Jian ePayment Systems Limited
(Stock Code: 8165)

Major Shareholder:

• Mr. Chin Ying Hoi & his Mother Mrs. Ya Zhen Quan - 71.7% interest

Company Subsidiaries:

• Zhengzhou Jian- O Yuan ITS Systems Co., Ltd (99.0%): Development and operation of the Jian Payment System

The Group is engaged in the development and operation of the Jian ePayment System in the PRC. The Jian ePayment comprises a back and electronic receipt/payment and data recording system. Together with the Jian Smart Passes, contactless smart card readers and other hardware and software, the Jian ePayment System processes and records data to:

• Enable the settlement of payment for the sale and provision of goods and services truncations effected between the Group's customers and holders of the Jian Smart Pass; and
• Provide the holders of the Jian Smart Passes with a convenient alternative to cash payment whilst allowing them to conveniently replenish the stored value on their Jian Smart Passes.

Holders of the Jian Smart Passes pay for goods and services by placing their Jian Smart Passes adjacent to the specially designed smart card readers produced by the Group and installed at the points of sale of the Group's customers.

The Group derives revenues initially by selling hardware, including smart card readers and associated software as well as by providing system integration services to set up application sub-system for customer's integration with and use of the Group's Jian ePayment System. The Group offers the use of its Jian ePayment System to assist its customers to collect payment for the customer's sales of goods and services and provide after sales services including repair and maintenance of their systems.

As at the Latest Practical Date, the Group has been commissioned to design and build roadside car parking fee collection sub-systems in various districts in eight cities in the PRC, namely Wuhan, Guangzhou, Haikou, Beijing, Nanning, Harbin and Nanchang.

In order to resolve the implicit shortage of coins and facilitate the development of a nationwide clearance system, the PRC government has shifted its attention to other alternatives, and he emergence of smart cards provides a solution. The introduction of smart cards to PRC's citizens would not only relieve them from fumbling for coins, the cards can be popularized to become a nation-wide electronic payment medium and minimizes the use of notes and coins.

By the end of 2000, there were 600 million IC payment cards issued in China. With more cities participating in the GCP and as the infrastructure for national network gradually takes shape, the use of smart cards as a transaction medium in China is expected to be increasingly common.

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

• Early mover advantage in establishing electronic payment systems in the PRC using contactless smart card technology;
• The Jian smart Passes for payment in the roadside car parking facilities are being used in eight municipal areas;
• Extensive distribution channels for the Jian Smart Passes and convenient access to Jian Initializers and Jian Rechargers in Wuhan to be established through the Group's recent alliance with The Agricultural Bank of China, Hubei Branch which has more than 200 branches in Wuhan, Hubei Province;
• The versatility of the Jian ePayment System;
• The success of building a rapidly growing circulation of Jian Smart Passes;
• Its experienced and entrepreneurial management team.

• Due to the limited operating history as an operator of the Jian ePayment System for general application, it is difficult of the Group to predict it future results of operations.
• Dependence on a small number of customers and high concentration of trade receivables.
• If the Group new products or enhancement fail to achieve market acceptance could result in the Group's business, financial condition and result of operations being materially and adversely affected.
• If the Jian Smart Pass does not achieve market acceptance, the Group could have difficulties in attracting new customers to use the Jian ePayment System.

The Group plans to use its roadside car parking fee collection sub-system as its inaugurate commercial application for the establishment of the Jian ePayment System in all of the Group's markets. The Directors believe that its roadside car parking fee collection sub-system, being an application that the Group has already been commissioned to build in various districts in eight cities in the PRC, and which has been successfully implemented in Wuhan would help the Group in raising public awareness of the Jian ePayment System, thereby boosting the usage and circulation of the Jian Smart Passes.

The Group plans to explore additional commercial applications of the Jian ePayment System to include, for example, applications in public transportation once the circulation of Jian Smart Passes reaches critical mass in each of the Group's markets where it has already implemented roadside car parking fee collection sub-systems.

In addition to its existing alliance with The Agricultural Bank of China, Hubei Branch, the Group plans to establish other strategic alliances with other established banking institutions, in each of the areas in which it operates, for the issue of affinity Jian Smart Passes with multiple commercial applications and to utilize the bank's extensive branch network for the distribution of Jian Smart Passes and the provision of the services of Jian Initializes and Jian Rechargers.

The Group will continue to invest in the development of its high caliber research and development team. The Group's dedicated research and development professionals will continue to devote themselves to keeping abreast of the market trends and technological evolution, and at the same time strive to develop new products and services, which adopt the latest technologies.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$32.4 million (based on the offer price HK$0.45 per share). The Group at present intends to apply the net proceeds as follows: