Inno Tech : Announcements and Notices - Discloseable Transaction Acquisition of 51% Equity Interest of Zhongshan City Share Paper towel Advertising Media Company Limited Involving Issue of Consideration Shares under General Mandate

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.

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

(incorporated in Bermuda with limited liability)

(Stock Code: 8202)

DISCLOSEABLE TRANSACTION ACQUISITION OF 51% EQUITY INTEREST OF ZHONGSHAN CITY SHARE PAPER TOWEL ADVERTISING

MEDIA COMPANY LIMITED

INVOLVING ISSUE OF CONSIDERATION SHARES

UNDER GENERAL MANDATE

THE ACQUISITION

The Board is pleased to announce that on 10 January 2019 (after the trading hours of the Stock Exchange), the Purchaser and the Vendors entered into the Sale and Purchase Agreement, pursuant to which, the Purchaser has conditionally agreed to purchase and the Vendors have conditionally agreed to sell, the Sale Shares for a total consideration of HK$6,120,000, pursuant to the terms and conditions of the Sale and Purchase Agreement.

GEM LISTING RULES IMPLICATIONS

As certain of the applicable percentage ratios under Chapter 19 of the GEM Listing Rules for the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction of the Company, and is therefore subject to the relevant reporting and announcement requirements under Chapter 19 of the GEM Listing Rules.

* For identification purpose only

Reference is made to the announcement of the Company dated 14 November 2018 relating to the entering into of the MOU between the Purchaser and the Vendors, in relation to the Acquisition. At the time of this announcement, the Sale and Purchase Agreement would be signed subject to the negotiation and execution of a formal Sale and Purchase Agreement which will set out the terms and conditions of the Acquisition.

THE SALE AND PURCHASE AGREEMENT

The salient terms of the Sale and Purchase Agreement are set out below:

Date:	10 January 2019 (after trading hours)
Parties:
Purchaser:	׺Կྼุછٰ€ଉέϞࠢʮ̡ (Kunlun Industrial Holdings (Shenzhen) Company
Limited), an indirect wholly owned subsidiary of the Company incorporated in the PRC
and is principally engaged in investment holding.

Vendors:

• (a) Vendor 1, ᄿ؇΍Ԯॷʌၣഖ߅ҦϞࠢʮ̡(Guangdong Share Paper Towel Network Technology Company Limited) who is the legal and beneficial owner of 70% of the equity interest of the Target; and

• (b) Vendor 2, մ˖ρ (Zhou Wenyu) who is the legal and beneficial owner of 30% of the equity interest of the Target.

As at the date of this announcement, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, (i) the Vendors and its ultimate beneficial owners are Independent Third Parties and do not hold any Shares or other convertible securities in the Company as at the date of this announcement; and (ii) there was no previous transaction or business relationship among the Company, the Vendors and/or their associates or connected persons of the Company in the previous 12 months which would result in aggregation under Rule 14.22 of the Listing Rules.

The Acquisition

The Board is pleased to announce that on 10 January 2019 (after the trading hours of the Stock Exchange), the Purchaser and the Vendors entered into the Sale and Purchase Agreement, pursuant to which, the Purchaser has conditionally agreed to purchase and the Vendors have conditionally agreed to sell, the Sale Shares for a total consideration of HK$6,120,000, pursuant to the terms and conditions of the Sale and Purchase Agreement.

Assets to be acquired

Pursuant to the terms and conditions of the Sale and Purchase Agreement, the Vendors have agreed to sell to the Purchaser, and the Purchaser has agreed to purchase from the Vendors, the Sale Shares, representing 51% of the total equity interest of the Target.

Consideration

The total consideration for the Acquisition is HK$6,120,000, which shall be satisfied by the Purchaser in the following manner:

• (a) At Completion, equal to the total consideration of HK$6,120,000 representing 51% of the total equity interest of the Target, the Company shall, and the Purchaser shall procure to, allot and issue 25,175,000 new Shares at the Issue Price out of the General Mandate and free from any encumbrance whatsoever to and in favour of the Vendor 1 and Vendor 2 for full and final settlement and discharge of the Consideration.

• (b) As to Vendor 1, equal to the consideration of HK$4,284,000 representing 35.7% of the total equity interest of the Target, the Vendor 1 shall receive from the Company 17,622,500 new Shares at the Issue Price for full and final settlement and discharge of the Consideration.

• (c) As to Vendor 2, equal to the consideration of HK$1,836,000 representing 15.3% of the total equity interest of the Target, the Vendor 2 shall received from the Company 7,552,500 new Shares at the Issue Price for full and final settlement and discharge of the Consideration.

The Consideration was arrived at after arm's length negotiations among the Parties, with reference to (i) the preliminary valuation on business development and prospects of the Target; and (ii) the reasons and benefits of the Acquisition as stated under the section headed "Reasons for and benefits of the Acquisition" below.

The Directors (including the independent non-executive Directors) consider the consideration of the Acquisition to be fair and reasonable and on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

The preliminary valuation of the Target was carried out by International Valuation Limited, an independent surveyor to the Company and the date of preliminary valuation was 4 January 2019. The valuer valued the Target in accordance with professional appraisal standard and by comparison method with reference to comparable market transactions as reported in the market.

Issue of the Consideration Shares

The Issue Price of HK$0.2431 per Consideration Shares represents: (i) approximately 2.39% of the number of issued Shares as at the date of this announcement; and (ii) approximately 2.34% of the number of issued Shares as enlarged by the allotment and issue of the Consideration Shares. The Consideration Shares will be allotted and issued under the General Mandate at Completion. As at the date of this announcement, 1,052,949,099 Shares have been issued and no Share has been issued under the General Mandate since the approval of the General Mandate. Accordingly, the maximum number of shares that can be issued under the General Mandate is 210,589,819 Shares which is sufficient for the issue and allotment of the Consideration Shares and is not subject to the Shareholders' approval.

The Issue Price was arrived at after arm's length negotiations between the Purchaser and the Vendors with reference to the current market price. The Directors (including the independent non-executive Directors) consider that the Issue Price is fair and reasonable and in the interests of the Shareholders as a whole.

The Consideration Shares, when allotted and issued, shall rank paripassu in all respects with the Shares in issue on the date of allotment and issue of the Consideration Shares including the right to all dividends, distributions and other payments made or to be made, on the record date which falls on or after the date of such allotment and issue.

Both Vendor 1 and Vendor 2 are restricted from subsequent sale or transfer of such Consideration Shares for 1 year from the completion of the Sale and Purchase Agreement.

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Consideration Shares.

Issue Price

The Issue Price represents:

(i) a discount of approximately 19.0% to the closing price of HK$0.30 per Share as quoted on the Stock Exchange on the date of the Sale and Purchase Agreement;

(ii) a discount of approximately 15% to the average closing price of approximately HK$0.286 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately preceding the date of the Sale and Purchase Agreement; and

(iii) a discount of approximately 2.37% to the average closing price of approximately HK$0.249 per

Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately preceding the date of the Sale and Purchase Agreement.

The Issue Price was arrived at arm's length negotiations among the parties with reference to the prevailing market price of the Shares. The Directors consider the Issue Price is fair and reasonable.

Conditions Precedent

Completions shall be subject to the following conditions precedent:

• (a) the parties to the Sale and Purchase Agreement having complied with all applicable laws, rules and regulations in Hong Kong or otherwise (including without limitation the GEM Listing Rules to which they may be subject) in relation to the Acquisition;

• (b) the warranties contained in the Sale and Purchase Agreement remaining true and accurate in all respects;

• (c) the Company being satisfied with the results of the due diligence review of the assets, liabilities, operations and affairs of the Target as it may reasonably consider appropriate; and

• (d) the Company having obtained all necessary consents or approvals (including but not limited to the approvals from all other authorizations, relevant government departments or regulatory authorities, if required), and such consents or approvals have not been cancelled or revoked before Completion.

• (e) the Company has obtained approval from the Stock Exchange for the listing of and the permission to deal in the Consideration Shares;

None of the conditions can be waived. In the event that any of the Conditions is not fulfilled by the Long Stop Date, the Sale and Purchase Agreement will be automatically terminated and be of no further effect, and the parties to the Sale and Purchase Agreement shall be released from all obligations under the Sale and Purchase Agreement and neither party shall have any claim against the other for any costs or losses save in respect of any antecedent breaches of the Sale and Purchase Agreement.

Guarantee

Pursuant to the Sale and Purchase Agreement, the Vendors agreed to guarantee the performance of the Vendors' obligations, warranties and other terms and provisions under the Sale and Purchase Agreement and the Company agreed to guarantee the performance of the Purchaser's obligations, warranties and other terms and provisions under the Sale and Purchase Agreement.