The board of directors of the Royale Home Holdings Limited informed the Shareholders that on 6 May 2022, the Company has entered into (i) a letter of intent (the "LOI(A)") with Avalon Biomedical (Management) Limited in relation to a possible formation of joint venture (the "Possible Formation of JV") and (ii) a letter of intent (the "LOI(B)") with Avalon Steritech (BVI) Limited, a subsidiary of Avalon Biomedical Management, the "Target Company"), in relation to a possible investment (the "Possible Investment") in the equity interest of the Target Company. The investments shall be made by way of capital injection. If the investment sum is not received by the Target Group and/or the Target Company on or before 30 June 2022, the LOI(A) and LOI(B) shall lapse.

On 6 May 2022, the Company has entered into the LOI(A) with Avalon Biomedical Management in relation to the Possible Formation of JV. The Company and Avalon Biomedical Management agreed to form a joint venture (the "JV") in the People's Republic of China (the "PRC") through their subsidiaries. The JV is expected to be engaged in promoting and expanding operations in relation to professional knowledge and advance technical know-how in respect of nanofibre filter and antimicrobial textiles, including but not limited to research and development of relevant products and technical know-how, production and sales of relevant products and provision of relevant services.

The preliminary total investment amount under the Possible Formation of JV and the Possible Investment is USD 10 million subject to adjustment and the Formal Agreement. Except for the provisions in relation to confidentiality, binding effect and counterparts, other provisions set out in the LOI(A) shall not be binding upon the parties thereto. The LOI(A) records the preliminary commercial intent of the parties in respect of the Possible Formation of JV, which is subject to further negotiation and a formal agreement (the "Formal Agreement (A)") to be negotiated and entered into by the parties to the LOI(A).

Avalon Biomedical Management is a company incorporated in Hong Kong with limited liability. The Target Group is dedicated in developing and delivering new biomedical technologies. Its businesses include public health, infection control, diagnostic platforms, medical device, and pharmaceutical, with the goal of addressing the world's pressing public health and medical needs.

To the best knowledge, information and belief of the Company having made all reasonable enquiries, Avalon Biomedical Management and its ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons. As at the date of this announcement, no definitive agreement has been entered into in respect of the Possible Formation of JV, which is subject to the entering into of the Formal Agreement (A). As such, the Possible Formation of JV may or may not proceed.

The preliminary total investment amount under the Possible Formation of JV and the Possible Investment is USD 10 million subject to adjustment and the Formal Agreement (B). The Possible Investment shall be subject to the Company having completed its internal procedures and relevant regulatory approvals (if required). The Target Company shall at its best effort maintain its current management and facilitate the internal approval procedures of the Company by providing relevant information of the Target Company and its subsidiaries (including but not limited to due diligence).

The Company (or its subsidiary(ies)) and the Target Company have agreed to form a joint venture, which is expected to be owned as to 51% and 49% of its equity interest by the Company and the Target Company, respectively. The joint venture is expected to be engaged in the production of disinfection and sterilization products in Mainland China and development of relevant operations in the PRC. Except for the provisions in relation to confidentiality, binding effect and counterparts, other provisions set out in the LOI(B) shall not be binding upon the parties thereto.

The LOI(B) records the preliminary commercial intent of the parties in respect of the Possible Investment, which is subject to further negotiation and a formal agreement to be negotiated and entered into by the parties to the LOI(B).