09:02     KANHAN TECH<08175> - Quarterly Results Announcement (2)             

                                                                              
    2. BASIS OF PREPARATION                                                   
                                                                              
    The accounting policies adopted in preparing the unaudited                
    consolidated results are consistent with those followed in the            
    annual financial statements for the year ended 31st December,             
    2004. The unaudited consolidated results have been prepared               
    under the historical cost convention and in accordance with               
    accounting standards issued by the Hong Kong Institute of                 
    Certified Public Accountants ("HKICPA"), accounting principles            
    generally accepted in Hong Kong and the disclosure requirements           
    of Hong Kong Companies Ordinance and the GEM Listing Rules.               
                                                                              
    In 2004, the HKICPA issued a number of new and revised Hong               
    Kong Accounting Standards and Hong Kong Financial Reporting               
    Standards ("HKFRS") which are effective for accounting                    
    periods beginning or after 1st January, 2005. The adoption                
    of these HKFRS has no material impact on the Group's results              
    of operations and financial position.                                     
                                                                              
    3. TAXATION                                                               
                                                                              
    No provision for taxation has been made in the account as                 
    the Group had no assessable profits for the three months                  
    ended 31st March, 2005 (2004: Nil).                                       
                                                                              
    4. DIVIDEND                                                               
                                                                              
    No dividend has been paid or declared by the Company                      
    or any of its subsidiaries for the three months ended                     
    31st March, 2005 and 2004.                                                
                                                                              
                                                                              
    5. (LOSS)EARNINGS PER SHARE                                               
                                                                              
    The computation of the basic loss per share for the three                 
    months ended 31st March, 2005 is based on the Group's loss                
    attributable to shareholders of approximately HK$750,000                  
    (2004: a profit of HK$10,000) and on the weighted average                 
    number of shares issued during the quarter of 583,718,400                 
    (2004: 486,432,000).                                                      
                                                                              
    No diluted(loss)earnings per share for both periods were                  
    presented as there were no dilutive potential ordinary shares             
    outstanding.