Major Shareholder:

• Mr. Yang Hong Gen ¡V 56.1% interest

Company Subsidiaries:

• Suzhou Longlifu Health Food Co., Ltd (100%): Manufacture, research and development and distribution of health related products in the PRC
• Smiston Technology Limited (100%): Investment holdings
• Suzhou Beautiful Biochemistry Co., Ltd (100%): Production and sale of biochemical products for daily use and health-care liquor (subject to special approval for specific projects)

The Group is engaged in the manufacture, research, development and distribution of health related in the PRC under its own brandname, most of contain natural ingredients such as tortoise, snake, pearl, placenta, glossy-ganoderma, ginseng, aloe vera etc, or their parts in different forms and medium to suit different requirements and circumstances. During the Track Record Period, the sale of health related products containing natural ingredients represented approximately 99%, 99%, 98% and 95% of the total turnover of the Group for the three years ended 30^th September, 2003 and the five months ended 29^th February, 2004. These Chinese traditional natural ingredients are believed to enhance human health generally.

Similar to the healing effect of different kinds of Chinese herbal medicine, the human health enhancing ability of the Chinese traditional natural ingredients used in the Group's products has not been subject to any systematic and scientific study, nor has any kind of human or animal clinical testing been conducted on the Group's products for the purpose of verifying as to the nature and extent of their human health enhancing effect. Although the Directors believe in the human health enhancing ability of the Chinese traditional natural ingredients used in the Group's products, there can be assurance that such ability may be proved in a systematic and scientific study or clinical testing.

The Group currently distributes more than 60 products, including Powder Tortoise and Snake, Glossy-ganoderma and Placenta Capsule, Calcium Supplement Capsule, Liquor of Tortoise and Snake and Black Sesame Shampoo. The Group distributes its products in various provinces in the PRC including Jiangsu Province, Zhejiang Province, Liaoning Province, Shanxi Province, Anhui Province, Shandong Province, Shanghai Municipality, Beijing Municipality and Tianjin Municipality, etc.

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

• Unique brand positioning and recognition of Longlifu brand name in its target markets;
• Invention patents protection;
• Management expertise;
• Market diversification; The Group considers that in general, the market can be segregated into two segments, namely high and middle consumption levels, each having different consumption patterns and needs. The Group has more than 60 types of products which allows it to meet the varying requirements of its customers; and
• Commitment to quality control; the Group has adopted an advanced quality control system, the effectiveness of which can be evidenced by the accreditation of the ISO9001: 2000 in August, 2002.

• Health enhancing effects o the Group's products not tested;
• Reputation and brand name recognition;
• Certain Group's products only contain a small amount of Chinese traditional natural ingredients;
• Seasonally;
• Reliance on key management and research and development personnel;
• Product substitution
• Infringement of intellectual property rights

In order to accomplish this key objective, the Group intends to strengthen its strategic alliance with local research and professional bodies, such as local Chinese medicine professional bodies and local universities by way direct subsidy on their research and/or acquisition of first refusal rights to develop commercial products based on their research results.

To expand the Group's distribution network, the Group will build on its own distribution network by means of expansion of its sales team and establishment of more branch companies offices and business offices to cover more provinces and cities in Northern and Southern China region. The Group has established plans to promote its products by sales conferences and products launching seminars. In addition, the Group will further strengthen its incentive schemes to encourage more aggressive marketing efforts.

The Group will continue its effort to broaden its customer base by means of introduction of new products to cater for a wide range of consumer needs. In addition, the Group will look for opportunities to co-operate with other distributors who have strong distribution network, especially in the southern provinces to expand its market coverage.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$50.5 million (based on the offer price HK$0.5 per share). The Group at present intends to apply the net proceeds as follows: