THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PART 2 (EXPLANATORY STATEMENT) OF THIS DOCUMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH SECTION 897 OF THE COMPANIES ACT 2006. THIS DOCUMENT CONTAINS DETAILS OF A PROPOSED ACQUISITION WHICH, IF IMPLEMENTED, WILL RESULT IN THE CANCELLATION OF THE XENETIC SHARES FROM ADMISSION TO TRADING ON AIM, A MARKET OPERATED BY THE LONDON STOCK EXCHANGE.

If you are in any doubt as to the action you should take, you are recommended to seek your own professional advice immediately from your stockbroker, bank manager, solicitor, accountant, tax adviser or other independent financial adviser who, if you are in the United Kingdom, should be authorised under the Financial Services and Markets Act 2000 (as amended), or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

If you have sold or otherwise transferred all your Shares, please forward this document (together with the related Forms of Proxy) at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. However, these documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws in such jurisdiction. If you have sold or transferred only part of your holding of Shares, please retain these documents and consult the bank, stockbroker or other agent through whom the sale or transfer was effected.

The distribution of this document and the accompanying documents in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this document and the accompanying documents come should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.

GSL’s common stock is quoted on OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc. It is expected that quotation of the GSL Consideration Shares will become effective subject to the satisfaction of certain conditions, including the sanction of the Scheme by the Court, on 27 January 2014.

Shareholders should carefully read the whole of this document. In addition this document should be read in conjunction with the relevant sections of the documents listed as incorporated by reference on page 52, and the accompanying blue and white Forms of Proxy.

RECOMMENDED ACQUISITION

of

XENETIC BIOSCIENCES PLC

(Incorporated in England and Wales under the Companies Act 1985 with registered number 03213174)

by

GENERAL SALES & LEASING, INC.

(to be effected by a scheme of arrangement under Part 26 of the Companies Act 2006)

This document should be read as a whole. Your attention is drawn to the letter from the Chairman of Xenetic set out in Part 1 of this document, which contains the recommendation of the Xenetic Directors (save for Roman Knyazev) that you vote in favour of the Scheme at the Court Meeting and in favour of the Special Resolution to be proposed at the General Meeting. A letter from London Bridge Capital explaining the Acquisition appears in Part 2 of this document and constitutes an explanatory statement in accordance with section 897 of the Companies Act.

Notices of the Meetings, each of which will be held at the offices of Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES, United Kingdom, on 17 December 2013, are set out at the end of this document. The Court Meeting will start at 10.00 a.m. GMT and the General Meeting will start at 10.30 a.m.GMT (or as soon thereafter as the Court Meeting shall have been concluded or adjourned).

Capitalised words and phrases used in this document have the meanings given to them in Part 9 of this document.

IMPORTANT NOTICE

The distribution of this document and/or the accompanying documents in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this document and the accompanying documents come should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this document nor the accompanying documents constitute an offer or an invitation to purchase any securities or a solicitation of an offer to sell any securities pursuant to these documents or otherwise in any jurisdiction in which such offer or solicitation is unlawful. This document and the accompanying documents have been prepared in connection with a proposal in relation to a scheme of arrangement pursuant to and for the purpose of complying with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with laws of jurisdictions outside England and Wales. Nothing in this document or the accompanying documents should be relied on for any other purpose.

The statements contained herein are made as at the date of this document, unless some other time is specified in relation to them, and service of this document will not give rise to any implication that there has been no change in the facts set forth herein since such date. Nothing contained herein will be deemed to be a forecast, projection or estimate of the future financial performance of the Company, the Xenetic Group, GSL or the GSL Group.

No person has been authorised to make representations on behalf of the Company or GSL concerning the Acquisition or the Scheme which are inconsistent with the statements contained in this document and any such representations, if made, may not be relied upon as having been so authorised. The summaries of the principal provisions of the Scheme contained in this document are qualified in their entirety by reference to the Scheme itself, the full text of which is set out in Part 4 of this document. Each Shareholder is advised to read and consider carefully the text of the Scheme itself.

No person should construe the contents of this document as legal, financial or tax advice but should consult their own advisers in connection with the matters contained herein, including without limitation in relation to holding US securities.

London Bridge Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company as its financial adviser and no one else in connection with the Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to clients of London Bridge Capital Limited nor for providing advice in connection with the Acquisition or the content of, or any other matter or arrangement described or referred to in, this document. Neither London Bridge Capital Limited nor any of its directors, officers, subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of London Bridge Capital Limited in connection with the Acquisition or any other matter referred to in this document, any statement contained herein or otherwise.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company as its nominated adviser and broker only and no one else in connection with the Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to clients of N+1 Singer nor for providing advice in connection with the Acquisition or the content of, or any other matter or arrangement described or referred to in, this document. Neither N+1 Singer nor any of their respective directors, officers, subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of N+1 Singer in connection with the Acquisition or any other matter referred to in this document, any statement contained herein or otherwise.

Please be aware that addresses, electronic addresses and certain other information provided by Xenetic Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Xenetic may be provided to GSL during the Offer Period as required under Section 4 of Appendix 4 to the City Code.

This document has been prepared for the purposes of complying with English law and the information disclosed may be different from that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside England and Wales. Overseas Shareholders should consult their own legal and tax advisers with regard to the legal and tax consequences of the Scheme and the Acquisition on their particular circumstances.

The release, publication or distribution of this document in jurisdictions other than the United Kingdom and the availability of any offer to shareholders in Xenetic who are not resident in the United Kingdom may be affected by the laws or regulations of any such jurisdictions. Accordingly, any persons who are subject to the laws or regulations of any jurisdiction other than the United Kingdom should inform themselves of, and observe, any applicable requirements.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains statements about Xenetic and GSL that are or may be forward-looking statements. All statements other than statements of historical facts included in this document may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “estimates”, “projects” or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Xenetic’s or GSL operations; and (iii) the effects of government or stock exchange regulation on Xenetic’s or GSL’s business or securities.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Each of Xenetic and GSL disclaims any obligation to update any forward-looking or other statements contained in this document, except as required by applicable law.

DISCLOSURE REQUIREMENTS OF THE CITY CODE

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). Opening Position Disclosures have already been made both by GSL and by Xenetic.

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

NOTICE TO OVERSEAS SHAREHOLDERS

The implications of the Scheme and the Acquisition for Overseas Shareholders may be affected by the laws of the relevant jurisdictions. Overseas Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of each Overseas Shareholder to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.

The Acquisition relates to the acquisition of shares in a UK public company and is proposed to be made by means of a scheme of arrangement under Part 26 of the Companies Act. In particular, with respect to investors in the United States, a transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US tender offer rules. Financial information on the Xenetic Group included in the relevant documentation has been prepared in accordance with accounting standards applicable to listed companies in the UK, being IFRS as adopted by the European Union. These may not be comparable to the financial statements of US companies.

Overseas Shareholders in the United States should note the matters set forth in paragraph 17 of Part 2 of this document.

The terms of the Scheme are set out in full in Part 4 of this document. The purpose of the Scheme is to enable GSL to become the owner of the entire issued and to be issued share capital of the Company. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full New Shares which have an aggregate nominal value equal to the aggregate nominal value of the Scheme Shares cancelled and issuing the same to GSL. Scheme Shareholders will then receive 56 GSL Consideration Shares for every 175 Scheme Shares held by them on the basis of the Acquisition (as is more fully described herein).

As a result of the Scheme, Scheme Shareholders will be acquiring GSL Consideration Shares from General Sales & Leasing, Inc., a Nevada corporation, in accordance with United States securities laws and the Equivalent Document.

The GSL Consideration Shares to be issued under the Scheme have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “ Securities Act ”), or under the securities laws of any state, district or other jurisdiction of the United States, the Republic of South Africa, Canada or Japan.

It is expected that the GSL Consideration Shares will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof on the basis of the Court Meeting, which will consider, among other things, the fairness of the terms of the Scheme. Under applicable US securities laws, shareholders who are or will be deemed to be affiliates of Xenetic or GSL, prior to or after the Effective Date, will be subject to certain transaction restrictions relating to the GSL Consideration Shares received in connection with the Scheme.

PUBLICATION ON WEBSITE

A copy of this document is, and will be available, free of charge for inspection on the Company’s website at www.xeneticbio.com/investorrelations during the course of the Acquisition but should not be forwarded or transmitted in or into or from any Overseas Jurisdiction.

For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this document.

COPIES OF THIS DOCUMENT

If you have received this document in electronic form or by it being published on Xenetic’s website: www.xeneticbio.com/investorrelations, you can obtain a hard copy of the document by contacting Share Registrars Limited on +44 (0) 1252 821390. Lines are open 9.00 a.m. to 5.00 p.m. (London time) Monday to Friday (except UK public holidays). The helpline cannot provide advice on the merits of the Acquisition or the Scheme nor give any financial, legal or tax advice. You will not receive a hard copy of this document unless you so request. You may also inform Share Registrars Limited that you wish all future documents, announcements and information in relation to the Acquisition or the Scheme to be sent to you in hard copy.

ACTION TO BE TAKEN

VOTING AT THE COURT MEETING AND THE GENERAL MEETING

There will be two separate meetings of Shareholders: the Court Meeting and the General Meeting. Scheme Shareholders will be entitled to vote at the Court Meeting and all Shareholders will be entitled to vote at the General Meeting. The Court Meeting and the General Meeting will be held at the offices of Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES, United Kingdom, on 17 December 2013 at 10.00 GMT and 10.30 a.m. GMT respectively (or, in the case of the General Meeting, if later, as soon as the Court Meeting has been concluded or adjourned). The Scheme requires approval of the Scheme Resolutions to be tabled at both of these Meetings.

Please check that you have received the following with this document:

● a blue Form of Proxy for use in respect of the Court Meeting;

● a white Form of Proxy for use in respect of the General Meeting; and

● a reply-paid envelope for use in the UK for the return of the Forms of Proxy.

If you have not received all of these documents, please contact the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL, or call on +44 (0) 1252 821390 between 9.00 a.m. and 5.00 p.m. GMT Monday to Friday (except UK bank holidays).

To vote on the Scheme:

It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of Scheme Shareholder opinion. Whether or not you plan to attend the Meetings, each eligible Shareholder is requested to complete and sign both the blue and white Forms of Proxy and return them, in accordance with the instructions printed thereon, by post or, during normal business hours only, by hand to the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL or by fax to Share Registrars Limited on +44 (0) 1252 719232 or by scan and email to Share Registrars Limited at proxies@shareregistrars.uk.com, as soon as possible, but in any event so as to be received by no later than:

(or in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned Meeting). If you wish to appoint more than one proxy you should request additional Forms of Proxy from Share Registrars Limited and submit them in accordance with the instructions set out in this document.

Returning the Forms of Proxy will enable your votes to be counted at the Meetings in the event of your absence. If the blue Form of Proxy for use at the Court Meeting is not returned by 10.00 a.m. GMT on 15 December 2013, it may be handed to the Chairman of the Court Meeting at the Court Meeting before the start of the Court Meeting. However, in the case of the General Meeting, unless the white Form of Proxy is returned by 10.30 a.m. GMT on 15 December 2013, it will be invalid. The completion and return of a Form of Proxy will not prevent you from attending and voting at the relevant Meeting, or any adjournment thereof, in person should you wish to do so and are so entitled.

Shareholders are encouraged to return their Forms of Proxy as soon as possible, to ensure they arrive before the relevant deadline.

To vote at the Meetings using a proxy appointment through CREST

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “ CREST Proxy Voting Instruction ”) must be properly authenticated in accordance with Euroclear’s specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST) . The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID 7RA36 by 6.00 p.m. on 13 December 2013 in the case of the Court Meeting and by 6.00 p.m. on 13 December 2013 in the case of the General Meeting (or, in the case of any adjournment, no later than 6.00 p.m. on the day two days before the day of the adjourned meeting (excluding any day which is not a working day) in respect of the Court Meeting or by no later than 6.00 p.m. on the day two days before the adjourned meeting (excluding any day which is not a working day) in respect of the General Meeting)). For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Voting Instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In connection with this, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning the practical limitations of the CREST system and timings.

Xenetic may treat as invalid a CREST Proxy Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations.

Appointment of multiple proxies and multiple proxy voting instructions

Shareholders are entitled to appoint a proxy in respect of some or all of their Shares. Shareholders are also entitled to appoint more than one proxy. A space has been included in the Forms of Proxy to allow you to specify the number of Shares in respect of which that proxy is appointed. If you return the blue Form of Proxy duly executed but leave this space blank, your blue Form of Proxy will be invalid. If you return the white Form of Proxy duly executed but leave this space blank, you will be deemed to have appointed the proxy in respect of all of your Shares. If you wish to appoint more than one proxy in respect of your shareholding you should contact the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL or call Share Registrars Limited on +44 (0) 1252 821390 between 9.00 a.m. and 5.00 p.m. GMT Monday to Friday (except UK bank holidays) for further Forms of Proxy or photocopy the Form of Proxy as required.

You may appoint more than one proxy in relation to a Meeting, provided that each proxy is appointed to exercise the rights attached to different Shares held by you. The following principles shall apply in relation to the appointment of multiple proxies:

Assistance

If you have any questions relating to the Meetings, this document or the completion and return of the Forms of Proxy, please address your questions in writing to the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL, or call Share Registrars Limited on +44 (0) 1252 821390 between 9.00 a.m. and 5.00 p.m. GMT Monday to Friday (except UK bank holidays). Please note that no advice on the merits of the matters described in this document or legal, tax or financial advice can or will be given by Share Registrars.

IT IS IMPORTANT THAT, FOR THE COURT MEETING, AS MANY VOTES AS POSSIBLE ARE CAST SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR REPRESENTATION OF SCHEME SHAREHOLDER OPINION. SCHEME SHAREHOLDERS ARE THEREFORE STRONGLY URGED TO COMPLETE, SIGN AND RETURN THEIR FORMS OF PROXY AS SOON AS POSSIBLE.

Date

This document is dated 21 November 2013.

TABLE OF CONTENTS

The Court Meeting and the General Meeting will each be held at the offices of Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES, United Kingdom.

Notes:

Unless otherwise stated, all references in this document to times are to times in London, England.

The dates given are based on current expectations and may be subject to change. If any of the expected dates change, the Company will give adequate notice of the change by issuing an announcement through a Regulatory Information Service.

To: Shareholders and, for information only, to holders of options and warrants Dear Shareholder

RECOMMENDED OFFER
BY
GENERAL SALES & LEASING, INC
FOR
XENETIC BIOSCIENCES PLC

(to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006)

1. Introduction

On 12 November 2013, Xenetic announced that the boards of GSL and Xenetic had reached agreement on the terms of a recommended proposal for the Acquisition under which GSL will acquire the entire issued and to be issued share capital of Xenetic.

Xenetic has been implementing its longer term strategy to migrate its corporate seat to, and expand in, the US, noting the significant value gap that exists between the biotechnology sector in the UK and in the US, where Xenetic believes the sector is better understood and more widely followed. Completion of the Acquisition will be the first step in the intended process of achieving a subsequent listing on an Exchange in a manner which the Board believes can be achieved more easily, more quickly and in a more cost-effective manner than would be possible were Xenetic to apply for such a quotation itself.

I am writing to you to explain:

Roman Knyazev is an employee and investment manager of Rusnano (a significant shareholder in Synbio, the 45 per cent. shareholder of Xenetic). He was appointed to the Board as a nominated director by Synbio pursuant to the relationship agreement between Synbio and Xenetic dated 28 November 2011 (the “Relationship Agreement”). As a result of his employment by Rusnano, a Russian state-owned entity, Mr Knyazev is unable to express a view on any transaction involving a board recommendation for shareholders to vote either in favour or against any particular proposal.

Since his appointment, the Xenetic Board has been aware of this situation and is wholly supportive of it and such a situation has not arisen to date. This does not affect Mr Knyazev’s ability to participate as a director of Xenetic as regards day-to-day and operational matters. Dr Dmitry Genkin and Dr Artur Isaev are directors of both Xenetic and SynBio (but not of Rusnano) and, as stated below, have voted in favour of the Scheme and recommend it to Xenetic Shareholders along with the remainder of the Xenetic Board.

The Scheme is conditional, amongst other things, on the approval by Shareholders of the Scheme Resolutions, proposed at the General Meeting.

The purpose of this document is therefore to provide details of the Scheme and to convene the General Meeting at which the Scheme Resolutions required to effect the Scheme will be proposed. The Notice of General Meeting is set out on page 104 of this document.

Shareholders are strongly advised to read this document carefully and seek their own independent financial, tax and legal advice and to consider, amongst other matters, paragraph 5 below headed ‘ Background to and reasons for the Xenetic Directors’ recommendation of the Acquisition ’, before casting their votes.

2. Summary of the terms of the Acquisition

The Acquisition is to be implemented by means of a scheme of arrangement between Xenetic and Scheme Shareholders under Part 26 of the Companies Act and involves a reduction of capital under section 648 of the Companies Act. Details of the Acquisition (including the Conditions to which it is subject) are set out in Part 2, Part 3 and Part 4 of this document. The Scheme requires the requisite approval of the Scheme Shareholders at a meeting convened by the Court and the subsequent sanction of the Court. The Reduction of Capital requires the approval of Shareholders at the General Meeting and the subsequent confirmation of the Court. Once the Scheme becomes Effective, the terms will be binding on all Scheme Shareholders irrespective of whether or not they attend or vote at the Meetings (and if they attend and vote, whether or not they vote in favour).

The purpose of the Scheme is to enable GSL to become the holder of the entire issued and to be issued share capital of Xenetic. This is to be achieved by the cancellation of the Scheme Shares and the application of the reserve resulting from such cancellation in paying up in full such number of New Shares as is equal to the number of Scheme Shares cancelled, and issuing the same to GSL, in circumstances where the Scheme Shareholders on the register of members at the Scheme Record Time will receive:

for every 175 Scheme Shares: 56 GSL Consideration Shares

Xenetic Shareholders holding 174 Scheme Shares or less will be entitled to vote at the Meetings. They will not however receive any GSL Consideration Shares. The GSL Consideration Shares attributable to their Scheme Shares will be aggregated and sold for cash on behalf of such Xenetic Shareholders as soon as reasonably practicable following completion of the Acquisition at the then prevailing market price on the OTCBB or OTCQB. The proceeds will then be converted into sterling at the exchange rate prevailing at that time and Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of £1 or more will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more will be able to opt to have such proceeds donated to charity. The white Form of Proxy contains a box to tick should such a Scheme Shareholder wish to elect to donate his or her proceeds to charity.

Any Xenetic Shareholders to the extent holding a number of Scheme Shares not divisible by 175, will also have such Scheme Shares aggregated together with similar Scheme Shares of other Xenetic Shareholders to result in GSL Consideration Shares to be sold on behalf of such Xenetic Shareholders in the same manner as explained above. Again, Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of £1 or more will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more will also be able to opt to have such proceeds donated to charity on the same basis as above.

On the basis of the value of a GSL Consideration Share of 18.59 pence as at 11 November 2013 set out at Part 12 of this document, the Acquisition values the entire existing issued share capital of the Company at approximately £24.3 million and each Scheme Share at approximately 5.95 pence. This represents a premium or discount of approximately:

The expected transaction timetable is set out on page 10 of this document. It is expected that the Acquisition and the resolutions required to implement the Scheme will be put to Xenetic Shareholders at the Court Meeting and the General Meeting which are expected to be held on 17 December 2013. It is expected that, subject to satisfaction or waiver of the Conditions, the Effective Date will be 23 January 2014. If the Scheme becomes Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting. Further details of the Scheme, including the arrangements for settlement of the consideration payable to Scheme Shareholders, are set out in the Explanatory Statement in Part 2 of this document.

Application has been made in accordance with AIM Rule 41 to the London Stock Exchange to cancel the admission to trading on AIM of Xenetic Shares. Cancellation is conditional upon the Scheme (and therefore the Acquisition) having become Effective. The announcement to be issued by Xenetic on 22 November 2013 provides Xenetic Shareholders with due notice of the intended suspension from trading on AIM which is expected to take place at 7.30 a.m. on 23 January 2014, and of the intended cancellation of trading on AIM which is expected to take place at 7.00 a.m. on 24 January 2014.

Accordingly the last day of dealings in, and for registration of transfers of, Xenetic Shares is presently anticipated to be 22 January 2014. The result of the Court Hearing will be announced on 23 January 2014. No transfers of Xenetic Shares will be registered after market close on 22 January 2014.

3. GSL Consideration Shares

The GSL Consideration Shares to be issued as consideration for the Acquisition will be issued in certificated form only. There is expected to be issued 130,520,137 shares of US$0.01 par value each in the capital of GSL assuming no further shares are issued by Xenetic up to the Effective Date. Fractions of GSL Consideration Shares will not be allotted or issued pursuant to the Acquisition.

It is the intention of the Proposed Directors and Xenetic that GSL, following the completion of the Acquisition, will seek a listing of its shares on an Exchange at the earliest practicable opportunity.

The GSL Consideration Shares will, in the meantime be available for quotation on the OTCBB and the OTCQB and will be issued free from all liens, charges, encumbrances and other third party rights and/or interests of any nature whatsoever. It is expected that the GSL Consideration Shares to be issued will be entitled to be deposited, in the normal course, into an individual shareholder’s trading account and then available for immediate trading.

Xenetic Shareholders should, however, be aware that the deposit of their GSL Consideration Shares into their existing trading accounts within the UK or outside may be limited due to the internal rules of operations of the shareholder’s chosen broker-dealer or its clearing firm. It is not uncommon for some broker-dealers and/or their clearing firms to require, among other things, the following items to effectuate the deposit of newly issued OTCBB and OTCQB shares: (1) substantial information on the transaction in which the shareholder received the shares; and/or (2) a legal opinion related to the shares. Moreover, some firms may even outright refuse to accept the deposit of newly issued OTCBB and OTCQB shares, among other limitations, due to such internal rules. As a result, neither GSL, nor Xenetic, can assure any shareholder that they will be able to deposit their GSL Consideration Shares in their existing brokerage accounts or that they will not be required to provide additional information or documentation, not otherwise provided by either company with stock certificates. Consequently, shareholders may be required to set up a new trading account with a different broker-dealer or otherwise find themselves subject to delays and other issues in the deposit of their GSL Consideration Shares. The deposit of the GSL Consideration Shares will be the responsibility of the recipient shareholder.

After receipt of the certificates representing their GSL Consideration Shares, shareholders may deposit their GSL Consideration Shares, subject to the limitations discussed above regarding deposits, either by providing their certificate to the broker-dealer where their trading account is set up, or by arranging for their GSL Consideration Shares to be electronically transferred into the account. If delivered in electronic form at this later date, the shareholder will need to confirm that their broker-dealer allows for such transfers of OTCBB shares, and then provide the transfer agent with the necessary information regarding such Shares and their trading account to allow the electronic transfer to occur. Shares transferred in this manner will be tradable by the shareholder upon acceptance of the deposit into the trading account consistent with the rules of the broker-dealer with which such Shares are deposited. While Xenetic will assist where it can, because the deposit of the GSL Consideration Shares is dependent on the individual processing rules of the shareholder’s choice of broker-dealer, it will be the responsibility of the individual shareholder receiving their GSL Consideration Share certificate to process and facilitate the deposit of such Shares. Xenetic will take no responsibility or liability whatsoever for ensuring the deposit of the GSL Consideration Shares into a specific shareholder trading account or with a specific broker-dealer.

The GSL Consideration Shares will be capable of being held in both certificated and uncertificated form, and will be issued credited as fully paid and will rank pani passu in all respects with the New GSL Shares, including as to voting rights and the right to receive and retain all dividends and other distributions declared, paid or made after the Effective Date. The New GSL Shares and GSL Consideration Shares will be denominated in US Dollars.

The GSL Consideration Shares will be issued on implementation of the Scheme to Scheme Shareholders on the register immediately following the Scheme Record Time. Details of the rights attaching to the GSL Consideration Shares are set out in paragraph 4 of Part VIII of the Equivalent Document, the text of which is set out for convenience at Part 7 of this document, and in paragraph D of Part 3 of this document.

Upon the Scheme becoming Effective and the receipt by Xenetic Shareholders of their entitlements to GSL Consideration Shares, the protections contained within the City Code will not apply to such holdings. Please refer to paragraph C of Part 3 of this document.

4. Conditions to the Acquisition

The implementation of the Acquisition is subject to the Conditions set out in section A of Part 3 of this document. To become Effective, the Acquisition requires, amongst other things:

Shareholders are referred to Part 3 of this document for the full details of the Conditions.

5. Background to and reasons for the Xenetic Directors’ recommendation of the Acquisition

The Board believes that at the present time smaller quoted bioscience companies, in general, have a higher profile and a better investor following in the US than is found in European markets in general and in the UK market, in particular. The Xenetic Directors believe that by achieving a listing for Xenetic on an Exchange, significant benefits will accrue to Xenetic and its shareholders including, but not exclusively:

The Board has considered a number of options to achieve the goal of migration to the US, including seeking a quotation of Xenetic’s shares directly on an Exchange and seeking a merger with an existing US quoted biotechnology company with complementary activities. Following careful consideration of the issues, the Board has determined that the most appropriate way of achieving this outcome is to be acquired by an SEC-reporting company and then seek to achieve a quotation on an Exchange within a reasonable period; and to effect such an acquisition by the Scheme.

Xenetic’s plan is for it to be acquired on a share-for-share basis by GSL, where the level of effective dilution to Xenetic’s Shareholders does not exceed 3 per cent. as at the Effective Date. This means that, other than for such dilution and the fees and costs of the Acquisition (which are deemed to be the “cost” of achieving Xenetic’s aims), the group formed by the completion of the Acquisition will be effectively the same group as at present, with the same assets and liabilities, save that it will have a US holding company (GSL) with an enhanced ability to achieve a listing on an Exchange. Whilst Xenetic and GSL have commenced developing a plan regarding such a listing, there is no guarantee that such a listing can be achieved.

In particular, GSL is subject to various regulatory requirements, including those of the SEC and the various trading exchanges where its equity shares may trade. Any securities exchange (for example, NASDAQ) can and will apply its own rules and/or analysis to GSL’s eligibility for listing which may adversely impact the Enlarged Group’s attempt to be listed on a securities exchange or the tradability of its shares.

6. Irrevocable Undertakings

Xenetic has sought and received irrevocable undertakings from those Xenetic Directors who are beneficial owners of Xenetic Shares to vote in favour of the Scheme Resolutions in respect of their entire beneficial holdings of Xenetic Shares, a total of 11,271,086 Xenetic Shares, representing approximately 2.76 per cent. of the existing issued ordinary share capital of Xenetic, as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

Xenetic has sought and received irrevocable undertakings from certain other Xenetic Shareholders who beneficially own or otherwise control Xenetic Shares to vote in favour of the Scheme Resolutions in relation to a total of 96,668,741 Xenetic Shares, representing approximately 23.7 per cent. of the existing issued ordinary share capital of Xenetic as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

In relation to the Scheme Resolutions, Xenetic has therefore received total irrevocable undertakings in respect of 107,939,827 Xenetic Shares representing, in aggregate, 26.46 per cent. of the existing issued ordinary share capital of Xenetic as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

Further details of the above irrevocable undertakings are set out in paragraph 7 of Part 8 of this document.

7. Information on Xenetic and current trading and prospects

Xenetic is committed to becoming a US-based and Exchange-listed speciality drug developer focused on achieving full value recognition of the Xenetic patent-protected portfolio with its core technologies and targeted therapeutic offerings.

Xenetic is currently a UK based biopharmaceutical company with core technology capabilities, intended to facilitate the development of a new generation of biological drugs, vaccines and oncology therapies.

Together with its collaborative partners SynBio, Pharmasynthez, SIIL and Baxter, the Group is developing a pipeline of next generation biotherapeutics based on its proprietary PolyXen, Oncohist and ImuXen platform technologies. The Group is pursuing a development strategy of clinical advancement through its own efforts and those of its collaborative partners (such as SynBio, Pharmsynthez, SIIL and Baxter) as further described below.

As announced on 31 July 2013, the Group has received regulatory approval in Australia and New Zealand to commence its Phase II FDA/ICH-compliant clinical trial for ErepoXen®, the Group’s PolyXen®-based biologic candidate for anaemia in pre-dialysis patients with Chronic Kidney Disease (“CKD”). Since that date, the drug has been released for export from India (where it is produced by SIIL). It is now available at the Group’s 10 clinical sites in Australia and New Zealand ready for first patient dosing in the trial being managed by Novotech, the clinical research organisation chosen to conduct the trial. The Company expects that it will be able to provide guidance on its first interim trial results in H2-2014. The trial is expected to finally report completion of Phase II studies by H1-2015.

SynBio:

Phase III trials for ErepoXen® in Russia have progressed rather more slowly than originally anticipated due to patient recruitment limitations. SynBio has now both increased the number of clinical trial sites and made some changes to the trial protocol in order to increase the rate of recruitment. Accordingly, the Group retains a high degree of confidence in the ultimate clinical outcome and the resultant marketing of the product in Russia, the former CIS and elsewhere.

Clinical trials on OncoHistTM candidate for Acute Myeloid Leukaemia are ongoing. The Phase I/II(a) dose-ranging phase of the trial for Non-Hodgkin’s Lymphoma has been completed. In neither case have there been any reported Serious Adverse Events (“SAEs”).

In December 2011, Dmitry Genkin and Peter Kruglyakov undertook to use best endeavours to procure by 16 January 2012 the novation, licence and/or re-transfer back to the Group of certain Cryonix/Onchoist intellectual property previously transferred and/or licensed out of SymbioTech to SynBio or its connected persons. While progress has been made, the relevant documentation has not yet been signed.

Pharmsynthez:

The ImuXen®-based Multiple Sclerosis candidate, MyeloXenTM has completed Stage I trials in healthy volunteers with no SAEs. The trial has now entered the Stage II stage in patients. The dose-ranging phase has been completed with no SAEs reported. The dose confirmation studies in patients are expected to commence within 3 months.

Pre-clinical work on PulmoXenTM has been completed. Pharmsynthez imminently expects to receive Russian regulatory approval to move this PolyXen®-based biologic proprietary candidate for Cystic Fibrosis into the clinic.

SIIL:

The most recently announced advance in Indian clinical work on the Group’s ErepoXen® product candidate relates to the screening of patients for a Phase I/II trial, treating CKD patients on dialysis.

Dana-Farber:

Work on this previously announced collaborative agreement with Dana-Farber Cancer Institute in Boston, examining the novel mechanism of action of OncoHistTM, is still in progress. The Group is awaiting interim data from the SynBio Phase I/II(a) trial prior to submitting an Investigational New Drug (“IND”) filing with the US FDA.

Baxter:

The US$1m license extension fee receivable in June 2013 was duly settled by Baxter, thereby granting that company a 12-month extension to file an IND for their PSA-Factor VIII candidate for haemophilia.

Summary:

The primary objective of the Group is monetising the Group’s IP by transitioning out of the research phase and into product- and indication-specific product development. In summary, the Group’s product development pipeline is as follows:

The above table provides an aggregate overview of the drug development pipeline for the Group. To achieve the most rapid and effective development of the candidates most likely to make rapid progress into and through the clinic, it is Xenetic’s intention that, from completion of Xenetic’s move of all drug development activities to the US, there will be a distillation and concentration of its internal development programmes to three candidates, being:

(1)        PSA-EPO (Anaemia)

(2)        OncoHist (Leukaemia)

(3)        PSA-Dnase (Cystic Fibrosis).

8. Funding Outlook

In the announcement of its interim report and unaudited condensed financial statements for the six months ended 30 June 2013 released on 30 September 2013, the Company stated:

“... new capital is planned to be raised in the last quarter of 2013 (whether or not the US listing process has been concluded by that time) and in the second or third quarter of 2014, to fund planned activities through September 2014.”

As at 20 November 2013, being the nearest practicable date prior to the publication of this document, the Group had cash reserves of approximately £3.3 million. As indicated in the interim report, due to the increase in operating costs arising from expenditures such as the stepping-up of the US transition process and the Australian PSA-EPO clinical trials, the monthly capital expenditure rate has risen from an historical rate of circa £250,000 to circa £450,000 per calendar month over the quarter ended June 2013; further increases are expected in the upcoming two quarters partly as a consequence of planned completion of the US transition but also to the expected roll-out of the PSA-EPO clinical trial.

  This position is in line with the long-term strategy of the Group. It has not proven practicable to raise capital in the last quarter of 2013 given the Company’s preparation for the Scheme. New capital is planned to be raised in the first half of 2014, to fund planned activities through September 2014. Further announcements will be made by Xenetic (or GSL as the case may be) in due course.

9.                         Risk Factors

The business of the Group is subject to various risk factors, the principal ones being set out in Part 13 of this document. These risks will continue to apply after the Scheme becomes Effective, in relation to the Enlarged Group and the GSL Consideration Shares.

10.                   Information on GSL

GSL Shares are currently available for quotation on the OTCBB and OTCQB. There has been only limited trading recently in such shares and therefore they are not considered to have a public valuation or market.

GSL is not currently identified as a ‘shell company’ under relevant SEC rules and regulations, which means that its stock is not subject to certain limitations contained in these rules. There can be no assurance, however, that the SEC and/or various regulatory bodies in the US will not reject this classification and effectively apply the shell company rules to GSL in the future. Additionally, any Exchange may apply its own rules and/or analysis and reach the conclusion that GSL was or is a shell company.

Any such determination, either by the SEC, one of the regulatory bodies in the US or an Exchange could adversely impact the Enlarged Group’s attempt to be listed on an Exchange or the tradability of its shares, and/or the cost and time involved in doing so. This may include being subject to the “seasoning rules” of an Exchange prior to being quoted, in effect requiring GSL to wait a year or more before being allowed to obtain a listing on such Exchange.

GSL was incorporated in August 2011 for the purpose of owning and operating helicopters for use in sightseeing tours and as pilot training aircraft. Whilst there is demand for hourly helicopter rental in Las Vegas, GSL believes that it is in its best interests to enter into the Acquisition of Xenetic, and dispose of its current business operations.

Accordingly, on 12 November 2013, GSL entered into an agreement with its largest shareholder, Oxbridge Technology Partners, SA (“Oxbridge”), a Belize Corporation, pursuant to which Oxbridge will acquire the entirety of GSL’s existing business, which acquisition is conditional upon and will complete immediately after the Scheme becomes Effective and the New Shares in Xenetic have been issued to GSL. Under this disposition agreement Oxbridge will exchange its 100,000,000 GSL Shares for: (a) the shares of GSL’s two subsidiaries, Shift It Media and General Aircraft, Inc., and (b) the payment of US$430,000 in cash, subject to the Scheme becoming Effective. The assets and liabilities associated with such businesses will thereby pass to Oxbridge. Oxbridge’s 100,000,000 GSL Shares will be retired to treasury. Further details of this agreement are set out in paragraph 9(c) of Part VIII of the Equivalent Document, the text of which is set out in Part 7 of this document.

GSL will also undertake a share consolidation in advance of the Scheme becoming Effective whereby every holder of GSL Shares will receive 1 New GSL Share of US$0.01 par value for every 10 GSL Shares of US$0.001 par value held on the consolidation date.

Subject to fulfilment (or as the case may be waiver) of the Conditions, GSL will issue the GSL Consideration Shares to the Scheme Shareholders pursuant to the Scheme. In connection with this, GSL has on or about the date hereof published information on itself and its securities in a document equivalent to a prospectus for the purposes of the Prospectus Rules, for which GSL is responsible. The text of this Equivalent Document is reproduced for convenience in Part 7 of this document.

The GSL Director will resign from the board of GSL when the Scheme becomes Effective and will confirm that he has no outstanding claims against GSL. The Proposed Directors will thereupon be appointed as directors of GSL. After the Effective Date, the board of GSL will review the needs of the business regarding whether to appoint additional directors. Such directors, if appointed, may come from the existing group of Xenetic Directors, be appointed from within the Enlarged Group or be recruited externally, in each case on terms of be agreed at the time.

Pending its conversion to a private limited company, the board of Xenetic will be reduced in number to Mr Maguire and Mr Hill only. It is also the intention to change the name of GSL to Xenetic Biosciences, Inc. on or before the Effective Date.

11. GSL’s strategic plans for Xenetic’s management, employees and places of business

Immediately after the Effective Date, the GSL Director will resign and the Proposed Directors will join the board of GSL as directors with the intention that their service agreements and/or terms of appointment will be equivalent or substantially equivalent to their current terms, and, where relevant, subject to applicable US laws and regulations.

No material changes to the number of Xenetic Group employees (or their current terms of employment) are expected as a result of the conclusion of the transaction contemplated by the Scheme, or from the Enlarged Group’s ongoing business strategy- which will be maintained on the same business model as has been executed by the Company for some years.

The principal objectives of the project are to re-domicile Xenetic’s activities to the US in order for the Company more effectively to develop its proprietary product pipeline with greater access to both a productdevelopment-focused labour pool, and development capital, these being key factors in the successful monetisation of the Company’s intellectual property portfolio.

For those in the UK and European small-cap biotech sector, the United States is recognised globally as the sector leader, and, in the case of Xenetic, especially so in terms of the range of skills located within Massachusetts where the Company is currently establishing its new drug development centre. Also, in terms of access to the US capital markets, where the magnitude of development capital available to emerging companies is appreciably greater than that available in European markets.

Xenetic does not have any employee pension plans to which it contributes. Employees will remain employed by their current Xenetic employer, and their employment rights will be unaffected. However, independently of the Scheme, and in accordance with its stated strategy, in 2012 Xenetic initiated some operational restructuring (which is ongoing) in anticipation of the re-location of operations to the US. This is exemplified by the hiring of senior US-based staff in May 2012, followed by the identification of new office and laboratory facilities in Lexington, Massachusetts. These facilities, where possible utilising fixed assets transferred from the UK, will become fully operational in December 2013. Consequently, the UK laboratories will be closed as there is neither the need for (nor the capital available) to sustain two scientific sites. The corporate office of Xenetic is in London and the new Lexington facility will, in due course, become the corporate hub of the business.

It is important to recognise that these operational issues have been and will continue to be conducted wholly independently of the Scheme. The purpose of the Scheme is a technical mechanism to relocate the domicile of the holding company of the Xenetic Group from the UK to the US, by installing a US company as the new holding company for the Xenetic Group. GSL will not have any other business or operations to be affected by the Scheme after it has acquired Xenetic. There is expected to be no change to the business or strategy of Xenetic following completion of the Scheme.

The current sole director of GSL has played no part in developing the US strategy of Xenetic and will resign on completion of the Scheme. The Proposed Directors (and such other directors as join the board of GSL going forward) will then lead the business, of which GSL will become the holding company. The business will be conducted in substantially the same manner as hitherto.

It is GSL’s intention, if practicable, to establish a mechanism in due course whereby smaller UK-based shareholders will be able to trade out of their positions after the Scheme has become Effective. However, should such holders wish to retain their holdings in the longer term, they will be encouraged to do so notwithstanding that they will need to utilise the services of a UK broker with facilities for trading US shares.

The Scheme will apply to all Scheme Shares, which will be cancelled and the resulting New Shares issued to GSL. As Xenetic will be 100 per cent. owned by GSL, there will therefore not be any trading facilities maintained for securities in Xenetic after the Effective Date. Please refer to paragraph 14 of Part 2 of this document (Explanatory Statement) in relation to the proposed cancellation of trading of Xenetic Shares on AIM.

12. Xenetic Share Schemes, options and warrants

The effect of the Scheme on outstanding options held by directors, employees and others under the Xenetic Share Option Plans and on other options and warrants can be found at paragraphs 6 and 7 of Part 2 of this document. Xenetic also proposes to enter into certain new arrangements with related parties, also as described in paragraph 7 of Part 2 of this document.

13. Suspension and cancellation of admission of Xenetic Shares to trading on AIM

Application has been made in accordance with AIM Rule 41 to the London Stock Exchange to cancel the admission to trading on AIM of Xenetic Shares. Cancellation is conditional upon the Scheme (and therefore the Acquisition) having become Effective. The announcement to be issued by Xenetic on 22 November 2013 provides Xenetic Shareholders with due notice of the intended suspension from trading on AIM which is expected to take place at 7.30 a.m. on 23 January 2014, and of the intended cancellation of trading on AIM which is expected to take place at 7.00 a.m. on 24 January 2014.

Accordingly the last day of dealings in, and for registration of transfers of, Xenetic Shares is presently anticipated to be 22 January 2014. The result of the Court Hearing will be announced on 23 January 2014. No transfers of Xenetic Shares will be registered after market close on 22 January 2014.

Your attention is drawn to paragraph 14 of Part 2 (Explanatory Statement) of this document in relation to cancellation of Xenetic Shares from admission to trading on AIM.

14. Re-registration of Xenetic

It is intended that, as soon as reasonably practicable after the Scheme becomes Effective, the Company will be re-registered as a private limited company in accordance with the Companies Act.

15. Action to be Taken

The Scheme and the Acquisition are subject to the satisfaction (or as the case may be waiver) of the Conditions set out in section A of Part 3 of this document. In order to become Effective, the Scheme must be approved by a majority in number of those Scheme Shareholders who are present and vote either in person or by proxy at the Court Meeting and who represent 75 per cent. or more in value of all Scheme Shares held by such Shareholders. In addition, the Special Resolution to give effect to the Scheme must be passed at the General Meeting. Under the Companies Act, the Scheme is also subject to the approval of the Court. Once the Scheme becomes Effective, the terms will be binding on all Scheme Shareholders irrespective of whether or not they attend or vote at the Meetings (and if they attend and vote, whether or not they vote in favour).

You will find enclosed with this document:

(a)         a blue Form of Proxy for use at the Court Meeting;

(b)         a white Form of Proxy for use at the General Meeting; and

(c)          a reply-paid envelope for use in the UK for the return of the Forms of Proxy.

To vote at the Meetings

Whether or not you intend to attend the Court Meeting and/or the General Meeting, you are requested to complete and sign the enclosed blue and white Forms of Proxy and return them in accordance with the instructions printed on them. Completed Forms of Proxy should be returned, in accordance with the instructions printed thereon, by post or, during normal business hours only, by hand to the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL or by fax to Share Registrars Limited on +44 (0) 1252 719232 or by scan and email to Share Registrars Limited at proxies@shareregistrars.uk.com, as soon as possible and, in any event, so as to be received by the times set out below:

(a)         blue Forms of Proxy for the Court Meeting 10.00 a.m. GMT on 15 December 2013

(b)         white Forms of Proxy for the General Meeting 10.30 a.m. GMT on 15 December 2013

(or in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned Meeting).

If you wish to appoint more than one proxy you should request additional proxy forms from Share Registrars and submit them in accordance with the instructions set out in this document.

If you hold your Shares in uncertificated form, you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the notes to the notices of the Court Meeting and the General Meeting set out in Parts 10 and 11 respectively of this document).

If the blue Form of Proxy for use at the Court Meeting is not lodged by the time specified above, it may be handed to the chairman of the Court Meeting at the start of the Court Meeting and will still be valid. However, in the case of the white Form of Proxy for the General Meeting, it will be invalid unless it is lodged by the time specified above with the Company’s Registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL. The completion and return of the relevant Form of Proxy will not prevent you from attending and voting in person at the relevant Meeting, or at any adjournment thereof, if you so wish and are so entitled.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of the opinions of the Scheme Shareholders. Therefore, whether or not you intend to attend the Meetings, you are strongly urged to sign and return your Forms of Proxy for both the Court Meeting and the General Meeting as soon as possible.

Notices convening the Court Meeting and the General Meeting are set out in Parts 10 and 11 of this document respectively.

If you have any questions relating to the Meetings, this document or the completion and return of the Forms of Proxy, please address your questions in writing to the Company’s Registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL, or call Share Registrars Limited on +44 (0) 1252 821390 between 9.00 a.m. and 5.00 p.m. GMT Monday to Friday (except U.K. bank holidays). Please note that no advice on the merits of the matters described in this document or legal, tax or financial advice can or will be given.

16.        Overseas Shareholders

Overseas Shareholders should refer to paragraph 17 of Part 2 (Explanatory Statement) of this document.

17.        Further information

The terms of the Scheme are set out in full in Part 4 of this document. Please read carefully the remainder of this document, including the letter from London Bridge Capital, financial adviser to the Company, set out in Part 2 of this document. Please note that the information contained in this letter is not a substitute for reading the remainder of this document.

Your attention is also drawn to the further information contained in this document and, in particular, to the Conditions and Further Terms of the Acquisition in Part 3 of this document, the financial information on Xenetic referred to in Part 5 of this document, UK taxation issues described in Part 6, information on GSL in Part 7 and the additional information in Part 8 of this document. You should read the whole of this document.

18.        Recommendation

The Xenetic Directors (other than Roman Knyazev for the reasons stated above), who have been so advised by London Bridge Capital, as the independent financial adviser to Xenetic for the purposes of Rule 3 of the City Code, consider the terms of the Scheme to be fair and reasonable insofar as Xenetic Shareholders are concerned. In providing its advice, London Bridge Capital has taken into account the Xenetic Directors’ commercial assessments. In addition, the Xenetic

Directors (other than Roman Knyazev) consider the terms of the Acquisition to be in the best interests of Xenetic Shareholders as a whole.

Accordingly, the Xenetic Directors (other than Roman Knyazev), unanimously recommend that Xenetic Shareholders vote in favour of the Acquisition and the Scheme Resolutions to be proposed at the Court Meeting and the General Meeting, as they have irrevocably undertaken to do in respect of their entire beneficial shareholdings in the Company, amounting to, in aggregate, 11,271,086 Shares, representing approximately 2.76 per cent. per cent. of the existing issued ordinary share capital of the Company as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

Yours faithfully

/s/ Brian Richards

Sir Brian Richards Chairman

PART 2

EXPLANATORY STATEMENT

(in compliance with section 897 of the Companies Act 2006)

London Bridge Capital Limited 30 Percy Street

London

W1T 5DB

21 November 2013

To Shareholders and, for information only, to holders of options and warrants Dear Shareholder,

RECOMMENDED ACQUISITION OF XENETIC BIOSCIENCES PLC
BY GENERAL SALES & LEASING, INC.

1. Introduction

On 12 November 2013, the Company announced that the boards of Xenetic and GSL had reached agreement on the terms of a recommended proposal for the acquisition of Xenetic by GSL. GSL is a US operating company whose main business involves the owning and operation of helicopters for use in sightseeing tours and as pilot training aircraft. Immediately following completion of the Acquisition, all of the current operating businesses of GSL will be disposed of and the only ongoing operating activities will be those of the Group.

On the basis of the value as at 11 November 2013 of a GSL Share set out in Part 12 of 5.95 pence per Scheme Share, the Acquisition values the entire existing issued share capital of the Company at approximately £24.3 million and each Xenetic Share at approximately 5.95 pence. This represents a discount of approximately 8.49 per cent. to 6.5 pence, being the Closing Price per Scheme Share on 11 November 2013 (being the Business Day prior to the date of the Announcement).

The Acquisition is to be implemented by means of a Court-sanctioned scheme of arrangement between the Company and the Scheme Shareholders under Part 26 of the Companies Act and involves a reduction of capital under section 648 of the Companies Act. The Scheme requires the approval of the Scheme Shareholders at a meeting convened by the Court and the subsequent sanction of the Court. The Reduction of Capital requires the approval of Shareholders at a General Meeting and the subsequent confirmation of the Court. Once the Scheme becomes Effective, the terms will be binding on all Scheme Shareholders whether or not they voted in favour of the Scheme.

The Xenetic Directors have been advised by London Bridge Capital in connection with the Acquisition. London Bridge Capital has been authorised by the Xenetic Directors to write to you to explain the terms of the Acquisition and the Scheme and to provide you with other relevant information.

Your attention is drawn to the letter from Sir Brian Richards, the Chairman of Xenetic, set out in Part 1 of this document, which forms part of this Explanatory Statement. That letter contains, amongst other matters, a summary of the Acquisition and the background to and the reasons for the recommendation of the Xenetic Directors (save for Roman Knyazev) to the Shareholders to vote in favour of the Scheme Resolutions.

The conditions and further terms of the Acquisition are set out in full in Part 3 of this document. Your attention is also drawn to the information in the other Parts of this document, which form part of the Explanatory Statement pursuant to section 897 of the Companies Act.

Statements made or referred to in this letter regarding GSL’s reasons for making the Acquisition, and/or intentions or expectations of or concerning GSL, reflect the views of GSL. Statements made or referred to in this letter regarding the background to and reasons for the recommendation of the Xenetic Directors, the recommendation of the Xenetic Directors, information concerning the business of Xenetic, and/or intentions or expectations of or concerning Xenetic, reflect the views of the Xenetic Directors (other than Roman Knyazev).

Scheme Shareholders should read the whole of this document and take independent advice before deciding whether or not to vote in favour of the Scheme and the Scheme Resolutions.

2.          Summary of the terms of the Acquisition

Under the terms of the Scheme, the Scheme Shares will be cancelled and in exchange, upon the Scheme becoming Effective, Scheme Shareholders on the Company’s register of members at the Scheme Record Time will receive:

for every 175 Scheme Shares: 56 GSL Consideration Shares

Upon the Scheme becoming Effective, Scheme Shareholders will hold 97.39 per cent. of the issued and to be issued shares of GSL, the significant majority of the then shares then in issue.

In accordance with Rule 24.11 of the Code, London Bride Capital has provided an Estimate of Value of the GSL Consideration Shares as at 11 November 2013, and has advised that each GSL Consideration Share should be valued at 18.59p. Further details of the bases and assumptions underlying this valuation are set out in Part 12 of this document.

3.          Structure of the Acquisition

(a) Introduction

The Acquisition will be effected by means of a scheme of arrangement between the Company and Scheme Shareholders under Part 26 of the Companies Act involving a reduction of capital under section 648 of the Companies Act. The terms of the Scheme are set out in full in Part 4 of this document. The purpose of the Scheme is to enable GSL to become the owner of the entire issued and to be issued share capital of the Company. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full New Shares which have an aggregate nominal value equal to the aggregate nominal value of the Scheme Shares cancelled and issuing the same to GSL. Scheme Shareholders will then receive 56 GSL Consideration Shares for every 175 Scheme Shares held by them on the basis of the Acquisition (as is more fully described in paragraph 2 above) and the Equivalent Document.

Prior to the Announcement, GSL did not hold any Scheme Shares. GSL has not acquired any Scheme Shares since the date of the Announcement. GSL has agreed to subscribe, following the General Meeting but prior to the Scheme Record Time, and to hold until after the Effective Date, one fully paid Xenetic Share. This will mean that GSL will be a member of Xenetic on the Effective Date and accordingly there will be no requirement under section 593 of the Companies Act for an independent valuation of the New Shares. The additional Xenetic Share to be subscribed for or acquired by GSL in advance of the Scheme Record Time will not be a Scheme Share and will not be subject to the Scheme. Save as set out in the preceding sentence, the Scheme Shares amount to all Shares and, upon the Scheme becoming Effective, GSL will own the entire issued ordinary share capital of the Company.

The implementation of the Acquisition and the Scheme is subject to the Conditions, which are set out in Part 3 of this document, and which include the approval of the Acquisition by Scheme Shareholders and the sanction of the Scheme and the Reduction of Capital by the Court.

For the Scheme (including the Reduction of Capital) to become Effective, the Scheme Resolutions implementing the Scheme must be passed by Shareholders at the Meetings. The Scheme must be approved by a majority in number of those Scheme Shareholders present and voting either in person or by proxy at the Court Meeting representing 75 per cent. or more in value of all Scheme Shares held by such Scheme Shareholders. Scheme Shareholders are entitled to attend the Court Hearing in person or to be represented by counsel.

The Reduction of Capital involved in the Scheme requires the approval of the Special Resolution at the General Meeting and the subsequent confirmation of the Court at the Court Hearing.

The Scheme is not capable of becoming Effective unless each Condition to the Acquisition has been satisfied or, where relevant, waived. The Scheme and Reduction of Capital will become Effective on the filing of office copies of the Court Order and a statement of capital with the Registrar of Companies.

Once the Scheme becomes Effective, the terms will be binding on all Scheme Shareholders irrespective of whether or not they attend or vote at the Meetings (and if they attend and vote, whether or not they vote in favour).

Application has been made in accordance with AIM Rule 41 to the London Stock Exchange to cancel the admission to trading on AIM of Xenetic Shares. Cancellation is conditional upon the Scheme (and therefore the Acquisition) having become Effective. The announcement to be issued by Xenetic on 22 November 2013 provides Xenetic Shareholders with due notice of the intended suspension from trading on AIM which is expected to take place at 7.30 a.m. on 23 January 2014, and of the intended cancellation of trading on AIM which is expected to take place at 7.00 a.m. on 24 January 2014.

Accordingly the last day of dealings in, and for registration of transfers of, Xenetic Shares is presently anticipated to be 22 January 2014. The result of the Court Hearing will be announced on 23 January 2014. No transfers of Xenetic Shares will be registered after market close on 22 January 2014.

If the Scheme becomes Effective, the New Shares will be issued to GSL fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them, including the right to receive and retain all dividends and distributions (if any) declared, made or payable after the Effective Date. The Company will not declare, make or pay any dividends or distributions prior to the Effective Date.

On the Effective Date, share certificates in respect of all Scheme Shares will cease to be valid and should be destroyed.

If for any reason the Scheme does not become Effective, the transactions described above will not take effect and Scheme Shareholders will retain their existing holdings of Scheme Shares and admission of the Shares to trading on AIM will not be cancelled.

(b) The Meetings

Before the Court’s approval can be sought to sanction the Scheme, the Scheme will require approval by the holders of Scheme Shares at the Court Meeting and the passing of the Special Resolution by Shareholders at the General Meeting to approve the Reduction of Capital and other related issues.

Notices of the Court Meeting and the General Meeting are set out in Parts 10 and 11 of this document respectively. All holders of Scheme Shares whose names appear on the register of members of the Company at the Voting Record Time will be entitled to attend and vote at the relevant Meeting in respect of the number of Scheme Shares respectively registered in their names at the relevant time, as further described below.

The Court Meeting

The Court Meeting, which has been convened for 10.00 a.m. on 17 December 2013, is being held at the direction of the Court to seek the approval of Scheme Shareholders for the Scheme (with or without modification).

At the Court Meeting, voting will be by way of a poll and each Scheme Shareholder present in person or by proxy will be entitled to one vote for each Scheme Share held. The approval required at the Court Meeting is a majority in number of those Scheme Shareholders present and voting, either in person or by proxy, representing 75 per cent. or more in value of all Scheme Shares held by such Scheme Shareholders.

For the Court Meeting it is important that as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of Scheme Shareholder opinion. Therefore, whether or not you intend to attend the Meetings, you are strongly urged to sign and return your Forms of Proxy for both the Court Meeting and General Meeting as soon as possible.

The General Meeting

The General Meeting has been convened for 10.30 a.m. on 17 December 2013 (or as soon thereafter as the Court Meeting has been concluded or adjourned), to consider and, if thought fit, pass the Special Resolution (which requires votes in favour representing at least 75 per cent., of the votes cast) to:

Amendments to the Articles

It is proposed that prior to the Court Hearing the Articles be amended so as to ensure that any Xenetic Shares which are issued after the General Meeting but prior to the Court Hearing will be subject to and bound by the Scheme. Any Xenetic Shares issued on the exercise of options or warrants granted under the Xenetic Share Schemes or otherwise after the Court Hearing will not be subject to the Scheme. Accordingly, it is also proposed that the Articles be amended so that any Xenetic Shares issued to any person other than GSL on or after the Scheme Record Time will automatically be acquired by GSL in consideration for the issue by GSL to such person of such number of GSL Consideration Shares which would have been issued had such Xenetic Shares been Scheme Shares.

The proposed amendments to the Articles are set out in full in the notice of the General Meeting in Part 11 of this document.

Registered Shareholders

Each holder of Scheme Shares who is entered in the Company’s register of members at 6.00 p.m. GMT on the Voting Record Time will be entitled to attend and vote at the Court Meeting. Each holder of Shares entered in the Company’s register of members at 6.00 p.m. GMT on the Voting Record Time will be entitled to attend and vote at the General Meeting.

If either Meeting is adjourned, only those relevant Shareholders on the register of members at 6.00 p.m. GMT on the date which is two days before the date of the adjourned meeting will be entitled to attend and vote. Such a Shareholder is entitled to appoint a proxy or proxies to attend and, on a poll, to vote instead of him or her. A proxy need not be a Shareholder. A blue Form of Proxy for the Court Meeting and a white Form of Proxy for the General Meeting are enclosed. To be valid, the blue Form of Proxy (in respect of the Court Meeting) must reach the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL (or by fax to Share Registrars Limited on +44 (0) 1252 719232 or by scan and email to Share Registrars Limited at proxies@shareregistrars.uk.com) by 10.00 a.m. on 15 December 2013, or it may be handed to the Chairman of the Court Meeting before the start of the Meeting. To be valid, the white Form of Proxy (in respect of the General Meeting) must reach Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL (including by fax or email as aforesaid) by 10.30 a.m. GMT on 15 December 2013.

Whether or not you intend to attend the Court Meeting and/or the General Meeting, you are requested to complete and sign the enclosed blue and white Forms of Proxy and return them in accordance with the instructions printed on them.

If you hold your Xenetic Shares in uncertificated form, you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the notes to the notices of the Court Meeting and the General Meeting set out in Parts 10 and 11 of this document respectively). Proxies submitted through CREST (under CREST Participant ID 7RA36) must be received by Share Registrars Limited by no later than 6.00 p.m. on 13 December 2013 in the case of the Court Meeting and by 6.00 p.m. on 13 December 2013 in the case of the General Meeting (or, in the case of an adjourned meeting, no later than 6.00 p.m. on the day two days before the date of the adjourned meeting (excluding any day which is not a working day) in respect of the Court Meeting or by no later than 6.00 p.m. on the day two days before the adjourned meeting (excluding any day which is not a working day) in respect of the General Meeting).

Shareholders who return completed Forms of Proxy may still attend the Meetings instead of their proxies and vote in person if they wish and are entitled to do so. In the event of a poll on which a Shareholder votes in person, his/her proxy votes lodged with the Company will be excluded.

Shareholders are entitled to appoint a proxy in respect of some or all of their Shares and are also entitled to appoint more than one proxy. A space has been included on the Forms of Proxy to allow Shareholders to specify the number of Shares in respect of which that proxy is appointed. Shareholders who return a white Form of Proxy duly executed but leave this space blank will be deemed to have appointed the proxy in respect of all of their Shares.

Shareholders who wish to appoint more than one proxy in respect of their shareholding should contact the Company’s Registrars, Share Registrars Limited of Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL, or call Share Registrars on +44 (0)1252 821390 between 9.00 a.m. and 5.00 p.m. GMT Monday to Friday (except UK bank holidays) for further Forms of Proxy or photocopy the Forms of Proxy as required. Such Shareholders should also read the notes on the Forms of Proxy and note the principles that will be applied in relation to multiple proxies. Shareholders should note that if they wish to appoint more than one proxy they should request additional proxy forms from Share Registrars and submit them in accordance with the instructions set out above.

(c) Conditions to the Acquisition

The Conditions to the Acquisition are set out in full in section A of Part 3 of this document. Inter alia, the implementation of the Acquisition is conditional upon:

The Conditions set out above are not capable of being waived in whole or in part.

The Acquisition is also conditional upon the other Conditions set out in section A of Part 3 to this document, which are not otherwise summarised in paragraphs (i) to (iii) inclusive above, being satisfied or as the case may be waived.

(d) Sanction of the Scheme and confirmation of the Reduction of Capital by the Court

Under the Companies Act, the Scheme requires the sanction of the Court and the Reduction of Capital requires the confirmation of the Court. The Court Hearing is expected to be held on 23 January 2014. GSL has confirmed that it has consented to being represented by Xenetic’s counsel at the Court Hearing so as to consent to the Scheme and to undertake to the Court to be bound thereby.

The Scheme (and associated Reduction of Capital) will become Effective in accordance with its terms on delivery of office copies of the Court Order and of a statement of capital to the Registrar of Companies.

If the Scheme becomes Effective, it will be binding on all Shareholders irrespective of whether or not, being entitled to do so, they attended or voted in favour of the Scheme at the Court Meeting or in favour of the Special Resolution at the General Meeting.

If the Scheme does not become Effective on or before 30 June 2014 (or such later date and time (if any) as the Company and GSL may agree and, if appropriate, the Court may approve) the Scheme will not become Effective and the Scheme will not proceed.

(e)          Modification of the Scheme

The Company and GSL may jointly consent, on behalf of all persons affected, to any modification of, or addition to, this Scheme or to any condition approved or imposed by the Court. The Court would be unlikely to approve any modification of, or additions to, or to impose a condition to, the Scheme which might be material to the interests of the Scheme Shareholders unless Scheme Shareholders were informed of such modification, addition or condition. It would be a matter for the Court to decide, in its discretion, whether or not a further meeting of Scheme Shareholders should be held in these circumstances. Similarly, if a modification, addition or condition is put forward which, in the opinion of the Xenetic Directors, is of such a nature or importance that it requires the consent of Scheme Shareholders, the Xenetic Directors will not take the necessary steps to enable the Scheme to become Effective unless and until such consent is obtained.

Xenetic has sought and received irrevocable undertakings from those Xenetic Directors who are beneficial owners of Xenetic Shares to vote in favour of the Scheme Resolutions in respect of their entire beneficial holdings of Xenetic Shares, a total of 11,271,086 Xenetic Shares, representing approximately 2.76 per cent. of the existing issued ordinary share capital of Xenetic, as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

Xenetic has sought and received irrevocable undertakings from certain other Xenetic Shareholders who beneficially own or otherwise control Xenetic Shares to vote in favour of the Scheme Resolutions in relation to a total of 96,668,741 Xenetic Shares, representing approximately 23.7 per cent. of the existing issued ordinary share capital of Xenetic as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

In relation to the Scheme Resolutions, Xenetic has therefore received total irrevocable undertakings in respect of 107,939,827 Xenetic Shares representing, in aggregate, 26.46 per cent. of the existing issued ordinary share capital of Xenetic as at 20 November 2013 (being the latest practicable date prior to the publication of this document).

Further details of the above irrevocable undertakings are set out in paragraph 7 of Part 8 of this document.

The Xenetic Directors believe that at the present time smaller quoted bioscience companies, in general, have a higher profile and a better investor following in the US than is found in European markets in general and in the UK market, in particular. It believes that by achieving a listing for Xenetic on an Exchange, significant benefits will accrue to Xenetic and its shareholders including, but not exclusively:

The Xenetic Directors have considered a number of options to achieve the goal of migration to the US, including seeking a quotation of Xenetic’s shares directly on a US stock market and seeking a merger with an existing US quoted biotechnology company with complementary activities. Following careful consideration of the issues, the Xenetic Directors have determined that the best way is to be acquired by an SEC –reporting, unlisted company, which can seek to achieve a quotation on an Exchange within a reasonable period; and to effect such an acquisition by the Scheme.

Xenetic’s plan is for it to be acquired on a share-for-share basis by GSL, where the level of effective dilution to Xenetic’s Shareholders does not exceed 3 per cent. as at the Effective Date. This means that, other than for such dilution and the fees and costs of the Acquisition (which are deemed to be the “cost” of achieving Xenetic’s aims), the group formed by the completion of the Acquisition will be effectively the same group as at present, with the same assets and liabilities, save that it will have a US holding company (GSL) with an enhanced ability to achieve a listing on an Exchange. Whilst Xenetic and GSL have commenced developing a plan regarding such a listing, there is no guarantee that such a listing can be achieved.

In particular, GSL is subject to various regulatory requirements, including those of the SEC and the various trading exchanges where its equity shares may trade. Any securities exchange (for example, NASDAQ) can and will apply its own rules and/or analysis to GSL’s eligibility for listing which may adversely impact the Enlarged Group’s attempt to be listed on a securities exchange or the tradability of its shares.

6. Xenetic Employee Share Schemes

In accordance with Rule 15 of the Code, the following proposals for replacing the current Xenetic Share Schemes with new schemes in relation to New GSL Shares under US laws, conferring no additional benefits will be put to relevant holders.

(a) Outstanding rights to subscribe for Xenetic Shares granted under the Xenetic employee Share Option Plans

Rights to subscribe for a total of 16,154,007 Xenetic Shares are outstanding as at 20 November 2013 (the nearest practicable date to the publication of this document) at exercise prices of between one penny and 46.6p per Share.

Options to subscribe for 7,669,815 Xenetic Shares are outstanding at exercise prices of between one penny and 37.75p per Share under the terms of the Xenetic 2000 Share Option Plan. Such share options will, if they are neither exercised nor exchanged for the grant of replacement share options as mentioned below within the period of six months after the Effective Date, lapse and cease to be exercisable at the end of that period.

If the Scheme becomes Effective, the holders of such options to subscribe for Xenetic Shares will be invited by GSL to exchange their existing share options for corresponding rights (without additional benefit) to acquire GSL Consideration Shares, such ‘exchange of options’ being conditional upon the Scheme becoming Effective. Such new rights will be in the form of options to acquire New GSL Shares exercisable only in accordance with the terms of replacement option grants as described at paragraph 9.3 of Part 8 of this document.

Options to subscribe for 8,484,192 Xenetic Shares are outstanding under the terms of the Plan (the “Xenetic 2007 Share Option Plan”) at exercise prices of between 6.75p and 46.6p per share. Such share options will, if they are not already, become immediately exercisable (regardless of whether any performance targets or vesting conditions have then been met or satisfied) upon the Effective Date, and will remain exercisable for a period of 40 days thereafter, at the end of which they will, if not exercised, lapse and cease to be exercisable.

It is intended that the holders of share options granted under the Xenetic 2007 Share Option Plan will each be invited by GSL to release their rights under such share options in consideration of the grant by GSL of rights which are equivalent (without additional benefit) but relate to New GSL Shares. Such invitations will be conditional upon the Scheme becoming Effective and must be accepted, if at all, so that such exchange will take effect as soon as practicable after the Scheme has effect. Such replacement options will be granted on terms such that, in each case, the total market value of New GSL Shares that are subject to the replacement option is equal to the total market value of the Xenetic Shares that were subject to the old option immediately before the release of rights under that option, and the total amount payable for the acquisition of shares under the replacement option is equal to the total amount that would have been payable for the acquisition of shares under the old option.

For these purposes, the exercise prices payable for the subscription of shares in GSL will be expressed in US$ and the market value of shares in GSL will be determined by reference to the rate of exchange from sterling into US$ quoted by Barclays Bank plc on the Business Day last preceding the date on which such grant of replacement share options becomes effective. Insofar as existing share options granted under the Xenetic 2007 Share Option Plan are exercisable only subject to the attainment of target levels of share price, the replacement options will be subject to correspondingly adjusted share price targets.

The grant by GSL of replacement share options as described above will not confer any additional benefits on the holders of existing rights to subscribe for Xenetic Shares.

(b) Joint ownership of Xenetic Shares by Directors under Xenetic JSOP

Certain of the Directors of Xenetic hold, jointly with the JSOP Plan Trustee (the “Co-Owner”), the beneficial interest in an aggregate of 33,400,606 Xenetic Shares upon and subject to the terms of Joint Ownership Agreements (“JOAs”) entered into pursuant to the terms of the Xenetic JSOP in June 2010 and March 2012. Under a JOA, and subject to the vesting of the participant’s interest, a participant will, when the jointly-owned shares are sold, be entitled to a share of the proceeds of sale equal to the growth in market value of the jointly-owned shares above their market value at the time of the JOA (being 7.75p in the case of those JOAs entered into in June 2010 and 10.625p in the case of those entered into in March 2012) plus a rate of simple interest on that amount (which, in the case of JOAs entered into in June 2010, is 8.387 per cent. accruing over a maximum period of 5 years and, in the case of JOAs entered into in March 2012, is 7.65 per cent. accruing over a maximum period of 3 years). Awards in the form of JOAs have been made to each of Scott Maguire and Colin Hill (“the Participating Directors”) in 2010 and 2012. Of the jointly-owned shares, the 5,318,479 awarded in 2010 have become fully vested.

Awards of jointly-owned Xenetic Shares made in 2012 vest on the attainment of share price targets (15p, 40 per cent.; 25p, 65 per cent.; 35p, 90 per cent.; and 50p, 100 per cent.) or upon a “Change of Control” (which includes if a 30 per cent.+ shareholder increases their stake by any amount). If, after 2 March 2017, the share price has not attained 35p, the Co-Owner may call upon the Participating Director to give up his interest in the unvested jointly owned shares for a nominal sum. If it has attained 35p, but the 50p target has not then been achieved, the Co-owner must wait until after 2 March 2020 before it can require the Participating Director to give up his interest in the unvested shares.

If the Participating Director ceases employment within the group at any time by reason of either (a) misconduct or (b) voluntary resignation without notice (otherwise than in circumstances amounting to constructive dismissal), the Co-owner has the right to call upon the Participating Director to dispose of his interest in unvested shares for a nominal sum.

A Participating Director has the right, in respect of the awards of jointly-owned shares made in 2012, exercisable at any time after 2 March 2015, or, if earlier, on a “Change of Control,” to require the Co-owner to join in selling vested jointly-owned shares, the proceeds being divided in accordance with the JOA. The Participating Director would receive the growth in value above 13.058p (this being the initial market value of a Xenetic Share at the time of award of 10.625p + the Carrying Cost at 7.65 per cent. which accrues over only a 3-year period). The proposed Acquisition of the Company by GSL will not be a “Change of Control” for these purposes and will not trigger an early vesting of the interests of Participating Directors in the jointly-owned Xenetic Shares awarded in 2012.

Title to the jointly-owned shares is held by Roy Nominees Limited as nominee for the joint owners.

Under the terms of the Scheme, joint owners of Xenetic Shares will be treated in the same manner as all other members of Xenetic. Under the terms of the JOAs, once the Scheme has effect, the joint owners will thereafter jointly hold the beneficial interest in GSL Shares acquired pursuant to the Scheme upon and subject to the terms of the relevant JOA. The share price targets mentioned above will be adjusted by applying the ratio of 56/175 and converting the resulting target prices into US$ at the rate quoted by Barclays Bank PLC on the Business Day last preceding the date on which the Scheme becomes Effective.

Jointly-owned shares were issued at a subscription price equal to their market value at the time of issue. Of that value the amounts shown in the table at paragraph 4.2 in Part 8 of this document were paid by the directors and the balance was funded by loans made by Xenetic to the Co-Owner. When the joint ownership arrangements terminate (which will be when either both directors have ceased employment or Co-Owner has exercised call options either to require the jointly-owned shares to be sold or to buy back from the directors their interests in the jointly-owned shares, or when the jointly-owned shares have been sold) any amounts held by the Co-Owner will be returned to Xenetic, either by way of repayment of loans outstanding or upon a winding-up of the Company’s Guernsey Purpose Trust.

7. Holders of other options and warrants

General

In accordance with Rule 15 of the Code, the following proposals for extending the offer constituted by the Scheme to other outstanding options and warrants will be effected, conferring no additional benefits for relevant holders.

It is proposed that the Articles be amended so as to ensure that any Xenetic Shares which are issued, inter alia following the exercise, in accordance with their terms, of options or warrants after the General Meeting but prior to the Scheme Record Time, will be subject to and bound by the Scheme. Any Xenetic Shares issued inter alia following the exercise, in accordance with their terms, of options or warrants after the Scheme Record Time will not be subject to the Scheme. Accordingly, it is also proposed that the Articles be amended so that any Xenetic Shares issued to any person (other than GSL) on or after the Scheme Record Time will automatically be acquired by GSL in consideration for the issue by GSL to such person of such number of GSL Consideration Shares which would have been issued had such Xenetic Shares been Scheme Shares included in the Scheme.

The Company considers that this mechanism achieves the same offer for option and warrant holders as if they had been Scheme Shareholders (while preserving the terms and conditions of existing options and warrants) and accordingly that this mechanism provides an appropriate offer in relation to such matters for the purposes of Rule 15 of the Code.

Proposed arrangements with related parties

Alongside equity subscriptions previously made by them, Xenetic has previously negotiated warrant arrangements with some of its collaborative partners. These take the form of investment incentives designed to allow those parties to benefit from growth in shareholder value anticipated to arise as a result of the collective efforts of Xenetic and its collaborators in the positive clinical development of Xenetic’s drug candidate pipeline.

All such arrangements have been based upon aspirational share price enhancement resulting from pre-clinical and clinical development milestones being achieved; such as, for example, the filing of Innovative New Drug (“IND”) applications or progression through regulated clinical trials whether in western Europe or elsewhere. This has customarily been the case given that Xenetic’s three principal co-development agreements are with two Russian entities (SynBio and Pharmsynthez) and with Serum Institute of India. Xenetic has also previously granted warrant rights to individuals within certain of these collaborative partnerships, designed to align the interests of operational field management with those of Xenetic’s shareholders and directors.

At the time of the making any such grants/awards, it is clearly difficult to account for future influences which can conspire against planned developments by way both as to absolute negative influences coming to bear, and in relation to the timing of events. Such has been the case with both SynBio and SIIL, where the warrant entitlements granted in 2011 have been rendered either effectively worthless (SIIL) or are now recognised as being relatively very much less attainable (SynBio) than was first considered reasonable by the parties at the date of grant.

Accordingly, Xenetic has been in discussions with SIIL and SynBio to revisit the original terms of grant, with a view to their warrants being renewed and/or re-priced with the benefit of current levels of understanding and development plans resulting from Xenetic’s migration to the United States. Details of the existing warrants of SynBio and SIIL to be replaced and/or re-priced are set out in paragraph 10.1 of Part 8 of this document. Additionally, now that product development lies at the heart of Xenetic’s activities, the Directors believe that it is again appropriate that further operational management awards should be considered.

Additionally, in 2011 SynBio provided Xenetic with loan facilities to fund its operations. Details of these loan facilities are set out at paragraph 10.1 of Part 8 of this document. Xenetic is now in discussions with SynBio as regards the repayment of the loan by way of a further issue of shares to them after the Scheme becomes Effective.

Arrangements in relation to the matters above have not yet been agreed. To the extent the Scheme becomes Effective and such arrangements (or other arrangements with related parties or their connected persons or concert parties, including any revision to the agreement with FDS Pharma as summarised at paragraph 10 of Part 8) are concluded within six months of the Effective Date, GSL will put appropriate resolutions to independent shareholders of GSL to approve the agreed arrangements, whether or not such resolutions are required to be considered by such shareholders under applicable laws or regulations (including the laws of Nevada). The relevant related party (and its connected persons and concert parties) would not be permitted to vote on any resolution in relation to any matter proposed in relation to itself.

8. GSL Consideration Shares

Subject to fulfilment (or as the case may be waiver) of the conditions, GSL will issue the GSL Consideration Shares to the Scheme Shareholders pursuant to the Scheme. In connection with this, GSL has on or about the date hereof published information on itself and its securities in a document equivalent to a prospectus for the purposes of the Prospectus Rules, for which GSL is responsible. The text of this Equivalent Document is reproduced for convenience in Part 7 of this document.

9. Financial effects of the Acquisition for Xenetic Shareholders

This paragraph 9 sets out, for illustrative purposes only, and on the bases and assumptions set out in the notes below, the financial effects on the value for a holder of 1,750 Xenetic Shares, assuming the Scheme becomes effective.

Notes:

In assessing the financial effects of the Scheme, the table shown in paragraph 5 of Part 8 should also be referred to as it gives an indication of the recent historical range of the Xenetic share price.

In assessing the financial effect on the income for a holder of 1,750 Xenetic Shares assuming the Scheme becomes Effective, it should be noted that it is not the intention of the Enlarged Company to make distributions by way of dividend payments for the foreseeable future following the Scheme becoming Effective. The Boards of Xenetic and GSL consider that it will be in the Enlarged Group’s shareholders’ best interests to reinvest the profits of the Enlarged Group in business growth opportunities. The Proposed Directors of GSL will regularly review the dividend policy as the Enlarged Group’s asset portfolio and financial position develop over the forthcoming years.

10. Information on Xenetic

Information on Xenetic and its current trading and prospects is set out in paragraphs 7 and 8 in Part 1 (Letter from the Chairman of Xenetic) of this document.

11.        Information on GSL

Information on GSL and its current trading and prospects is set out in paragraphs 10 and 11 in Part 1 (Letter from the Chairman of Xenetic), and in its Equivalent Document the text of which is appears for convenience in Part 7 of this document. The GSL Director has taken responsibility for such information.

12.        Directors, Management and Employees

Information regarding the intentions of GSL for the management and employees of Xenetic is set out in paragraph 11 of Part 1 (Letter from the Chairman of Xenetic) of this document.

The GSL Director will resign from the board of GSL when the Scheme becomes Effective and will confirm that he has no outstanding claims against GSL. The Proposed Directors will thereupon be appointed as directors of GSL.

After the Effective Date, the board of GSL will review the needs of the business regarding whether to appoint additional directors. Such directors, if appointed, may come from the existing group of Xenetic Directors, be appointed from within the Enlarged Group or be recruited externally, in each case on terms of be agreed at the time.

Pending its conversion to a private limited company, the board of Xenetic will with effect from the Effective Date be reduced in number to Mr Maguire and Mr Hill only. It is also the intention to change the name of GSL to Xenetic Biosciences, Inc. on or before the Effective Date.

13.        The Directors and the effect of the Scheme on their interests

The Shares held by the Directors will be subject to the Scheme. Information on the Shares and the options in respect of Shares held by the Directors, their immediate families and any related trusts is provided in paragraph 4 of Part 8 of this document. Details of the irrevocable undertakings provided by the Directors in respect of their legal and/or beneficial interests in Shares are set out in paragraph 7 of Part 8 of this document.

Particulars of the service agreements and letters of appointment of the Xenetic Directors are set out in paragraph 9 of Part 8 of this document. As regards the Proposed Directors it is intended to replicate these on the same commercial terms without conferring additional benefits as near as possible (subject to applicable laws and regulations) in relation to GSL. The new agreements and letters of appointment will be governed by New York law.

Save as set out above, the effect of the Scheme on the interests of the Directors does not differ from its effect on the like interest of any other Shareholder.

14.        Suspension and cancellation of admission of Shares to trading on AIM

Application has been made in accordance with AIM Rule 41 to the London Stock Exchange to cancel the admission to trading on AIM of Xenetic Shares. Cancellation is conditional upon the Scheme (and therefore the Acquisition) having become Effective. The announcement to be issued by Xenetic on 22 November 2013 provides Xenetic Shareholders with due notice of the intended suspension from trading on AIM which is expected to take place at 7.30 a.m. on 23 January 2014, and of the intended cancellation of trading on AIM which is expected to take place at 7.00 a.m. on 24 January 2014.

Accordingly the last day of dealings in, and for registration of transfers of, Xenetic Shares is presently anticipated to be 22 January 2014. The result of the Court Hearing will be announced on 23 January 2014. No transfers of Xenetic Shares will be registered after market close on 22 January 2014.

Upon the Scheme becoming Effective, Xenetic will become a wholly owned subsidiary of GSL and each existing certificate representing a holding of Shares shall cease to be valid for any purpose and each holder of certificates representing Shares shall be bound at the request of the Company to deliver up the same to the Company or to any person nominated by Company for cancellation. In addition, on the Effective Date, entitlements to Xenetic Shares held within the CREST System will be cancelled.

15. Settlement

Xenetic Shareholders holding 174 Scheme Shares or less will be entitled to vote at the Meetings. They will not however receive any GSL Consideration Shares. The GSL Consideration Shares attributable to their Scheme Shares will be aggregated and sold for cash on behalf of such Xenetic Shareholders as soon as reasonably practicable following completion of the Acquisition at the then prevailing market price on the OTCBB or OTCQB. The proceeds will then be converted into sterling at the exchange rate prevailing at that time and Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of £1 or more will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more will be able to opt to have such proceeds donated to charity. The white Form of Proxy contains a box to tick should such a Scheme Shareholder wish to elect to donate his or her proceeds to charity.

Any Xenetic Shareholders to the extent holding a number of Scheme Shares not divisible by 175, will also have such Scheme Shares aggregated together with similar Scheme Shares of other Xenetic Shareholders to result in GSL Consideration Shares to be sold on behalf of such Xenetic Shareholders in the same manner as explained above. Again, Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of £1 or more will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more will also be able to opt to have such proceeds donated to charity on the same basis as above.

Subject to the Scheme becoming Effective, save with the consent of the Panel, settlement of the consideration to which any Scheme Shareholder is entitled under the Scheme will be implemented in full, in accordance with the terms set out below, free of any liens, rights of set-off, counterclaims or other analogous rights to which GSL may otherwise be, or claim to be, entitled against such Scheme Shareholder.

It should be noted that all documents and remittances sent through the post will be sent at the risk of the person(s) entitled thereto.

(a)       Scheme Shares held in certificated form

Any GSL Consideration Shares to which Shareholders are entitled pursuant to the Scheme will be issued on the Effective Date. Certificates for the GSL Consideration Shares will be despatched by post no later than 14 days after the Effective Date in prepaid envelopes addressed to the persons thereto entitled at their respective addresses, as appearing in the register of members of Xenetic at the Scheme Record Time (or, in the case of joint holders, to the address of that joint holder whose name stands first in the said register in respect of such joint holding).

Pending the despatch of certificates for GSL Consideration Shares, temporary documents of title will not be issued and transfers of GSL Consideration Shares in certificated form will be certified against the register of GSL.

Every holder of Xenetic Shares will be bound at the request of Xenetic to deliver up to Xenetic the existing certificate(s) for cancellation or to destroy the certificate(s). On the Effective Date, the certificates for the Scheme Shares will cease to be valid and should be destroyed on receipt of the consideration to which the holder is entitled.

(b)       Scheme Shares held in uncertificated form

Where, at the Scheme Record Time, a Scheme Shareholder holds Scheme Shares in uncertificated form, he or she will be issued with any GSL Consideration Shares to which he or she is entitled in certificated form, in the same way as set out above.

After receipt of the certificates representing their GSL Consideration Shares, shareholders may deposit their GSL Consideration Shares, subject to the limitations discussed above regarding deposits, either by providing their certificate to the broker-dealer where their trading account is set up, or by arranging for their GSL Consideration Shares to be electronically transferred into the account. If delivered in electronic form at this later date, the shareholder will need to confirm that their broker-dealer allows for such transfers of OTCBB shares, and then provide the transfer agent with the necessary information regarding such Shares and their trading account to allow the electronic transfer to occur. Shares transferred in this manner will be tradable by the shareholder upon acceptance of the deposit into the trading account consistent with the rules of the broker-dealer with which such Shares are deposited. While Xenetic will assist where it can, because the deposit of the GSL Consideration Shares is dependent on the individual processing rules of the shareholder’s choice of broker-dealer, it will be the responsibility of the individual shareholder receiving their GSL Consideration Share certificate to process and facilitate the deposit of such Shares. Xenetic will take no responsibility or liability whatsoever for ensuring the deposit of the GSL Consideration Shares into a specific shareholder trading account or with a specific broker-dealer.

As from the Scheme Record Time, each holding of Scheme Shares credited to any stock account in CREST will be disabled and all Scheme Shares will be removed from CREST in due course thereafter.

16.      Taxation

Your attention is drawn to Part 6 of this document which provides information in respect of UK taxation.

Shareholders who are in any doubt about their tax position, or who are subject to taxation in a jurisdiction outside the UK are strongly advised to contact an appropriate professional independent tax adviser immediately.

17.      Overseas shareholders

The availability of the Scheme to persons resident in, or citizens of, jurisdictions outside the United Kingdom may be affected by the laws of such relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements. It is the responsibility of each Overseas Shareholder to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental exchange control or other consents which may be required or compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.

This document has been prepared for the purposes of complying with English law and the information disclosed may be different from that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside England and Wales.

The Acquisition relates to the acquisition of shares in a UK company and is proposed to be made by means of a scheme of arrangement under English law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US tender offer rules.

Financial information on Xenetic included in the relevant documentation has been prepared in accordance with accounting standards applicable to listed companies in the UK, being IFRS. These may not be comparable to the financial statements of US companies.

This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities in any jurisdiction in which such offer or solicitation is unlawful.

The terms of the Scheme are set out in full in Part 4 of this document. The purpose of the Scheme is to enable GSL to become the owner of the entire issued and to be issued share capital of the Company. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full New Shares which have an aggregate nominal value equal to the aggregate nominal value of the Scheme Shares cancelled and issuing the same to GSL. Scheme Shareholders will then receive 56 GSL Consideration Shares for every 175 Scheme Shares held by them on the basis of the Acquisition and the Equivalent Document (as is more fully described herein).

As a result of the Scheme, Scheme Shareholders will be acquiring GSL Consideration Shares from General Sales & Leasing, Inc., a Nevada corporation, in accordance with United States securities laws.

The GSL Consideration Shares to be issued under the Scheme have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “ Securities Act ”), or under the securities laws of any state, district or other jurisdiction of the United States, the Republic of South Africa, Canada or Japan.

It is expected that the GSL Consideration Shares will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof on the basis of the Court Meeting, which will consider, among other things, the fairness of the terms of the Scheme. Under applicable US securities laws, shareholders who are or will be deemed to be affiliates of Xenetic or GSL, prior to or after the Effective Date, will be subject to certain transaction restrictions relating to the GSL Consideration Shares received in connection with the Scheme.

18.        Action to be taken

It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of Shareholder opinion. Your attention is drawn to paragraph 15 of the letter from the Chairman of Xenetic set out in Part 1 of this document, which explains the action you should take in relation to the Acquisition and the Scheme.

19.        Further information

The terms of the Scheme are set out in full in Part 4 of this document. Your attention is also drawn to the further information contained in this document which forms part of the explanatory statement pursuant to section 897 of the Companies Act. In particular, your attention is drawn to the Conditions and Further Terms of the Acquisition in Part 3, the financial information on the Company in Part 5, the information on GSL in Part 7 and the Additional Information set out in Part 8 of this document.

Yours faithfully

/s/ Adam D. Hart

Adam D. Hart Director

For and on behalf of

London Bridge Capital Limited

PART 3

CONDITIONS AND FURTHER TERMS OF THE ACQUISITION

A. Conditions of the Acquisition

1. The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective by no later than 5.00 p.m. London time on 30 June 2014, or such later date (if any) as GSL and Xenetic may, with the consent of the Panel, agree and, if required, the Court may allow.

2. The Scheme will be conditional upon:

3. Subject as stated in Part B below and to the requirements of the Panel, the Acquisition will also be conditional on the following Condition and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Condition (as amended if appropriate) has been satisfied or, where relevant, waived:

(1) all necessary filings or applications having been made in connection with the Acquisition and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Acquisition and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals (collectively “Consents”) reasonably deemed necessary or appropriate by GSL and Xenetic for or in respect of the Acquisition having been obtained in terms and in a form satisfactory to GSL and Xenetic and all necessary statutory or regulatory obligations in connection with the Acquisition in any jurisdiction having been complied with in all material respects. Such filings include, but are not limited to, filings with the Secretary of State of Nevada effectuating the Acquisition and filings with the SEC, all as required by law.

B. Certain further terms of the Acquisition

To the extent permitted by law and subject to the requirements of the Panel, GSL and Xenetic reserve the right to waive, in whole or in part, Condition 3(1) above. Conditions 1 and 2 cannot be waived.

Condition 3(1) must be fulfilled or waived by no later than 11.59pm on the date immediately preceding the date of the Court hearing to sanction the Scheme, failing which the Scheme will lapse. GSL shall be under no obligation to waive or treat as satisfied Condition 3(1) by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions of the offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

If GSL is required by the Panel to make an offer for Xenetic Shares under the provisions of Rule 9 of the Code, GSL may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

The Acquisition will be governed by English law and will be subject to the jurisdiction of the English courts. The Acquisition will comply with the applicable rules and regulations of the Financial Services Authority and the London Stock Exchange and the Code.

Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

Under Rule 13.5 of the City Code, GSL may not invoke a condition to the Scheme so as to cause the Scheme not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to GSL in the context of the Scheme. The determination of the whether or not such a condition can be invoked would be made by the Panel. Conditions 1 and 2 are not subject to this provision of the Code.

The GSL Consideration Shares will be issued credited as fully paid and will rank pani passu in all respects with the New GSL Shares.

The City Code on Takeovers and Mergers applies, inter alia , to offers for all public companies (other than open ended investment companies) which have their registered office in the United Kingdom and the securities of which are admitted to trading on AIM. As a company incorporated in England with Xenetic Shares admitted to trading on AIM, Xenetic is subject to the provisions of the City Code.

The Takeover Panel is an independent body, whose main functions are to issue and administer the City Code and to supervise and regulate takeovers and other matters to which the City Code applies in accordance with the general principles and rules set out in the City Code. The City Code applies to the Xenetic and certain dealings in its shares. The City Code also applies to a range of persons who participate in, or are connected with, or who in any way seek to influence, intervene in, or benefit from takeovers and other matters to which the City Code applies. A copy of the City Code can be obtained at and further guidance on the City Code can be sought, if required, by telephoning the Panel on +44 (0) 20 7382 9026.

Xenetic Shareholders should note that, with effect from the Effective Date, the protections afforded by the City Code will cease to apply in relation to Xenetic and its securities. The City Code will not apply in relation to GSL and its securities, including the GSL Consideration Shares.

Xenetic Shareholders’ rights are governed by English law, including the Companies Act. Once the Scheme becomes Effective, all Scheme Shares will be cancelled and Scheme Shareholders will receive GSL Consideration Shares. Because GSL is a corporation incorporated under Nevada law, the rights of the holders of GSL Consideration Shares will be governed by the Nevada Revised Statutes along with GSL’s Articles of Incorporation and Bylaws.

Certain of the principal attributes of the Xenetic Shares and the GSL Consideration Shares are similar. However, there are differences between the rights of Shareholders of Xenetic under English law and the rights of shareholders of GSL Consideration Shares under Nevada law, following the Scheme becoming Effective. In addition, there are differences between GSL’s Articles of Incorporation and Bylaws and Xenetic’s articles of association.

The following is a summary comparison of the material differences between the rights of Shareholders of Xenetic Shares under English law (and its articles of association) and the rights they will have as shareholders of GSL Consideration Shares under Nevada law and GSL’s Articles of incorporation and Bylaws.

The discussion in this section does not include a description of rights or obligations under the U.S. federal securities laws, relevant NASDAQ listing requirements or standards or Xenetic’s or GSL’s corporate governance or other policies.

PART 4

THE SCHEME OF ARRANGEMENT

IN THE MATTER OF XENETIC BIOSCIENCES PLC

and

IN THE MATTER OF THE COMPANIES ACT 2006

SCHEME OF ARRANGEMENT

(under Part 26 of the Companies Act 2006) between

XENETIC BIOSCIENCES PLC

and

THE HOLDERS OF SCHEME SHARES
(as hereinafter defined)

THE SCHEME

1.1 The share capital of the Company shall be reduced by cancelling and extinguishing all of the Scheme Shares.

1.2 Subject to and forthwith upon the said Reduction of Capital taking effect, and notwithstanding anything to the contrary in the Company’s articles of association, the reserve arising in the books of account of the Company as a result of the said Reduction of Capital shall be capitalised and applied in paying up in full at par such number of New Shares as shall be equal to the number of Scheme Shares cancelled pursuant to clause 1.1 of this Scheme, which shall be allotted and issued credited as fully paid (free from all liens, charges, equitable interests and encumbrances) to GSL and/or its nominee(s).

2.1 In consideration of the cancellation of the Scheme Shares pursuant to clause 1.1 of this Scheme and the allotment and issue to GSL and/or its nominee(s) of the New Shares, GSL shall, contingently upon the Reduction of Capital provided for in clause 1.1 of this Scheme taking effect (and subject as hereinafter provided) in accordance with clause 5 of this Scheme, issue to each holder of Scheme Shares (as appearing in the register of members of the Company at the Scheme Record Time):

for every 175 Scheme Shares: 56 GSL Consideration Shares

2.2 The provisions of this clause 2 of the Scheme shall be subject to any prohibition or condition imposed by law.

With effect from and including the Effective Date, all certificates representing Scheme Shares shall cease to have effect as documents of title or to be valid for any purpose and each holder of Scheme Shares shall be bound at the request of the Company to deliver up the same to the Company or to any person nominated by the Company for cancellation or to destroy the same.

4. Settlement

4.1 In the case of Scheme Shares which at the Scheme Record Time are held in certificated form, any GSL Consideration Shares to which Shareholders are entitled pursuant to the Scheme will be issued on the Effective Date. Certificates for the GSL Consideration Shares will be despatched by post no later than 14 days after the Effective Date in prepaid envelopes addressed to the persons thereto entitled at their respective addresses, as appearing in the register of members of Xenetic at the Scheme Record Time (or, in the case of joint holders, to the address of that joint holder whose name stands first in the said register in respect of such joint holding).

Pending the despatch of certificates for GSL Consideration Shares, temporary documents of title will not be issued and transfers of GSL Consideration Shares in certificated form will be certified against the register of GSL. Every holder of Xenetic Shares will be bound at the request of Xenetic to deliver up to Xenetic the existing certificate(s) for cancellation or to destroy the certificate(s). Euroclear will also be instructed to cancel the entitlements to Xenetic Shares cancelled as part of the Scheme.

4.2 In the case of Scheme Shares which at the Scheme Record Time are held in uncertificated form, GSL will procure that Scheme Shareholders will be issued any GSL Consideration Shares to which he or she is entitled in certificated form in the same way as set out in clause 4.1 above.

4.3 The provisions of this clause 4 of this Scheme shall take effect subject to any prohibition or condition imposed by law or regulation.

5. The Effective Date

5.1 This Scheme and Reduction of Capital, which it includes, shall become effective in accordance with its terms as soon as the following shall have occurred, in the following order, that:

5.2 Unless this Scheme shall become effective on or before 5.00 p.m. London time on 30 June 2014 (or such later date, if any as GSL and the Company may agree and the Court may allow), this Scheme shall never become effective.

6. Modification

GSL and the Company may jointly consent, on behalf of all persons affected, to any modification of, or addition to, this Scheme or to any condition approved or imposed by the Court.

Dated: 21 November 2013

PART 5

 FINANCIAL INFORMATION RELATING TO THE XENETIC GROUP

Basis of financial information

The following table sets out the financial information in respect of Xenetic as required by Rule 24.3(e) of the Code. Reference in the first column is to Rule 24.3(a) of the Code, referring to information to be set out in accordance with Rule 24.3(e). The documents referred to in the table, the contents of which have been announced through a Regulatory Information Service, are incorporated by reference into this document and are available in ‘read only’ format for viewing or downloading, free of charge, on the Company’s website at http://www.xeneticbio.com/financial-reports.

Incorporation of information by reference

The Company will send within two Business Days, without charge, to each person to whom a copy of this document has been sent, on their request, a copy of any documents incorporated by reference in this document. Requests should be addressed to the Directors at Xenetic Biosciences plc, Greener House, 66-68 Haymarket, London SW1Y 4RF.

PART 6

UK TAXATION

The following statements are intended only as a general guide to certain UK tax considerations and do not purport to be a complete analysis of all potential UK tax consequences of the Scheme. They are based on current UK legislation and what is understood to be the current published practice of HM Revenue & Customs as at the date of this document, both of which may change, possibly with retroactive effect. They apply only to Scheme Shareholders who are resident (and, in the case of individuals domiciled) for tax purposes in (and only in) the UK (except in so far as express reference is made to the treatment of non-UK residents) and who hold their Scheme Shares as an investment (other than under an individual savings account), and who are the absolute beneficial owners of both their Scheme Shares and any dividends paid on them. The tax position of certain categories of Scheme Shareholders who are subject to special rules (such as persons acquiring their Scheme Shares by exercising share options under the Xenetic Share Schemes or in connection with employment, dealers in securities, insurance companies and collective investment schemes) is not considered.

Scheme Shareholders who are in any doubt about their tax position or who may be subject to tax in a jurisdiction other than the UK are strongly recommended to consult their own professional tax advisers.

A.       UK taxation of chargeable gains

Liability to UK taxation of chargeable gains will depend on the individual circumstances of Scheme Shareholders. Acquisition of GSL Consideration Shares

A Scheme Shareholder who, together with persons connected with him, does not hold more than five per cent. of, or of any class of, shares in or debentures of, the Company should not be treated as having made a disposal of his Scheme Shares for the purposes of UK taxation of chargeable gains to the extent that he receives GSL Consideration Shares in exchange for his Scheme Shares under the Scheme. Instead the GSL Consideration Shares will be treated as the same asset as his Scheme Shares, acquired at the same time as his Scheme Shares.

Any Scheme Shareholder who, either alone or together with persons connected with him, holds more than five per cent. of, or of any class of, shares in or debentures of the Company, is advised that an application for clearance will be made to HM Revenue & Customs under section 138 of the Taxation of Chargeable Gains Act 1992 in respect of the Scheme. If such clearance is given, any shareholder will be treated in the manner described in the preceding paragraph.

Disposal of GSL Consideration Shares

A subsequent disposal of the GSL Consideration Shares may, depending on individual circumstances, give rise to a liability to United Kingdom taxation of chargeable gains and, accordingly, any gain deferred on approval of the Scheme may, on such disposal, become chargeable to taxation.

Indexation allowance may be available to reduce any chargeable gain arising (but not to create or increase any allowable loss) to Scheme Shareholders within the charge to corporation tax.

B.       Tax on dividends on GSL Consideration Shares

GSL will not be required to withhold tax at source when paying a dividend to UK Scheme Shareholders.

C.       Stamp duty and stamp duty reserve tax (“SDRT”)

No stamp duty or SDRT will be payable by Scheme Shareholders as a result of the Scheme.

Part 6 of this document is not intended to be, and should not be construed to be, legal or taxation advice to any particular Scheme Shareholder. Any Scheme Shareholder who has any doubt about his own taxation position, or who is subject to taxation in any jurisdiction other than the UK should consult his professional taxation advisor immediately.

PART 7

INFORMATION RELATING TO GSL
TEXT OF EQUIVALENT DOCUMENT

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000, if you are in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.

This document is being sent to the shareholders of Xenetic Biosciences plc (“Xenetic”). If you have sold or otherwise transferred all of your shares in Xenetic, please forward this document, together with the accompanying documents, at once, to the purchaser or transferee or to the bank, stockbroker, or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into a Restricted Jurisdiction (as defined herein) or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with those restrictions may constitute a violation of the securities laws of any such jurisdiction.

This document does not comprise a prospectus prepared in accordance with the Prospectus Rules under Section 73A of FSMA and has not been approved by the Financial Conduct Authority in accordance with Section 85 of FSMA.

You should read the whole of this document prior to making any decision. Your attention is drawn to the section of this document entitled “Risk Factors” for details of certain factors that should be considered.

Equivalent Document

published in connection with the issue of shares of Common Stock with par value of $0.001
each in the capital of General Sales and Leasing, Inc. (“GSL”) pursuant to the acquisition by

General Sales and Leasing, Inc.

of the entire issued share capital of

Xenetic Biosciences plc

to be effected by a scheme of arrangement under Part 26 of the Companies Act 2006

GSL’s Shares are quoted on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. and the OTCQB operated by OTC Markets Group, Inc. It is expected that the GSL Consideration Shares to be issued pursuant to the Acquisition will be available to shareholders subject to the satisfaction of certain conditions, including the sanction of the Scheme by the Court, on 27 January 2014.

This document does not constitute an offer to sell, or a solicitation of an offer to acquire GSL Consideration Shares in any jurisdiction in which such offer or solicitation is unlawful. In particular, this document is not for distribution in or into the United States of America, Canada, Australia, the Republic of South Africa or Japan. The GSL Consideration Shares have not been and will not be registered under the United States Securities Act 1933 (as amended) or under the securities legislation of a Restricted Jurisdiction or in any country, territory or possession where to do so may contravene local securities laws or regulations. Accordingly, the GSL Consideration Shares may not, subject to certain exceptions, be offered or sold, directly or indirectly in or into a Restricted Jurisdiction or to any national, citizen or resident of a Restricted Jurisdiction.

CONTENTS

PART I

SUMMARY

This summary should be read as an introduction to the full text of this document and any decision to accept under the Scheme should be based on consideration of the full text of this document as a whole. Where a claim relating to the information contained in this document is brought before a court, a plaintiff investor may, under the national legislation of a member state of the European Economic Area, have to bear the costs of translating this document before the legal proceedings are initiated. Civil liability attaches to those persons who are responsible for this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of this document.

Introduction

On 12 November 2013, GSL announced the terms of a proposed acquisition of the entire issued share capital of Xenetic by GSL by way of a Scheme and a Reduction of Capital.

Information on the Acquisition

The Acquisition is to be implemented by means of a Scheme between Xenetic and its shareholders and also involves a reduction of Xenetic’s capital. Under the terms of the Scheme, the outstanding Xenetic shares shall be cancelled and, upon the Scheme becoming Effective, the Xenetic Shareholders shall receive in consideration for the cancellation of their shares:

for every 175 Xenetic Shares : 56 GSL Consideration Shares

The capital reserve created by the cancellation in the reserves of Xenetic shall be capitalised and applied in paying up new Xenetic Shares which shall then be issued by Xenetic to GSL. The full details of the Scheme are set out in the Scheme Document.

Information on GSL

GSL was incorporated in August 2011 for the purpose of owning and operating helicopters for use in sightseeing tours and as pilot training aircraft. On 11 February 2013, with the appointment of its new sole officer and Director, Ari L. Nagler, GSL began to operate an online advertising business through its newly-formed subsidiary, Shift It Media Co. The helicopter rental business was subsequently moved into another wholly-owned subsidiary, General Aircraft, Inc.

While GSL has experienced a reasonable demand and for its helicopter rental and online advertising businesses, because of limited growth results over the past year and increasing expenses in relation to maintaining the public entity and its SEC filing requirements, the Director considers it in the best interests of GSL to enter into the Acquisition of Xenetic. GSL intends to dispose of the helicopter rental and online advertising businesses through the transfer of its two subsidiaries to its largest shareholder immediately following the Acquisition so that its sole focus can be on the business of Xenetic.

For a more complete discussion of GSL, its financials, risk factors and history, it is recommended that you review GSL’s disclosure filings made on the US SEC’s online EDGAR system. Indeed, this document is supplemented by and reference is made to the information contained in GSL’s filings which can be found at: www.sec.gov .

Specific attention is made to the list of all GSL’s:

●         filings at: http://www.sec.gov/cgi-bin/browse-

edgar?company=general+sales&owner=exclude&action=getcompany

●         final amended form S-1/A filing at:

http://www.sec.gov/Archives/edgar/data/1534525/000125529412000158/0001255294-12- 000158-index.htm

●         most recent form10-K filing at:

http://www.sec.gov/Archives/edgar/data/1534525/000125529412000898/0001255294-12- 000898-index.htm

●         its most recent form 10-Q filing at:

http://www.sec.gov/Archives/edgar/data/1534525/000125529413000560/0001255294-13- 000560-index.htm

Information on Xenetic

Xenetic Biosciences was founded in as Lipoxen Technologies Limited in 1997 by the liposomologist Professor Gregory Gregoriadis, PhD DSc, as a spin-out from The School of Pharmacy at the University of London. Xenetic listed on the AIM market operated by the London Stock Exchange on 17 January 2006. Since flotation, Xenetic has steadily progressed the development of all of:

●         PolyXen, its natural polymer-based enabling technology for next generation biologic drugs;

●         ImuXen, its natural liposome-based enabling technology platform for next generation vaccines; and

●         OncoHist, its natural technology for the delivery of oncology therapies.

Risk Factors

The material risk factors relating to GSL fall into a number of areas and are set out more fully in Part II entitled “Risk Factors”.

PART II

RISK FACTORS

The Director makes no warranty or guarantee of performance of GSL. Past performance is not necessarily a guide to future performance, especially in view of the proposed change in business plan as discussed throughout this document. Post events, experience derived from these, or assumptions derived from any of these, do not predetermine the future.

The Director believes the following risks to be the most significant. Additional risks and uncertainties not presently known to the Director, or which the Director currently deems immaterial, may also have an adverse effect upon GSL.

The information set out below does not purport to be an exhaustive summary of the risks affecting GSL nor are they set out in any particular order of priority. If any of the following risks were to materialise, GSL’s business, financial condition, results or future operations could be materially and adversely affected with consequent impact on the financial position of GSL.

For a more complete list of risk factors, please review GSL’s filing on form S-1/A online at the US SEC’ s EDGAR site at:

http://www.sec.gov/Archives/edgar/data/1534525/000125529412000158/mainbody.htm.  

General Economic Risk

Both US and world economic conditions may affect the performance of GSL. Factors such as inflation, currency fluctuations, interest rates, recession, supply and demand of capital and industrial disruption or unemployment have an impact on business costs, future operations, earnings and stock market prices. GSL’s operations, business and profitability could be affected by these and other economic and political factors, which are beyond the control of GSL.

Business, strategy, growth and competition

The ability of GSL to implement its strategy in a competitive market requires effective planning and management control systems. GSL’s future growth will depend on its ability to expand and improve operational, financial and management information and control systems in line with GSL’s growth. This growth and expansion could place a significant strain on GSL’s financial, management and other resources, particularly if such growth and/or expansion occurs rapidly. Failure to do so could have an adverse effect on GSL’s business, financial condition and results of operations.

Revenue and profit growth

The results of GSL’s operations may fluctuate. GSL may not be able to achieve sustained revenue growth and profitability in the future as its results are influenced by a number of factors, many of which are beyond GSL’s control. Ultimately, if GSL does not realize sufficient revenue levels to sustain profitability, it may be required to seek financing and/or borrowing in the longer term, which may not be available or which may be on adverse terms.

Dependence on key personnel

GSL’s success depends to a significant extent upon the retention of the services of members of the senior management or other key personnel. Any loss (whether temporary or permanent) could have a material adverse effect on the business, financial condition or results of operations of GSL.

Ability to recruit and retain staff

The future success of GSL depends to a significant extent on its ability to hire and retain key development and operational personnel. There can be no assurance that GSL will be able to continue to retain and attract qualified personnel for the development of GSL’s products and business.

Permits

There can be no guarantee that any permits, consents or approvals required from third parties in connection with existing or new projects will be issued or granted to GSL. A failure by GSL to obtain such permits, consents or approvals may affect GSL’s ability to execute or complete existing and/or new projects.

Capital expenditure and development risk

Projects in which GSL is involved often require significant capital expenditure during the implementation stage, and often may only generate a return at a later date. Furthermore, changing conditions, unforeseen circumstances and financing costs during development periods may result in losses or diminished profits from such projects.

Market for common stock

The common stock is eligible for quotation on the OTC Bulletin Board. If for any reason, however, our securities later becomes ineligible for continued quotation on the OTC Bulletin Board, or a public trading market does not develop, purchasers of the common stock may have difficulty selling their securities should they desire to do so and purchasers of our common stock may lose their entire investment if they are unable to sell our securities.

FINRA sales practice requirements

In addition to the “penny stock” rules described below, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.

Limit on secondary trading

Common stock holders may not be able to resell the shares in any state in the United States unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our common stock for secondary trading, or identifying an available exemption for secondary trading in our common stock in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our common stock in any particular state, the shares of common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the market for the common stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the shares of our common stock and a stockholder’s ability to resell shares of our common stock at all or at current market prices, which could increase a stockholder’s risk of losing some or all of his investment.

Dividend policy

GSL has never declared or paid any cash dividends on our common stock. GSL currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, the Director does not anticipate paying any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the Director after taking into account various factors, including but not limited to GSL’s financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that GSL may be a party to at the time. Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never occur, as the only way to realize their investment.

“Penny Stock” rules

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on NASDAQ). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

Dilution

Generally, existing shareholders will experience dilution of their ownership percentage in GSL if and when additional shares of common stock are offered and sold. In the future, GSL may be required to seek additional equity funding in the form of private or public offerings of its common stock. In the event that GSL undertakes subsequent offerings of common stock, shareholders’ ownership percentage, voting power as a common shareholder, and earnings per share, if any, will be proportionately diluted. This may, in turn, result in a substantial decrease in the per-share value of the common stock.

Government policies and legislation

The introduction of new policies or legislation or amendments to existing policies or legislation by governments or the interpretation of those laws in the State of Nevada or other jurisdictions under which GSL operates could impact adversely on the assets, operations and ultimately the financial performance of GSL.

Regulatory risk

GSL is not currently identified by its management as a Shell Company as defined under SEC rules and regulations, which means that its stock is not subject to certain limitations contained in these rules. There can be no assurance, however, that the SEC and/or various regulatory bodies in the US will not reject this classification and effectively apply the Shell Company rules to GSL in the future. Additionally, any Exchange may apply its own rules and/or analysis to the classification of GSL and reach a different conclusion than GSL’s management. Any such determination, either by the SEC, one of the other regulatory bodies in the US or an Exchange, could adversely impact GSL’s attempt to be listed on an Exchange or the tradability of its shares in its current markets, and/or the cost and time involved in doing so.

Taxation

Any change in GSL’s tax status or in taxation legislation in any of the countries in which GSL operates could affect GSL’s ability to provide returns to shareholders.

No guarantee of listing

Xenetic’s plan is for it to be acquired on a share-for-share basis by GSL, where the level of effective dilution to Xenetic’s shareholders is modest. This means that, other than for an acceptable level of dilution (which is deemed to be the “cost” of achieving GSL’s aims) and the fees and costs of the Acquisition including the costs involved in the GSL Hive Out Agreement described below, the group formed by the completion of the Acquisition will be as near as possible the same as Xenetic’s is currently constituted, with the same assets and liabilities, save that it would have a US holding company with an enhanced ability to achieve a listing on a major United States securities exchange. While Xenetic and GSL have already had general discussions regarding such a listing, the process of getting listed on a major securities exchange in the US is complex and subject to the independent rules of the Exchange. Consequently, there can be no assurance or guarantee given that such a listing can or will be achieved by GSL.

Forward-Looking Statements

This Document includes statements that are (or may be deemed to be) “forward-looking statements.” These forward-looking statements can be identified by the use of forward-looking terminology including the terms “believes,” “continues,” “expects,” “intends,” “may,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Prospective Investors should not place undue reliance on forward-looking statements, the timeframe of which starts with the date of this Document.

Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Document based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

Subject to any requirement under applicable laws and regulations, neither GSL nor its Director undertakes to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

All references to statute or other forms of UK legislation in this document shall, unless otherwise stated, be references to statutes or forms of legislation of the UK and any references to provisions of any legislation shall include any amendment, modification, re-enactment or extension thereof.