Crypto Flow Technology Limited — Board/Management Information 2006

Dec 15, 2006

IMPORTANT

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold all your shares in Wafer Systems Limited (the “Company”), you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

This circular, for which the directors of the Company (the “Directors”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market (“GEM”) of the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, (i) the information contained in this circular is accurate and complete in all material respects and not misleading; (ii) there are no other matters the omission of which would make any statement in this circular misleading; and (iii) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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WAFER SYSTEMS LIMITED 威 發 系 統 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8198)

PROPOSED CHANGE OF AUDITORS

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

A notice convening the extraordinary general meeting of the Company to be held at Units 901-7, 9/F., MLC Millennia Plaza, 663 King’s Road, North Point, Hong Kong on Saturday, 30 December, 2006 at 3:30 p.m. is set out on page 4 of this circular.

Whether or not you intend to attend and vote at the extraordinary general meeting, you are requested to complete and return the enclosed form of proxy to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjournment thereof should you so wish.

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting.

* For identification purpose only

15 December 2006

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. GEM listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

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LETTER FROM THE BOARD

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WAFER SYSTEMS LIMITED

威 發 系 統 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

( Stock Code: 8198)

Executive Director Mr. Chan Sek Keung, Ringo Non-Executive Directors Mr. Alasdair Gordon Nagle Ms. Clara Ho Mr. Kwan Kit Tong Independent Non-Executive Directors Mr. Pang Hing Chung, Alfred Mr. Tsoi Tai Wai, David Mr. Yu Zhonghou

Registered Office 4th Floor, Scotia Centre P.O. Box 2804 George Town Grand Cayman Cayman Islands

Head Office and Principal Place of Business Units 901-7, 9th Floor MLC Millennia Plaza 663 King’s Road North Point Hong Kong

15 December 2006

To the Shareholders

Dear Sir or Madam,

PROPOSED CHANGE OF AUDITORS

The directors (the “Directors”) of Wafer Systems Limited (the “Company”) proposed to change the auditors of the Company as the Board and Deloitte Touche Tohmatsu (“Deloitte”), the auditors of the Company, could not reach an agreement on the audit fees for the financial year ending 31 December 2006.

Deloitte were re-appointed as auditors of the Company at the last annual general meeting of the Company held on 28 April 2006 to hold office until the conclusion of the next annual general meeting of the Company. The Company received a notice of resignation from Deloitte in respect of their services as auditors of the Company and its subsidiaries with effect from 8 December 2006. In accordance with the articles of association of the Company, if the office of auditors becomes vacant by the resignation of the auditors, the Directors will as soon as practicable convene an extraordinary general meeting to fill the vacancy.

* For identification purpose only

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LETTER FROM THE BOARD

Deloitte have confirmed that there are no circumstances in respect of their resignation which they consider should be brought to the attention of the shareholders of the Company and shareholders or creditors of its subsidiaries incorporated in Hong Kong. To the best knowledge of the Directors, there are also no circumstances connected with the change of auditors which they consider should be brought to the attention of the shareholders or creditors of the Group.

Deloitte have not yet commenced any audit work on the accounts of the Company and its subsidiaries for the financial year ending 31 December 2006. It is expected that the change of auditors of the Company will not affect the audit and the release of the annual results of the Company for the financial year ending 31 December 2006.

The Directors propose to appoint CCIF CPA Limited as auditors of the Company to fill the vacancy and hold office until the conclusion of the next annual general meeting of the Company. The appointment of CCIF CPA Limited as auditors of the Company in place of Deloitte is subject to the approval by the shareholders of the Company at an extraordinary general meeting to be convened pursuant to the articles of association of the Company.

An ordinary resolution will be proposed at the extraordinary general meeting of the Company to approve the proposed change of auditors of the Company. None of the shareholders of the Company are required to abstain from voting at the extraordinary general meeting of the Company. The extraordinary general meeting of the Company is to be held at Units 901-7, 9th Floor, MLC Millennia Plaza, 663 King’s Road, North Point, Hong Kong on Saturday, 30 December, 2006 at 3:30 p.m. The notice of the extraordinary general meeting is set out in this circular. A form of proxy for use at the extraordinary general meeting is also enclosed.

PROCEDURES FOR DEMANDING A POLL

Article 66 of the Company’s articles of association sets out the procedures by which shareholders of the Company may demand a poll;

A resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the Chairman of such meeting; or

• (b) by at least three Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) by a Member of Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Members having the right to vote at the meeting; or

• (d) by a Member or Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deem to be the same as a demand by a Member.

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LETTER FROM THE BOARD

ACTION TO BE TAKEN

Whether or not you intend to attend and vote at the extraordinary general meeting, you are requested to complete and return the enclosed form of proxy to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjournment thereof should you so wish. In accordance with the articles of association of the Company, members may demand that voting in respect of the resolution to be put to the extraordinary general meeting shall be taken on a poll. Details of those members who may demand a poll are set out on page 2 of this circular.

RECOMMENDATION

The Directors are of the opinion that the nomination and appointment of CCIF CPA Limited as auditors of the Company is in the best interest of the Company and recommend you to vote in favour of the resolution to be proposed at the extraordinary general meeting of the Company.

Yours faithfully, For and on behalf of the board of directors of WAFER SYSTEMS LIMITED CHAN Sek Keung, Ringo Chairman and Chief Executive Officer

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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WAFER SYSTEMS LIMITED 威 發 系 統 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8198)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting of Wafer Systems Limited (the “Company”) will be held at Units 901-7, 9th Floor, MLC Millennia Plaza, 663 King’s Road, North Point, Hong Kong on Saturday, 30 December, 2006 at 3:30 p.m., for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“THAT :

CCIF CPA Limited, be and are hereby appointed as the auditors of the Company to fill the vacancy following the resignation of Deloitte Touche Tohmatsu, and to hold office until the conclusion of the next annual general meeting of the Company and that the board of directors of the Company be authorised to fix their remuneration.”

By Order of the Board Wafer Systems Limited Pang Kin Man, Edmond Company Secretary

Hong Kong, 15 December 2006

Notes:

• (i) A member of the Company entitled to attend and vote at the above meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is holder of two or more shares may appoint more than one proxy to attend and vote instead of him. A proxy need not be a member of the Company.

• (ii) In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be deposited at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong no later than 48 hours before the time appointed for the meeting (or any adjournment thereof).

• (iii) Completion and return of the form of proxy will not preclude members of the Company from attending and voting in person at the meeting or any adjournment thereof should they so desire.

• For identification purpose only

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