Major Shareholder:

• Taiyuan Changcheng ¡V 25.95% interest
• Beijing Gensir ¡V 18.55% interest
• Taiyuan Tanghai ¡V 8.06% interest
• Dandong Shuguang ¡V 11.01% interest

The Group is engaged principally in the design, research, development, manufacture and sale of image transmission fibre optic products in the PRC. Image transmission fibre optic products produced by the Company are currently used as intermediate products by different manufacturers in Jaoan, Koream Singapore, India, Turkey, Europe, Canada and the US.

Traditionally, image transmission fibre optic products are used for the manufacture of specialized image transmitting products such as night vision devices. Nowadays, the use of image transmission fibre optic products has been extended to other areas, such as medical radiography and high performance digital consumer products, including high performance photocopiers and digital cameras.

The Group currently has three main image transmission fibre optic products; fibre optic faceplate, the fibre optic inverter/fibre inverter billet and fibre optic taper/fiber optic taper billet. The Group's production facilities are based in Taiyuan, Shanxi Province, the PRC, and comprise a two-storey workshop with a total gross floor area of approximately 1,255 sq.m. and with an annual production capacity of approximately 50,000 pieces of image transmission fibre optic products.

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

• Its experience and expertise in the image transmission fibre optic product industry;
• A strong research and development team which enables the Company to develop all of its products in-house;
• A team of skilful and experienced technical staff has been engaged in the research of image transmission fibre optic technology for over 10 years; and
• Its proximity to low cost raw materials and labor force.

• Product concentration;
• Reliance on major suppliers;
• Reliance on major customers;
• Protection of confidential technical know-how;
• Air purification system;
• Risk associated with the development of new products;

The Group's existing production facilities in Taiyuan are designed to have an annual production capacity of 50,000 pieces of image transmission fibre optic products. During the eyar 2002, the Group's production facilities were operating at its full capacity. To cope with the anticipated demand for the Company's existing products, and to facilitate the production of any new products, the Directors intend to expand the production capacity of the Group to 150,000 pieces per annum by 2005 and to focus on high margin products.

The Group plans to import and install at the new production facilities more advanced equipment and machinery from overseas for the manufacturer of high standard image transmission fibre optic products and large diameter image transmission fibre optic products. The Group also plans to import other new production equipment to improve the quality of the products, such as vacuum drawing machines, which the Directors believe would increase the overall productivity and the effectiveness of the Group's production.

Due to the low cost of production in the PRC, the company has been enjoying a competitive edge over other major competitors, which are mainly located in the US. The company intends to continue to strengthen its position in the international market by locating more overseas agents in Asia and Eastern Europe, such as Russia, Japan, South Korea, Singapore and Turkey. In the long run, the Company also plans to set up sales offices in several major cities in the PRC to promote its image transmission firbre optic products and fibre optic ITS display panel. These cities include Beijing, Shanghai and Guangzhou. The costs of setting up such offices are expected to be financed primarily by internally generated funds of the company.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$26.2 million (based on the offer price HK$0.4 per share). The Group at present intends to apply the net proceeds as follows: