Major Shareholder:

• Mr. Chan Choi Har, Ivy & Mr. Law Kin Ming - 33.33% interest
• Ms. Rajewski Natalie N.- 20.51% interest

Company Subsidiaries:

• Blu Spa Canada Inc. (100%): Engaging in product development sourcing and quality control in Canada.
• Blu Spa (HK)Ltd (100%): Engaging in market development product distribution and customer support services in Asia-Pacific region.
• Blu Spa Managing Services Ltd (100%):Provision of retail concept store and spa operation and related management services
• Blu Spa International Ltd (100%): Advertising marketing of granting of distribution rights
• Beachgold Assets (100%): Holding the Group's intellectual property rights
• Chapton Holdings Ltd (100%): Advertising, marketing and granting of distribution rights

The Group is a developer, promoter and distributor of a broad range of botanical personal care products, treatments and services. The Group aim to pioneer a holistic lifestyle approach to beauty and relaxation by offering its products and spa treatments and services for consumers. To commensurate the high standards of products and services and to maintain the integrity of the brand image, the Group has developed a uniform licensing, merchandising, marketing and training system and manuals for its distributors.

At present, the Group's products can be categorized into eight lines namely, anti-bacterial, aronmatherapy, body care, color cosmetics, face care, hair care, men line and milk protein treatment. The Group currently distributes and sells its broad range of products through selected distributes in China, HK, Japan, Malaysia, South Korea and Taiwan.

Since September 2001, the Group expanded into the provision of spa management services by entering into a letter of intent with an independent in PRC hotel chain owner whereby the Group will license to the hotel chain owner the use of brand name in the spa and provide relevant spa management services for spa to be operated by the hotel chain owner.

The Directors consider that there is considerable growth potential for personal care products worldwide, particularly in China, the second largest market in the Asia-Pacific region in terms of retail sales of personal care products. The Directors believe that there will be encouraging demand for the Group's botanical personal care products and related spa management services in view of '

• The potential growth underlying the personal care products market worldwide with the overall sales volume amounting to over US$ billion in 2000;
• The fundamental changes in purchasing patterns that drive demand for high quality, effective products and services relating to personal care;
• The shift in market trend towards "feel-good" products like aromatherapy oils, massage rubs and botanical products; and
• The increased awareness of spa services as a means to combat stress contributing to the double-digit sap industry growth rate.

The Directors believe that the Group has competitive advantage as following:

• Unique brand positioning and recognition of brand name in its target markets;
• Strategic relationship with established retail distributors in each of its target markets;
• Uniform global brand management system;
• Wide and comprehensive range of unique, self-developed high quality products; and
• Good research and product development capability.

• Net current liabilities and working capital;
• Reliance on financing form an Initial Management Shareholder and two Directors;
• Substantial part of the proceeds form the New Issues will be applied to repay the existing creditors of the Group;
• With an limited operating history;
• Risk related to the failure to achieve market acceptance for the Group's products and services;
• The industry is full of competition.

The Directors believe tat the key to success in the ever-changing personal care industry lies with the ability to introduce new and quality products in a timely and efficient manner. The Group will continue its focus on the development of quality and innovative personal care products with a view to introducing a number of new products or line extensions including reformulation and repackaging semi-annually.

The Directors consider that in order to achieve growth through the continued introduction of new and innovative products, dedicated research and development efforts are of utmost importance. The Group will continue to invest n and strengthen its research and development capability by expanding its research and development department and to recruit more qualified chemists knowledgeable and experienced in various types of cosmetic timely debut ingredients, formulations and skin care development to ensure the continuous development of new and quality products.

The Group will continue to expand its geographical markets to cover the PRC, Southeast Asia North America and Europe through the granting of distributorship to local retailers with established distribution networks. The Group intends to target large metropolitan cities such as New York and Toronto with respect to its expansion in North America, and London with respect to its expansion.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$18.0 million (based on the offer price HK$0.30 per share). The Group at present intends to apply the net proceeds as follows: