Crypto Flow Technology Limited — Capital/Financing Update 2002

May 15, 2002

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

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WAFER SYSTEMS LIMITED 威發系統有限公司[*]

(incorporated in the Cayman Islands with limited liability)

LISTING ON THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF PLACING

Number of Placing Shares : Initially 55,972,000 Shares comprising 52,020,000 New Shares and 3,952,000 Sale Shares (Subject to Over-allotment Option) Placing Price : HK$0.55 per Share Nominal value : HK$0.01 each Stock code : 8198

Sponsor

CSC Asia Limited

Co-Sponsor

JS Cresvale International Limited

Financial Advisor and Lead Manager

Watterson Asia Limited

Lead Manager

CSC Securities (HK) Limited

Co-lead Managers

MasterLink Securities (H.K.) Corp. Ltd. Luen Fat Securities Co. Ltd.

Co-Managers

First Shanghai Securities Limited Sino Grade Securities Ltd. Koffman Securities Limited First Asia Finance Group Limited Sanfull Securities Limited South China Securities Limited Toyo Securities Asia Limited

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The Placing Shares were placed to professional, institutional and other individual investors and were approximately 4.6 times over-subscribed. The placees are independent of and not connected with any of the Directors, chief executive, substantial shareholders or initial management shareholders of the Company or associates of any of them.

The Company has granted the Over-allotment Option to the Underwriters, exercisable by Watterson Asia at any time within 30 days from the date of the Prospectus, to require the Company to allot and issue at the Placing Price up to an aggregate of 7,803,000 additional Shares, representing 15% of the number of the New Shares initially available under the Placing. On 10 May 2002, Watterson Asia has partially exercised the Over-allotment Option and required the Company to allot and issue 4,000,000 Over-allotment Shares, representing approximately 1.42% of the enlarged share capital of the Company after the exercise of the Over-allotment Option. Pursuant to the Underwriting Agreement, Watterson Asia has the right to require the Company to allot and issue an additional 3,803,000 Shares any time on or before 5:00 p.m. on 9 June 2002.

Immediately following the Placing and the exercise of the Over-allotment Option, the Company will have a public float of approximately 29.10% of the enlarged issued share capital of the Company. The public float presented here does not include the 296,000 Shares which has been placed to 10 employees of the Group.

Dealings in the Shares on GEM are expected to commence at 9:30 a.m. on Friday, 17 May 2002.

Unless defined otherwise, terms used in this announcement shall have the same respective meanings as defined in the prospectus of the Company dated 10 May 2002 (the “Prospectus”).

LEVEL OF INTEREST

The 55,972,000 Placing Shares (comprising 52,020,000 New Shares and 3,952,000 Sale Shares) and 4,000,000 Over-allotment Shares have been conditionally allocated in full to 172 professional, institutional and other individual investors and were approximately 4.6 times over-subscribed. The placees are independent of and not connected with any of the Directors, chief executive, substantial shareholders or initial management shareholders of the Company or associates of any of them.

RESULTS OF ALLOCATION

Pursuant to the Placing, the 55,972,000 Placing Shares and 4,000,000 Over-allotment Shares will be held by a total of 172 placees as follows:

Number of Placing Shares

Number of	Placing Shares	Placing Shares	Number of placees
4,000	–	100,000	111
100,001	–	500,000	40
500,001	–	1,000,000	10
1,000,001	–	3,000,000	7
3,000,001	–	5,000,000	2
5,000,001	–	10,000,000	1
10,000,001	or	above	1
Total			172

Total

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The following table sets out the distribution of the 55,972,000 Placing Shares and 4,000,000 Over-allotment Shares:

				Approximate percentage
				of shareholding
			Approximate	immediately after
		Aggregate	percentage of the	the completion of the
		number of Placing	Placing Shares and	Placing and exercise of the
		Shares held	Over-allotment Shares	Over-allotment Option
Top	placee	11,680,000	19.48%	4.14%
Top	5 placees	28,040,000	46.76%	9.93%
Top	10 placees	37,248,000	62.11%	13.20%
Top	25 placees	47,392,000	79.02%	16.79%

The investors should be aware that the concentration of Shareholders may affect the liquidity of the Shares. Shareholders and potential investors are advised to exercise extreme caution when dealing with the Shares.

No Placing Shares have been placed to any parties or group of persons as specified in Rule 10.12(4) of the GEM Listing Rules, save for an aggregate of 296,000 Shares which has been placed to 10 employees of the Group, representing approximately 0.10% of the enlarged issued share capital of the Company after the exercise of the Over-allotment Option.

OVER-ALLOTMENT OPTION

The Company has granted the Over-allotment Option to the Underwriters, exercisable by Watterson Asia at any time within 30 days from the date of the Prospectus, to require the Company to allot and issue at the Placing Price up to an aggregate of 7,803,000 additional Shares, representing 15% of the number of New Shares initially available under the Placing to cover over-allocations to professional, institutional and other individual investors in the Placing. On 10 May 2002, Watterson Asia has partially exercised the Over-allotment Option and required the Company to allot and issue 4,000,000 Over-allotment Shares, representing approximately 1.42% of the enlarged issued share capital of the Company after the exercise of the Overallotment Option. Pursuant to the Underwriting Agreement, Watterson Asia has the right to require the Company to allot and issue an additional 3,803,000 Shares any time on or before 5:00 p.m. on 9 June 2002.

MINIMUM PUBLIC FLOAT REQUIREMENT

Pursuant to the GEM Listing Rules, the Company is required to maintain a public float of not less than 25% of its issued share capital at all times immediately after the listing of the Shares on GEM. Immediately following the Placing and the exercise of the Over-allotment Option, the Company will have a public float of approximately 29.10% of the enlarged issued share capital of the Company. The public float presented here does not include the 296,000 Shares which has been placed to 10 employees of the Group.

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DEPOSIT OF SHARE CERTIFICATES INTO CCASS

The share certificates for the Placing Shares will be issued in the name of HKSCC Nominees Limited and deposited into CCASS on Thursday, 16 May 2002 for credit to the respective CCASS participants’ stock accounts designated by the Underwriters, the placees or their agents, as the case may be, before dealings in the Shares on GEM are to commence. No temporary documents of title will be issued.

COMMENCEMENT OF DEALINGS

Dealings in the Shares on GEM are expected to commence at 9:30 a.m. on Friday, 17 May 2002.

By order of the Board WAFER SYSTEMS LIMITED Chan Sek Keung, Ringo Chairman

Hong Kong, 16 May 2002

This announcement, for which 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 of The Stock Exchange of Hong Kong Limited 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: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

This announcement will appear on the GEM website at www.hkgem.com.

• For identification only

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