Major Shareholder:

• Mr. Zhu Zhaofa and Ms. Xue Wanjuan¡V 21.57% interest
• OGHL (1220)- 18.57% interest
• Mr. Ng Siu Kei- 10.1% interest

Company Subsidiary:

• Beijing Linefan (100%): Sale, development and implementation of non-structural knowledge integration systems and KM related network application system and technology
• Hangfan (80%): ASP of non-structural knowledge integration systems and services
• Wellpay (80%): R&D and provision of KM related network application and services
• Karson (55%): Sale, development and implementation of structural information integration and analysis systems

The Group is an enterprise software applications and technology provider in Hong Kong and the PRC. The Group is principally engaged in the sale, development and implementation of KM systems and the provision of system integration and IT related services. the Group's major customers include commercial enterprises and/or government entities in both Hong Kong and/or the PRC seeking to deploy and improve their use of the Web-based applications and information processing technology. With its headquarter located in Beijing, the PRC, the Group currently employs about 104 full-time employees with offices in Beijing and Hong Kong.

The concept of Knowledge Management is a systematic process of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that will improve organizational performance. Essentially, it embodies organizational process that seek synergistic combination of data and information processing capacity of Its, and the creative innovative and interactive capacity of human beings.

The Group's expertise in Knowledge Management comprises of two streams, namely non-structural knowledge integration systems and structural information integration and analysis systems. The Group's KM network application systems can be used to help corporation better manage their information assets and to discover vital business trends that can improve a corporation's efficiency and enhance cost savings.

Besides, the non-structural knowledge integration systems, the Group has also developed a number of KM related network application systems with communication functions including: (1) LF WebMail launched into the market in August 2001; (2) LF BBS launched into the market in September 2001; and (3) LF Webpub launched into the market in May 2001.

IDC predicts that worldwide KM software market will grow from US$1.4 billion in 1999 to a substantial US$5.4 billion in 2004, while Ovum predicts that worldwide KM software market will grow from US$0.5 billion to US$3.5 billion during the same period. IDC also estimated that the KM software market alone will grow from US$1.4 billion in 1999 to a substantial US$5.4 billion in 2004.

The Directors believe that with the rapid growth in Internet and its related technology will stimulate the market of network application software, particularly in Web-based KM systems. The Directors also believe that a KM solution system that enable users to integrate an organization¡¦s internal and external information and creates a knowledge-sharing atmosphere will be demanded by small to medium enterprises in the PRC and HK.

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

• Its strong and dedicated management team which provides their expertise in business and product development;
• Its established operations in the PRC and Hong Kong software markets;
• Its broad client base including reputable international companies and government entities in Hong Kong and the PRC;
• Its close working relationship with major suppliers;
• Its experienced R&D professionals who posses a strong technical know-how for the development of KM systems and its related network application systems;
• Its cooperative relationship with reputable worldwide IT business partners and strategic alliances; and
• Its strong and experienced technological and management advisory board which possesses a thorough understanding and in-depth knowledge of the PRC software industry and market.

• Should the Group's resources be inadequate to support its future expansion, the Group's business and operations may be adversely affected.
• The Group's expansion plan depends on the availability of the Group's management, operational and financial resources.
• If the Group cannot secure adequate number of contracts in the future, the Group's business, operation and financial condition may be adversely affected.
• There can be no assurance that the Group can obtain additional funds on terms acceptable to the Group. If the required funds are not available, the business of the Group may be adversely affected.

During the Forward Looking Period, the Group will continue to upgrade its knowledge acquisition technology and natural language processing technology in order to develop new products including LF e-Center, ADMS, LF e-Agent, LF e-Assistant, LF e-Media and Identity Verification System.

In order to establish "Linefan" as a leading brand name for KM systems, the Group will continue to use "LF" as prefix for its product name in order to create customer recognition. The Group will also organize KM related seminars and forums, attend press conferences, conventions and trade shows not only to education the public but also to arouse the awareness to the brand name "Linefan" as well as promoting the Group's corporate image.

The Directors consider one of the Group ¡¦s competitive advantages its capability in the development of knowledge acquisition technology and natural language processing technology. As such, the Group will continue to strengthen its R & D capability by enlarging its R&D team to 80 professionals in the Forward Looking Period. The Group will upgrade its software, hardware and management information system so as to keep up with its

Also, the Director considers that potential collaboration with or acquisition of other IT companies may create synergy with the Group in KM technology or in marketing or distribution of its products. As at the Latest Practicable Date, the Directors have not identified any potential any potential companies for acquisition or strategic investment.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$35 million (based on the offer price HK$0.24 per share). The Group at present intends to apply the net proceeds as follows: