Major Shareholder:

• Mr. Ng Chi Ho ¡V 69.0% interest

Company Subsidiaries:

• Suga Electronics Limited (100%): Trading of electronics products
• Suga Electronics Co., Ltd (100%): Manufacture of electronics products
• Speedy Source Limited (100%): Trading of electronics products
• Sumega (HK) Limited (100%): Trading of computer related products
• Typhoon International Limited (100%): Property holdings.
• On million Ltd (100%): Provision of management services
• Suga Networks (HK) Ltd (100%): Trading and manufacture of networking devices

The Group is an electronics manufacturing services provider and is principally engaged in the manufacture and sale of electronic appliances, including: animal training devices, portable TVs, corded telephones, networking devices, CD-RW drives, portable multimedia entertainment centers, air purifiers, dehumidifiers, dryers, air cleaners, fans, and PCBs for installation in various electronic appliances.

The majority of the Group's products is manufactured in accordance with specifications of customers, and are marketed and sold under the customers' designated brand names (i.e. on an OEM basis). The Group also manufactures goods on an ODM basis. Suga conducts these OEM and ODM sales. The Group also sells non-customized products through Sumega.

The major destinations of the Group's products are the US and Japan which accounted for approximately 34% and 41% respectively of the turnover of the Group for the year ended 31 March, 2002. During the same period, the Group had a customer base of over 40 customers, comprised of manufacturers and traders, some of which have up to 9 years' business experience with the Group.

The Group also has business relationships with over 250 suppliers, most of whom are located in the US and Hong Kong. Some of the major suppliers are also major customers of the Group. For the three years ended 31 March, 2002, purchases from the top five suppliers represented about 88%, 78%, and 79% of the Group's purchases. The Group's products are manufactured in two production plants, located in close proximity to each other, in Buji Town, Longgang District, Shenzhen, PRC.

The Group is committed to maintaining the quality control of its products. The Group's wholly owned subsidiary, Suga (Shenzhen), was awarded the ISO9002 certification in February 1996, and was further awarded the ISO9001 certification by SGS Yarsley International Certification Services Limited in February 2002.

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

• its commitment to producing high quality products;
• the experience and knowledge of the Group's management team in the electronics industry;
• its relationship with a number of customers comprising manufacturers and traders;
• its commitment to design and develop new products to meet changing market trends and customers' demands.

• Reliance on key management;
• Sustainability of profit margin;
• Reliance on the US and the Japanese markets;
• Reliance on major customers;
• Threat of new entrants;

The Directors expect that the market for consumer electronic appliances will remain strong in the foreseeable future, with growing demand from both the developing and developed economies. The Group intends to further develop its business in consumer electronic appliances, including an increase in product variety and the development of new processing technology to reduce costs and enhance production efficiency. To achieve these objectives, the Group intends to recruit additional engineers to further improve the production process and to purchase additional machinery and equipment to upgrade the existing production lines of consumer electronic appliances.

The Group intends to expand the production capacity of its production facilities by 25% through the acquisition of additional machinery and equipment and the expansion of its production floor area. The Group plans to set up a new production facility in Xi Xiang, Shenzhen, PRC for the manufacture of networking devices. The new production facility is expected to have a total gross floor area of approximately 4,000 square meters.

The Group plans to promote certain products bearing its own brand names through marketing activities, such as advertising in industry magazines and participating in trade fairs, and to widen the range of products bearing its own brand names. The Group is in the process of applying for registration of its own trade marks in Hong Kong.

Currently, the major markets for the Group's products are the US and Japan. The Directors intend to strengthen the Group's market penetration in the US and Japan and to explore new markets, as well as other emerging markets such as France and the PRC. The Directors are optimistic that with appropriate marketing strategies, there will be a continuous demand for the Group's products in these markets.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$40 million (based on the offer price HK$1.00 per share). The Group at present intends to apply the net proceeds as follows: