Sinopharm Tech will acquire 25% Equity Interest in Target Company with anti-counterfeiting patents

HONG KONG,Feb. 18,2021 -- Sinopharm Tech Holdings Limited ("Sinopharm Tech" and its subsidiaries,together,the "Group",stock code: 8156) is pleased to announce that,the China Success Enterprises Limited,an indirect wholly-owned subsidiary of the Company (as the Purchaser) entered into the Sale and Purchase Agreement with Sharp Associates Limited (as the Vendor),conditionally to purchase Rich General Limited ("Target Company") 25% of the entire issued share capital at the Consideration of HK$200 million. The Consideration will be settled by allotment and issue of the Consideration Shares by the Company to the Vendor at the Issue Price of HK$0.28 per Consideration Share.

The Consideration Shares comprise a maximum of 714,285,714 Shares,representing approximately 16.65% of the existing issued share capital of the Company as at the date of the announcement. The Issue Price is HK$0.28 per Consideration Share,which represents a discount of approximately 12.5% to the closing price of HK$0.32 per Share as quoted on the Stock Exchange as at the date of the Sale and Purchase Agreement.

Profit guarantee

The Vendor warranted and guaranteed to the Purchaser that the audited net profits after taxation of the Target Group on a consolidated basis will:

not be less than HK$25,000,000 for the period commencing from 1 July 2021 and ending 31 December 2021;

not be less than HK$50,000 for the year ending 31 December 2022; and

not be less than HK$50,000 for the year ending 31 December 2023.

About the Target Company

Shenzhen Ficus Technology Holdings Ltd. ("SZCo") is wholly-owned by Target Company and is the registered holder of the Patents. It is engaged in the business of provision of services in relation to the design,development and provision of anti-counterfeiting devices in the PRC. The SZCo was incorporated by the Vendor and the Patents were self-developed by the SZCo.

The SZCo registered and held various patents,including (i) Anti-counterfeit Packaging Device for Products (registration numbers: ZL 2019 2 1449828. X and 3229334 in the PRC and Japan,respectively) and Anti-counterfeit Packaging Device for Adhesive Parts(registration numbers: ZL 2019 2 1579150. 7 and 3229631 in the PRC and Japan,respectively). As at the date of this announcement,the Patents have been registered in the PRC and Japan,and applications for registration in Hong Kong,Taiwan,Indonesia,Korean and Malaysia are in progress.

The Licensing and Master Service Agreement

On 17 February 2021 (after trading hours),the SZCo and the Licensee (a wholly-owned subsidiary of the Company),entered into the conditional Licensing and Master Service Agreement in relation to the Licensing Arrangement and the Anti-counterfeit Device Services,the SZCo shall (i)grant the Licensee during the term of the Licensing and Master Service Agreement,a non-exclusive and royalty-bearing license to the Patents to use,sell,and offer to sell its Licensed Products in the PRC; and (ii) provide services in relation to design,production arrangement,material procurement and quality control,and customisation service of the anti-counterfeiting device with lottery tickets pursuant to the specification required by the Licensee and with the quality satisfactory to the Licensee at reasonable costs under each individual purchase order,and provide and sell such customised anti-counterfeiting device with lottery tickets to the Licensee.

Benefits for the Sale and Purchase Agreement and the Licensing and Master Service Agreement

The Group have been engaged in welfare and sports lottery business for years,with the incubation of Internet plus technology and interactive marketing,the Group has participated in innovation by integrating traditional lottery business with new anti-counterfeiting technology. With the aims to offer comprehensive solutions to the immature anti-counterfeiting industry in the PRC and cover the insufficiencies of the prevailing technology in the market,in 2019,the Group started to formulate an anti-counterfeiting traceability solution with anti-counterfeiting packaging devices and online anti-counterfeiting information verification platform as the core contents. Since then,the Group has been utilizing such anti-counterfeiting solution for marketing,as well as formulating comprehensive solutions with patented technologies for the application on the products of its customers.

The Group has contracted with brands owners in the tea leaves and natural food industry while expecting entry into other consumer sectors. The Acquisition presents the Group a timely opportunity to maximize its market share in the field of anti-counterfeiting in the PRC utilizing the legal protection of the Patents.

Mr.CHAN Ting,Executive Director and Chief Executive Officer of Sinopharm Tech,said,"The Group have got a head start on the business opportunities of anti-counterfeiting lottery devices. The group is expected that the Acquisition and the Licensing and Master Service Agreement shall help foster the commercialisation of anti-counterfeiting solutions of the Group by exploring the business opportunities of anti-counterfeiting lottery devices and capturing the upside therefrom,as well as facilitate the Group to strengthen its business operation of the anti-counterfeiting lottery devices,which integrate the Group's anti-counterfeiting solution with lottery tickets and is consistent with its business strategies. The Group with the use of the Patents,it is intended that the customised anti-counterfeiting lottery devices will be ultimately sold to the Group's customers,primarily brand owners and/or merchants in different industries. Going forward,by accelerating the implementation of such solution,the Group shall foster cooperation in terms of anti-counterfeit lottery solution in various provinces and cities in the PRC in order to capture the potential growth from the rising importance of anti-counterfeiting technology"

About Sinopharm Tech Holdings Limited

Sinopharm Tech Holdings Limited is a company that provides integrated solutions on lottery and "Internet Plus",as well as the manufacturing of personal protective equipment. The Companyis engaged in (i) the provision of lottery-related services; (ii) Internet plus services (solution and supply chain); (iii) manufacturing and distribution of personal protective equipment; and (iv) other services. In 2019,the Group successfully introduced Sinopharm Traditional Chinese Medicine Co. Ltd.,a member of China Traditional National Chinese Medicine Co.,Ltd.,as one of the main strategic shareholders.

The Group has been deeply involved in China's welfare lottery and sports lottery industries for more than 20 years,and is committed to bringing different innovative solutions to the industry,from lottery systems to interactive marketing to the latest anti-counterfeiting business. Meanwhile,the Group has established 7 cleanrooms in Hong Kong SAR and Mainland China with more than 20 mask production lines,producing 3-ply adult masks,3-ply student masks,N95 folding masks,N95 cup-shaped masks and other personal protective equipment.