Major Shareholder:

• People Market Management Ltd - 26.54% interest
• China Equity Associates L.P - 14.84% interest

Company Subsidiary:

• Tat Lung Shenzhen(100%): Provision of medical equipment,

The Group is principally engaged in the research, development and provision of medical devices for cancer treatment and promotion of sales of anti-cancer drugs in the PRC. Leveraging on the experience of Dr. Nga Kuk. James in the medical device and pharmaceutical industries, the Group strives to provide medical devices and promote sales of drugs for cancer treatment in a more effective manner at reduced costs. At present, the Group provides its assets, being RFAS, for the setting up of cancer treatment centers with the contracted hospitals in the PRC.

Under the business model, instead of selling RFAS to the hospitals, the Group enters into cooperation contracts with the hospitals whereby the Group provides RFAS. which remains as the assets of the Group and consists of radiofrequency generator, LeVeen electrodes, an ultrasonic scanner, a personal computer and the software for the system, to the hospitals for the setting up of RFAS treatment centers and in return shares part of the profits of the RFAS treatment centers as medical service fees. This helps promoting the use of RFAS and increases the profitability of the Group since the Group cn make profits from each medical treatment given by the contracted hospital rather than merely receiving a one-time payment from selling RFAS.

The profit sharing ratio varies from contracts to contracts. The terms of most of the contracts are six years and during such period the Group will share 80%, 70% and 60% of the profits, which are arrived at by deducting the price of LeVeen Electrodes, electric plates and administrative costs mainly including telephone and Internet fees and utility charges relating to the RFAS treatment centers from the fees of operations of about RMB15,000 to RMB20,000 per operation, for the first two years, the third to fourth years and the fifth to the sixth years respectively from the date of each of such contracts.

In 1998, the total amount spent on health related issues (not including amount spent on Chinese medicine and related products) in the PRC was more than RMB28 billion (representing an increase of 35.2% from 1997), presented about 2.6% of the total national expenses for that year. Because of the natural increase in population, the gradual aging society, the revolution of the urban medical insurance system and the rise in the living standard, growth in the overall demand for medication services in the PRC s estimated to remain stable.

According to estimation made by experts with MOH, the PRC has more than 3,000 manufacturers producing 47 categories, 11,000 kinds of medical equipment. A few of these categories entail electronic medical, optical ultrasonic and laser system. However, as far as the Directors are aware of, no RFAAS or similar medical devices are manufactured in the PRC.

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 PRC medical device industry and distribution of medical devices and medicines;
• the Group's ability to establish the strategic cooperation with hospitals in the PRC which reduces costs of investment by the hospitals and in turn provides the Group with business opportunities and enhances the profitability of the Group;
• the Group's exclusive distribution right obtained from Radio Therapeutics for the distribution of RFAS, which consists of radiofrequency generators, LeVeen Electrodes, and ultrasonic scanner, a personal computer with the software for the system in the PRC and Hong Kong; and
• the Group's extensive cooperation network with hospitals in the PRC (as at the Latest Practicable Date, with 49 hospitals) which is expanding, enables the Group to develop the market for 3dimensiional laparoscpe and to promote the sale of IP6 and Neustim.

• The failure of the Group to expand the markets geographically for RFAS of the Group, to promote other applications of RFAS and to introduce 3-dimensional laparoscope and anti-cancer drugs could have a material adverse effect on the business prospects, operating results and financial condition of the Group.
• The failure in renewing existing contracts or entering into new contracts with similar terms and conditions may have a material adverse effect on the business prospects and financial condition of the Group.
• It is possible that the Group may encounter 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 and operating profit in the near term.
• New entrants to the cancer treatment industry may have substantially more capital and higher research and development and marketing capabilities than the Group. these competitors may succed in developing products and services that are more effective or less costly than those developed by the Group.

The Group plans to enter into cooperation contracts with another 10 hospitals in Guangdong. Fujian and Beijing, the PRC for establishment of RFAS treatment centers by the end of 2001.

The Group plans to enter into cooperation contracts with another 30 hospitals in the PRC especially in Shanghai, Beijing, middle and eastern part of the PRC for establishment of RFAS treatment centers in 2002 so that there will be a total of about 89 RFAS treatment centers in the PRC.

The Group plans to enter into cooperation contracts with another 30 hospitals in Guangdong, Shanghai, Xichuan and Fujian, the PRC for establishment of RFAS treatment centers in 2003 so that there will be a total of about 119 RFAS treatment centers in the PRC.

In addition, the Group plans that during the years 2002 and 2003 in addition to forming cooperation contracts with hospitals the Group, upon being grated the necessary approval by the relevant authorities in the PRC, will commence to sell RFAS, which is supplied by Radio Therapeutics and to which the computer system developed by the Group is attached, to the hospitals.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$60.0 million (based on the offer price HK$0.50 per share). The Group at present intends to apply the net proceeds as follows: