Gelonghui February 1?01162.HK announced that on February 1st, 2023, Cool Studio, an indirect non-wholly owned subsidiary of the company, entered into the agreement with King Yuanwang, under which the parties agreed to set up a joint venture company in China to undertake the project to produce and distribute an animation series adapted from the novel "chivalrous Walk" and projects involving Jin Yong's other novels.

The company will initially be owned by Cool Studio (or its subsidiaries) and Yuanwang, respectively, and (I) Yuanwang will transfer the exclusive agency rights to JVCo for the project free of charge; and (ii) Cool Studio shall allocate the production cost of the project. The total production cost of the project is expected to be 24 million yuan.

The agreement further stipulates that if Yuanwang succeeds in recruiting investors to invest in the project, the proportion of shares owned by Yuanwang in the joint venture company will be increased by an increase equal to the proportion of the production costs of these investors, provided that in no case shall Cool Studio's shareholding in the joint venture company be less than 60 per cent and Yuanwang's shareholding in the joint venture company shall not be higher than 40 per cent.

In terms of attracting investors to participate in the production of the project, Cool Studio has to produce a trailer at its own expense, which is expected to cost 1.2 million yuan to produce.

If Yuanwang fails to recruit investors to invest in the project and Cool Studio chooses not to terminate the project, the maximum capital commitment to be fulfilled by Cool Studio in respect of the project is RMB 25.2 million, including a budget of RMB 24 million for the project and a budget of RMB 1.2 million for the trailer, which will be allocated from within the Group.

Hero Power and Sea urchin Power (both shareholders of Cool Studio) have agreed to leverage their respective strengths and resources to jointly invest in and develop digital film production projects. Under this premise, Sea urchin Power has identified and secured the opportunity to participate in the project and has been contacting and coordinating the appointment of Cool Studio to carry out the project. Hero Power will be responsible for funding the project.