# 13 Investments Accounted for Using Equity Method (Continued)

# (a) Investment in a Joint Venture (Continued)

O-Net WaveTouch was incorporated by the Group for the purpose of development of the wave touch technology, together with an independent third party, pursuant to an investment agreement signed on 4 June 2013. According to the Memorandum and Article of Association of O-Net WaveTouch (“O-Net WaveTouch M&A”), the Group has joint control with the counter party over O-Net WaveTouch as unanimous consent is required from both parties for all significant day-to-day operating activities, future capital fund raising as well as future business development. Despite the Group was granted an option to acquire from the counter party an additional 35% of the shares of O-Net WaveTouch (“Original Call Option”) at fixed purchase price of USD10,000,000 from 4 June 2013 to 4 June 2017, unanimous consent is still required from both parties for all above-mentioned business activities. Accordingly, the investment in O-Net WaveTouch has been accounted for as a joint venture by the Group in 2015.

According to a share swap agreement dated 19 October 2016 (“Share Swap Agreement”), the Group transferred its shareholding interests in O-Net WaveTouch to WaveTouch Group Limited (“WaveTouch Group”), a company located in UK, in return for WaveTouch Group’s 8,000,000 shares. As a result of the share swap, the investment in O-Net WaveTouch and Original Call Option was disposed of. In return, the Group obtained investment in WaveTouch Group (approximately 33% of interests) and a call option to acquire additional 7,000,000 shares in WaveTouch Group (“Revised Call option”). Pursuant to the Share Swap Agreement, the Group has also granted PASINIKA SARL (“PKA”), a third party, a call option (“Call Option”) to buy the Group’s interest in WaveTouch Group (including the interests and Revised Call Option), at a consideration of a cash of USD3,000,000 or certain interests in Windar Photonics PLC (“Windar”), a UK listed company, with the market value not less than USD2,500,000, or a cash payment of USD1,500,000 and 750,000 shares of Windar. The certain interests in Windar will be satisfied by 1,000,001 to 2,000,000 shares of Windar dependent upon the price of Windar’s share. At the same time, PKA granted the Group a put option (“Put Option”) to sell the Group’s interests in WaveTouch Group (including the interest and Call Option), at a consideration of 1,000,000 Windar shares if the market value of such Windar Shares is not less than USD2,500,000, or up to 2,000,000 Windar shares if the market value of 1,000,000 Windar Shares is less than USD2,500,000. The Call Option and Put Option could be exercised any time during the period from 1 October 2016 to 30 June 2018. Given the Group has no significant influence on WaveTouch Group, and it managed the investment in WaveTouch Group on a fair value basis, the Group designated the investment in WaveTouch Group together with other financial assets related to the Share Swap Agreement as financials assets at fair value through profit or loss (Note 17). A disposal gain regarding the investment in O-Net WaveTouch amounting to HKD2,980,000 (including HKD4,205,000 gain on disposal of investments accounted for using equity method and HKD1,225,000 loss on disposal of call option in equity investment) was recognized in 2016.

On 2 August 2017, O-Net Coating and Materials Technologies (HK) Limited (“O-Net Coating”) entered into an Agreement with OB Technologies (Hong Kong) Limited, formerly known as Butterfly Technologies (Hong Kong) Limited (“OB”) in relation to the formation of OB Technologies (Shenzhen) Limited, formerly known as O-Net Butterfly Technologies (Shenzhen) Limited (“the JV Company”). The total registered capital of the JV Company is HKD10,000,000 with each of O-Net Coating and OB investing HKD5,000,000. As stipulated in the joint venture agreement, the financial and operational policies of the JV Company must be decided jointly by O-Net Coating and OB.