Major Shareholder:

• Mr. Lau Yeung Sang ¡V 69.745% interest

Company Subsidiaries:

• Universal Cyberworks (Group) Ltd (100%): R&D of online payment and logisitics solutions
• iPayment China (PRC) (60%): Provision of online payment solutions and related services
• iLogistics China (HK) (100%): Investment Holding
• iLogistics Shanghai (PRC) (100%): Provision of logistics online and related services.

The Group is principally engaged in the provision of enterprise solutions with a focus on online payment and logistics. The Group 's enterprise solutions are principally provided to enterprise n the PRC to enable them to conduct online payment and logistics processes. The Group had registered the software copyright of its proprietary software systems for Internet payment service with the relevant PRC authority in August 2001.

Combining its technical and application expertise together with the software components developed on its own and other third parties ' products, the Group provides enterprise solutions with a focus on online payment and logistics. The third parties ' products used in providing the Group 's enterprise solutions comprise mainly software packages. The Group 's services in this regard include consulting, system design, system integration, implementation and maintenance.

In April 2001,the Group entered into agreements with two software developers, namely SLI and EXE, to act as the exclusive value-added reseller of the logistics software in the Greater China Region of SLI and as a non-exclusive value-added reseller in the PRC (and to the clients worldwide to whom iLogistics China provides services)of EXE respectively. Being a value-added reseller, the Group uses the software packages of SLI or EXE as components to build logistics solutions and provide the solution, together with value-added services such as system design, implementation and maintenance, to its clients.

The Directors believe that e-commerce, particularly in the case of the PRC, is still in its infancy and both the volume and form of the business of e-commerce are still emerging.

As technology and applications for e-commerce become increasingly available at a reasonable cost and as the Internet user population grows. The volume of both traditional and new forms of business conducted online will multiply in the future.

The Directors believe that the probable consequence of the flourishing e-commerce market will be an increase in demand for efficient and reliable online payment and logistics solutions and services. The e-commerce market in the PRC has in fact already entered a phase of significant growth.

IDC estimated in October 2001 that B2C transactions in the PRC amounted to approximately US$522 million for the year 2000.This is forecast to reach approximately US$16.9 billion in 2005,representing a compound annual growth rate of approximately 100.4%.

The Directors believe that the Group has the following competitive advantages:

• The Group commenced its provision of online payment and logistics solutions in the PRC in early 2001. The Directors believe that the Group has positioned itself as a mission critical application provider for e-commerce operations in the PRC.
• Apart from project fees for the provision of enterprise solutions, the Group has recurring revenue stream mainly from: (1) the provision of system maintenance services to clients using its logistics enterprise solutions, and (2) the provision of ongoing technical support services to clients using its online payment enterprise solution.
• The Directors consider that, because of its relationship with the banks, the Group is in position to assist its prospective clients to negotiate with the banks to establish a direct interface between prospective client and the banks concerned.
• As for the logistics enterprise solutions business, the Group has formed alliances with two overseas software developers, namely SLI and EXE, and has obtained the rights to act as the value-added reseller of their software packages in the Greater China region and the PRC.
• The Group is operated by a dedicated management team, which is committed to a focused business strategy based on its target clients' needs, profitability and scalability from the outset. They also have in-depth knowledge of the PRC market and the technical expertise in e-commerce.

• History of the Group's solutions and services in the PRC is limited.
• The Group may not obtain all the necessary permits and business licenses.
• The establishment of the Group's reputation and brand name may not be as successful as planned.
• The Group's has a history of financial losses and there is a possibility of future financial losses.
• Competition resulting from the admission of the PRC into the membership of the WTO.
• Shareholder's interests in the Company may be diluted in the future if the Company needs to raise additional funds.

The Group will continuously enhance IPRS, IPSVAS and iwareZ. The Group will promote its services of provision of online payment and logistics enterprise solutions together as a total solution for online enterprises to enhance the effectiveness of their e-commerce operations. With the view of providing more timely local support for clients of its enterprise solutions, the Group intends to expand the coverage of its technical teams by establishing branch offices in Shenzhen, Beijing, Wuhan, Chongqing and Xi á n in the future.

As at the Latest Practicable Date, the Group has a R&D team of 13 professionals with expertise and experience in e-commerce related areas. To accelerate the achievement of its R&D endeavours, the Group will continue to expand its R&D team and intends to invite research institutes such as computer departments of universities in the PRC and R&D professionals outside the Group to conduct specific researches relating to online payment and logistics enterprise solutions, as well as e-commerce in general.

It is the intention of the Group to establish additional branch offices in the PRC in the near future to conduct more intensive direct marketing to online enterprises and to provide them with more responsive local support. It is intended that five branches will be established in Shenzhen, Beijing, Wuhan, Chongqing and Xian by the end of the first quarter of 2003. Other brand building activities such as press and Internet advertisements, participation in industry exhibitions and seminars in the PRC will also be carried out to enhance the market awareness of the Group 's expertise and services.

As an online payment and logistics focused solutions provider, the Group intends to collaborate with other solutions providers and system integrators to provide a total IT solution to online enterprises in the PRC. The Group has signed memoranda of understanding with three software developers and a telecommunication services provider for joint marketing programs and cross client referral opportunities in the PRC and will continue to seek cooperative opportunities with other market practitioners in the future. The Group is currently negotiating with certain software developers with a view to collaborating on provision of enterprise solutions. As at the Latest Practicable Date, no definite agreement has been reached yet.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$23.8 million (based on the offer price HK$0.21 per share). The Group at present intends to apply the net proceeds as follows: