<PAGE>   1


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 20-F

[ ]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended March 31, 2001.

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from                    to
                                        ------------------    ----------------

                        Commission file number: 0-30830

                              QUINTALINUX LIMITED
             (Exact name of Registrant as specified in its charter)


              ---------------------------------------------------
                (Translation of Registrant's name into English)

                             BRITISH VIRGIN ISLANDS
                (Jurisdiction of incorporation or organization)

                          Suites 1404-06, Devon House
             979 King's Road, Taikoo Place, Island East, Hong Kong
             -----------------------------------------------------
                    (Address of principal executive offices)

             Securities registered or to be registered pursuant to
                        Section 12(b) of the Act: None

                         Securities registered or to be
               registered pursuant to Section 12(g) of the Act:
                  $.01 Par Value Common Stock ("Common Stock")
                  --------------------------------------------
                                (Title of Class)

                 Warrants to Purchase Common Stock ("Warrants")
                 ----------------------------------------------
                                (Title of Class)


       Securities for which there is a reporting obligation pursuant to
                        Section 15(d) of the Act: None

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report (as of September 15, 2001):

                            10,200,000 Common Stock

                               1,500,000 Warrants

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                         [X] Yes         [ ] No

         Indicate by check mark which financial statement item the registrant
has elected to follow.

                      [ ] Item 17       [X] Item 18

         (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PAST FIVE YEARS)

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections, 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.


         NOT APPLICABLE


<PAGE>   2


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>


                                                                                                            PAGE NO.
                                                                                                            --------
                                              PART I

<S>      <C>                                                                                                <C>
Item 1.  Identity of Directors, Senior Management and Advisers ....................Not Applicable               1

Item 2.  Offer Statistics and Expected Timetable ..................................Not Applicable               1

Item 3.  Key Information.........................................................................               1

         A.       Selected Financial Data........................................................               1

         B.       Capitalization and Indebtedness..................................Not Applicable               4

         C.       Reasons for the Offer and Use of Proceeds........................Not Applicable               4

         D.       Risk Factors...................................................................               4

Item 4.  Information on the Company..............................................................              10

         A.       History and Development of the Company.........................................              10

         B.       Business Overview..............................................................              12

         C.       Organizational Structure.......................................................              24

         D.       Property, Plants and Equipment.................................................              24

Item 5.  Operating and Financial Review and Prospects............................................              25

         A.       Operating Results..............................................................              25

         B.       Liquidity and Capital Resources................................................              28

         C.       Research and Development, Patents and Licenses etc.............................              31

         D.       Trend Information..............................................................              31

Item 6.  Directors, Senior Management and Employees..............................................              32

         A.       Directors and Senior Management and Employees..................................              32

         B.       Compensation...................................................................              34

         C.       Board Practices................................................................              36

         D.       Employees......................................................................              36

         E.       Share ownership................................................................              37

Item 7.  Major Shareholders and Related Party Transactions.......................................              38

         A.       Major Shareholders.............................................................              38

         B.       Related Party Transactions.....................................................              38

         C.       Interests of Experts and Counsel.................................Not Applicable              40
</TABLE>
<PAGE>   3


<TABLE>
<S>      <C>                                                                                             <C>
Item 8.  Financial Information...................................................................        40

         A.       Consolidated Statements and Other Financial Information........................        40

         B.       Export Sales...................................................................        40

         C.       Legal Proceedings..............................................................        40

         D.       Policy on Dividend Distributions...............................................        43

         E.       Significant Changes............................................................        43

Item 9.  The Offer and Listing...................................................................        43

         A.       Offer and Listing Details......................................................        43

         B.       Plan of Distribution.............................................Not Applicable        45

         C.       Markets........................................................................        45

         D.       Selling Shareholders.............................................Not Applicable        45

         E.       Dilution.........................................................Not Applicable        45

         F.       Expenses of the Issue............................................Not Applicable        46

Item 10. Additional Information..................................................................        46

         A.       Share Capital....................................................Not Applicable        46

         B.       Memorandum and Articles of Association.........................................        46

         C.       Material Contracts.............................................................        47

         D.       Exchange Controls..............................................................        48

         E.       Taxation.......................................................................        48

         F.       Dividends and Paying Agents......................................Not Applicable        49

         G.       Statements by Experts............................................Not Applicable        49

         H.       Documents on Display...........................................................        49

         I.       Subsidiary Information...........................................Not Applicable        49

Item 11. Quantitative and Qualitative Disclosures About Market Risk..............................        49

Item 12. Description of Securities Other than Equity Securities....................Not Applicable        49



                                              PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.........................................        50

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds............        50

Item 15. ................................................................................Reserved        51

Item 16. ................................................................................Reserved        51
</TABLE>


                                      ii
<PAGE>   4


<TABLE>
<CAPTION>
                                    PART III

<S>      <C>                                                                                             <C>
Item 17. Financial Statements....................................................................        52

Item 18. Financial Statements....................................................................        52

Item 19. Exhibits................................................................................        52


SIGNATURES
</TABLE>


                                      iii
<PAGE>   5


                                     PART I

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

         Not Applicable.

ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

         Not Applicable.

ITEM 3 - KEY INFORMATION

         A.       SELECTED FINANCIAL DATA

         The following selected consolidated financial data for Quintalinux
Limited, a British Virgin Islands corporation (the "Company") with respect to
each of the years in periods ended March 31, 1997, 1998, 1999, 2000 and 2001
have been derived from our audited financial statements. The following selected
consolidated financial data should be read in conjunction with "Operating and
Financial Review and Prospects" and the Consolidated/Combined Financial
Statements and Notes included in Item 18 of this Annual Report.

         We have prepared our financial statements in accordance with U.S.
generally accepted accounting principles ("US GAAP") consistently applied and
publish such statements in Hong Kong dollars, which is the functional currency
of our subsidiaries and the legal tender currency of Hong Kong. All references
to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars. All references to
"U.S. Dollars," "Dollars" or "$" are to United States dollars. Conversion of
amounts from Hong Kong dollars into United States dollars for the convenience of
the reader has been made at the exchange rate of US$1.00 = HK$7.75.


                                       1


<PAGE>   6

                      SELECTED CONSOLIDATED FINANCIAL DATA
               (in thousands of dollars, except per share amounts)


QUINTALINUX LIMITED


<TABLE>
<CAPTION>
                                                                                   YEARS ENDED MARCH 31,
                                                                                   ---------------------
                                                          1997            1998            1999             2000             2001
                                                      ----------      ----------       ----------       ----------       ----------
                                                          HK$             HK$             HK$              HK$               HK$
CONSOLIDATED STATEMENTS OF
  OPERATIONS DATA:
<S>                                                   <C>             <C>              <C>              <C>              <C>
Operating revenues ..............................             --         208,679          171,495          188,103          138,071
                                                      ----------      ----------       ----------       ----------       ----------
Operating income/(loss) before
  interest and income taxes ....................              --          13,979           19,025           24,321          (43,143)
                                                      ----------      ----------       ----------       ----------       ----------
Net interest expense ...........................              --          (1,185)            (798)          (1,388)          (2,418)
                                                      ----------      ----------       ----------       ----------       ----------
Income/(loss) before income taxes ..............              --          12,794           18,227           22,933          (45,561)
                                                      ----------      ----------       ----------       ----------       ----------
Income taxes ...................................              --              --           (1,200)            (893)              --
                                                      ----------      ----------       ----------       ----------       ----------
Net income/(loss) ..............................              --          12,794           17,027           22,040          (45,561)
                                                      ----------      ----------       ----------       ----------       ----------
Dividends per share ............................              --              --               --               --               --
                                                      ----------      ----------       ----------       ----------       ----------
Net income/(loss) per share ....................              --            2.65             3.52             3.68            (5.32)
                                                      ----------      ----------       ----------       ----------       ----------
Weighted average number of
  Shares outstanding ...........................          10,000       4,825,000        4,831,932        5,985,808        8,562,950
</TABLE>

<TABLE>
<CAPTION>
                                                                        AS OF MARCH 31,
                                                                        ---------------
                                               1997    1998            1999           2000            2001
                                               ----    ----            ----           ----            ----
                                                HK$     HK$             HK$            HK$             HK$

<S>                                            <C>    <C>             <C>            <C>              <C>
CONSOLIDATED BALANCE SHEET DATA:

Working capital ...............                 1      6,367          20,248           9,625            6,757

Total assets ..................                 1     77,368          78,362         188,123          226,225

Long-term obligations .........                --         21              38           6,084            1,284

Total stockholders' equity ....                 1      7,206          24,234          63,185           77,102
</TABLE>


---------------


         UNITED STATES DOLLARS/HONG KONG DOLLARS

         As of August 15, 2001, the rate of exchange for the Hong Kong Dollar
was HK$7.997 per one United States Dollar. As used here, the rate of exchange
means the noon buying rate in


                                       2
<PAGE>   7

New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York. The exchange rate is therefore
the number of Hong Kong Dollars required under that formula to buy one United
States Dollar.

         The following table sets forth high and low rates of exchange for the
Hong Kong Dollar for each month during the previous six months:

<TABLE>
<CAPTION>
          ======================================================================
                             MONTH                          HIGH          LOW
          <S>                                              <C>          <C>
          July 2001                                        7.8003       7.7996
          June 2001                                        7.8000       7.7990
          May 2001                                         7.8003       7.7991
          April 2001                                       7.8000       7.7983
          March 2001                                       7.8003       7.7994
          February 2001                                    7.8000       7.7990
          =====================================================================
</TABLE>

         The average rate of exchange for the Hong Kong Dollar for each of the
years ended March 31, 1997, 1998, 1999, 2000 and 2001, as calculated using the
average of the exchange rates on the last day of each month during the period,
is as follows:

<TABLE>
<CAPTION>
          =========================================================
                              YEAR                        AVERAGE
          <S>                                             <C>
          Fiscal Year ended March 31, 2001                 7.7977
          Fiscal Year ended March 31, 2000                 7.7686
          Fiscal Year ended March 31, 1999                 7.7479
          Fiscal Year ended March 31, 1998                 7.7431
          Fiscal Year ended March 31, 1997                 7.7379
          =========================================================
</TABLE>

         The Hong Kong Dollar is freely convertible into other currencies
(including the United States Dollar). Since October 17, 1983, the Hong Kong
Dollar has been linked to the United States Dollar at the official rate of
HK$7.80 to US$1.00. The central element in the arrangements which gives effect
to the link is that, by agreement between the Hong Kong Government and the three
Hong Kong banknote issuing banks, The Hong Kong and Shanghai Banking Corporation
Limited, Bank of China and Standard Chartered Bank, certificates of
indebtedness, which are issued by the Hong Kong Government Exchange Fund to the
banknote issuing banks to be held as cover for their banknote issues, are issued
and redeemed only against payment in United States Dollars, at the fixed
exchange rate of US$1.00 = HK$7.80. When the banknotes are withdrawn from
circulation, the banknote issuing banks surrender the certificates of
indebtedness to the Hong Kong Government Exchange Fund and are paid the
equivalent United States Dollars at the fixed rate.

         The market exchange rate of the Hong Kong Dollar against the United
States Dollar continues to be determined by the forces of supply and demand in
the foreign exchange market. However, as a result of the mechanism for linking
the exchange rate described above, the market exchange rate has not deviated
significantly from the level of HK$7.80 to US$1.00, even though the link came
under speculative attack in 1998. The Hong Kong Government has stated its
intention to maintain the link at that rate. The Hong Kong Government has stated
that it has no


                                       3
<PAGE>   8

intention of imposing exchange controls in Hong Kong and the Hong Kong Dollar
will remain freely convertible into other currencies, including the United
States Dollar. Exchange rates between the Hong Kong Dollar and other currencies
are influenced by the linked rate between the United States Dollar and the Hong
Kong Dollar.

         Effective July 1, 1997, Hong Kong became a Special Administrative
Region ("SAR") of the People's Republic of China (the "PRC"). The Basic Law of
the Hong Kong SAR (the "Basic Law"), enacted on April 4, 1990 by the National
People's Congress of the PRC as the basic law to govern the Hong Kong SAR
commencing July 1, 1997, provides that the Hong Kong Dollar will remain the
legal tender in the Hong Kong SAR after July 1, 1997. The Basic Law also
provides that no exchange control policies shall be applied in the Hong Kong SAR
and that the Hong Kong Dollar shall be freely convertible.

         B.       CAPITALIZATION AND INDEBTEDNESS

         Not applicable.

         C.       REASONS FOR THE OFFER AND USE OF PROCEEDS

         Not applicable.

         D.       RISK FACTORS

         RISKS RELATED TO OUR HIGH-TECHNOLOGY PRODUCTS AND CONSTRUCTION RELATED
         BUSINESS

         Competition from numerous competitors may limit our ability to generate
revenue or income. The high-technology construction-related services industry in
Hong Kong is highly competitive and served by numerous small, owner-operated
private companies and several public companies. In addition, there are
relatively few, if any, barriers to entry into the markets in which we operate
and, as a result, any organization that has adequate financial resources and
access to technical expertise may become a competitor to us. Competition in the
industry depends on a number of factors, including price. Some of our
competitors may have lower overhead cost structures and may, therefore, be able
to provide their services and products at lower prices than us. Furthermore,
some of our competitors are larger and have greater resources than us. There can
be no assurance that our competitors do not currently possess or will not
develop the expertise, experience, and resources to provide the products and
services that are equal or superior in both price and quality to our products
and services, or that we will be able to maintain or enhance our competitive
position.

         Fixed price contracts may result in reduced profitability on projects.
We currently generate, and expect to continue to generate, a significant portion
of our revenues under fixed price contracts. We must estimate the costs of
completing a particular project to bid for such fixed price contracts. The cost
of labor and materials, however, may vary from the costs we originally
estimated. These variations, along with other risks inherent in performing fixed
price contracts, may result in actual revenue and gross profits for a project
differing from those we originally estimated and could result in reduced
profitability and losses on projects. Depending


                                       4
<PAGE>   9

upon the size of a particular project, variations from estimated contract costs
can have a significant negative impact on our operating results for any fiscal
quarter or year.

         We could be held responsible for the inability of our sub-contractors
to perform properly. In relation to total project costs, we sub-contract a
substantial portion of work to third-party sub-contractors. Our use of
sub-contractors exposes us to certain risks associated with non-performance, not
completing a project according to budget and additional costs that our
sub-contractors might bear.

         If we commence variation orders before agreeing to fees, we may have
disagreements with clients and may not be able to collect these fees. Similar to
other specialist construction contractors in the industry, we have experienced
variation orders from time to time, both in terms of quantities and design
specifications. Construction work relating to a variation order may commence
before the price is fully agreed to by a client. These variation orders may
result in disagreements with clients in the final accounts, which could have an
adverse effect on our finances.

         Revisions to environmental regulations could result in additional
expenditures for our fit-outs and renovations business. The fit-outs and
renovation business in Hong Kong are subject to the relevant laws, regulations
and guidelines which apply to the operation of all construction projects in Hong
Kong. In China, it is subject to both Chinese national and local environmental
protection regulations. These laws, regulations and guidelines may be revised
from time to time to reflect the latest environmental needs. Revisions may
result in additional expenditure by our subsidiary in order to comply with any
revised requirements.

         RISK FACTORS RELATED TO OUR INFORMATION TECHNOLOGY BUSINESS

         Our limited operating history in the new and developing market for
software products makes it difficult to evaluate our business. One of our
operating subsidiaries, Linux System Solution Limited, commenced business in
April 1999. Accordingly, we have a limited operating history, and we face all of
the risks and uncertainties encountered by early-stage companies. Our limited
operating history makes it difficult to forecast our future operating results.

         Our business will be affected if Linux products are not accepted by the
market. Although we plan to expand our business in other software applications,
we currently focus on the sale of Linux software and the provision of Linux
related services and support. The Linux operating system has only recently
gained market acceptance. Even if Linux is widely accepted, the Linux operating
system is an open source software product, which users are licensed to freely
copy, use, modify and distribute. Accordingly, anyone may download the Linux
operating system and numerous related software applications from the Internet,
or otherwise copy it, without cost, and run it on an existing Linux compatible
product. Our success depends on customers purchasing new systems which integrate
and are optimized to run the Linux operating system.

         Changes in technology may adversely affect our financial results. The
markets for our products change rapidly because of technological innovation,
changes in customer requirements, declining prices, and evolving industry
standards, among other factors. As a result, our success


                                       5
<PAGE>   10

depends on our ability to timely innovate and integrate new technologies into
our current products and service offerings. We cannot guarantee that we will
successfully integrate new technologies into our services or develop new
services in a timely manner.

         Advances in technology also require us to commit substantial resources
to acquiring and applying new technologies for use in our operations. We have to
continually commit resources to train our personnel to use these new
technologies and maintain the compatibility of existing software systems with
these new technologies. We cannot be sure that we will be able to continue to
commit the resources necessary to refresh our technology infrastructure at the
rate demanded by our markets.

         RISKS RELATED TO OVERALL OPERATIONS

         If qualified employees are not available to us, our operations and
growth strategy will be adversely affected. Our ability to provide high-quality
services on a timely basis requires that we employ an adequate number of skilled
engineers, scientists, design and technology professionals and project managers.
Accordingly, our ability to increase our operating efficiency and profitability
will be limited by our ability to employ, train and retain skilled personnel
necessary to meet our requirements. We, like many of our competitors, may
experience shortages of qualified personnel. We may not be able to maintain an
adequate level of skilled labor necessary to operate efficiently and to support
our growth strategy and our labor expenses may increase as a result of a
shortage in the supply of skilled personnel.

         We depend upon certain key personnel to manage our company. Our ability
to successfully carry out our business plans continues to be largely dependent
upon the efforts of our senior management and executive officers, particularly
our Chairman, Chu Tat ("Mr. Chu"), and our Vice Chairman, Perick Li ("Mr. Li").
Although we have entered into employment agreements with Messrs. Chu and Li, the
loss of their services would have a material adverse effect on our ability to
achieve our business objectives. We have obtained key-person life insurance in
the total amount of US$2,000,000 on their lives, with the proceeds payable to
us.

         We are controlled by two of our existing shareholders, whose interests
may differ from other shareholders. Our two largest shareholders, Mr. Chu and
Mr. Li, currently beneficially own approximately 53.03% of our outstanding
shares (as calculated on a fully-diluted basis). Accordingly, they have
controlling influence in determining the outcome of any corporate transaction or
other matter submitted to the shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, election
of directors and other significant corporate actions. They also have the power
to prevent or cause a change in control. In addition, without the consent of
these shareholders, we could be prevented from entering into transactions that
could be beneficial to us. The interests of these shareholders may differ from
the interests of the other shareholders.

         Related party transactions may conflict with the interests of our
minority shareholders. In November 1999, the Company entered into share exchange
agreements with the stockholders of the "Tat Group," defined in "Item 4A-History
and Development of the Company," below, which is controlled by Mr. Chu, one of
our directors and the "Li Group," defined in "Item 4A -


                                       6
<PAGE>   11

History and Development of the Company," below, which is controlled by Mr. Li,
one of our directors. In fiscal 2000, we entered into certain related party
transactions with the Tat Group and the Li Group, including the satisfaction of
debt owed by the Company to the Tat Group and of debt owed by the Li Group to
the Company as set forth in "Item 4A - History and Development of the Company"
and again in Item "7B - Related Party Transactions." In addition, the Company
currently has engaged in several related party transactions with Mr. Chu and Li,
including a currently outstanding debt of HK$14,718,000 (US$1,899,000) owed to
Mr. Chu as of March 31, 2001. As Mr. Chu and Mr. Li together own a majority of
the Company, potential conflicts of interest may arise in relation to the
interests of our minority shareholders. These potential conflicts will usually
be resolved in the exercise of our independent directors as is consistent with
their fiduciary duty.

         Our holding company structure creates restrictions on the payment of
dividends. We have no direct business operations, other than ownership of our
subsidiaries. While we have no current intention of paying dividends, should we
decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiaries and other holdings and
investments. In addition, our operating subsidiaries, from time to time, may be
subject to restrictions on their ability to make distributions to us, including
as a result of restrictive covenants in loan agreements, restrictions on the
conversion of local currency into U.S. Dollars or other hard currency and other
regulatory restrictions. If future dividends are paid in Hong Kong Dollars,
fluctuations in the exchange rate for the conversion of Hong Kong Dollars into
U.S. Dollars may adversely affect the amount received by U.S. shareholders upon
conversion of the dividend payment into U.S. Dollars.

         It may be difficult to serve us with legal process or enforce judgments
against us or our management. We are a British Virgin Islands holding company,
and all or a substantial portion of our assets are located in Hong Kong. In
addition, all of our directors and officers are non-residents of the United
States, and all or a substantial portion of the assets of such non-residents are
located outside the United States. As a result, it may not be possible to effect
service of process within the United States upon such persons. Moreover, there
is doubt as to whether the courts of the British Virgin Islands or Hong Kong
would enforce:

         -        judgments of United States courts against us, our directors or
                  our officers based on the civil liability provisions of the
                  securities laws of the United States or any state; or
         -        in original actions brought in the British Virgin Islands or
                  Hong Kong, liabilities against us or non-residents based upon
                  the securities laws of the United States or any state.

         Non-registration of the Warrants and the underlying Common Stock in
certain jurisdictions may make them worthless. The Warrants are not exercisable
unless, at the time of the exercise, we have a current prospectus covering the
shares of Common Stock issuable upon exercise of the Warrants, and such shares
are registered, qualified or deemed to be exempt under the securities laws of
the states of residence of the exercising holders of the Warrants. As of the
date of this annual report, Management of the Company believed that it was not
prudent to maintain an effective registration statement given current market
conditions. Should Management of the Company ultimately decide against
maintaining a current registration


                                       7
<PAGE>   12

statement because the costs render it uneconomical, or because the value of the
shares of Common Stock underlying the Warrants is less than the exercise price,
or any number of other reasons, the warrant holders will be unable to exercise
the Warrants and the Warrants may become valueless.

         Although the Warrants have not been knowingly sold to purchasers in
jurisdictions in which the securities are not registered or otherwise qualified
for sale, purchasers may buy Warrants in the after-market or may move to
jurisdictions in which the shares underlying the Warrants are not registered or
qualified during the period that the Warrants are exercisable. In such event, we
would be unable to issue shares of Common Stock to those persons desiring to
exercise their Warrants, whether in response to a redemption notice or
otherwise, unless and until the shares could be qualified for sale in the
jurisdictions in which such purchasers reside, or exemptions exist in such
jurisdictions from such qualification. Warrant holders would have no choice but
to attempt to sell the Warrants or allow them to expire unexercised.

         Some information about us may be unavailable due to exemptions under
the Exchange Act for a foreign private issuer. We are a foreign private issuer
within the meaning of the rules under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). As such, we are exempt from certain provisions
applicable to United States public companies, including:

         -        the rules under the Exchange Act requiring the filing with the
                  Securities and Exchange Commission of quarterly reports on
                  Form 10-Q or current reports on Form 8-K;
         -        the sections of the Exchange Act regulating the solicitation
                  of proxies, consents or authorizations in respect of a
                  security registered under the Exchange Act; and
         -        the sections of the Exchange Act requiring insiders to file
                  public reports of their stock ownership and trading activities
                  and establishing insider liability for profits realized from
                  any "short-swing" trading transaction.

Because of these exemptions, investors are not provided the same information
generally available to investors in public companies organized in the United
States.

         RISKS RELATED TO HONG KONG AND CHINA

         Any downturn in the construction industry in Hong Kong and China would
adversely affect our business. A large portion of our business involves interior
fitting-out works in newly constructed and renovated properties for commercial
and industrial customers. The level of fitting out services is affected by
fluctuations in the level of new construction of properties for commercial and
industrial customers. The extent to which we are able to maintain or increase
revenues from the fitting out services will depend on the level of new
construction projects in Hong Kong and China and the volume of projects
successfully tendered.

         Our sales and marketing operations are performed principally at our
executive offices which are located in Hong Kong. As a result, our results of
operations and financial condition may be influenced by the political situation
in Hong Kong and by the general state of the Hong Kong economy. On July 1, 1997,
sovereignty over Hong Kong was transferred from the United Kingdom to China, and
Hong Kong became a SAR. As provided in the Sino-British Joint


                                       8
<PAGE>   13

Declaration on the Question of Hong Kong, the "Joint Declaration," and the Basic
Law, the Hong Kong SAR is to have a high degree of autonomy except in foreign
and defense affairs. Under the Basic Law, the Hong Kong SAR is to have its own
legislature, legal and judicial system and full economic autonomy for 50 years.
Changes in the political and/or economic conditions due to the transfer of
sovereignty over Hong Kong may have an adverse impact on our financial and
operating environment.

         Many of our fitting out and installation projects have been located in
the PRC. Our results of operations and financial condition may therefore be
influenced by the economic, political, legal and social conditions in the PRC.
Since 1978, the PRC government has been reforming, and is expected to continue
to reform, its economic and political systems. Such reforms have resulted in
significant social progress. Other political, economic and social factors could
also lead to further readjustment of the reform measures. This refinement and
readjustment process may not have a positive effect on our operations in the
PRC. At times, we may be adversely affected by changes in policies of the PRC's
government such as changes in laws and regulations or their interpretation, the
introduction of additional measures to control inflation, changes in the rate or
method of taxation and imposition of additional restrictions on currency
conversion and remittances abroad.

         China's legal system has uncertainties that could harm our interests in
China. The legislative trend in China over the past decade has been to enhance
the protection afforded to foreign investment and allow for more active control
by foreign parties of foreign invested enterprises. There can be no assurance,
however, that legislation directed towards promoting foreign investment will
continue. More restrictive rules on foreign investment could adversely affect
our ability to transfer our interest in joint ventures in China or to repatriate
any profits.

         Enforcement of regulations in China may be inconsistent. Although the
Chinese government has introduced new laws and regulations to modernize its
securities and tax systems on January 1, 1994, China does not yet possess a
comprehensive body of business law. Under the Chinese legal system, as in civil
law jurisdictions, court decisions are based on statutory law. Prior court
decisions do not have binding precedential effect in the Chinese system, as they
do in common law systems. As a result, the enforcement, interpretation and
implementation of regulations may prove to be inconsistent and it may be
difficult to enforce contracts.

         We may experience lengthy delays in resolution of legal disputes. As
China has not developed a dispute resolution mechanism similar to the Western
court system, dispute resolution over Chinese projects and joint ventures can be
difficult and there is no assurance that any dispute involving our business in
China can be resolved expeditiously and satisfactorily.

         Fluctuations of currency exchange rates between the Hong Kong Dollar
and the Renminbi and between the Hong Kong Dollar and United States Dollar could
adversely affect our business. The Chinese government controls its foreign
currency reserves through restrictions on imports and conversion of Renminbi
into foreign currency. Although the Renminbi to United States Dollar exchange
rate has been stable since January 1, 1994 and the Chinese government has stated
its intention to maintain the stability of the value of Renminbi, there can be
no


                                       9
<PAGE>   14

assurance that exchange rates will remain stable. The Renminbi could devalue
against the United States Dollar or the Hong Kong Dollar. Exchange rate
fluctuations may adversely affect our revenue arising from contracts performed
in China and denominated in Renminbi and the value of our investment in joint
ventures in China.

         We are also subject to a variety of risks associated with changes among
the relative values of the United States Dollar and the Hong Kong Dollar. We do
not currently hedge our foreign exchange positions. Any material increase in the
value of the Hong Kong Dollar relative to the United States Dollar would
increase our expenses and therefore would have an adverse effect on our company.
Since 1983, the Hong Kong government has maintained a policy of linking the
United States Dollar and the Hong Kong Dollar at an exchange rate of
approximately HK$7.80 to $1.00. There can be no assurance that this link will be
continued, although we are not aware of any intention of the governments of Hong
Kong or China to abandon the link.

ITEM 4 - INFORMATION ON THE COMPANY

         A.       HISTORY AND DEVELOPMENT OF THE COMPANY.

         We were incorporated as an international business company under the
International Business Companies Act of the British Virgin Islands on January 8,
1997 as a limited liability company under the name Quinta Development Limited.
On February 3, 2000, pursuant to a resolution of our board of directors, we
changed our name to Quintalinux Limited. The name change was approved by the
Registrar of Companies of the British Virgin Islands on February 17, 2000.


         We maintain a registered office at the Offices of Ansbacher (BVI)
Limited, International Trust Building, Wickhams Cay I, Road Town, Tortola,
British Virgin Islands. Our principal executive offices are located at Suites
1404-06, Devon House 979 King's Road, Taikoo Place, Island East, Hong Kong, the
People's Republic of China.

         On July 3, 1998, we split our outstanding 100 shares of Common Stock on
a 100 for one basis and reduced the par value from US$1 to US$0.01. On July 22,
1998, we issued an additional 10,000 shares to our current shareholders at
US$0.01 per share in the same proportion as their existing shareholdings.

         On November 5, 1999, we entered into a share exchange agreement with
Mr. Chu, who was the sole shareholder of each of Interact Contracting Company
Limited, Interact (China) Design and Contracting Company Limited, and Uni-Zone
Holdings Limited (collectively, the "Tat Group"). On November 19, 1999, we
issued to Mr. Chu a total of 4,815,000 of our shares as follows: 1,991,000
shares to Asian Progress Holdings Limited and 2,824,000 shares to Muehl Products
& Service Asia Limited, in exchange for all of the outstanding common stock of
each of the companies comprising the Tat Group. Asian Progress Holdings Limited
is a limited liability company incorporated in the British Virgin Islands and is
wholly owned by Mr. Chu.

         On November 5, 1999, we entered into a share exchange agreement with
Mr. Li, who was the sole shareholder of each of (a) Pado (Holdings) Limited,
which owns all of the


                                       10
<PAGE>   15

outstanding shares of its two subsidiaries, Pado Contracting Company Limited and
Good Prominent Engineering Company Limited (b) Good Prominent Technology Company
Limited and (c) Good Prominent Trading Limited (collectively, the "Li Group").
On November 19, 1999, we issued to Mr. Li a total of 2,985,000 of our shares as
follows: 1,931,000 shares to Oceanic Land Holdings Limited and 1,054,000 shares
to Muehl Products & Service Asia Limited, in exchange for all of the outstanding
common stock of each of the companies comprising the Li Group. Oceanic Land
Holdings Limited is a limited liability company incorporated in the British
Virgin Islands and is wholly owned by Mr. Li. Muehl Products & Service Asia
Limited is a limited liability company incorporated in the British Virgin
Islands whose issued and outstanding shares are owned 73% by Mr. Chu and 27% by
Mr. Li.

         On November 11, 1999, we entered into share exchange agreements with
three of the shareholders of Linux System Solution Limited, which include two of
our directors, Mr. Li and Mr. Kin Chan. On November 24, 1999, we issued to each
of Mr. Chan, Oceanic Land Holdings Limited on behalf of Mr. Li, and Liu Chuk
Wang, Ray 60,000 shares of our Common Stock, totaling 180,000 shares, in
exchange for their combined 72.5% equity interest in Linux System Solution
Limited.

         On December 28, 1999, Mr. Li reduced the amount owing from him to the
Li Group by HK$11,625,000 (US$1,500,000) to HK$3,060,000 (US$395,000) by
transferring good title to us of 400,000 shares of Intermost Corporation (OTC
BB: IMOT) valued by an independent valuer at US$3.75 per share. In addition, on
January 26, 2000, one of Mr. Li's related companies repaid an aggregate of
HK$12,000,000 (US$1,549,000) to us as a settlement of debt owing to the Li
Group.

         On March 6, 2000, the amount owing to the Tat Group from Mr. Chu and
his related companies amounted to HK$25,487,000 (US$3,289,000) and was fully
repaid by transferring legal title of a Class A residential property and a
commercial property located in Hong Kong to the Tat Group. The parties agreed
that the fair market value of these properties at August 19, 1999 as valued by
an independent professional valuer was HK$27,000,000 (US$3,484,000) and being
used to record as the consideration for the transfer.

         On September 1, 2000, we entered into a conditional purchase agreement
with Mr. Shikiba, one of our directors and majority shareholder of Workplace
Company Limited ("Workplace"), whereby, in exchange for HK$5,000,000
(US$645,000), we will purchase a 30% equity interest in Workplace within
eighteen months from the date of the agreement; provided that if we do not
receive the 30% Workplace interest within the eighteen month period, the
purchase will not close and Mr. Shikiba will return the entire HK$5,000,000
consideration plus interest pursuant to the agreement.

         On October 2, 2000, we signed a memorandum of understanding regarding
the Company's acquisition of Uni-Zone Advanced Technology Company Limited
("UATC"). On March 27, 2001, we entered into a conditional purchase agreement
with Mr. Chu, one of our directors and majority shareholder of UATC, to acquire
approximately a 7.9% equity interest in UATC exchange for HK$25,000,000
(US$3,226,000). The aggregate value of UATC, as determined by an independent
valuation report, was determined to be approximately


                                       11
<PAGE>   16

HK$350,000,000. The HK$25,000,000 consideration given in exchange for the 7.9%
equity interest therefore represents a 10 percent discount from fair market
value.

         On June 12, 2001, we entered into a formal share exchange agreement
with three shareholders of Sonik Interior Contracting Company Limited ("Sonik"),
whereby we acquired 100% of the issued share capital of Sonik in exchange for
HK$6,000,000 (US$774,000).

         Other than that disclosed above, we currently have no principal capital
expenditures or divestitures currently in progress. We are not aware of any
public takeover offers by third parties in respect to our shares or shares
related to us during the last or current financial year.

         B.       BUSINESS OVERVIEW

         1.       OUR OPERATIONS AND PRINCIPAL ACTIVITIES

         We provide technological services designed to address broad
technological needs in Hong Kong and China. Currently, our focus is in four
principal businesses:

         -        Intelligent Building Solution Provider. We provide innovative,
                  high technology solutions for "intelligent buildings" by
                  integrating various building systems, which includes automated
                  control systems, fire system, safety, security and
                  energy/lighting management through the use of the
                  telecommunication infrastructure.

         -        Interior Fitting Out. We believe that we are one of the
                  leading construction and contracting service companies in Hong
                  Kong specialized in interior fitting out works and other
                  related contracting businesses, including (a) interior design,
                  (b) renovation and decoration, (c) electrical engineering, (d)
                  fire control systems, (e) carpentry; and (f) installation of
                  information and telecommunication network and structured
                  cabling for commercial and residential properties.

         -        Commercial Construction Products and Services. We offer a wide
                  variety of commercial construction products and services in
                  connection with electrical network, air-conditioning,
                  flooring, lighting and information display systems.

         -        Information Technology Services. We offer comprehensive
                  professional consulting and support services, systems
                  integration and application development for Linux operating
                  systems. We also provide groupware technology and solutions
                  for office and home users.

         (A)      INTELLIGENT BUILDING SOLUTIONS SERVICES, TECHNOLOGICAL
                  PRODUCTS MARKETING AND ENGINEERING, AND CONSTRUCTION AND
                  CONTRACTING SERVICES BUSINESSES

         Industry Overview

         Despite the slow down of economic development in Hong Kong and China,
we anticipate continuous growth for the intelligent building and
construction-related services market. We believe the future growth in this
industry is positively affected by the following trends:


                                       12
<PAGE>   17

         -        Intelligent Buildings in Hong Kong and China. Recent
                  technological innovations and access to information has led to
                  an enormous demand for, and active use of, information,
                  including requirements for new types of properties known as
                  intelligent buildings. Such buildings are equipped with
                  appropriate technical foundations required for a modern
                  office. The intelligent building market in Asia is still in
                  its early growth stage; participants in the industry therefore
                  tend to be either building contractors, systems/equipment
                  suppliers, or information technology/network providers. Only a
                  handful of companies, however, are capable of providing all
                  three levels of expertise and outfitting. Our vertically
                  integrated structure provides expertise and outfitting at all
                  levels; we are therefore in a position to deliver and support
                  total intelligent building solutions.

         -        Hong Kong--Large Projects to be Developed. The government of
                  the Hong Kong SAR has confirmed the development and
                  construction of the "Cyber Port" project in Hong Kong. This
                  project would include the development of 26 hectares of land
                  into residential, manufacturing, office and research
                  facilities. It is anticipated that about 5.78 million square
                  feet of floor area will be built. In addition, the development
                  of the 126-hectare Disneyland in Hong Kong will also create a
                  large demand for contracting and engineering works for both
                  the theme park itself and its supporting infrastructure and
                  facilities. Moreover, along the route corridor of the West
                  Railway, which is now under construction, over 40,000 new
                  flats of residential, retail, office and hotel facilities will
                  be built. These projects would create valuable opportunities
                  for construction and contracting companies in Hong Kong.

         -        China-Large Projects to be Developed. China's accession into
                  the World Trade Organization (the "WTO") and the 2008 Olympics
                  in Beijing are two major catalysts for large project
                  development in China. The deputy mayor of the Beijing
                  Municipal Government indicated that within the next five
                  years, an estimated US$21.7 billion will be spent in
                  developing and modernizing Beijing as the capital of China.
                  Such modernization projects will include improvements to
                  telecommunication systems, transportation, environmental
                  protection, roads, bridges and railways. According to market
                  estimates, China's entry into the WTO will increase import and
                  export trade to US$600 billion from US$320 billion in 1998.
                  Direct foreign investment would grow from US$45 billion to
                  US$100 billion. China's gross domestic product growth is
                  expected to increase by 2.94% first year after WTO entry. To
                  accommodate this anticipated upsurge in business activities
                  and huge influx of foreign capital, a large number of projects
                  are expected to be built. For example, according to the
                  Beijing Bureau of Tourism, Beijing currently has 392
                  star-graded hotels, which provide approximately 80,000 hotel
                  rooms. To cope with demand from tourists attending the 2008
                  Olympic Games, the number of star-graded hotels is expected to
                  increase to 800, offering as many as 180,000 hotel rooms.
                  These development projects offer tremendous growth potential
                  for intelligent building solution providers such as
                  Quintalinux.


                                       13
<PAGE>   18

         -        Hong Kong and China--Demand for Quality Buildings. Due to
                  various market and economic factors, the property market in
                  Hong Kong and China has slumped since the mid 1990's. There is
                  intense competition for property tenants and buyers. In order
                  to strengthen competitive advantage, many real estate
                  developers improve the quality of their buildings by adding
                  various high-technology features such as computerized control
                  systems, flexible floor configuration, interior and exterior
                  lighting system and information and telecommunication
                  networks. In addition, older buildings need to be upgraded to
                  keep existing tenants. These factors create good market
                  opportunities for high-technology construction businesses such
                  as ours.

         -        Concern for Quality of Environment. In the "Second Review of
                  the 1989 White Paper on Pollution" issued in November 1993,
                  the Hong Kong government recognized the existence of potential
                  health risks and problems associated with indoor air
                  pollution. The Hong Kong Environmental Protection Department
                  subsequently launched an indoor air quality program in Hong
                  Kong aimed at categorizing building indoor air quality into
                  three levels using a self-regulatory approach. In addition,
                  more stringent regulations in monitoring indoor air quality in
                  commercial buildings may be possible after the review is
                  completed in 2003. Maintaining good air quality in buildings
                  is an obvious benefit to a company since it can improve the
                  productivity of employees and enhance a company's reputation
                  for maintaining a healthy working environment. UATC, a company
                  that we are in the process of acquiring, is currently working
                  together with the Hong Kong University of Science and
                  Technology to develop advanced ventilation systems, such as
                  displacement type ventilation systems and the integration of
                  demand control algorithms, in order to improve indoor air
                  quality as well as to save energy and operation costs over the
                  long-term. We believe that our acquisition of UATC will create
                  a good business opportunity that complements our extensive
                  experience in supplying and installing under-floor air
                  conditioning systems to improve air quality.

         -        Growing Market for Information Display Systems. There are a
                  number of market factors contributing to the market growth of
                  light emitting diode ("LED") displays. These factors include
                  increasing popularity of LED displays as a result of advances
                  in information technology and the increased availability of
                  information and visual content in electronic format which are
                  used for both advertising and informational purposes. For
                  example, public transportation systems, including bus and
                  subway systems, have increasingly used on-board LED signs to
                  provide news, advertising or route information for passengers.

         Strategy

         We intend to continue to maintain our position as one of the leading
providers of intelligent building solutions and high-quality construction
services in Hong Kong and China. Principal elements of our strategy are:


                                       14
<PAGE>   19

         -        Intelligent Building Solutions. By combining our experience in
                  interior design and construction with our expertise in
                  information technology and state-of-the-art systems and
                  products, we have become a leader in the intelligent building
                  industry. We provide services such as feasibility studies,
                  design specifications, infrastructure planning, facility
                  planning, systems integration, system selection, budgeting,
                  cost management, project management and quality control. In
                  short, we provide complete "end-to-end" solutions that meet
                  clients' needs for intelligent buildings.

         -        Comprehensive Product Offering. Unlike traditional contracting
                  companies, we offer a wide range of construction related
                  services, including interior design, fitting out, electrical
                  engineering and installation, fire control systems, cabling,
                  and maintenance work.


                  We plan to continue to expand our services through both
                  internal development and possible future acquisitions of
                  complimentary businesses, products and technologies. Our
                  comprehensive service offerings enable us to meet a broad
                  range of customer needs and to provide an integrated source of
                  contracting services for architects and project managers as
                  they seek to consolidate their contractor relationships into a
                  smaller select group.


         -        Close Working Relationship With Customers. Since our
                  establishment, we have focused on satisfying the needs of real
                  estate developers and architects and have developed long-term
                  relationships with many of our customers. We work with our
                  customers at the initial design stage to identify and respond
                  to their needs. These close working relationships allow us to
                  understand and address the cost and performance expectations
                  of our customers. We plan to enhance our relationships with
                  our major customers and develop similar relationships with new
                  customers mainly through referral by our current customers.

         -        Active Participation in Government Projects. We have been
                  actively providing contracting services for small-scale
                  government projects since our establishment. In view of the
                  vast potential demand for contracting works sponsored by the
                  Hong Kong government including the Cyberport, Disneyland and
                  the West Railway, we plan to participate more aggressively in
                  the government sector. We believe that our ability, expertise
                  and experience resulting from our involvement in information
                  technology will enhance our success rate in bidding for these
                  and other projects.

         -        Technological Products Marketing and Engineering. We are
                  specialized in a wide variety of state of the art
                  high-technology construction products and services in
                  connection with electrical, air-conditioning, flooring,
                  lighting and information display systems. Our major products
                  and services include:

                  1.       Raised floor system and under-floor air-conditioning
                           systems. We specialize in intelligent office design
                           and installation turnkey projects. Our subsidiary,
                           Uni-Zone Holdings Limited, is involved in this
                           sector. We provide raised floor


                                       15
<PAGE>   20

                  systems, under-floor air conditioning, clean room systems,
                  uninterruptible power systems, under-floor cable management
                  systems and computer related peripherals.

                  The under-floor air-conditioning system has revolutionized the
                  concept of ventilation in modern offices and commercial
                  buildings. Raised modular flooring allows greater flexibility
                  in the installation of various electrical and mechanical
                  components, including different kinds of wiring and cable
                  network. This system can provide significant cost advantages
                  to the user in the long run and will become an important
                  element of the so-called "intelligent building" that stresses
                  high flexibility in space and facility usage.

                  We believe that these systems can offer the following
                  benefits:

                           -        flexible, adaptable and re-usable

                           -        maximize the capacity of the building

                           -        low costs for maintaining and re-configuring

                           -        easy relocation in a matter of minutes

                           -        minimize total long term running costs

                           -        reduce energy costs

                           -        reduce construction time and material cost

                           -        healthy working environment with cleaner air

                           -        computerized temperature control

                           -        computerized smart control system

                           -        environmental protection

                           -        freedom to move, design and integrate
                                    services

         2.       Architectural Lighting Systems. Our subsidiary, Good Prominent
                  Engineering Company Limited, is involved in architectural
                  lighting. We design, install and maintain various
                  architectural lighting systems that are commonly used for
                  highlighting architectural details, lighting advertising
                  signage and outdoor decorative purposes. We provide cold
                  cathode and fibre-optics lighting systems, which are
                  innovative high-technology products for both interior and
                  exterior building decoration. These products are widely used
                  in shopping malls and hotels.

                  At present, we are offering three main categories of
                  architectural lighting products: fibre optic lighting, light
                  pipe systems and cold cathode neon lighting systems. We have
                  developed our proprietary fibre optic lighting system known as
                  "Brite Lite." Our cold cathode neon lighting systems are used
                  mainly to highlight architectural details or outdoor signs. In
                  addition, we have developed our own brand name of cold cathode
                  lighting systems known as "Elite." We believe that we are the
                  market leader in this field, controlling 60% of the
                  fibre-optics market and 30% of the cold cathode lighting
                  market in Hong Kong.


                                       16
<PAGE>   21

         3.       Display Systems. Our subsidiary, Good Prominent Technology
                  Company Limited, is involved in display systems, which focuses
                  mainly on the design and installation of various LED displays,
                  liquid crystal displays and multimedia information systems for
                  government, commercial and industrial applications.

                  We are a distributor of the "Litedot" display systems from
                  Lite Vision. Lite Vision integrates modular technology with
                  advanced digital systems. The products are controlled by
                  regular computer terminals with video and graphic software
                  which opens up a vast spectrum of display possibilities.

         4.       Construction and Contracting Services. We also specialize in
                  the interior fitting out works and other related contracting
                  businesses, including: (i) interior design, (ii) renovation
                  and decoration, (iii) electrical engineering, (iv) fire
                  control systems, (v) carpentry, and (vi) installation of
                  information systems and telecommunication networks and cabling
                  within commercial buildings.

                  We are mainly engaged in the interior design and contracting
                  business with a special focus on offices, shopping malls,
                  department stores, hotels, banks and universities. The
                  majority of our clients are blue-chip and multi-national
                  companies.

                  Four of our subsidiaries, Interact Contracting Company
                  Limited, Interact (China) Design and Contracting Company
                  Limited, Pado Contracting Company Limited and Sonik,
                  specialize in providing a series of constructing and
                  contracting services. Interact Contracting Company Limited has
                  been awarded ISO 9002 qualification in 1997 for our quality
                  assurance systems, reflecting our reputation as a quality
                  contracting service provider.

         Customers


         We have developed a diversified customer base for our high-technology
products and construction related businesses:

         -        Technological products--Our customers include general
                  contractors, real estate developers, architects, government
                  entities and public transportation companies.

         -        Intelligent building and construction and contracting
                  services--Our customers include general contractors, real
                  estate developers, property managers, and owners and operators
                  of commercial and industrial properties in both Hong Kong and
                  China.

         Competition

         -        Technological Products. The technological products industry in
                  Hong Kong and China is highly fragmented and competitive.
                  There are relatively few, if any, barriers


                                       17
<PAGE>   22

                  to entry into these markets in which we operate. As a result,
                  any organization that has adequate financial resources and
                  access to the technological products and expertise may become
                  a competitor to us. Most of our competitors are small,
                  private-owned companies. We believe the major competitive
                  factors in the technological products sector include (i)
                  expertise in design and integration of the technological
                  products, (ii) cost structure, (iii) relationship with
                  customers, (iv) access to technology, and (v) experience in
                  specific markets.


                  We own proprietary rights for some of the products that we are
                  currently distributing, and intend to continue to develop our
                  proprietary products. We believe we have certain competitive
                  advantages over our competitors.


         -        Intelligent building and construction and Contracting
                  Services. The market in which we operate is highly
                  competitive, requiring substantial resources as well as
                  skilled and experienced personnel. We compete with other
                  independent contractors in most of the markets in which we
                  operate, some of which are large domestic companies that have
                  greater financial, technical and marketing resources. In
                  addition, there are few barriers to entry into the industry in
                  which we operate. A significant portion of our revenues is
                  currently derived from contracts granted on a private bidding
                  or public tender basis. Price is often an important factor in
                  the award of such contracts. Accordingly, our competitors
                  could underbid us in an effort to procure such business. On
                  the other hand, bidding for large scale projects may require a
                  large amount of working capital since most of these projects
                  have progressive payment terms and pay no or a small amount of
                  deposit upfront. These projects always have higher profit
                  margins but will involve more cashflow for procuring material
                  and paying our subcontractors.


         (B)      SOFTWARE SUPPORT AND SYSTEM INTEGRATION SERVICES

         We are developing and expanding our operations in the information
technology, software support and system integration business. Currently, our
core services cover technical support and systems integration for Linux
operating systems and application development for Linux products. In addition,
we provide groupware technology and solutions for office and home users that
were originally developed by Neo Japan Inc. of Yokohama, Japan. We have launched
iOffice 2000, a web based groupware to which we have distribution rights for the
English version in the Greater China region and Asia and Oceana market (except
Japan). We are also participating in the development of the Chinese (both
traditional and simplified) version of iOffice 2000 and will hold rights to its
worldwide distribution.

         Strategy

         Our objective is to become a leading Linux total solution provider and
system integrator and groupware technology and solution provider in Hong Kong,
China and other ASEAN countries. We intend to continue to deliver the best
business solutions on Linux to warrant the adoption of Linux for our corporate
and enterprise customers. We also intend to develop and


                                       18
<PAGE>   23

design custom applications of Linux for use in our other core businesses. Our
infrastructure and technical expertise will enable us to:

         (i)      Expand Our Strategic Alliances. We are actively seeking new
                  strategic alliances with other major Linux companies to
                  improve our access to new customers and geographic markets.

         (ii)     Expand Our Core Competence Relating to Linux Technologies and
                  Applications. We are expanding our professional teams to
                  enhance our ability and better serve our clients by offering
                  them the most cost-effective internet, intranet and e-commerce
                  solutions based on Linux.


         (iii)    Expand Our Domestic and International Markets. We intend to
                  continue to focus on expanding our sales effort by
                  establishing resource and support service centers in Hong
                  Kong, China and other ASEAN countries.


         (iv)     Develop and Design Custom Applications for Our Other Core
                  Businesses. We intend to develop Linux applications for our
                  use by our subsidiaries in the development of their
                  businesses, such as:

                  -        construction technology

                           -        design and installation of intelligent
                                    buildings
                           -        office and residential automation
                           -        telecommunication infrastructure

                  -        architectural lighting, electrical and electronics
                           system integration

                           -        process control
                           -        process monitoring and automation
                           -        animation

                  -        visual and information display systems

                           -        process control
                           -        animation
                           -        database technology

                  -        raised floor systems and under-floor air-conditioning
                           systems

                           -        process control
                           -        environment monitoring
                           -        process monitoring and automation
                           -        control and distributed systems

         Products and Services

         We specialize in offering groupware, Linux products and related
services, which can be broadly categorized into three main areas:


         (i)      Trading and re-selling iOffice and iHome software;


                                       19
<PAGE>   24

         (ii)     Trading and re-selling Linux based products such as TurboLinux
                  and providing the necessary services to fully support and
                  maintain these products; and

         (iii)    Linux application solutions and the related services,
                  including:

                  -        internet and e-commerce solutions
                  -        network management services
                  -        turnkey or existing hardware solutions
                  -        service and consulting, such as technical support and
                           on-going maintenance
                  -        on-site Linux installation and training
                  -        application development
                  -        system integration services
                  -        project management


         Customers

         With our wide range of professional products and well-designed
services, we target customers ranging from individuals to large corporate users
in Hong Kong, China and other ASEAN countries.


                                       20
<PAGE>   25


<TABLE>
<CAPTION>
               SERVICES                                         CUSTOMER BASE
               --------                                         -------------
<S>                                                     <C>
Internet and Internet solution using Linux as a         Individual users and enterprises
Launching platform

Support and maintenance services of Linux system        Enterprises

Training                                                Small to medium enterprises Individual users

Enterprise Solution                                     Medium to large enterprises Oracle customer
                                                        base
                                                        IBM DB2

Sales and distribution of groupware and software        Enterprises and individual users

Publication of Linux material                           Individual users
</TABLE>


         We market our products and services through direct sales personnel and
retail distributors. We operate a head office in Hong Kong and we intend to
expand our activities into China and other ASEAN countries.

         We actively participate in large-scale marketing programs, such as
exhibitions and conferences. We also maintain marketing programs to support the
sales and distribution of our products and services to communicate corporate
direction. Our marketing programs include public relations campaigns, seminars,
industry conferences and trade shows.

         Competition

         In the market for computer operating systems, Linux competes with a
limited number of large and well-established companies that have significantly
greater financial resources, larger development staffs and more extensive
marketing and distribution capabilities. These competitors include Microsoft,
Novell, IBM, Sun Microsystems and The Santa Cruz Operation, all of which offer
hardware-independent multi-user operating systems for Intel platforms, and AT&T,
Compaq, Hewlett-Packard, Olivetti and Unisys, each of which, together with IBM
and Sun Microsystems, offers its own version of the UNIX operating system. Many
of these competitors bundle competitive operating systems with their own
hardware offerings, making it more difficult for us to penetrate their customer
bases.

         The Linux-based operating systems market is not characterized by the
traditional barriers to entry that are found in most other markets, due to the
open source nature of the products. For example, anyone can download, copy,
modify and redistribute Linux. Consequently, it is possible that new competitors
or alliances among competitors may emerge and rapidly acquire significant market
share.

                                       21
<PAGE>   26

         An integral part of our strategy to develop a leading position in Hong
Kong, China and other ASEAN countries is to (i) build up our brand name by
investing in marketing and promotional efforts, and (ii) build up and expand our
asset base of talented scientists and engineers.


         2.       PRINCIPAL MARKETS

         Our revenues over the last three years can be classified, by category
of activity and geographic location, as follows:

<TABLE>
<CAPTION>
                                                 BUSINESS SEGMENTS
                                                    1999             2000            2001
       REVENUE                                       HK$              HK$             HK$
                                                 (thousands)      (thousands)      (thousands)
                                                 -----------      -----------      -----------
        <S>                                      <C>              <C>              <C>
        Design and contracting                       105,334          177,729          124,721
        High-technology products and
        systems                                       66,161           10,374           13,350
                                                   ---------        ---------        ---------
        Total                                        171,495          188,103          138,071
                                                   =========        =========        =========
</TABLE>

<TABLE>
<CAPTION>

                                                 GEOGRAPHIC LOCATION
       GEOGRAPHICAL SEGMENTS                         1999            2000             2001
       REVENUE                                        HK$             HK$              HK$
                                                 (thousands)      (thousands)      (thousands)
                                                 -----------      -----------      -----------
       <S>                                       <C>              <C>              <C>
        Hong Kong                                     94,500          104,441          103,637
        China                                         76,995           83,662           34,434
                                                   ---------        ---------        ---------
        Total                                        171,495          188,103          138,071
                                                   =========        =========        =========
</TABLE>

         3.       SEASONALITY OF OUR BUSINESS

         The nature of our business is not seasonal, and cash flows are
characteristically spread throughout any particular year.

         4.       SOURCING

         Not applicable


         5.       MARKETING


         For both of our technological products and contracting services
sectors, we have developed and maintained successful long-term relationships
with our key customers by focusing on customer satisfaction and high quality
service and by providing value-added services such as information technology
services. Many of our customers or prospective customers have a qualification
procedure for becoming an approved bidder or vendor based upon the satisfaction
of particular performance and safety standards set by such customers. These
customers often maintain a list of vendors or subcontractors meeting such
standards and award contracts for individual jobs only to such vendors. We
strive to maintain our status as a preferred or qualified vendor to such
customers.


                                       22
<PAGE>   27

         Furthermore, our sales and marketing personnel maintain a careful watch
on new developments, utilizing information from advertisements and attending
relevant exhibitions and events, in order to introduce us to any new prospective
customer. We also rely on both the written and verbal referrals of our satisfied
customers to help generate new business.


         In addition, we market our products and services through direct sales
personnel and retail distributors. We operate a head office in Hong Kong and we
intend to expand our activities into China and other ASEAN countries.

         6.       PROPRIETARY RIGHTS

         We have exclusive distribution rights for (a) the English version of
iOffice 2000 in the Greater China region and Asia and Oceana market (except
Japan) and (b) the Chinese version of iOffice 2000 on a worldwide basis.

         7.       COMPETITIVE POSITION

         We provide a wide variety of commercial construction products and
services along with technological solutions and systems integration required to
build an intelligent building and to equip a modern office building.
Participants in our industry tend to be either building contractors, systems and
equipment suppliers or network providers. We believe we are one of the few
companies in Hong Kong and China capable of providing expertise and integrated
solutions for each of these three areas.

         8.       MATERIAL EFFECTS OF GOVERNMENT REGULATIONS ON OUR BUSINESS

         None.



                                       23
<PAGE>   28


         C.       ORGANIZATIONAL STRUCTURE

         The Company is a British Virgin Islands holding corporation. We hold a
direct interest (unless otherwise indicated) in each of the following
corporations, all of which are organized under the laws of Hong Kong:

<TABLE>
<CAPTION>

CORPORATION                                                   PERCENTAGE HELD
-----------                                                   ---------------
<S>                                                           <C>
Interact Contracting Company Limited                          100%
Interact (China) Design and Contracting Company Limited       100%
Pado (Holdings) Limited                                       100%
Pado Contracting Limited                                      100% (indirect holding)
Good Prominent Engineering Company Limited                    100% (indirect holding)
Uni-Zone Holdings Limited                                     100%
Good Prominent Technology Company Limited                     100%
Good Prominent Trading Limited                                100%
Jext Company Limited                                          100%
iB Consultants Limited                                        100%
Quintalinux Investment Holdings Limited                       100%
Quinta (China) Company Limited                                100% (indirect holding)
Interact (Asia) Contracting Company Limited                   100% (indirect and direct holding)
RDC Limited                                                   100%
Sonik Interior Contracting Company Limited                    100%
Linux System Solution Limited                                72.5%
Intelligent Wireless Application Systems Limited               70%
W&T System Technology Company Limited                          51% (indirect holding)
</TABLE>

         D.       PROPERTY, PLANTS AND EQUIPMENT.  Our principal executive
offices are located at Suites 1404-06, Devon House, 979 King's Road, Taikoo
Place, Island East, Hong Kong, the People's Republic of China. We lease
approximately 6,500 square feet of office space at this location. We also lease
the following properties (i) 6,500 square feet of office space at Suite 2209,
22/F., Metro Centre II, 21 Lam Hing Street, Kowloon Bay, Hong Kong, the People's
Republic of China, (ii) 3,000 square feet of office space at Room 1715-16 Asian
House, 1 Hennessy Road, Wanchai, Hong Kong, the People's Republic of China, and
(iii) 1,500 square feet of office space at Unit 902, 9/F, Hanley House, 776-778
Nathan Road, Kowloon, Hong Kong, the People's Republic of China.

         We own two commercial units and one industrial units in Hong Kong, the
People's Republic of China. The first commercial unit is a 2,423 square foot
office facility, which is leased to a non-affiliated third party. The other
commercial unit is a 2,711 square foot office facility, which is leased to one
of our subsidiary companies. The industrial unit is a 2,575 square foot facility
that is currently used as our warehouse. We also own a 1,962 square foot Class A
residential property in Hong Kong which is occupied by the Chairman as
director's quarters. Our banking facilities are collateralized by all of these
properties.


                                       24
<PAGE>   29



ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

         The following discussion should be read in conjunction with the
consolidated financial statements/balance sheet of Quintalinux and its
subsidiaries and the related notes and the other financial information included
in Item 18 of this annual report. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results might differ
materially from those anticipated in these forward-looking statements as a
result of any number of factors, including those set forth under "Risk Factors"
and elsewhere in this annual report. Figures are expressed in Hong Kong Dollars
and translated into United States Dollars at an exchange rate of HK$7.75 = US$1.

         A.       OPERATING RESULTS

         The following discussion is based on our audited consolidated
statements of operations for the year ended March 31, 2001 as if we had acquired
the Tat Group, Li Group and Linux System Solution Limited on April 1, 1999.


         Overview

         The Company derives most of its revenue from various professional
construction contracting services, including interior design, alternations and
additions, fit-outs, project design and management, and trading of
high-technology building materials, as well as the installation and engineering
of high-technology lighting systems and LED display board systems.

         Costs of revenue include labor, non-reimbursable subcontract costs,
materials and various direct and indirect overhead costs. Direct labor employees
work at our offices, and in some cases at the clients' job-site. The number of
direct labor employees assigned to a contract will vary according to the size,
complexity, duration and demands of the project. Depending on the nature of the
projects, gross profit margins may vary significantly.

         Selling, general, and administrative expenses consist primarily of
corporate costs related to finance and accounting, information technology,
contract proposal, executive salaries, rent, utilities and other indirect
overhead costs.


                                       25
<PAGE>   30
         The following table presents, for the periods indicated, selected items
in the audited consolidated statements of operations as a percentage of total
revenue.


<TABLE>
<CAPTION>
                                                                     YEAR ENDED MARCH 31

                                                             1999            2000          2001
                                                             ----            ----          ----
<S>                                                         <C>            <C>           <C>
Contract Revenue..........................................  100.00%        100.00%       100.00%
Contract Costs............................................   74.58%         74.24%        95.76%
Gross Profit..............................................   25.42%         25.76%         4.24%
Depreciation..............................................    0.38%          0.42%         2.48%
Selling, General and Administrative expenses..............   14.08%         12.85%        34.81%

Other operating income/(loss).............................   (0.03)%        (0.21)%       (0.35)%
Operating income/(loss)...................................   10.99%        12.71%        (32.70)%
Non-operating income/(loss), net..........................   (0.37%        (0.52)%        (0.29)%
Income/(loss) before tax..................................   10.63%        12.19%        (33.00)
Tax expenses..............................................     0.7%         0.47%          0.00%
Net income (loss) after tax...............................    9.93%         11.71%       (33.00)%
</TABLE>

COMPARISON OF RESULTS BETWEEN FISCAL YEAR ENDED MARCH 31, 2001 AND MARCH 31,
2000

         Revenue. Revenues for fiscal 2001 decreased by HK$50,032,000
(US$6,455,000), from HK$188,103,000 (US$24,271,000) in fiscal 2000 to
HK$138,071,000 (US$17,816,000) in fiscal 2001, which represents a 26.6% decrease
in revenue. The following table illustrates the geographical and sector
breakdown of operating revenue:

<TABLE>
<CAPTION>

                                               FOR YEARS ENDED MARCH 31,
                                               -------------------------
                                                1999     2000     2001
                                                ----     ----     ----
<S>                                            <C>      <C>      <C>
Hong Kong....................................  55.10%   55.52%   75.06%
China........................................  44.90%   44.48%   24.94%
Design and contracting business..............  61.42%   94.48%   90.33%
High-technology products and systems.........  38.58%    5.52%    9.67%

</TABLE>

         Revenue from the design and contracting business in fiscal 2001
decreased by HK$53,008,000 (US$6,840,000), from HK$177,729,000 (US$22,933,000)
in fiscal 2000 to HK$124,721,000 (US$16,093,000) in fiscal 2001, which
represents a 29.8% decrease in revenue. This revenue decrease was primarily due
to the weakening property market in Hong Kong which adversely affected the
traditional construction and contracting markets. The Company's acquisition of
Sonik, however, has helped to increase operating and management efficiency in
this sector, which has alleviated issues caused by the slumping Hong Kong
property market.


                                       26
<PAGE>   31
         Revenue from the supply and installation of high-technology products
and systems in fiscal 2001 increased by HK$2,976,000 (US$384,000), from
HK$10,374,000 (US$1,339,000) in fiscal 2000 to HK$13,350,000 (US$1,723,000) in
fiscal 2001, which represents a 28.7% increase in revenue. This increase was due
to the growth of our high-technology systems and computer software business
during the year.

         Gross Profit. Gross profits from operations decreased by HK$42,604,000
(US$5,498,000), which represents an 87.9% drop in gross profits in fiscal 2001
as compared to fiscal 2000. Gross profit margin, as a percentage of total
revenue, decreased from 25.8% in fiscal 2000 to 4.24% in fiscal 2001. The
decrease in gross profit was due to tightening profit margins, intense
competition, and the weakening of the Hong Kong property market. Management has
been offsetting this trend, however, by shifting more resources to the
"intelligent building" market, a segment that carries higher margins than the
traditional construction and contracting markets.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by HK$23,897,000 (US$3,083,000), from
HK$24,171,000 (US$3,119,000) in fiscal 2000 to HK$48,068,000 (US$6,202,000) in
fiscal 2001, which represents 98.9% increase in these expenses. The increase was
primarily attributable to (i) the operating expenses associated with the
establishment of our new corporate headquarters and (ii) expenses related to
developing our intelligent building business. Our new headquarters is equipped
with high-technology intelligent facilities that can serve as a showroom for our
Company's products and services.

         Net Income/Loss. Net loss for fiscal 2001 was HK$45,561,000
(US$5,877,000), as compared to a profit of HK$22,040,000 (US$2,844,000) in
fiscal 2000.

         During fiscal 2001, we incurred a HK$33,810,000 (US$4,362,000) net loss
in our contracting business, as compared to a profit of HK$19,322,000
(US$2,493,000) in fiscal 2000. During fiscal 2001, we also incurred a
HK$11,751,000 (US$1,516,000) net loss in our high-technology products and
systems segment, as compared to a profit of HK$2,718,000 (US$351,000) in fiscal
2000. These losses were mainly due to a decrease in revenues from our
contracting business and increased operating expenses in connection with
developing our intelligent building business.

COMPARISON OF RESULTS BETWEEN FISCAL YEAR ENDED MARCH 31, 2000 AND 1999

         Revenue. Revenue in fiscal 2000 increased from HK$171,495,000
(US$22,128,000) in fiscal 1999 to HK$ 188,103,000 (US$24,271,000), which
represents a 9.7% revenue increase.

         Revenue from our design and contracting business in fiscal 2000
increased by HK$72,395,000 (US$9,341,000), from HK$105,334,000 (US$13,591,000)
in fiscal 1999 to HK$177,729,000 (US$22,933,000) in fiscal 2000, which
represents a 68.7% revenue increase.

                                       27
<PAGE>   32
The increase in revenues was mainly due to the US$16 million design and fitting
out contract for the Maxdo Center in Shanghai, China.

         Revenue from our high-technology products and systems business
decreased by HK$55,787,000 (US$7,198,000), from HK$66,161,000 (US$8,537,000) in
fiscal 1999 to HK$10,374,000 (US$1,339,000), an 84.3% decrease in revenue. This
substantial decrease was mainly attributable to the completion during fiscal
1999 of the HK$80 million contract for the raised floor and under-floor
air-conditioning system for the "Center," one of the tallest buildings in Hong
Kong.

         Gross Profit. Gross profit from operations increased by HK$4,874,000
(US$629,000) or 11.2% in fiscal 2000 as compared to fiscal 1999. Gross profit
margin, as a percentage of total revenue, increased slightly from 25.4% to
25.8%.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses in fiscal 2000 increased slightly to HK$24,171,000
(US$3,119,000), which represents an increase of HK$21,000 (US$3,000), or 0.1%,
from expenses reported in fiscal 1999. As a percentage of total revenues,
selling, general and administrative expenses decreased from 14.08% to 12.85%.
The decrease was mainly due to increased efficiency and reduced overhead
expenses (such as redundant administrative functions) resulting from the
restructuring and merger of the Li Group and Tat Group into the Company's
current structure.

         Net Income. Net income for fiscal 2000 was HK$22,040,000
(US$2,844,000), as compared to net income of HK$17,027,000 (US$2,197,000) in
fiscal 1999.

         During fiscal 2000, net income from our contracting business was
HK$19,322,000 (US$2,493,000), as compared to net income of HK$9,928,000
(US$1,281,000) in fiscal 1999. During fiscal 2000, net income from our
high-technology business in fiscal 2000 was HK$2,718,000 (US$351,000), as
compared to a profit of HK$7,099,000 (US$916,000) in fiscal 1999. The
fluctuations in net income from the contracting and high-tech segments were
mainly due to varying profit margins that we charged for certain large scale
projects that strengthened our competitive position.

         B.       LIQUIDITY AND CAPITAL RESOURCES

         The sources of our cash for working capital and capital expenditures
have been net positive cash flows from operating activities, capital lease
financings and bank borrowings. We have met working capital needs through
short-term borrowing under a revolving line of credit.

         As of March 31, 2001, we had a consolidated working capital of
HK$6,757,000 (US$872,000). We anticipate that we will be able to meet our
ongoing cash requirements with cash generated from operations and borrowings, as
required, from our existing banking relationships.

         The present practice for both our Hong Kong and PRC projects is to
finance the projects in stages. Payments to us are usually made according to
payment schedules proposed by the


                                       28
<PAGE>   33
relevant architects and approved by clients. Payments are then made based upon
the architects' certification of the contracting work done. A sum of
approximately 5% to 15% of the total contract sum is normally retained by our
clients, which sum is usually released when all defects have been rectified and
completion confirmed by the architects. The duration of this defect liability
period is usually between 6 to 12 months.

      All sub-contractors and suppliers are paid in accordance with specified
credit terms, ensuring a good working relationship with reliable subcontractors
and suppliers.

      Cash and cash equivalents amounted to HK$694,000 (US$90,000) at
March 31, 2001. During fiscal 2001, we have not paid any dividends to our
stockholders. In September 2000, we entered into a conditional purchase
agreement to purchase a 30% equity interest in Workplace Company Limited and
have paid a deposit of HK$5,000,000 (US$645,000) for this transaction. The
deposit is returnable to our Company should the acquisition be unsuccessful.
Workplace is a Japan-based company which specializes in the distribution of
office furniture. We believe that this acquisition will complement our interior
design and renovation business. In addition, pursuant to a conditional purchase
agreement, we are in the process of acquiring a certain equity interest in UATC
for a consideration of HK$25,000,000 (US$3,226,000). UATC is a company focused
on the design and installation of high-technology under-floor air-conditioning
systems. We expect that UATC would become one of the core components to our
intelligent building business.

         For trading building materials, we usually request that clients pay (i)
an initial deposit of 50% upon confirmation of the trade, (ii) a 30% second
payment upon delivery of materials to the site, and (iii) the remaining balance
of 20% upon completion of the installation.

         Accounts receivable as of March 31, 2001 was HK$66,257,000
(US$8,549,000). This amount includes the accounts receivable taken up by the
Company pursuant to the acquisition of Sonik.

         Amounts due from customers for contracting work as of March 31, 2001
was HK$9,360,000 (US$1,208,000). This figure reflects a significant proportion
of the contracting projects awarded to the Company for projects that will be
completed in the next fiscal year. In addition, amounts due from customers for
contracting work and advance contract receipts that are carried on our balance
sheets for a given point of time usually depends on the project's stage of
completion rather the number of contracts on hand.

         Accounts payable as of March 31, 2001 was HK$88,404,000
(US$11,406,000), which amount consists primarily of subcontracting works and
materials purchased for our increased contracting activities during the last
fiscal year.

         It is common practice in Hong Kong to withhold from the contractor the
last payment of the contract, which is generally 5% to 15% of the total contract
sum. This amount is not released until final accounts have been finalized and
settled. In accordance with this practice, we also generally withhold the final
payment to subcontractors for various projects.


                                       29
<PAGE>   34
         As of March 31, 2001, our Company is owed approximately HK$5,383,000
(US$695,000) from related parties, the majority of which is a debt owed to us by
two companies which are controlled by directors of Sonik, one of our subsidiary
companies.

         As of March 31, 2001, we owe Mr. Chu, a director of our Company,
approximately HK$14,718,000 (US$1,899,000).

     During fiscal 2001, cash flows used in operating activities totaled
HK$56,732,000 (US$11,190,000) as compared to cash flows in fiscal 2000 used in
operating activities amounting to HK$11,369,000 (US$1,502,000). Cash flows used
in operating activities increased in fiscal 2001 due to our operating loss for
fiscal 2001. Incoming cash flows provided by investing activities was
HK$15,473,000 (US$1,997,000) in fiscal 2000 as compared to cash outflows of
HK$44,690,000 (US$5,766,000) in fiscal 2001. Fiscal 2001 resulted in cash
outflows due to capital expenditures incurred in establishing our new corporate
headquarters and cash used in our acquisition of Sonik, a corporation whose
selling shareholders included Mr. Lam Chi Yiu and Mr. Sham Chi Kit, both of whom
are directors of one of our subsidiaries and deposits for the UATC and Workplace
acquisitions. During fiscal 2001, cash flows provided by financing activities
was HK$96,695,000 (US$12,476,000) as compared to in fiscal 2000 for investing
activities amounting to HK$1,149,000 (US$148,000). The increase in 2001
financing activities reflects the use of our net proceeds from our initial
public offering in fiscal 2001 of HK$74,570,000 (US$9,622,000).

         We believe that cash and cash equivalents on hand, cash flows from
operating activities, amounts available under certain revolving credit
agreements and access to third-party financings in capital markets will be
adequate to meet our working capital and liquidity needs for the foreseeable
future.

         INFLATION

         Based on historical experience, the duration of our alterations and
additions contracts as well as high-technology products and services, from
commencement to completion, has varied between two and eleven months, with the
majority of projects approximately four months. Thus, it has not been necessary
to provide for inflation in contracts entered into by the Company.

         The annual inflation rate in Hong Kong was approximately -3.7% in 2000,
-4% in 1999 and 2.8% in 1998. The annual inflation rate in China was
approximately 0.4% in 2000, 1.4% in 1999 and -0.8% in 1998. However, we will
continue to avoid problems resulting from inflation by ensuring our works are
kept to schedule. We have always been able to purchase supplies and materials
once a project is signed, thus minimizing the effect of inflation.

         New works projects that may be awarded to us could extend for up to two
years, in which case we intend to include cost escalation clauses in such
contracts.


                                       30
<PAGE>   35

         FOREIGN EXCHANGE

         We expect to continue our present practice of entering into contracts
under which contract sums are payable in Hong Kong or United States Dollars.
Expenses for PRC projects will be paid in Renminbi ("Rmb") or Hong Kong Dollars.
The Company will gain on foreign exchange if the Rmb depreciates against the
Hong Kong or United States Dollar. Conversely, the Company will incur foreign
exchange losses if the Rmb appreciated against the Hong Kong or United States
Dollar.

         Recently, there has been a shortage of Rmb available within the PRC. In
connection with PRC projects, we have been experimenting with accepting a
certain percentage of a contract sum to cover Rmb expenditures in relation to
these projects. This payment method reduces our need to actively manage our
foreign exchange exposure. Under these arrangements, we also minimize the risk
of the Rmb non-convertibility since a portion of the contracts remains payable
in freely convertible foreign currencies.


         C.       RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES ETC.

         We do not expend resources of any significance on company-sponsored
research and development activities.

         D.       TREND INFORMATION

         HONG KONG PROPERTY MARKET.

         The property market in Hong Kong was severely depressed during the
Asian financial crisis in 1997. The property market in Hong Kong reached its
lowest point, both in terms of number of transactions and transaction value,
some time last year. The market has improved over the past 12 months and the
market has been given a boost by new government measures on housing. We believe
these measures should re-ignite confidence over the economy and property market
in the long run, providing increased opportunities in property development.

         PRC PROPERTY MARKET

         Both of China's prospective accession into the WTO and the development
and modernization of western China should have a positive impact on the Chinese
property market. We expect that demand for both residential and commercial
property in China will increase and that multi-national corporations will move
to the PRC in the near future. In addition, the property market in the PRC was
booming in 1997, which created opportunities in property development and related
businesses such as the fitting-out and decoration businesses.



                                       31
<PAGE>   36
ITEM 6 - DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

         A.       DIRECTORS AND SENIOR MANAGEMENT AND EMPLOYEES

         Our executive officers and directors are as follows:
<Table>
<Caption>
         NAME                      AGE            POSITION
         ----                      ---            --------
         <S>                       <C>       <C>
         CHU Tat                   45        Chairman and Director
         Perick LI Wai Ho          46        Vice-Chairman and Director
         David LEE Chai Ve         53        Chief Executive Officer and Director
         Sam LAW Hung Wai          44        Chief Financial Officer
         CHAN Kin Hang             39        Director
         CHEUNG Kwok Ho, Richard   49        Director
         Ryoji SHIKIBA             37        Director
         CHAN Sai Keung            47        Non-executive Director
         Samuel YUNG Wing Ki(1)    44        Non-executive Director
         Fernando MARCHITELLI      62        Non-executive Director
</Table>

(1)      Effective as of September 19, 2001 Samuel YUNG Wing Ki resigned as our
         director.

         Mr. CHU Tat is our chairman. He is one of our founders and has over 15
years of experience in interior design and contracting business. Mr. Chu has
also served as our director since August 18, 1997. He is mainly responsible for
our strategic planning and business development of contracting projects in Hong
Kong and China. Mr. Chu holds a Diploma in Architecture Studies from the Hong
Kong Polytechnic University. Mr. Chu is also a director of Genuine Interior
Design and Associates Limited ("Genuine"), Prographic Productions Company
("Prographic") and Ba Wah Design and Construction Company Limited ("Ba Wah").

         Mr. Perick LI Wai Ho is our vice-chairman and one of our founders. Mr.
Li has also served as one of our directors since August 18, 1997. He has over 16
years of experience in the field of interior contracting works. He is mainly
responsible for our business development and strategic planning. Mr. Li is also
a director of Good Prominent Fire Safety Company Limited and Good Prominent
Media Advertising Company Limited.

         Mr. David LEE Chai Ve has served as our chief executive officer since
April 1999 and as a director since August 28, 2000. He joined us in 1998. Mr.
Lee is mainly responsible for our strategic management as well as our design and
engineering team for the electronic display system. From 1996 to 1998, Mr. Lee
was deputy managing director of MetalWall Co., Ltd., a designer and manufacturer
of metal wall cladding and metal ceiling systems. From 1994 to 1995, he served
as deputy-managing director of Good Prominent Engineering Company Limited, in
charge of the supply and installation of lighting systems and advertising
display boards. Mr. Lee received a Bachelor of Architecture from Kent State
University in 1977 and is a member of the California State Board of
Architectural Examiners and American Institute of Architecture--LA Chapter and
Washington Chapter.


                                       32
<PAGE>   37

         Mr. Sam LAW Hung Wai has served as our chief financial officer since
August 2001. He is mainly responsible for our financial planning and management.
He has 16 years of finance and business development experience in the
Asia-Pacific region with major multinational companies and has focused on the
Greater China market since 1996. He is a qualified accountant in Hong Kong, the
United Kingdom, the United States and in the PRC (since 1995). Mr. Law was a
civil engineer before embarking on his career in finance. He has a MBA from the
University of California at Berkeley.

         Mr. CHAN Kin Hang has served as a director since June 1999. Mr. Chan
has worked for a systems integrator as a senior manager from June 1996 to June
1998 and is now a director of BA Consulting (Hong Kong) Limited and the managing
director of Linux System Solution Limited. Mr. Chan earned a bachelor of
engineering degree in civil engineering and a masters of science degree in
computer data processing from the University of Ulster, U.K. and a masters of
business administration from the University of South Australia. Mr. Chan directs
our information technology division and is mainly responsible for the business
development and strategic management of Linux System Solution Limited.

         Mr. CHEUNG Kwok Ho, Richard has served as a director since August 28,
2000. He had worked for Samson Wong & Associates Property Consultancy Limited
since 1998 as an associate director. Mr. Cheung is a chartered building
surveyor. Prior to 1998, he was a director and partner of Prudential Surveyors
International Limited for seven years with responsibilities including town
planning, interior design, project management, interior decoration, licensing
and condition surveys. Mr. Cheung directs our construction technology division,
which consists of our three construction contracting subsidiaries: Interact
Contracting Company Limited, Interact (China) Design and Contracting Company
Limited, and Pado Contracting Company Limited. He received a B.Sc. degree in
building surveying from Leicester Polytechnic.

         Mr. Ryoji SHIKIBA has served as a director since August 28, 2000. He
has worked for Uchida Yoko Co., Ltd., a company involved in the sales and
marketing of office furniture, since 1988 as sales executive (1988 - 1992),
sales manager (1992 - 1995) and managing director of Uchida Yoko (HK) Ltd. (1995
- 2000). Mr. Shikiba directs our business development efforts in Japan,
including evaluating and forming strategic alliances with Japanese companies
whose products and/or services offer us an opportunity to further strengthen our
business lines. He received a Bachelors degree in applied physics from Tokai
University.

         Mr. CHAN Sai Keung has served as a non-executive director since June
1999. Mr. Chan received a law degree from the University of Southampton, U.K. in
1978 and is a practicing attorney and partner in Liau, Ho & Chan, Hong Kong, and
an appointed Attesting Officer of the PRC. Mr. Chan also serves as a director of
Intermost Corporation (OTC BB: IMOT).

         Mr. Samuel YUNG Wing Ki served as a non-executive director from June
1999 until September 2001. Mr. Yung has been a district director of American
International Assurance Co. (Bermuda) Ltd. since 1989. He has over 17 years of
experience in the insurance industry. He received "The Outstanding Young Persons
Award" of Hong Kong in November 1994 and sits on a number of fund raising
committees for several major charitable organizations. He is also an


                                       33
<PAGE>   38
independent non-executive director of Group Sense (International) Ltd., a listed
company in Hong Kong.

         Mr. Fernando MARCHITELLI has served as a non-executive director since
June 1999. Mr. Marchitelli has been the chairman of Acotex Far East Ltd. since
1973 and has over 29 years of experience in manufacturing and trading in Asia.
Mr. Marchitelli received a Bachelor of Arts degree in economics from the City
College of the City University of New York in 1968.

         None of our directors and officers was selected pursuant to any
agreement or understanding with any other person. There is no family
relationship between any of our directors or executive officers and any other
director or executive officer.

         B.       COMPENSATION

         The aggregate compensation paid by us to all of our directors and
executive officers as a group for the fiscal year ended March 31, 2001, for
services in all capacities, was HK$6,282,000 (US$811,000).

         We have entered into employment agreements with all of our executive
directors, as follows:

         (i)      Commencing on August 1, 2000 and expiring three years later,
Mr. Chu is entitled to receive an annual salary of HK$2,730,000 and an annual
management bonus of a sum to be determined by the board at its absolute
discretion with regard for the Company's operating results and individual
performance during the relevant financial year. The amount payable to Mr. Chu
will be decided by majority decision of the members of the board present in the
meeting called for that purpose, provided that Mr. Chu will abstain from voting
and not be counted in the quorum in respect of the resolution regarding the
amount payable to him. In addition Mr. Chu's agreement includes benefits with
respect to (a) a motor car and (b) quarters provided by the Company. Upon
termination, Mr. Chu may stay at such quarters without charge for three months
beyond the date of termination.

         (ii)     Commencing on August 1, 2000 and expiring three years later,
Mr. Li is entitled to receive an annual salary of HK$2,730,000 and an annual
management bonus under the same terms as described in paragraph (i), above. In
addition, Mr. Li's agreement includes benefits with respect to (a) a motor car
and (b) quarters provided by the Company. Upon termination, Mr. Li may stay at
such quarters without charge for three months beyond the date of termination.

         (iii)    Commencing on August 1, 2000 and expiring three years later,
Mr. Lee is entitled to receive an annual salary of HK$1,080,000 and an annual
management bonus under the same terms as described in paragraph (i), above. In
addition, Mr. Lee's agreement includes benefits with respect to a motor car.


                                       34
<PAGE>   39
         (iv)     Commencing on September 1, 2000 and expiring three years
later, Mr. Chan is entitled to receive an annual salary of HK$720,000 and an
annual management bonus under the same terms as described in paragraph (i),
above.

         (v)      Commencing on September 1, 2000 and expiring three years
later, Mr. Shikiba is entitled to receive an annual salary of HK$360,000 and an
annual management bonus under the same terms as described in paragraph (i),
above.

         (vi)     Commencing on August 15, 2000 and expiring three years later,
Mr. Cheung is entitled to receive an annual (a) consulting fee of HK$840,000,
(b) commission of HK$480,000, and (c) management bonus under the same terms as
described in paragraph (i), above.

         STOCK OPTIONS

         The Company has adopted a share option scheme (the "Option Plan") under
which the directors may, on or before January 22, 2011, grant options to certain
officers, directors, employees and advisors of the Company or any of its
subsidiaries to subscribe for Common Stock of the Company, subject to an
aggregate maximum of 2,000,000 shares of Common Stock (as adjusted for splits,
recapitalizations, and the like). The option price under the Option Plan shall
be equal to or greater than the fair market value at the time of the grant. An
option may be exercised from the date of grant and prior to the expiry of ten
years thereafter, in accordance with the terms of the Option Plan and subject to
any vesting period set forth in the option. As of August 15, 2001, our officers
and directors held options under the Option Plan to purchase 923,000 shares of
Common Stock exercisable at US$1.00 per share.

         Options to purchase our shares granted to our officers and directors
during FY 2001 are set forth in the following table:

<TABLE>
<CAPTION>
                                                 Date of     Exercise       Number
   Officer/Director             Date of Grant   Expiration     Price       Granted
   <S>                          <C>             <C>            <C>         <C>
   Chu Tat                      1-May-01        30-April-11    $1.00       358,000
   Li Wai Ho                    1-May-01        30-April-11    $1.00       350,000
   Lee Chai Ve                  1-May-01        30-April-11    $1.00        80,000
   Chan Kin Hang                1-May-01        30-April-11    $1.00        25,000(1)
   Shikiba, Ryoji               1-May-01        30-April-11    $1.00        25,000(1)
   Cheung Kwok Ho               1-May-01        30-April-11    $1.00        25,000(1)
   Chan Sai Keung               1-May-01        30-April-11    $1.00        20,000
   Yung Wing Ki                 1-May-01        30-April-11    $1.00        20,000
   Fernando Marchitelli         1-May-01        30-April-11    $1.00        20,000
                                                                    Total: 923,000

</TABLE>

(1)      16,667 shares subject to option vest as of the date of grant; 8,333
         shares subject to option will vest on May 1, 2002.

                                       35
<PAGE>   40

         DISCRETIONARY BONUS PLANS

         Bonus payments made to certain of our officers and directors are made
on a case-by-case basis and not pursuant to a written plan.

         PENSION PLANS

         During the fiscal year ended March 31, 2001, we contributed HK$28,000
(US$4,000) towards the pension plans of our directors and executive officers.

         C.       BOARD PRACTICES

         BOARD OF DIRECTORS

         In general, directors of the Company are elected by the members or the
directors for such term as such members or directors may determine. Each of the
executive directors have signed a three year employment or consultancy
agreement, as further described in "Item 6B, Compensation," above.

         AUDIT COMMITTEE

         We have established an audit committee, which consists of Messrs. Chan
and Marchitelli. Mr. Yung, who resigned as our Director as of September 19,
2001, was a member of the audit committee prior to his resignation. The
functions of the audit committee are to:

         -        recommend annually to the board of directors the appointment
                  of our independent public accountants;

         -        discuss and review the scope and the fees of the prospective
                  annual audit and review the results with the independent
                  public accountants;

         -        review and approve non-audit services of the independent
                  public accountants;

         -        review compliance with our existing accounting and financial
                  policies;

         -        review the adequacy of our financial organization; and

         -        review our management's procedures and policies relative to
                  the adequacy of our internal accounting controls and
                  compliance with federal and state laws relating to financial
                  reporting.


         D.       EMPLOYEES

         As at March 31 for each of fiscal years 1999, 2000 and 2001, the
Company employed, on a worldwide basis, 79, 67 and 95 employees, respectively.
As of August 15, 2001, we had a total of 95 full time employees, as well as 6
network of consultants and hourly workers available on an as-required basis. Of
the 95 full time employee, 14 are key management staff, 42 are engaged in
project management, nine in sales and marketing and 30 in finance and
administration.


                                       36
<PAGE>   41

         None of our employees is represented by a labor union and we believe
that our employees' relations are good.

         E.       SHARE OWNERSHIP

         With respect to each of our officers and directors, the following table
provides information as to share ownership as of September 15, 2001 Shares held
by such officers and directors do not carry different voting rights. Except as
set forth below, as far as is known to Management, we are not directly or
indirectly owned or controlled by another corporation or by any foreign
government.

<TABLE>
<CAPTION>

                                                    COMMON STOCK                 PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER                        BENEFICIALLY OWNED (1)              OUTSTANDING (2)
------------------------                        -----------------------          --------------------
<S>                                                    <C>                                <C>
CHU Tat                                                3,931,533(3)                       30.38
Perick LI Wai Ho                                       2,931,992(4)                       22.65
David LEE Chai Ve                                         80,000                       Less than 1%
CHAN Kin Hang                                             76,667                       Less than 1%
CHEUNG Kwok Ho, Richard                                   16,667                       Less than 1%
Ryoji SHIKIBA                                             16,667                       Less than 1%
CHAN Sai Keung                                            20,000                       Less than 1%
Samuel YUNG Wing Ki                                       20,000                       Less than 1%
Fernando MARCHITELLI                                      20,000                       Less than 1%
All directors and executive officers as a              7,113,526                          54.96%
group with beneficial ownership (9 persons)
</TABLE>

         (1)      Beneficial Ownership is determined pursuant to Rule 13-d under
                  the Exchange Act.

         (2)      Based on 12,942,333 shares outstanding as of September 15,
                  2001 (as calculated on a fully-diluted basis) which consists
                  of (a) 10,200,000 shares of Common Stock, (b) 1,500,000
                  Warrants, and (c) 1,242,333 outstanding options to purchase
                  shares of Common Stock within 60 days of September 15, 2001.

         (3)      Mr. Chu's 3,931,533 shares are held as follows: 2,000,000
                  shares are owned of record by Asian Progress Holdings Limited,
                  a British Virgin Islands corporation which is solely owned by
                  Mr. Chu. Mr. Chu is also deemed to own 1,573,533 shares of the
                  2,155,525 shares owned of record by Muehl Products & Service
                  Asia Limited, a British Virgin Islands corporation which is
                  73% owned by Mr. Chu. Mr. Chu also owns an option to purchase
                  358,000 of our Common Stock, which option was granted on May
                  1, 2001, under the Option Plan, with an exercise price of
                  US$1.00 per share.

         (4)      Mr. Li's 2,931,992 shares are held as follows: 2,000,000
                  shares are owned of record by Oceanic Land Holdings Limited, a
                  British Virgin Islands corporation which is solely owned by
                  Mr. Li. Mr. Li is also deemed to own 581,992 shares of the
                  2,155,525 shares owned of record by Muehl Products & Service
                  Asia Limited, a British Virgin Islands corporation which is
                  27% owned by Mr. Li. Mr. Li also own an option to purchase
                  350,000 of our Common Stock, which option was granted to on
                  May 1, 2001, under the Option Plan, with an exercise price of
                  US$1.00 per share.

         Employees of the Company may participate in the Company's Option Plan,
as described in "Item 6B - Compensation," above.



                                       37
<PAGE>   42
ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

         A.       MAJOR SHAREHOLDERS

         Other than Mr. Chu and Mr. Li who, through their beneficial ownership
of our Common Stock, are major shareholders of the Company (as provided in Item
6E "Share Ownership," above), there are no persons known by the Company who
beneficially own more than 5% of our outstanding shares as of September 15,
2001.

         Since the Company filed its post-effective amendment on October 17,
2000, Mr. Chu and Mr. Li's holdings have decreased from approximately 82.9% in
the aggregate to approximately 53.03% in the aggregate as of September 15, 2001
due to a number of private share transfers and the dilutive effect of the Option
Plan. Other than this change, there have been no significant changes in the
percentage ownership held by any major shareholders during the last three years.
The shares beneficially owned by Mr. Chu and Mr. Li do not have voting rights
different from other holders of the Company's Common Stock.

         As of September 15, 2001 the shareholders' list for the Company's
shares showed approximately 550 registered shareholders and 10,200,000 shares
outstanding. More than 65 % of these shareholders were non-U.S. residents. We
believe that Cede & Co. holds a substantial majority of the outstanding Common
Stock and Warrants in the United States as record holder.

         The Company is not currently aware of any arrangements that may result
in a change of control of the Company.

          B.       RELATED PARTY TRANSACTIONS

         In November 1999, we acquired all of the common stock of the Tat Group
and the Li Group and 72.5% of the common stock of Linux System Solution Limited,
as further detailed in "Item 4 - Information on the Company," above.

         On December 28, 1999, Mr. Li reduced the amount owing from him to the
Li Group by HK$11,625,000 (US$1,500,000) to HK$3,060,000 (US$395,000) by
transferring good title to us of 400,000 shares of Intermost Corporation (OTC
BB: IMOT) valued by an independent appraiser at US$3.75 per share.

         On January 26, 2000, one of Mr. Li's related companies repaid an
aggregate of HK$12,000,000 (US$1,549,000) to us as a settlement of debt owing to
the Li Group.

         On March 6, 2000, the amount owing to the Tat Group from Mr. Chu and
his related companies amounted to HK$25,487,000 (US$3,289,000) and was fully
repaid by transferring legal title of a Class A residential property and a
commercial property located in Hong Kong to the Tat Group. The parties agreed
that the fair market value of these properties at August 19, 1999 as valued by
an independent professional valuer was HK$27,000,000 (US$3,484,000) and being
used to record as the consideration for the transfer.


                                       38
<PAGE>   43

         On September 1, 2000, we entered into an agreement with Mr. Shikiba,
one of our directors and majority shareholder of Workplace whereby Mr. Shikiba
will use his best endeavour to seek approval by the board of directors of
Workplace to sell, within 18 months, 630 shares of Workplace (or 30% of the
issued shares of Workplace) to us, in exchange for HK$5,000,000.

         In November 2000, we made a payment of HK$4,460,000 (US$576,000) to
Genuine, a company controlled by Mr. Chu, for a leasehold improvement of the
Company's new office facilities.

         On March 27, 2001, we entered into a conditional purchase agreement
with Mr. Chu, one of our directors and majority shareholder of UATC, to acquire
approximately a 7.9% equity interest in UATC exchange for HK$25,000,000
(US$3,226,000). The aggregate value of UATC, as determined by an independent
valuation report, was determined to be approximately HK$350,000,000. The
HK$25,000,000 consideration given in exchange for the 7.9% equity interest
therefore represents a 10 percent discount from fair market value.

         In fiscal 2001, we entered into a number of loan transactions with
certain of our directors and corporations related to the Company. Except for a
loan due from Mr. Chan Kin Hang, which is an interest bearing loan payable on
May 2001, these loans are unsecured, interest-free, and repayable on demand. As
of March 31, 2001, debt due from these related parties amounted to HK$5,383,000
(US$695,000), which amount consists of the following: (i) HK$300,000 (US$39,000)
from Mr. Chan Kin Hang, a director of our Company, (ii) HK$4,434,000
(US$572,000) from INT Design Company Ltd., a company whose stockholders include
Mr. Lam Chi Yui and Mr. Sham Chi Kit, directors of one of our subsidiaries and
(iii) HK$649,000 (US$84,000) from INT Design (China) Ltd., a company whose
stockholders include Mr. Lam Chi Yui and Mr. Sham Chi Kit, directors of one of
our subsidiaries.

         In fiscal 2001 we entered into a number of loan transactions with
certain of our directors and corporations related to the Company. These loans
are unsecured, interest-free, and repayable on demand. As of March 31, 2001 debt
due by the Company to Mr. Chu, one of directors, amounted to HK$14,718,000
(US$1,899,000).

         Other existing loans between the Company and its board of directors,
affiliated and associated companies and their board of directors, and
participating interests as of March 31, 2001 are shown in Note 12 of the
Consolidated Financial Statements included in Item 18.

          In fiscal 1999, 2000 and 2001, the Company and its subsidiaries made
or received payments for various rent, general, management, sales,
subcontracting expenses and property, plant and equipment expenses from related
parties, which parties include (i) Prographic, a company whose stockholder and
board members include Mr. Chu, one of our directors, (ii) BA Consulting (HK)
Limited, a company whose major stockholder and one of its board members is Mr.
Chan Kin Hang, one of our directors, (iii) Genuine, a company whose major
stockholder and one of its board members is Mr. Chu, one of our directors, (iv)
Ba Wah, a company whose major stockholder and one of its board members is Mr.
Chu, one of our directors (v) Good Prominent Media Advertising Company Limited,
a company whose major stockholder


                                       39
<PAGE>   44
and one of its board members is Mr. Li and (vi) INT Design Company Ltd., a
company whose stockholders include Mr. Lam Chi and Mr. Sham Chi Kit, directors
of one of our subsidiaries. Further details, along with details of other related
party transactions set forth in this subsection is set forth in Note 12 of the
Consolidated Financial Statements included in Item 18 of this annual report.

         C.       INTERESTS OF EXPERTS AND COUNSEL

         Not applicable


ITEM 8 - FINANCIAL INFORMATION


         A.       CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

         See Item 18, "Financial Statements."


         B.       EXPORT SALES

         We did not engage in export sales during the year.


         C.       LEGAL PROCEEDINGS

         Enforceability of Civil Liabilities. We are a British Virgin Islands
holding company, and all of our assets are located in Hong Kong, the People's
Republic of China. In addition, all of our directors and officers are
non-residents of the United States, and all or a substantial portion of their
assets are located outside the United States. As a result, investors may be
unable to effect service of process within the United States upon these
non-residents or to enforce against them judgments obtained in United States
courts, including judgments based upon the civil liability provisions of the
securities laws of the United States or any state. There is uncertainty as to
whether the courts of the British Virgin Islands or Hong Kong would enforce:

         -        judgments of United States courts obtained against us or these
                  non-residents based on the civil liability provisions of the
                  securities laws of the United States or any state; or

         -        in original actions brought in the British Virgin Islands or
                  Hong Kong, liabilities against us or these non-residents based
                  on the securities laws of the United States or any state.

         There are no treaties between the British Virgin Islands and the United
States nor between Hong Kong and the United States providing for the reciprocal
enforcement of foreign judgments. However, the courts of the British Virgin
Islands and Hong Kong may accept a foreign judgment as evidence of a debt due.
An action may be commenced in the British Virgin Islands or Hong Kong for
recovery of this debt. However, a British Virgin Islands or Hong Kong court will
only accept a foreign judgment as evidence of a debt due, if:

         -        the judgment is for a liquidated amount in a civil matter;


                                       40
<PAGE>   45
         -        the judgment is final and conclusive and has not been stayed
                  or satisfied in full;
         -        the judgment is not directly or indirectly for the payment of
                  foreign taxes, penalties, fines or charges of a like nature.
                  In this regard, a British Virgin Islands or Hong Kong court is
                  unlikely to accept a judgment of an amount obtained by
                  doubling, trebling or otherwise multiplying a sum assessed as
                  compensation for the loss or damages sustained by the person
                  in whose favor the judgment is given;
         -        the judgment was not obtained by actual or constructive fraud
                  or duress;
         -        the foreign court has taken jurisdiction on grounds that are
                  recognized by the common law rules as to conflict of laws in
                  the British Virgin Islands or Hong Kong;
         -        the proceedings in which the judgment was obtained were not
                  contrary to the concept of fair adjudication;
         -        the proceedings in which the judgment was obtained, the
                  judgment itself and the enforcement of the judgment are not
                  contrary to the public policy of the British Virgin Islands or
                  Hong Kong;
         -        the person against whom the judgment is given is subject to
                  the jurisdiction of the British Virgin Islands or the Hong
                  Kong courts; and
         -        the judgment is not on a claim for contribution in respect of
                  damages awarded by a judgment that does not satisfy the above
                  requirements.

         Enforcement of a foreign judgment in the British Virgin Islands or Hong
Kong also may be limited or otherwise affected by applicable bankruptcy,
insolvency, liquidation, arrangement, moratorium or similar laws relating to or
affecting creditors' rights generally and will be subject to a statutory
limitation of time within which proceedings may be brought.

         Under United States law, majority and controlling shareholders
generally have certain fiduciary responsibilities to minority shareholders.
Shareholder action must be taken in good faith and actions by controlling
shareholders that are obviously unreasonable may be declared null and void.
While we believe there are no material differences between the protection
afforded to minority shareholders of a company organized as an international
business company under the law of the British Virgin Islands from those
generally available to shareholders of corporations organized in the United
States, there may be circumstances where the British Virgin Islands law
protecting the interests of minority shareholders may not be as protective as
the law protecting minority shareholders in United States jurisdictions. Under
British Virgin Islands law, a shareholder of a company organized as an
international business company under the laws of the British Virgin Islands may
bring an action against a company, even if other shareholders do not wish to
bring an action and even though no wrong has been done to the shareholder
personally. This is a representative action, that is, an action on the
shareholder's own behalf and on behalf of other persons in his class, or
similarly situated. Instances where representative actions may be brought
include to:

         -        compel a company to act in a manner consistent with its
                  Memorandum of Association and Articles of Association;
         -        restrain directors from acting on resolutions, where notice of
                  a shareholders' meeting failed adequately to inform
                  shareholders of a resolution proposed at the meeting;
         -        restrain a company, where it proposes to perform an act not
                  authorized by the Memorandum of Association and the Articles
                  of Association or to seek damages from


                                       41
<PAGE>   46
                  a director to compensate a company from the consequences of
                  such an unauthorized act, or to recover property of a company
                  disposed of due to such unauthorized act;
         -        restrain a company from acting upon a resolution that was not
                  made in good faith and for the benefit of shareholders as a
                  whole;
         -        redress where a resolution passed at a shareholders' meeting
                  was not properly passed, for instance, if it was not passed
                  with the necessary majority;
         -        restrain a company from performing an act which is contrary to
                  law; and
         -        restrain a company from taking any action in the name and for
                  the benefit of a company.

         Such an action also may be brought against directors and promoters who
have breached their fiduciary duties to a company, although acts amounting to a
breach of a fiduciary duty can be ratified by a general meeting of shareholders,
in the absence of fraud. Such actions against directors and promoters only may
be taken, however, if such directors and promoters have power to influence the
action taken by a general meeting by means of, for instance, their votes as
shareholders, which would prevent a company from suing them in the company's
name. Although British Virgin Islands law does permit a shareholder of a British
Virgin Islands company to sue its directors representatively or derivatively,
the circumstances in which any such action may be brought as set forth above may
result in the rights of shareholders of a British Virgin Islands company being
more limited than those of shareholders in a United States company.

         Current Proceedings. The Tat Group received on January 5, 1999 a claim
for liquidated damages amounting to HK$21,832,000 in respect of the delay of a
PRC contract. No formal court action has been filed in connection with this
claim, nor has the Tat Group received any further notice from the claimant. Work
on the contract has been completed and the developer took possession of the
property. The delay in completion was caused by changes in job specifications,
which under normal practice, the Tat Group would be given an extension of time
for completion. Accordingly, Management is of the opinion that the Tat Group
will not suffer any losses in respect of this claim. The Tat Group's attorney
meanwhile, having reviewed the facts and evidence, has advised that the Tat
Group has a genuine defense and a good arguable case to answer such dispute. If
such claim is formally asserted, Management intends to vigorously contest such
claim.

         On April 29, 1999, an action was brought against the Tat Group in the
PRC by entity which performed certain constructions works for our subcontractor
amounting to HK$14,019,000 (US$1,809,000). In the initial litigation filed in a
provincial court in the PRC, the court ruled such claimant has no merit to the
case, and, accordingly, the claimant withdrew its legal proceeding on June 18,
1999. The claimant subsequently pursued the claim in another litigation and on
October 20, 1999, received a favorable ruling against the Tat Group, resulting
in a judgment of HK$15,731,000 (US$2,030,000). The legal environment in the PRC
is still not well defined and the Tat Group has appealed the latest ruling on
December 23, 1999. The Tat Group's legal counsel advised that having perused and
considered all the legal documents and evidence, there has not been any legal
binding subcontracting or subcontracting obligations between the claimant and
the Tat Group. Accordingly, the Tat Group could never be a


                                       42
<PAGE>   47
defendant. As such, the Tat Group has not recorded any provision for loss in
connection with this claim. Management intends to continue to vigorously contest
this action.

         Except as described above, we are not a party to any material legal
proceedings and there are no material legal proceedings pending with respect to
our property. We are not aware of any legal proceedings contemplated by any
governmental authorities involving either us or our property. None of our
directors, officers or affiliates is an adverse party in any legal proceedings
involving us or our subsidiaries, or has an interest in any proceeding which is
adverse to us or our subsidiaries.

         D.       POLICY ON DIVIDEND DISTRIBUTIONS

         We do not intend to pay dividends on our Common Stock in the
foreseeable future. Instead, we will retain our earnings to support our growth
strategy and for general corporate purposes. As a holding company, our ability
to pay dividends depends upon our receipt of dividends or other payments from
our subsidiaries and other holdings and investments. In addition, our operating
subsidiaries from time to time may be subject to restrictions on their ability
to make distributions to us, including as a result of restrictive covenants in
loan agreements, restrictions on the conversion of local currency into U.S.
Dollars or other currency and other regulatory restrictions. Any determination
to pay dividends in the future will be at the discretion of our board of
directors and will depend upon our results of operations, financial condition,
contractual restrictions and other factors. Any dividends paid in the future on
the Common Stock may be paid in either U.S. Dollars or Hong Kong Dollars. If
future dividends are paid in Hong Kong Dollars, fluctuations in the exchange
rate for the conversion of Hong Kong Dollars into U.S. Dollars may adversely
affect the amount received by U.S. shareholders upon conversion of the dividend
payment into U.S. Dollars.

         E.       SIGNIFICANT CHANGES

         Effective as of September 19, 2001, Mr. Samuel Yung Wing Ki resigned as
a director of the Company. Other than this, no significant changes have occurred
since the date of the most recent annual financial statements included herein.


ITEM 9 - THE OFFER AND LISTING

         A.       OFFER AND LISTING DETAILS

         1.       Not Applicable

         2.       Not Applicable

         3.       Not Applicable



                                       43
<PAGE>   48
         4.       PRICE HISTORY OF THE STOCK

         Our Common Stock is traded in the over-the-counter market and is quoted
on The Nasdaq National Market under the symbol "QLNX." The following table sets
forth, for the specified periods, the high and low sales prices for the Common
Stock since its listing on the Nasdaq National Market on August 10, 2000:

         We do not believe that there is any principal non-United States trading
market for the Common Stock or the Warrants. We believe that Cede & Co. holds a
substantial majority of the outstanding Common Stock and Warrants in the United
States as record holder.

<TABLE>
<CAPTION>
                      PERIOD                     HIGH (US$)     LOW (US$)
            <S>                                  <C>            <C>
            August 10, 2001 through                8.000           0.610
            August 20, 2001

            Q1 2002 (Apr, May and                  3.020           0.610
            June 2001)
            Q4 2001 (Jan, Feb and Mar              1.250           0.750
            2001)
            Q3 2001 (Oct, Nov, Dec                 7.000           0.750
            2000)

            July 2001                              1.940           1.000
            June 2001                              3.020           1.490
            May 2001                               3.000           0.880
            April 2001                             1.031           0.610
            March 2001                             1.094           0.781
            February 2001                          1.250           0.813
</TABLE>



                                       44
<PAGE>   49
         The Warrants are traded in the over-the-counter market and are quoted
on the Nasdaq National Market under the symbol "QLNXW". The following table sets
forth, for the specified periods, the high and low sales prices for the Warrants
since their listing on the Nasdaq National Market on August 10, 2000:

<TABLE>
<CAPTION>
                        PERIOD                     HIGH (US$)      LOW (US$)
              <S>                                  <C>             <C>
              August 10, 2001 through                1.500           0.050
              August 20, 2001

              Q1 2002 (Apr, May and                  0.440           0.050
              June 2001)
              Q4 2001 (Jan, Feb and Mar              0.313           0.063
              2001)
              Q3 2001 (Oct, Nov, Dec                 0.750           0.063
              2000)

              July 2001                              0.350           0.160
              June 2001                              0.440           0.200
              May 2001                               0.430           0.050
              April 2001                             0.125           0.063
              March 2001                             0.156           0.094
              February 2001                          0.219           0.125

</TABLE>


         There are no provisions for pre-emptive rights under the Memorandum and
Articles of Association of the Company.

         B.       PLAN OF DISTRIBUTION

         Not Applicable


         C.       MARKETS

         The Company's Common Stock is traded on the Nasdaq National Market
System in the United States under the symbol "QLNX." The Company's Warrants are
traded over the counter in the United States under the symbol "QLNXW." For
further information, please see Item 9A-4, above.

         D.       SELLING SHAREHOLDERS

         Not Applicable

         E.       DILUTION

         Not Applicable



                                       45
<PAGE>   50
         F.       EXPENSES OF THE ISSUE

         Not Applicable

ITEM 10 - ADDITIONAL INFORMATION

         A.       SHARE CAPITAL

         Not applicable

         B.       MEMORANDUM AND ARTICLES OF ASSOCIATION

         Corporate Powers. The Company was incorporated in the British Virgin
Islands on January 8, 1997, under British Virgin Islands International Business
Companies number 213972. Clause 4 of the Amended Memorandum of Association
states that the objects for which the Company is established are to engage in
any businesses which are not prohibited by law in force in the British Virgin
Islands.

         Directors. A director who is interested in any transaction with the
Company shall declare the nature of his interest at the meeting of the Board of
Directors. A director may vote or counted as the quorum on any resolution of the
Board in respect of any transaction in which he is materially interested.
However, if the transaction cannot be approved by a resolution of directors
without counting the vote or consent of the interested director the transaction
may only be validated by approval or ratification by a resolution of members.
The directors may, by a resolution of directors, fix the emoluments of directors
in respect of services rendered or to be rendered in any capacity to the
Company. The directors may by a resolution of directors exercise all the powers
of the Company to borrow money. There is no age limit requirement for retirement
or non- retirement of directors. A director shall not require a share
qualification.

         Share Rights, Preferences and Restrictions. The authorized share
capital of the Company is US$ 1 million divided into 100 million shares of par
value US$ 0.01 per share. All dividend unclaimed for three years after having
been declared may be forfeited by the directors for the benefit of the Company.
All shares vote as one class and each whole share has one vote. The Company may
redeem any of its own shares for such consideration as the Company by a
resolution of directors considers fit.

         Changing Share Rights. The rights of each class and series of shares
that the Company is authorized to issue shall be fixed by the resolution of
directors. If the authorized capital is divided into different classes, the
rights attached to any class may be varied with the consent in writing of the
holders of not less than three-fourths of the issued shares of that class and of
the holders of not less than three-fourths of the issued shares of any other
class which may be affected by such variation.

         Shareholder Meetings. The directors may convene meetings of the members
of the Company at such time and in such manner and places as the directors
consider necessary or desirable. The directors shall convene such a meeting upon
the written request of members holding more than 10 percent of the votes of the
outstanding voting shares in the Company. At


                                       46
<PAGE>   51
least seven days notice of the meeting shall be given to the members whose name
appears on the share register and at least fourteen days notice shall be given
to shares issued to bearer.

         Restrictions on Rights to Own Securities. There are no limitations on
the rights to own securities.

         Change in Control Provisions. No provision of the Company's memorandum
of association and articles of association that have an effect of delaying,
deferring or preventing a change in control of the Company and that would have
operate only with respect to a merger, acquisition or corporate restructuring
involving the Company.

         Disclosure of Share Ownership. There are no provisions governing the
ownership threshold above which shareholder ownership must be disclosed.

         Applicable Law. In connection with rights related to the above listed
items, see "Item 8 - Legal Proceedings" for certain differences between the law
of the British Virgin Islands and the United States.

         Changes in Capital. Requirements to effect changes in capital are not
more stringent than is required by law.

         C.       MATERIAL CONTRACTS

         The following is a summary of each material contract, other than
contracts entered into in the ordinary course of business, to which the Company.
or a member of the Company's group, is a party for the two immediately preceding
years:

         1.       On September 1, 2000, we entered into a conditional purchase
                  agreement with a shareholder of Workplace, whereby, in
                  exchange for HK$5,000,000 (US$645,000), we will purchase a 30%
                  equity interest in Workplace within eighteen months from the
                  date of the agreement; provided that if we do not receive the
                  30% Workplace interest within the eighteen month period, the
                  purchase will not close and shareholder will return the entire
                  HK$5,000,000 consideration plus interest pursuant to the
                  agreement.

         2.       On March 27, 2001, we entered into a conditional purchase
                  agreement with Mr. Chu, one of our directors and majority
                  shareholder of UATC to acquire approximately a 7.9% equity
                  interest in UATC exchange for HK$25,000,000 (US$3,226,000).
                  The aggregate value of UATC, as determined by an independent
                  valuation report, was determined to be approximately
                  HK$350,000,000. The HK$25,000,000 consideration given in
                  exchange for the 7.9% equity interest therefore represents a
                  10 percent discount from fair market value.

         3.       On June 12, 2001, we entered into a formal agreement with
                  Delightmen Limited, a Hong Kong corporation, Ever Base
                  Investment Limited, a Hong Kong corporation, Mr. Lam Chi Yiu
                  and Mr. Sham Chi Kit, whereby, in exchange for


                                       47
<PAGE>   52
                  HK$6 million, the Company acquired 100% of the issued share
                  capital of Sonik Interior Contracting Company.

         D.       EXCHANGE CONTROLS

         GENERAL

         There are no material British Virgin Islands laws that impose foreign
exchange controls on us or that affect our payment of dividends, interest or
other payments to nonresident holders of our capital stock. British Virgin
Islands law and our Memorandum of Association and Articles of Association impose
no limitations on the right of nonresident or foreign owners to hold or vote the
Common Stock.

         E.       TAXATION

         The following is a summary of the principal British Virgin Islands tax
consequences of the purchase, ownership and disposition of our Common Stock. The
summary does not deal with all possible tax consequences relating to an
investment in the Common Stock and does not purport to deal with the tax
consequences applicable to all categories of investors, some of which, such as
dealers in securities, insurance companies and tax exempt entities, may be
subject to special rules. In particular, the discussion does not address the tax
consequences under non-British Virgin Islands tax laws. Accordingly, each
prospective investor should consult its own tax advisor regarding the particular
tax consequences to it of an investment in our Common Stock. The discussion
below is based upon laws and relevant interpretations in effect as of the date
of this annual report, all of which are subject to change.

         BRITISH VIRGIN ISLANDS TAXATION

         Under the International Business Companies Act of the British Virgin
Islands as currently in effect, a holder of Common Stock who is not a resident
of BVI is exempt from BVI income tax on dividends paid with respect to the
Common Stock and all holders of Common Stock are not liable for BVI income tax
on gains realized during that year on sale or disposal of such shares; BVI does
not impose a withholding tax on dividends paid by a company incorporated under
the International Business Companies Act.

         There are no capital gains, gift or inheritance taxes levied by the
British Virgin Islands on companies incorporated under the International
Business Companies Act. In addition, the Common Stock is not subject to transfer
taxes, stamp duties or similar charges.

         There is no income tax treaty or convention currently in effect between
the United States and the British Virgin Islands.


                                       48
<PAGE>   53
         F.       DIVIDENDS AND PAYING AGENTS

         Not Applicable

         G.       STATEMENTS BY EXPERTS

         Not Applicable

         H.       DOCUMENTS ON DISPLAY

         We are currently subject to the information and periodic requirements
of the Securities Exchange Act of 1934, as amended, and file periodic reports
and other information with the Commission. Our SEC filings, including this
annual report, are available for inspection and copying at the public reference
facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W.
Washington, D.C., 20549, and the Commission's regional offices in New York, New
York and Chicago, Illinois. Copies of all or any part of this annual report may
be obtained from these offices after payment of fees prescribed by the
Commission. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. The Commission also maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants.

         As a foreign private issuer, we are exempt from the rules under the
Securities Exchange Act of 1934, as amended, prescribing the furnishing and
content of proxy statements to shareholders. Because we are a foreign private
issuer, we, our directors and our officers are also exempt from the shortswing
profit recovery and disclosure regime of Section 16 of the Exchange Act.


         I.       SUBSIDIARY INFORMATION

         Not applicable

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We do not hold market sensitive instruments for trading or other
speculative purposes. Therefore, no quantitative tabular disclosures have been
included in this report



ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not Applicable


                                       49
<PAGE>   54

                                     PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

         None

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

         E.       USE OF PROCEEDS

         On August 9, 2000, the Commission declared effective the Company's
Registration Statement (file number 333-11750) on Form F-1, as filed with the
Commission in connection with the Company's initial public offering (the "IPO"),
which was managed by Barron Chase Securities, Inc. Pursuant to this Registration
Statement, the Company commenced an offering and sale of certain securities on
August 10, 2000. The title of each class of securities registered is US$.01 par
value Common Stock and Warrants to purchase Common Stock. The Company registered
1,500,000 shares of Common Stock and 1,500,000 Warrants for its account; the
aggregate offering price of the Common Stock was US$12,000,000 and the aggregate
offering price of the Warrants was US$187,500. All of the foregoing shares of
Common Stock and Warrants were sold as of the date hereof, aggregating
US$12,187,500. The offering has since terminated and did not terminate before
the sale of all securities registered.

         In connection with the issuance and distribution of the securities
registered, the Company incurred expenses for underwriting discounts and
commissions, finder's fees, expenses paid to or for underwriters, and other
expenses in the aggregate amount of approximately US$3,086,000 paid directly to
others in connection with the IPO. The net offering proceeds to the Company,
after deducting the total expenses of US$3,086,000, as described above, is set
forth as follows, all of which were paid to others (unless otherwise indicated):
(i) US$1,248,000 to expand our computer and software business, (ii) US$5,225,000
for business development in new technological products, which amount includes
the US$3,493,000 used to acquire UATC, US$3,226,000 of which was paid to Mr.
Chu, one of our directors and majority shareholder of UATC, and US$267,000 of
was advance to UATC for reseach and development, (iii) US$527,000 for marketing
and promotion, (iv) US$774,000 to acquire Sonik, (v) US$645,000 to conditionally
acquire Workplace, whose majority shareholder is Mr. Shikiba, and (vi)
US$1,210,000 for working capital.

         The use of proceeds as described above represents a material change in
the use of proceeds as described in our prospectus dated August 9, 2000 (the
"Prospectus"). Firstly, in our Prospectus under "Use of Proceeds," we had
expected to expend approximately US$3,500,000 to expand our computer and
software business. Due to the worldwide downturn in demand for high


                                       50
<PAGE>   55

technology and software products, however, the Company had decided to reduce its
expenditures on such expansion, instead spending only US$1,248,000 in this
category. Secondly, the Company has focused its core business on providing
intelligent building solutions. Therefore, rather than spending only
US$2,800,000 on business development in new technological products as described
in the Prospectus, the Company has instead expended US$5,225,000 in this
category. Thirdly, we used US$774,000 to acquire Sonik and US$645,000 to
conditionally acquire Workplace. Our Prospectus indicated that we would expend
approximately US$1,800,000 to acquire a Hong Kong Government Class C contractors
license, which was intended to expand our constructing and contracting business.
Because we were not able to acquire such license, we instead expanded our
constructing and contracting business by acquiring Sonik and Workplace. Finally,
because of a recent decrease in profits, we used US$1,210,000 for working
capital rather than the US$725,000 as described in the Prospectus.

ITEM 15 - RESERVED

ITEM 16 - RESERVED


                                       51
<PAGE>   56

                                    PART III

ITEM 17 -  FINANCIAL STATEMENTS

         The Company has elected to provide financial statements pursuant to
Item 18.

ITEM 18 - FINANCIAL STATEMENTS

         The financial statements as required under Item 18 are attached hereto
and found immediately following the text of this annual report. The reports of
the Company's independent public accountants are included herein immediately
preceding the Consolidated Financial Statements for the years ended March 31,
1999, 2000 and 2001.

ITEM 19 - EXHIBITS

         The following financial statements are being filed as part of this
Annual Report on Form 20-F:

         Report of Independent Auditors
         Consolidated statements of operations for the years ended March 31,
          1999, 2000 and 2001
         Consolidated balance sheets at March 31, 2000 and 2001
         Consolidated statements of shareholders' equity for the years ended
          March 31, 1999, 2000 and 2001
         Consolidated statements of cash flows for the years ended March 31
          1999, 2000 and 2001
         Notes to and forming part of the financial statements

         EXHIBIT INDEX

         The following exhibits are being filed as part of this Annual Report on
Form 20-F:

<TABLE>
         <S>      <C>
         10.1     Agreement dated September 1, 2000, by and between the Company
                  and Mr. Shikiba, a director of the Company, in connection with
                  a conditional sale of approximately 30% of the issued share
                  capital of Workplace in exchange for HK$5,000,000.

         10.2     Agreement dated March 27, 2001, by and between the Company and
                  Mr. Chu, a director and Chairman of the Company in connection
                  with the sale of approximately 7.9% of the issued share
                  capital of UATC in exchange for HK$25,000,000.

         10.3     Agreement dated June 12, 2001, by and among the Company,
                  Delightmen Limited, a Hong Kong corporation, Ever Base
                  Investment Limited, a Hong Kong corporation, Mr. Lam Chi Yiu
                  and Mr. Sham Chi Kit in connection with the Company's
                  acquisition 100% of the issued share capital of Sonik Interior
                  Contracting Company in exchange for HK$6 million.
</TABLE>


                                       52
<PAGE>   57

                                   SIGNATURES

          Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                             QUINTALINUX LIMITED

                                             By:

                                             /s/Tat CHU
                                             -----------------------------------

                                             Tat CHU, Chairman

                                             Date: September 28, 2001


                                       53
<PAGE>   58

                               Quintalinux Limited

                       Years Ended March 31, 2000 and 2001

                                 Contents

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                ------------

<S>                                                                             <C>
Report of Independent Certified Public Accountants                                       F-2

Consolidated Statements of Operations for the Years Ended
March 31, 1999, 2000 and 2001                                                      F-3 - F-4

Consolidated Balance Sheets as of March 31, 2000 and 2001                          F-5 - F-6

Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended March 31, 1999, 2000 and 2001                                            F-7

Consolidated Statements of Cash Flows for the Years Ended March 31,
1999, 2000 and 2001                                                               F-8 - F-10

Notes to the Consolidated Financial Statements                                   F-11 - F-37
</TABLE>


                                      F-1
<PAGE>   59

               Report of Independent Certified Public Accountants

To the Stockholders and Board of Directors of
Quintalinux Limited

We have audited the accompanying consolidated balance sheet of Quintalinux
Limited and its subsidiaries ("the Group") as of March 31, 2001, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
financial statements for the Company as of and for the year ended March 31, 2000
and for the year ended March 31, 1999, were audited by other auditors whose
report dated July 28, 2000, expressed an unqualified opinion on those financial
statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above,
present fairly, in all material respects, the consolidated financial position of
the Company as of March 31, 2001, and the consolidated results of its operations
and cash flows for the year ended March 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.


/s/
Blackman Kallick Bartelstein, LLP
Chicago, Illinois

September 19, 2001


                                      F-2
<PAGE>   60

                               Quintalinux Limited

                      Consolidated Statements of Operations

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands except share amounts)

<TABLE>
<CAPTION>
                                                   Years Ended March 31,
                                  --------------------------------------------------------
                                    1999            2000            2001            2001
                                    HK$             HK$             HK$             US$
                                  --------        --------        --------        --------

<S>                               <C>             <C>             <C>             <C>
Contract Revenue                   171,495         188,103         138,071          17,816

Contract Costs                    (127,905)       (139,639)       (132,211)        (17,059)
                                  --------        --------        --------        --------

Gross Profit                        43,590          48,464           5,860             757
                                  --------        --------        --------        --------

Expenses
   Selling, general and
     administrative                (24,150)        (24,171)        (48,068)         (6,202)
   Depreciation and
      amortization                    (649)           (784)         (3,428)           (442)
                                  --------        --------        --------        --------
                                   (24,799)        (24,955)        (51,496)         (6,644)
                                  --------        --------        --------        --------

Other Operating Income
   Management fee income                57              53              --              --
   Rental income                        --             258             480              62
   Project handling income              --              93              --              --
                                  --------        --------        --------        --------
                                        57             404             480              62
                                  --------        --------        --------        --------

Operating Income (Loss)             18,848          23,913         (45,156)         (5,825)
                                  --------        --------        --------        --------

Interest Income                        192             128           1,230             159

Interest Expense                      (990)         (1,516)         (3,648)           (471)
                                  --------        --------        --------        --------

                                      (798)         (1,388)         (2,418)           (312)
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-3
<PAGE>   61

                               Quintalinux Limited

                      Consolidated Statements of Operations

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands except share amounts)

<TABLE>
<CAPTION>
                                                                                Years Ended March 31,
                                                           ----------------------------------------------------------------
                                                              1999              2000              2001              2001
                                                               HK$               HK$               HK$               US$
                                                           ----------        ----------        ----------        ----------

<S>                                                        <C>               <C>               <C>               <C>
Other Income
     Exchange gain                                                 --                57                76                10
     Minority interest                                             --                92               529                68
     Other                                                        177               259             1,408               182
                                                           ----------        ----------        ----------        ----------

                                                                  177               408             2,013               260
                                                           ----------        ----------        ----------        ----------

Income (Loss) before Income Taxes                              18,227            22,933           (45,561)           (5,877)

Income Tax Expense                                             (1,200)             (893)               --                --
                                                           ----------        ----------        ----------        ----------

Net Income (Loss)                                              17,027            22,040           (45,561)           (5,877)

Other Comprehensive Income (Loss) - Gross
     unrealized gains (losses) on marketable equity
     securities                                                    --               969           (11,521)           (1,487)
                                                           ----------        ----------        ----------        ----------

Comprehensive Income (Loss)                                    17,027            23,009           (57,082)           (7,364)
                                                           ==========        ==========        ==========        ==========

Net Income (Loss) per Share
     Weighted average number of -
       shares outstanding
         Basic                                              4,831,932         5,985,808         8,562,950         8,562,950
                                                           ==========        ==========        ==========        ==========

Net Income (Loss) per Share of
  Common Stock                                                HK$3.52           HK$3.68          HK$(5.32)          US$(.69)
                                                           ==========        ==========        ==========        ==========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-4
<PAGE>   62

                               Quintalinux Limited

                           Consolidated Balance Sheets

                       Years Ended March 31, 2000 and 2001

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  As of March 31,
                                                       -------------------------------------
                                                         2000           2001           2001
                                                         HK$            HK$            US$
                                                       -------        -------        -------

<S>                                                    <C>            <C>            <C>
                                          Assets

Current Assets
     Cash and cash equivalents                           5,421            694             90
     Restricted cash                                    11,150         13,481          1,739
     Accounts receivable, net of allowance
       For doubtful accounts (HK$7,049 in 2000
       and HK$5,298 in 2001)                            76,026         66,257          8,549
     Costs and estimated earnings in excess
      of billings on uncompleted contracts              24,219          9,360          1,208
     Unbilled receivables                                   --          4,569            590
     Retention money receivable                          5,816          5,109            659
     Inventories                                         2,018          4,796            619
     Due from related parties, net of allowance
       for doubtful accounts (HK$0 in 2000 and
       HK$9,237 in 2001)                                    --          5,383            695
     Deposits                                              581          2,282            294
     Deposits on investments                                --         30,000          3,871
     Prepayments and other current assets                3,348         11,598          1,497
     Preconstruction costs                                  --          1,335            172
     Prepaid taxes                                          50            403             52
                                                       -------        -------        -------

                 Total Current Assets                  128,629        155,267         20,035

Property, Plant and Equipment, Net                      40,520         45,982          5,933

Marketable Equity Securities                            12,594          1,073            138

Deferred Offering Costs                                  5,355             --             --

Goodwill (Net of accumulated amortization
  of HK$55 in 2000 and HK$1,270 in 2001)                 1,025         23,903          3,084
                                                       -------        -------        -------

                 Total Assets                          188,123        226,225         29,190
                                                       =======        =======         ======
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-5
<PAGE>   63

                               Quintalinux Limited

           Consolidated Statements of Changes in Stockholders' Equity

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                   As of March 31,
                                                      ----------------------------------------
                                                        2000            2001            2001
                                                        HK$             HK$             US$
                                                      --------        --------        --------

<S>                                                   <C>             <C>             <C>
                             Liabilities and Stockholders' Equity

Current Liabilities
     Bank overdraft                                      9,589          23,985           3,095
     Bank loans, current                                 4,197           5,095             657
     Trust receipt loan                                     --           3,683             475
     Accounts and bills payable - trade                 90,530          88,404          11,406
     Capital lease obligations, current                     75             115              15
     Accrued expenses and other payable                  5,434           4,857             627
     Billings in excess of costs and estimated
       Earnings on uncompleted contracts                 1,819           6,452             832
     Provision for anticipated future contract
       losses                                               --             484              62
     Other deposits received                               176              44               5
     Retention money payable                               306              --              --
     Due to related parties                              3,076          14,718           1,899
     Income taxes payable                                1,560             673              87
     Accrued deferred offering costs                     1,784              --              --
     Loan payable                                          458              --              --
                                                      --------        --------        --------

                 Total Current Liabilities             119,004         148,510          19,160

Bank Loans, Noncurrent                                   6,030             936             121
Capital Lease Obligations, Noncurrent                       17             311              40
Deferred Taxation                                           37              37               5
                                                      --------        --------        --------

                 Total Liabilities                     125,088         149,794          19,326

Minority Interest                                         (150)           (671)            (87)
                                                      --------        --------        --------

Commitments and Contingencies

Stockholders' Equity
     Common stock                                          620             735              95
     Additional paid-in capital                         18,324          89,208          11,511
     Accumulated other
       comprehensive income                                969         (10,552)         (1,362)
     Retained earnings (Accumulated
       deficit)                                         43,272          (2,289)           (293)
                                                      --------        --------        --------

                 Total Stockholders' Equity             63,185          77,102           9,951
                                                      --------        --------        --------

                 Total Liabilities and
                   Stockholders' Equity                188,123         226,225          29,190
                                                      ========        ========        ========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-6
<PAGE>   64

                               Quintalinux Limited

           Consolidated Statements of Changes in Stockholders' Equity

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands except share amounts)

<TABLE>
<CAPTION>
                                         Common Stock                     Accumulated      Retained
                                  -----------------------    Additional      Other         Earnings            Total
                                    Number                     Paid-in   Comprehensive  (Accumulated    --------------------
                                  of Shares       Amount       Capital   Income (Loss)     Deficit)       HK$          US$
                                  ----------      -------    ----------  -------------   -----------    -------      -------
                                                    HK$           HK$         HK$              HK$

<S>                               <C>             <C>        <C>         <C>            <C>             <C>          <C>
Balance as of
  March 31, 1998                   4,825,000          374        2,627           --          4,205        7,206          930
Issue of Shares
  at Par Value                        10,000            1           --           --             --            1           --
Net Income                                --           --           --           --         17,027       17,027        2,197
                                  ----------      -------      -------      -------        -------      -------      -------
Balance as of
  March 31, 1999                   4,835,000          375        2,627           --         21,232       24,234        3,127
Issue of Shares
  (Note (1))                       2,985,000          231       14,784           --             --       15,015        1,937
Issue of Shares
  (Note (2))                         180,000           14          913           --             --          927          120
Gross Unrealized Gain
  on Marketable Equity
  Securities                              --           --           --          969             --          969          125
Net Income                                --           --           --           --         22,040       22,040        2,844
                                  ----------      -------      -------      -------        -------      -------      -------
Balance as of
  March 31, 2000                   8,000,000          620       18,324          969         43,272       63,185        8,153
Issue of Shares (Net of
  offering costs) (Note (3))       1,500,000          115       70,884           --             --       70,999        9,162

Gross Unrealized Loss
  on Marketable Equity
  Securities                                                                (11,521)                    (11,521)      (1,487)
Net Income (Loss)                                                                          (45,561)     (45,561)      (5,877)
                                  ----------      -------      -------      -------        -------      -------      -------
Balance as of
  March 31, 2001                   9,500,000          735       89,208      (10,552)        (2,289)      77,102        9,951
                                  ==========      =======      =======      =======        =======      =======      =======
</TABLE>

Note:

(1)      Issuance of 2,985,000 shares of common stock of the Company in exchange
         for the outstanding common stock of Li Group effected on November 19,
         1999.

(2)      Issuance of 180,000 shares of common stock of the Company in exchange
         for 72.5% equity interest in LSSL effected on November 24, 1999.

(3)      Issuance of 1,500,000 shares of common stock in a public offering in
         August of 2000.

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-7
<PAGE>   65

                               Quintalinux Limited

                      Consolidated Statements of Cash Flows

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           Years Ended March 31,
                                                               ----------------------------------------------
                                                                 1999         2000         2001         2001
                                                                 HK$          HK$          HK$          US$
                                                               -------      -------      -------      -------

<S>                                                            <C>          <C>          <C>          <C>
Cash Flows from Operating Activities
     Net income (loss)                                          17,027       22,040      (45,561)      (5,877)
     Adjustment to reconcile net income to
       net cash provided by (used in)
       operating activities
         Depreciation of property, plant and
           equipment                                               649          729        2,085          269
         Amortization                                               --           55        1,345          173
         Allowance for doubtful accounts                           244            9        1,700          219
         Loss on disposal of property, plant
           and equipment                                           369           44          882          114
         Minority interest                                          --          (92)        (529)         (68)
           Changes in operating assets and liabilities:
           Accounts receivable                                   3,979      (51,301)      18,167        2,344
           Unbilled receivable                                      --           --       (4,045)        (522)
           Provision for anticipated future losses                  --           --         (624)         (81)
           Costs in excess of billings                          (1,915)      (7,189)      24,387        3,147
           Retention money receivable                            1,135       (2,082)         707           91
           Inventories                                               8         (452)      (2,778)        (358)
           Deposits                                                364          129       (1,701)        (220)
           Prepayments and other current assets                   (382)         155       (9,619)      (1,241)
           Accounts and bills payable - trade                  (13,669)      35,511      (33,498)      (4,322)
           Accrued expenses and other payable                   (1,735)      (4,164)        (699)         (90)
           Billings in excess of costs
             and other deposits received                        (4,691)      (5,287)      (5,709)        (737)
           Retention money payable                                 111          135         (306)         (39)
           Taxation                                              1,120          121         (936)        (121)
                                                               -------      -------      -------      -------

                 Net Cash Provided by (Used in)
                   Operating Activities                          2,614      (11,639)     (56,732)      (7,319)
                                                               -------      -------      -------      -------
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-8
<PAGE>   66

                               Quintalinux Limited

                      Consolidated Statements of Cash Flows

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  Years Ended March 31,
                                                     ----------------------------------------------
                                                       1999         2000         2001         2001
                                                       HK$          HK$          HK$          US$
                                                     -------      -------      -------      -------

<S>                                                  <C>          <C>          <C>          <C>
Cash Flows from Investing Activities
     Purchase of property, plant and
       equipment                                      (2,705)      (1,266)      (7,784)      (1,004)
     Due from related parties                         (1,587)      16,660       (1,346)        (174)
     Proceeds on disposal of property,
       plant and equipment                                65           --           --           --
     Deposits on investment                               --           --      (30,000)      (3,871)
     Acquisitions, net of cash acquired                   --           79       (5,560)        (717)
                                                     -------      -------      -------      -------

                 Net Cash (Used in) Provided
                    By Investing Activities           (4,227)      15,473      (44,690)      (5,766)
                                                     -------      -------      -------      -------

Cash Flows from Financing Activities
     Common stock issued                                   1           --       74,570        9,622
     Loan acquired                                        --        7,700           --           --
     Repayment of amounts borrowed                        --         (191)        (973)        (125)
     Repayment of capital lease obligations             (105)         (66)         (54)          (7)
     Due to related parties                              167       12,661       11,087        1,430
     Restricted cash                                     (45)      (7,031)      (2,331)        (301)
     Bank overdraft                                    1,193       (8,778)      14,396        1,857
     Deferred offering costs                            (425)      (3,146)          --           --
     Increase in loan payable                            458           --           --           --
                                                     -------      -------      -------      -------

                 Net Cash Provided by
                   Financing Activities                1,244        1,149       96,695       12,476
                                                     -------      -------      -------      -------
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-9
<PAGE>   67

                               Quintalinux Limited

                      Consolidated Statements of Cash Flows

                    Years Ended March 31, 1999, 2000 and 2001

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                 Years Ended March 31,
                                                      ------------------------------------------
                                                       1999        2000        2001        2001
                                                       HK$         HK$         HK$         US$
                                                      ------      ------      ------      ------

<S>                                                   <C>         <C>         <C>         <C>
Net Increase (Decrease) in Cash and
  Cash Equivalents                                      (369)      4,983      (4,727)       (609)

Cash and Cash Equivalents, as of
  Beginning of Year                                      807         438       5,421         699
                                                      ------      ------      ------      ------

Cash and Cash Equivalents, as of
  End of Year                                            438       5,421         694          90
                                                      ======      ======      ======      ======

Supplemental Disclosure of Cash Flow Information
     Cash paid for interest                              990       1,516       3,648         471
                                                      ======      ======      ======      ======

     Cash paid for taxes                                  80         726       1,240         160
                                                      ======      ======      ======      ======

Noncash Transaction
     Common stock issued for acquisitions                 --         245          --          --
     Purchase of equipment under capital lease            77          --         388          50
     Accrual of deferred offering costs                1,040         744          --          --
     Transfer-in of property from stockholder             --      27,000          --          --
     Transfer-in of marketable equity
       securities from stockholder                        --      11,625          --          --
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-10
<PAGE>   68

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 1 -- Basis of Financial Statements Presentation and Reorganization

The Company was incorporated in the British Virgin Islands on January 8, 1997 as
a limited liability company and was known as Quinta Development Limited. On
February 3, 2000, pursuant to a resolution passed by the Board of Directors, the
Company changed its name to Quintalinux Limited. The change of name was approved
by the Registrar of Companies of the British Virgin Islands on February 17,
2000. As of March 31, 1999, the Company has authorized and outstanding common
stock of 100,000,000 shares and 20,000 shares of US$0.01 each respectively (see
note 10 for further details). 9,000 outstanding shares, representing 45% of the
Company's issued common stock, are issued to each of Mr. Chu Tat ("Mr. Chu") and
Mr. Perick Li Wai Ho ("Mr. Li"). Another 2,000 outstanding shares representing
the remaining 10% of the Company's issued common stock are issued to other third
parties.

Mr. Chu was the principal stockholder of Interact Contracting Company Limited;
Interact (China) Design & Contracting Company Limited and Uni-Zone Holdings
Limited, hereinafter collectively referred to as (the "Tat Group").

Mr. Li was the principal stockholder of Pado (Holdings) Limited and its
subsidiary companies, namely Pado Contracting Company Limited and Good Prominent
Engineering Company Limited, Good Prominent Technology Company Limited and Good
Prominent Trading Limited, hereinafter collectively referred to as (the "Li
Group").

Pursuant to the Share Exchange Agreements entered into between the Company and
the stockholders of Tat Group and Li Group on November 5, 1999, each of the
stockholders of the Tat Group and Li Group transferred his controlling interest
in the outstanding common stock of each of the companies comprising the Tat
Group and the Li Group respectively in exchange for 61.57% and 38.17% of the
enlarged outstanding shares of common stock of the Company. The transaction was
completed on November 19, 1999 when the Company became the holding company of
all companies comprising the Tat Group and the Li Group.

Pursuant to the Share Exchange Agreement entered into between the Company and
the stockholders of Linux System Solution Limited ("LSSL") on November 11, 1999,
the Company issued a further 180,000 shares, representing 2.25% of the enlarged
outstanding shares of common stock of the Company, to certain LSSL's
stockholders, one of whom is Mr. Li, in exchange for their 72.5% equity interest
in LSSL. The transaction was completed on November 24, 1999.

Upon completion of the above acquisitions, the Company had outstanding 8,000,000
shares of common stock of which 60.3% and 38.2% were owned by Mr. Chu and Mr. Li
respectively.


                                      F-11
<PAGE>   69

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 1 -- Basis of Financial Statements Presentation and
          Reorganization (Continued)

Acquisition of the Tat Group, for accounting purposes, has been treated as the
acquisition of the Company by the Tat Group with the Tat Group as the accounting
acquirer ("reverse acquisition"). On this basis, the historical stockholders'
equity amounts since April 1, 1997 has been retroactively restated to reflect
the equivalent number of shares of common stock of the Company issued for
acquisition with the difference between par value of the Company's and Tat
Group's common stock reported in additional paid-in capital. The historical
financial statements prior to November 19, 1999, are those of the Tat Group.

Acquisitions of the Li Group and LSSL have been accounted for using the purchase
method of accounting. The purchase method of accounting allocates the aggregate
purchase price to the assets acquired and liabilities assumed based upon their
respective fair value.

The following supplementary unaudited pro forma condensed consolidated statement
of operations information for the year ended March 31, 2000 give effect to the
acquisitions of Li Group and LSSL as if such acquisitions had occurred at the
beginning of the period. All significant inter-company transactions have been
eliminated.

The supplemental unaudited pro form presentation does not purport to be
indicative of what the Group's actual results would have been assuming the
acquisitions mentioned above had been completed at the beginning of the period,
nor does it purport to be indicative of results of operations that may be
achieved in the future.

<TABLE>
<CAPTION>
                                                                        Years Ended March 31,
                                                      -----------------------------------------------------
                                                         1999                  2000                 2000
                                                          HK$                   HK$                  US$
                                                      ----------            ----------           ----------
        <S>                                           <C>                   <C>                  <C>
        Operating Revenue                                215,559               201,343               25,980
                                                      ----------            ----------           ----------
        Operating Income before Interest
           and Income Tax                                 21,716                25,681                3,314
        Net Interest Expense                              (2,711)               (2,143)                (277)
                                                      ----------            ----------           ----------
        Income before Income Taxes                        19,005                23,538                3,037
        Income Tax Expense                                (1,550)                 (893)                (115)
                                                      ----------            ----------           ----------
        Net Income                                        17,455                22,645                2,922
        Other Comprehensive Income                            --                   969                  125
                                                      ----------            ----------           ----------
        Comprehensive Income                              17,455                23,614                3,047
                                                      ==========            ==========           ==========
        Net Income per Share                             HK$2.18               HK$2.83               US$.37
                                                      ==========            ==========           ==========
        Shares Used in Computing Net
          Income per Share                             8,000,000             8,000,000            8,000,000
                                                      ==========            ==========           ==========
</TABLE>


                                      F-12
<PAGE>   70

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 1 -- Basis of Financial Statements Presentation and
          Reorganization (Continued)

The Company is an investment holding company. Details of each of the companies
comprising the Group and its principal activities as of March 31, 2001 are
summarized below:
<TABLE>
<CAPTION>
                                                                               Equity Interest
                                       Date of                Place of             Owned by           Principal
Name of Company                     Incorporation          Incorporation          the Company         Activities
---------------                    ---------------         -------------      -------------------     ----------
                                                                              Direct     Indirect
                                                                              ------     --------
<S>                                <C>                     <C>                <C>        <C>          <C>
Interact Contracting
  Company Limited                  January 21, 1992          Hong Kong         100%                   Construction,
                                                                                                      engineering,
                                                                                                      decoration and
                                                                                                      design services
Interact (China) Design &
  Contracting Company
  Limited                          December 20, 1994         Hong Kong         100%                   General
                                                                                                      contracting
                                                                                                      and decoration
                                                                                                      services
                                                                                                      in the PRC

Uni-Zone Holdings Limited          May 19, 1994              Hong Kong         100%                   Design, supply
                                                                                                      and installation
                                                                                                      of carpet and raised
                                                                                                      floor system
Pado Contracting Company
  Limited                          December 16, 1983         Hong Kong                     100%       Renovation work

Pado (Holdings) Limited            March 11, 1993            Hong Kong         100%                   Investment holding

Good Prominent Technology
 Company Limited                   April 18, 1990            Hong Kong         100%                   Construction and
                                                                                                      installation of light
                                                                                                      emitting diode
Good Prominent Engineering
  Company Limited                  October 1, 1992           Hong Kong                     100%       Trading and
                                                                                                      installation of
                                                                                                      lighting materials
Good Prominent Trading
  Limited                          December 28, 1987         Hong Kong         100%                   Trading of
                                                                                                      building materials
</TABLE>


                                      F-13
<PAGE>   71

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 1 -- Basis of Financial Statements Presentation and
          Reorganization (Continued)

<TABLE>
<CAPTION>
                                                                               Equity Interest
                                       Date of                Place of             Owned by           Principal
Name of Company                     Incorporation          Incorporation          the Company         Activities
---------------                    ---------------         -------------      -------------------     ----------
                                                                              Direct     Indirect
                                                                              ------     --------
<S>                                <C>                     <C>                <C>        <C>          <C>
Linux Systems Solutions
Limited                            April 23, 1999            Hong Kong          72.5%                 Provision of
                                                                                                      professional
                                                                                                      consulting and
                                                                                                      support services,
                                                                                                      systems integration
                                                                                                      and application
                                                                                                      development for Linux
                                                                                                      operating systems

RDC Limited                        December 8, 2000          Hong Kong         100%                   Dormant

Quintalinux Investment
Holdings Limited                   October 25, 2000          Hong Kong         100%                   Investment holding

Quinta (China) Company
Limited                            January 10, 2001          Hong Kong                    100%        Dormant

W & T System Technology
Company Limited                    November 13, 2000         Hong Kong                     51%        Dormant

Interact (Asia) Contracting
Company Limited                    November 10, 2000         Hong Kong          50%        50%        Dormant

Jext Company Limited               October 23, 2000          Hong Kong         100%                   Trading of software
                                                                                                      applications
</TABLE>


                                      F-14
<PAGE>   72

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 1 -- Basis of Financial Statements Presentation and
          Reorganization (Continued)

<TABLE>
<CAPTION>
                                                                               Equity Interest
                                       Date of                Place of             Owned by           Principal
Name of Company                     Incorporation          Incorporation          the Company         Activities
---------------                    ---------------         -------------      -------------------     ----------
                                                                              Direct     Indirect
                                                                              ------     --------
<S>                                <C>                     <C>                <C>        <C>          <C>
Intelligent-Wireless
Automation Systems Limited         December 1, 2000          Hong Kong           70%                  Development of
                                                                                                      intelligent-wireless
                                                                                                      automation systems

IB Consultants Limited             October 24, 1997          Hong Kong          100%                  Intelligent building
                                                                                                      solution consultants

Sonik Interior Contracting
Company Limited                    January 10, 1991          Hong Kong          100%                  Interior contracting
                                                                                                      works
</TABLE>


Note 2 -- Summary of Significant Accounting Policies

         (a)      Basis of accounting

         The consolidated financial statements are presented in Hong Kong
         dollars and have been prepared in accordance with accounting principles
         generally accepted in the United States of America.

         (b)      Deferred offering costs

         In connection with the public offerings, the Company incurred certain
         costs associated with these offerings. These costs were deferred and
         offset against the proceeds from the sale of the securities.

         (c)      Principles of consolidation

         The consolidated financial statements include the financial statements
         of the Company and all of its subsidiaries.

         The acquisition of Tat Group has been accounted for on a "reverse
         acquisition" basis with the Tat Group as the accounting acquirer. The
         acquisition was treated as if it was consummated on April 1, 1997. The
         acquisitions of Li Group and LSSL have been dealt with using the
         purchase method of accounting.

         All material intercompany balances and transactions have been
         eliminated on consolidation.


                                      F-15
<PAGE>   73

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 2 -- Summary of Significant Accounting Policies (Continued)

         (d)      Cash and cash equivalents

         Cash and cash equivalents include cash on hand, demand deposits with
         banks and highly liquid debt instruments with an original maturity of
         three months or less.

         (e)      Inventories

         Inventories are stated at the lower of cost or net realizable value.
         Cost comprises purchase cost of building materials and is calculated
         using the first-in, first-out method.

         (f)      Marketable equity securities

         Investments in marketable equity securities represents available for
         sale securities and are stated at fair value, with unrealized gains and
         losses reported as a component of accumulated other comprehensive
         income.

         (g)      Property, plant and equipment and depreciation

         Property, plant and equipment are stated at cost less accumulated
         depreciation. The cost of an asset comprises of its purchase price and
         any directly attributable costs of bringing the asset to its present
         working condition and location for its intended use. Expenditure
         incurred after the property, plant and equipment have been put into
         operation, such as repairs and maintenance, is charged to the statement
         of operations in the period in which it is incurred. In situations
         where it can be clearly demonstrated that the expenditure has resulted
         in an increase in the future economic benefits expected to be obtained
         from the use of the property, plant and equipment, the expenditure is
         capitalized, as an additional cost of property, plant and equipment.

         When assets are sold or retired, their costs and accumulated
         depreciation are eliminated from the accounts and any gain or loss
         resulting from their disposal is included in statement of operations.

         Depreciation is provided to write off the cost of property, plant and
         equipment, over their estimated useful lives and after taking into
         account their estimated residual value, using the straight-line method,
         at the following rates per annum:

<TABLE>
                  <S>                                               <C>
                  Yacht                                             20%
                  Leasehold and buildings                           0.75% or over the remaining term
                                                                    of relevant leases, if shorter
                  Furniture and fixtures                            20%
                  Motor vehicles                                    30%
                  Plant and machinery                               20%
                  Others and computer equipment                     20%
</TABLE>

Assets held under capital lease contracts are depreciated over their expected
useful lives on the same basis as owned assets.


                                      F-16

<PAGE>   74

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 2 -- Summary of Significant Accounting Policies (Continued)

         (h)      Goodwill

         Goodwill represents the excess of the cost of companies acquired over
         the fair value of their net assets at dates of acquisition and is
         amortized on a straight-line method over 7-20 years.

         (i)      Income taxes

         The Group accounts for income tax under the provisions of Statement of
         Financial Accounting Standards ("SFAS") No. 109, which requires
         recognition of deferred tax assets and liabilities for the expected
         future tax consequences of events that have been included in the
         financial statements or tax returns. Deferred income taxes are provided
         using the liability method. Under the liability method, deferred income
         taxes are recognized for all significant temporary differences between
         the tax and financial statements based of assets and liabilities.

         (j)      Operating leases

         Leases where substantially all the rewards and risks of ownership of
         assets remain with the leasing company are accounted for as operating
         leases. Rentals payable under operating leases are charged to statement
         of operations on a straight-line basis over the lease terms.

         (k)      Capital lease obligations

         Where assets are acquired under capital lease, the amounts representing
         the outright purchase price of such assets are included in property,
         plant and equipment and the corresponding liabilities, net of finance
         charges, are recorded as capital lease obligations. Depreciation is
         provided on the cost of the assets on a reducing balance method over
         their estimated useful lives and after taking into account their
         estimated residual value as set out in note 2(g) above. Finance charges
         implicit in the purchase payments are charged to statement of
         operations over the periods of the contracts so as to produce an
         approximately constant periodic rate of charge on the remaining
         balances of the obligations for each accounting period.

         (l)      Related parties

         Parties are considered to be related if one party has the ability to
         control the other party or exercise significant influence over the
         other party in making financial and operating decisions.

         (m)      Revenue recognition

         Revenue is recognized when it is probable that the economic benefits
         will flow to the Group and when the revenue can be measured reliably.

         Revenue from contract works is recognized on the percentage of
         completion method and in situations where the outcome of the contract
         works cannot be estimated reliably, revenue from such contract works is
         recognized only to the extent of the contract costs incurred that it is
         probable will be recoverable.


                                      F-17
<PAGE>   75

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 2 -- Summary of Significant Accounting Policies (Continued)

         (m)      Revenue recognition (Continued)

         Sale of goods is recognized when goods are delivered and title has
         passed.

         Management and design fees received are recognized in the period when
         services are rendered.

         (n)      Foreign currencies

         The books and records of the Group are maintained in Hong Kong dollars.
         Monetary assets and liabilities denominated in foreign currencies have
         been translated to Hong Kong dollars using the approximate rates
         prevailing at the balance sheet dates. Transactions in foreign
         currencies have been converted at the approximate rates prevailing at
         the dates of transactions. The exchange gains or losses have been
         credited or charged to the statement of operations.

         For the convenience of the readers of these consolidated financial
         statements, translation of amounts from Hong Kong dollars (HK$) into
         United States dollars (US$) has been made at the exchange rate of
         US$1.00 = HK$7.75 on March 31, 2001. No representation is made that the
         Hong Kong dollars amounts could have been or could be, converted into
         the United States dollars at that rate on March 31, 2001 or at any
         other rates.

         (o)      Construction contracts

         When the outcome of a construction contract can be estimated reliably,
         contract costs and revenue are recognized as expenses and income by
         reference to the stage of completion of the contract activity at the
         balance sheet date. When it is probable that total contract costs will
         exceed total contract revenue, the expected loss is recognized as an
         expense immediately. Whilst most of the contracts undertaken follow the
         percentage of completion method, in rare cases where lack of dependable
         estimates or inherent hazards cause forecasts to be doubtful, the
         completed contract method is adopted.

         Construction contracts in progress at the balance sheet date are
         recorded in the consolidated balance sheet at the net amount of costs
         incurred plus attributable profits less foreseeable losses and progress
         billings, and represented in the consolidated balance sheet as due from
         customers for contract work (as an asset) or contract work deposit from
         customers (as a liability), as applicable.

         (p)      Use of estimates

         The preparation of the consolidated financial statements in conformity
         with generally accepted accounting principles in the United States of
         America requires management to make estimates and assumptions that
         affect certain reported amounts and disclosures. Accordingly, actual
         amounts could differ from those estimates.


                                      F-18

<PAGE>   76

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 2 -- Summary of Significant Accounting Policies (Continued)

         (q)      Fair value of consolidated financial statements

         The carrying amounts of the Group's cash, accounts receivable, accounts
         payable and accrued expenses approximate their fair values because of
         the short-term maturity of those instruments.

         (r)      Comprehensive income

         The Group adopted SFAS No. 130, "Reporting Comprehensive Income" which
         establishes standards for reporting and display of comprehensive income
         and its components in a full set of general purpose financial
         statements.

         (s)      Earnings per share (Net income per share)

         According to the requirements of SFAS No. 128, "Earnings Per Share,"
         basic earnings per share are computed by dividing income available to
         common stockholders by the weighted-average number of common shares
         outstanding. The computation of diluted earnings per share is similar
         to the computation of basic earnings per share except that the
         weighted-average number of shares outstanding is adjusted to include
         estimates of additional shares that would be issued if potentially
         dilutive common shares had been issued. In addition, income available
         to common stockholders is adjusted to include any changes in income or
         loss that would result from the assumed issuance of the dilutive common
         shares. There were no diluted securities outstanding during the years
         ended March 31, 1999 and 2000. The exercise of warrants outstanding
         during the year ended March 31, 2001 is not assumed as the result is
         antidilutive to the loss per share.

         (t)      Accounting pronouncements

         Segment information

         On April 1, 1999, the Group adopted SFAS No. 131, "Disclosures about
         Segments of an Enterprise and Related Information", which supersedes
         SFAS No. 14, "Financial Reporting Segments of a Business Enterprise",
         and establishes standards for the way that public enterprises report
         information about operating segments in financial statements. It also
         establishes standards for disclosures regarding products and services,
         geographic areas and major customers. SFAS No. 131 defines operating
         segments as components of an enterprise about which separate financial
         information is available that is evaluated regularly by the chief
         operating decision maker in deciding how to allocate resources and in
         assessing performance.

         Costs of start-up activities

         As of April 1, 1999, the Group adopted Statement of Position ("SOP")
         98-5, "Reporting on the Costs of Start-up Activities", which requires
         costs of start-up activities to be expensed as incurred. This statement
         is effective for fiscal years beginning after December 15, 1998. The
         statement requires previously capitalized costs related to start-up
         activities to be expensed as a cumulative effect of a change in
         accounting principle when the statement is adopted. The adoption of
         this new standard did not have a significant effect on the Group's
         financial position or results of operations.


                                      F-19

<PAGE>   77

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 2 -- Summary of Significant Accounting Policies (Continued)

         (t)      Accounting pronouncements (Continued)

         Costs of computer software

         As of April 1, 1999, the Group adopted SOP 98-1, "Accounting for the
         Costs of Computer Software Developed or Obtained for Internal Use",
         which establishes new accounting and reporting standards for the costs
         of computer software developed or obtained for internal use. This
         statement will be applied prospectively and is effective for fiscal
         years beginning after December 15, 1998. The impact of this new
         standard did not have a significant effect on the Group's financial
         position or results of operations.

         New accounting standards not yet adopted

         In June 1999, the Financial Accounting Standards Board issued SFAS No.
         137, "Accounting for Derivative Instruments and Hedging Activities"
         which delayed the effective date of SFAS No. 133 "Accounting for
         Derivative Instruments and Hedging Activities" for one year. SFAS No.
         133 provides guidance for the recognition and measurement of
         derivatives and hedging activities. It requires an entity to record, at
         fair value, all derivatives as either assets or liabilities in the
         balance sheet, and it establishes specific accounting rules for certain
         types of hedges. SFAS No. 133 is now effective for fiscal years
         beginning after June 15, 2000 and will be adopted by the Group when
         required, if not earlier. The adoption of this new standard is not
         expected to have a significant impact on the Group's financial position
         or results of operations.

         In December 1999, the Securities and Exchange Commission issued Staff
         Accounting Bulletin ("SAB") 101, "Revenue recognition in financial
         statements", which provides guidance on applying generally accepted
         accounting principles for recognizing revenue. SAB 101 is effective for
         fiscal years beginning after December 15, 1999. The adoption of SAB 101
         did not have an impact on the Group's consolidated financial position,
         results of operations and cash flows.

         In June 2001, the FASB issued SFAS No. 141, "business Combinations" and
         SFAS No. 142, "Goodwill and Other Intangible Assets", effective for
         years beginning after December 15, 2001. Under the new rules, goodwill
         will no longer be amortized, but will be subject to annual impairment
         tests in accordance with the Statements. Other intangible assets will
         continue to be amortized over their useful lives. The pooling of
         interest method is no longer permitted for business combinations after
         June 30, 2001. Early adoption is permitted for companies with fiscal
         years beginning after March 15, 2001 provided that their first quarter
         financial statements have not been issued. The Company is not required
         to adopt this new standard until fiscal year ended March 31, 2003 and
         is currently evaluating its impact.


                                      F-20

<PAGE>   78

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 3 -- Acquisition

Effective October 1, 2000, the Company acquired all the issued and outstanding
shares of Sonik Interior Contracting Limited (Sonik) for HK$6,000. The
acquisition was accounted for using the purchase method of accounting, with the
excess of purchase price over fair value of the underlying assets allocated to
goodwill. Goodwill is being amortized over twenty years. The contract also
included certain guarantees to be provided by the selling shareholders, Mr. Lam
and Mr. Sham, such as a guarantee of net income of not less than HK$12,000 for
the period from October 1, 2000 to March 31, 2003 and a guarantee of the payment
of the outstanding accounts receivables from the debtors of Sonik. Due to the
uncertainty of collection of related party receivables acquired in the
acquisition and the uncertainty of the sellers to reimburse the Company upon
default, the Company has provided an allowance on these items in the amount of
HK$9,237, as of March 31, 2001, with an offsetting adjustment to goodwill.
Should any cash be realized in the future on these receivables, the goodwill
would be reduced accordingly.

Note 4 -- Operating Risks

         (a)      Concentration of major customers and suppliers

<TABLE>
<CAPTION>
                                                                                   Years Ended March 31,
                                                               ----------------------------------------------------------
                                                                1999              2000             2001             2001
                                                                 HK$               HK$              HK$              US$
                                                               -------           -------           ------           -----
<S>                                                            <C>               <C>               <C>              <C>
Major customers with revenues of
  more than 10% of  contract
  revenue
     Sales to major customers                                  168,104           111,365           22,942           2,961
     Percentage of contract revenue                                 98%               59%              17%             17%
     Number                                                          2                 2                1               1

Major suppliers with purchases of
  more than 10% of contract cost
     Purchases from major suppliers                             99,643                --               --              --
     Percentage of contract cost                                    78%               --               --              --
     Number                                                          2                --               --              --
</TABLE>


                                      F-21
<PAGE>   79

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 4 -- Operating Risks (Continued)

         Accounts receivable related to the Group's major customers was 66% and
         55% of all accounts receivable as of March 31, 2000 and 2001,
         respectively.

         Credit risk represents the accounting loss that would be recognized at
         the reporting date if counterparties failed completely to perform as
         contracted. Concentrations of credit risk (whether on or off balance
         sheet) that arise from financial instruments exist for groups of
         customers or counterparties when there are similar economic
         characteristics that would cause their ability to meet contractual
         obligations to be similarly affected by changes in economic or other
         conditions. The major concentration of credit risk arises from the
         Group's receivables, primarily from customers whose operations are
         commercial in nature. Even though the Group does have a major customer,
         it does not consider itself exposed to significant credit risk with
         regards to collection of the related receivable.


         (b)      Country risks

         The Group may also be exposed to the risks as a result of its
         contracting and decoration operation being located in the People's
         Republic of China ("PRC"). This includes risks associated with, among
         others, the political, economic and legal environments and foreign
         currency exchange. The Group's results may be adversely affected by
         changes in the political and social conditions in the PRC, and by
         changes in governmental policies with respect to laws and regulations,
         anti-inflationary measures, currency conversion and remittance abroad,
         and rates and methods of taxation, among other things. The Group's
         management does not believe these risks to be significant. There can be
         no assurance, however, that changes in political, social and other
         conditions will not result in any adverse impact.

         (c)      Cash and time deposits

         The Group maintains its cash balances and investments in time deposits
         with various banks and financial institutions located in Hong Kong. In
         common with local practice, such amounts are not insured or otherwise
         protected should the financial institutions be unable to meet their
         liabilities. There has been no history of credit losses.


                                      F-22

<PAGE>   80

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 5 -- Construction Contracts

<TABLE>
<CAPTION>
                                                                              Years Ended March 31,
                                                                --------------------------------------------------
                                                                  2000                2001                  2001
                                                                   HK$                 HK$                   US$
                                                                --------             --------             --------
         <S>                                                    <C>                  <C>                  <C>
         Accumulated contract costs
           incurred                                              265,842              226,139               29,179
         Add: Attributable profits                                56,246               31,239                4,031
                                                                --------             --------             --------

         Less: Progress payments                                 322,088              257,378               33,210
               Received/receivable                              (299,688)            (254,470)             (32,834)
                                                                --------             --------             --------

                                                                  22,400                2,908                  376
                                                                ========             ========             ========
         Amounts disclosed as:
              Costs and estimated earnings
                In excess of billings                             24,219                9,360                1,208
              Billings in excess of costs
                and estimated earnings                            (1,819)              (6,452)                (832)
                                                                --------             --------             --------

                                                                  22,400                2,908                  376
                                                                ========             ========             ========
</TABLE>

Note 6 -- Property, Plant and Equipment, Net

<TABLE>
<CAPTION>
                                                                              Years Ended March 31,
                                                                --------------------------------------------------
                                                                  2000                2001                  2001
                                                                   HK$                 HK$                   US$
                                                                --------             --------             --------
         <S>                                                    <C>                  <C>                  <C>
             Yacht                                                 1,301                1,301                  168
             Leasehold land and buildings                         37,632               38,463                4,962
             Furniture and fixtures                                4,618                9,477                1,223
             Motor vehicles                                          745                2,132                  275
             Plant and machinery                                     234                   --                   --
             Others and computer
                equipment                                          1,910                2,099                  271
                                                                --------             --------             --------

                                                                  46,440               53,472                6,899
         Accumulated depreciation                                 (5,920)              (7,490)                (966)
                                                                --------             --------             --------

                                                                  40,520               45,982                5,933
                                                                ========             ========             ========
</TABLE>


                                      F-23

<PAGE>   81

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 7 -- Banking Facilities

The Group had various letters of credit and import loans and overdraft under
banking facilities as of March 31, 2000 and 2001 as follows:

<TABLE>
<CAPTION>
                                                                              Years Ended March 31,
                                                                --------------------------------------------------
                                                                  2000                2001                  2001
                                                                   HK$                 HK$                   US$
                                                                --------             --------             --------
         <S>                                                    <C>                  <C>                  <C>
         Facilities granted
             Letter of credit and import
               loans                                              22,600              24,800                3,200
             Overdrafts                                           21,500              24,530                3,165

         Utilized
         Letter of credit and import
           loans (Note 8)
                                                                  10,227               6,031                  778
         Overdrafts                                                9,589              23,985                3,095

         Unutilized facilities
         Letter of credit and import
           loans                                                  12,373              18,769                2,422
         Overdrafts                                               11,911                 545                   70
</TABLE>

The bank overdrafts are denominated in Hong Kong dollars, bear interest at the
floating commercial bank lending rates in Hong Kong, which ranged from 9.75% to
11.75% per annum as of March 31, 2000 and 2001, respectively, and are renewable
annually with the consent of the relevant banks.

Under the banking facilities arrangements, the Group's banking facilities are
collateralized by unlimited personal guarantees of certain directors of the
Company and leasehold land and buildings owned by the Group. In addition, the
Group is required to maintain certain cash balances based on the amount of
facilities granted. These balances are reflected as restricted cash in the
consolidated financial statements.

A key financial covenant provides that facilities granted to the Group must not
exceed a certain percentage of the market value of leasehold land and buildings
collateralized. As of March 31, 2000 and 2001, the Group was not in violation of
the key financial covenant.


                                      F-24
<PAGE>   82

                               Quintalinux Limited

                 Notes to the Consolidated Financial Statements
                 (Dollars in thousands except per share amounts)
                    Years Ended March 31, 1999, 2000 and 2001

================================================================================

Note 8 -- Bank Loans

<TABLE>
<CAPTION>
                                                                              Years Ended March 31,
                                                                --------------------------------------------------
                                                                  2000                2001                  2001
                                                                   HK$                 HK$                   US$
                                                                --------             --------             --------
         <S>                                                    <C>                  <C>                  <C>
         Bank loans, bearing interest ranging
           from 1.75% to 3% over the prime
           rate (8.00% as of March 31, 2001)
           and maturing on June, August and
           December 2001, January 2002
           and May 2004                                           10,227                6,031                  778
         Less: Amount due within one year
           included under current liabilities                     (4,197)              (5,095)                (657)
                                                                --------             --------             --------

                                                                   6,030                  936                  121
                                                                ========             ========             ========
</TABLE>

Expected maturities of bank loans are as follows:

<TABLE>
<CAPTION>
                                                                         HK$              US$
                                                                         ----            ----
                                <S>                                      <C>             <C>
                                Year ending March 31:
                                               2003                       411              53
                                               2004                       447              58
                                               2005                        78              10
                                                                         ----            ----

                                               Total                      936             121
                                                                         ====            ====
</TABLE>


                                      F-25
<PAGE>   83
                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 9  - Capital Lease Obligations

The Group leases certain equipment under agreements classified as capital
leases. Equipment under these leases has a cost of HK$256 and accumulated
depreciation of approximately HK$117 as of March 31, 2001. The following is a
schedule of future minimum lease payments under capital leases as of March 31,
2001.


<TABLE>
<CAPTION>
                                                       March 31,
                                         -------------------------------------
                                         2000             2001            2001
                                          HK$              HK$             US$
                                         ----             ----            ----

<S>                                      <C>              <C>             <C>
Future minimum lease payments             123              530              69
Less: Amount representing
  interest                                (31)            (104)            (14)
                                         ----             ----            ----

Present value of net minimum
  lease payments                           92              426              55
Less: Current portion                     (75)            (115)            (15)
                                         ----             ----            ----

                                           17              311              40
                                         ====             ====            ====
</TABLE>


Expected maturities of capital lease are as follows:


<TABLE>
<CAPTION>
                                                       March 31,
                                         -------------------------------------
                                         2000             2001            2001
                                          HK$              HK$             US$
                                         ----             ----            ----

<S>                                      <C>              <C>             <C>
2002                                       75              115              15
2003                                       17               99              13
2004                                       --               95              12
2005                                       --               74              10
2006                                       --               43               5
                                         ----             ----            ----

                                           92              426              55
                                         ====             ====            ====
</TABLE>


                                     F-26
<PAGE>   84
                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001


Note 10 - Marketable Equity Securities

Investment in a single marketable equity security available for sale as of
March 31, 2000 and 2001 is as follows (See Note 12):


<TABLE>
<CAPTION>
             Fair Value                                      Gross Unrealized Gain (Loss)
-------------------------------------                --------------------------------------
 2000           2001            2001                  2000           2001              2001
  HK$            HK$             US$                   HK$            HK$               US$
------         ------          ------                ------         -------           ------

<S>            <C>             <C>                   <C>            <C>               <C>
12,594          1,073            138                   969          (11,521)          (1,487)
======          =====            ===                   ===          =======           ======
</TABLE>


Note 11 - Common Stock

On July 22, 1998, the Company issued another 10,000 shares of par value of
US$0.01 each at par consideration to the then existing shareholders in same
proportion as to their existing shareholdings.

Pursuant to the Share Exchange Agreements entered into between the Company and
the Stockholders of Tat Group and Li Group on November 5, 1999, the Company
issued 1,991,000 and 2,824,000 shares to Asian Progress Holdings Limited and
Muehl Product and Service Asia Limited respectively in exchange for Mr. Chu's
entire interest in the outstanding common stock of each of the companies
comprising the Tat Group and 1,931,000 and 1,054,000 shares to Oceanic Land
Holdings Limited and Muehl Product and Service Asia Limited respectively in
exchange for Mr. Li's entire interest in the outstanding common stock of each
of the companies comprising the Li Group.

Pursuant to the Share Exchange Agreements entered into between the Company and
certain stockholders of LSSL on November 11, 1999, the Company issued to them
in aggregate 180,000 shares in exchange for their 72.5% equity interest in
LSSL.

In the August 2000 initial public offering, the Company sold 1,500,000 shares of
common stock priced at US$8.00 per share and 1,500,000 warrants priced at
US$0.125 per warrant. Each warrant entitles the holder to purchase one share of
common stock at US$10.88 per share through August 9, 2005. As a result, the
Company raised approximately US$9,102 net of underwriting commissions and other
offering costs.

The Company's common stock and warrants commenced trading on The Nasdaq
National Market under the symbols "QLNX" and "QLNXW" on August 10, 2000.

As of March 31, 2001, authorized common stock amounted to 100,000,000 shares at
par value of US$0.01 each, issued and outstanding amounted to 9,500,000 shares
at par value of US$0.01. As of March 31, 2001 all warrants issued remained
outstanding.


                                     F-27
<PAGE>   85


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 12 - Related Party Transactions

         a.       Name and relationship of related parties


<TABLE>
<CAPTION>
                                                         Existing Relationships with the Company
                                                         ---------------------------------------

<S>                                                      <C>
Mr. Chu                                                  Director and major stockholder of the Company

Genuine Interior Design & Associates                     Common director and a company owned by
  Limited ("GIDAL")                                      Mr. Chu, major stockholder of the Company

Prographic Productions Company ("PPC")                   Common director and a company owned by
                                                         Mr. Chu, major stockholder of the Company

Ba Wah Design & Construction Company                     Common director and a company owned by
  Limited ("BWDCCL")                                     Mr. Chu, major stockholder of the Company

Mr. Chan Kin Hang ("Mr. Chan")                           Director and stockholder of the Company

Mr. Liu Chuk Wang ("Mr. Liu")                            Stockholder of the Company

Mr. Li                                                   Director and stockholder of the Company

Good Prominent Fire Safety Company                       Common director and a company owned by Mr.
   Limited ("GPFSCL")                                    Li, major stockholder of the Company

Good Prominent Media Advertising Company                 Common director and a company owned by Mr.
   Limited ("GPMACL")                                    Li, major stockholder of the Company

BA Consulting (HK) Limited ("BACHKL")                    Common director and a company owned by Mr.
                                                         Chan, stockholder of the Company.

INT Design Company Limited ("IDCL")                      Entity owned by Mr. Lam Chi Yui and Mr. Sham Chi Kit,
                                                         being employees of the Company.(1)

INT Design Group (China) Limited ("IDGCL")               Entity owned by Mr. Lam Chi Yui and Mr. Sham Chi Kit,
                                                         being employees of the Company.(1)
</TABLE>


(1)      See Note 3 for additional related party disclosures regarding these
         individuals.


                                     F-28
<PAGE>   86


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 12 - Related Party Transactions (Continued)


         b.       Summary of related party transactions


<TABLE>
<CAPTION>
                                                               March 31,
                                               -----------------------------------------
                                                2000              2001              2001
                                                 HK$               HK$               US$
                                               ------            ------            -----

<S>                                            <C>               <C>               <C>
Due from related parties (Note (i))
    Mr. Chan                                       --               300               39
    INT Design Company Limited                     --             4,434              572
    INT Design Group (China) Limited               --               649               84
                                               ------            ------            -----
                                                   --             5,383              695
                                               ======            ======            =====

Due to related parties (Note (ii))
    Mr. Chan                                       97                --               --
    Mr. Liu                                        27                --               --
    Mr. Chu                                       887            14,718            1,899
    Mr. Li                                      2,065                --
                                               ------            ------            -----
                                                3,076            14,718            1,899
                                               ======            ======            =====
</TABLE>


                                     F-29
<PAGE>   87


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 12 - Related Party Transactions

         b.       Summary of related party transaction (Continued)


<TABLE>
<CAPTION>
                                                                                  March 31,
                                                      --------------------------------------------------------
                                                       1999              2000             2001            2001
                                                        HK$               HK$              HK$             US$
                                                      ------            ------           ------          -----

<S>                                                   <C>               <C>              <C>             <C>
General expenses and acquisitions of fixed
     assets (Note (iii))
     PPC                                                 242                --               --             --
     BACHKL                                               --                --            1,990            257
                                                       =====             =====            =====          =====

 Rental expenses (Note (iv))
     BWDCCL                                              150                --               --             --
     GIDAL                                             1,114               960            1,277            165
                                                      ------            ------            -----            ---

                                                       1,264               960            1,277            165
                                                      ======            ======           ======          =====

Management fee income (Note (v))
     PPC                                                  45                --               --             --
     GPMACL                                               --               144               --             --
                                                      ------            ------            -----            ---

                                                          45               144               --             --
                                                      ======            ======           ======          =====

Project income
     IDCL (Note (viii))                                   --                --              818            106
     GIDAL (Note (ix))                                    --               144               72              9
                                                      ------            ------            -----            ---

                                                          45               144              890            115
                                                      ======            ======           ======          =====

Project expenses (Note (xi))
     IDCL                                                 --                --              346             45
                                                      ======            ======           ======          =====

Rental deposit (Note (x))
     GIDAL                                                --                --              282             36
                                                      ======            ======           ======          =====

 Property, plant and equipment
     Mr. Chu (Note (vi))                                  --            27,000               --             --
     GIDAL (Note (iii))                                2,405                --            4,460            576
                                                      ------            ------            -----            ---

                                                       2,405            27,000            4,460            576
                                                      ======            ======           ======          =====

Marketable equity securities (Note (vii))
     Mr. Li                                               --            11,625               --             --
                                                      ======            ======           ======          =====

Rental income (Note (v))
     GPFSCL                                               --               140               --             --
                                                      ======            ======           ======          =====

Deposit on Investment
     Mr. Chan (Note (vi))                                --                --            25,000          3,226
                                                      ======            ======           ======          =====
</TABLE>


                                     F-30
<PAGE>   88


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 12 - Related Party Transactions

         b.       Summary of related party transaction (Continued)

                  (i)      The amounts due from IDGCL represents unsecured
                           advances that are interest free and repayable on
                           demand.

                           The amount due from Mr. Chen is due on or before
                           May 9, 2001 and bears interest at 6.2%.

                           The amount due from IDCL is for sales with the
                           accounts receivable due at normal trade terms.

                  (ii)     The amounts due to related parties represent
                           unsecured advances made from those parties from time
                           to time. These amounts are interest free and
                           repayable on demand.

                  (iii)    The Group made payments to PPC, BACHKL and GIDAL for
                           various general, management, subcontracting expenses
                           and property, plant and equipment.

                  (iv)     The Group made rental expenses to BWDCCL and GIDAL
                           for the leasing of office premises.

                  (v)      The Group received management fee income from PPC
                           and GPMACL for management services provided.

                  (vi)     Pursuant to an arrangement with Mr. Chu, the amounts
                           owing from Mr. Chu and companies owned and
                           controlled by him as of March 6, 2000 amounted to
                           HK$25,487 was fully repaid by means of transferring
                           legal title of a class A residential property and a
                           commercial property located in Hong Kong to the Tat
                           Group. The fair market value of these properties as
                           valued by independent Professional valuer as of
                           August 19, 1999 was HK$27,000. This amount has been
                           used to record the value of the properties and the
                           amount repaid by Mr. Chu. The excess of payment of
                           approximately HK$1,513 has been accounted for as due
                           to related parties.

                           On March 27, 2000, the Company entered into a
                           conditional purchase agreement with Mr. Chu to
                           acquire a majority interest in Uni-Zone Advanced
                           Technology Company Limited (UAT), a company in which
                           Mr. Chu is a major shareholder and director. The
                           agreement calls for the acquisition of a majority
                           shares of the shares of UAT at a per share price of
                           90% of the value per share as determined by an
                           independent valuation report. The Company has the
                           option to acquire upto 100% of the shares outstanding
                           of UAT. Pending the outcome of the independent
                           valuation, the Company has made an initial deposit of
                           HK$ 25,000 to Mr. Chu.

                  (vii)    Pursuant to an arrangement made with Mr. Li, the
                           amount owing from Mr. Li and companies owned and
                           controlled by him as of December 28, 1999 amounted
                           to HK$22,443 was partially repaid by means of
                           transferring good title of 400,000 shares in
                           Intermost Corporation, a company listed on NASDAQ
                           OTC Bulletin Board (OTCBB) to the Company. The
                           shares were valued at US$3.75 per share which was
                           the closing trade value as listed on the OTCBB as of
                           December 3, 1999 and the transfer was completed on
                           December 28, 1999. Consequently, HK$11.6 million was
                           repaid. The market value as of March 31, 2000 and
                           2001 was US$4.0625 and US$0.344 per share,
                           respectively.

                           In addition, HK$12 million was paid to the Company
                           by PCDCL, a company owned and controlled by Mr. Li
                           on January 26, 2000 as final settlement of a debt to
                           the Li Group.


                                     F-31
<PAGE>   89


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 12 - Related Party Transactions

         b.       Summary of related party transaction (Continued)

                  (viii)   The group made sales to IDCL.

                  (ix)     The group made sales to GIDAL.

                  (x)      The group paid rental deposit to GIDAL for
                           properties rented out.

                  (xi)     The group paid project expenses to IDCL.

         c.       The stockholders have undertaken to indemnify the Group
                  against any contingent liabilities including tax liabilities
                  and claims that may result from the operating activities of
                  the Group in Hong Kong, the PRC and elsewhere occurring
                  before March 31, 1999. Any such payments by the stockholders
                  will be recorded as expenses by the Group with the
                  corresponding credit to the equity.


Note 13 - Operating Leases

As of March 31, 2001, the Group had commitments under noncancelable operating
leases for land and buildings as follows:


<TABLE>
<CAPTION>
                                           March 31,
                                   -----------------------
                                     2001            2001
                                      HK$             US$
                                   -------         -------
                  <S>              <C>             <C>
                  2002               3,271             480
                  2003               1,964             253
                  2004               1,195             154
                                   -------         -------
                  Total              6,430             887
                                   =======         =======
</TABLE>

Total rent expense for the years ended March 31, 1999, 2000 and 2001 was
HK$1,682, HK$1,505 and HK$2,892 respectively.


Note 14 - Performance Bonds

There were contingent liabilities as of March 31, 2000 and 2001 in respect of
performance bonds issued by third parties which are inherent in the nature of
the business in which the Group operates. The directors do not anticipate
material losses from these matters.


Note 15 - Pension Costs

The Group operates a defined contribution retirement plan ("Plan") for all
qualified employees. The assets of the Plan are held separately from those of
the Group in a provident fund managed by an independent trustee. The pension
cost charge represents contributions payable to the fund by the Group at rates
specified in the rules of the Plan. Where employees leave the Plan prior to
vesting fully in the contributions, the contribution payable by the Group is
reduced by the amount of forfeited contribution.


                                     F-32
<PAGE>   90


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


The pension expense for the years ended March 31, 1999, 2000 and 2001 was
HK$80, HK$177 and HK$277, respectively.


Note 16 - Income Taxes

The parent Company is not subject to any tax in the British Virgin Islands
("BVI") or in Hong Kong. Under current BVI and Hong Kong laws, dividends and
capital gains arising from the investment are not subject to income taxes. No
withholding tax is imposed on payments of dividends.

Companies comprising the subsidiaries are subject to income taxes on an entity
basis on income arising in or derived from the tax jurisdiction in which each of
the companies is domiciled and operates.

Companies with income arising in or derived from Hong Kong are subject to Hong
Kong Profits Tax at a rate of 16% .

Income tax expense is composed of the following:


<TABLE>
<CAPTION>
                                                           March 31,
                                       -----------------------------------------------
                                        1999           2000         2001         2001
                                         HK$            HK$          HK$          US$
                                       -----           ----        -----        -----

     <S>                               <C>             <C>         <C>          <C>
     Current tax                       1,200            893           --           --
     Deferred tax                         --             --           --           --
                                       -----           ----        -----        -----

         Income tax expense            1,200            893           --           --
                                       =====           ====        =====        =====
</TABLE>

Reconciliation to the expected statutory tax rate in Hong Kong is as follows:


<TABLE>
<CAPTION>
                                              1999            2000              2001
                                               %                %                %
                                             -----            -----            -----

<S>                                          <C>              <C>              <C>
Statutory rate                                16.0             16.0             16.0
Nontaxable income                             (8.8)             (.7)              --
Tax effect on net operating loss               (.9)           (12.0)           (16.1)
Others                                          .2               .6               .1
                                             -----            -----            -----

Effective tax rate                             6.5              3.9               --
                                             =====            =====            =====
</TABLE>


                                     F-33
<PAGE>   91


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 17 - Report on Segment Information

The Group adopted SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information", in respect of its operating segments. The Group
reportable segments are design and contracting section and high-technology
products section. They are managed separately because each business requires
different technology and marketing strategies. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. The Group evaluates performance based on operating
earnings of the respective business units.

Segment information for the years 1999, 2000 and 2001 are as follows:


<TABLE>
<CAPTION>
                                               Design and Contracting Section           High-Technology Products Section
                                          -------------------------------------        ----------------------------------
                                                                Years Ended March 31,
                                          -------------------------------------------------------------------------------
                                           1999           2000           2001           1999          2000          2001
                                            HK$            HK$            HK$            HK$           HK$           HK$
                                          -------        -------        -------        ------        ------        ------

<S>                                       <C>            <C>            <C>            <C>           <C>           <C>
Segment revenue                           105,334        177,729        124,721        66,161        10,374        13,350

Segment profits (loss)                      9,928         19,322        (33,810)        7,099         2,718       (11,751)

Included in segment profits (loss):
   Depreciation and
     amortization                            (617)          (619)        (2,395)          (32)         (165)       (1,033)
   Interest income                            104            127          1,045            88             1           185
   Interest expense                          (810)        (1,297)        (2,257)         (180)         (219)       (1,391)

Segment assets                             67,509        111,912        170,579        10,853        76,211        55,646
</TABLE>


                                     F-34
<PAGE>   92


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


<TABLE>
<CAPTION>
                              Total
        --------------------------------------------------
          1999          2000          2001           2001
           HK$           HK$           HK$            US$
        -------       -------       -------         ------

        <S>           <C>           <C>             <C>
        171,495       188,103       138,071         17,816

         17,027        22,040       (45,561)        (5,877)



           (649)         (784)       (3,428)          (442)
            192           128         1,230            159
           (990)       (1,516)       (3,648)          (471)

         78,362       188,123       226,225         29,190
</TABLE>


                                     F-35
<PAGE>   93


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 17 - Report on Segment Information (Continued)

Segment information for the years 1999, 2000 and 2001 relating to the Group's
operations by geographic areas are as follows:


<TABLE>
<CAPTION>
                                                  Years Ended March 31,
                           ---------------------------------------------------------------
                            1999               2000               2001              2001
                             HK$                HK$                HK$                US$
                           -------            -------            -------            ------

<S>                        <C>                <C>                <C>                <C>
Segment Revenue
    Hong Kong               94,500            104,441            103,637            13,373
    PRC                     76,995             83,662             34,434             4,443
                           -------            -------            -------            ------

                           171,495            188,103            138,071            17,816
                           =======            =======            =======            ======
</TABLE>

All long-lived assets are situated in Hong Kong for the years 1999, 2000, and
2001.


Note 18 - Financial Instruments

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. The Group currently does not hold or issue derivative financial
instruments in the normal course of business. Accordingly, adoption of SFAS No.
133 is not expected to affect the Group's financial statements.


Note 19 - Contingencies

(a)      The Tat Group received on January 5, 1999 a claim for liquidated
         damages amounting to HK$21,832 in respect of the delay in completion
         of a PRC contract. No formal court action has been filed in connection
         with this claim, nor has the Tat Group received any further notice
         from the claimant. Work on the contract has been completed and the
         developer took possession of the property. The delay in completion was
         caused by changes in job specifications, which under normal practice,
         the Tat Group would be given an extension of time for completion.
         Accordingly, management is of the opinion that the Tat Group will not
         suffer any losses in respect of this claim. The Tat Group's attorney
         meanwhile having reviewed the facts and evidence, has advised that the
         Tat Group has a genuine defense and a good arguable case to answer
         such dispute. If such claim is formally asserted, management intends
         to vigorously contest such claim.


                                     F-36
<PAGE>   94


                              Quintalinux Limited

                  Notes to Consolidated Financial Statements
                (Dollars in thousands except per share amounts)
                   Years Ended March 31, 1999, 2000 and 2001

===============================================================================


Note 19 - Contingencies (Continued)

(b)      On April 29, 1999, an action has been brought against the Tat Group in
         the PRC by an entity ("claimant") which performed certain construction
         works for its subcontractor for HK$14,019 (US$1,809). In the initial
         litigation filed in a provincial court in the PRC, the court ruled
         that the claimant has no merit to the case, and accordingly, the
         claimant withdrew its legal proceeding on June 18, 1999.

         The claimant subsequently pursued the claim in another litigation
         ("trial") and, on October 20, 1999, received a favorable ruling
         against the Tat Group, resulting in a judgment of HK$15,731
         (US$2,030).

         The legal environment in the PRC is still not well defined and the Tat
         Group has appealed against the latest ruling on December 23, 1999. The
         Tat Group's legal counsel advised that having perused and considered
         all the legal documents and the evidence, there has not been any legal
         binding subcontracting or sub-subcontracting obligations between the
         claimant and Tat Group. Accordingly, the Tat Group could never be a
         Defendant. As such, the Tat Group has not recorded any provision for
         loss in connection with this claim. Management intends to continue to
         vigorously contest this action.

(c)      Except as described above, the Group has not been a party to any
         material legal proceedings and there have been no material legal
         proceedings pending with respect to the Group's property.

NOTE 20 - SUBSEQUENT EVENT

         On January 22, 2001, the Company adopted the 2001 Stock Compensation
         Plan (the "Plan"), which was approved by the stockholders on April 20,
         2001. The Plan permits the issuance of options to certain officers,
         directors, employees and advisors of the Company. The purpose of the
         Plan is to promote the interests of the Company and its stockholders
         by providing such persons with additional incentives and the
         opportunity, through stock ownership, to increase their proprietary
         interests in the Company and their personal interest in its continued
         success. Under the terms of the Plan, options granted may be either
         nonqualified or incentive stock options. Incentive stock options shall
         only be granted to employees of the Company. The Plan reserves two
         million shares of common stock for grant and provides that the term of
         each award be determined by the Board of Directors or a committee of
         the Board.

         Options granted must be exercisable at not less than the fair market
         value of a share on the date of grant ( 110% of fair market value if
         the incentive options are owned by a 10% or greater stockholder).
         Generally, the exercise price of each stock option equals the market
         price of the Company's stock on the date of grant. The Plan will
         terminate on January 22, 2011, unless terminated sooner by action of
         the Board. Options are exercisable for a period of up to ten years
         from the respective exercise date. As of March 31, 2001, no options
         had been granted under the Plan.


                                     F-37