Youzan Technology Limited - Capital/Financing Update 2004

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

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SYSCAN Technology Holdings Limited 矽感科技控股有限公司[*]

(Stock Code: 8083)

(Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION – SHARE EXCHANGE AGREEMENT

The Directors are pleased to announce that SIL, SYSCAN Inc., BankEngine and Mr. Xirinachs entered into the Share Exchange Agreement on 29 March 2004 (United States’ time), pursuant to which BankEngine and SIL have agreed to exchange shares by (i) SIL transferring the Sale Shares to BankEngine; and (ii) BankEngine allotting and issuing the Exchange Shares to SIL subject to (a) SIL transferring 10% of the Exchange Shares which SIL will receive from BankEngine to Emerald Asset Advisors at nil consideration at Completion; and (b) SIL granting the Option to BankEngine.

Pursuant to the Option, BankEngine has the right to acquire from SIL the entire issued share capital of SML during a period of 2 years commencing from the Completion Date.

The Company has no controlling Shareholder. The largest Shareholders are Mr. Cheung Wai and Mr. Darwin Hu, who are interested in approximately 10.78% and 5.33% of the issued share capital of the Company as at the date of this announcement respectively and are also the executive Directors and their interests as Shareholders are in all respects identical with those of the other Shareholders as a general body.

The Share Exchange Agreement and hence the Transactions contemplated thereunder constitute a discloseable transaction for the Company under the GEM Listing Rules. The Stock Exchange has indicated that it regards the Transactions as a spin-off of SML and SYSCAN Inc. by the Company on NASDAQ and therefore that the Transactions and the Proposed Spin-off will be conditional on, inter alia, the approval of the GEM Listing Committee and the Shareholders. Consequently, the Company will apply for the approval of the Stock Exchange to proceed with the Proposed Spin-off. The Company does not intend to provide any assured entitlements to the Shareholders and has indicated to the Stock Exchange that, if so required by the Stock Exchange, it will seek the approval of the minority Shareholders at the SGM (with the Directors, substantial Shareholders and chief executive of the Company and their respective associates abstain from voting) for a waiver of the requirement for the Company to provide assured entitlements to the Shareholders in connection with the Proposed Spinoff. As SYSCAN Inc. is a major subsidiary of the Company (as defined in the GEM Listing Rules), the Transactions constitute a material dilution of the Company’s interest in SYSCAN Inc. pursuant to Rule 17.39 of the GEM Listing Rules. Accordingly, an IFA will be appointed to advise the Independent Board Committee and the Shareholders in relation to the Proposed Spin-off and the waiver of the assured entitlements requirement.

* For identification purposes only

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The Company will send a Circular within 21 days after publication of this announcement to the Shareholders setting out further details of the Transactions and other information prescribed by the GEM Listing Rules and containing, inter alia, details of the Proposed Spin-off, a letter from the Independent Board Committee and an IFA letter together with a notice of the SGM.

Completion of the Share Exchange Agreement will take place on the first Business Day immediately following the satisfaction or waiver of the conditions under the Share Exchange Agreement or such other date as BankEngine and SYSCAN Inc. may agree, but in any event no later than the Long Stop Date.

As the Transactions are regarded by the Stock Exchange as a spin-off of SML and SYSCAN Inc. by the Company on NASDAQ, the Company agrees to use Practice Note 15 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as guidelines and further information will be provided by the Company to the Stock Exchange for review and approval regarding the Proposed Spin-off. The Proposed Spin-off is subject to approval by the GEM Listing Committee of the Stock Exchange and the compliance with the relevant provisions of the GEM Listing Rules and the Proposed Spin-off may or may not proceed. As the Share Exchange Agreement is a conditional agreement, the Company will not proceed with it without fulfillment of the requirements under Practice Note 15 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited or without the Shareholders’ approval.

As the Proposed Spin-off may or may not proceed, the Shareholders and potential investors are advised to exercise cautions when dealing in securities of the Company.

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:35 a.m. on 30 March 2004 pending the release of this announcement. The Company has applied for the resumption of trading effective 9:30 a.m. on 13 May 2004.

The Share Exchange Agreement

Date : 29 March 2004 (United States’ time) Parties Party A : SIL Party B : SYSCAN Inc. Party C : BankEngine Party D : Mr. Xirinachs

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Shareholding Structures of the Company & BankEngine immediately before completion of the Share Exchange Agreement without taking into account the BankEngine’s Options

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The
Mr. Xirinachs Public
Company
50.56% 49.44%
100% 100%
SIL BankEngine
SHL
Scanner
Business
SYSCAN Inc. SML
Overseas
Display
Distribution
Business
Business
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Shareholding Structures of the Company & BankEngine immediately after completion of the Share Exchange Agreement without taking into account the BankEngine’s Options

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The Company Mr. Xirinachs
100% 100% 46.40%
Emerald Asset
SIL Public
SHL Advisors
81.23% 4.92% 9.03% 4.82%
Scanner
Business 100%
BankEngine
SML
100%
Display
Business
SYSCAN Inc.
Overseas
Distribution
Business
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Shareholding Structures of the Company & BankEngine after completion of the Share Exchange Agreement (without taking into account the BankEngine’s Options) and assuming that the Option has been duly exercised by BankEngine

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The Company Mr. Xirinachs
100% 100% 46.40%
Emerald Asset
SIL Public
SHL Advisors
81.23% 4.92% 9.03% 4.82%
Scanner
Business
BankEngine
100% 100%
SML SYSCAN Inc.
Overseas
Display
Distribution
Business
Business
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Shareholding Structures of the Company & BankEngine after completion of the Share Exchange Agreement assuming that the BankEngine’s Options have been exercised by the holders thereof and that the Option has been duly exercised by BankEngine

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The Company Mr. Xirinachs
100% 100% 46.40%
Emerald Asset
SIL Public
SHL Advisors
81.02% 5.13% 9% 4.85%
Scanner
Business
BankEngine
100% 100%
SML SYSCAN Inc.
Overseas
Display
Distribution
Business
Business
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Consideration

The Exchange Shares represent:–

(1) 90.26% of the issued share capital of BankEngine as enlarged by the issue of the Exchange Shares without taking into account the BankEngine’s Options;
(2) 90.02% of the issued share capital of BankEngine as enlarged by the issue of the Exchange Shares after taking into account the BankEngine’s Options;

As at the date of this announcement, BankEngine has granted the BankEngine’s Options to grantee thereof, which represent options to acquire up to 600,000 BankEngine’s Shares (representing 2.67% of the issued share capital of BankEngine or 2.6% of the enlarged issued share capital of BankEngine)

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pursuant to BankEngine’s Stock Option Plan, amongst which options to subscribe for 500,000 BankEngine’s Shares are held by Mr. Xirinachs and options to subscribe for 100,000 BankEngine’s Shares are held by Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, legal counsel for BankEngine who are not connected persons (as defined in the GEM Listing Rules) to the Company.

After taking into account SIL’s transfer of 10% of the Exchange Shares to Emerald Asset Advisors, the Company is disposing of an effective interest of 18.77% in SYSCAN Inc. in return for 90% of the Exchange Shares, representing 81.23% of the enlarged issued share capital of BankEngine. The deemed disposal of 18.77% (being US$900,049) of the net asset value of SYSCAN Inc. of US$4,795,147 as at 31 December 2003 as consideration represents:–

(1) a discount of approximately 80.3% to the Exchange Shares when the Exchange Shares are taken as 81.23% (being US$4,571,322) of the market capitalization of BankEngine of US$5,627,628.25 with reference to the closing price of US$0.25 per BankEngine’s Share as quoted on NASDAQ on 26 March 2004 (being the last trading day prior to the date of the Share Exchange Agreement); and
(2) a discount of approximately 72.95% to the Exchange Shares when the Exchanges Shares are taken as 81.23% (being US$3,327,922) of the market capitalization of BankEngine of US$4,096,913.37 with reference to the average closing price of US$0.182 per BankEngine’s Share as quoted on NASDAQ for the last 10 trading days up to and including 26 March 2004.

SYSCAN Inc. recorded a turnover of US$7,456,782 (or approximately HK$58,162,900) for the year ended 31 December 2003, a turnover of US$1,983,551 (or approximately HK$15,471,698) for the year ended 31 December 2002 and a turnover of US$3,822,817 (or approximately HK$29,817,973) for the year ended 31 December 2001. SYSCAN Inc. recorded a net profit after taxation of US$668,160 (or approximately HK$5,211,648) for the year ended 31 December 2003, a net loss of US$510,387 (or approximately HK$3,981,019) for the year ended 31 December 2002 and a net loss of US$1,069,688 (or approximately HK$8,343,566) for the year ended 31 December 2001. The net asset value of SYSCAN Inc. was US$4,637,374 (or approximately HK$36,171,517) and US$4,126,987 (or approximately HK$32,190,499) as at 31 December 2001 and 31 December 2002, respectively. The net asset value of SYSCAN Inc. was US$4,795,147 (or approximately HK$37,402,147) as at 31 December 2003, representing approximately 26.97% of the net asset value of the Group of approximately HK$138,667,000 (or approximately US$17,777,820) as at 31 December 2003, accordingly, SYSCAN Inc. is a major subsidiary of the Company under the GEM Listing Rules.

The closing price per BankEngine’s Share was US$0.25 as quoted on NASDAQ on 26 March 2004 (being the last trading day prior to the date of the Share Exchange Agreement), and the average closing price per BankEngine’s Share was US$0.182 as quoted on NASDAQ for the last 10 trading days up to and including 26 March 2004. The significant discount of the Sale Shares to the Exchange Shares was due to the fact that the closing prices of BankEngine’s Shares had been increased significantly from US$0.13 as at 1 March 2004 to US$0.25 as at 26 March 2004.

The Share Exchange Agreement was determined on arm’s length negotiations between the relevant parties after considering, inter alia, the financial position of SYSCAN Inc. and the prevailing market prices of the BankEngine’s Shares as quoted on the NASDAQ and the Directors consider the terms of the Share Exchange Agreement are fair and reasonable and are in the interest of the Company and the Shareholders as a whole.

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Immediately following the Completion, BankEngine will become a subsidiary of the Company. The BankEngine’s Stock Option Plan is not in compliance with Chapter 23 of the GEM Listing Rules. The Company will make amendments to the BankEngine’s Stock Option Plan after BankEngine becomes a subsidiary of the Company, at which time, the Company will seek approval from the Shareholders on the adoption of the BankEngine’s Stock Option Plan. BankEngine will not grant further options before the approval from the Shareholders on the adoption of the BankEngine’s Stock Option Plan and the holders of the BankEngine’s Options have confirmed that they have no present intention to exercise any of the BankEngine’s Options prior to such approval.

Pursuant to the Share Exchange Agreement, SIL will grant the Option to BankEngine, pursuant to which BankEngine has the right to acquire from SIL the entire issued share capital of SML at a consideration of not more than US$16 million during a period of 2 years commencing from the Completion Date. After Completion, BankEngine will have a board of directors comprising 5 members, 4 of whom will be the representatives of the Company, as a result of which the Company will control the board of directors of BankEngine and hence can determine whether to exercise the Option or not.

The consideration of US$16 million under the Option represents a premium of approximately 795.8% to the net asset value of approximately HK$13,931,694 (or approximately US$1,786,114) of SML as at 31 December 2003.

SML recorded a turnover of HK$173,202,692 for the year ended 31 December 2003, a turnover of HK$25,585,837 for the year ended 31 December 2002 and a turnover of HK$14,659,691 for the year ended 31 December 2001. SML recorded a net profit after taxation of HK$833,216 for the year ended 31 December 2003, a net profit after taxation of HK$14,872,684 for the year ended 31 December 2002 and a net profit after taxation of HK$7,914,134 for the year ended 31 December 2001. The net asset value of SML was in deficit of HK$1,122,230 as at 31 December 2001 and the net asset value of SML was HK$12,463,932 as at 31 December 2002. The net asset value of SML was HK$13,931,694 as at 31 December 2003, representing approximately 10% of the net asset value of the Group of approximately HK$138,667,000 as at 31 December 2003.

The Option was determined on arm’s length negotiations between the relevant parties after considering, inter alia, the financial position of SML and the Directors consider the Option is fair and reasonable so far as the Shareholders are concerned.

Conditions precedent to the obligations of BankEngine

The obligations of BankEngine on the Completion Date as provided in the Share Exchange Agreement shall be subject to the satisfaction, on or prior to the Completion Date, of the following conditions precedent, unless waived in writing by BankEngine:–

(a) Consents and Approvals. SYSCAN Inc. shall have obtained all material consents, including any material consents and waivers by SYSCAN Inc.’s lenders and other third parties, if necessary, to the consummation of the transactions contemplated by the Share Exchange Agreement.
(b) Representations and Warranties. The representations and warranties by SYSCAN Inc. in the Share Exchange Agreement shall be true and accurate in all material respects on and as of the Completion Date with the same force and effect as though such representations and warranties had been made at and as of the Completion Date, except to the extent that any changes therein are specifically contemplated by the Share Exchange Agreement or the same shall not have a material adverse effect.

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(c) Performance. SYSCAN Inc. shall have performed and complied in all material respects with all agreements to be performed or complied with by it pursuant to the Share Exchange Agreement prior at or prior to the Completion or except to the extent that the failure to so perform or comply with the same shall not have a material adverse effect.
(d) Proceedings and Documents. All corporate, company and other proceedings in connection with the transactions contemplated by the Share Exchange Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to BankEngine and its legal counsel, and BankEngine and its legal counsel shall have received all such counterpart originals (or certified or other copies) of such documents as they may reasonably request.
(e) Certificate of Good Standing. SYSCAN Inc. shall have delivered to BankEngine a certificate as to the good standing of SYSCAN Inc. certified by the Secretary of State of the state of California on or within 2 Business Days prior to the Completion Date.
(f) Material Changes. Except as contemplated by the Share Exchange Agreement, since the date the Share Exchange Agreement, SYSCAN Inc. shall not have suffered a material adverse effect.
(g) Option Agreement. SIL shall have executed an option agreement to grant the Option to BankEngine.
(h) Intellectual Property Opinion. SYSCAN Inc. shall provide to BankEngine a letter from its patent agent reasonably satisfactory to BankEngine stating that (i) SYSCAN Inc. has good and marketable title to any and all of its intellectual property, (ii) to the best of its knowledge, the intellectual property of SYSCAN Inc. does not violate the rights of any third party, (iii) a prior-art search was completed prior to filing the patent applications for the intellectual property referenced above, and to the best of SYSCAN Inc.’s knowledge, the intellectual property does not infringe any third parties’ rights, and (iv) SYSCAN Inc. is not aware of any infringement claims against SYSCAN Inc.
(i) Opinion of SYSCAN Inc.’s Legal Counsel. BankEngine shall have received an opinion of Pacific Law Group, legal counsel for SYSCAN Inc., dated the Completion Date, in form and substance satisfactory to BankEngine and its legal counsel.
(j) Due Diligence. BankEngine shall have completed to its own satisfaction due diligence in relation to SYSCAN Inc.

The approval by shareholders of BankEngine for the Transactions is not required and the board of directors of BankEngine approved the Share Exchange Agreement on 22 March 2004.

Conditions precedent to the obligations of SYSCAN Inc.

The obligations of SYSCAN Inc. on the Completion Date as provided in the Share Exchange Agreement shall be subject to the satisfaction, on or prior to the Completion Date, of the following conditions precedent, unless waived in writing by SYSCAN Inc.:–

(a) Consents and Approvals. BankEngine shall have obtained all material consents, including any material consents and waivers of its respective lenders and other third-parties, if necessary, to the consummation of the transactions contemplated by the Share Exchange Agreement.

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(b) Representations and Warranties. The representations and warranties by BankEngine in the Share Exchange Agreement shall be true and accurate in all material respects on and as of the Completion Date with the same force and effect as though such representations and warranties had been made at and as of the Completion Date, except to the extent that any changes therein are specifically contemplated by the Share Exchange Agreement or the same shall not have a material adverse effect.
(c) Performance. BankEngine shall have performed and complied in all material respects with all agreements to be performed or complied with by it pursuant to the Share Exchange Agreement prior to or at the Completion or the same shall not have a material adverse effect.
(d) Proceedings And Documents. All corporate, company and other proceedings in connection with the transactions contemplated by the Share Exchange Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to SYSCAN Inc. and its legal counsel, and SYSCAN Inc. and its legal counsel shall have received all such counterpart originals (or certified or other copies) of such documents as they may reasonably request.
(e) Certificate of Good Standing. BankEngine shall have delivered to SYSCAN Inc. a certificate as to the good standing of BankEngine certified by the Secretary of State of the state of Delaware on or within 2 Business Days prior to the Completion Date.
(f) Material Changes. Except as contemplated by the Share Exchange Agreement, since the date of the Share Exchange Agreement, BankEngine shall not have suffered a material adverse effect.
(g) BankEngine Board of Directors. At Completion, all of the officers and members of the board of directors of BankEngine shall tender their resignations as officers and directors of BankEngine, and the vacancies created on the BankEngine board of directors shall be filled by the persons designated by SYSCAN Inc.
(h) Reverse Split. BankEngine shall have consummated the Reverse Split at or immediately prior to the Completion Date.
(i) Opinion of BankEngine’s Legal Counsel. SYSCAN Inc. shall have received an opinion of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, legal counsel for BankEngine, dated the Completion Date, in form and substance satisfactory to SYSCAN Inc. and its legal counsel.
(j) Due Diligence. SYSCAN Inc. shall have completed to its own satisfaction due diligence in relation to BankEngine.

In addition, as the Stock Exchange has indicated that it regards the Transactions as a spin-off of SML and SYSCAN Inc. by the Company on NASDAQ, therefore, approval must be obtained from the GEM Listing Committee and the Shareholders for the Proposed Spin-off.

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Reasons for entering into the Share Exchange Agreement

The Directors are of the opinion that a business combination between BankEngine and the Group is advisable and in the best interests of the Company and the Shareholders as a whole, and presents an opportunity for the Group to achieve the following long-term strategic and financial benefits:

the Transactions will provide clear focus for different management teams in managing the Group’s distinct businesses, namely, the Display Business and the Scanner Business;
the Transactions will relief the financial stress on the Group as the Display Business and the Scanner Business, both of which are growing rapidly, are in urgent need of further financial resources to sustain their growth;
the Transactions will make each of the Display Business and the Scanner Business financially independent of each other and hence able to pursue and implement their respective business development strategies and financial objectives without the risk of depriving the resources of the other;
the Transactions can cap the investment of the Company in Display Business so that the Company is no longer required to finance the Display Business and can focus its financial resources on the Scanner Business;
the Group may through the Share Exchange Agreement acquire an overseas listing vehicle which provides an opportunity for the Display Business to raise new funds by way of equity financing on its own.

Information of the Company

The Company is an investment holding company. Its subsidiaries are principally engaged in (1) the design, research, development, manufacturing and distribution of optical image capturing devices and related components; and (2) the manufacturing and distribution of cathode ray tubes and liquid crystal display monitors.

All corporate entities engaging in the Scanner Business are held by SHL while all corporate entities engaging in the Display Business are held by SML. In addition, the Overseas Distribution Business is conducted through SYSCAN Inc. and its subsidiaries. SYSCAN Inc. and its subsidiaries only distribute the products made by SHL (and its subsidiaries) and SML (and its subsidiaries).

SYSCAN Inc., SHL and SML have cross guarantees for each other, which are summarized briefly in the following table (Note: SST means Shenzhen SYSCAN Technology Co., Ltd, a wholly-owned subsidiary of SHL and SOT means SYSCAN Optoelectronics Technology (Shenzhen) Co., Ltd, a wholly-owned subsidiary of SML):–

Guarantor	Borrower	Type	Amount	Bank
The Company	SOT	Short-term bank loan	RMB130 million	Bank of China
The Company	SOT	Letter of credit	US$10 million	China Merchants Bank
SST	SOT	Short-term bank loan	RMB130 million	Bank of China
SOT	SST	Short-term bank loan	RMB20 million	China Minsheng Banking
				Corp. Ltd

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Background Information of BankEngine

BankEngine was previously involved in the telecommunications and software development businesses. After selling all of its interest in its telecommunications and software businesses in December 2003, which was its only source of revenue, BankEngine became a bare shell company without carrying on any substantial business and began aggressively seeking a business combination.

BankEngine recorded a profit before taxation of US$201,000 and a loss of US$299,000 for the year ended 31 August 2003 and the year ended 31 August 2002, respectively and a profit after taxation of US$201,000 and US$299,000 for the year ended 31 August 2003 and the year ended 31 August 2002, respectively. BankEngine had a net deficit of US$54,237 as at 31 August 2003, being the date to which its latest financial statements were made up, and does not have any contingent liability as at the date of this announcement.

General Information

The Directors are of the opinion that the Share Exchange Agreement was entered into after arm’s length negotiations between the parties. The Directors also consider that (i) the Share Exchange Agreement is on normal commercial terms; (ii) the consideration payable under the Share Exchange Agreement is fair and reasonable; and (iii) it is in the best interests of the Company and the Shareholders as a whole to enter into the Share Exchange Agreement.

The Share Exchange Agreement and hence the Transactions contemplated thereunder constitute a discloseable transaction for the Company under the GEM Listing Rules. The Stock Exchange has indicated that it regards the Transactions as a spin-off of SML and SYSCAN Inc. by the Company on NASDAQ and therefore that the Transactions and the Proposed Spin-off will be conditional on, inter alia, the approval of the GEM Listing Committee and the Shareholders. Consequently, the Company will apply for the approval of the Stock Exchange to proceed with the Proposed Spin-off. The Company does not intend to provide any assured entitlements to the Shareholders and has indicated to the Stock Exchange that, if so required by the Stock Exchange, it will seek the approval of the minority Shareholders at the SGM (with the Directors, substantial Shareholders and chief executive of the Company and their respective associates abstain from voting) for a waiver of the requirement for the Company to provide assured entitlements to the Shareholders in connection with the Proposed Spin-off. As SYSCAN Inc. is a major subsidiary of the Company (as defined in the GEM Listing Rules), the Transactions constitute a material dilution of the Company’s interest in SYSCAN Inc. pursuant to Rule 17.39 of the GEM Listing Rules. Accordingly, an IFA will be appointed to advise the Independent Board Committee and the Shareholders in relation to the Proposed Spin-off and the waiver of the assured entitlements requirement.

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As at the date of this announcement, the Directors are Mr. Cheung Wai, Mr. Darwin Hu, who are executive Directors, and Mr. Lo Wai Ming and Mr. Fong Chi Wah, who are independent non-executive Directors.

As the Proposed Spin-off may or may not proceed, the Shareholders and potential investors are advised to exercise cautions when dealing in securities of the Company.

Definitions:

“associate(s)”

has the same meaning ascribed thereto under the GEM Listing Rules

“BankEngine”

BankEngine Technologies Inc., a corporation formed under the laws of the state of Delaware of the United States, whose shares are listed on NASDAQ

“BankEngine’s Options”

options to acquire up to 600,000 BankEngine’s Shares (representing 2.67% of the issued share capital of BankEngine or 2.6% of the enlarged issued share capital of BankEngine) pursuant to BankEngine’s Stock Option Plan, amongst which options to subscribe for 500,000 BankEngine’s Shares are held by Mr. Xirinachs and options to subscribe for 100,000 BankEngine’s Shares are held by Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, legal counsel for BankEngine who are not connected persons (as defined in the GEM Listing Rules) to the Company

“BankEngine’s Shares”

shares of US$0.001 each in the share capital of BankEngine

“BankEngine’s Stock the existing stock option plan adopted by BankEngine Option Plan”

“Board” board of Directors

“Business Day(s)”

day(s) on which banks in the United States are generally open for business (excluding Saturdays)

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“Circular” the circular to be issued by the Company pursuant to Rule 19.38 of the GEM Listing Rules “Company” SYSCAN Technology Holdings Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the GEM “Completion” completion of the Share Exchange Agreement in accordance with its terms “Completion Date” 1 Business Day immediately following the satisfaction or waiver of the conditions under the Share Exchange Agreement or such other date as BankEngine and SYSCAN Inc. may agree, but in any event no later than the Long Stop Date

“Directors” the directors of the Company for the time being, including Mr. Cheung Wai and Mr. Darwin Hu, who are executive Directors, and Mr. Lo Wai Ming and Mr. Fong Chi Wah, who are independent non-executive Directors

“Display Business” the business of manufacturing of cathode ray tubes and liquid crystal display monitors and distribution thereof (excluding Overseas Distribution Business) being carried on by SML and its subsidiaries “Emerald Assets Advisors” Emerald Assets Advisors LLC, a limited liability company incorporated in the United States, which as at the date of this announcement is beneficially owned by Mr. Xirinachs as to 46.40% and other persons who are not connected persons (as defined in the GEM Listing Rules) to the Company as to the remaining 53.60%

“Exchange Shares” 208,594,590 BankEngine’s Shares to be issued by BankEngine pursuant to the Share Exchange Agreement “GEM” The Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” The Rules Governing the Listing of Securities on the GEM “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” The Hong Kong Special Administrative Region of the PRC “Independent Board the independent board committee of the Company comprising Mr. Lo Committee” Wai Ming and Mr. Fong Chi Wah, which has been established to advise the Shareholders in relation to the Proposed Spin-off and the waiver of the assured entitlements requirement

“IFA” independent financial advisor to be appointed to advise the Independent Board Committee and the Shareholders in relation to the Proposed Spin-off and the waiver of the assured entitlements requirement

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“Long Stop Date”

30 June 2004

“Mr. Xirinachs”

Mr. Michael Xirinachs, the principal shareholder of BankEngine, who is not a connected person (as defined in the GEM Listing Rules) to the Company and whom as at the date of the Share Exchange Agreement is legally and beneficially interested in 11,380,760 BankEngine’s Shares, representing approximately 50.56% of the issued share capital of BankEngine

“NASDAQ” the National Association of Securities Dealers Automated Quotation of the United States

“Option” the option to be granted by SIL to BankEngine, pursuant to which BankEngine has the right to acquire from SIL the entire issued capital of SML at a consideration of not less than US$16 million during a period of 2 years commencing from the Completion Date

“Overseas Distribution the business of distribution of cathode ray tube and liquid crystal Business” display monitors and optical image capturing devices and related components in the United States and Europe being carried on by SYSCAN Inc. and its subsidiaries

“PRC” The People’s Republic of China

“Proposed Spin-off” the proposed spin-off of SML and SYSCAN Inc. by the Company on NASDAQ as a result of the Share Exchange Agreement and the Transactions

“Reverse Split” the share consolidation to be carried out by BankEngine prior to the Completion, pursuant to which every 10 BankEngine’s Shares will be consolidated into 1 share of US$0.01 each in the share capital of BankEngine

“RMB” Renminbi, the lawful currency of the PRC “Sale Shares” the entire issued share capital of SYSCAN Inc.

“Share Exchange” the exchange of shares between BankEngine and SIL contemplated under the Share Exchange Agreement, namely, (i) SIL transferring the Sale Shares to BankEngine; and (ii) BankEngine allotting and issuing the Exchange Shares to SIL “Share Exchange Agreement” the share exchange agreement entered into between SIL, BankEngine, Mr. Xirinachs and SYSCAN Inc. in relation to the Share Exchange “Scanner Business” the business of manufacturing of optical image capturing devices and related components and distribution thereof (excluding Overseas Distribution Business) being carried on by SHL and its subsidiaries

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“SGM” the special general meeting of the Company to be convened for the purpose of approving, inter alia, the Proposed Spin-off and the request for a waiver of the assured entitlements requirement “Shareholder(s)” holder(s) of the Shares “Shares” shares of HK$0.01 each in the share capital of the Company “SHL” SYSCAN Holdings Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of the Company “SIL” SYSCAN Imaging Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of the Company “SML” SYSCAN Manufacturing Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of SIL “Stock Exchange” The Stock Exchange of Hong Kong Limited “SYSCAN Inc.” SYSCAN Inc., a corporation incorporated under the laws of the state of California of the United States and a wholly-owned subsidiary of SIL “Transactions” the transactions contemplated under the Share Exchange Agreement “US$” United States dollars, the lawful currency of the United States

Note: Unless otherwise stated, certain amounts denominated in US$ in this announcement have been converted, for the purpose of illustration only, into HK$ using an exchange rate of US$1.00 = HK$7.8 or vice versa. Such conversion shall not be construed as a representation that amounts in US$ were or may have been converted into HK$ using such exchange rate or any other rate or vice versa.

By Order of the Board of SYSCAN Technology Holdings Limited Cheung Wai Chairman

Hong Kong, 12 May 2004

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This announcement, for which the directors of SYSCAN Technology Holdings Limited 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 purposes of giving information with regard to SYSCAN Technology Holdings Limited. 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 “Latest Company Announcements” page of the GEM website for at least 7 days from the date of its posting and on the Company’s website at www.syscaninc.com.

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AI assistant

Youzan Technology Limited Capital/Financing Update 2004

51261_rns_2004-05-13_65611548-a390-4cd9-b1a1-dec867615273.pdf

SYSCAN Technology Holdings Limited 矽感科技控股有限公司[*]

(Stock Code: 8083)

DISCLOSEABLE TRANSACTION – SHARE EXCHANGE AGREEMENT

The Share Exchange Agreement

Consideration

Conditions precedent to the obligations of BankEngine

Conditions precedent to the obligations of SYSCAN Inc.

Reasons for entering into the Share Exchange Agreement

Information of the Company

Background Information of BankEngine

General Information

Definitions:

“associate(s)”

“BankEngine”

“BankEngine’s Options”

“BankEngine’s Shares”

“Business Day(s)”

“Mr. Xirinachs”

AI assistant

Youzan Technology Limited — Capital/Financing Update 2004

51261_rns_2004-05-13_65611548-a390-4cd9-b1a1-dec867615273.pdf

SYSCAN Technology Holdings Limited 矽感科技控股有限公司[*]

(Stock Code: 8083)

DISCLOSEABLE TRANSACTION – SHARE EXCHANGE AGREEMENT

The Share Exchange Agreement

Consideration

Conditions precedent to the obligations of BankEngine

Conditions precedent to the obligations of SYSCAN Inc.

Reasons for entering into the Share Exchange Agreement

Information of the Company

Background Information of BankEngine

General Information

Definitions:

“associate(s)”

“BankEngine”

“BankEngine’s Options”

“BankEngine’s Shares”

“Business Day(s)”

“Mr. Xirinachs”

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Youzan Technology Limited Capital/Financing Update 2004