Novautek Technologies Group Limited — M&A Activity 2000

Sep 18, 2000

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.

KONG SUN HOLDINGS LIMITED

江 山 控 股 有 限 公 司

(Incorporated in Hong Kong with limited liability)

Discloseable and Share Transaction

The Directors announce that on 15 September 2000, Great Star entered into the Preliminary Agreement with Prosper Vision, whereby Great Star has conditionally agreed to acquire from Prosper Vision 50% interest in the issued share capital of Global Focus for a consideration of HK$19,000,000. The Consideration will be satisfied by a cash payment of HK$3,475,000 and by the issue of the 31,050,000 Consideration Shares at an agreed issue price of HK$0.5 each amounting to HK$15,525,000.

Prosper Vision is an independent third party not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

Global Focus is a single purpose investment holding company holding the entire issued share capital of 5 Dimensions, which is engaged in the business of information technology educational services in Hong Kong.

The Acquisition constitutes a discloseable and share transaction under Chapter 14 of the Listing Rules. A circular containing, inter alia, details of the Agreement, will be despatched to the shareholders of the Company as soon as possible.

The directors of the Company (the "Directors") announce that on 15 September 2000, Great Star Associates Limited ("Great Star"), a wholly-owned subsidiary of the Company, entered into a legally binding preliminary agreement ("Preliminary Agreement") with Prosper Vision International Limited ("Prosper Vision") in which Great Star conditionally agreed to acquire 50% interests in the issued share capital of Global Focus Enterprise Limited ("Global Focus") held and beneficially owned by Prosper Vision. Major terms of the Preliminary Agreement and information relating to the vendor are as follows:

THE PRELIMINARY AGREEMENT

Date : 15 September 2000

Vendor : Prosper Vision

Purchaser : Great Star, a wholly-owned subsidiary of the Company

Shares to be purchased : 50% interest in the entire issued share capital of Global Focus as at the date of Completion with full title guarantee free from all liens charges pre-emption rights encumbrances

Consideration : HK$19,000,000, which will consist of:

(1) Cash payments of HK$3,475,000 payable as follows:

(a) HK$500,000 has been paid in cheque upon signing of the Preliminary Agreement;

(b) HK$500,000 will be paid in cheque within one month from the date of signing of the Preliminary Agreement or other means of payment as Prosper Vision may direct in writing;

(c) the remaining balance will be payable in cash or in such manner as the parties may agree on Completion or; and

(2) HK$15,525,000 will be satisfied by the issue and allotment of the 31,050,000 shares of HK$0.10 each in the share capital of the Company ("Consideration Shares") at an issue price of HK$0.5 each upon Completion.

Consideration Shares : The issue price of the Consideration Shares at HK$0.5 per share, is at approximate 4% discount by making reference to the previous 10 trading days average price HK$0.521 per share of the Company as quoted on The Stock Exchange of Hong Kong Limited ("Stock Exchange") from 1 September 2000 to 15 September 2000 inclusive, comparing with the closing price of HK$0.52 on 15 September 2000 is at approximate 3.85% discount and is arrived at after arm's negotiations between the parties.

The Consideration Shares represent 5.28 % of the existing issued share capital of the Company and represent 5.02% of the enlarged issued share capital of the Company. The Consideration Shares will rank pari passu in all respects with the existing shares in issue. The Consideration Shares will be issued under the general mandate granted to the Directors at the annual general meeting of the Company held on 28 June 2000.

After the Completion, Prosper Vision will hold 5.02% of the enlarged issued share capital of the Company.

Conditions : Completion of the Acquisition ("Completion") is conditional upon, among other things:

(1) Great Star being satisfied with the results of a due diligence exercise conducted by itself or its representatives on the financial, business and affairs of Global Focus and 5 Dimensions Limited ("5 Dimensions"); and

(2) the Stock Exchange granting listings of, and permission to deal in, the Consideration Shares to be issued.

Sale and Purchase Agreement : Upon signing of the Preliminary Agreement, the parties will use their best endeavours to negotiate in good faith and procure the signing of a formal sale and purchase agreement on or before 15 December, 2000 or such earlier date as the parties may agree.

Completion : Completion of the Acquisition will take place upon the conditions of the Preliminary Agreement set out above are fulfilled or satisfied, which, is expected to be on or before 15 December 2000 or such later date as the parties may agree.

Information on Prosper Vision, Global Focus and 5 Dimensions

Prosper Vision

Prosper Vision, a limited company incorporated in the British Virgin Islands ("BVI"), is a single purpose investment holding company and is the sole shareholder holding the entire issued share capital of Global Focus. Prosper Vision is an independent third party not connected with the chief executive, directors or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as the term is defined in the Listing Rules).

Global Focus

Global Focus, a limited company incorporated in the BVI, is a single purpose investment holding company holding the entire issued share capital of 5 Dimensions. Upon Completion, Prosper Vision will hold 50% issued share capital of Global Focus which in turn holds the entire issued share capital of 5 Dimensions.

5 Dimensions

5 Dimensions is a limited company incorporated in Hong Kong and has commenced business operation since 1997. It is engaged in the provision of information technology educational services in Hong Kong. Its bi-lingual products, including the software application, namely, Library Master providing library management services. Discipline Master recording the discipline and attendance records and Communicate providing a communication channel between students, schools and students, have been used by more than 200 secondary and primary schools in Hong Kong.

Management : Upon Completion, each of Great Star and Prosper Vision may nominate three representatives respectively to the boards of Global Focus and 5 Dimensions. Mr. Kong Look Sen, the chairman and managing director of the Company, or his nominee(s) will be appointed as chairman and Mr. Tse Kam Shing, one of the founders of 5 Dimensions will be appointed as chief executive officer to the respective boards of Global Focus and 5 Dimensions. The other representatives will be appointed later.

Other Information

For the period ended 30 April 1999, the audited net loss of 5 Dimensions amounted to HK$352,999. For the year ended 30 April 2000, the unaudited net profit before taxation of 5 Dimensions amounted to HK$994,290. As at 31 July 2000, the unaudited net asset value of 5 Dimensions amounted to HK$1,243,064.

The Consideration of HK$19,000,000 was arrived at after arm's length negotiations. Taking into account of 5 Dimensions about 15% market share within three years reputable goodwill of the Company in the education market of the provision of information technology industry in Hong Kong, qualitative and well-known products among schools in Hong Kong and the future prospect of the information technology industry in Hong Kong, the Directors believe that the Acquisition is in the best interests of the Company. The Directors also consider that the Consideration is fair and reasonable.

Following the Acquisition, the interests of the controlling shareholders, namely, Kong Fa Holding Limited and Kong Sun Enterprise Sdn Bdh, in the Company will be diluted from 37.41% and 34.58% to 35.53% and 32.84% respectively.

The principal activities of the Group consist of property holding, securities brokerage, investment activities, the provision of loan finance and the provision of information technology training and software development services.

The Acquisition constitutes a discloseable and share transaction under Chapter 14 of the Listing Rules. A circular containing, inter alia, details of the Agreement, will be despatched to the shareholders of the Company as soon as possible. Application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

By Order of the Board

Kong Li Szu

Executive Director

Hong Kong, 15 September 2000