The Board of Digital China Holdings Limited announced that on 13 October 2022, the Company, Digital China Information Service Company Ltd. (DCITS) (a subsidiary of the Company), Digital China Group Co., Ltd. (DCG) and Mr. Guo entered into the Shareholders' Agreement in relation to the proposed establishment of the Joint Venture Company. Parties: the Company; (2) DCITS (a subsidiary of the Company); DCG; and (4) Mr. Guo, the Chairman of the Board, the Chief Executive Officer, an executive Director and a substantial Shareholder of the Company. (collectively, the "Parties", each a "Party").

The name of the joint venture company is 2035 Research Institute (Shenzhen) Technology Co., Ltd. (being the tentatively proposed company name). The purpose of establishing the Joint Venture Company. The Joint Venture Company is principally engaged in the research and development of core technologies and related product development.

The Joint Venture Company is expected to be at the forefront of the nation's science and technology field. As a new type of enterprise- driven research and development institution, the Joint Venture Company will be able to attract top talent to conduct innovative research and devise methods to boost commercialization of technologies over the next three to five years. Through such methods, the Joint Venture Company will further incubate such technologies and integrate these technologies into the wider industry ecosystem.

Registered capital of the Joint Venture Company and details of capital contribution Pursuant to the terms of the Shareholders' Agreement, the registered capital of the Joint Venture Company will be RMB 100 million. Each of the Company, DCITS and DCG will contribute RMB 30 million (representing 30% of the registered capital of the Joint Venture Company), and Mr. Guo will contribute RMB 10 million (representing 10% of the registered capital of the Joint Venture Company). The Parties shall pay their capital contribution by cash and in full at the specific investment period to be determined by the Parties.

The amount of capital contribution under the Shareholders' Agreement was determined after arm's length negotiations between the Parties after taking into consideration various factors, including the proposed business nature, working capital need and development plan of the Joint Venture Company. The capital contribution by the Company and DCITS will be funded by the internal resources of the Group. Upon the establishment of the Joint Venture Company, it will be owned by the Company, DCITS, DCG and Mr. Guo as to 30%, 30%, 30% and 10%, respectively.

The Joint Venture Company will be accounted for as a jointly controlled entity of the Group using the equity method.