday, 27 September 2022 to Wednesday, 5 October 2022 (both days inclusive). Any Shareholder or other person contemplating transferring, selling or purchasing the Shares and/or Rights Shares in their nil-paid form is advised to exercise caution when dealing in the Shares and/or the nil-paid Rights Shares.

Any party who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s). Any Shareholder or other person dealing in the Shares or Adjusted Shares or in the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled (and the date on which the Underwriter’s right of termination of the Underwriting Agreement ceases) will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By order of the Board Life Concepts Holdings Limited James Fu Bin Lu Chairman, Executive Director and Chief Executive Officer

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Rights Issue and the Underwriting Agreement.

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L I F E C O N C E P T S

Life Concepts Holdings Limited 生活概念控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8056)

28 June 2022

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE

We refer to the circular of the Company dated 28 June 2022 (the “ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders as to whether the terms of the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

Opus Capital has been appointed as the Independent Financial Adviser to advise us and the Independent Shareholders in this respect.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the terms of the Rights Issue (including the Underwriting Agreement), and the advice from Opus Capital, we are of the opinion that the terms of the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder.

Yours faithfully,

the Independent Board Committee

Mr. Lu Cheng Independent non-executive Directors

Mr. Shi Kangping Independent non-executive Directors

Mr. Kim Jin Tae Independent non-executive Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the full text of a letter received from Opus Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue (including the Underwriting Agreement) for the purpose of inclusion in this circular.

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18th Floor, Fung House 19-20 Connaught Road Central Central, Hong Kong

28 June 2022

To: The Independent Board Committee and the Independent Shareholders of Life Concepts Holdings Limited

Dear Sir/Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE

INTRODUCTION

We refer to our engagement by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular issued by the Company to the Shareholders dated 28 June 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 requires otherwise.

As stated in the Letter from the Board, the Company proposes to implement the Rights Issue on the basis of three (3) Rights Shares for every two (2) Adjusted Shares held on the Record Date at the Subscription Price of HK$0.04 per Rights Share, to raise up to approximately HK$48.6 million (before expenses) by issuing up to 1,215,375,000 Rights Shares to the Qualifying Shareholders assuming there will be no change in the issued share capital of the Company from the Latest Practicable Date up to the Record Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The EGM will be convened for the Independent Shareholders to consider and, if thought fit, approve, among others, the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder. As at the Latest Practicable Date, as Strong Day, Mr. James Lu and Ms. Li are the controlling shareholders of the Company, Strong Day, Mr. James Lu, Ms. Li and their respective associates shall abstain from voting in favour of the resolution(s) to approve the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder at the EGM.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee of the Company comprising Mr. Lu Cheng, Mr. Shi Kangping and Mr. Kim Jin Tae, all being the independent non-executive Directors, has been established to consider and provide recommendations to the Independent Shareholders in relation to the terms of the Rights Issue (including the Underwriting Agreement) and the voting recommendation on the relevant resolution. Our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard has been approved by the Independent Board Committee.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationship with or interest in the Company, the controlling shareholders of the Company and their respective associates, or any other parties that could reasonably be regarded as relevant to our independence. During the two years immediately prior to this letter, we have not acted in the capacity as an independent financial adviser, financial adviser or in any other capacity to the Company. Apart from normal independent financial advisory fees paid or payable to us in connection with the current appointment as the Independent Financial Adviser, no arrangements exist whereby we had received or will receive any fees or benefits from the Company, the controlling shareholders of the Company and their respective associates, or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider ourselves independent pursuant to Rule 17.96 of the GEM Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have reviewed, amongst other things:

(i) the Company’s interim report (the “ 2021 Interim Report ”) for the six months ended 30 September (“ 1H ”) 2021;
(ii) the Company’s annual report for the year ended 31 March (“ FY ”) 2021 (the “ 2021 Annual Report ”);
(iii) the Underwriting Agreement; and
(iv) other information as set out in the Circular.

We have relied on the truth, accuracy and completeness of the statements, information, opinions and representations contained or referred to in the Circular and the information and representations made to us by the Company, the Directors and the management of the Group (collectively, the “ Management ”). We have assumed that all information and representations contained or referred to in the Circular and provided to us by the Management, for which they are solely and wholly responsible, are true, accurate and complete in all respects and not misleading or deceptive at the time when they were provided or made and will continue to be so up to the Latest Practicable Date. Our opinion is necessarily based on the Management’s representation and confirmation that there is no undisclosed private agreement/arrangement or implied understanding with anyone concerning the Rights Issue (including the Underwriting Agreement), in addition, where information in this letter has been extracted from published or otherwise publicly available sources including but not limited to the 2021 Interim Report, 2021 Annual Report and other economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date, it is our responsibility to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 17.92(2) of the GEM Listing Rules. Shareholders will be notified of material changes as soon as possible, if any, to the information and representations provided and made to us after the Latest Practicable Date and up to and including the date of the EGM.

We have also assumed that all statements of belief, opinion, expectation and intention made by the Management in the Circular were reasonably made after due enquiries and careful consideration and there are no other facts not contained in the Circular, the omission of which make any such statement contained in the Circular misleading. We have no reason to suspect that any relevant information has been withheld, or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Management, which have been provided to us.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. However, we have not carried out any independent verification of the information provided by the Management, nor have we conducted any independent investigation into the business, financial conditions and affairs of the Group or its future prospects.

The Directors jointly and severally accept full responsibility for the accuracy of the information disclosed and confirm, having made all reasonable enquiries that to the best of their knowledge and belief, there are no other facts not contained in this letter, the omission of which would make any statement herein misleading.

We have not considered the tax consequences on the Qualifying Shareholders arising from the subscription for, holding of or dealing in the Rights Shares or otherwise, since these are particular to their own circumstances. We will not accept responsibility for any tax effect on, or liabilities of, any person resulting from the subscription for, holding of or dealing in the Rights Shares or the exercise of any rights attaching thereto or otherwise. In particular, Qualifying Shareholders subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax positions with regard to the Rights Shares and, if in any doubt, should consult their own professional advisers.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection with the Rights Issue (including the Underwriting Agreement), and 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 purpose without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our advice and recommendation to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder, we have taken into consideration the following principal factors and reasons:

1. Background information of the Group

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is certain summary of the key financial information of the Group for each of FY2020, FY2021, 1H2020 and 1H2021 as extracted from the 2021 Annual Report and the 2021 Interim Report:

Table 1: Highlights of the financial results of the Group

	Audited	Audited		Unaudited	Unaudited
	FY2021		FY2020	1H2021	1H2020
HK$’000	(audited)	(audited)		(unaudited)	(unaudited)
Revenue	214,325		452,147	107,767		70,110
- Operation of restaurants	137,748		446,938	85,860		69,217
- Provision of interior design and fitting-out
services	454		4,619	—		—
- Provision of organic vegetables consulting
services	2,056		590	1,726		893
- Provision of financial institution
intermediation services	74,067		—	20,181		—
(Loss) for the year/period attributable to the
Shareholders	(64,432)	(130,858)		(6,361)	(19,841)

Sources: the 2021 Annual Report and the 2021 Interim Report

FY2021 vs FY2020

According to the 2021 Annual Report, the Group recorded revenue of approximately HK$214.3 million for FY2021, representing a notable decrease of approximately 52.6% from approximately HK$452.1 million for FY2020. Such decrease in revenue was mainly attributable to the decrease in revenue generated from restaurant operations as the Hong Kong Government imposed travel restriction, several restrictions in relation to catering business and prohibition on group gathering during the year owing to the COVID-19 pandemic (the “ Pandemic ”), which severely disrupted the local economy, the negative impact was especially felt by the local food and beverage businesses. However, loss for the year attributable to the Shareholders for FY2021 was approximately HK$64.4 million, representing a significant decrease in loss of approximately 50.8% from approximately HK$130.9 million for FY2020. Such decrease in loss was mainly attributable to the combined effects of: (i) (a) the revenue of Group’s restaurants has been negatively impacted by the outbreak of the Pandemic since January 2020; and (b) the revenue of the interior design and fitting-out business of the Group has been negatively impacted by the outbreak of the Pandemic since January 2020; and (ii) (a) the disposal and closure of certain loss-making restaurants of the Group during the last and the current financial period led to the decrease in the operating costs of the food and beverage business, comprising mainly cost of inventories consumed, employee benefit expenses, rental expenses and other operating expenses, which outweighed the decrease in revenue as abovementioned in item (i) above; (b) one-off government subsidies, mainly represented the employment support scheme, amounting to approximately HK$20.2 million was received during FY2021; and (c) the financial institution intermediation services of the Group generated a profit attributable to the Shareholders for FY2021 of approximately HK$7.3 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1H2021 vs 1H2020

According to the 2021 Interim Report, the Group recorded revenue of approximately HK$107.8 million for 1H2021, representing a significant increase of approximately 53.8% from approximately HK$70.1 million for 1H2020. The increase in revenue was mainly attributable to the operating results of the Group’s restaurants having moderately recovered from the outbreak of the Pandemic. Although several short-term measures were still in place including but not limited to the implementation of travel restrictions, several restrictions in relation to catering business and prohibition on group gathering, the Hong Kong government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme in order to encourage and boost local consumption. Loss for the period attributable to the Shareholders for 1H2021 was approximately HK$6.4 million, representing a yet another significant decrease in loss of approximately 67.7% from approximately HK$19.8 million for 1H2020. The decrease in loss for the period attributable to the Shareholders was mainly attributable to: (i) the revenue and operating results of the Group’s restaurants in Hong Kong having moderately recovered from the outbreak of the Pandemic since January 2020, as the Hong Kong Government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme in order to encourage and boost local consumption; (ii) the decrease in loss from the Group’s interior design and fitting-out business, provision of organic vegetables consulting services and financial institution intermediation services as more revenue was generated after the start-up stage of operation; and (iii) the disposal and closure of certain loss-making restaurants of the Group during the last and the current financial periods led to the decrease in the operating costs of the Group’s food and beverage business, comprising mainly cost of inventories consumed, staff costs, rental expenses and other operating expenses. The decrease in loss of the Group during 1H2021 is partially offset by the increase in net impairment losses on financial instruments and contract assets during 1H2021 due to the early repayment of the borrowers to the financial institutions in the Group’s provision of financial institutions intermediation services segment.

Table 2: Highlights of the financial positions of the Group

	As at	As at
	31 March	30 September
	2021	2021
HK$’000	(audited)	(unaudited)
Cash and cash equivalents	12,193	4,070
Total assets	251,134	209,049
Trade and other payables	36,089	32,282
Bank borrowing	—	1,200
Total liabilities	311,088	279,467
Net current liabilities	63,981	193,068
Net deficit attributable to the Shareholders	74,914	84,734

Source: the 2021 Interim Report

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at 30 September 2021, the Group had total assets and total liabilities of approximately HK$209.0 million and HK$279.5 million respectively, as compared to the respective total assets and total liabilities of approximately HK$251.1 million and HK$311.1 million as at 31 March 2021, registering a decrease of approximately 16.8% and 10.2% respectively. The net liabilities attributable to the Shareholders were approximately HK$74.9 million as at 31 March 2021 and further deteriorated to approximately HK$84.7 million as at 30 September 2021. The Group had cash and cash equivalents amounting to approximately HK$4.1 million as at 30 September 2021, representing a significant decrease of approximately 66.4% as compared to approximately HK$12.2 million as at 31 March 2021. In terms of net current liabilities, the Group held a balance of approximately HK$193.1 million as at 30 September 2021 which had ballooned from a balance of approximately HK$64.0 million as at 31 March 2021. Based on the above figures, we note that the Company is facing significant pressure on its working capital and liquidity position. The challenging financial position also create concerns to the Company as a going-concern.

2. Reasons for and benefits of the Rights Issue

As stated in the Letter from the Board, for FY2021 and the nine months ended 31 December (“ 9M ”) 2021, the financial performance of the Group was adversely affected by the prolonged Pandemic, particularly the social distancing measures imposed by the Hong Kong Government from time to time. Notably, for 9M2021, the operating results of the Group’s restaurants moderately recovered from the Pandemic as the Hong Kong Government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme to boost local consumption, with revenue generated from restaurant operations increased from approximately HK$108.5 million for 9M2020 to approximately HK$118.0 million. In addition, as the Group gradually developed its financial institution intermediation services business after the start-up stage, the Group generated revenue of approximately HK$25.1 million from this segment during the period. The Management consider that there would be growing demand from small and medium-sized enterprises in the PRC for the Group’s one-stop and professional financial services platform to fulfill their financing needs, and hence are optimistic about the prospects of this business. Due to the combined effect of the above, the Group recorded an increase in revenue by approximately 31.7% from approximately HK$110.4 million for 9M2020 to approximately HK$145.3 million for 9M2021. The Group recorded a decrease in loss attributable to the Shareholders from approximately HK$33.5 million for 9M2020 to approximately HK$17.9 million for 9M2021.

Albeit improving, due to the continuous unsatisfactory financial performance, the financial position of the Group deteriorated. As discussed in the above section, as at 30 September 2021, the Group had (i) cash and cash equivalents of approximately HK$4.1 million; (ii) net current liabilities of approximately HK$193.1 million; and (iii) net deficit attributable to the Shareholders of approximately HK$84.7 million. As discussed in the Letter from the Board, while the Group had restricted bank deposits of approximately HK$61.0 million as at 30 September 2021, such deposits were used to secure the Group’s obligations under certain operating leases and service agreements in relation to the provision of financial institution intermediation services in the PRC, and could not be released until the termination of the relevant service agreements which is expected to be beyond one year from 30 September 2021. On the other hand, as disclosed in the Letter from the Board, as at 31 March 2022, the Group had unaudited trade and other payables of approximately HK$26.8 million, which primarily comprised payable to suppliers of the catering business, accrued staff salaries, franchise and licensing fee payables, payable for repair and maintenance and payable for utilities and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

consumables. Among the trade and other payables as at 31 March 2022, approximately HK$21.4 million was overdue. As at 31 March 2022, save for the trade and other payables, the Group has other indebtedness which included, among others, the amount due to a Director of approximately HK$100.9 million and the amount due to the non-controlling shareholder of a subsidiary of approximately HK$77.2 million, which will either mature on 31 July 2022 or repayable on demand. As at the Latest Practicable Date, the Company was in negotiation with the non-controlling shareholder of the subsidiary for the further extension on repayment of the debts. All these indicate the Group is currently under liquidity pressure and facing a material uncertainty in relation to going concern.

Further to the above, we understand from the Management that although the net proceeds of the Rights Issue will not be sufficient to settle the full repayment of the trade and other payables and other indebtedness. In the event that the Rights Issue are fully subscribed, the Company will apply the net proceeds from the Rights Issue as to (i) 46.3% (i.e. approximately HK$21.4 million) for the settlement of overdue trade and other payables in full; and (ii) 53.7% (i.e. approximately HK$24.8 million) for the settlement of the amount due to a Director and the non-controlling shareholder of the subsidiary. Under the circumstances that an undersubscription of the Rights Issue occurred, the net proceeds of the Rights Issue will first be prioritised to settle the trade and other payables taking into account of the respective maturity dates, interest rates and the amount overdue, and any remaining proceeds will be utilised for the partial settlement of amount due to a Director and the non-controlling shareholder of the subsidiary. In any event, the Company will follow the aforementioned proceeds allocation ratio to the greatest extent as possible.

Firstly, we concur with the Management for prioritising the proceeds towards the repayment of overdue trade and other payables, which mainly included payable to suppliers of the catering business, accrued staff salaries, franchise and licensing fee payables, payable for repair and maintenance and payable for utilities and consumables, the nature of which is to maintain the normal business operation of the Group, which is critical to its ordinary and usual course of business. Secondly pursuant to the settlement of other indebtedness, the Group will use its best endeavour to negotiate with the non-controlling shareholder of the subsidiary for the further extension on repayment of their respective debts. Although the Company was still in the process of negotiation as at the Latest Practicable Date, we understand from the Management that during the course of negotiation, the non-controlling shareholder of the subsidiary indicated his willingness of extending the maturity date, subject to other terms and conditions, by approximately one year from July 2022 to July 2023, and the Director has agreed to further extend the repayment of the amount due to him. Furthermore, we noted from the Management that they presently would like to seek the financial flexibility to opt for partial repayment of the amount due to a Director and the non-controlling shareholder of the subsidiary in order to release the Group’s financial pressure, the Group will also be in a better position to negotiate for an extension of maturity date and other terms. We are of the view that although the net proceeds will not be sufficient to fully settle all the indebtedness, the application of a portion of the net proceeds from the Rights Issue towards the repayment of such existing indebtedness will nevertheless able to reduce (i) the gearing ratio of the Company in a certain extent (further details are set out in the section headed “5. Financial effects of the Rights Issue” below); and (ii) the amount that is required to be refinanced upon maturity of such existing indebtedness, all of which would serve the purpose of improving the overall financial performance of the Company. Given the existing cash level of the Group as detailed in the paragraph headed “1. Background information of the Group” above, the cash and cash equivalents position of the Group only stood at approximately HK$4.1 million as at 30 September 2021, which is totally insufficient for the Company to settle any of the trade and other

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

payables or other indebtedness as stated above, the Group therefore had a relatively low cash and cash equivalents taking into consideration its debt level as abovementioned, we consider that it is fair and reasonable for the Group to undertake the equity fund raising exercise by way of Rights Issue to offset partial of the outstanding loans, so as to relieve the Group’s financial burden by reducing its gearing ratio to improve the financial position of the Group and is in the interests of the Company and the Shareholders as a whole.

We note from the Letter from the Board that, in light of the stringent liquidity position and to improve its financial performance, the Group has taken or will take the following measures, including but not limited to: (i) adopting a series of measures to control costs and to enhance cash flow and operational efficiency, including implementing salary reduction for staff, closing and disposing of certain underperforming restaurants, obtaining rent concessions from the landlords on the leases of certain restaurants of the Group and tightening expenditures; and (ii) raising additional capital, as and when needed, by carrying out fund raising activities, to finance the operations of the Group. We understand from the Management that the Rights Issue is part of the abovementioned measure.

Having considered (i) the material uncertainty in relation to going concern due to its loss-making financial performance and the net deficit position; (ii) the severe shortage of cash and working capital for the repayment of the trade and other payables and other indebtedness; (iii) imminent maturity of loans in July 2022, we concur with the Directors (including the independent non-executive Directors) that there is pressing need for the Company to conduct the Rights Issue and it is justifiable for the Group to apply the net proceeds from the Rights Issue to ease the liquidity pressure and improve the financial position of the Group to get over the downturn caused by the Pandemic.

3. Financing alternatives

Through discussions with the Management, we understand that other alternative means of fund raising, including (i) debt financing/bank borrowings; and (ii) equity fund raising such as placing of new Shares and open offer has each been individually explored and turned down in favour of the Rights Issue for the following reasons respectively:

Debt financing/bank borrowings

As set out in the Letter from the Board, in respect of debt financing, the Directors consider it is difficult to obtain any debt financing at terms that are acceptable to the Company given its current financial performance and financial position. In addition, the Company does not consider debt financing to be desirable given the requirement of interest payments and the impact on the Group’s gearing position. We understand from the Management that, to obtain bank borrowings from commercial banks will also be subject to lengthy due diligence exercise, banks’ internal risk assessment and negotiations with commercial banks that usually require pledge of assets by the borrower. In contrast, the equity raised through the Rights Issue would not be interest-bearing and hence the Company would save on any interest payable on debt financing/bank borrowings, takes the form of equity which would not negatively impact on the Group’s gearing position and relieve the Company from any strenuous due diligence and internal processes required by lenders.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Other equity fund raising options

Also as set out in the Letter from the Board, as for equity fund raising, such as placing of new Shares, it would lead to immediate dilution in the shareholding interest of the existing Shareholders without offering them an equal opportunity to participate in the enlarged capital base of the Company, which is not the intention of the Company. We also note that the market capitalisation of the Company was approximately HK$40.5 million as at the Latest Practicable Date, which is relatively small and in light of the thin trading liquidity of the Shares as discussed in the subsection headed “Review on the trading liquidity of the Shares” below, placing of new Shares is also not considered a feasible solution for the Group. As for open offer, while it is similar to a rights issue by offering qualifying shareholders to participate, it does not allow free trading of rights entitlements in the open market which deprive of the qualifying shareholders’ freedom to exit some of their investments through the disposal of rights entitlements.

In comparison, the Rights Issue is pre-emptive in nature, allowing Qualifying Shareholders to maintain their respective pro-rata shareholding through their participation in the Rights Issue. The Rights Issue allows the Qualifying Shareholders to (i) increase their respective interests in the shareholding of the Company by acquiring additional rights entitlement in the open market (subject to the availability); or (ii) reduce their respective interests in the shareholding of the Company by disposing of their rights entitlements in the open market (subject to the market demand). Furthermore, we note that given the unstable business environment under the Pandemic, the Sino-US trade war and the geopolitical warfare in Europe, most investors and financial institutions are more cautious on investing and financing activities, in particular to loss-making businesses and companies in distress which would result in much uncertainty on transaction completion. The Rights Issue generally fare better than the abovementioned alternatives.

After taking into account all of the above factors and considerations, we concur with the Directors that the current fund raising method by way of the Rights Issue, which (i) offers all the Qualifying Shareholders equal opportunity to subscribe for their pro-rata provisional allotments of the Rights Shares and hence avoids dilution and participate as fully as the Qualifying Shareholders wish in the growth opportunity of the Company by way of applying for excess Rights Shares; (ii) allows the Qualifying Shareholders who decide not to take up their entitlements under the Rights Issue to sell the nil-paid Rights Shares in the market to recover some of their investments ; and (iii) allows the Company to strengthen its capital base and liquidity without incurring interest costs and also enables the Company to reduce its gearing ratio, is in the interests of the Company and the Shareholders as a whole. As at the Latest Practicable Date, other than the Rights Issue, the Company did not have any intention or plan (initial or concrete) to undertake any equity fundraising or other corporate action or arrangement that may affect the trading in the Shares in the next 12 months.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Principal terms of the Rights Issue

Issue statistics

Basis of the Rights Issue : Three (3) Rights Shares for every two (2) Adjusted Shares held on the Record Date Subscription Price : HK$0.04 per Rights Share Number of Adjusted Shares in : 810,250,000 Adjusted Shares (assuming no change in issue upon the Capital the share capital of the Company on or before the Reorganisation becoming Record Date) effective

Number of Rights Shares : Up to 1,215,375,000 Rights Shares (assuming no change in the share capital of the Company on or before the Record Date)
Aggregate nominal value of the : Up to US$1,215,375 (assuming no change in the share Rights Shares (after completion capital of the Company on or before the Record Date) of the Capital Reorganisation)
Number of Adjusted Shares as : Up to 2,025,625,000 Adjusted Shares (assuming no enlarged by the allotment and change in the share capital of the Company on or before issue of the Rights Shares the Record Date)
Maximum funds to be raised : Up to approximately HK$48.6 million (assuming no before expenses change in the share capital of the Company on or before the Record Date)
Right of excess applications : Qualifying Shareholders may apply for Rights Shares in excess of their provisional allotment

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.1 Subscription Price

The Subscription Price is HK$0.04 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of Rights Shares and, where applicable, application for Excess Rights Shares under the Rights Issue or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

In order to assess the fairness and reasonableness of the Subscription Price, we set out the following informative analysis for illustrative purpose:

Comparison with prevailing market prices

We note the Subscription Price represents:

(i) a discount of 20% to the closing price of HK$0.05 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 6.98% to the closing price of HK$0.043 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 13.04% to the average of the closing price of approximately HK$0.0460 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 28.57% to the average of the closing price of approximately HK$0.0560 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day;
(v) a discount of approximately 61.94% to the average of the closing price of approximately HK$0.1051 per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day;
(vi) a discount of approximately 2.91% to the theoretical ex-rights price of approximately HK$0.0412 per Share as adjusted for the effect of the Rights Issue, based on the closing price of HK$0.043 per Share as quoted on the Stock Exchange on the Last Trading Day;
(vii) a premium of approximately HK$0.163 over the unaudited net deficits per Share of approximately HK$0.119 as at 31 December 2021, based on the unaudited net deficits attributable to the Shareholders of approximately HK$96.7 million as at 31 December 2021 and 810,250,000 issued Shares as at the Last Practicable Date;
(viii) a premium of approximately HK$0.136 over the audited net deficits per Share of approximately HK$0.092 as at 31 March 2021, based on the audited net deficits attributable to the Shareholders of approximately HK$74.9 million as at 31 March 2021 and 810,250,000 issued Shares as at the Last Practicable Date; and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ix) a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of approximately 9.28%, being the discount of the theoretical diluted price of approximately HK$0.043 per Share to the benchmarked price of approximately HK$0.0474 per Share (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the higher of the closing price on the Last Trading Day of HK$0.043 per Share and the average of the closing prices of the Shares as quoted on the Stock Exchange for the five consecutive trading days immediately prior to the Last Trading Day of approximately HK$0.0474 per Share).

Based on the above, we note that the Subscription Price in general represents a discount to the prevailing market prices of the Shares. The net price per Rights Share (i.e. Subscription Price less cost and expenses incurred in the Rights Issue) upon full acceptance of the provisional allotment of Rights Shares will be approximately HK$0.038. As explained in the Letter from the Board, the Subscription Price was set at a discount to the recent closing prices of the Shares aiming at lowering the further investment cost of the Shareholders so as to encourage them to take up their entitlements to maintain their shareholdings in the Company, thereby minimising dilution impact. The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to, among other things, (i) the market price of the Shares under the prevailing market conditions, which demonstrated a general decreasing trend since the beginning of 2022; (ii) the latest business performance and financial position of the Group, being loss making for the five years ended FY2021 and 1H2021 and with a net deficit of approximately HK$70.4 million as at 30 September 2021, indicating that the Group has been under stringent liquidity pressure and facing uncertainty in relation to going concern; and (iii) the reasons for and benefits of Rights Issue as discussed in the section headed “Reasons for and benefits of the Rights Issue” in the Letter from the Board, in particular the imminent funding needs to improve its financial position and the limitation in adopting alternative fund raising methods, which includes the interest burden and difficulty in obtaining favourable terms for debt financing, and the smaller fund raising scale for placing of Shares. The Management is aware that during the period of the 30 consecutive trading days up to and including the Last Trading Day, the closing price of the Shares has dropped significantly from a maximum of HK$0.17 to a minimum of HK$0.043, and the Subscription Price represented a discount of approximately 76.47% and 6.98% to the maximum and minimum closing price of the Shares respectively during the period, and the Subscription Price also represented a relatively deep discount of approximately 61.94% to the average of the closing prices for the 30 consecutive trading days up to and including the Last Trading Day. On the other hand, the Management also noted that during the period from the Last Trading Day up to the Latest Practicable Date, the closing price of the Shares ranged from HK$0.042 to HK$0.051, and the Subscription Price represented a discount of approximately 21.57% and 4.76% to the maximum and minimum closing price of the Shares respectively during the period. The Management consider the recent closing prices of the Shares better reflect the financial performance and position of the Group. Given the deteriorating financial performance and position of the Group, the decreasing trend of the Share closing price and the lower discounts of the Subscription Price to the closing prices of the Shares in the most recent periods, the Management consider that the Subscription Price to be fair and reasonable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparison with historical daily closing Share prices

In order to assess the fairness and reasonableness of the Subscription Price, we have performed a review on the movement of the daily closing Share prices for the twelve-month period ended on and including the Last Trading Day (i.e. 28 April 2022) (the “ Review Period ”) and compared with the Subscription Price. We consider the Review Period is reasonably long enough to illustrate the historical trend and level of movement of the closing Share price and the Review Period is fair to reflect the market assessment and the financial performance of the Group before and after the release of the 2021 Annual Report and the general market sentiment under the prolonged Pandemic. In general, we are of the view that the Review Period is adequate to reflect and for us to observe the general market sentiments impacted by the Sino-US trade war, the outbreak of Pandemic and the geopolitical warfare in Europe as reflected in the general trend and level of movement of the historical daily closing Share prices.

The chart set out below illustrates the historical daily closing Share prices during the Review Period:

Chart 1: Movement of the Share closing price during the Review Period

==> picture [426 x 218] intentionally omitted <==

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

0.2
Announcement
0.18 Announcement on disposal of
on improvement shares by
0.16 in financial controlling
performance shareholder
0.14
Publication of
0.12 the 2021
Annual Report
0.1
The
0.08 Publication of the Announcement
2021 Interim
0.06 Report
0.04
0.02
0
Closing Share price Subscription Price
HK$ per Share
----- End of picture text -----

Source: The website of the Stock Exchange

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During the Review Period, the average closing price was approximately HK$0.1106 per Share (the “ Average Closing Price ”). The daily closing price range from HK$0.0430 per Share (the “ Lowest Closing Price ”) to HK$0.1900 per Share (the “ Highest Closing Price ”) during the Review Period. As illustrated in the chart above, the prevailing market closing price of the Shares increased gradually from approximately HK$0.08 at 29 April 2021 to approximately HK$0.19 at 24 December 2021, which can be explained by an inside information announcement published by the Company on 5 November 2021 in relation to the improvement in financial performance of the Group as attributable to: (i) the operating results of the Group’s restaurants moderately recovered from the Pandemic as the Hong Kong Government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme to boost local consumption; (ii) the decrease in loss from the Group’s interior design and fitting-out business, provision of organic vegetables consulting services and financial institution intermediation services as more revenue was generated after the start-up stage of operation; and (iii) the disposal and closure of certain loss-making restaurants of the Group during the last and the current financial periods led to the decrease in the operating costs of the Group’s food and beverage business, comprising mainly cost of inventories consumed, staff costs, rental expenses and other operating expenses, all of which was expected to reduce the net loss of the Group significantly during 1H2021 compared to 1H2020. However, starting from February 2022, the prevailing market closing price of the Shares decreased sharply from its recent height of approximately HK$0.167 on 22 February 2022 and fell to the Lowest Closing Price as at the Last Trading Day.

We noted that the substantial fall in Share price in April 2022 appeared to be associated with substantial trading volume of the Shares during April 2022 as illustrated in Table 3: Trading liquidity analysis below. According to the inside information announcement published by the Company on 6 April 2022 that Strong Day, the controlling shareholder of the Company, had disposed of 200,000,000 Shares (representing approximately 24.68% of the then issued share capital of the Company) to an independent third party. According to the relevant disclosure of interests filing made by the Strong Day, the average price under the relevant disposal was HK$0.0825 per Share. Save for the above notable event, the reason for the substantial fall in Share price during 24 December 2021 to 28 April 2022 (“ Downtrend Period ”) was unknown to us since:

(i) the Management were not aware of any reason for such fall in Share price during the Downtrend Period; and
(ii) we have reviewed all the announcements disclosed during the Downtrend Period, and we were not aware of any information which led to abrupt decrease of the Share prices during the Downtrend Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note that the Shares generally traded above the Subscription Price during the Review Period. The Subscription Price of HK$0.04 represents (i) a discount of approximately 7.0% to the Lowest Closing Price of HK$0.0430 per Share; (ii) a discount of approximately 78.9% to the Highest Closing Price of HK$0.1900 per Share; and (iii) a discount of approximately 63.8% to the Average Closing Price of HK$0.1106 per Share during the Review Period. Given that the prevailing historical daily closing price have already reflected the market valuation of the Company based on its financial results and the prevailing market sentiment, we consider it is fair and reasonable for the Company to determine the Subscription Price with reference to the prevailing market closing price of the Shares and a discount to enhance the attractiveness of the Rights Issue. In the absence of such discount, the Shareholders will have much fewer incentives to participate in the Rights Issue.

Based on the average closing price of the Shares of the Downtrend Period of approximately HK$0.135, the Subscription Price represents a discount rate of approximately 70.4%, we noted that such discount rate is generally in line with the discount rate of approximately 63.8% and 61.9% to the Average Closing Price and the average closing price of the 30 consecutive trading days up to and including the Last Trading Day, respectively. Accordingly, we consider it is fair and reasonable for the Company to determine the Subscription Price with reference to the prevailing market price of the Shares and a discount to enhance the attractiveness of the Rights Issue.

Furthermore, except for solely relying on the above analysis in evaluating the Subscription Price, we have further assess the fairness and reasonableness of the Subscription Price by including a comparison with other rights issue exercises as discussed in further details in the paragraph headed “Comparison with recent rights issue exercises” below. In addition, we also noted that it is common market practice to set the Subscription Price at a discount to prevailing market prices to increase the attractiveness and encouraging the shareholders to participate in a rights issue to meet the companies’ need for additional funding, further details of which can be referred to the below paragraph headed “Comparison with recent rights issue exercises”. In addition, we understand from the Management that in view of recent decrease in Hang Seng Index, together with the uncertainty of local economy due to lingering impact of the Pandemic, the discount of the Subscription Price to the Share’s recent trading price has to be attractive in order to incentivise Shareholders’ participation in the Rights Issue and the participation of the Underwriter under current market conditions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Review on the trading liquidity of the Shares

In order to assess the fairness and reasonableness of the Subscription Price, apart from the historical daily closing price of the Adjusted Shares, we have also reviewed the trading volume data in respect of the Shares during the Review Period as illustrated in the table below:

Table 3: Trading liquidity analysis

				Approximately
				% of average
			Average	daily trading
	No. of	Total	daily	volume to total
	trading	trading	trading	no. of Shares in
Month	days	volume	volume	issue
		Number of	Number of
		Shares	Shares
			(Note 1)	(Note 2)
2021
April (starting from 29 April)	2	—	—	0.0000%
May	20	275,000	13,750	0.0001%
June	21	890,000	42,381	0.0004%
July	21	120,000	5,714	0.0001%
August	22	655,000	29,773	0.0003%
September	21	1,500,000	71,429	0.0007%
October	18	425,000	23,611	0.0002%
November	22	295,000	13,409	0.0001%
December	22	1,240,000	56,364	0.0006%
				Approximately
				% of average
			Average	daily trading
	No. of	Total	daily	volume to the
	trading	trading	trading	total issued
2022	days	volume	volume	Shares
January	21	15,000	714	0.0000%
February	17	210,000	12,353	0.0001%
March	23	955,000	41,522	0.0004%
April (up to and including the Last
Trading Day)	17	64,895,000	3,817,353	0.0382%
			Maximum	0.0382%
			Minimum	0.0000%
			Average	0.0032%

Source: The website of the Stock Exchange

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

Average daily trading volume is calculated by dividing the total trading volume for the month/period by the number of trading days during the month/period which exclude any trading day on which trading of the Shares on the Stock Exchange was suspended for the whole trading day.
Based on number of Shares in issue stated in the monthly return of the Company as at the respective month-end.

As illustrated in the table above, we noted that the average number of Shares traded per trading day in each month during the Review Period as a percentage of the total number of issued Shares as at the respective month-ends ranged from approximately 0% to approximately 0.0382%. Given the very thin trading volume of the Shares during the Review Period, it would be very difficult for the Shareholders to acquire/dispose a substantial block of the Shares in the open market, without exerting impact on the share price. Accordingly, we consider that it is reasonable for the Subscription Price to be set at a discount to the prevailing historical closing prices of the Shares in order to attract and encourage the Qualifying Shareholders to participate in the Rights Issue, and to maintain their respective shareholding interests in the Company.

Comparison with recent rights issue exercises

In order to further assess the fairness and reasonableness of the terms of the Rights Issue, we have independently reviewed rights issues exercises initially announced by companies listed on the GEM of the Stock Exchange from 29 October 2021, being approximately six months prior to the Last Trading Day, and up to the date of the Underwriting Agreement (the “ Comparison Period ”), to provide a general reference for the recent market practice in relation to the key terms of the rights issue under similar market condition. Based on such search criteria, we have identified 11 rights issues (the “ Rights Issue Comparables ”) for comparison purposes. Although the circumstances surrounding such Rights Issue Comparables may be different from those relating to the Company, we consider that the six-month period is adequate and fair and reasonable to capture the prevailing market conditions arising from the impact from the Sino-US trade war, the outbreak of Pandemic and the geopolitical warfare in Europe, in relation to rights issue exercises which the Rights Issues Comparables, for illustrative purpose only, as a review of the rights issue transactions within the previous six-month period is more reflective of the prevailing market practices. Although the Rights Issue Comparables may be different from the Group in terms of business nature, financial performance, financial position and funding requirements, the Rights Issue Comparables can serve as a market reference for recent market practices in relation to the subscription prices under other rights issues as compared to the relevant prevailing market share prices and provide an insight to the reasonableness of the Subscription Price in respect of the Rights Issue. We consider that the Comparison Period is appropriate since it provided, in our opinion, a reasonable and meaningful number of samples for our analysis purpose coupled with a Comparison Period within the previous six months period to demonstrate the prevailing market practices and not too remote from the Latest Practicable Date, Therefore, we consider that the Rights Issue Comparables as a whole to be sufficient, fair and representative to reflect the most recent market condition prior to the Last Trading Day.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To the best of our knowledge, the list of Rights Issue Comparables is an exhaustive list of rights issues meeting the aforesaid search criteria and is a fair and representative sample to be taken as a general reference of the recent market practices in relation to rights issues, details of which are set out in the table below.

Table 4: Analysis of the Rights Issue Comparables

				Discount/
				(premium) of
				subscription	Discount/
				price (to)/ over	(premium) of
				the closing price	subscription	Potential	Theoretical
				per share on the	price (to)/ over	maximum	dilution		Application
	Stock	Date of	Basis of	respective last	the theoretical	dilution	effect	Underwriting	for excess
Company name	code	announcement	entitlement	trading day	ex-rights price	(Note 1)	(Note 2)	commission	rights shares
Grand T G Gold Holdings	8299	2-Nov-21	3 for 1	-16.67%	-5.41%	75.00%	11.90%	0.00%	No
Limited
Xinyi Electric Storage	8328	8-Nov-21	1 for 10	-8.07%	-7.39%	9.09%	5.37%	Nil	Yes
Holdings Limited								(Note 3)
Vertical International	8375	26-Nov-21	1 for 2	-40.80%	-31.60%	33.33%	14.20%	4.00%	Yes
Holdings Limited
Hanvey Group Holdings	8219	24-Dec-21	1 for 2	-22.81%	-16.35%	33.33%	7.60%	3.50%	No
Limited
Prosperous Printing	8385	29-Dec-21	3 for 2	-34.33%	-16.98%	60.00%	20.90%	1.00%	Yes
Company Limited
China Information	8178	5-Jan-22	1 for 2	-34.78%	-26.11%	33.33%	11.74%	1.50%	Yes
Technology Development
Limited
Beaver Group (Holding)	8275	14-Jan-22	3 for 2	-24.14%	-11.29%	60.00%	14.48%	3.50%	No
Company Limited
RMH Holdings Limited	8437	19-Jan-22	1 for 2	-29.58%	-21.88%	33.33%	21.88%	2.50%	Yes
Cornerstone Financial	8112	21-Jan-22	3 for 1	-11.63%	-3.18%	75.00%	14.62%	3.50%	Yes
Holdings Limited
Zioncom Holdings Limited	8287	28-Feb-22	1 for 2	-16.70%	-11.80%	33.33%	5.60%	2.50%	No
China Eco-Farming Limited	8166	3-Mar-22	1 for 2	-10.11%	-6.98%	33.33%	5.26%	2.00%	Yes
Max				-8.07%	-3.18%	75.00%	21.88%	4.00%	N/A
Min				-40.80%	-31.60%	9.09%	5.26%	0.00%	N/A
Average				-22.69%	-14.45%	43.55%	12.14%	2.40%	N/A
Median				-22.81%	-11.80%	33.33%	11.90%	2.50%	N/A
The Company	8056	28-Apr-22	3 for 2	-6.98%	-2.91%	60.00%	9.28%	1.00%	Yes

Source: The website of the Stock Exchange

Notes:

The potential maximum dilution of shareholding is calculated by the number of new rights shares divided by the total number of issued shares as enlarged by the issue of the new rights shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Theoretical dilution effect of a rights issue refers to the discount of the “theoretical diluted price” to the “benchmarked price” of shares. The “theoretical diluted price” means the sum of (i) the issuer’s total market capitalisation (by reference to the “benchmarked price” and the number of issued shares immediately before the rights issue); and (ii) the total funds raised and to be raised from the rights issue, divided by the total number of shares as enlarged by the rights issue.
The rights issue is proceeded on a non-underwritten basis irrespective of the level of acceptance of the provisionally allotted rights shares. If there is an under-subscription of the rights issue as a result of untaken rights not being fully taken up by qualifying shareholders or transferees of nil-paid rights shares, the size of the rights issue will be reduced accordingly.

As shown in the above table, the subscription prices of all of the Rights Issue Comparables were set at discounts to the respective closing price per share on the last trading day ranging from approximately 8.1% to approximately 40.8%, with average and median discounts of approximately 22.7% and 22.8% respectively. The Subscription Price, which represents a discount of approximately 7.0% to closing Share price on the Last Trading Day is slightly above the minimum of the Rights Issue Comparables and is significantly below the average and median discounts of the Rights Issue Comparables.

Similar comparative results were noted when comparing the discounts represented by the subscriptions prices to the theoretical ex-rights prices per share of the Rights Issue Comparables with that represented by the Subscription Price. The subscription prices to the theoretical ex-rights price per share of the Rights Issue Comparables ranged from approximately 3.2% to a discount of approximately 31.6%, with average and median discounts of approximately 14.5% and 11.8% respectively. The Subscription Price, which represents a discount of approximately 2.9% to the theoretical ex-rights price per Adjusted Share is significantly below the average and median discounts of the Rights Issue Comparables.

The maximum dilution effect of the Rights Issue of approximately 60.0% falls within the range of the maximum dilution effect of the Rights Issue Comparables ranging from approximately 9.1% to approximately 75.0%. Having considered, notably: (i) it is common for listed issuers in Hong Kong to issue rights shares at a discount to market price in order to enhance the attractiveness of a rights issue as illustrated in our analysis above; (ii) the Subscription Price was determined by the Company with reference to, amongst other factors, (a) the market price of the Shares under the prevailing market conditions; (b) the latest business performance and financial position of the Group; and (c) the relevant reasons for and benefits of Rights Issue; (iii) the potential maximum dilution on shareholding of the Rights Issue fall within the range of the Rights Issue Comparables; (iv) all Qualifying Shareholders are offered an equal opportunity to subscribe for the Rights Shares under the Rights Issue where all Shareholders are given with the same discounts of the Subscription Price to the theoretical closing price of the Consolidated Share on the Last Trading Day and to the theoretical ex-rights price and the same potential maximum dilution; and (v) very low trading liquidity of the Shares, which may have an implication on the discounts of the Subscription Price to the theoretical closing price per Consolidated Share on the Last Trading Day and the theoretical ex-rights price, we are of the view that the Subscription Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.2 Underwriting commission

As set out in the Letter from the Board, the terms of the Underwriting Agreement, including the underwriting commission rate, were determined after arm’s length negotiation between the Company and the Underwriter with reference to the existing financial position of the Group, the size of the Rights Issues, and the current and expected market condition. For further details of the principal terms of the Underwriting Agreement, please refer to section headed “The Underwriting Agreement” in the Letter from the Board. The Underwriter will receive an underwriting commission of 1.0% (the “ Underwriting Commission ”) of the aggregate Subscription Price in respect of such number of the Rights Shares. According to the Rights Issue Comparables as set out above, the underwriting commission of the Rights Issue Comparables ranged from a minimum of nil to a maximum of 4.0%, with average and median underwriting commissions of approximately 2.4% and 2.5% respectively. As the Underwriting Commission falls within the range and well below the average and median of the Rights Issue Comparables, we are of the view that the Underwriting Commission is in the interests of the Company and Independent Shareholders as a whole.

4.3 Application for excess Rights Shares

As set out in the Letter from the Board, Qualifying Shareholders may apply, by way of excess application, for any nil-paid Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise not subscribed for by transferees of nil-paid Rights Shares, any unsold entitlements of the Excluded Shareholders and for any of the Rights Shares created from the aggregation of fractions of the Rights Shares.

The Directors will, upon consultation with the Underwriter, allocate any Excess Rights Shares at their discretion on a fair and equitable basis, according to the principle that any Excess Rights Shares will be allocated to Qualifying Shareholders who apply for them on a pro rata basis by reference to the number of Excess Rights Shares applied for, reference will only be made to the number of Excess Rights Shares being applied for but no reference will be made to the Rights Shares subscribed through applications by PALs or the existing number of Shares held by Qualifying Shareholders, the Company will allocate to each Qualifying Shareholder who applies for Excess Rights Shares in full application if the aggregate number of Rights Shares not taken up by the Qualifying Shareholders and/or transferees of nil-paid Rights Shares under the PALs is greater than the aggregate number of Excess Rights Shares applied for through the EAFs, no preference will be given to topping up odd-lots to whole board lots.

Based on our review of the basis of allocation, we are not aware of any unusual arrangement as compared to the Rights Issue Comparables. We therefore consider that such allocation basis is consistent with normal market practice.

−61 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.4 Potential dilution effect of the Rights Issue

					Immediately upon completion
					of the Rights Issue (assuming
					none of the Qualifying
			Immediately upon completion		Shareholders have taken up
			of the Rights Issue (assuming		any entitled Rights Shares
			all Qualifying Shareholders		and all Untaken Shares were
	As at the Latest	Practicable	have taken up all the	entitled	subscribed for by or through
	Date		Rights Shares)		the Underwriter)
	Number of		Number of		Number of
	Adjusted	Approximate	Adjusted Approximate		Adjusted Approximate
	Shares	%	Shares	%	Shares %
Names of Shareholders
Strong Day (Note 1)	407,600,000	50.31	1,019,000,000	50.31	407,600,000 20.12
Wong Man Hin Max	171,550,000	21.17	428,875,000	21.17	171,550,000 8.47
The Underwriter and/or
its subscriber(s)
procure by it (Note 2)	—	—	—	—	1,215,375,000 60.00
Other public
Shareholders	231,100,000	28.52	577,750,000	28.52	231,100,000 11.41
Total	810,250,000	100.00	2,025,625,000	100.00	2,025,625,000 100.00

Notes:

Strong Day is a company incorporated in the British Virgin Islands with limited liability and is owned as to 29.90% by Ms. Li, an executive Director and the spouse of Mr. James Lu. The Shares held by Strong Day has been pledged to Excel Precise International Limited, a company incorporated in Hong Kong and is owned as to 25% by Mr. Law Fei Shing and as to 73.50% by True Promise Investments Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Law Fei Shing.
Pursuant to the Underwriting Agreement, the Underwriter has undertaken to the Company that (i) it shall use its best endeavours to procure that each of the subscribers of the Untaken Shares procured by it (including any direct and indirect sub-underwriters) shall be a third party independent of, not acting in concert with and not connected with the Directors, chief executive or substantial shareholders of the Company (within the meaning of the GEM Listing Rules) or any of its subsidiaries and their respective associates; (ii) it will procure each and any of the subscribers of the Untaken Shares procured by it (including any direct and indirect sub-underwriters) not to, together with any party acting in concert (within the meaning of the Takeovers Code) with it or its associates, hold in aggregate thirty per cent (30%) or more of the voting rights of the Company immediately upon completion of the Rights Issue; (iii) it will underwrite solely on a best effort basis, and not in a fully underwritten basis. In any event, the Underwriter will not underwrite to the extent, together with any party acting in concert (within the meaning of the Takeovers Code) or its associates, hold thirty per cent (30%) or more of the voting rights of the Company immediately upon completion of the Rights Issue; and (iv) in the event that there is insufficient public float of the Company within the meaning of the GEM Listing Rules immediately upon completion of the Rights Issue solely because of the Underwriter’s performance of its obligations under the Underwriting Agreement, it agrees to take appropriate steps together with the other sub-underwriters as may be reasonably required to maintain the minimum public float for the Shares in compliance with Rule 11.23 of the GEM Listing Rules.

−62 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As the Rights Issue is only underwritten on a best effort and non-fully underwritten basis, any Rights Shares not taken up by the Qualifying Shareholders whether under the PAL(s) or EAF(s), or transferees of nil-paid Rights Shares, and not subscribed by subscribers procured by the Underwriter will not be issued, and hence, the size of the Rights Issue will be reduced accordingly.

In the case that (i) all Qualifying Shareholders have taken up their respective entitlements of the Rights Shares in full, the shareholding interests of the public Shareholders will remain 28.52%; and (ii) assuming none of the Qualifying Shareholders have taken up their respective entitlements of the Rights Issue and all untaken rights shares were subscribed for by or through the Underwriter, the shareholding interest of the public Shareholders will decrease from approximately 28.52% as at the Latest Practicable Day to approximately 11.41% immediately upon completion of the Rights Issue, representing a possible dilution of approximately 60.0% in their shareholding interest arising from the Rights Issue. As mentioned under the section headed “Change in the shareholding structure of the company arising from the rights issue” in the Letter from the Board, the above scenario is for illustrative purpose only based on the undertaking arrangements pursuant to the Underwriting Agreement.

Even though the Rights Issue may cause a dilution effect to the Qualifying Shareholders, Having taken into account that (i) the theoretical dilution effect of the Rights Issue (i.e. 9.28%) falls within the range of the Rights Issue Comparables that ranging from a discount of approximately 5.3% to a discount of approximately 21.9%, with an average discount of approximately 12.1%; (ii) the reasons for and benefits of the Rights Issue as stated under the section headed “2. Reasons for and benefits of the Rights Issue” above in this letter; (iii) the Rights Issue offers the Qualifying Shareholders an opportunity to subscribe for the Rights Shares for maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the prevailing market prices of the Shares; (iv) other fund raising alternatives, including debt financing, placement, and open offer are not feasible for the Company as mentioned above in this letter; (v) the Qualifying Shareholders have the opportunity to sell their nil-paid Rights Shares in the market if they do not wish to take up the provisional entitlements under the Rights Issue and (vi) the Subscription Price is fair and reasonable based on our analysis above, we are of the view that notwithstanding the cumulative dilution effect on the Shareholding interests of the Independent Shareholders, which will only result when the Qualifying Shareholders do not subscribe for their pro-rata allotments of the Rights Shares, the Rights Issue can satisfy the imminent funding need of the Company as stated above which is in the interest of the Shareholders and the Company as a whole.

5. Financial effects of the Rights Issue

Assuming full subscription under the Rights Issue, the net proceeds from the Rights Issue after deducting the expenses are estimated to be approximately HK$46.2 million (assuming no change in the number of Shares in issue on or before the Record Date). The Company intends to apply the net proceeds from the Rights Issue as to (i) 46.3% (i.e. approximately HK$21.4 million) for the settlement of overdue trade and other payables in full; and (ii) 53.7% (approximately HK$24.8 million) for the settlement of the amount due to a Director and the non-controlling shareholder of the subsidiary. In the event that there is an under-subscription of the Rights Issue, the Group intends to apply the net proceeds from the Rights Issue on the repayment of overdue trade and other payable first, and any

−63 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

remaining proceeds will be utilised for the partial settlement of amount due to a Director and the non-controlling shareholder of the subsidiary. The Group will use its best endeavour to negotiate with the amount due to a Director and the non-controlling shareholder of the subsidiary for the further extension on repayment of their respective debts.

Net tangible liabilities

According to the unaudited pro forma statement on adjusted consolidated net tangible liabilities of the Group as set out in Appendix II to the Circular (the “ Pro Forma Financial Information ”), the Group had unaudited consolidated net tangible liabilities attributable to the Shareholders of approximately HK$96.2 million as at 30 September 2021. As per the Pro Forma Financial Information, upon completion of the Rights Issue (based on maximum number of 1,215,375,000 Rights Shares and assuming no change in the share capital of the Company on or before the Record Date), the Group would have unaudited pro forma adjusted consolidated net tangible liabilities attributable to the Shareholders of approximately HK$49.9 million, representing a decrease of approximately 48.1%, as a result of the inflow of the estimated net proceeds from the Rights Issue.

Upon completion of the Rights Issue (based on maximum number of 1,215,375,000 Rights Shares and assuming no change in the share capital of the Company on or before the Record Date), the unaudited pro forma adjusted consolidated net tangible liabilities per share attributable to the Shareholders after the completion of the Rights Issue would be approximately HK$0.02, representing a decrease of approximately 83.3% as compared to the unaudited consolidated net tangible liabilities per share attributable to the Shareholders of HK$0.12 as at 30 September 2021. The net liability position of the Group would be improved upon the completion of the Rights Issue.

Liquidity

Based on the 2021 Interim Report, the cash and cash equivalents of the Group amounted to approximately HK$4.1 million as at 30 September 2021. Immediately upon completion of the Rights Issue, the cash and cash equivalents of the Group is expected to increase by the estimated net proceeds of the Rights Issue of approximately HK$46.2 million (assuming no change in the number of Shares in issue on or before the Record Date). As such, the liquidity of the Group will be enhanced following the completion of the Rights Issue.

Gearing ratio

According to the 2021 Annual Report and 2021 Interim Report, the gearing ratio of the Group, calculated by net debt (computed based on the sum of total lease liabilities, amounts due to directors, amounts due to related parties and bank borrowings, less cash and cash equivalents) divided by the aggregate of net debt and total capital, was approximately 140.8% as at 31 March 2021, was then increased to approximately 156.3% as at 30 September 2021. As part of the net proceeds from the Rights Issue will be used for partial settlement of amount due to a Director and the non-controlling shareholder of the subsidiary, gearing of the Group is expected to improve accordingly.

Although the above analysis is for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon completion of the Rights Issue, we are of the view that the Rights Issue is in the interests of the Company and the Independent Shareholders.

−64 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OPINION AND RECOMMENDATION

Having taken into consideration the principal factors and reasons discussed above, we are of the opinion that the terms of the Rights Issue (including the Underwriting Agreement) and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. We, therefore, recommend the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Opus Capital Limited Cheung On Kit Andrew Executive Director

Mr. Cheung On Kit Andrew is an Executive Director of Opus Capital and is licensed under the SFO as a Responsible Officer to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities. Mr. Cheung has over 14 years of corporate finance experience in Asia Pacific and has participated in and completed various financial advisory and independent financial advisory transactions.

−65 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three financial years ended 31 March 2019, 2020 and 2021 and the nine months ended 31 December 2021 were disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the Company’s website (www.lifeconcepts.com):

annual report of the Company for the year ended 31 March 2019 published on 27 June 2019 (pages 52 to 99);
(https://www1.hkexnews.hk/listedco/listconews/gem/2019/0627/gln20190627049.pdf)
annual report of the Company for the year ended 31 March 2020 published on 29 June 2020 (pages 54 to 119);

(https://www1.hkexnews.hk/listedco/listconews/gem/2020/0629/2020062900806.pdf)

annual report of the Company for the year ended 31 March 2021 published on 28 July 2021 (pages 57 to 127);
(https://www1.hkexnews.hk/listedco/listconews/gem/2021/0728/2021072800475.pdf)
third quarterly report of the Company for nine months ended 31 December 2021 published on 14 February 2022 (pages 2 to 8).

(https://www1.hkexnews.hk/listedco/listconews/gem/2022/0214/2022021400277.pdf)

2. INDEBTEDNESS OF THE GROUP

As at the close of business on 30 April 2022, being the latest practicable date for the purpose of ascertaining information contained in this statement of indebtedness prior to the printing of this circular, the Group had outstanding bank borrowings of approximately HK$1.2 million which were unsecured and unguaranteed. The Group had guaranteed liabilities of approximately HK$21.0 million. In addition, the Group entered into several lease agreements for the use of restaurant operation and management office located in Hong Kong and the PRC recognised right-of-use assets and lease liabilities for the above-mentioned leases. Such lease liabilities amounted to approximately HK$16.8 million as at 30 April 2022.

As at 30 April 2022, the Group had an amount due to a director of the Company and amounts to related parties of approximately HK$104.0 million and HK$75.0 million respectively, which were non-trade in nature, unsecured and interest-free.

As at 30 April 2022, save as restricted bank deposits of approximately HK$53.6 million for the Group’s obligations under certain operating leases or service agreements in relation to the provision of financial institution intermediation services, the Group did not pledge any other assets.

As at 30 April 2022, the Group had no material commitments and contingent liabilities.

−I-1 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above and for intra-group liabilities, the Group did not have any debt securities authorized or created but unissued, issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guaranteed, unguaranteed, secured and unsecured borrowing and debt, or other material contingent liabilities as at the close of business on 30 April 2022.

3. WORKING CAPITAL STATEMENT

As at 30 April 2022, the Group had a net shareholders’ deficit of HK$89.5 million and its current liabilities exceeded its current assets by HK$67.1 million while it had cash and cash equivalents of approximately HK$3.9 million.

The Group’s catering operations have been negatively impacted by the weak market sentiment amidst the Coronavirus Disease 2019 (“ COVID-19 ”) pandemic. COVID-19 pandemic has started to affect Hong Kong in early 2020 and a series of precautionary and control measures have been and continued to be implemented in Hong Kong. The Hong Kong Government has introduced group gathering measures to limit the number of persons allowed in group gatherings in public places, including those for different types of mode of operations in catering business, under the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation. Although the Hong Kong Government is gradually relaxing the precautionary and control measures, the measures together with poor consumer sentiment caused by the pandemic are still causing short-term disruption to the Group’s restaurant operations in Hong Kong. Also, the Directors are not certain whether the COVID-19 pandemic will continue and whether the restrictions and control measures will have a prolong impact to the Group’s operating performance and cash flows.

The above conditions indicate the existence of material uncertainties which may cast a significant doubt about the ability of the Group to continue as a going concern. In view of these circumstances, the Directors have given careful consideration to the future liquidity requirements and operating performance of the Group and its available sources of financing to assess whether the Group would have sufficient financial resources to fulfill its financial obligations to continue as a going concern for the next twelve months from the date of this circular. The Group has plan and measures to improve its financial position and to alleviate its liquidity pressure, which include but not limited to the following:

1) The Government announced the relief of certain quarantine and social distancing restrictions in May 2022 for different types of mode of operations for the catering business. The Group has been closely monitoring the latest developments on the COVID-19 situation, changes to quarantine and social distancing restrictions in Hong Kong, as well as government stimulus measures so as to formulate appropriate plans to improve its operating performance and cash inflows of its catering business;
2) The Group has adopted a series of measures to control costs and to enhance cash flow and operational efficiency, including implementing salary reduction for staff; closing and disposing of certain underperforming restaurants; obtaining rent concessions from the landlords on the leases of certain restaurants of the Group and tightening expenditures;

−I-2 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3) As at 30 April 2022, the Group had obtained a total of HK$104.0 million non-interest bearing advance from the Chairman of the Company, Mr James Fu Bin Lu which was not repayable within one year from the date of this circular;
4) Furthermore, Mr James Fu Bin Lu has confirmed his intention on 23 June 2022 to commit further financing and/or arrange a loan facility to the Group by either himself, the immediate holding company or other related entities amounting to not more than HK$130 million as and when needed;
5) The directors of the Group are working to revamp the Group’s current business arrangement of the provision of financial intermediation services to cope with the implications of the relevant PRC regulations and based on their assessment, the directors do not expect there will be significant cash outflow arising from the potential non-compliance as well as in the course of revamping the business arrangement; and
6) The Group will consider to raise additional capital, as and when needed, by carrying out fund raising activities, to finance the operation of the Group.

The Directors have reviewed the Group’s cash flow projections, which cover a period of not less than twelve months from the date of this circular. They are of the opinion that the Group will have sufficient financial resources to satisfy its future working capital requirements as and when they fall due within the next twelve months from the date of this circular.

The shareholders of the Company should noted that the validity of the statement of the working capital sufficiency of the Group as mentioned above depends on the outcome of the plans and measures undertaken/being undertaken of the Group, which are subject to inherent uncertainties, including:

1) whether the Group is able to generate adequate operating cash inflows by adjusting the restaurants operation soonest possible upon easing of the COVID-19 restrictions and controlling the operating costs;
2) whether the Group will be able to obtain financing from either the Chairman, the immediate holding company or other related entities up to HK$130 million as and when needed;
3) whether the Group will be able to obtain additional capital from fund raising activities to finance the operations of the Group as and when needed.

Should the Group be unable to successfully implement the plans and measures as mentioned above, the Group may not have sufficient working capital for its requirements within the next 12 months from the date of this circular.

−I-3 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MATERIAL ADVERSE CHANGE

The financial performance of the Group has been adversely affected by the prolonged COVID-19 pandemic, particularly the social distancing measures imposed by the Hong Kong Government from time to time. Due to the continuous unsatisfactory financial performance, the financial position of the Group deteriorated.

As disclosed in the interim report of the Company for the six months ended 30 September 2021, at 30 September 2021, the net current liabilities of the Group increased to approximately HK$193.1 million and net deficit attributable to the Shareholders increased to approximately HK$84.7 million. The significant increase in net current liabilities was mainly due to the approaching maturity of loans, including (i) loan from non-controlling shareholder of a subsidiary amounted to approximately HK$73.3 million which shall mature on 31 July 2022, and (ii) amounts due to directors amounted to approximately HK$78.3 million which shall mature on 31 July 2022.

Saved as disclosed, as at the Latest Practicable Date, the Directors confirm that there is no other material adverse change in the financial or trading position of the Group since 31 March 2021 (being the date to which the latest published audited consolidated financial statements of the Group were made up).

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

For the year ended 31 March 2021 and the nine months ended 31 December 2021, the financial performance of the Group was adversely affected by the prolonged COVID-19 pandemic, particularly the social distancing measures imposed by the Hong Kong Government from time to time. For the nine months ended 31 December 2021, the operating results of the Group’s restaurants slightly recovered from the pandemic as the Hong Kong government has relaxed some social distancing measures and promoted the electronic consumption voucher scheme to boost local consumption. However, due to the outbreak of the fifth wave of the pandemic since February 2022, restaurants of the Group had been in limited operation and the financial performance are expected to be adversely affected during the three months ended 31 March 2022. The Directors are of the view that the COVID-19 pandemic may continue to have unforeseeable impact to the Group’s catering business. The Group will continue to closely monitor the business in response to the policies and perform comprehensive risk study and contingency plan to minimise the impact of the COVID-19 pandemic.

The Group has gradually developed its financial institution intermediation services business after the start-up stage during the nine months ended 31 December 2021. The Directors consider that there would be growing demand from small and medium-sized enterprises in the PRC for the Group’s one-stop and professional financial services platform to fulfill their financing needs, and hence are optimistic about the prospects of this business. The Group will continue to observe the changes of business environment and government policies in this segment and adjust its business strategy in accordingly.

−I-4 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s interior design and fitting-out services featured with fashionable and customized one-stop solution aims to provide affordable luxury and environmental-friendly service to the PRC clients. The business is facing fierce competition in the market. The Group will pay close attention to the market environment and endeavor to develop and grow the business by combining its own advantageous resources.

Consulting services in relation to organic vegetables research and development, plantation and sales rely on the extensive managerial experience of the operating team and advanced patents and technologies. As living standards are rising, the demands towards quality of food ingredients are increasing, which could be a critical component of the Group’s diversified development structure and deployment.

The Group will take opportunities to continue to invest in and develop new business.

−I-5 −

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(A) INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of the independent reporting accountants’ assurance report received from Yongtuo Fuson CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, in respect of the Group’s unaudited pro forma financial information prepared for the purpose of incorporation in this circular.

==> picture [273 x 40] intentionally omitted <==

To the directors of Life Concepts Holdings Limited

We have completed our assurance engagement to report on the compilation of the unaudited pro forma financial information of Life Concepts Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group as at 30 September 2021 and related notes (the “Unaudited Pro Forma Financial Information”) as set out in page II-4 to II-5 to the circular dated 28 June 2022 (the “Circular”) issued by the Company. The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in section (B) of Appendix II to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed rights issue of 1,215,375,000 rights shares at HK$0.04 per rights share (the “Rights Shares”) on the basis of three Rights Share for every two existing shares of the Company held on the rights issued record date (the “Rights Issue”) on the Group’s unaudited consolidated net tangible liabilities attributable to owners of the Company as at 30 September 2021 as if the Rights Issues had taken place at 30 September 2021. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s unaudited condensed consolidated financial statements of the Company for the six months ended 30 September 2021, on which an interim report has been published.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 31 of Chapter 7 of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited (the “GEM Listing Rules”）and with reference to Accounting Guideline 7 (“AG 7”) Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

−II-1 −

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 (Clarified) Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the GEM Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the GEM Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Rights Issue on unadjusted financial information of the Group as if the Rights Issue had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Rights Issue at 30 September 2021 would have been as presented.

−II-2 −

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

a) the Unaudited Pro Forma Financial Information has been properly complied on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Yours faithfully,

Yongtuo Fuson CPA Limited

Certified Public Accountants

Fok Tat Choi

Practicing Certificate Number: P06895

Hong Kong, 28 June 2022

−II-3 −

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(B) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

The following unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company prepared by the Directors (the “Unaudited Pro Forma Financial Information”）in accordance with Rule 7.31 of GEM Listing Rules is set out to illustrate the effect of the Rights Issue on the Group’s unaudited consolidated net tangible assets attributable to the owner of the Company as if the Rights Issue had been completed on 30 September 2021.

The Unaudited Pro Forma Financial Information has been prepared based on the judgments, estimates and assumptions of the Directors, and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible liabilities of the Group as at 30 September 2021 or any further dates following the Rights Issue.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2021, as extracted from published interim report of the Company for the six months ended 30 September 2021, with adjustments described below.

					Unaudited pro
			Unaudited pro		forma adjusted
			forma adjusted		consolidated
			consolidated		net tangible
			net tangible	Unaudited	liabilities of
	Unaudited		liabilities of	consolidated	the Group per
	consolidated		the Group	net tangible	share
	net tangible		attributable to	liabilities of	attributable to
	liabilities of		owners of the	the Group per	owners of the
	the Group		Company	share	Company
	attributable to	Unaudited	immediately	attributable to	immediately
	owners of the	estimated net	after	owners of the	after
	Company as at	proceeds from	completion of	Company as at	completion of
	30 September	the Rights	the Rights	30 September	the Rights
	2021	Issue	Issue	2021	Issue
	HK$’000	HK$’000	HK$’000	HK$	HK$
	(note 1)	(note 2)		(note 3)	(note 4)
Rights Issue of
1,215,375,000 Rights
Shares to be issued at
Subscription Price of
HK$0.04 per Rights
Share	(96,170)	46,232	(49,938)	(0.12)	(0.02)

−II-4 −

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

The unaudited consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 30 September 2021 of approximately HK$96,170,000 is arrived at after deducting other intangible assets of HK$11,436,000 from the unaudited consolidated net liabilities attributable to owners of the Company of HK$84,734,000 which is extracted from the published interim report of the Company for the six months ended 30 September 2021.
The estimated net proceeds from the Rights Issue of approximately HK$46,232,000 is calculated based on 1,215,375,000 Rights Shares to be issued (in the proportion of three (3) Rights Shares for every two (2) existing shares held as at the Rights Issue record date) at the subscription price of HK$0.04 per Rights Shares, after deduction of the estimated related expenses of approximately HK$2,383,000, assuming that the Rights Issue had been completed on 30 September 2021.
The unaudited consolidated net tangible liabilities attributable to owners of the Company per share as at 30 September 2021 is approximately HK$0.12, which is calculated based on the consolidated net tangible liabilities of the Group attributable to owners of the Company as at 30 September 2021 of approximately HK$96,170,000 divided by 810,250,000 shares in issue as at 30 September 2021.
The unaudited pro forma adjusted consolidated net tangible liabilities attributable to owners of the Company per share immediately after completion of the Rights Issue is approximately HK$0.02, which is calculated based on the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company immediately after completion of the Rights Issue of approximately HK$49,938,000 divided by 2,025,625,000 shares, which represents 810,250,000 shares of the Company in issue as at 30 September 2021 and 1,215,375,000 Rights Shares to be issued, pursuant to the Rights Issue (in the proportion of three (3) Rights Shares for every two (2) existing shares held as at the Rights Issue record date), are in issue assuming that the Rights Issue had been completed on 30 September 2021.
No adjustments have been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group entered into subsequent to 30 September 2021.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

Set out below is a summary of certain provisions of the Memorandum of Continuance and the New Bye-laws of the Company upon continuation in Bermuda and their material differences with the Memorandum and the Articles prior to the Change of Domicile.

1. THE MEMORANDUM AND THE MEMORANDUM OF CONTINUANCE

The Memorandum states, inter alia , that the liability of each member of the Company is limited to the amount from time to time unpaid on such member’s shares, that the objects for which the Company is established are unrestricted and that the Company shall have and be capable of from time to time and at all times exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate, irrespective of any question of corporate benefit provided that the Company shall only carry on the businesses for which a licence is required under the laws of the Cayman Islands when so licensed under the terms of such laws.

Upon continuance of the Company in Bermuda, the Company will adopt the Memorandum of Continuance which, upon filing with and registration by the Bermuda Registrar of Companies, will in effect be the Company’s new memorandum of association. The Memorandum of Continuance states, inter alia, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the shares respectively held by them and that the Company is an exempted company as defined in the Companies Act. The Memorandum of Continuance also sets out the objects of the Company from the date of continuance are unrestricted and that the Company has the capacity, rights, powers and privileges of a natural person. As an exempted company, the Company will be carrying on business outside Bermuda.

In accordance with and subject to the Companies Act, the Memorandum of Continuance of the Company empowers it to purchase its own shares; this power is exercisable by the Board upon such terms and subject to such conditions as it thinks fit.

2. NEW BYE-LAWS

A summary of certain provisions of the New Bye-laws is set out below.

(i) Variation of rights of existing shares or classes of shares

Summary

If at any time the capital is divided into different classes of shares, all or any of the special rights (unless otherwise provided for by the terms of issue of that class) attached to any class may, subject to the provisions of the Companies Act, be varied or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. The provisions of

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

the New Bye-laws relating to general meetings will apply mutatis mutandis to every such separate general meeting, but so that the necessary quorum is not less than two persons holding or representing by proxy one-third in nominal value of the issued shares of the class.

Material differences

The Articles contain similar provisions.

(ii) Alterations of capital

Summary

The Company may from time to time by ordinary resolution: (i) increase its share capital by the creation of new shares; (ii) consolidate all or any of its share capital into shares of larger amount than its existing shares; (iii) divide its shares into several classes and attach to such shares any preferential, deferred, qualified or special rights, privileges or conditions; (iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Continuance; (v) cancel any shares which at the date of the resolution have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled;(vi) subject to applicable regulatory requirements, make provision for the issue and allotment of shares which do not carry any voting rights; and (vii) change the currency denomination of its share capital.

The Company may by special resolution reduce its share capital, any capital redemption reserve fund or any share premium account or other undistributable reserve in any manner authorised and subject to any conditions prescribed by law.

Material differences

The Articles contain similar provisions save and except that the Company may also by ordinary resolution reduce its share premium account in any manner authorised and subject to any conditions prescribed by Cayman laws.

(iii) Transfer of shares

Summary

All transfers of shares must be effected by transfer in writing in the usual or common form or in any other form acceptable to the Board and may be under hand or by means of mechanically imprinted signatures or such other manner as the Board may from time to

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

time approve. An instrument of transfer must be executed by or on behalf of the transferor and by or on behalf of the transferee and the transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register of members in respect of that share.

The Board may, in its absolute discretion, at any time and from time to time transfer any share on the principal register to any branch register or any share on any branch register to the principal register or any other branch register. Unless the Board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor shall shares on any branch register be transferred to the principal register or any other register. All transfers and other documents of title must be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the transfer office in Bermuda.

The Board may in its absolute discretion and without assigning any reason, refuse to register a transfer of any shares (not being fully paid shares) to a person of whom it does not approve or on which the Company has a lien. The Board may also refuse to register a transfer of shares (whether fully paid or not) in favour of more than four persons jointly. If the Board refuses to register a transfer, it will within two months after the date on which the transfer was lodged with the Company send to the transferor and transferee notice of the refusal.

The Board may decline to recognise any instrument of transfer unless the specified fee of up to such sum as the applicable stock exchange may determine to be payable is paid to the Company, the shares are free of any lien in favour of the Company, the instrument of transfer is properly stamped, is in respect of only one class of share and is lodged at the relevant registration or transfer office accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require is provided to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do). Where applicable, the permission of the Bermuda Monetary Authority (“ BMA” ) with respect to the transfer shall be obtained.

The registration of transfers may be suspended and the register may be closed at such times and for such periods as the Board may from time to time determine and either generally or in respect of any class of shares. The register of members shall not be closed for more than 30 days in any year.

Fully paid shares shall be free from any restriction on transfer (except when permitted by the Stock Exchange) and shall also be free from all liens.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

Material differences

The Articles contain similar provisions save and except that the permission of the BMA with respect to any transfer of share shall be obtained where applicable is required under Bermuda laws only.

(iv) Power for the Company to purchase its own shares

Summary

The Company’s power to repurchase its own shares is exercisable by the Board, upon such terms and subject to such conditions as it thinks fit.

Material differences

The Company is empowered by the Companies Law and the Articles to purchase its own shares subject to certain restrictions and the Board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by the Stock Exchange.

The Articles contain a provision stipulated that where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender must be limited to a maximum price determined by the Company in general meeting. If purchases are by tender, tenders must be made available to all shareholders alike.

(v) Power of any subsidiary of the Company to own shares in the Company

Summary

There are no provisions in the New Bye-laws relating to ownership of shares in the Company by a subsidiary.

Material differences

Similarly, the Articles do not contain any such provisions.

(vi) Calls on shares and forfeiture of shares

Summary

The Board may from time to time make such calls as it thinks fit upon the shareholders in respect of any monies unpaid on the shares held by them (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment of such shares made payable at fixed times. A call may be made payable either in one sum or by instalments. If the sum payable in respect of any call or instalment is not

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APPENDIX III

SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

paid on or before the day appointed for payment, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding 20% per annum as the Board shall fix from the day appointed for payment to the time of actual payment, but the Board may waive payment of such interest wholly or in part. The Board may, if it thinks fit, receive from any shareholder willing to advance the same, either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) not exceeding 20% per annum as the Board may decide.

If a shareholder fails to pay any call or instalment of a call on the day appointed for payment, the Board may, for so long as any part of the call or instalment remains unpaid, serve a notice on the shareholder requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment. The notice shall name a further day (not earlier than the expiration of 14 days from the date of the notice) on or before which the payment required by the notice is to be made, and shall also name the place where payment is to be made. The notice shall also state that, in the event of non-payment at or before the appointed time, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a shareholder in respect of the forfeited shares but shall, nevertheless, remain liable to pay to the Company all moneys which, at the date of forfeiture, were payable by him to the Company in respect of the shares together with (if the Board shall in its discretion so require) interest thereon from the date of forfeiture until payment at such rate not exceeding 20% per annum as the Board may prescribe.

Material differences

The Articles contain substantially similar provisions.

(b) Directors

(i) Appointment, retirement and removal

Summary

At each annual general meeting one-third of the Directors for the time being, or if their number is not three or a multiple of three then the number nearest to but not less than

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

one third, shall retire from office by rotation. The Directors to retire in every year shall be those who have been in office longest since their last election but, as between persons who became Directors on the same day, those to retire shall (unless they otherwise agree between themselves) be determined by lot.

No person, other than a retiring Director, shall, unless recommended by the Board for election, be eligible for election to the office of Director at any general meeting, unless notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected has been lodged at the head office or at the registration office of the Company at least seven days before the date of the general meeting.

The number of Directors shall not be less than two. A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for breach of any contract of service between him and the Company). The Company may from time to time in general meeting by ordinary resolution elect any person to be a Director either to fill a casual vacancy or as an addition to the Board.

There is no shareholding qualification for Directors nor is there any specified age limit for Directors.

The Board may from time to time entrust to and confer upon a managing director, joint managing director, deputy managing director or executive director all or any of the powers of the Board that it thinks fit provided that the exercise of all powers by such Director shall be subject to such regulations and restrictions as the Board may from time to time make and impose. The Board may delegate any of its powers to committees consisting of such member or members of its body and such other persons as the Board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall in the exercise of the powers so delegated conform to any regulations that may from time to time be imposed upon it by the Board.

Material differences

The Articles contain substantially similar provisions.

(ii) Power to allot and issue shares

Summary

Without prejudice to any special rights or restrictions for the time being attaching to any shares or any class of shares, any share may be issued upon such terms and conditions and with such preferred, deferred or other special rights, or such restrictions, whether as regards dividend, voting, return of capital or otherwise, as the Company may from time to

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

time by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the Board may determine). Any preference share may, subject to the Companies Act and with the sanction of a special resolution, be issued on terms that it is liable to be redeemed upon the happening of a specified event or upon a given date and either at the option of the Company or, if so authorised by the Memorandum of Continuance, at the option of the holder.

The Board may, subject to the approval by the shareholders in general meeting, issue warrants to subscribe for any class of shares or securities of the Company on such terms as the Board may from time to time determine. Where warrants are issued to bearer, no certificate in respect of such warrants shall be issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt that the original certificate has been destroyed and the Company has received an indemnity in such form as the Board thinks fit with regard to the issue of any such replacement certificate.

All unissued shares in the Company shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and generally on such terms as it shall in its absolute discretion think fit, but so that no shares shall be issued at a discount.

Material differences

The Articles contain similar provisions save and except that the Articles do not contain a provision requiring special resolutions to approve the issuance of preference shares on terms that is liable to be redeemed upon the happening of a specified event or upon a given date.

(iii) Power to dispose of the assets of the Company or any of its subsidiaries

Summary

While there are no specific provisions in the New Bye-laws relating to the disposal of the assets of the Company or any of its subsidiaries, the Board may exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the New Bye-laws or the statutes to be exercised or done by the Company in general meeting.

Material differences

The Articles do not contain any prohibition or restriction on the disposal of the assets of the Company or any of its subsidiaries.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

(iv) Borrowing powers

Summary

Subject to the provisions of the Companies Act, the Board may from time to time at its discretion exercise all the powers of the Company to raise or borrow or to secure the payment of any sum or sums of money for the purposes of the Company and to mortgage or charge its undertaking, property and uncalled capital or any part thereof. The Board may raise or secure the payment or repayment of such sum or sums in such manner and upon such terms and conditions in all respects as it thinks fit and in particular by the issue of debentures, debenture stock, bonds or other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Material differences

The Articles contain substantially similar provisions.

(v) Remuneration

Summary

The Directors shall be entitled to receive by way of remuneration for their services such sum as is from time to time determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is determined) to be divided among the Directors in such proportions and in such manner as the Board may agree or, failing agreement, equally or, in the case of any Director holding office for less than the whole of the relevant period in respect of which the remuneration is paid, pro rata. These provisions shall not apply to a Director who holds any salaried employment or office in the Company except in the case of sums paid in respect of Directors’ fees. The Directors shall also be entitled to be repaid all expenses reasonably incurred by them in the performance of their duties as Directors or otherwise incurred whilst engaged on the business of the Company. The Board may grant special remuneration to any Director who performs any special or extra services to or at the request of the Company. Such special remuneration may be made payable to such Director in addition to or in substitution for his ordinary remuneration as a Director. The remuneration of managing director, joint managing director, deputy managing director or other executive director or a Director appointed to any other office in the management of the Company may be fixed from time to time by the Board and may comprise remuneration and such other benefits and allowances as the Board may from time to time decide. Such remuneration is in addition to his remuneration as a Director.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

The Board also has power to establish and maintain or procure the establishment and maintenance of any contributory or non-contributory pension or superannuation funds for the benefit of, or to give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any persons who are or were at any time in the employment or service of the Company, or of any company which is a subsidiary of the Company or is allied or associated with the Company or with any such subsidiary, or who are or were at any time Directors or officers of the Company or of any such other company and who hold or have held any salaried employment or office in the Company or such other company, and the dependents of any such persons, and may make payments for or towards the insurance of any such persons. Any Director holding any such employment or office is entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument.

Material differences

The Articles contain substantially similar provisions.

(vi) Compensation or payments for loss of office

Summary

Payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

Material differences

The Articles contain substantially similar provisions.

(vii) Loans to Directors

Summary

There are no provisions in the New Bye-laws relating to the making of loans to Directors. However, the Companies Act contains restrictions on companies making loans to their directors.

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APPENDIX III

SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

Material differences

There are provisions in the Articles prohibiting the making of loans to a Director of the Company or to his associates (as defined in the Articles) excepted as permitted under the Companies Law. There are no similar provisions in the New Bye-laws since the Companies Act already contained provisions prohibiting the making of loans to directors without consent of shareholders.

(viii) Financial assistance to acquire shares in the Company

Summary

(a) Subject, where applicable, to the rules of any relevant stock exchange: (i) the Company may in accordance with an employees’ share scheme (as defined in the Companies Act) approved by the shareholders in general meeting provide money on such terms as the Board thinks fit for the acquisition of fully or partly paid shares in the Company or its holding company; and (ii) the Company, the Company’s subsidiary or holding company or a subsidiary of the Company’s holding company may make loans to persons, including Directors and former Directors, employed in good faith by the Company with a view to enabling those persons, to acquire fully or partly paid shares in the Company or its holding company to be held by them by way of beneficial ownership.
(b) The conditions subject to which money and loans are provided may include a provision to the effect that when an employee ceases to be employed by the Company, the shares acquired with such financial assistance shall or may be sold to the Company or such other company on such terms as the Board thinks fit.

Material differences

The Articles contain similar provision save and except that the Articles do not contain provision regarding the treatment of shares acquired with financial assistance.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

(ix) Disclosure of interests in contracts with the Company or any of its subsidiaries

Summary

Subject to the Companies Act, a Director may hold any other office or place of profit with the Company (except that of auditor of the Company) in conjunction with his office of Director for such period and upon such terms as the Board may determine, and may be paid such extra remuneration for that other office or place of profit, in whatever form, as the Board may determine. A Director may be or become a director or other officer of, or be otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested and shall not be liable to account to the Company or the shareholders for any remuneration, profit or other benefit received by him as a director or officer of or from his interest in such other company. The Board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A Director shall not vote or be counted in the quorum on any resolution of the Board concerning his own appointment as the holder of any office or place of profit with the Company or any other company in which the Company is interested (including the arrangement or variation of the terms, or the termination, of such appointment).

Subject to the provisions of the Companies Act, no Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the shareholders for any benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship established by it. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company must declare the nature of his interest at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case at the first meeting of the Board after he knows that he is or has become so interested.

Save as otherwise provided by the New Bye-laws, a Director shall not vote (nor shall he be counted in the quorum) on any resolution of the Board in respect of any contract or arrangement in which he or any of his close associates has a material interest, and if he does so his vote shall not be counted, but this prohibition will not apply to any of the following matters:

(a) the giving of any security or indemnity to the Director or his close associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of the Company or any of its subsidiaries;

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

(b) the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his close associate(s) has/have himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(c) any proposal concerning an offer of shares, debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his close associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(d) any proposal or arrangement concerning the benefit of employees of the Company or its subsidiaries, including, the adoption, modification or operation of either: (i) any employees’ share scheme or any share incentive or share option scheme under which the Director or his close associate(s) may benefit; or (ii) any pension fund or retirement, death or disability benefits scheme which relates to Directors, their close associates and employees of the Company or any of its subsidiaries and does not provide in respect of any Director or his close associate(s) any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and
(e) any contract or arrangement in which the Director or his close associate(s) is/are interested in the same manner as other holders of shares, debentures or other securities of the Company by virtue only of his/their interest in those shares, debentures or other securities.

Material differences

The Articles contain similar provisions.

(c) Alterations to the constitutional documents and the Company’s name

Summary

The Memorandum of Continuance may, with the consent of the Minister of Finance of Bermuda (if required), be altered by the Company in general meeting. The New Bye-laws may be amended by the Directors subject to the approval of the Company in general meeting. The New Bye-laws state that a special resolution is required to alter the Memorandum of Continuance, to approve any amendment of the New Bye-laws or to change the name of the Company.

Material differences

Under the Articles, any alteration to the Memorandum and the Articles only requires the sanction of a special resolution of the Company.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

(d) Meetings of shareholders

(i) Special resolutions

Summary

A special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast of such shareholders as, being entitled so to do, vote in person or, where a corporate representative is allowed, by a duly authorised corporate representative or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given.

Material differences

The definition of special resolution under the Articles is similar.

(ii) Voting rights and right to demand a poll

Summary

Subject to any special rights, privileges or restrictions as to voting for the time being attached to any class or classes of shares, at any general meeting: (a) on a poll, every shareholder present in person or by a duly authorised corporate representative or by proxy shall have one vote for every share of which he is the holder which is fully paid up or credited as fully paid (but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share); and (b) on a show of hands every shareholder who is present in person or by a duly authorised corporate representative or by proxy shall have one vote. On a poll, a shareholder entitled to more than one vote need not use all his votes or cast all the votes in the same way.

At any general meeting a resolution put to the vote of the meeting shall be decided by poll save that the chairman of the meeting may, pursuant to the Listing Rules, allow a resolution to be voted on by a show of hands. Where a show of hands is allowed, before or on the declaration of the result of the show of hands, a poll may be demanded by (in each case by shareholders present in person or by proxy or by a duly authorised corporate representative): (i) at least three shareholders for the time being entitled to vote at the meeting; or (ii) any shareholder or shareholders representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the meeting; or (iii) a shareholder or shareholders holding shares in the Company conferring a right to vote at the meeting on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

Where a shareholder is a recognised clearing house within the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), it may appoint such person or persons as it thinks fit to act as its proxy or proxies or as its corporate representative or representatives, to the extent permitted by the Companies Act, at any shareholders’ general meeting or any meeting of any class of shareholders, provided that if more than one proxy or corporate representative is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy or corporate representative is to be appointed. The number of persons a clearing house may appoint to act as its corporate representative or representatives shall not exceed the number of shares held by the clearing house (or its nominee), being shares in respect of which there is an entitlement to attend and vote at the relevant meeting.

Material differences

The Articles contain similar provisions.

(iii) Annual general meetings

Summary

An annual general meeting must be held once in every financial year.

Material differences

Under the Articles, the Company must hold a general meeting as its annual general meeting each year and not more than fifteen (15) months shall elapse between the date of one annual general meeting and the next. The relevant provisions of the New Bye-laws conform with the latest GEM Listing Rules regarding the core shareholders’ protection standard set out in Appendix 3 of the GEM Listing Rules that came into effect on 1 January 2022.

(iv) Notices of meetings and business to be conducted

Summary

An annual general meeting of the Company shall be called by at least 21 days’ notice in writing and any other general meeting shall be called by at least 14 days’ notice in writing (in each case exclusive of the day on which the notice is served or deemed to be served and of the day for which it is given). The notice shall specify the place, the day and the hour of meeting and, in the case of special business, the general nature of that business.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

Any notice or document to be given to or by any person pursuant to the New Bye-laws may be served on or delivered to any shareholder of the Company personally, by post to such shareholder’s registered address or (other than share certificates) by advertisement in at least one English language newspaper and one Chinese language newspaper circulating generally in Hong Kong. Subject to the applicable laws of Bermuda and any rules prescribed by the Stock Exchange from time to time, a notice or document may be served or delivered by the Company to any shareholder by electronic means.

Material differences

The Articles contain substantially similar provisions.

(v) Quorum for meetings and separate class meetings

Summary

The quorum for a general meeting shall be two shareholders present in person or by a duly authorised corporate representative or by proxy and entitled to vote. In respect of a separate class meeting convened to sanction the modification of class rights, the necessary quorum shall be two persons holding or representing by proxy or by a duly authorised corporate representative one-third in nominal value of the issued shares of that class.

Material differences

The Articles contain similar provisions.

(vi) Proxies

Summary

Any shareholder of the Company entitled to attend and vote at a meeting of the Company or a meeting of the holders of any class of shares in the Company is entitled to appoint another person as his proxy to attend and vote instead of him. Votes, whether on a show of hands or on a poll, may be given either personally or by a duly authorised corporate representative or by proxy. A shareholder holding two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal or under the hand of a duly authorised officer or attorney.

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APPENDIX III

SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

The instrument appointing a proxy to vote at a general meeting shall: (i) be deemed to confer authority upon the proxy to demand or join in demanding a poll and to vote on any resolution (or an amendment to any resolution) put to the meeting for which it is given as the proxy thinks fit; and (ii) unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates. Any form issued to a shareholder for appointing a proxy to attend and vote at a special general meeting or at an annual general meeting at which any business is to be transacted shall be such as to enable the shareholder, according to his intentions, to instruct the proxy to vote in favour of or against (or, in default of instructions, to exercise his discretion in respect of) each resolution dealing with any such business.

A proxy or proxies representing either an individual shareholder or a shareholder which is a corporation shall be entitled to exercise the same powers on behalf of the shareholder which he or they represent as such shareholder could exercise, including the right to vote individually on a show of hands.

Material differences

The Articles contain substantially similar provisions.

(e) Accounts and audit

Summary

The Board shall cause true accounts to be kept of the sums of money received and expended by the Company, the property, assets, credits and liabilities of the Company and all other matters required by the Companies Act affecting the Company or necessary to give a true and fair view of the state of the Company’s affairs and to show and explain its transactions.

The books of account are to be kept at the head office or at such other place as the Board thinks fit and shall always be open to the inspection of the Directors provided that such records as are required by the Companies Act shall also be kept at the registered office. No shareholder (not being a Director) or other person has any right to inspect any account, book or document of the Company except as conferred by the Companies Act or ordered by a court of competent jurisdiction or authorised by the Board or the Company in general meeting.

The Board shall from time to time cause to be prepared and laid before the Company at its annual general meeting such profit and loss accounts, balance sheets, group accounts (if any) and reports as are required by the Companies Act. Every balance sheet of the Company shall be signed on behalf of the Board by two Directors and a copy of every balance sheet (including every document required by law to be comprised therein or attached or annexed thereto) and profit and loss account which is to be laid before the Company at its annual general meeting, together with a copy of the Directors’ report and a copy of the auditors’ report, shall not less than 21 days before the date of the meeting be sent to every shareholder of, and every holder of debentures of, the Company and every other person entitled to receive notices of general

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

meetings of the Company under the Companies Act or the New Bye-laws. If all or any of the shares or debentures of the Company are for the time being (with the consent of the Company) listed or dealt in on any stock exchange, there shall be forwarded to the appropriate officer of such stock exchange such number of copies of such documents as are for the time being required under its regulations or practice.

Auditors shall be appointed and their duties regulated in accordance with the Companies Act. Subject as otherwise provided by the Companies Act, the remuneration of the auditors shall be fixed by or on the authority of the Company at each annual general meeting but, in respect of any particular year, the Company in general meeting may delegate the fixing of such remuneration to the Board.

Material differences

The Articles contain similar provisions. However, there is no requirement to keep the book of account at the Company’s registered office.

(f) Dividends and other methods of distribution

Summary

The Company in general meeting may declare dividends in any currency but no dividends shall exceed the amount recommended by the Board.

Unless and to the extent that the rights attached to any shares or the terms of their issue otherwise provide, all dividends shall be apportioned and paid pro rata according to the amounts paid or credited as paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. No amount paid upon a share in advance of calls will for this purpose be treated as paid up on the shares. The Board may retain any dividends or other moneys payable on or in respect of a share upon which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. The Board may deduct from any dividend or bonus payable to any shareholder all sums of money (if any) presently payable by him to the Company on account of calls, instalments or otherwise.

Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the Board may further resolve either: (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled to such dividend will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment; or (b) that the shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board thinks

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

fit. The Company may also, upon the recommendation of the Board, by a special resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

The Board may, if it thinks fit, receive from any shareholder willing to advance the same, and either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the moneys so advanced may pay interest at such rate (if any) not exceeding 20% per annum, as the Board may decide but a payment in advance of a call shall not entitle the shareholder to receive any dividend subsequently declared or to exercise any other rights or privileges as a shareholder in respect of the share or the due portion of the shares upon which payment has been advanced by such shareholder before it is called up.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise used by the Board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the Board and shall revert to the Company.

The Company may exercise the power to cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants have been left uncashed on two consecutive occasions or after the first occasion on which such a cheque or warrant is returned undelivered.

Material differences

The Articles contain substantially similar provisions save and except that dividend must be paid out of profits and reserves lawfully available for distribution including share premium and there is no reference to contributed surplus which is distributable under the laws of Bermuda only. The relevant provisions in the Articles and Bye-laws are different as there are differences in the laws of Cayman Islands and Bermuda regarding the declaration and distribution of dividends. Under the Companies Law, dividends may only distribute from profits and reserves lawfully available for distribution including share premium. Under the Companies Act, in addition to these sources of funds, a Bermuda company can also make a distribution out of contributed surplus account.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

(g) Inspection of register of members

Summary

Except when the register of members is closed, any shareholder may inspect during business hours any register of members maintained in Hong Kong without charge.

Material differences

The Articles contain similar provision.

(h) Rights of the minorities in relation to fraud or oppression

Summary

There are no provisions in the New Bye-laws relating to rights of minority members in relation to fraud or oppression. However, Bermuda company law provides for protection of minorities.

Material differences

The Articles contain no provisions specifically dealing with such rights of minority Shareholders.

(i) Procedures on liquidation

Summary

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

If the Company is wound up, the surplus assets remaining after payment to all creditors are to be divided among the shareholders in proportion to the capital paid up on the shares held by them respectively, and if such surplus assets are insufficient to repay the whole of the paid up capital, they are to be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid up on the shares held by them respectively, all subject to the rights of any shares issued on special terms and conditions.

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APPENDIX III SUMMARY OF THE MEMORANDUM OF CONTINUANCE AND THE NEW BYE-LAWS AND DIFFERENCES WITH THE MEMORANDUM AND THE ARTICLES

If the Company is wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the sanction of a special resolution, divide among the shareholders in specie or kind the whole or any part of the assets of the Company and whether the assets consist of property of one kind or different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be so divided and may determine how such division is to be carried out as between the shareholders or different classes of shareholders and the shareholders within each class. The liquidator may, with like sanction, vest any part of the assets in trustees upon such trusts for the benefit of shareholders as the liquidator thinks fit, but so that no shareholder shall be compelled to accept any shares or other assets upon which there is a liability.

Material differences

The Articles contain similar provisions.

(j) Untraceable shareholders

Summary

The Company shall have the power to sell, in such manner as the Board thinks fit, any shares of a shareholder who is untraceable, but no such sale shall be made unless:

(i) all cheques or warrants, being not less than three in total number, for any sum payable in cash to the holder of such shares in respect of them sent during the relevant period in the manner authorised by the New Bye-Laws of the Company have remained uncashed;
(ii) so far as it is aware at the end of the relevant period, the Company has not at any time during the relevant period received any indication of the existence of the shareholder who is the holder of such shares or of a person entitled to such shares by death, bankruptcy or operation of law;
(iii) the Company has caused an advertisement to be inserted in the newspapers of its intention to sell such shares and a period of three months has elapsed since the date of such advertisement; and
(iv) the Company has notified the relevant stock exchange of its intention to effect such sale.

Material differences

The Articles contain similar provisions.

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GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, 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 circular 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 circular misleading.

2. NUMBER OF SHARES IN ISSUE

The share capital of the Company as at the Latest Practicable Date and following the completion of the Rights Issue was and will be as follows:

As at the Latest Practicable Date:

Issued and fully paid share capital 810,250,000 Shares

Immediately after completion of the Rights Issue:

Rights Shares to be issued 1,215,375,000 Adjusted Shares

Adjusted Shares in issue upon completion of the Rights Issue 2,025,625,000 Adjusted Shares

All the existing Shares in issue are fully-paid and rank pari passu in all respects including all rights as to dividends, voting and return of capital. The Rights Shares, when allotted, issued and fully-paid, shall rank pari passu in all respects with the Adjusted Shares then in issue. Holders of the Rights Shares in their fully-paid form will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares in their fully-paid form.

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

The Company did not have any options outstanding under any share option scheme of the Company or any other derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares as at the Latest Practicable Date.

As at the Latest Practicable Date, there was no arrangement under which future dividends are waived or agreed to be waived.

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3. DISCLOSURE OF INTERESTS

(i) Interests and/or short positions of Directors in the Shares, underlying Shares or debentures of the Company and its associated corporations

As at the Latest Practicable Date, the Directors have the following interests and/or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV the SFO) which have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) or which are required pursuant to section 352 of the SFO to be entered in the register referred to therein, or pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors, are required to be notified to the Company and the Stock Exchange once the Shares are listed:

(a) Interests in the Company

			Percentage of
		Number of	interest in the
Name of Director	Capacity	Shares	Company
Mr. James Lu (Note)	Interest of spouse/Family	407,600,000	50.31%
	interest
Ms. Li (Note)	Interest in controlled	407,600,000	50.31%
	corporation/ Corporate
	interest

Note: These Shares are held by Strong Day. Strong Day is 29.9% owned by Ms. Li, an executive Director and the spouse of Mr. James Lu. By virtue of the SFO, Ms. Li is deemed to be interested in the Shares of the Company held by Strong Day and Mr. James Lu, being the spouse of Ms. Li, is deemed to be interested in the Shares deemed to be held by Ms. Li. Mr. James Lu is also a director of Strong Day.

(b) Interest in associated corporation of the Company

	Name of			Percentage of
	associated		Number of	interest in the
Name of Director	corporation	Capacity	Shares	Company
Ms. Li	Strong Day	Beneficial owner/	299	29.90%
		Personal interest

Save as disclosed above, as at the Latest Practicable Date, none of the Directors have any interests and/or short position in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including

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APPENDIX IV

interests and short positions which they are taken or deemed to have under such provisions of the SFO) or which are required pursuant to section 352 of the SFO to be entered in the register referred to therein or pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors.

(ii) Interests and/or short position of substantial shareholders in the Shares which are discloseable under Divisions 2 and 3 of Part XV of the SFO

So far as is known to the Directors, as at the Latest Practicable Date, the following persons (not being a Director or chief executive of the Company) have an interest or a short position in the Shares or underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or are interested in 10% or more of the total number of issued Shares of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

			Percentage of
Name of substantial		Number of	interest in the
shareholder	Capacity	Shares	Company
Strong Day (Note)	Beneficial owner/Personal	407,600,000	50.31%
	interest
Excel Precise International	Person having a security	407,600,000	50.31%
Limited (“Excel	interest in Shares/Others
Precise”) (Note)
True Promise Investments	Interest in controlled	407,600,000	50.31%
Limited (“True	corporation/ Corporate
Promise”) (Note)	interest
Mr. Law Fei Shing	Interest in controlled	407,600,000	50.31%
(“Mr. Law”) (Note)	corporation/ Corporate
	interest
Mr. Wong Man Hin Max	Beneficial owner	171,550,000	21.17%

Note: These Shares are held by Strong Day. Excel Precise is the lender of record which has direct interest in the Shares pledged by Strong Day. Excel Precise is owned as to 73.50% by True Promise and 25% by Mr. Law. True Promise is wholly owned by Mr. Law. By virtue of the SFO, True Promise and Mr. Law are deemed to be interested in the Shares of the Company pledged to Excel Precise.

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, there are no other person (not being a Director or chief executive of the Company) who have an interest or a short position in the Shares or underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or are interested in 10% or more of the voting power at general meetings or any other members of the Group.

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APPENDIX IV

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associates (as defined under the GEM Listing Rules) had any interests in any business which competed or might compete with the business of the Group.

5. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

None of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors has or had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2021, being the date to which the latest published audited consolidated accounts of the Group were made up.

6. DIRECTORS’ SERVICE CONTRACTS

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

7. LITIGATION

Neither the Company nor any other member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any other member of the Group as at the Latest Practicable Date.

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into under the ordinary course of business of the Group) have been entered into by the Company within the two years immediately preceding the Latest Practicable Date and are or may be material:

(i) the loan agreement (the “ Loan Agreement ”) dated 1 July 2020 entered into between Shanghai Aie Vegetables Cultivation Specialty Cooperative (上海愛娥蔬菜種植專業合作社) (the “ Borrower ”) and Shanghai Aie Agriculture Technology Company Limited (上海愛娥農業科技有限責任公司) (the “ Lender ”), an indirect non-wholly owned subsidiary of the Company, in respect of the provision of a loan (the “ Loan ”) in the principal amount of RMB13,000,000 for a period of 24 months commencing from the date of the Loan Agreement. The Loan is interest-bearing at the rate of 4.785% per annum and is payable on an annual basis;

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APPENDIX IV

(ii) in connection with the Loan Agreement, on 1 July 2020, the Borrower as pledgor and the Lender as pledgee entered into (a) an accounts receivable pledge agreement in relation to the pledge of any and all of the Borrower’s existing and future accounts receivables and all their related interests; and (b) a floating charge agreement in relation to the charge of all production equipment, raw materials, semi-finished products and finished products owned by the Borrower, to secure the obligations of the Borrower under the Loan Agreement;
(iii) in connection with the Loan Agreement, on 1 July 2020, the shareholders of the Borrower as pledgors entered into an equity pledge agreement in favour of the Lender as pledgee, in relation to the pledge of the entire equity interest of the Borrower held by the shareholders of the Borrower, to secure the obligations of the Borrower under the Loan Agreement; and
(iv) the Underwriting Agreement.

9. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given their opinions, letters or advices which are contained in this circular:

Name Qualifications Yongtuo Fuson CPA Limited Certified Public Accountants Opus Capital a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the Independent Financial Adviser

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, advice or report, as the case may be, and reference to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of the above experts had any shareholding in any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, none of the above experts had any direct or indirect interest in any assets which had been, since 31 March 2021 (the date to which the latest published audited 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.

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GENERAL INFORMATION

APPENDIX IV

10. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

Registered office of the	Windward 3, Regatta Office Park
Company:	PO Box 1350, Grand Cayman KY1-1108
	Cayman Islands
Head office and principal	Suites 1701-3, 17th Floor
place of business of the	Chinachem Hollywood Centre
Company in Hong Kong	1,3,5,7,9,11 and 13 Hollywood Road
	Central, Hong Kong
Underwriter:	Canfield Securities Company Limited
	Unit 4201-05, COSCO Tower
	183 Queen’s Road Central
	Hong Kong
Legal adviser to the Company	HANS
as to the Rights Issue:	Room 802, 8/F., LKF29
	29 Wyndham Street
	Central, Hong Kong
Legal adviser to the Company	Appleby
as to Cayman Islands and	Suites 4201-03 & 12, 42/F
Bermuda laws:	One Island East, Taikoo Place
	18 Westlands Road
	Quarry Bay, Hong Kong
Share registrar and transfer	Boardroom Share Registrars (HK) Limited
office:	Room 2103B, 21/F
	148 Electric Road
	North Point, Hong Kong
Financial adviser to Company:	Rainbow Capital (HK) Limited
	Room 5B, 12/F, Tung Ning Building
	No. 2 Hillier Street
	Sheung Wan, Hong Kong
Independent Financial Adviser	Opus Capital Limited
to the Independent Board	18/F Fung House
Committee and the	19-20 Connaught Road Central
Independent Shareholders	Central, Hong Kong
Auditors:	PricewaterhouseCoopers
	(Certified Public Accountants)
	Registered Public Interest Entity Auditor
	22/F, Prince’s Building
	Central
	Hong Kong

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APPENDIX IV

Reporting accountants: Yongtuo Fuson CPA Limited (Certified Public Accountants) Unit 1020 on 10th Floor Tower B, Mandarin Plaza No. 14 Science Museum Road Tsim Sha Tsui East, Kowloon Hong Kong Principal bankers: The Hongkong and Shanghai Banking Corporation Limited HSBC Main Building 1 Queen’s Road Central Central Hong Kong Company secretary Ms. Cheng Lucy 31/F 148 Electric Road North Point, Hong Kong Authorised representatives Mr. James Lu Suites 1701-3, 17th Floor Chinachem Hollywood Centre 1,3,5,7,9,11 and 13 Hollywood Road Central, Hong Kong Ms. Cheng Lucy 31/F 148 Electric Road North Point, Hong Kong

11. PARTICULARS OF DIRECTORS AND SENIOR MANAGEMENT

Executive Directors

Mr. James Lu, aged 40, was appointed as an executive Director, the chairman of the Board and chief executive officer of the Company on 12 December 2018. He is the chairman of the nomination committee of the Board. Mr. James Lu is also a director of various subsidiaries of the Company. Mr. James Lu is a founding partner of Joffre Capital Limited, a technology buyout fund with multi-billion dollars under management and presence across United States (the “ U.S. ”), Europe and Asia; and Longview Capital LLC, a U.S. based real estate management company. He has years of experience working in technology, media and internet industries, and previously served as a vice president at Baidu, Inc., founder and general manager of Amazon Marketing Services, founding team member of chegg.com. Mr. James Lu held a number of senior management positions in real estate, internet and e-commerce companies both in China and the U.S., responsible for business operation and investment. Mr. James Lu graduated from the University of Michigan with a master’s degree in electrical engineering and computer science. Mr. James Lu is a director of Strong Day, a substantial shareholder of the Company within the meaning of Part XV of the SFO. Mr. James Lu is the spouse of Ms. Li, an executive Director.

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APPENDIX IV

Mr. Long Hai (“Mr. Long”) , aged 37, was appointed as an executive Director on 12 December 2018. He is also a member of the remuneration committee of the Board and the compliance officer of the Company. Mr. Long is a certified public accountant in the PRC and has over 10 years of work experience in the financial sector. He previously served as head of the finance department of Sichuan Shengtian New Energy Development Co. Ltd and as a project manager in ShineWing Certified Public Accountants (Special General Partnership), an accounting firm based in the PRC, where he was involved in initial public offerings, audit, mergers and acquisitions, due diligence and management consulting projects for listed companies, large and medium-sized state-owned enterprises, and private enterprises. Mr. Long graduated from Sichuan Normal University with a bachelor’s degree in accounting.

Ms. Li , aged 36, was appointed as an executive Director on 24 July 2020. She is the spouse of Mr. James Lu, the chairman, an executive Director and the chief executive officer of the Company. She is currently the chief financial officer of a U.S. based investment management company. Ms. Li previously served as an assistant merchandiser of Eddie Bauer and H. Stern, and held facilities engineer role with Chevron. She is a seasoned investor with about 10 years’ experience in the investment industry, covering venture capital, fixed income and stock trading and has over 8 years’ experience in the financial sector. Ms. Li graduated from University of Michigan with a bachelor’s degree in civil engineering.

Independent Non-executive Directors

Mr. Lu Cheng (“Mr. Lu”) , aged 39, was appointed as an independent non-executive Director on 12 December 2018. He is also the chairman of the remuneration committee and a member of each of the audit committee and the nomination committee of the Board. Mr. Lu has over 13 years of investment management experience in the U.S., the PRC, Asia and Europe. He is currently the chief operating officer of KCA Capital Partners, an investment management firm with offices in Singapore, Beijing and Seoul and which is engaged in private equity investments. KCA Capital Partners is a subsidiary of China International Capital Corporation Limited. Mr. Lu previously held management roles with HOPU Investments Management Company Limited and CITIC Capital Holdings Limited, and commenced his career in investment banking with Citigroup in New York. Mr. Lu received his master’s degree in business administration from Harvard Business School, and also holds a bachelor of science degree in computer science and economics from the University of Virginia.

Mr. Shi Kangping (“Mr. Shi”) , aged 45, was appointed as an independent non-executive Director on 12 December 2018. He is also the chairman of the audit committee and a member of the nomination committee of the Board. Mr. Shi has over 20 years of experience in the accounting and finance sector. He is currently the chief financial officer of Waterdrop Corporation (stock code: WDH), a listed company on The New York Stock Exchange. Among which, Mr. Shi served as the chief financial officer from February 2018 to November 2020 at Maoyan Entertainment, a company listed on the Stock Exchange (stock code: 1896), which is engaged in media and entertainment and related business. Mr. Shi previously served as chief financial officer from December 2016 to December 2017 at Ping An Healthcare and Technology Company Limited, a company listed on the Stock Exchange (stock code: 1833), as director of internal audit and director of financial planning and analysis in Baidu from September 2011 to August 2014 and August 2014 to December 2016, respectively. He also held previous roles in the Microsoft Corporation, a company listed on the NASDAQ (stock symbol: MSFT) from July 2007 to September 2011, the transaction services department of PricewaterhouseCoopers LLP (Beijing) from January 2002 to July 2005, and the auditing department

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APPENDIX IV

of Arthur Andersen LLP from July 1998 to September 2000. Mr. Shi received a bachelor’s degree in accounting from the School of Economics and Management at Tsinghua University in Beijing, the PRC in July 1998, and a master’s degree in business administration from Ross School of Business at the University of Michigan in Michigan, the U.S. in April 2007. Mr. Shi has been a chartered professional accountant of Canada since August 2000.

Mr. Kim Jin Tae (“Mr. Kim”) , aged 41, was appointed as an independent non-executive Director on 14 April 2020. He is also a member of each the audit committee and the remuneration committee of the Board. Mr. Kim has been the chief executive officer of the PJ Design Beijing Office since 2014, after graduation of Master of Business Administration program in Beijing University (北大國家發展研究院) in 2012. PJ Design Group is a branding and interior design firm, established in 1987 with the operations in Seoul, Korea, Beijing and Shanghai, China. Mr. Kim spent 7 years at Mirae Asset Daewoo Investment Group from 2003 to 2009 and 3 years at Towers Watson from 2010 to 2012 in Seoul, Korea. He graduated from Northeastern University in the United States of America in 2003 with a bachelor’s degree in accounting and finance.

12. AUDIT COMMITTEE

The Company established an audit committee (“ Audit Committee ”) with written terms of reference in accordance with Rules 5.28 to 5.33 of the GEM Listing Rules and the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules. The Audit Committee members as at the Latest Practicable Date were the independent non-executive Directors of the Company. The primary duties of the Audit Committee are mainly to make recommendations to the Board on the appointment, re-appointment and removal of external auditor; review and supervise the financial reporting process and internal control procedures of the Company.

The responsibility of the Audit Committee is to assist the Board in fulfilling its audit duties through the review and supervision of the Company’s financial reporting system and internal control procedures. It reports to the Board and has held regular meetings to review and make recommendations to improve the Group’s financial reporting process and internal controls. The Audit Committee was also delegated the authority and responsibility to review the Company’s risk management and internal control systems and to make recommendations to the Board.

13. EXPENSES

The expenses in connection with the Rights Issue, including underwriting commission, financial advising fees, printing, registration, translation, legal and accounting fees are estimated to be approximately HK$2.4 million and are payable by the Company.

14. DOCUMENTS ON DISPLAY

Pursuant to paragraph 42 of Appendix 1B to the GEM Listing Rules, the issuer shall set out in the listing document the details of a reasonable period of time (being not less than 14 days) during which the documents as required under the paragraph are published on the Stock Exchange’s website and the issuer’s own website.

−IV-9 −

GENERAL INFORMATION

APPENDIX IV

Accordingly, copies of the following documents will be published on the websites of the Company (https://www.lifeconcepts.com/) and the Stock Exchange (www.hkexnews.hk) during a period of 14 days from the date of this circular (both days inclusive):

(i) the Memorandum and Articles;
(ii) the material contracts referred to in the section headed “Material Contracts” in this appendix;
(iii) the annual reports of the Company for the financial years ended 31 March 2019, 2020 and 2021;
(iv) the first quarterly report of the Company for the three months ended 30 June 2021;
(v) the interim report of the Company for the six months ended 30 September 2021;
(vi) the third quarterly report of the Company for the nine months ended 31 December 2021;
(vii) the letter from the Board, the text of which is set out on pages 13 to 38 of this circular;
(viii) the letter from the Independent Board Committee, the text of which is set out on pages 39 to 40 of this circular;
(ix) the letter from the Independent Financial Adviser, the text of which is set out on pages 41 to 65 of this circular;
(x) the report from Yongtuo Fuson CPA Limited in respect of the unaudited pro forma financial information of the Group, the text of which as set out in appendix II of this circular;
(xi) the written consents referred to in the paragraph under the heading “Experts and Consents” in this appendix; and
(xii) this circular.

15. MISCELLANEOUS

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

For identification purpose only. The Chinese name has been translated in English in this circular. In the event of any discrepancies between the Chinese name and the English translation, the Chinese name prevails.

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NOTICE OF EGM

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L I F E C O N C E P T S Life Concepts Holdings Limited 生活概念控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8056)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ EGM ”) of Life Concepts Holdings Limited (the “ Company ”) will be held at A505, Parkview Green, No. 9 Dongdaqiao Road, Chaoyang District, Beijing, the People’s Republic of China on Monday, 1 August 2022 at 10:00 a.m. for the purposes of considering the following resolutions of the Company:

SPECIAL RESOLUTIONS

“ THAT:
(i) subject to obtaining all necessary governmental and regulatory consents, the change of the domicile of the Company (the “ Change of Domicile ”) from the Cayman Islands to Bermuda by way of de-registration as a company under the laws of the Cayman Islands and continuation of the Company as an exempted company under the laws of Bermuda be and is hereby approved;
(ii) conditional upon the continuance of the Company in Bermuda as an exempted company under the laws of Bermuda, the memorandum of continuance (a copy of which has been produced to the EGM marked “A” and signed by the chairman of the EGM for the purpose of identification) be and is hereby adopted in substitution for the existing memorandum of association of the Company, effective from the date that the memorandum of continuance is approved and registered by the Registrar of Companies in Bermuda;
(iii) conditional upon the continuance of the Company in Bermuda as an exempted company under the laws of Bermuda, the bye-laws of the Company (a copy of which has been produced to the EGM marked “B” and signed by the chairman of the EGM for the purpose of identification) be and is hereby adopted in substitution for the existing articles of association of the Company, effective from the date that the memorandum of continuance is approved and registered by the Registrar of Companies in Bermuda;

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NOTICE OF EGM

(iv) conditional upon the continuance of the Company in Bermuda as an exempted company under the laws of Bermuda, the maximum number of directors of the Company (the “ Directors ”) shall, for the time being, be fixed at twenty (20) and the Directors be and are hereby authorised to fill any vacancies on the board of Directors and to appoint additional Directors up to the maximum number determined herein or such other maximum number as may be determined from time to time by members of the Company in general meeting and to appoint alternate Directors at their discretion; and
(v) any one Director be and is hereby authorised to do all such acts and things and execute all such documents on behalf of the Company, including under seal where applicable, as they may consider necessary or expedient to give effect to or in connection with the implementation of the Change of Domicile.”
“ THAT subject to the passing of special resolution numbered 1 above, the Change of Domicile (as defined in special resolution numbered 1 above) becoming effective and compliance with the requirements of Section 46(2) of the Companies Act 1981 (as amended) of Bermuda:
(i) the entire amount standing to the credit of the share premium account of the Company as at the day of passing this resolution be reduced to nil and transferred to an account designated as the contributed surplus account of the Company (the “ Reduction of Share Premium Account ”);
(ii) the account designated as the contributed surplus account of the Company shall be the contributed surplus account of the Company within the meaning of the Companies Act 1981 (as amended) of Bermuda (the “ Contributed Surplus Account ”) upon the Change of Domicile (as defined in special resolution numbered 1 above) becoming effective and the amount standing to the credit of such designated account shall continue to stand to the credit of the Contributed Surplus Account upon the Change of Domicile becoming effective; and
(iii) any one Director be and is hereby authorised to do all such acts and things and execute all such documents on behalf of the Company, including under seal where applicable, as they may consider necessary or expedient to give effect to or in connection with the Reduction of Share Premium Account.”
“ THAT subject to (i) the passing of special resolution numbered 1 above, (ii) the Change of Domicile (as defined in special resolution numbered 1 above) becoming effective; (iii) The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the Adjusted Shares (as defined below) to be issued upon the Capital Reorganisation (as defined below) becoming effective and the Adjusted Shares (as defined below) which may fall to be allotted and issued upon exercise of the share options outstanding and to be granted under the share option scheme of the Company; and (iv) compliance with the requirements of Section 46(2) of the Companies Act 1981 (as amended) of Bermuda, with effect from the 21st day (if it is not a business day, the immediately following business day) (Hong Kong time) after the effective date of the Change of Domicile:

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NOTICE OF EGM

(i) the issued share capital of the Company be reduced through a cancellation of the paid-up capital of the Company to the extent of US$0.009 on each of the then issued shares (the “ Capital Reduction ”) such that the nominal value of each issued share be and is reduced from US$0.01 (each such issued share, a “ Share ”) to US$0.001 (each such reduced Share, an “ Adjusted Share ”);
(ii) subject to and forthwith upon the Capital Reduction taking effect, each of the authorised but unissued Shares of US$0.01 each be sub-divided into 10 Adjusted Shares of US$0.001 each (the “ Share Subdivision ”, together with the Capital Reduction, the “ Capital Reorganisation ”);
(iii) the credits arising from the Capital Reduction be transferred to the Contributed Surplus Account (as defined in special resolution numbered 2 above);
(iv) the amount as may from time to time standing to the credit of the Contributed Surplus Account be applied to set off the accumulated losses of the Company from time to time by the amount of such credit or be applied in any other manner as may be permitted under the bye-laws of the Company and all applicable laws of Bermuda (including paying dividend or making any other distribution out of the Contributed Surplus Account) from time to time without further authorisation from the shareholders of the Company and all such actions in relation thereto be approved, ratified and confirmed; and
(v) any one Director be and is hereby authorised to do all such acts and things and execute all such documents on behalf of the Company, including under seal where applicable, as they may consider necessary or expedient to give effect to or in connection with the Capital Reorganisation.”

ORDINARY RESOLUTION

“ THAT conditional upon: (i) The Stock Exchange of Hong Kong Limited granting or agreeing to grant (subject to allotment) and not having revoked the listing of and permission to deal in the Rights Shares (as defined below) to be allotted and issued to the shareholders of the Company (the “ Shareholder(s) ”) pursuant to the terms and conditions of the Rights Issue (as defined below); and (ii) the Underwriting Agreement (as defined below) becoming unconditional and not being terminated in accordance with its terms:

(a) the issue by way of rights issue (the “ Rights Issue ”) of up to 1,215,375,000 ordinary shares (the “ Rights Share(s) ”) at the subscription price of HK$0.04 per Rights Share to the qualifying shareholders (the “ Qualifying Shareholders ”) of the Company whose names appear on the date (the “ Record Date ”) by reference to which entitlement under the Rights Issue will be determined (other than those shareholders (the “ Excluded Shareholders ”) with registered addresses outside Hong Kong whom the Directors, after making relevant enquiry, consider their exclusion from the Rights Issue to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place) in the

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NOTICE OF EGM

proportion of three (3) Rights Shares for every two (2) existing shares of the Company then held on the Record Date at the subscription price of HK$0.04 per Rights Share and otherwise on the terms and conditions set out in the Circular be and is hereby approved;

(b) the underwriting agreement (the “ Underwriting Agreement ”) dated 28 April 2022 and entered into between the Company and Canfield Securities Company Limited (a copy of which has been produced to the EGM marked “B” and signed by the chairman of the EGM for the purpose of identification) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(c) the Directors be and are hereby authorised to allot and issue the Rights Shares pursuant to the Rights Issue notwithstanding the same may be offered, allotted or issued otherwise than pro-rata to the Qualifying Shareholders and, in particular, the Directors may (i) make such exclusions or other arrangements in relation to the Excluded Shareholders as they may deem necessary, desirable or expedient having regard to any restrictions or obligations under the articles of association of the Company or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong; and (ii) offer for application under forms of excess application for any Rights Shares provisionally allotted but not accepted, and to do all such acts and things as they consider necessary, desirable or expedient to give effect to any or all other transactions contemplated in this resolution; and
(d) the Directors be and are hereby authorised to sign or execute such documents and do all such acts and things in connection with the allotment and issue of the Rights Shares, the implementation of the Rights Issue and the Underwriting Agreement, the exercise or enforcement of any of the Company’s rights under the Underwriting Agreement and to make and agree to make such variations of the terms of the Underwriting Agreement as they may in their discretion consider to be appropriate, necessary, desirable or expedient to carry out, to give effect to or in connection with the Rights Issue or any transaction contemplated thereunder.”

By order of the Board Life Concepts Holdings Limited James Fu Bin Lu Chairman, Executive Director and Chief Executive Officer

Hong Kong, 28 June 2022

Registered Office and Principal Place of Business in Hong Kong: Suites 1701-3, 17th Floor Chinachem Hollywood Centre 1,3,5,7,9,11 and 13 Hollywood Road Central, Hong Kong

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NOTICE OF EGM

Notes:

Any member of the Company entitled to attend and vote at the EGM shall be entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A member who is the holder of two or more Shares may appoint more than one proxy. A proxy need not be a member of the Company. Completion and return of a form of proxy will not preclude a member of the Company from attending the GM and voting in person should he/she so wish. In such event, his/her form of proxy will be deemed to be revoked.
A form of proxy for the EGM is enclosed with the circular of the Company dated 28 June 2022 (the “ Circular ”) and published on the GEM website at www.hkgem.com and the Company’s website at http://www.lifeconcepts.com. 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 such power or authority, shall be deposited at the Company’s branch share registrar and transfer office, Boardroom Share Registrars (HK) Limited, at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.
Where there are joint registered holders of any share of the Company, any one of such persons may vote at the EGM, either personally or by proxy, in respect of such share as if he/she were solely entitled thereto; but if more than one of such joint registered 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.
For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 27 July 2022 to Monday, 1 August 2022, both dates inclusive, during which period no transfer of shares will be effected. In order to be eligible to attend and vote at the EGM, unregistered holders of shares of the Company will ensure that all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar and transfer office, Boardroom Share Registrars (HK) Limited, at Room 2103B, 21/F, 148 Electric Road, North Point, Hong Kong for registration not later than 4: 30 pm on Tuesday, 26 July 2022.
If “extreme conditions” caused by super typhoons is announced by the Government of Hong Kong or there is a tropical cyclone warning signal number 8 or above, or a “ black ” rainstorm warning is in effect any time after 8:00 a.m. on the date of the EGM, the meeting will be postponed. The Company will post an announcement to notify Shareholders of the date, time and place of the rescheduled meeting on the website of the Stock Exchange at www.hkexnews.hk and on the website of the Company at www.lifeconcepts.com.
All resolutions at the EGM will be taken by poll pursuant to the GEM Listing Rules. The results of the poll will be published on the GEM website at www.hkgem.com and the Company’s website at www.lifeconcepts.com in accordance with the GEM Listing Rules.

As at the date of this notice, the Board comprises Mr. James Fu Bin Lu (Chairman and Chief Executive Officer), Mr. Long Hai and Ms. Li Qing Ni as executive Directors; and Mr. Lu Cheng, Mr. Shi Kangping and Mr. Kim Jin Tae as independent non-executive Directors.

This notice, 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 notice 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 notice misleading.

This notice will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting. This notice will also be published on the Company’s website at www.lifeconcepts.com.

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AI assistant

Life Concepts Holdings Limited — Proxy Solicitation & Information Statement 2022

51242_rns_2022-06-28_c7fad02c-17ae-497f-920a-069ebcaf8193.pdf

L I F E C O N C E P T S Life Concepts Holdings Limited 生活概念控股有限公司

(3) PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT; (4) PROPOSED CAPITAL REORGANISATION; (5) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE; AND (6) NOTICE OF EGM

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Event

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

TERMINATION OF THE UNDERWRITING AGREEMENT

L I F E C O N C E P T S

Life Concepts Holdings Limited 生活概念控股有限公司

(1) PROPOSED CHANGE OF DOMICILE; (2) PROPOSED ADOPTION OF MEMORANDUM OF CONTINUANCE AND NEW BYE-LAWS;

(3) PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT;

(4) PROPOSED CAPITAL REORGANISATION; (5) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE; AND (6) NOTICE OF EGM

INTRODUCTION

PROPOSED CHANGE OF DOMICILE

Conditions of the Change of Domicile

Effect of the Change of Domicile

Reasons for the Change of Domicile

LETTER FROM THE BOARD

PROPOSED ADOPTION OF MEMORANDUM OF CONTINUANCE AND NEW BYE-LAWS

Conditions of the Adoption of Memorandum of Continuance and New Bye-laws

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT

Conditions of the Reduction of Share Premium Account

PROPOSED CAPITAL REORGANISATION

Effects of the Capital Reorganisation

LETTER FROM THE BOARD

Conditions of the Capital Reorganisation

Application for listing of the Adjusted Shares

Reasons for the Capital Reorganisation

Free exchange of share certificates

PROPOSED RIGHTS ISSUE

Issue statistics

Subscription Price

LETTER FROM THE BOARD

Qualifying Shareholders

Rights of Overseas Shareholders

Closure of register of members

Basis of provisional allotments

Fractional entitlements of the Rights Shares

Status of the Rights Shares

Share certificates and refund cheques for the Rights Issue

Application for Excess Rights Shares

Arrangement on odd lots trading

Application for listing of the Rights Shares

Condition of the Rights Issue

THE UNDERWRITING AGREEMENT

The Underwriting Agreement

Principal terms of the Underwriting Agreement

Conditions of the Underwriting Agreement

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE

Circumstances leading to the Rights Issue

Alternative means of fund raising

INTENDED USE OF PROCEEDS

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE RIGHTS ISSUE

FUND RAISING ACTIVITIES INVOLVING ISSUE OF SECURITIES IN THE PAST 12 MONTHS

GEM LISTING RULES IMPLICATIONS

GENERAL

RECOMMENDATION

ADDITIONAL INFORMATION

WARNING OF THE RISKS OF DEALING IN SHARES AND THE NIL PAID RIGHTS SHARES

L I F E C O N C E P T S

Life Concepts Holdings Limited 生活概念控股有限公司

PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE

Yours faithfully,

PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) ADJUSTED SHARES HELD ON RECORD DATE

INTRODUCTION

THE INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Group

Table 1: Highlights of the financial results of the Group

FY2021 vs FY2020

Life Concepts Holdings Limited Proxy Solicitation & Information Statement 2022