Major Shareholder:

• Mr.Yang Tse Ying & Mr. Yang Ching Yau ¡V 75.0% interest

Company Subsidiaries:

• Shangsheng Electric (51%): Manufacture and sale of loudspeaker systems for automobiles
• Shangsheng Enterprises (51%): Manufacture and sale of loudspeaker components
• Sonavox Acoustics (51%): Manufacture and sale of loudspeaker systems for home theatres
• Taraki Services co Ltd (100%): Provision of management services to group companeis

The Group is engaged principally in the design, manufacture and sale of loudspeaker systems used in both automobiles and home theatres on an OEM and ODM basis. Up to the Latest Practicable Date, the Group has designed and manufactured more than 250 types of loudspeaker systems for automobiles and more than 50 types of loudspeaker systems for home theatres, all of which have different levels of quality, sizes, design and/or functions or are tailor-made for different customers.

The group has been designing and manufacturing loudspeaker systems for automobiles since 1992. During the two-year ended 31st December 2001 approximately 77% and 96% of the Group's loudspeaker systems for automobiles were sold to domestic automobile manufacturers in the PRC on an OEM and ODM basis including Shanghai Volkswagen, Shanghai General Motors, Dongfeng Cirtoen, Jiangling Motors and Kia Motors and the remaining were sold to overseas automobile manufacturers. Sale of loudspeaker systems for automobile accounted for approximately 82% and 64% of the Group's turnover for the two years ended 31st December 2001 respectively

All of the Group's products for home theatres are sold to renowned customers in the PRC on an OEM and ODM basis. The Group's customers for loudspeaker systems for home theatres include Kenwood and Sharp. Sales of loudspeaker systes for home theatres accounted for approximately 18% and 36% of the Group's turnover for the two years ended 31st December 2001 respectively.

The Group's production facilities are based in Likou Town, Xiangcheng District, Suzhou city, Jiangsu Province, the PRC which comprise various factory buildings and ancillary structures with a total gross floor area of approximately 35,261 sq.m. The Group currently has eight production ines with a maximum annual production capacity of approximately 4,000,000 sets of loudspeaker system for automobiles and five production lines with a maximum annual production capacity of approximately 600,000 sets of loudspeaker systems for home theatres.

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

• Its quality and reliable loudspeaker systems;
• Its well-established customer base including internationally well-known manufacturers of automobiles and home theatre system;
• Extensive experience and strong technological know-how of its management team in the design. Development, manufacture and sale of loudspeaker systems used in automobiles and home theatres;
• Its high production efficiency and effective cost control resulting form its vertically integrated manufacturing process and its ability to produce its own material and major components for its products;
• Its strong research and development teams which enable the Group to design and develop new products, enhance its existing products and develop efficient methods of production to meet changing markets trend and customer demands;
• Its comprehensive quality control monitoring procedures throughout the production process demonstrated by the award of ISO9002, QS9000 and VDA 6, Part 1 certifications.

• Reliance on the key executives and personnel;
• Competing business carried on by the controlling shareholder and executive Directors;
• Reliance on major customers;
• No assurance on achievement of business objective;
• Foreign exchange control and foreign currency remittance;

The Group, through its sales and marketing teams, will actively promote the Group's production capability and products and services in order to expand its share in the global audio systems market, especially in the automobile and home theatre segments. In anticipate of the growth in the loudspeaker system markets in the PRC and worldwide, the Group also plans to increase the awareness of the Group's products in the loudspeaker systems industry and promote its corporate image by participating in international exhibitions and trade fairs and advertising in these evens

The Group will continue to carry our research and development activities in advanced technologies and development of new models within the Group such as tin-profile loudspeaker and digital-ready loudspeakers with a view to improving the quality, performance and functionary of the Group's major products. Meanwhile, the group will also carry out research and development activities with universities, research institutes, and other technological partners in the PRC and overseas.

Although the Directors expect the PRC will continue to be the Group's primary market in the future, they also consider that other markets in the Asia Pacific region, the America continent and Europe have vast business potential for the Group's products. Accordingly they intends to expand the Group's sales network by setting up sales offices in the US, Korea and Europe.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$33.0 million (based on the offer price HK$0.5 per share). The Group at present intends to apply the net proceeds as follows: