09:41 VISION TECH<00922> - Announcement (5) such other date as the Company and the Subscriber may agree in writing. 5. Listing of the Conversion Shares The Company does not currently intend to make any application for listing of, or permission to deal in, the Note on the Stock Exchange or any other stock exchange. The Company will make an application to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares. 6. Use of proceeds The consideration for the issue of the Note will be settled at completion by the Subscriber as to HK$3,000,000 to be satisfied by effecting an assignment of debt in respect the indebtedness under the Loan Agreement from the Subscriber to the Company and as to HK$27,000,000 to be satisfied by payment by cash. It is intended that the net proceeds will be used principally as additional working capital and to finance the Group's expansion of its existing distribution business into production and trading of home appliance, electronic components for home appliance and electronics products, etc., as well as for future investment opportunities. However, the Directors currently do not identify any specific investment opportunities. REASONS FOR THE ISSUE OF THE NOTE The purpose of the proposed issue of the Note is to provide new funding for working capital and business expansion of the Group in future. The Directors believe that the terms of the Subscription Agreements are fair and reasonable and in the interests of the Shareholder as a whole. Assuming that the Capital Reorganisation having become effective and the Note are fully converted at the initial conversion price, a total of 3,000,000,000 Conversion Shares will be issued representing approximately 822.8% of the existing issued share capital of the Company and approximately 89.2% of the issued share capital of the Company as enlarged by the Shares to be issued upon the full conversion of the Note. The Company is currently in the third stage of the delisting procedures under Practice Note 17 to the Listing Rules, and it currently does not have a sufficient level of operations or have tangible assets of sufficient value that can be demonstrated to the Stock Exchange to warrant continued listing of the Shares as required under Rule 13.24 of the Listing Rules. The Company has a final six months commencing from 17th September, 2004 for the submission of a valid resumption proposal 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 have 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 Directors are of the opinion that, taking into account the new funding obtained from the proposed issue of the Note, the Group will have sufficient working capital for expanding its existing business. The Subscriber has confirmed that it is fully aware of the Stock Exchange's position as detailed above. CHANGE IN THE COMPANY'S SHAREHOLDING STRUCTURE The following table sets out the existing shareholding structure of the Company and the changes thereto as a result of the full conversion of the Note at the initial conversion price: Immediately before the Immediately after the Capital