Joy Spreader Group Inc. — Capital/Financing Update 2006

Oct 18, 2006

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

This announcement may not be released or circulated directly or indirectly in the United States. This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States. The securities referred to in this announcement have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States unless such securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.

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(incorporated in Bermuda with limited liability) (Stock Code: 8279)

PLACING OF NEW SHARES AND RESUMPTION OF TRADING

PLACING OF NEW SHARES

On 12 October 2006, the Company entered into the conditional Placing Agreement with the Agent for the Placing on a best effort basis. In view of perceived demand for the securities being offered in the Placing, including certain institutional investor demand, the Company and the Agent entered into a Supplemental Placing Agreement on 17 October 2006 to increase the number of Placing Shares from a maximum of 33,000,000 new Shares (or a maximum of 165,000,000 new Subdivided Shares after completion of the Share Subdivision) under the Placing Agreement to a maximum of 42,104,000 new Shares (or a maximum of 210,520,000 new Subdivided Shares after completion of the Share Subdivision) and include further clauses in such agreement, including to comply with relevant international legal provisions. Under the Placing Agreement (as supplemented by the Supplemental Placing Agreement), the Agent will procure Placees for a maximum of 42,104,000 new Shares (or a maximum of 210,520,000 new Subdivided Shares after completion of the Share Subdivision) for up to an aggregate cash consideration of HK$54,735,200, equivalent to a Placing Price of HK$1.30 (or HK$0.26 after completion of the Share Subdivision) per Placing Share.

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The aforesaid maximum number of Placing Shares represents approximately 7.56% of the existing issued share capital of the Company as at the date of this announcement and approximately 7.03% of the issued share capital of the Company as enlarged by the allotment and issue of such Placing Shares. Assuming that the aforesaid maximum number of Placing Shares will be fully subscribed by the Placees, the net proceeds of the Placing will be about HK$54.1 million which will be used as to HK$10 million as general working capital of the Group and the remaining balance will be used for investments to be made by the Group should suitable opportunities arise (including, but not limited to, the proposed investment in SYSTEK LTD as announced by the Company on 10 October 2006 should the Group proceed with such investment).

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on 13 October 2006 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 18 October 2006.

THE PLACING

On 12 October 2006, the Company entered into the conditional Placing Agreement with the Agent for the Placing on a best effort basis. In view of perceived demand for the securities being offered in the Placing, including certain institutional investor demand, the Company and the Agent entered into a Supplemental Placing Agreement on 17 October 2006 to increase the number of Placing Shares from a maximum of 33,000,000 new Shares (or a maximum of 165,000,000 new Subdivided Shares after completion of the Share Subdivision) under the Placing Agreement to a maximum of 42,104,000 new Shares (or a maximum of 210,520,000 new Subdivided Shares after completion of the Share Subdivision) and include further clauses in such agreement, including to comply with relevant international legal provisions.

Under the Placing Agreement (as supplemented by the Supplemental Placing Agreement), the Agent will procure Placees for a maximum of 42,104,000 new Shares (or a maximum of 210,520,000 new Subdivided Shares after completion of the Share Subdivision) for up to an aggregate cash consideration of HK$54,735,200, equivalent to a Placing Price of HK$1.30 (or HK$0.26 after completion of the Share Subdivision) per Placing Share.

The aforesaid maximum number of Placing Shares represents approximately 7.56% of the existing issued share capital of the Company as at the date of this announcement and approximately 7.03% of the issued share capital of the Company as enlarged by the allotment and issue of such Placing Shares.

Reference is made to the announcement and the circular of the Company dated 22 September 2006 and 6 October 2006 respectively in relation to the Share Subdivision.

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The Placees

Subject to Completion, the Placing Shares will be placed to professional, institutional and/or individual investors who will be independent of and not connected with the directors, chief executive, management shareholders or substantial shareholders of the Company or its subsidiaries, or any of their respective associates (as defined in the Listing Rules). It is expected that no Placee will become a substantial shareholder of the Company as a result of the Placing.

Further announcement will be made by the Company immediately after Completion to disclose the actual number of Placing Shares subscribed by the Placees and (if the number of Placees procured by the Agent falls below six) the identities of such Placees.

Placing Price

The Placing Price of HK$1.30 (or HK$0.26 after completion of the Share Subdivision) per Placing Share represents:

• (i) a discount of approximately 4.41% to the closing price of HK$1.36 per Share (or HK$0.272 per Subdivided Share as adjusted for the effect of the Share Subdivision) as quoted on the Stock Exchange on 12 October 2006, being the last trading day before the release of this announcement; and

• (ii) a discount of approximately 3.70% to the average closing price of HK$1.35 per Share (or HK$0.27 per Subdivided Share as adjusted for the effect of the Share Subdivision) as quoted on the Stock Exchange for the last five consecutive trading days up to and including 12 October 2006.

If the maximum number of 42,104,000 (or 210,520,000, after completion of the Share Subdivision) Placing Shares are fully subscribed by the Placees, the gross proceeds of the Placing will be HK$54,735,200. After deduction of the relevant legal fees and expenses, the net proceeds of the Placing will be approximately HK$54.1 million and the net Placing Price will be approximately HK$1.28 per Placing Share.

The Placing Price was arrived at after arm’s length negotiations between the Company and the Agent with reference to the recent market prices of the Shares. The Directors consider that the Placing Price and the terms of the Placing Agreement (as supplemented by the Supplemental Placing Agreement) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Placing costs

The Company shall pay to the Agent a placing commission upon Completion and shall bear all printing costs, legal fees and expenses in relation to the Placing.

Rights

The Placing Shares, when allotted and issued, will rank equally in all respects among themselves and with the Shares in issue, or as the case may be, the Subdivided Shares in issue on the date of allotment and issue of the Placing Shares.

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Mandate to issue the Placing Shares

The Placing Shares will be allotted and issued pursuant to the General Mandate. As of the date of this announcement, no Shares have been issued under the General Mandate since it was granted.

Independence of the Agent

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Agent and its ultimate beneficial owners are third parties independent of and not connected with the directors, chief executive, management shareholders or substantial shareholders of the Company or its subsidiaries, or any of their respective associates (as defined in the Listing Rules).

Condition of the Placing

The Placing is conditional upon the GEM Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Placing Shares.

In the event that the GEM Listing Committee of the Stock Exchange does not grant the listing of, and permission to deal in, the Placing Shares on or before 10 November 2006 (or such later date as may be agreed in writing by the Company and the Agent), the Company’s obligation to allot and issue the Placing Shares and all the obligations of the Agent under the Placing Agreement (as supplemented by the Supplemental Placing Agreement) shall forthwith cease to be of any effect and neither party thereto shall have any right to damages or reimbursement for any costs and expenses that it may have incurred in connection with or arising out of the Placing Agreement (as supplemented by the Supplemental Placing Agreement) or the failure to complete the Placing.

Completion

Completion shall take place on the third business day (excluding Saturday) after the GEM Listing Committee of the Stock Exchange has granted the listing of, and permission to deal in, the Placing Shares.

Application for listing

Application will be made by the Company to the GEM Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

REASONS FOR THE PLACING

The Company is an investment holding company incorporated in Bermuda and its issued Shares are listed on GEM. The Group is principally engaged in the provision of enterprise solutions for targeted customers in the Macau Special Administrative Region of the People’s Republic of China and the People’s Republic of China. The Group specialises in the research and development of innovative and quality value-added applications that aim to increase operating effectiveness and efficiencies of enterprises. The Group offers an array of enterprise solutions including MegaImage (document imaging application), MegaMax (surveillance solution), MegaDMS (document management system) and MegaERP (enterprise resource planning application), and a range of services including installation, testing and commissioning, after-sales support and scanning services.

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Other than the aggregate amount of HK$6,141,800 received by the Company following the exercise of the share options granted to certain Directors and employees of the Company pursuant to its share option scheme adopted on 18 November 2004, there has been no fund raising exercise conducted by the Company in the past twelve months immediately prior to the date of this announcement. The Board considers that the Placing represents an opportunity to raise capital for the Group while broadening its shareholder and capital base. In addition, the net proceeds of approximately HK$54.1 million of the Placing will be used as to HK$10 million as general working capital of the Group and the remaining balance will be used for investments to be made by the Group should suitable opportunities arise (including, but not limited to, the proposed investment in SYSTEK LTD as announced by the Company on 10 October 2006 should the Group proceed with such investment).

CHANGES OF SHAREHOLDING STRUCTURE

The changes of the shareholding structure of the Company as a result of the Placing are as follows:

Shareholders MAXPROFIT GLOBAL INC_(Note 1) Mr. SUN Ho(Note 2) Mr. KOT Wai Ming(Note 2) Mr. WANG Ronghua(Note 2) Public(Note 4)_: Placees Existing public Shareholders Total:	As at the date of this announcement(Note 3) Approximate % of total issued share Number of capital of the Shares held Company 401,250,000 72.05% 5,350,000 0.96% 5,350,000 0.96% 535,000 0.10% – – 144,450,000 25.93% 556,935,000 100.00%	Immediately after Completion (assuming Completion takes place before completion of Share Subdivision(Note 3)) Approximate % of total issued share Number of capital of the Shares held Company 401,250,000 66.98% 5,350,000 0.89% 5,350,000 0.89% 535,000 0.09% 42,104,000 7.03% 144,450,000 24.12% 599,039,000 100.00%	Immediately after Completion (assuming Completion takes place after completion of Share Subdivision(Note 3)) Approximate % of total Number of issued share Subdivided capital of the Shares held Company 2,006,250,000 66.98% 26,750,000 0.89% 26,750,000 0.89% 2,675,000 0.09% 210,520,000 7.03% 722,250,000 24.12% 2,995,195,000 100.00%	Immediately after Completion (assuming Completion takes place after completion of Share Subdivision(Note 3)) Approximate % of total Number of issued share Subdivided capital of the Shares held Company 2,006,250,000 66.98% 26,750,000 0.89% 26,750,000 0.89% 2,675,000 0.09% 210,520,000 7.03% 722,250,000 24.12% 2,995,195,000 100.00%
				100.00%

Notes:

1. MAXPROFIT GLOBAL INC is beneficially and wholly-owned by Mr. Sun Ho, an executive Director and Chairman of the Company.

2. Each of the two executive Directors, Mr. Sun Ho and Mr. Kot Wai Ming, holds 5,350,000 Shares and Mr. Wang Ronghua, an independent non-executive Director, holds 535,000 Shares following their exercise in full of the respective options granted to them on 14 August 2006 by the Company pursuant to the share option scheme of the Company adopted on 18 November 2004.

3. It is assumed that each of the Placees, Mr. Sun Ho, Mr. Kot Wai Ming and Mr. Wang Ronghua will not dispose of, or acquire, any shares of the Company following the date of this announcement up to immediately after completion of the Share Subdivision or the Completion (whichever is the later), and that, other than the Placing Shares, the Company will not issue or repurchase any of its shares during such period.

4. Upon completion of the Placing, not less than 25% of the total issued share capital of the Company will be in public hands.

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SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on 13 October 2006 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 18 October 2006.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings when used herein:

“Agent”	China Everbright Securities (HK) Limited, a licensed corporation
	permitted to engage in types 1, 4, 6 and 9 (dealing in securities,
	advising on securities, advising on corporate finance and asset
	management) of the regulated activities under the Securities and
	Futures Ordinance, Cap.571 of the Laws of Hong Kong
“Board”	the board of Directors
“Company”	MegaInfo Holdings Limited, a company incorporated in Bermuda
	with limited liability and the issued Shares of which are listed on
	GEM
“Completion”	completion of the Placing pursuant to the terms and conditions of
	the Placing Agreement (as supplemented by the Supplemental
	Placing Agreement)
“Directors”	directors of the Company
“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Committee”	the listing sub-committee of the Stock Exchange with responsibility
	for GEM
“General Mandate”	the general mandate granted to the Directors to allot, issue and
	deal with new shares of the Company at the annual general meeting
	of the Company held on 23 November 2005
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Listing Rules”	the Rules Governing the Listing of Securities on GEM

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“Placees”	the placees of the Placing Shares who will be third parties
	independent of the directors, chief executive, management
	shareholders or substantial shareholders of the Company or its
	subsidiaries, or any of their respective associates (as defined in the
	Listing Rules)
“Placing”	the placing, on a best effort basis, of the Placing Shares by the
	Agent on behalf of the Company to the Placees pursuant to the
	Placing Agreement (as supplemented by the Supplemental Placing
	Agreement)
“Placing Agreement”	the agreement dated 12 October 2006 and entered into between the
	Company and the Agent in respect of the Placing
“Placing Price”	the placing price of HK$1.30 (or as the case may be, HK$0.26
	after completion of the Share Subdivision) per Placing Share
“Placing Shares”	a maximum of 42,104,000 new Shares (or as the case may be, a
	maximum of 210,520,000 new Subdivided Shares after completion
	of the Share Subdivision) to be placed by the Agent on behalf of
	the Company to the Placees pursuant to the terms and conditions
	of the Placing Agreement (as supplemented by the Supplemental
	Placing Agreement)
“Share(s)”	existing ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Share Subdivision”	the proposed subdivision of every Share of HK$0.01 each into
	five Subdivided Shares of HK$0.002 each, the details of which
	were disclosed in the announcement of the Company dated 22
	September 2006 and the circular of the Company dated 6 October
	2006
“Shareholder(s)”	holder(s) of the Share(s), or as the case may be, the Subdivided
	Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subdivided Share(s)”	ordinary share(s) of HK$0.002 each in the share capital of the
	Company after completion of the Share Subdivision

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“Supplemental Placing the supplemental agreement dated 17 October 2006 and entered Agreement” into between the Company and the Agent in respect of the Placing

“HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

By Order of the Board Sun Ho Chairman

Hong Kong, 17 October 2006

As at the date of this notice, the Board comprises two executive Directors, namely Mr. Sun Ho and Mr. Kot Wai Ming, and three independent non-executive Directors, namely Mr. Wang Ronghua, Mr. Hua Fengmao and Mr. Kwok Wing Leung Andy.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the 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:

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

• For identification purposes only

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