The Board announced that on December 13, 2023, Zhongguancun Science-Tech Leasing Co., Ltd. (the Company) (as the Lessor) entered into the Finance Lease Agreement II with the Lessee, pursuant to which, (i) the Lessor shall acquire the Leased Assets II owned by the Lessee at a transfer consideration of RMB 15,000,000; and (ii) the Lessor shall lease the Leased Assets II back to the Lessee for a term of 33 months with a total lease payment of RMB 16,631,500, which shall include a finance lease principal of RMB 15,000,000 and a finance lease interest income (inclusive of VAT) of RMB 1,631,500. Within the past 12 months, on June 21, 2023, the Company (as the Lessor) entered into the Finance Lease Agreement I with the Lessee, pursuant to which, among other things, the Company (as Lessor) agreed to: (i) acquire the Leased Assets I owned by the Lessee at a transfer consideration of RMB 30,000,000; and (ii) lease the Leased Assets I back to the Lessee for a term of 36 months with a total lease payment of RMB 33,873,694, which included a finance lease principal of RMB 30,000,000 and a finance lease interest income (inclusive of VAT) of RMB 3,873,694. Lessee: a limited company incorporated in the PRC, which is principally engaged in the research and development, production and sales of vehicle parts business.

The Leased Assets I are related assets under the vehicle auto parts processing business, with a net book value of approximately RMB 32,786,227.50. The Leased Assets II are related assets under the vehicle auto parts processing business, with a net book value of approximately RMB 16,808,203.16. The lease period of the Finance Lease Agreement I is 36 months, which commenced on June 21, 2023.

The lease period of the Finance Lease Agreement II is 33 months, which shall commence on December 13, 2023. Under the Finance Lease Agreements, the respective total lease payment of RMB 33,873,694 and RMB 16,631,500, included the respective finance lease principal of RMB 30,000,000 and RMB 15,000,000, and the respective finance lease interest income (inclusive of VAT) of RMB 3,873,694 (calculated based on the interest rate of 7.4% per annum) and RMB 1,631,500 (calculated based on the interest rate of 7.2% per annum). The Lessee shall pay the lease payment to the Lessor at the end of each quarter in installments in accordance with the terms and conditions of the Finance Lease Agreements during the lease period.

The terms of the Finance Lease Agreements, including the transfer consideration for the Leased Assets, finance lease principal, finance lease interest income and other expenses, were determined upon arm's length negotiation between the Lessee and the Lessor with reference to net book value of the Leased Assets and prevailing market prices of the same category of finance lease products in the PRC. The Lessee agreed to pay the security deposit for the Finance Lease Agreements of RMB1,500,000 (bearing nil interests) and RMB 750,000 (bearing nil interests). When the last lease payments are due to be paid, the lease payment and other payables under the final payment will automatically be deducted from the deposit, and the Lessor will refund the Lessee the remaining amount (if any).

The Company's principal activities are to provide finance leasing and advisory services to customers. The entering of the Finance Lease Agreements is part of the Company's ordinary and usual course of business, which is expected to provide a stable revenue and cashflow to the Company. The Directors consider that entering into the Finance Lease Agreements will generate revenue and profit to the Company over the lease period and is consistent with the Company's business development strategy.

Since the Finance Lease Agreements was entered into under normal commercial terms, the Directors are of the view that the terms under the Finance Lease Agreements are fair and reasonable and are in the interests of the Company and its shareholders as a whole.