Strawbear Entertainment Group — Capital/Financing Update 2025

May 26, 2025

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Strawbear Entertainment Group

荀草熊娱乐集团

(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 2125)

ANNOUNCEMENT

FURTHER CHANGE IN USE OF PROCEEDS

References are made to (i) the prospectus of Strawbear Entertainment Group (the "Company", together with its subsidiaries and consolidated affiliated entities, the "Group") dated December 31, 2020 (the "Prospectus") in relation to the listing of the shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the "Listing"), which sets out the intended use of the net proceeds from the global offering (the "Net Proceeds"); (ii) the announcement of the Company dated February 7, 2021 in relation to the full exercise of the over-allotment option, stabilizing actions and end of stabilization period; (iii) the announcements of the Company dated September 15, 2021 and October 18, 2024 in relation to the change in use of proceeds (the "Previous Announcements"); and (iv) the annual report of the Company for the year ended December 31, 2024, in which the use of the Net Proceeds up to December 31, 2024 was disclosed. Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as those defined in the Prospectus.

PREVIOUS CHANGES IN USE OF PROCEEDS

The Net Proceeds from the Global Offering received by the Company, after deduction of the underwriting fees and commissions and other expenses payable by the Company in connection with the Global Offering, amounted to approximately HK$1,071.1 million. The original intended use of the Net Proceeds was disclosed in the section headed "Future Plans and Use of Proceeds" in the Prospectus.

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As disclosed in the Previous Announcements, (i) on September 15, 2021, the Board resolved to re-allocate part of the unutilised Net Proceeds of approximately HK$635.7 million (representing approximately 59.4% of the Net Proceeds), of which (a) HK$528.6 million originally intended to be used for funding the production of Hello Baby (《你好寶貝》), No One but You (《也許這就是愛情》), Light My Way (《偷走他的心》), The Wind Catcher (《捕風者》) and Two Capitals (《兩京十五日》) was re-allocated to fund the production of Cat & Thief (《鬥賊》), The Swimsuit Saga (《乘風踏浪》), Never Too Late (《我的助理六十歲》) and Thousand Years For You (《請君》), and (b) HK$107.1 million originally intended to be used for acquiring one premium copyright company which focuses on investment, development, production and distribution of web series was re-allocated to acquire more premium IPs; and (ii) on October 18, 2024, the Board further resolved to change the use of the remaining Net Proceeds of approximately HK$107.1 million (representing approximately 10.0% of the Net Proceeds), which were originally intended to be used for funding potential investment in, or merger and acquisition of, companies that may enhance the Group's market position and ramp up the Group's drama series development, production and distribution. For details, please refer to the Previous Announcements.

FURTHER CHANGE IN USE OF PROCEEDS

As of the date of this announcement, the Net Proceeds utilised were approximately HK$991.5 million and the remaining Net Proceeds unutilised were approximately HK$79.6 million.

For the reasons set out in the paragraph headed "Reasons for and Benefits of the Change in Use of Proceeds" below, the Board has resolved that the remaining Net Proceeds of HK$79.6 million originally intended to be used for funding potential investment in, or merger and acquisition of, companies, businesses and assets that may enhance the Group's market position and ramp up the Group's drama series development, production and distribution, as well as investment in funds related to content products development, production and distribution and funds focusing on pan-entertainment industry will be re-allocated to fund certain drama series investment, production and distribution of the Group.

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The table below sets out the previous allocation of Net Proceeds, the change in use of Net Proceeds and the revised allocation of the unutilised Net Proceeds:

	Previous allocation of Net Proceeds(1)HK$ in million	Utilised amount of Net Proceeds as of the date of this announcementHK$ in million	Unutilised amount of Net Proceeds as of the date of this announcementHK$ in million	Revised allocation of the unutilized Net ProceedsHK$ in million	Expected timeline for utilisation(2)
Funding the drama series investment, production and distribution of the Group
Move Heaven and Earth (《赴山海》)	-	-	-	9.0	By June 30,2026
By December 31,2025
By December 31,2026
Win or Die (《夜不收》)	-	-	-	9.1
Love in Red Dust (《紅塵四合》)	-	-	-	61.5	-
Other drama series	749.8	749.8	-	-
Sub-total	749.8	749.8	-	79.6	-
Funding potential investment in, or merger and acquisition of, companies, businesses and assets that may enhance the Group's market position and ramp up the Group's drama series development, production and distribution, as well as investment in funds related to content products development, production and distribution and funds focusing on pan-entertainment industry	107.1	27.5	79.6	-	-
Acquiring more premium IPs to guarantee the stable growth of the Group's drama series production and distribution	107.1	107.1	-	-	-
Working capital and general corporate purposes	107.1	107.1	-	-	-
Total	1,071.1	991.5	79.6	79.6

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Notes:

(1) The previous allocation of Net Proceeds refers to the revised allocation made by the Board on October 18, 2024.

(2) The expected timeline for the usage of the remaining Net Proceeds is made based on the best estimate of the Group’s future market conditions, which is subject to the current and future development of the market conditions.

As of the date of this announcement, save for the aforementioned changes, there are no other changes in the use of the Net Proceeds and the Company intends to utilise the Net Proceeds in the manner and the proportion set out in the Prospectus, the Previous Announcements and this announcement.

REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF PROCEEDS

The planned use of the Net Proceeds as disclosed in the Prospectus and the Previous Announcements was based on the best estimation made by the Group in relation to the then future market conditions as at the Latest Practicable Date of the Prospectus and the date of the Previous Announcements, while the Net Proceeds were applied in accordance with the actual development of the market from time to time.

As disclosed in the Prospectus and the Previous Announcements, approximately 10.0% of the Net Proceeds is expected to be used to fund potential investment in, or merger and acquisition of, companies, businesses and assets that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution, as well as investment in funds related to content products development, production and distribution and funds focusing on pan-entertainment industry.

Since the Listing, the Group has been actively exploring investment and acquisition opportunities of suitable companies that have business synergies with the Group. The Company has closely monitored the market trend and conducted market research regarding the preference of audience from time to time, to help select a suitable target that may enhance the Group’s market position and ramp up the Group’s drama series development, production and distribution. Due to changes in market structure, although the Group has utilized a portion of the Net Proceeds for a limited amount of equity investments to enhance the Group’s market position and ramp up the Group’s drama series development, production, and distribution, it has become increasingly difficult to identify suitable investment and acquisition targets. Moreover, the Group prefers to adopt a cautious equity investment strategy. As a result, the amount of funds allocated for equity investments in the future is expected to be minimal, and the timing of their use remains unpredictable. Given that the Group’s business development requires sufficient cash, the Group intends to re-allocate the remaining Net Proceeds of HK$79.6 million to fund certain drama series investment, production and distribution of the Group, so as to enhance the efficiency and effectiveness of the use of the Net Proceeds.

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The table below sets forth the detailed information of the drama series that the Group plans to use the remaining Net Proceeds to fund:

No.	Name of the drama series	Genre	Status as at the date of this announcement	Time of public record
1.	Move Heaven and Earth (《赴山海》)	New-style martial art	To be broadcast	June 2023
2.	Win or Die (《夜不收》)	Period Military	To be broadcast	August 2023
3.	Love in Red Dust (《紅塵四合》)	Period Other	Under production	January 2024

Move Heaven and Earth (《赴山海》), Win or Die (《夜不收》) and Love in Red Dust (《紅塵四合》) will be funded in part with the remaining Net Proceeds, and the Group plans to fund the remaining amounts through cash generated from operations as well as bank and other borrowings.

The Board confirms that there is no material change in the nature of business of the Group as set out in the Prospectus, and that the change in use of the Net Proceeds as set out above will not have any material adverse impact on the operations of the Group. The Board considers that such change in use of the Net Proceeds will facilitate an effective use of the financial resources of the Group, strengthen the future development of the Group and is therefore in the best interests of the Company and its shareholders as a whole.

The Board will continuously assess the plans for the use of the Net Proceeds, and may revise or amend such plans where necessary to respond to the changing market conditions and strive for better business performance of the Group.

By order of the Board

Strawbear Entertainment Group

Liu Xiaofeng

Chairman

Nanjing, PRC, May 26, 2025

As of the date of this announcement, the Board comprises Mr. Liu Xiaofeng and Ms. Zhai Fang as executive Directors, Mr. Wang Xiaohui and Ms. Liu Fan as non-executive Directors, and Mr. Zhang Senquan, Mr. Ma Zhongjun and Mr. Chung Chong Sun as independent non-executive Directors.