Major Shareholder:

• Mr. Cai Zhen Rong ¡V 69.63% interest

Company Subsidiaries:

• Powerful China (100%): Provision of administrative services
• Huafeng Trading (100%): Provision of fabrics processing services
• Huafeng Knitting (96%): Provision of fabrics processing services
• Huafeng Technical (100%): Provision of technical support services
• Huafeng Quality Control (100%): Provision of quality control services
• Huafeng Marketing (100%): Provision of marketing and promotion service

The Group is an established fabrics processor in Fujian Province, the PRC. It is principally engaged in the provision of fabrics processing services covering bleaching and dyeing to setting and finishing. Leveraged on its experience and knowledge in fabrics processing and its commitment in the delivery of quality services, the Group has built up a customer base of over 100 including garment manufacturers, wholesalers, distributors and importers of fabrics items in the Philippines, Africa, Australia, North America, Hong Kong and other Asian countries.

The Group's processing facilities are located at Shishi City, Fujian Province, the PRC. During the period 1997 to 2001, the Group completed construction of two polyester fabrics processing workshops, four spun polyester fleece fabrics processing workshops and two heat setting workshops. According to the estimates of the Directors, based on the processing capacity for the five month ended 28 February 2002, the Group was capable of processing approximately 23,800 tonnes of polyester fabrics, 15,900 tonnes of spun polyester fleece fabrics and 6,400 tonnes of T/C blended fabrics per annum.

The Group successfully obtained the accreditation of the ISO14001 certification in May 2002. According to the Fujian Certification Consultative Centre, up to December 2001, only approximately 30 out of over 1,000 enterprises in the PRC accredited for the ISO14001 certification were fabrics manufacturers, of which only approximately six were fabrics processors. The Directors believe that the Group's accreditation of the ISO14001 certification would serve as a ¡§greenpass¡¨ for the Group to further penetrate the European and North American market, which imposes higher environmental requirements for companies providing fabrics processing services.

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

• The extensive technical and industrial experience of its management in fabrics processing;
• Its commitment to quality control and delivery of quality services to its customers, as evidenced by the accreditation of the ISO9002 certification;
• Its ability to process un-processed water sourced directly from the city reservoir for fabrics processing to achieve cost savings;
• Its strong waste water treatment and recycling capability which enable the Group to attain recognised environmental standards, as evidenced by the accreditation of the ISO14001 certification, while achieving cost savings through re-applying the recycled water dyeing fabrics with darker colour requirements; and
• Its reputation among the fabrics processing and garment manufacturing companies in Fujian Province, the PRC and its well established relationships with its customers.

• Reliance on key management;
• Reliance on the Philippines market;
• Environmental issues;
• Financial resources and leverages;
• Risk relating to credit terms granted to customers;

It is the intention of the Directors to achieve its business goals through the implementation of the following:

• Continue the second stage of construction of the Group's pure cotton fabrics processing plant with an aim to achieving an annual processing capacity of approximately 10,000 tonnes;
• Expand the Group's annual processing capacity of non-pure cotton fabrics from approximately 46,000 tonnes to approximately 59,000 tonnes through the acquisition of additional machinery and equipment;
• Expand the Group's waste water treatment system to support the anticipated expansion of its annual processing capacity of pure and non-pure cotton fabrics;
• Vertically integrate into the fabrics manufacturing business through the acquisition of various fabrics manufacturing machineries and equipment, to develop its fabrics distribution business and to introduce its own brandname fabrics; and
• Continue its research and development on nano-technology with the aim of introducing new value-added fabrics characteristics, as well as for further advancements in fabrics processing with the aim of becoming a more environmentally friendly fabrics professor.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$39.0 million (based on the offer price HK$0.5 per share). The Group at present intends to apply the net proceeds as follows: