On July 23, 2026, Zhejian Environmental Development (the direct wholly-owned subsidiary of the Company) entered into a capital increase agreement with Yubang Holdings and the target company, Zhoushan Blue Environment Technology Co., Ltd. Under this agreement, Zhejian Environmental Development is to subscribe for the target company's newly increased registered capital of RMB20 million in cash, with a subscription price of RMB20 million.

Upon completion of the capital increase, the target company's registered capital will increase from RMB20 million to RMB40 million. Consequently, Zhejian Environmental Development and Yubang Holdings will each hold a 50% equity stake in the target company.

As of the date of this announcement, the target company is wholly owned by Yubang Holdings. Following the capital increase, the target company will not become a subsidiary of the Company, and its financial performance will not be consolidated into the Group's consolidated financial statements.

The Group is primarily engaged in environmental engineering and construction services in China, including the construction, renovation, and operation of sewage and reclaimed water treatment plants, water distribution plants, other environmental protection facilities and infrastructure, as well as environmental improvement-related construction services.

The principal business of the target company is water pollution prevention and control, along with wastewater treatment and recycling, which aligns with the Group's existing operations.

The Group's strategy focuses on achieving high-quality construction and environmental operations by enhancing project management capabilities and implementing stringent quality control, thereby maintaining and strengthening its industry position.

The Board of Directors believes that the capital increase aligns with the Group's business strategy of seeking new opportunities in environmental services and sewage treatment. This move is expected to enhance its existing business and generate investment returns for shareholders.

The capital injection will facilitate synergistic cooperation in technology, resources, and project experience. It is anticipated to catalyze greater integration, forming a comprehensive industrial chain within the environmental protection sector and generating valuable synergistic effects for the Group's business operations.