09:40 VISION TECH<00922> - Announcement (2) to the Stock Exchange. A viable resumption proposal should be submitted at least 10 business days before the expiry of the six-month period. The Stock Exchange has stated that a viable resumption proposal of the Company includes, among others, that the Company has a sufficient level of operations or has tangible assets of sufficient value to warrant continued listing on the Stock Exchange. The Company should also have in place adequate financial reporting and compliance system and procedures to enable the Company to meet its obligations under the Listing Rules. Furthermore, the concerns raised by the Company's auditors through the qualification of their reports on the Company's accounts for the years ended 31st March, 2002, 2003 and 2004 will be required to be investigated and addressed to the Stock Exchange's satisfaction in the resumption proposal. Where all of these conditions are not satisfactorily met, the Company will not be deemed to have a viable resumption proposal. If the Company does not submit a valid resumption proposal as required, the Stock Exchange intends to cancel the listing of the Company on the expiry of the six-month period, being 16th March, 2005. Given the circumstance of the Company, the Stock Exchange has indicated that the Stock Exchange would not grant an approval for the listing of the Conversion Shares and Reduced Shares under the proposed issue of the Note, or any new Shares to be issued by the Company by any other means until the Company can demonstrate to the satisfaction of the Stock Exchange that it can comply with the requirement of Rule 13.24 of the Listing Rules and, where applicable, other relevant requirements of the Listing Rules. The Subscriber has confirmed that it is fully aware of the Stock Exchange's position as detailed above. The Loan Agreement Kingston, a wholly-owned subsidiary of the Company, and the Subscriber, among others, entered into the Loan Agreement relating to a term loan facility of HK$3 million on 30th December, 2004. As far as the Board is aware, the Subscriber, Mr. Lau and Mr. Choi are independent of, not connected with, and not acting in concert with the Company, the directors, substantial shareholders and chief executives of the Company, its subsidiaries and their respective concert parties and associates (as defined in the Listing Rules). The Subscription Agreements and the Loan Agreement are not inter-conditional. Increase in Authorised Capital The authorised share capital of the Company consists of 600,000,000 Shares, of which 364,600,000 Shares are in issue as at the date of this announcement. In order to facilitate the issue of the Conversion Shares, the Directors propose to increase the authorised share capital of the Company from HK$60 million to HK$360 million by the creation of an additional 3,000,000,000 Shares. Capital Reorganisation The Directors propose to put forward the following to the Shareholders: (a) the reduction of the nominal value of each Reduced Share in issue from HK$0.1 to HK$0.01 by way of cancellation of HK$0.09 from the paid-up capital on each Reduced Share; and (b) the application of the total credit arising from the Capital Reduction to set off part of the accumulated losses of the Company as at 31st March, 2004 as shown in the audited accounts of the Company for the year ended 31st March, 2004; and (c) the reduction of the Share Premium Account by HK$42,823,000 and the application of the credit arising therefrom to eliminate the part of the accumulated losses of the Company as at 31st March, 2004 as shown in the audited accounts of the Company for the year ended 31st March, 2004. The issue of the Note, the Conversion Shares, the Whitewash Waiver, the increase in the authorised share capital and the Capital Reogranisation Proposal are subject to, among other things, the approval of the Independent Shareholders at the SGM. The Company will send a notice of the SGM together with an explanation circular to all Shareholders as soon as possible. General Shareholders and investors should note that completion of the Subscription Agreements is subject to a number of conditions and the release of this announcement does not in any way imply that the Subscription Agreements will be completed and conditions to resumption of trading of the Shares will be met. Shareholders and investors should exercise caution in dealing in the Shares.