Major Shareholder:

• Mr. Kwok Wing ¡V 37.5% interest
• Mr. Kwok Chiu - 37.5% interest

Company Subsidiaries:

• Tack Fat Manufacturing Factory Ltd (100%): Trading of fabric and other materials
• Chiu Wing Enterprise Ltd (100%): Property holding.
• Potter Industries Ltd (100%): Trading of packing materials
• Tack Fat Swimwear Manufacturing Ltd (100%): Manufacturing and sale of garment
• Tack Fact Garment (Cambodia) Ltd (100%): Manufacturing of garments
• Blue Cat Enterprises Ltd (100%) Manufacturing of Blue Cat apparel

The Group is engaged principally in the design and manufacture of jeans, pants, shorts, swimming apparel and sportswear for men, women and children on OEM and ODM basis. For those products of the Group, which are sold on an OEM basis, they are generally manufactured in accordance with the specifications prescribed by the customers. The Group has a solid customer base, which includes licensees of internationally well known brandnames such as Sears, Union Bay, JC Penney, Karstadt Quelle, Lee Wrangler, Reebok, Arena and Mexx.

For those products, which are sold on an ODM basis, the Group has a product design team which designs a wide range of fashionable styles and patterns for its customers. The product design team also gives advice to customers on the choice of fabric, color and pattern in order to provide tailor-made products to them. The Group has three production facilities, one of which is located in Luoding City, Guangdong Province, the PRC and the other two of which are located in Phnom Penh, Cambodia.

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

• Its extensive customer base which includes licenses of internationally well-known brandnames;
• Its long-established relationship and excellent connection with overseas customers and their strong loyalties towards the Group;
• The extensive experience and expertise of the Group's senior management who generally has over 25 years of experience in the manufacturing of garment;
• Its strong production capacity which enables the Group to make timely delivery at a competitive price;
• Its large amount of export quota on hand;
• Its strong commitment to maintain the high quality of its products;
• Its comprehensive range of fashionable products created by the Group's team of professional designers who adapt promptly to changes in market trends and meet the specification of its customers; and
• Its well-established relationship with an extensive base of suppliers.

• Reliance on major customers;
• Reliance on major suppliers;
• Reliance on the North American and European markets;
• Reliance on independent subcontractors
• Reliance on the production facilities in Cambodia

At present, the Group operates at approximately 93.5% of its full production capacity. The Group intends to enhance its production capacity by hiring more workers and purchasing additional machinery for its production facilities in the PRC in anticipation to the increasing number of overseas orders following the accession of the PRC into the WTO. The Group also intends to enhance its production capacity of its production facilities in Cambodia to fully utilize the cheap and abundant labour force these.

The Group plans to automate part of the production processes such as cutting and packing in order to shorten the production time and to improve the quality of its products. The Directors believe that investment in new production technologies is crucial to the Group';s future development as these technologies can always give the Group a competitive edge over its counterparts and improve the overall production efficiency.

The Group plans to develop new business of retail operation and explore the new market opportunity in the PRC by investing in Blue Cat Development. Blue Cat Development is a company incorporated in BVI which limited liability on 28th November 2001 in which Blue Cat Enterprises, Sure Profit Trading Ltd, and three independent third parties hold 5%, 51% and 44% equity interest respectively.

The Group is considering the feasibility of setting up its own production facilities to print and dye fabric for its own consumption, although the Directors do not have any concrete plan at the moment. The Directors consider such vertical integration beneficial to the Group';s future development by reduction not only its overall production costs, but also its reliance on its suppliers and subcontractors.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$89.6 million (based on the offer price HK$0.385 per share). The Group at present intends to apply the net proceeds as follows: