Joy Spreader Group Inc. — Capital/Financing Update 2007

Mar 21, 2007

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.

==> picture [316 x 158] intentionally omitted <==

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

DISCLOSEABLE TRANSACTION –

Subscription for an approximate 20.69% interest in the registered capital of 上海卡友信息服務有限公司 (Shanghai Cardinfo Co., Ltd.)

The Board is pleased to announce that on 20 March 2007, SYSTEK LTD (being an indirect wholly-owned subsidiary of the Company) entered into the Formal Subscription Agreement to subscribe for an approximate 20.69% interest in the registered capital of Shanghai Cardinfo upon Completion at a cash consideration of RMB60 million (equivalent to approximately HK$60 million).

Shanghai Cardinfo, a subsidiary of China UnionPay as at the date of the Formal Subscription Agreement, is principally engaged in the provision of electronic payment services through its fixed-line telephone-based payment system known as “信付通 ”, which enables the users to settle transactions (including electronic funds transfers, bill payments, payments for air tickets and online shopping transactions) with China UnionPay’s bankcards and credit cards. Shanghai Cardinfo is also engaged in the publication and distribution of periodicals for targeted readers including China UnionPay, banks, credit card and other bank customers in the PRC. China UnionPay was jointly established by a consortium of financial institutions in the PRC to operate a unified nationwide inter-bank bankcard information exchange network in the PRC.

The Subscription constitutes a discloseable transaction for the Company under the GEM Listing Rules. A circular containing information on the Formal Subscription Agreement and Shanghai Cardinfo, and other information as required under the GEM Listing Rules, will be despatched to the Shareholders as soon as practicable.

1

INTRODUCTION

Reference is made to the announcement of the Company dated 29 January 2007 in relation to the MOU. On 20 March 2007, SYSTEK LTD (being an indirect wholly-owned subsidiary of the Company) entered into the Formal Subscription Agreement to subscribe for an approximate 20.69% interest in the registered capital of Shanghai Cardinfo upon Completion at a cash consideration of RMB60 million (equivalent to approximately HK$60 million).

THE FORMAL SUBSCRIPTION AGREEMENT

Date 20 March 2007

Parties
The subscribers:	SYSTEK LTD and Shenzhen Fengyingzhichuang
The Existing Shareholders:	UnionPay Commercial, Shanghai UnionPay Venture, Guangzhou
	UnionPay, Shanghai Tongze, Shenzhen Dixun, Xinjiang
	International Trust and Ping An Trust
Subject company:	Shanghai Cardinfo

Each of Shenzhen Fengyingzhichuang and the Existing Shareholders was established in the PRC with limited liability. Principal activities of Shenzhen Fengyingzhichuang and the Existing Shareholders are set out below.

Name of company	Principal activities
Shenzhen Fengyingzhichuang	Investment management
UnionPay Commercial	Provision of China UnionPay’s bankcard related services
Shanghai UnionPay Venture	Investment management
Guangzhou UnionPay	Management and distribution of point-of-sale terminals and
	management of payment network
Shanghai Tongze	Investment management
Shenzhen Dixun	Investment management
Xinjiang International Trust	Investment trust
Ping An Trust	Investment trust

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, each of Shenzhen Fengyingzhichuang, the Existing Shareholders, Shanghai Cardinfo and their respective beneficial owners are third parties independent of and not connected with the Company and the directors, chief executive, management shareholders or substantial shareholders of the Company or its subsidiaries, or any of their respective associates (as defined under the GEM Listing Rules).

2

Assets to be acquired

An approximate 20.69% interest in the registered capital of Shanghai Cardinfo upon Completion.

The Consideration and payment terms

The consideration for the Subscription is RMB60 million (equivalent to approximately HK$60 million) in cash. The Consideration was arrived at after arm’s length negotiations among SYSTEK LTD, Shanghai Cardinfo and the Existing Shareholders having regard to (i) the strength and technical expertise of Shanghai Cardinfo and its parent company, namely China UnionPay (further details of China UnionPay are set out in the paragraph below headed “Information on Shanghai Cardinfo”), in payment system in the PRC; (ii) the business potentials of Shanghai Cardinfo’s fixed-line telephonebased payment system; and (iii) the unaudited net asset value of approximately RMB30.0 million (equivalent to approximately HK$30.0 million) of Shanghai Cardinfo as at 31 December 2006. The Consideration will be financed by way of internal resources of the Group and/or external equity financing from fund raising activities to be carried out by the Company. The Company has yet to determine the proportion of financing for the Consideration between internal resources and external equity financing.

The Consideration will be settled by way of three installments. The first installment of RMB12 million (equivalent to approximately HK$12 million) shall be payable by SYSTEK LTD within five business days after, among other things, obtaining the approval from the relevant PRC government authority in respect of the increase in the registered capital of Shanghai Cardinfo. After the payment of the aforesaid first installment, Shanghai Cardinfo will release its co-management right on the deposit of RMB3 million (equivalent to approximately HK$3 million) previously deposited into a bank account jointly managed by a subsidiary of SYSTEK LTD and Shanghai Cardinfo in accordance with the terms of the MOU. The second installment of RMB24 million (equivalent to approximately HK$24 million) shall be payable by SYSTEK LTD within 15 business days after having completed updating the business registration and the renewal of the business licence of Shanghai Cardinfo as a result of the increase in the registered capital of Shanghai Cardinfo (“ Business Registration Completion ”). The third installment of the remaining RMB24 million (equivalent to approximately HK$24 million) shall be payable by SYSTEK LTD within 45 business days from the date of Business Registration Completion.

Condition

The Formal Subscription Agreement is conditional on having obtained the approval from the relevant PRC government authority in respect of the Subscription within 180 days from the date of submission of the requisite information for approval from the relevant PRC government authority in respect of the increase in the registered capital of Shanghai Cardinfo.

Other principal terms

Set out below are other principal terms of the Formal Subscription Agreement:

• (1) Board representation

Upon obtaining the approval of the Formal Subscription Agreement from the relevant PRC government authority and Business Registration Completion, the board of directors of Shanghai Cardinfo will consist of nine directors, two of whom will be nominated by SYSTEK LTD.

3

• (2) Anti-dilution

Following Completion, any increase in the registered capital, including those issued to employees under any employee share incentive scheme and those issued pursuant to any share option, of Shanghai Cardinfo will be subject to the approval of the board of the directors of Shanghai Cardinfo. In addition, SYSTEK LTD, Shenzhen Fengyingzhichuang and the China UnionPay Subsidiaries have the preferential rights to subscribe for any registered capital to be issued by Shanghai Cardinfo such that the respective equity interests of SYSTEK LTD and Shenzhen Fengyingzhichuang and the aggregate equity interests of the China UnionPay Subsidiaries in Shanghai Cardinfo will be maintained at no less than 20.69%, 10.345% and 47.41% respectively.

• (3) Penalty for breach of the Formal Subscription Agreement

In the event of any material breaches of the clauses of the Formal Subscription Agreement by SYSTEK LTD that would result in the termination of the Formal Subscription Agreement, SYSTEK LTD shall pay a penalty (the “ Penalty ”) equivalent to 5% of the Consideration (that is, RMB3 million (equivalent to approximately HK$3 million)) to Shanghai Cardinfo. In the event of any material breaches of the clauses of the Formal Subscription Agreement by Shanghai Cardinfo or any of the Existing Shareholders that would result in the termination of the Formal Subscription Agreement, Shanghai Cardinfo shall refund any portion of the Consideration already paid by SYSTEK LTD and pay the Penalty to SYSTEK LTD.

INFORMATION ON SHANGHAI CARDINFO

Shanghai Cardinfo, a subsidiary of China UnionPay as at the date of the Formal Subscription Agreement, is principally engaged in the provision of electronic payment services through its fixedline telephone-based payment system known as “信付通 ”, which enables the users to settle transactions (including electronic funds transfers, bill payments, payments for air tickets and online shopping transactions) with China UnionPay’s bankcards and credit cards. Shanghai Cardinfo is also engaged in the publication and distribution of periodicals for targeted readers including China UnionPay, banks, credit card and other bank customers in the PRC. China UnionPay was jointly established by a consortium of financial institutions in the PRC to operate a unified nationwide inter-bank bankcard information exchange network in the PRC. China UnionPay is also engaged in the provision of advanced electronic payment technologies and specialised services relating to the inter-bank bankcard information exchange network, the development of innovative bankcard technologies, and the management and operation of the “China UnionPay” brand.

4

Shanghai Cardinfo was established in the PRC with limited liability on 30 January 2003. As at the date of this announcement, Shanghai Cardinfo has a registered capital of RMB40 million (equivalent to approximately HK$40 million). Immediately upon Completion, Shanghai Cardinfo’s registered capital will be increased to RMB58 million (equivalent to approximately HK$58 million). Set out below are the shareholding structures of Shanghai Cardinfo as at the date of this announcement and immediately upon Completion.

UnionPay Commercial_(Note) Shanghai UnionPay Venture(Note) Guangzhou UnionPay(Note)_ Sub-total Shanghai Tongze Shenzhen Dixun Xinjiang International Trust Ping An Trust SYSTEK LTD Shenzhen Fengyingzhichuang Total	As at the date of this announcement Registered capital RMB’000 Approximate % 12,500 31.25% 10,000 25.00% 5,000 12.50% 27,500 68.75% 2,900 7.25% 4,450 11.12% 1,475 3.69% 3,675 9.19% – – – – 40,000 100.00%	Immediately upon Completion Registered capital RMB’000 Approximate % 12,500 21.55% 10,000 17.24% 5,000 8.62% 27,500 47.41% 2,900 5.00% 4,450 7.67% 1,475 2.54% 3,675 6.34% 12,000 20.69% 6,000 10.35% 58,000 100.00%	Immediately upon Completion Registered capital RMB’000 Approximate % 12,500 21.55% 10,000 17.24% 5,000 8.62% 27,500 47.41% 2,900 5.00% 4,450 7.67% 1,475 2.54% 3,675 6.34% 12,000 20.69% 6,000 10.35% 58,000 100.00%
			47.41% 5.00% 7.67% 2.54% 6.34% 20.69% 10.35%
			100.00%

Note: UnionPay Commercial, Shanghai UnionPay Venture and Guangzhou UnionPay are subsidiaries of China UnionPay as at the date of this announcement.

The excess of the Consideration of RMB60 million (equivalent to approximately HK$60 million) over the registered capital to be subscribed by SYSTEK LTD of RMB12 million (equivalent to approximately HK$12 million) will be recorded as a capital reserve of Shanghai Cardinfo upon Completion. Based on the understanding of the Company, the proceeds from the Subscription are intended to be used for operations and business development by Shanghai Cardinfo.

On the basis that SYSTEK LTD will hold an approximate 20.69% interest in Shanghai Cardinfo, Shanghai Cardinfo will be treated as an associated company of the Group and equity accounted for by the Group upon Completion.

5

Based on the audited accounts for the year ended 31 December 2005 and the management accounts for the year ended 31 December 2006 of Shanghai Cardinfo prepared in accordance with generally accepted accounting principles in the PRC, Shanghai Cardinfo had turnovers of approximately RMB19.5 million (equivalent to approximately HK$19.5 million) and approximately RMB28.4 million (equivalent to approximately RMB28.4 million) respectively. For the year ended 31 December 2005, Shanghai Cardinfo recorded both losses before and after taxation of approximately RMB2.2 million (equivalent to approximately HK$2.2 million). For the year ended 31 December 2006, Shanghai Cardinfo recorded both profits before and after taxation of approximately RMB0.5 million (equivalent to approximately HK$0.5 million). The net asset values of Shanghai Cardinfo as at 31 December 2005 and 31 December 2006 were approximately RMB25.6 million (equivalent to approximately HK$25.6 million) and approximately RMB30.0 million (equivalent to approximately HK$30.0 million) respectively.

REASONS FOR THE SUBSCRIPTION

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 research, development and sale of software products and systems as well as the provision of information technology solutions (including project implementation, system integration and after-sales maintenance services) to customers in Macao and the PRC. 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).

The Group has been looking for suitable investment opportunities in order to broaden its income source. The Directors consider the Subscription an attractive investment opportunity for the Group to further extend its scope of products and services and to strengthen its business in the PRC market. With a population of over 1.3 billion and increasing gross domestic products per capita, the PRC certainly represents an unparalleled consumer market in the world. Although Shanghai Cardinfo has only achieved a slight profit for the year ended 31 December 2006, given (i) China UnionPay is the exclusive operator of the unified nationwide inter-bank bankcard information exchange network in the PRC; (ii) there were over 100 million China UnionPay bankcards issued up to February 2006; and (iii) the support provided by the China UnionPay group entities, the Directors consider that the Subscription will provide the Group with a springboard to enter the vast payment market in the PRC. The terms of the Formal Subscription Agreement have been agreed based on arm’s length negotiations among the parties involved.

In view of the above, the Directors (including the independent non-executive Directors) consider that the Subscription is in the interest of the Company and the Shareholders as a whole and the terms of the Formal Subscription Agreement are fair and reasonable and on normal commercial terms.

GENERAL

The Subscription constitutes a discloseable transaction for the Company under the GEM Listing Rules. A circular containing information on the Formal Subscription Agreement and Shanghai Cardinfo, and other information as required under the GEM Listing Rules, will be despatched to the Shareholders as soon as practicable.

6

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

“Board”	board of the Directors
“China UnionPay”	中國銀聯股份有限公司(China UnionPay Company Limited), a
	company jointly established by a consortium of financial institutions
	in the PRC and the parent company of Shanghai Cardinfo as at the
	date of the Formal Subscription Agreement
“China UnionPay Subsidiaries”	UnionPay Commercial, Shanghai UnionPay Venture and
	Guangzhou UnionPay
“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 Formal Subscription Agreement and the
	transactions contemplated thereunder
“Consideration”	RMB60 million (equivalent to approximately HK$60 million) in
	cash, being the consideration payable by SYSTEK LTD for the
	subscription of an approximate 20.69% interest in the registered
	capital of Shanghai Cardinfo upon Completion pursuant to the
	Formal Subscription Agreement
“Directors”	the directors of the Company
“Existing Shareholders”	the shareholders of Shanghai Cardinfo, as at the date of the Formal
	Subscription Agreement, comprising UnionPay Commercial,
	Shanghai UnionPay Venture, Guangzhou UnionPay, Shanghai
	Tongze, Shenzhen Dixun, Xinjiang International Trust and Ping
	An Trust
“Formal Subscription	the agreement dated 20 March 2007 entered into among SYSTEK
Agreement”	LTD, Shenzhen Fengyingzhichuang, the Existing Shareholders and
	Shanghai Cardinfo in respect of the subscription of the registered
	capital of Shanghai Cardinfo by SYSTEK LTD and Shenzhen
	Fengyingzhichuang
“GEM”	the Growth Enterprise Market of The Stock Exchange of Hong
	Kong Limited
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“Group”	the Company and its subsidiaries

7

“Guangzhou UnionPay”	廣州銀聯支付網絡有限公司(Guangzhou UnionPay Payment
	Network Company Limited), a company established in the PRC
	with limited liability and one of the Existing Shareholders
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Macao”	the Macao Special Administrative Region of the PRC
“MOU”	a memorandum of understanding dated 29 January 2007 entered
	into between Shanghai Cardinfo and a subsidiary of SYSTEK LTD
	(namely,北京思德泰科科技發展有限公司(Beijing Systek
	Science & Technology Development Co., Ltd.)) in relation to a
	possible subscription of an approximate 20.69% equity interest in
	Shanghai Cardinfo
“Ping An Trust”	平安信託投資有限責任公司(Ping An Trust Investment Limited
	Liability Company), a company established in the PRC with limited
	liability and one of the Existing Shareholders
“PRC”	the People’s Republic of China which, for the purpose of this
	announcement, excludes Hong Kong, Macao and Taiwan
“Shanghai Cardinfo”	上海卡友信息服務有限公司(Shanghai Cardinfo Co., Ltd.), a
	company established in the PRC with limited liability
“Shanghai Tongze”	上海同澤信息技術有限公司(Shanghai Tongze Information
	Technology Company Limited), a company established in the PRC
	with limited liability and one of the Existing Shareholders
“Shanghai UnionPay Venture”	上海聯銀創業投資有限公司(Shanghai UnionPay Venture
	Investment Company Limited), a company established in the PRC
	with limited liability and one of the Existing Shareholders
“Shareholders”	holders of the existing ordinary share(s) of HK$0.002 each in the
	issued share capital of the Company
“Shenzhen Dixun”	深圳迪迅實業有限公司(Shenzhen Dixun Industrial Company
	Limited), a company established in the PRC with limited liability
	and one of the Existing Shareholders
“Shenzhen Fengyingzhichuang”	深圳市豐盈智創投資有限公司(Shenzhen Fengyingzhichuang
	Investment Company Limited), a company established in the PRC
	with limited liability and one of the two subscribers of the registered
	capital of Shanghai Cardinfo pursuant to the Formal Subscription
	Agreement
“Subscription”	the subscription by SYSTEK LTD of an approximate 20.69%
	interest in the registered capital of Shanghai Cardinfo upon
	Completion pursuant to the Formal Subscription Agreement

8

• “SYSTEK LTD” SYSTEK LTD, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company

• “UnionPay Commercial” 銀聯商務有限公司 (UnionPay Commercial Company Limited), a company established in the PRC with limited liability and one of the Existing Shareholders

• “Xinjiang International Trust” 新疆國際信託投資有限責任公司 (Xinjiang International Trust Investment Limited Liability Company), a company established in the PRC with limited liability and one of the Existing Shareholders

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

Notes:

1. In this announcement, the exchange rate of HK$1.00 to RMB1.00 has been used for reference only.

2. The English translation of the Chinese company names in this announcement are included for reference only and should not be regarded as the official English translation of such Chinese company names.

By order of the Board MegaInfo Holdings Limited Sun Ho Chairman

Hong Kong, 21 March 2007

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

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with 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: (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 on the GEM website at http://www.hkgem.com on the “Latest Company Announcements” page for at least seven days from the date of its posting.

• For identification purpose only

9