Major Shareholder:

• Mr. Li Ruijie ¡V 37.5% interest
• Jiangxi Cement ¡V 14.51% interest
• Mr. Wang Lixin ¡V 10.89% interest

The Company is principally engaged in the design, manufacture, integration, and sale of IA servers and related products and the provision of related after-sales services in the PRC. The Company's server sales represented 5.3% of the total sales volume of the server market in the PRC for Year 2001. In addition, the Company was regarded as the largest application server provider in the PRC according to a research report prepared by CCW Research in June 2002. The Company also provides industry-specific server solutions for telecommunications services providers, Internet data centres, education authorities, securities houses, and other IT corporations.

Powerleader works closely with INTEL for the development of IA servers in the PRC. The Company entered into a co-operation agreement with INTEL in January 2002 for the joint operation on INTEL solution centre in Shenzhen. It aims at facilitating the provision of IA based technical and consulting services for solution enablement and is expected to further expand the Company's server business in the PRC.

The Company provides IA-based servers which mainly comprise the connectivity of INTEL CPUs and motherboards, RAID application technology, INTEL approved hardware and application software, and the provision of INTEL server management. The Company's products can be categorised as typical servers and application servers. These products are tailor-made based on different specifications and applications to suit the particular needs of customers.

The Company has developed a variety of application servers with built-in functions mainly for processing complex transaction-based applications, namely VOD broadband servers, mail servers, firewall servers, education servers, and database servers. The Company also develops and distributes its own software products, namely Info Track and Star Linux.

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

• The Company has collaborated with INTEL for the joint operation of INTEL Solution Centre in Shenzhen. It provides an opportunity to the Company to build relationships with a number of hardware and software providers.

• The Directors believe that the Company is more flexible in decision making and in formulation of marketing strategies than foreign companies and other established domestic companies.

• The Company is committed to providing tailor-made server solution services to its customers and endeavours to remain flexible in customisation. The Directors believe that the Company's focus on the niche market may maximise customer's satisfaction and better cope with the changing needs in the server market.

• The Company's co-operation with Harbin Technology Research Institute, AsiaInfo, NEU Soft, and Red-Flag Linux will enable the Company to leverage on the R&D expertise of these organisations for the enhancement of technical capabilities of the Company.

• The Company's continuous business relationships and collaboration with hardware and software providers may facilitate the Company in providing tailor-made server solutions, as well as IT consulting services to customers.

• Reliance on supply of INTEL's products;
• Deterioration of the Company's business relationship with INTEL;
• Potential risk on uncollected trade receivable;
• Inventory risk and stock obsolescence;
• Reliance on major suppliers;

The overall business objective of the Company is to become one of the leading server providers in the PRC, by providing quality products and tailor-made solution services to various industry-specific application users. The Company also intends to expand its business to other IT and networking products by capitalising on the technical know-how and R&D capabilities of its business partners.

In order to achieve its business objective, the Company plans to focus on the vertical development of server applications in specific industries such as telecommunications, Internet data centres, education and public sectors, securities, and other IT corporations. In addition, the Company will work with other hardware and software providers in R&D collaboration and technology development. This may enable the Company to obtain advanced technology in server solutions and facilitate the provision of technical consulting services.

The Directors believe that the Company will gradually set up different production lines in network related products to broaden its product mix and customer base. The Directors believe that this will not change its core business of manufacture and sale of servers and may enhance the Company's competitive strength in the existing server operation so as to enable the Company to provide a more complete network solution services to its customers.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$41.3 million (based on the offer price HK$0.25 per share). The Group at present intends to apply the net proceeds as follows: