OSL Group Limited — M&A Activity 2025

Jan 3, 2025

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This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

OSL

OSL Group Limited

OSL集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 863)

SUPPLEMENTAL ANNOUNCEMENT ON DISCLOSEABLE TRANSACTION IN RELATION TO ACQUISITIONS OF THE SALE INTERESTS IN THE TARGET COMPANIES INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER GENERAL MANDATE

Reference is made to the announcement of OSL Group Limited (the "Company", and together with its subsidiaries, the "Group") dated 9 December 2024 in relation to the Acquisitions (the "Announcement"). Capitalised terms used herein shall have the same meanings as those defined in the Announcement unless otherwise defined.

The Board wishes to provide the Shareholders and potential investors of the Company with additional information in relation to the Acquisitions, in particular, further details of (i) basis of each of the Europe Acquisition Consideration and Italy Acquisition Consideration; and (ii) unaudited combined net assets value of each of the New Target Group Companies and the Italian Target Group Companies as follows:

BASIS OF EACH OF THE EUROPE ACQUISITION CONSIDERATION AND THE ITALY ACQUISITION CONSIDERATION

As disclosed in the Announcement, each of the Europe Acquisition Consideration and the Italy Acquisition Consideration was determined on an arm's length basis under normal commercial terms pursuant to the negotiation between the Purchaser and the Vendor after taking into account, among others, the financial conditions and prospects of each of the New Target Company upon completion of the Pre-Completion Restructuring and the Italian Target Company, and the potential synergy benefits generated through the Acquisitions to the Group.

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In particular, the Board has considered and assessed: (i) the historical financial performance of the Lithuanian Subsidiary 1 (being the key operating Subsidiary that has active operations); (ii) the growth prospects of the New Target Group Companies upon completion of the Pre-Completion Restructuring; (iii) the positive outlook for the future development of the European market; (iv) the various registrations and licenses held by the Subsidiaries; and (v) the potential synergies generated to the Group, which are further described as follows:

(i) the Lithuanian Subsidiary 1 possesses a robust customer base, which aligns with the Group's objective to expand market reach and diversify customer portfolio. By incorporating the Lithuanian Subsidiary 1's customer network, the Group anticipates accelerated growth, expansion and diversification of client base. In 2023, the Lithuanian Subsidiary 1 recorded a monthly average increase of approximately 77% in the number of monthly active users, growing from a base of 444 active users in January to 56,351 active users in December. Such increase continues into 2024 as it achieved 68,635 active users in June 2024;

(ii) the Lithuanian Subsidiary 1 recorded a rapid revenue growth in 2023 and 1H 2024, indicating strong potential for future business development. Based on the unaudited half-year financial statements of the Lithuanian Subsidiary 1, the revenues were €756,620, €3,136,104 and €15,120,458 for 1H 2023, 2H 2023 and 1H 2024 respectively. It recorded a revenue growth rate more than 300% in 2H 2023 and 1H 2024 (as compared to the 1H 2023 and 2H 2023), which were driven by the bullish cryptocurrency market and its focus on strengthening its foothold in the existing market. This growth highlights the depth of the market and client segments serviced by the Lithuanian Subsidiary 1 and its potential to capture and expand its market share. The Board believes that, after the completion of the Acquisitions, the Lithuanian Subsidiary 1 may become an important contributor to the Group's efforts to diversify its geographical footprint, product offerings, customer base and, ultimately, sources of revenues;

(iii) the Acquisitions are based on a positive outlook for the future development of the European regulated digital asset landscape in anticipation of the implementation of the European regulation on Markets in Crypto-Assets. Referencing an independent third-party source (Statista.com, https://www.statista.com/outlook/dmo/fintech/digital-assets/cryptocurrencies/europe?currency=USD), crypto user penetration in Europe will be 19.49% in 2024 and is expected to hit 22.26% by 2028. The revenue in European cryptocurrencies market is projected to reach US$13.57 billion in 2024, with a compound annual growth rate of 8.06% from 2024 to 2028, reaching US$18.50 billion by 2028. With the continuing rise in popularity in digital assets and stablecoin, this will gradually result in a potentially massive market in Europe;

(iv) while the New Target Group Companies (assuming completion of the Pre-Completion Restructuring) have recorded a combined net deficit value of approximately HK$1,365,000 as at 31 December 2023, the Board considered this against: (A) the strategic value of the enlargement to the Group's geographical, revenue and user base resulting from the transaction from the acquisition; and (B) the substantial costs required to be borne by the Group, as well as the substantial time required, in connection with alternative plans to expand via organic growth of the Group's operations. Specifically, the Lithuanian Subsidiary 1 (being the major revenue

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generating entity among the New Target Group Companies) has had a short operating history and its financial position throughout this period is consistent with a typical early growth phase where acquisition of market presence, significant investments in technology infrastructure, and building of brand recognition may be prioritised over short-term profitability, thereby leading to short-term deficits in 2023. The net deficit in 2023 primarily resulted from its loss for the year, which was approximately HK$3,534,000, driven by significant expenditures on platform development, infrastructure, and workforce expansion necessary to support its revenue growth and long-term potential;

(v) the various registrations and licenses held by each Subsidiary (as the case may be) as follows:

(a) the Lithuanian Subsidiary 1 is registered in Lithuania's official list of virtual currency exchange and custodian wallet service providers, which in turn allows the Lithuanian Subsidiary 1 to operate as a digital assets and cryptocurrency exchange in the relevant jurisdiction. Lithuania has implemented a virtual asset service provider regulatory regime which is in accordance with the Regulation on Markets in Crypto-Assets ("MiCA") of the European Parliament and the Council of the European Union, which sets out a uniform legal framework for regulation of crypto-assets and related services in the European Union. Accordingly, Lithuanian Subsidiary 1 is required to comply with anti-money laundering (AML) and counter-terrorist financing (CTF) obligations and maintain a minimum registered capital in accordance with principles that are in line with those applicable to other European Union jurisdictions which are required to implement MiCA;

(b) the Italian Target Company holds an OAM Registration, which allows it to operate as a virtual asset service provider granted by Organismo Agenti e Mediatori within the relevant jurisdiction;

(c) the Canadian Subsidiary holds a Money Services Business licence issued by the Financial Transactions and Reports Analysis Centre of Canada, which allows the Canadian Subsidiary to operate a payment service business in the relevant jurisdiction; and

(vi) collectively, the Acquisitions align with the Company's broader strategy to utilize its financial resources (including proceeds from its recent fundraising) to expand its global regulated footprint, expand its product offerings and diversify its sources of revenues. The Board also believes that the Acquisitions can generate synergies to the Group in areas such as enhancing market liquidity, expanding brand influence, offering a more diversified range of services and products.

In light of the above, the Board is of the view that each of the Europe Acquisition Consideration and the Italy Acquisition Consideration is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

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UNAUDITED COMBINED NET ASSETS VALUE OF EACH OF THE NEW TARGET GROUP COMPANIES AND THE ITALIAN TARGET GROUP COMPANIES

The unaudited combined net deficit value of the New Target Group Companies was approximately HK$1,365,000 as at 31 December 2023 (assuming completion of the Pre-Completion Restructuring).

The unaudited combined net assets value of the Italian Target Group Companies was approximately HK$860 as at 31 December 2023 (assuming completion of the Pre-Completion Restructuring).

By order of the Board of
OSL Group Limited
Cui Song
Executive Director and Chief Executive Officer

Hong Kong, 3 January 2025

As at the date of this announcement, the executive Directors are Mr. Cui Song, Mr. Tiu Ka Chun, Gary, Ms. Xu Kang and Mr. Yang Chao, the non-executive Director is Mr. Lee Kam Hung Lawrence and the independent non-executive Directors are Mr. Chau Shing Yim, David, Mr. Xu Biao and Mr. Yang Huan.