Star Fashion Culture Holdings Ltd

Purpose of Share Restructuring

The Company’s Class A Ordinary Shares are listed on Nasdaq Capital Market under the trading symbol of “STFS”. In order for Class A Ordinary Shares to continue to be listed on Nasdaq Capital Market, the Company must satisfy the Listing Rules of the Nasdaq Stock Market LLC (“Nasdaq”).

The Company has been monitoring the closing bid price of its Class A Ordinary Shares and now considers effecting the Share Consolidation. In the event that the Company’s Class A Ordinary Shares are delisted by Nasdaq, Class A Ordinary Shares would likely trade on the over-the-counter market. If the Company’s shares were to trade on the over-the-counter market, selling Class A Ordinary Shares could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions could be delayed. In the event the Company’s Class A Ordinary Shares are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in Class A Ordinary Shares, further limiting the liquidity of Class A Ordinary Shares. These factors could result in lower prices and larger spreads in the bid and ask prices for the Company’s Class A Ordinary Shares. Such potential delisting from Nasdaq and continued or further declines in the Company’s share price could also greatly impair its ability to raise additional necessary capital through equity or debt financing. The Board also believes that the delisting of Class A Ordinary Shares from Nasdaq Capital Market would likely result in a loss of current or future analyst coverage, and a diminution of institutional investor interest. In addition, the Board believes that such delisting could also cause a loss of confidence of corporate partners, customers and employees, which could harm the Company’s business and future prospects.

To enhance the Company’s ability to retain compliance with the Nasdaq continued listing requirements and remain listed on Nasdaq Capital Market, the Board believes that it is in the best interest of the Company and the shareholders to authorize the Board to effectuate the Share Consolidation to increase the market price of Class A Ordinary Shares to meet the Minimum Bid Price Requirement. As a result, the Board is soliciting shareholders’ approval for the authorization of the Board to effect the Share Consolidation, and to provide authorization to the Board to settle as it considers expedient any difficulty which arises in relation to any consolidation of the shares of the Company and to round up any fractions of shares issued to or registered in the name of such shareholders of the Company following or as a result of the Share Consolidation.

In evaluating whether or not to proceed with the Share Consolidation, the Board also took into account various negative factors associated with such corporate action. These factors include: the negative perception of a share consolidation held by some investors, analysts and other stock market participants; the fact that the share prices of other companies that have effected a share consolidation have subsequently declined back to pre-consolidation levels; the adverse effect on liquidity that might be caused by a reduced number of Class A Ordinary Shares outstanding; and the costs associated with implementing a share consolidation.

The Board considered these factors, and the potential harm of being delisted from Nasdaq Capital Market. The Board determined that continued listing on Nasdaq Capital Market is in the best interest of the Company and its shareholders, and that the Share Consolidation is likely necessary to maintain the listing of Class A Ordinary Shares on Nasdaq Capital Market.

In addition, there can be no assurance that, after the Share Consolidation, the Company would be able to maintain the listing of Class A Ordinary Shares on Nasdaq Capital Market. Nasdaq Capital Market maintains several other continued listing requirements currently applicable to the listing of Class A Ordinary Shares. Shareholders should recognize that if the Share Consolidation is effected, they will own a smaller number of Class A Ordinary Shares than they currently own. While the Company expects that the Share Consolidation will result in an increase in the market price of Class A Ordinary Shares, it may not increase the market price of Class A Ordinary Shares in proportion to the reduction in the number of Class A Ordinary Shares outstanding or result in a permanent increase in the market price (which depends on many factors, including but not limited to the Company’s performance, prospects and other factors that may be unrelated to the number of Class A Ordinary Shares outstanding).

If the Share Consolidation is effected and the market price of Class A Ordinary Shares declines, the percentage decline as an absolute number and as a percentage of the Company’s overall market capitalization may be greater than would occur in the absence of the Share Consolidation. Furthermore, the liquidity of Class A Ordinary Shares could be adversely affected by the reduced number of Class A Ordinary Shares that would be outstanding after the Share Consolidation. Accordingly, the Share Consolidation may not achieve the desired results that have been outlined above.