Pan Asia Environmental Protection Group Limited (SEHK:556) entered into a conditional sale and purchase agreement to acquire 44.5% stake in Zhongshan Codes Network Technology Co., Ltd. from Chung Kam Ming for CNY 30.2 million on July 10, 2019. The consideration comprises 33 million shares of which 6.6 million shares will be issued within 30 business days immediately after Pan Asia receives the audited consolidated financial statements of the Zhongshan Codes Network Technology Group for the financial year ending December 31, 2019 and the net profit after tax of the Zhongshan Codes Network Technology for the financial year ending December 31, 2019 meets the 2019 Guaranteed Profit of HKD 20 million (CNY 17.6 million) (“Tranche A”), 6.6 million shares to be issued within 30 business days immediately after Pan Asia receives the unaudited consolidated financial statements of Zhongshan Codes Network Technology Group for the six months ending June 30, 2020 and the net profit after tax of Zhongshan Codes Network Technology Group for the six months ending June 30, 2020 meets 50% of the 2020 Guaranteed Profit of HKD 30 million (CNY 26.4 million) (“Tranche B”), 6.6 million shares to be issued within 30 business days immediately after Pan Asia receives the audited consolidated financial statements of Zhongshan Codes Network Technology Group for the financial year ending December 31, 2020 and the net profit after tax of the of Zhongshan Codes Network Technology Group for the financial year ending December 31, 2020 meets the 2020 Guaranteed Profit of HKD 30 million (CNY 26.4 million) (“Tranche C”), 6.6 million shares to be issued within 30 business days immediately after Pan Asia receives the unaudited consolidated financial statements of Zhongshan Codes Network Technology Group for the six months ending June 30, 2021 and the net profit after tax of Zhongshan Codes Network Technology Group for the six months ending June 30, 2021 meets 50% of the 2021 Guaranteed Profit of HKD 40 million (CNY 35.2 million) (“Tranche D”) and 6.6 million shares to be issued within 30 business days immediately after Pan Asia receives the audited consolidated financial statements of Zhongshan Codes Network Technology Group for the financial year ending December 31, 2021 and the net profit after tax of Zhongshan Codes Network Technology Group for the financial year ending 31 December 31, 2021 meets the 2021 Guaranteed Profit of HKD 40 million (CNY 35.2 million) (“Tranche E”), In the event that the net profit after tax for six months ending June 30, 2020 fails to meet 50% of the 2020 Guaranteed Profit, Pan Asia shall not allot and issue any Tranche B consideration shares to Chung Kam Ming. Where the 2020 Guaranteed Profit is fulfilled, Pan Asia shall allot and issue the Tranche B consideration shares to Chung Kam Ming by the time the Tranche C consideration shares are allotted and issued to Chung Kam Ming. In the event that the net profit after tax for six months ending June 30, 2021 fails to meet 50% of the 2021 Guaranteed Profit, Pan Asia shall not allot and issue any Tranche D consideration shares to Chung Kam Ming. Where the 2021 Guaranteed Profit is fulfilled, Pan Asia shall allot and issue the Tranche D consideration shares to Chung Kam Ming by the time the Tranche E Consideration Shares is allotted and issued to Chung Kam Ming. If the net profit after tax for any of the financial year ending December 31, 2019, financial year ending December 31, 2020 or financial year ending December 31, 2021 after completion does not meet 2019 Guaranteed Profit, 2020 Guaranteed Profit or 2021 Guaranteed Profit, respectively, Pan Asia shall be entitled to terminate the agreement immediately. Upon termination, Pan Asia Environmental Protection Group shall dispose of and the vendor shall purchase the shares of Zhongshan Codes Network Technology at a price equivalent to the amount of consideration that has been paid by Pan Asia Environmental Protection Group to the Vendor as a compensation for the non-fulfilment of the profit guarantee. Chung Kam Ming shall compensate the Pan Asia in cash for any consideration shares allotted by Pan Asia under the agreement within 30 business days after the issuance of a written notice by Pan Asia. For the year ended December 31, 2018, Zhongshan Codes Network Technology Co., Ltd. reported revenue of CNY 17.05 million and net profit after tax of CNY 3.1 million. The transaction is subject to all necessary consent and approval required to be obtained by Pan Asia and Chung Kam Ming, due diligence review, Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in the consideration shares, further allotment and issuance of 98 new shares to Chung Kam Ming by MSC (HONGKONG) LIMITED having been duly completed. The long stop date falls on six months after the date of the agreement and completion is scheduled to take place on the third business day upon fulfillment of conditions. As of January 9, 2020, additional time is required to fulfill each of the Conditions Precedent, the Long Stop Date is extended to April 30, 2020 or such other date as the Parties may further agree in writing. Pan Asia Environmental Protection Group Limited (SEHK:556) cancelled the acquisition of 44.5% stake in Zhongshan Codes Network Technology Co., Ltd. from Chung Kam Ming on January 22, 2020.