Major Shareholder:

• CKC Holdings Limited ¡V 37.5% interest
• Mr. Li Jialin and his wife Mrs. Liu Li - 37.5% interest

Company Subsidiaries:

• VST Computers (H.K) Ltd (100%): Distribution of IT products

The Group is engaged principally in the distribution of a wide range of IT products including data storage devices CPUs, media products, PC motherboards and server motherboards. In addition, the Group strives to distinguish itself from other distributors of IT products in general and to maintain its competitiveness I its distribution business by providing value-added services to its suppliers as well as support and after-sale services to its customers and the end-users off the IT products distributed by the Group.

As related to its distribution business, the Group had received various awards from some of its suppliers, which included AMD, Seagate and Aztech during the Track Record Period and are recognized as one of the leading distributors of AMD and Seagate in the PRC and Hong Kong.

The Group's distribution business is mainly conducted in Hong Kong through VST Hong Kong. As in the Latest Practical Date, the Group has six registered representative offices in six cities of the PRC, namely, Beijing, Shanghai, Shenzhen, Chengdu, Guangzhou and Shenyang to perform marketing functions for the Group and provide liaison and consultancy services and technical supports to the customers and the end users of the products distributed by the Group in the PRC.

At present, the Group is distributing IT products to various types of customers. According to the Group's classification, its customers include OEM, PC and other consumer electronics manufacturers, regional resellers, local resellers and system integrators. Among the Group's customers all of the production operation of the OEM and the PC and other consumers electronics manufacturers currently take place in the PRC. The Directors believe that the Group¡¦s customers to end-users in the PRC ultimately distribute most of the products.

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

• The Group's management has in depth knowledge of an extensive experience in the IT products distribution business, which enables the group to keep abreast of the latest development in the market trends of IT products.
• The Group has an extensive and efficient supply chain and distribution network for IT products, which allows the Group to render its value-added services to suppliers, customers and end-users promptly;
• The Group has established long business relationship with its major suppliers who include AMD and Seagate, and its major customers, such as LCS. It helps the Group to secure its distribution business;
• The Group is an authorized distributor of the five international well-known manufactures of IT products including AMD, Aztech, Guillemot, Seagate and Supermicro;
• The Group has a proven track record of over 10 year in financial management and working capital control; and
• The Group's distribution rights and is not subject to any minimum purchase quota. This allows the Group to maintain a flexible-purchasing schedule to adapt to the changing market demands.

• Risks related to the sustainability of gross and net profit margin;
• Risks related to historical reliance on related parties in respect of revenue;
• Risks related to the market price erosion;
• Credit risks;
• Risks related to the obsolete inventories.

The Group will focus its business development I the PRC. By the end of 2004, the Group is expected to enhance the function of its registered representative offices in the PRC, namely, Beijing, Shanghai, Shenzhen, Chengdu, Guangzhou and Shentyang, to promote, market and provide supporting services, which include technical support and advisory services in the PRC. The Group will also explore the opportunities to establish subsidiaries in the PRC so as to provide more comprehensive functions and services to its customers and end-users.

The Group will continue to explore other cities in the PRC, which have potential economic growth and appoint regional reseller and local resellers to expand its marketing channel. If the Group's business is encouraging, the Group will consider setting up additional local representative offices and/ or subsidiaries to cater for the needs of the local customers.

To complement the range of the products distributed by the Group, the Group will continue to seek reputable supplier for distributing new IT products through its extensive distribution network. The Group is currently in negotiation with several brands of graphic cards, motherboards, DVD drives, CD-ROM and LCD monitors for inclusion in its product line.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$33.3 million (based on the offer price HK$0.25 per share). The Group at present intends to apply the net proceeds as follows: