National Arts Group Holdings Limited entered into a letter of cooperation with First Bullion and National Treasure whereby the parties agreed to establish a new joint venture company engaging in the development of virtual reality business. Under the LOC, the Company, First Bullion and National Treasure will respectively own 40%, 30% and 30% equity interest in the JV Company. The board of directors of the JV Company will consist of three directors and each shareholder has the right to nominate one director.

The Company is principally engaged in investment holdings. The Group is principally engaged in film production and distribution, the provision of management services to artistes, event coordination, provision of travel related products and operations of film studio and hotels. The Group has a film-making studio at Xi Qiao Shan, Nanhai District, Guangdong Province, the PRC with a total area of approximately 667,000 square meters.

First Bullion is principally engaged in the provision of digital assets listing, trading and management services. It established Cryptosx, a digital assets exchange portal, in 2018 and is licensed in the Philippines by Cagayan Economic Zone Authority to conduct Financial Technology Solutions and Offshore Virtual Currency Exchange ("FTSOVC") business activities, including the authority to approve and endorse security token offerings, operation of digital assets exchanges as well as the provision of digital assets wealth management services. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, First Bullion is an Independent Third Party.

National Treasure is principally engaged in the provision of artists management and production of entertainment programs of all kinds including but not limiting to broadcasting, music, movies, shows and exhibitions online and offline. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, National Treasure is an Independent Third Party. According to the LOC, the JV Company will be established for the development of a virtual reality environment based on the scenery of the Studio with both online and offline operations.

For online operation, the JV Company will arrange music contexts, talent quests, production of movie clips, music concerts, for players, in principle, along the line of a dream making studio. Also, Metaverse will provide shopping and market place for the players' products. For offline operation, the JV Company will organize singing, acting, movie making and martial arts training to enable players to do what one intend to actualise in the Metaverse.

Also the JV Company will facilitate an e-commerce platform to sell the players' commodities on the virtual mall including on/off shore payment gateways and goods delivery. Blockchain technology and non-fungible token will be applied in the above business model and will be supported by First Bullion. National Treasure will provide the design and arts direction for virtual reality environment and the creation of virtual artists in such environment.

The Board considers that, if the above business plan could be materialized, this would enable the Group to expand its development in the virtual reality and even Metaverse businesses.