About JY GAS Company

We are a natural gas operator located in Gaomi City, Weifang City, Shandong Province. We have signed a license agreement with the Gaomi Municipal Administration, according to which we have exclusive rights to operate natural gas sales and related businesses within the administrative district of Gaomi City (including urban and rural areas). At the last practical date, the operating area under our concession was equivalent to about 70% of the total administrative area of Gaomi City. We have more than 16 years of operating experience in the natural gas industry, and are committed to supplying high-quality and safe natural gas to the public in Gaomi City. During the track record period and up to the last practical date, we mainly generated revenue from the sale of natural gas. The natural gas we sell includes pipeline natural gas, compressed natural gas, and liquefied natural gas. Pipeline gas sales are our main business. Our pipeline gas suppliers are CNPC and Shandong Shihua (50% owned by Sinopec), which have each signed a master agreement and a series of actual procurement agreements with us for the procurement of pipeline gas. These agreements ensure that we can enjoy a stable supply of pipeline gas. Our urban pipeline network lays the foundation for our pipeline gas sales business. Our pipeline gas is mainly sold to retail customers such as residential, commercial and industrial pipeline gas end users. During the record period, we also sold piped natural gas through our urban pipeline network to two wholesale customers. One was a natural gas supplier in the neighboring city of Changyi and the other was a gas station operator in Gaomi City. These customers purchase pipeline gas from us for resale. We also sell compressed natural gas and liquefied natural gas as vehicle fuel to retail customers at compressed natural gas and liquefied natural gas filling stations. Gaomi Jiaotong Shihua Natural Gas Co., Ltd. Jiaotong Shihua is one of our operating subsidiaries. It was established as a limited company in China on April 7, 2013, with an initial registered capital of RMB 30,000,000, paid in cash. On March 18, 2016, Jiaotong Shihua's registered capital was increased proportionately by RMB 5,000,000. After the increase in registered capital was completed, Jiaotong Shihua still held 70% and 30% of the shares by Jiayun Natural Gas and Shandong Shihua, respectively. On January 25, 2014, Jiaotong Shihua obtained a gas business license to operate compressed natural gas sales, and has continued its compressed natural gas sales operation since then.