Eco-Tek Holdings Limited
(Stock Code: 8169)

Major Shareholder:

• Dr. Chiang Lily - 54.15% interest
• The Hong Kong Polytechnic University - 16.10% interest

Company Subsidiaries:

• Eco-Tek Technology Ltd(100%): Marketing, sale, servicing and research and development of environmental protection related products and services
• Eco-Tek Technology (100%): Holding of intellectual properties rights

The Group is principally engaged in the development, sales and marketing of innovative environmental protection related products and ancillary services. It is the mission of the Group to become one of the leading providers of environmental protection related products and ancillary services in Hong Kong and overseas. The Group was founded by Dr. Chiang in October 1999. The Group has successfully expanded its range of environmental protection related products under the efforts of Dr. Pau.

Since the establishment of the Group in October 1999, the Group focuses on the application of innovative technologies to the research and development of practical and economical environmental protection related products and services. The marketed products of the Group include Eco-Trap, suction filter and return line filer (being two of the three kinds of hydraulic filters developed or under development by the Group) and the products under research and development include soundproof barriers, diesel oxidation catalysts and pressure line filter, another kind of hydraulic filter. The Group also provides cleaning services of the filter cartridges of Eco-Trap in the Company's head office in Kwun Tong.

Also, the Group provides ancillary services to support the use of environmental protection products of the Group. Since late April 2001, the Group has been providing cleaning services of the filter cartridges of Eco-Trap in its head office in Kwun Tong. In May 2001, the Group commenced Eco-Trap installation services in its head office in Kun Tong.

The Hong Kong government plans that commencing from around 2002, all pre-Euro standard diesel vehicles, which are diesel vehicles produced before the introduction of Euro I standard in 1992, will be required to be retrofitted with diesel oxidation catalysts or particulate traps before renewing their registration. Since January 2001, the Hong Kong government has adopted the more stringent Euro II emission standard.

The Hong Kong government is prepared to build noise barriers on existing roads and flyovers if people living nearby are exposed to the level of noise above 70 decibels. As a result, it is estimated that the retrofitting of noise barriers would have to be done on more than 29 roads and flyovers. The total estimated cost for this project is about HK$2.34 billion.

According to the International Industry Statistics in 1996, the hydraulic industry in the PRC, with the total gross production value of RMB2,348 million, ranked the sixth in the world. It is anticipated that the market demand in the PRC or hydraulic system components will reach approximately 13,000,000 pieces with total revenue RMB7,000 million in 2005.

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

• The Group's dedicated management team which has extensive experience and technical expertise in the development and commercialization of industrial products;
• The Group's alliance will collaboration with PolyU which strengthen the Group's research and development capability in environmental protection related products and services;
• An effective communication channel built up between the management team of the Group and the relevant authorities of the Hong Kong government; and
• A low-cost strategy in the development and supply of environmental protection related products and services.

• The failure of the Group to expand the geographical market for Eco-Trap and other products, that could have a material adverse effect on the business prospect, operating results and financial conditions of the Group.
• There is no assurance that the Group may successfully obtain the necessary government contracts for nay or all of its new products, the failure of which may have material adverse effect on the business prospects and profitability of the Group.
• It is possible that the Group would generate operating losses in the foreseeable future due to a high level of planned operating and capital expenditures which may not be matched by a corresponding increase in revenue in the near term.
• Any increase in competition could result in price reduction, which erodes the Group's market, share, and have an adverse impact on the Group's business.

Apart from Eco-Trap, suction filter and return line filter, the Group has commenced the development of the diesel oxidation catalyst and pressure line filter and the preliminary study of soundproof barrier. The Directors expect that the diesel oxidation catalysts and the pressure line filter of the Group will be launched in the Hong Kong market in the second or the third quarter of 2002 and the soundproof barrier will be commercialized before the end of 2004.

The Group intends to work closely with the distribution agents to be appointed to obtain necessary support and approval from the relevant environmental protection authority in Shunde for the sale Eco-Trap in Shunde in the second or cities in the Guangdong Province of the PRC, including Foshan, Panyu, Zhuhai and Zhongshan and various cities in the Fujian Province.

The Group plans to establish its own production facilities for the prediction of Eco-Trap, diesel oxidation catalyst, hydraulic filters and soundproof barrier. It is expected that bout HK$7 million will be utilized to establish the Group's production facilities in the PRC by the second or third quarter of 2003.

The Directors recognize that maintaining a high quality standard for the Group's products and service performance is vital for its reputation and continuing business growth. Improvement in the quality of its products and service performance is therefore one of the important initiatives for the Group's business development. The Group will continue to conduct research and development through its research and development team in order to enhance the performance of its existing products and services.

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$00.23 per share). The Group at present intends to apply the net proceeds as follows: