Major Shareholder:

• Mr. James Ang ¡V 53.76% interest

Company Subsidiaries:

• NTL (100%): Trading of telecommunication equipment of long distance call services
• Think God (100%): Investment holding
• PLDT (100%): Provision of long distance call services, sales of prepaid telehpone cards
• SHL (100%): Operation of Lotus Club outlets

The Group is principally engaged in the provision of long distance call services through an integrated network infrastructure, comprising both the packet-switched system (IP based) and the circuit-based system (conventional phone based), focusing in the Asia-Pacific region, including the Philippines, Indonesia, Singapore, South Korea, Taiwan, and Japan, as well as the United States. The Group is also engaged in the sales of VoIP gateways and related equipment. Turnover from the provision of long distance call services accounted for approximately 86% and 98% of the Group's total turnover for the two years ended May 31, 2002.

The Group carries out its telecommunication services through its wholly-owned subsidiaries, in particular NTL and PLDT. NTL is principally engaged in the provision of VoIP telephony services and the sales of VoIP gateways and related equipment; PLDT mainly provides long distance call services through the Group's prepaid telephone cards system. In March 2001, the Group integrated PLDT's circuit-switched system (conventional phone based) into NTL's packet-switched system (IP based) to build up an efficient network infrastructure platform which enables the Group to provide competitive long distance call services to its customers.

To further capture a larger market share, the Group has finished developing and integrating a prototype CPE, namely the NVP, which is basically a VoIP access gateway, aiming to provide voice and fax traffic over the Internet.

The Group first launched its prepaid telephone cards in 2001. The Group's prepaid telephone cards system has a technological niche over its conventional counterpart. The Group takes advantage of its prepaid telephone cards system that combines traditional long distance products with an advanced Internet telephony technology. The Group's prepaid telephone cards system has been designed as a PSTN switch with VoIP functions, and enables the Group to provide a robust, reliable, and quick prepaid product. With the simultaneous use of VoIP and PSTN switching, the Group is able to achieve lower routing costs through the VoIP functionality, whilst remaining more stable connections and QoS offered by the PSTN platform.

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

• The technological know-how of its management and technical personnel in the telecommunications industry, which was developed through years of experience
• The capability of its research and development team to build in value-added services to the existing products
• Its strong customer base established through approximately 750 independent distributors, dealers, and its self-operated outlets, namely the Lotus Club, among ethnic groups such as Filipinos and Indonesians

• Limited operating history;
• Net current liabilities and working capital;
• Substantial part of the proceeds from the Placing of the New shares will be applied to repay existing loans;
• Inability to sustain profit;
• Risks relating to PINETS Licenses;
• Renewal of tenancies;

To compete favourably, the Company's strategy is to continue widening the applicability and market coverage of its products and services, to achieve technological advancement through research and development, and to leverage on the ability to develop, commercialize, and continuously improve a variety of applications, including CPE and other hardware applications.

The Company will continue to review its operations and technological competitiveness in order to ensure that its network infrastructures will be able to support anticipated new and extensive IP based applications, and that the compatible interfaces between its equipment facilities and those if its business partners will be maintained.

The Group intends to widen the distribution channels through opening additional sales outlets, penetration into other potential markets, such as the tourism industry, and expansion of its international wholesale network. The Directors also intend to leverage on the successful model of the Lotus Club and to set up similar operation in other countries.

The Group will also devote substantial effort in promoting its IP based applications telecommunications equipment. THE trial run of the NVP is expected to take place by the end of 2002 and will be commercially launched in selected Asian cities through dealerships and distributors if its trial run is successful.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$18.0 million (based on the offer price HK$1.00 per share). The Group at present intends to apply the net proceeds as follows: