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

                                    FORM 20-F

(Mark One)

[_]  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 December 31, 2000

                                       OR

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

                             Commission file number


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


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


                             British Virgin Islands
                 (Jurisdiction of incorporation or organisation)


               34th Floor, West Tower, Shun Tak Centre, Hong Kong
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


       Title of each class           Name of each exchange on which registered

              None                                 Not Applicable

<PAGE>
                                      -2-


Securities registered or to be registered pursuant to Section 12(g) of the Act.

                      Common Stock, Par Value US$0.01 each
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.

                                      None
                                (Title of Class)

As of June 25, 2001,  there were 6,905,797  shares of Common Stock  outstanding,
with par value of US$0.01 each.

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

<PAGE>
                                      -3-


                                     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  financial data should be read in conjunction  with
the "Management's  Discussion and Analysis of Financial Condition and Results of
Operations",  and the Financial  Statements and Notes thereto included elsewhere
in this Annual Report.

     The selected  financial data as of December 31, 1996 and 1997 for the years
ended December 31, 1996 and 1997 have been derived from the Company's  financial
statements  prepared in according with U. S. GAAP but not included  elsewhere in
this Annual Report.

     All financial data included  elsewhere in this Annual Report are expressed,
unless otherwise stated, in the nearest thousand of Renminbi ("Rmb").

<PAGE>
                                      -4-


<TABLE>
<CAPTION>
                                                               (Amounts in thousands, except per share data)

                                                                                   Company
                                             ---------------------------------------------------------------------------------------

                                             Year Ended     Year Ended     Year Ended     Year Ended     Year Ended     Year Ended

                                             December 31,   December 31,   December 31,   December 31,   December 31,   December 31,
                                             ------------   ------------   ------------   ------------   ------------   ------------

                                                 1996           1997           1998           1999           2000           2000

                                                  Rmb            Rmb            Rmb            Rmb            Rmb            US$
                                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                                            <C>            <C>             <C>            <C>           <C>            <C>
Statement of Operations
Data: (1)

Non-operating income ....................          656         10,273          4,334          2,862          3,373           407

Income/(loss) from continuing
   operations before income
   tax provision ........................       (2,118)         2,463              9         (1,855)         1,344           162

Discontinued operations

   Profits/(Loss) from operations
   of disposed subsidiaries .............       14,351        (90,166)       (37,760)       (14,875)            --            --

   Gain on disposal of subsidiaries .....           --             --             --         20,011             --            --

Earnings/(loss) per share from
   continuing operations ................        (0.01)          0.27           0.01          (0.23)          0.21          0.03

(Loss)/earnings per share from
   discontinued operations ..............         1.67         (10.03)         (4.20)          0.65             --            --

Supplemental data to Statements
   of Operations

Net sales (2) ...........................      205,284         68,754         43,080         19,225         15,727         1,900

Cost of goods sold (2) ..................      153,993         77,076         42,943         17,680          9,732         1,176

Gross Profit/(loss)(2) ..................       51,291         (8,322)           137          1,545          5,995           724

Balance Sheet Data:

Cash and cash equivalents ...............       44,156         51,631         45,404         46,803         51,302         6,198

Total assets ............................      321,836        221,881         74,503         74,803        104,128        12,580

Long-term debt ..........................       15,867          2,373             --             --             --            --

Owners'/Shareholders' equity ............      218,272        110,697         71,440         70,241         71,681         8,660
</TABLE>

(1)  For the  convenience  of the reader,  translation  of amounts from Renminbi
     into  United  States  Dollars  has been made at the noon buying rate in New
     York City for cable transfer in foreign currencies as certified for customs
     purposes by the Federal  Reserve  Bank of New York on

<PAGE>
                                      -5-


     December 31, 2000 of Rmb 8.2774 = $1.00. No representation is made that the
     Renminbi amounts could have been, or could be, converted into United States
     Dollars at that rate or at any other certain rate.

(2)  Net sales, cost of goods sold and gross  profit/(loss) for each of the four
     years in the period ended  December 31, 1999 referred to the PRC Operations
     disposed in July 2, 1999 while these for the period ended December 31, 2000
     referred to the Newly Acquired Operations acquired in June 30, 2000.

B.   Capitalization and indebtedness.

     Not Applicable.

C.   Reasons for the offer and use of proceeds.

     Not Applicable.

D.   Risk factors.

     Investing  in our common  stock  involves a high degree of risk.  The risks
described below are not the only ones facing our company.  Additional  risks not
presently  known to us or that we deem  immaterial  may also impair our business
operations.  Any of the following risks could  materially  adversely  affect our
business,  operating  results  and  financial  condition  and could  result in a
complete loss of your investment.

     We have limited experience in managing our new business.

     Although  incorporated in 1995, from inception until July 1999, through our
subsidiaries, we had joint venture interests in a manufacturer of enameled steel
and cast iron bathtubs as well as a manufacturer  of ceramic wall tiles. In July
1999,  however,  all of our interests in those joint ventures were sold. In June
2000 we acquired the entire  interest of BHL Networks  Technology Co. Ltd. ("BHL
Networks"),  which owns a 76% joint  venture  interest in Beijing  BHL  Networks
Technology Co., Ltd. ("Beijing BHL Networks"),  a company engaged in the network
security,  network  management and  e-business  software  development  business.
Accordingly,  we have had a limited  history  upon  which an  evaluation  of our
performance  and  prospects  in this new  field  can be made.  Even the  Company
believes  qualified staff can be recruited easily in the PRC who will contribute
significantly  in enhancing  the smooth  operation of the new  business,  we are
still subject to all of the risks, uncertainties, expenses, delays, problems and
difficulties  frequently  encountered  in the  establishment  of a software  and
technology business on the Internet which is generally  characterized by intense
competition.

     Our market is relatively new and becoming intensely competitive.

     The market for Internet  security and software  development  is  relatively
new, rapidly evolving and intensely  competitive.  As we expand,  we expect that
additional  competitors will arise. Some of these existing  competitors may have
greater  financial  and  marketing  resources  and  may  have  longer  operating
histories in the Internet  market,  greater name  recognition,  larger  customer
bases and  databases.  The Internet  industry is  relatively  new and subject to
continuing  definition  and, as a result,  new  competitors  may better position
themselves  to compete in this  market as it  matures.  Although  prohibited  by
relevant Chinese  authorities,  large global  competitors may increasingly focus
their  resources  on the  greater  China  market and  thereby  may  create  more
competition. In addition, providers of Chinese language Internet

<PAGE>
                                      -6-


tools and services may be acquired by,  receive  investments  from or enter into
other commercial  relationships with large,  well-established  and well-financed
Internet, media or other companies.

     Presently,  the  barriers to entry by local  competitors  in the market for
Internet services, application software and Internet security are few, even most
of them cannot compete with us in terms of technical strengths and shareholders'
support.  Therefore,  we expect  competition to persist and  intensify,  and the
number of competitors could increase significantly in the future.

     We believe that, in order to attract the maximum amount of attention to our
product and services offerings and increase our customer base, we must establish
our  products  and  services as the leading  alternative  for the  services  and
software  we intend  to  offer.  If we fail to do so  quickly,  competitors  may
prevent us from obtaining a leading  market share in those markets,  which would
adversely  affect  our  business.  Therefore,  we intend  to deploy  significant
resources and pursue an aggressive brand marketing and growth strategy. However,
we cannot assure that we will be able to capture or maintain  sufficient  market
share in the face of increasing competition.

     It is hard to estimate our financial results

     Our  operating  results  will vary greatly in the future  depending  upon a
number of factors.  Many of these factors are beyond our control.  Our revenues,
gross margins and operating results may fluctuate  significantly from quarter to
quarter due to, among other things:

     -    our ability to obtain timely and accurate user sales information;

     -    product  upgrading  or  updating  progress  of  products  by us or our
          competitors;

     -    the mix of products sold;

     -    the price changes of us and our competitors;

     -    the general economic  condition and development trends in the computer
          industry of the PRC;

     -    our research and development and marketing abilities;

     -    the acquisition costs of technology or businesses;

     -    fluctuation in Beijing BHL Network's expenditure levels related to its
          efforts to build brand  awareness and establish with various  Internet
          companies;

     -    the effectiveness of our distribution channel and our mix of operating
          and non-operating income;

     -    employee wages pressure arising from increased competition for skilled
          employees; and

     -    extraordinary  costs  incurred for  acquisitions  or any reductions in
          forces.

     We do not  maintain a  significant  level of  inventories  and our business
success  is  dependent  on number of  contracts  entered  into.  This fact makes
predicting  revenues more difficult.  Although we believe more contracts will be
entered  into in  future,  there is no  assurance  that these  contracts  can be
successfully  signed, or even successfully  signed, we may not control our costs
effectively. The operating results will

<PAGE>
                                      -7-


be adversely  materially  affected in case the  contracts  are not  successfully
signed and costs are not effectively controlled.

     There are risks of employee retention and new employee assimilation

     Many of our  employees are located in areas and have skills in fields where
there is high worker mobility and work force turnover.  The departure of a large
number of our employees or a meaningful  number of key  non-executive  employees
could  materially  adversely  impact our business,  including our ability of new
products  development,  existing  products  upgrading  and  products  sales  and
marketing. We anticipate that we will continue to have difficulties in retaining
employees because of the competitions for skilled employees increased along with
the expansion in the PRC IT market.

     Risk of reliance on management  and technical  personnel who may not remain
with us in the future

     We expect to rely,  and will continue to rely, on a number of key technical
and  management  employees.  If any of our key  employees  leave,  our business,
results of operations and financial condition could suffer.  Furthermore,  we do
not maintain life insurance policies on our key employees.

     Our ability to achieve our revenue  and  operating  performance  objectives
will  depend in large  part on our  ability to  attract  and retain  technically
qualified  and  highly  skilled  sales,  consulting,  technical,  marketing  and
management personnel. Competition for these employees is intense and is expected
to remain so for the foreseeable  future.  We have seen upward pressure on wages
as a result of this  intense  competition  for  employees,  which could cause an
increase in our  operating  expenses.  We may not be successful in retaining our
existing key personnel and in attracting and retaining the personnel we require,
and our  failure to retain and hire key  employees  could  materially  adversely
affect our business and operating  results.  Additions of new, and departures of
existing,  employees,  particularly in key positions,  can be disruptive and can
result in departures of existing  employees,  which could  materially  adversely
affect our business.

     Our success also depends in large part upon the continued  contributions of
Li Xiao Hong,  our Chairman of the Board and  President,  and Jiang Xinhao,  our
Chief Executive  Officer.  The loss of their services or the services of certain
other key  employees  could have a material  adverse  effect on our business and
prospects.

     We are subject to risk of hackers' attacks

     Even we have maintained on low profile in the security  software market, we
may will have been a target of computer  hackers who have,  among other  things,
created viruses to sabotage or otherwise  attack our products.  While to date no
such event  happened and  discovered but their adverse impact cannot be ignored.
If this  happen,  users'  computer  systems  could  damaged  and  demand for our
software products may suffer as a result.

     Risk of  reliance  on  revenue  from  our  network  security  products  and
e-business software development

     We have  historically  derived  a  majority  of our net  revenues  from our
e-business  tailor-made  software  development,  network  security  products and
system  integration  services.  These  products  and  services  are  expected to
continuously  account  for a  significant  portion  of our net  revenues  in the
foreseeable future.  Because of this high concentration of revenue, a decline in
demand for,  or in the prices of,  these  products  as a result of  competition,
technological  change,  a change in our  pricing  model  and any  other  factors
reducing the demand of these products and servers could harm our business.

<PAGE>
                                      -8-


     Risks of acquisition of new business, products and technologies

     Our industry has experienced,  and is expected to continue to experience, a
significant amount of consolidation.  It is one of our growth strategy to buy or
make  investments  in  complementary  companies,  products and  technologies  in
future.

     Our acquisitions and strategic investments involve a number of risks and we
may not realize the expected benefits of these transactions.  We may lose all or
a portion of our investment,  particularly in the case of our strategic minority
investments,  if any. Our available  cash and  securities  may be used to buy or
invest  in   companies  or   products,   which  could   result  in   significant
acquisition-related  charges  to  earnings  and  dilution  to our  shareholders.
Moreover, we may have to incur or assume that company's  liabilities,  including
liabilities  that are unknown at the time of acquisition,  which may result in a
material adverse effect on us.

     Besides,  our  acquisitions  are accounted for under the purchase method of
accounting.  We expect we will  experience  significant  charges  related to the
amortization  of  purchased  technology  and goodwill if more  acquisitions  are
completed  in future  periods.  In  addition,  if we later  determine  that this
purchased  technology  and goodwill is  impaired,  we will be required to take a
related non-recurring charge to earnings.

     We are  subject  to  risks of the  rapidly  changing  business  environment
brought on by the widespread use of Internet

     We utilize the Internet and depend on its  functionality and reliability in
many  parts of  business,  including  sales,  distribution  and  support  of our
products.  There are  still  many  uncertainties  regarding  many  facets of the
Internet,  including reliability,  security,  access, tax, government regulation
and cost.  We also run the risk of not  adapting  to the  latest  changes in the
Internet, which could affect our business operations.  If growth of the Internet
does not develop at the rapid pace we expect,  our  operating  results  could be
materially adversely affected.

     We are subject to risks of rapid technological change in the market and the
risks associated with the product development

     The network security and network management market is highly fragmented and
characterized by ongoing technological developments, evolving industry standards
and rapid  changes in  customer  requirements.  Our  success  will depend on our
ability to:

     -    provide a broad  range of  network  security  and  network  management
          software products,  including the enhancement of existing products and
          expansion of product offerings;

     -    timely develop and introduce new products with technological advances;

     -    respond promptly to new customer requirements;

     -    comply promptly with evolving industry standards;

     -    provide  upgrades and updated to users frequently at the lowest costs;
          and

     -    maintain  compatibility of our products with popular operating systems
          and  develop  products  that  are  compatible  with  new or  otherwise
          emerging operating systems.

<PAGE>
                                      -9-


     Our product  enhancements  or new products may not  adequately  address the
changing  needs  of  the  marketplace.   New  products  with  new  technological
capabilities  could  replace or shorten the life cycle of our  products or cause
our customers to defer or cancel purchases of our existing products.

     Our product  development  efforts are impacted by the adoption or evolution
of industry  standards.  For example, no uniform industry standard had developed
in the market for  encryption  security  products.  As  industry  standards  are
adopted or  evolve,  we may have to modify  existing  products  or  develop  and
support new versions of existing products.  In addition, if no industry standard
develops,  our products and our competitors' products could incompatible,  which
could  prevent or delay  overall  development  of the  market  for a  particular
product.  If our  products  fail to comply with  existing  or evolving  industry
standards in a timely fashion, our business,  results of operation and financial
condition could materially and adversely affected.

     Our long-term success depends on our ability to upgrade and update existing
product  offerings,  modify and enhance  acquired  products  and  introduce  new
products  which meet our  customers'  needs.  Future  upgrades  and  updates may
include   additional   functionality,   respond  to  user  problems  or  address
compatibility  problems with changing  operating  systems and  environments.  We
believe that our ability to provide these upgrades and updated frequently and at
low costs is key to our success.  Failure to release  upgrades and updated could
have a  material  adverse  effect on our  business,  results of  operations  and
financial  condition.  We may not be successful in these  efforts.  In addition,
future changes in popular operating systems could cause  compatibility  problems
with our products.  Further,  delays in the  introduction  of future versions of
operating  systems or lack of market  acceptance of these future  versions would
delay or reduce  demand for our future  products  which were designed to operate
with these future operating systems. Our failure to introduce in a timely manner
new  products  that are  compatible  with  operating  systems  and  environments
preferred by users would materially  adversely  affect our business,  results of
operation and financial condition.

     We will suffer if the markets evolve out of our anticipation

     The markets for  network  management  and  network  security  products  are
evolving,  and their  growth  depends  upon broader  market  acceptance  of this
software. Although the number of networks has increased dramatically in the PRC,
the network  management  and network  security  markets  continue to be emerging
markets.  These  markets may not continue to develop or may not develop  rapidly
enough to benefit our business significantly. In addition, there are a number of
potential  approaches to network management and network security,  including the
incorporation  of  management  and  security  products  into  network  operating
systems.  Therefore,  even if network management and network security tools gain
broader market acceptance,  potential purchasers may not select our products. To
the extent that either the network  management or network  security  market does
continue to develop, we expect that competition will increase.

     We are subject to risk of increasing competition in future periods

     Even our market is a new and emerging market and the entry barrier existed,
we expect increased competition in the near-term.  We believe that the principal
competitive factors affecting the markets for our products include  performance,
functionality, quality, customer support, breadth of product group, frequency of
upgrades and updates, integration of products,  manageability of products, brand
name recognition, reputation and price.

     Some of our  competitors  have longer  operating  histories,  greater  name
recognition,  larger technical staffs,  established  relationships with hardware
vendors  and/or  greater  financial,  technical and marketing  resources.  These
factors may provide our competitors  with an advantage in penetrating the market
with their network security and management products.  This increased competition
could reduce

<PAGE>
                                      -10-


average selling prices and,  therefore,  profit margins.  Competitive  pressures
could result not only in price reductions but also in a decline in sales volume,
which could cause our business to suffer.

     Finally,  as the network management market develops,  we may face increased
competition from a number of large companies, as well as other companies seeking
to enter the market.  The trend toward  enterprise-wide  network  management and
security  solutions may result in a consolidation of the network  management and
security market around a smaller number of companies who are able to provide the
necessary software and support capabilities.

     We are  subject  to  cancellation  or delay of  products  and  services  by
customers

     Our product and service is generally  considered as a capital  expenditures
by customers,  which is usually  discretionary or will be canceled or delayed if
the customer  experiences a downturn in its business prospects or as a result of
economic  conditions  in general.  Any  cancellation  or delay could  materially
adversely affect our results of operations.

     We are subject to risk of growth management

     We are subject to risk of growth  management.  Following the growth through
acquisitions,  we may  face a  significant  strain  on  our  limited  personnel,
management and other  resources.  Our ability to manage any future growth,  will
require us to: -

     -    attract,   train,   retain,   motivate   and  manage   new   employees
          successfully;

     -    effectively   integrate  and   assimilate   new  employees   into  our
          operations; and

     -    continue  to  improve  our  operational,   financial,  management  and
          information system and control.

     Our management  systems  currently in place may be inadequate or we may not
be able to effectively manage this growth.

     We expect the volatility of our stock price will continue

     Our stock price was volatile and ranged from a per-share high of US$2.50 to
low of US$0.219.  On June 21, 2001, the per share closing price for common stock
was US$0.3.  Announcements and our ability to meet the expectations of investors
with respect to our operating and  financial  results may  contribute to current
and future  stock  price  volatility.  It is a general  situation  in the United
States,  even currently there existed no such litigation,  following  periods of
volatility  in the market price of a company's  stock,  securities  class action
litigation has often been instituted. Any litigation, if instituted, could cause
substantial  costs  incurred and the  diversion of  management's  attention  and
resources.

     There may be need for additional financing

     The Company is currently  intending to strengthen  our marketing  effort in
order to increase the customers'  awareness.  Besides, the growth strategy of us
also involves  continuous  cash  injection,  particularly  when we are failed in
settling  the  consideration  of  acquisitions  by  shares.  There may result in
shortage  of cash in the future of the  Company  which will cause the Company to
seek additional  financing sooner than  anticipated.  No assurances can be given
that such financing would be available on terms

<PAGE>
                                      -11-


satisfactory  to us, if at all. If we need to pay higher than  anticipated  cost
for  additional  financing,  the  results  of  the  Company  will  be  adversely
materially affected.

     Risk of dilution

     We are intending to issue additional shares for our new  acquisitions.  The
existing shareholders may be subject to dilution of their rights when additional
shares are issued in future.

     We do not intend to pay dividends

     The future  payment of dividends is within the  discretion  of the Board of
Directors. The Board does not intend to declare any dividends in the foreseeable
future,  but instead intends to retain all future  earnings,  if any, for use in
our business operations.

     We are subject to joint venture risks

     Expiration  of Term.  Our joint venture  agreements  provide for an initial
term of 50 years, which by the mutual consent of the parties,  is subject to the
approval of the relevant Chinese Government  authorities.  In the event the term
of the joint  venture  agreements is not  extended,  the joint  ventures will be
dissolved and  liquidated  pursuant to the  provisions of the applicable law and
the  applicable  joint venture  agreement.  In addition,  joint  ventures may be
terminated  prior to the  expiration  of the joint  venture  agreement  upon the
occurrence of certain events, including without limitation, the inability of the
enterprise  to conduct its business  due to financial  losses or a breach of the
joint venture agreement by one of the parties.

     Failure to Pay  Capital  Contributions.  Pursuant to the terms of the joint
venture  agreement  between BHL  Networks  Technology  Co. Ltd.  and Beijing BHL
Networks Technology Co., Ltd., in connection with the establishment of the joint
ventures,  we have agreed to make a capital  contribution to  approximately  US$
1.83 million to the joint venture. The agreed capital contribution is to be paid
within three months of  obtaining  the  appropriate  business  license.  Even an
extension can be granted on an individual case basis upon our application to the
relevant  authorities  but  there is no  assurance  that this  extension  can be
granted. Our failure to satisfy our future capital  contribution  obligations in
accordance  with the  terms of the  joint  venture  contract  may  result in the
dissolution of the joint ventures and the loss of our equity interest therein as
well as the  cancellation  of the business  license of each joint  venture.  The
dissolution of the joint ventures or the  cancellation  of its business  license
will have a  significant  material  adverse  effect on our  business,  operating
results and financial  condition  and would likely force us to cease  operations
altogether.

     We are subject to risks relating to the China Internet Market

     The China Internet  industry is a developing market and has not been proven
as an effective  commercial medium. The market for Internet services in China is
a new development and the Internet is an unproven medium. Although a substantial
portion of our  business  is  related to the  consulting  services  provided  to
government  authorities,  military units and  educational  institutions  who are
continuously  encouraged by the  government to  computerise,  the success of our
services remains dependent upon the increased use of the Internet. Our customers
may have limited  experience  utilizing the Internet as a sales and distribution
channel and may not find the  Internet to be  effective  for  promotion of their
products and services.  Critical  issues  concerning  the  commercial use of the
Internet in China and Asia such as security

<PAGE>
                                      -12-


reliability, cost, ease of deployment, administration and quality of service may
affect the adoption of the Internet to solve business needs.

     Our success in our business  development also depends on the  establishment
of an  adequate  telecommunications  infrastructure  in  China  by  the  Chinese
government.  Apart from large cities and specific  coastal regions in China, the
telecommunications  infrastructure  in  other  regions  of  China  is  not  well
developed.  Access to the  Internet is  accomplished  primarily  by means of the
government's backbone of separate national interconnection networks that connect
with  the  international  gateway  to the  Internet.  The  Chinese  government's
interconnecting,   national   networks   connect   to   the   Internet   through
government-owned  international  gateways,  which are the only channels  through
which a domestic Chinese user can connect to the international Internet network.
This is owned and operated by the Chinese  government and it is the only channel
through  which  the  domestic  Chinese  Internet  network  can  connect  to  the
international  Internet  network.  We rely  on this  backbone  to  provide  data
communications capacity primarily through local Chinese governments to establish
and  maintain  a reliable  Internet  infrastructure  to reach a broader  base of
Internet users in China.  We will have no means of getting access to alternative
networks  and  services,  on a  timely  basis  or at all,  in the  event  of any
disruption   or  failure.   There  can  be  no   assurance   that  the  Internet
infrastructure  in China will  support the  demands  associated  with  continued
growth.  In  addition,  we  have  no  guarantee  that we  will  have  access  to
alternative  networks and services in the event of any disruption or failure. If
the necessary  infrastructure  standards;  protocols; or complementary products,
services or facilities are not developed by the Chinese government, our business
could be materially and adversely affected.  The relatively lower growth rate of
Internet  users in other regions of China may cause  difficulties  in our future
business  expansion,  particularly in the provision of ASP services and Internet
security services.

     Regulation of the  information  industry in China may adversely  affect our
business.  The  Ministry  of  Information  Industry  (the  "MII") has  published
implementing  regulations  that foreign  investors  are  prohibited to invest as
majority   shareholder  in  Internet  service  providers  and  Internet  content
providers.  We do not believe that we are currently subject to this prohibition.
However,  a  majority  of  Chinese  laws,  regulations  and  legal  requirements
governing the Internet are relatively new and untested, their interpretation and
enforcement  of  what  is  deemed  to  be  socially   destabilizing  by  Chinese
authorities may involve significant uncertainty.  In addition, the Chinese legal
system  is a  civil  law  system  in  which  decided  legal  cases  have  little
precedential  value. As a result, in many cases it is difficult to determine the
type of content that may result in liability.  We cannot  predict the actions of
Chinese  legal  authorities,  particularly  with  regard  to  the  Internet  and
software,  including the  promulgation of new laws,  changes to existing laws or
the interpretation or enforcement of local regulations by national laws.

     Our business may be adversely affected by Chinese government  regulation of
Internet companies.

     China  has  recently  begun to  regulate  its  Internet  sector  by  making
pronouncements  or  enacting  regulations  regarding  the  legality  of  foreign
investment in the Chinese  Internet  sector,  the existence and  enforcement  of
content  restrictions  on  the  Internet  and  the  availability  of  securities
offerings  by  companies  operating in the Chinese  Internet  sector.  There are
substantial  uncertainties  regarding the proper  interpretation  of current and
future Chinese Internet laws and regulations.  Although we believe and have been
advised that many current regulations will not apply to us, we cannot assure you
that  existing  or  future  regulations  will be  interpreted  differently.

     The existing issues, risks and uncertainties relating to Chinese government
regulation of the Chinese Internet sector include the following:

     A prohibition  of foreign  investment in businesses  providing  value-added
telecommunication   services,   including  computer   information   services  or
electronic mail box services may be applied to

<PAGE>
                                      -13-


businesses such as ours.  Some officials of the Chinese  Ministry of Information
and Industry,  or MII,  have taken the position  that foreign  investment in the
Internet sector is prohibited.

     The MII has also  stated  recently  that it  intends  to adopt  new laws or
regulations  governing foreign  investment in the Chinese Internet sector in the
near future. If these new laws or regulations  forbid foreign  investment in the
Internet sector, our business in China will be severely impaired.

     The MII has also stated  recently that the  activities of Internet  content
providers  are  also  subject  to  regulation  by  various  Chinese   government
authorities,  depending  on the  specific  activities  conducted by the Internet
content provider.  Various government authorities have stated publicly that they
are in the process of preparing new laws and regulations  that will govern these
activities.  In  addition,  the new laws and  regulations  may  require  various
Chinese  government  approvals for securities  offerings by companies engaged in
the Internet sector in China.

     The   interpretation   and   application  of  existing   Chinese  laws  and
regulations,  the  stated  positions  of the MII and the  possible  new  laws or
regulations  have created  substantial  uncertainties  regarding the legality of
existing and future  foreign  investments  in, and the businesses and activities
of, Chinese Internet businesses.  Accordingly,  it is possible that the relevant
Chinese  authorities  could, at any time,  assert that any portion or all of our
existing or future ownership  structure and businesses violates Chinese laws and
regulations.  It is also possible that the new laws or regulations governing the
Chinese  Internet  sector  that may be adopted in the future  will  prohibit  or
restrict  foreign  investment  in, or other  aspects  of, any of our  current or
proposed businesses and operations.

     If we are found to be in violation  of any existing or future  Chinese laws
or regulations,  the relevant Chinese authorities would have broad discretion in
dealing with such a violation, including, without limitation, the following:

     -    levying fines;

     -    revoking our business license;

     -    requiring us to restructure our ownership structure or operations; and

     -    requiring  us to  discontinue  any  portion  or all  of  our  Internet
          business.

     We are subject to risks relating to operating a business in China

     China may in the near future join the World Trade Organization. In November
1999,  China signed a bilateral  trade agreement with the U.S. which has enabled
China to gain the  support  of the U.S.  in  China's  attempt to enter the World
Trade  Organization,  or the "WTO".  Permanent Normal Trade Relations with China
were approved by the U.S.  House of  Representatives  on May 24, 2000 and by the
U.S. Senate on September 19, 2000.  President  Clinton signed the legislation on
October 10,  2000,  which will allow  China to gain entry into the WTO  shortly,
provided  that  support is provided by every other  member of the WTO.  Although
China has been reducing  tariff levels over the past several  years,  entry into
the WTO will require China to further reduce  tariffs and eliminate  other trade
restrictions.  While China's entry into the WTO and related  relaxation of trade
restrictions  may lead to  increased  foreign  investment,  it may also  lead to
increased competition in China's markets from international  companies. In light
of recent  developments,  it appears likely that China will be accepted into the
WTO,  but, if accepted,  the impact on China's  economy and our  business  would
remain uncertain.

<PAGE>
                                      -14-


     Chinese  government  controls the conversion of the Chinese  currency,  the
Renminbi.  We must rely on the Chinese  government's foreign currency conversion
policies,  which  may  change at any time,  in regard to our  currency  exchange
needs. We receive a substantial portion of our revenues in Renminbi which is not
freely  convertible  into  other  foreign  currencies  and  we  require  foreign
currencies to meet many of our  obligations,  such as for purchases of equipment
and raw materials.  In China, the government has control over Renminbi  reserves
through,  among other things,  direct  regulation of the  conversion of Renminbi
into other foreign  currencies and  restrictions  on foreign  imports.  Although
foreign currencies which are required for "current account"  transactions,  such
as the payment of dividends to shareholders to foreign invested enterprises such
as  ourselves,  can be bought  freely at authorized  Chinese  banks,  the proper
procedural requirements prescribed by Chinese law must be met. At the same time,
Chinese  companies are also required to sell their foreign exchange  earnings to
authorized  Chinese  banks and the  purchase of foreign  currencies  for capital
account  transactions  still requires prior approval of the Chinese  government.
This type of heavy  regulation  by the Chinese  government  of foreign  currency
exchange  restricts  certain of our business  operations  and a change in any of
these government  policies,  or any other,  could further  negatively impact our
operations.

     The  value of the  Renminbi  may be or may  become  more  volatile  and may
devalue  against  foreign  currencies  in which we do business,  including  U.S.
dollars.  The value of the  Renminbi  may be or become  volatile and may devalue
against   foreign   currencies,   including  the  U.S.   dollar.   Although  the
Renminbi/United  States dollar  exchange rate has been  relatively  stable since
1994,  we can give no assurance  that this  exchange  rate will not again become
volatile or that the Renminbi will not devalue further against the United States
dollar.   Exchange  rate   fluctuations   may  adversely  affect  our  financial
performance   because  of  our  liabilities  that  are  denominated  in  foreign
currencies and this may materially adversely affect our value, net fixed assets,
our earnings and declared dividends.  Furthermore, we currently do not engage in
any hedging activities in order to minimize the effects of exchange rate risks.

     China Has An Uncertain And Evolving Legal System

     The legal system of the PRC relating to foreign investments in both new and
continually  evolving  and  currently  there  can  be no  certainty  as  to  the
application of its laws and regulations in particular instances.  Enforcement of
existing   laws  or  agreements   may  be  sporadic.   The   implementation   or
interpretation of laws may be inconsistent.

     Political and Economic Developments Affecting Hong Kong

     Our  executive  office is  located  in Hong  Kong.  Accordingly,  we may be
materially  adversely  affected  by  factors  affecting  Hong  Kong's  political
situation  and  its  economy  or in its  international  political  and  economic
relations.  Under the Sino-British  Joint Declaration the agreement that governs
the  ceding  of Hong  Kong  to the  PRC,  the  government  of the PRC  exercises
sovereignty  over Hong Kong  effective  July 1, 1997 through a Hong Kong Special
Administrative  Region established pursuant to Article 31 of the constitution of
the PRC. The PRC has agreed that:

     o    Hong Kong's  current  social and economic  system will remain  largely
          unchanged  for the ensuing 50 years,  with the Special  Administrative
          Region to be administered by local  inhabitants under the PRC's "Basic
          Law,";

     o    the laws currently enforced in Hong Kong will remain largely unchanged
          and foreign  investment  will be protected by the law. There can be no
          assurance  that the Basic Law as adopted in its present  form will not
          be changed in the future or that any such  changes  would not be given

<PAGE>
                                      -15-


          retroactive effect.  Accordingly,  future political developments could
          make it  impractical,  inefficient  or  impossible  for us to  conduct
          business in or from Hong Kong.

     We May Be Subject To Foreign Exchange Rates And Fluctuations

     We operate in China and Hong Kong and record our  operating  activities  in
Renminbi ("Rmb"), the Chinese currency and Hong Kong Dollars. The exchange rates
between  Rmb and US Dollars and between  Hong Kong  Dollars and US Dollars  have
been relatively stable for the last few years. The Rmb exchange rates,  however,
are fixed by the government of the PRC, and a change in the exchange rate by the
PRC could have a material adverse effect on our financial statements.

     Rights of Shareholders under British Virgin Islands Law May Be Less than in
U.S. Jurisdictions

     General.  Our corporate affairs are governed by our Memorandum and Articles
of Association and by the  International  Business  Companies Act of the British
Virgin  Islands.  Principles  of law relating to such matters as the validity of
corporate  procedures,  the fiduciary  duties of our  management,  directors and
controlling  shareholders and the rights of our  shareholders  differ from those
that would apply if we were  incorporated  in a  jurisdiction  within the United
States. Further, the rights of shareholders under British Virgin Islands law are
not as clearly  established as the rights of shareholders  under  legislation or
judicial precedent in existence in most United States  jurisdictions.  Thus, our
public  shareholders  may have more difficulty in protecting  their interests in
the face of actions by the  management,  directors or  controlling  shareholders
than they might have as shareholders  of a corporation  incorporated in a United
States jurisdiction.

     Fiduciary  Duties.  Under  the  laws of most  jurisdictions  in the  United
States, majority and controlling shareholders generally have certain "fiduciary"
responsibilities to the minority shareholders.  Shareholder action must be taken
in good  faith and  actions  by  controlling  shareholders  which are  obviously
unreasonable  may  be  declared  null  and  void.  British  Virgin  Islands  law
protecting  the interests of minority  shareholders  may not be as protective in
all circumstances as the law protecting  minority  shareholders in United States
jurisdictions. In addition, in most United States jurisdictions, directors owe a
fiduciary  duty to the  corporation  and its  shareholders,  including a duty of
care,  pursuant to which  directors  must  properly  apprise  themselves  of all
reasonably available information,  and a duty of loyalty, pursuant to which they
must  protect the  interests  of the  corporation  and refrain from conduct that
injures the corporation or its  shareholders or that deprives the corporation or
its  shareholders of any profit or advantage.  Many United States  jurisdictions
have enacted various statutory provisions which permit the monetary liability of
directors  to be  eliminated  or limited.  Under  British  Virgin  Islands  law,
liability of a corporate  director to the  corporation  is basically  limited to
cases of willful  malfeasance in the performance of his duties or to cases where
the  director  has not acted  honestly  and in good faith and with a view to the
best interests of the corporation.

     Enforcement  of Civil  Liabilities.  There is doubt  that the courts of the
British  Virgin  Islands would  enforce,  either in an original  action or in an
action for enforcement of judgments of United States courts,  liabilities  which
are predicated upon the securities laws of the United States.

Item 4.  Information on the Company

     Some  of  the   statements   contained  in  this  annual   report   contain
forward-looking  information  within  the  meaning  of  the  Private  Securities
Litigation Reform Act of 1995. These statements are found

<PAGE>
                                      -16-


in Item 3, this Item 4, Item 5 and other sections in which the future  prospects
of the Company are discussed. These statements include information concerning:

     o    growth and operating strategy,

     o    liquidity and capital expenditures,

     o    the Company's financing plans,

     o    industry trends, and

     o    payment of dividends.

     You  can  identify  these  statements  by  forward-looking  words  such  as
"expect",  "believe", "goal", "plan", "intend",  "estimate", "may" and "will" or
similar words. These forward-looking statements involve known and unknown risks,
uncertainties  and  other  factors,  including  those  described  in  Item 4 and
elsewhere  in this annual  report that could cause our actual  results to differ
materially from those anticipated in these forward-looking statements.

A.   History and development of the Company.

     The Company was incorporated as an International Business Company under the
laws of the  British  Virgin  Islands  ("BVI") in  September  1995.  The Company
previously  owned,  through its wholly owned  subsidiaries,  Jing Tai Industrial
Investment  Company  Limited ("Jing Tai") and Jolly Mind Company Limited ("Jolly
Mind"), both Hong Kong companies,  95% equity interests in each of Linyi Baoquan
Bathtub Company Limited  ("Baoquan") and Linyi Xinhua Building  Ceramics Company
Limited  ("Xinhua")(collectively,  the "PRC Operations"). The PRC Operations are
Sino-foreign  equity joint ventures  incorporated under the laws of the People's
Republic of China ( the "PRC").  A wholly owned  subsidiary of Jing Tai, Beijing
Taigong  Sanitary Wares Company Limited  ("Taigong"),  was also  incorporated in
1997 under the laws of the PRC as our administrative and sales support office of
the PRC Operations.

     Pursuant to certain sales and purchases  agreements entered into among Jing
Tai, Shandong Linyi Industrial Enamel Joint Stock Company ("Linyi  Industrial"),
Jolly Mind and Shandong Luozhang Group Company ("Shandong Luozhang"), on July 2,
1999, the Company's  interest in the PRC Operations were disposed of through the
sale by Jing Tai of its 60%  interests in each of Baoquan and Xinhua to Shandong
Luozhang in cash consideration of Rmb28 million.

     Pursuant to a Share  Purchase  Agreement  dated July 2, 1999  entered  into
between the Company and Linyi  Industrial,  the Company sold all of its interest
in Jolly Mind, which owns a 35% interest in each of Baoquan and Xinhua, to Linyi
Industrial in consideration of 1,952,291 shares (the "Consideration  Shares") of
Common Stock of the Company.

     In January,  2000,  Taigong  applied a voluntary  winging up to the Beijing
Hi-tech Development Zone. The dissolution was approved in March, 2000.

     On June 30, 2000, the Company's wholly owned subsidiary,  Jingle Technology
Co., Ltd.,  entered into an agreement with China Internet  Technology  Co., Ltd.
("China  Internet") and Great Legend  Internet  Technology and Service Co., Ltd.
("Great  legend")  to acquire  the  entire  outstanding  shares of BHL  Networks
Technology Co., Ltd. ("BHL Networks"),  a company incorporated under the laws of
the BVI, which owns a 76% interest in Beijing BHL Networks  Technology Co., Ltd.
("Beijing BHL Networks"), a

<PAGE>
                                      -17-


company  incorporated  under the laws of the PRC.  BHL  Networks and Beijing BHL
Networks are  hereinafter  referred  to,  collectively,  as the "Newly  Acquired
Operations"

     The  Company's  registered  office is  located  at P.O.  Box 71,  Craigmuir
Chambers,  Road Town, Tortola,  BVI. Only corporate  administrative  matters are
conducted at this office,  through the Company's  registered agent, HWR Services
Limited.  The Company's  principal executive offices are located in Hong Kong at
34th Floor, West Tower, Shun Tak centre, 200 Connaught Road Central, Hong Kong.

B.   Business overview.

     Company Overview

     After  completing  the  restructuring  and  acquisition,  the  Company  was
transformed into an network technology company, focusing on the network security
and software  development.  Our  long-term  goal is to maximise the value of the
Company and thus the shareholders'  value, with short-term operating strategy as
a leading and pioneering  technology company with growing and expanding ability.
We emphasis innovation,  reliability,  flexibility and efficiency to ensure high
degree of advancement in technology and  commercialisation  of research results.
We believe the existing  market  preference of local products and services,  the
governing  regulations and our  technological  advancement  will create an ample
market opportunity for our success.

     Industry Overview

     The following table summarises key historical and projected growth rates of
Internet usage in the PRC: -

                                                                    Projected
                                                                     compound
                                                                      annual
                                                                   growth rate
                                       1998             2004        1998-2004

                                  (in millions)(5)

Number of Internet users (1)             2.4             33.1          54.9%

Internet penetration rate (2)           0.2%             2.6%          53.3%

E-commerce spending (3)                  8.1         11,708.3         236.3%

Population (4)                       1,236.9          1,288.7           0.7%


Notes:

1.   Source: IDC, October 1999.

2.   Calculated by dividing the number of Internet users by country population.

<PAGE>
                                      -18-


3.   U.S. dollars. Source: IDC, October 1999

4.   Figures are for total  mid-year  population.  Source:  United States Census
     Bureau, January 2000.

5.   Except penetration and growth rates.

     According to the IDC,  the number of Internet  users in the PRC is expected
to increase to approximately 33.1 million in 2004 from approximately 2.4 million
as at the end of 1998,  representing  a compound  annual growth rate ("CAGR") of
54.9%. As at mid 1998, given a population of approximately 1.2 billion,  the PRC
had an Internet  penetration  rate of 0.2  percent and which will  significantly
grow up to 2.6% in  2004,  representing  a CAGR of  53.3%.  IDC  estimates  that
e-commerce  revenues generated by users in the PRC will reach US$11.7 billion by
2004 from US$8.1 million in 1998. As the Internet  becomes more pervasive in the
PRC, the opportunities for e-commerce are also expected to expand.

     The  substantial   increase  in  the  number  of  Internet  users  and  the
development of existing and new Internet technologies are fuelling the expansion
of many Internet business  applications.  Of these, three key business areas are
software development, system integration and Internet security.

     Software development

     In the PRC, the software  industry  includes three main categories:  system
software  (operating  system),  support software  (including database management
software, network and communication software, language and development software)
and  application   software   (professional   software  made  according  to  the
applications and requirements of specific industries, such as financial software
and educational software).

     The report "Statistics of the Development of PRC Software Market 1999-2000"
published  by the CCID ("The  Center of Computer  and  Microelectronic  Industry
Development  and  Research"  administrated  by the MII)  reported that the total
software  sales  of  the  PRC  was  approximately  Rmb  17.6  billion  in  1999,
representing a CAGR of 26.8% based on the 1995's total sales of Rmb 6.8 billion.
Also  according to the MII's  another  report,  the software  sales in 2000 will
reach Rmb 22.5 billion,  or a 27.8% growth over 1999. Of these,  the application
software  leads the growth,  then  followed by  supporting  software  and system
software.  However,  it is  generally  believed  that the  sales  growth  of the
application  software will reduce in coming years due to the fast  saturation of
the market as a result of easy entry by new participants.  The support software,
which is the Newly  Acquired  Operations  specialises  in, will  replace it as a
result of changes in market  preference to localise and tailored  system so that
the specific needs of local enterprises can be met.

     The profit margin of software sales is generally higher than that of system
integration.  Among the  three  categories,  the  profit  margin of  application
software is the lowest due to price war caused by keen  competition.  The profit
margin of the system  software and support  software is comparable but the sales
of system software are limited due to limited users.

     System integration

     It was not until the middle 1990's that a substantial number of enterprises
engaged in the  computer  industry in the PRC  commenced  providing  tailor-made
integrated computing systems to their customers.  It is estimated that there are
over 1,800 systems  integration service providers in the PRC with varying sizes,
but  there  are not  many of  these  providers  have a main  business  focus  on
providing integrated computing solutions to their customers, which is one of the
strengths of the Newly Acquired Operations.

     System  integration  in the PRC,  involves both hardware sales and software
development, representing the setting up of a computer system in accordance with
the general requirements of the

<PAGE>
                                      -19-


industry,  the regional location of the customer and its specific  requirements.
It  requires a  thorough  understanding  of the  computing  requirements  of the
customers  as  well  as an  in-depth  knowledge  of  the  industry  regulations.
Therefore,  local  integration  service  providers  have a definite  competitive
advantage over their foreign competitors.  Nevertheless,  the industry is facing
two market adverse  factors:  (1) keen  competition  existed because of the free
entry barriers into the market by new participants.  New participants,  in order
to  secure  new  customers,  usually  sacrify  their  profit  margin  . (2)  the
deteriorating  profit margin of the hardware  component  sales erodes the higher
margin earned from software development services. As a result, the profit margin
of the  integration  service had  decreased to  approximately  10%,  compared to
around 20% of last year.  The Newly  Acquired  Operations  previously  relied on
system integration as its main income stream.  However,  we are already aware of
the  decreasing  trend and had input  more  resources  in  system  software  and
security  technology  development  since late 2000.  We expect our  reliance  on
system will be minimized in 2001 to the extent of offsetting all of the expenses
incurred and rely on the support  software and  Internet  security  products and
services for the coming profit growth.

     Internet security

     According  to the  figures  stated in the  "Statistic  Report  of  Internet
Development  in the PRC"  published by the China  Internet  Network  Information
Center  ("CNNIC") in January 2001, so far, there are a total of 122,099 websites
in the PRC,  which  most have not  adopted  effective  security  measures.  . In
respect of  e-business,  according  to this  report,  the  biggest  concern  for
approximately  63.23% of the users is the  reliability  and  security  of online
transactions.  CCID's survey  conducted  with 500  enterprises  which  installed
networks indicates that,  approximately  11.21% of these enterprises had adopted
relevant security solution,  approximately  46.67% had recently been planning to
enhance the  security of their  networks,  approximately  32.42%  wanted to have
further  information  and  only  approximately  9.7% did not  consider  adopting
security  measures in the future.  It is generally  believed  that the increased
consciousness of Internet  security will create a fast growing market,  and thus
huge business opportunities, in future.

     The sales of network  security  products  in the PRC  market  were not well
developed  in the past due to:  (1)  measures  were  usually  taken  only  after
enterprises  suffer  because of their weak sense of security and (2) the network
security  industry  is  primitive  as most of the  capital  was  invested in the
building of network infrastructure in the past.

     The network security markets in the PRC is categorised into system security
market and data security  market.  System security product market can be further
divided into specific markets such as firewall product market and attack-defense
product market,  while data security  product market can be further divided into
specific markets such as data encryption  product market,  CA product market and
access  control  product  market.  Firewall has the largest  capacity  among all
network  security  products  in the  PRC.  Data  encryption  product  market  is
protected by the State, and the research, production and sale of data encryption
products  must be those  appointed by the State Data  Encryption  Administrative
Committee and the Central Working Group of Data Encryption.  The  administration
of CA  product is  relatively  loose and market  competition  is also  vigorous.
Access control product markets is likely become the fastest developing  security
market as the  settlement  of security  control in web-based  applications  is a
strategic  issue for  governments  and  corporations in the PRC. It is generally
believed  that  network  security  will be a fast  growing  market in the coming
years,  along  with  the  increased   consciousness  of  the  network  security,
especially after the Chinese-American hackers' war happened in May 2001. All key
securities   sensitive    industries   such   as   the   government,    finance,
telecommunications,  transport,  customs, electricity,  manufacturing,  trading,
military and  education are now  encouraged  to be covered by locally  developed
network security products.

<PAGE>
                                      -20-


     Business Strategy

     Tramford's  strategy  is to become a leading  network  technology  services
provider in the PRC,  particularly in network security,  network  management and
software development. The Company intends to achieve this goal primarily through
the following strategies:

     Capitalize on the strengths of the established goodwill

     Prior to the  acquisitions,  the existing  branches of the Company,  namely
East  Communications  Information  Limited  ("ECI") and the Beijing  Enterprises
Development  Corporation  Zhuhai  Branch  ("Zhuhai  Branch") had long history of
operations.  They had established solid client base and goodwill in the Internet
security and software development market respectively.

     The ECI,  established in 1996, was one of the earliest authorised agents of
famous  international  security  products in China,  such as Checkpoint and NAI.
Later ECI owned its development  force, the leader of which,  Doctor Zhang Jian,
also currently the Chief  Technology  Officer of Beijing BHL Networks,  lead the
successful  development  of the CA server,  Secure  Channel  and LDAP  Catalogue
Server. CA Server was also one of the few servers approved by the State Security
Bureau and the LDAP  Catalogue  Server was the first domestic  catalogue  server
developed in the PRC.

     The Zhuhai Branch, also established in 1996, was principally engaged in the
development  of large scaled  database  management  software.  It mainly  served
overseas customers such as a Hong Kong listed international conglomerate and the
Hong Kong Telecom (now named the Pacific Century Cyberworks).

     The  Company  believes  the proven  successful  records  contribute  to our
success in future. We will capitalise on the historically established well-known
brand and good relationships with customers to further expand the market share.

     Capitalise on the strengths of Beijing Holdings

     Through the  acquisition of the entire  interests in the CMEC in June 2000,
Beijing  Holdings  became the controlling  shareholder of the Company.  Beijing,
being the  capital of the PRC,  is a base for  headquarters  of large  local and
overseas  enterprises and government bureaus.  Beijing Holdings,  being the sole
window company of the Beijing Municipal  Government,  has established  long-term
and good relationships with these enterprises and government bureaus,  which can
directly  contribute to our business  development.  Mr. Li Xiao Hong,  the Board
Chairman and the president of the Company and also the Deputy General Manager of
Beijing  Holdings,  has agreed to utilise his extensive  relationships  with the
senior  management of these potential  customers when expanding  business by the
Company in future. Besides, Mr. Li Xiao Hong also represents Beijing Holdings to
promise the unconditional support to the Company in our future development.

     The Company believes,  with Beijing  Holdings's  specific  background,  our
market expansion and penetration can be fast than other participants, which will
directly contribute to our business success in future.

     Capitalise on the strengths of the ICT

     The Institute of Computing  Technology ("ICT") is a partner and contributor
of our  advancement  in technology  as well as a shareholder  of the Beijing BHL
Networks.  The ICT, who enjoys a high academic reputation in the PRC and is well
recognised  worldwide,  is an  institution  of the  Chinese  Academy  of Science
("CAS")  specializing in high-performance  computer systems. It is the cradle of
the  computer  science and  technology  of the PRC. It takes  "Invigorate  China
through  Science and  Education"  as the  business.  The  research of the ICT is
divided into  fundamental  research,  key  technology  research and  application
research.  These  researches  supplement  each other and work in coordination to
undertake

<PAGE>
                                      -21-


national  tasks for  providing key  technology  of the national  economy and the
people's  livelihood  and to transform  research  results  into high  technology
products to meet the market needs.  Management of the ICT highly  appreciate the
cooperation  with Beijing  Holdings and the Company.  They have  authorised  the
priority usage right to the Company of their latest research results.

     The Company  believes the support from the ICT is a strong  backbone of our
technology. We can launch new products fast than other participants at a minimum
research  and  development  costs  incurred,  and  thus,  higher  margin  can be
obtained.

     Developing new products and projects

     Our products are well  accepted by the high  security  sensitive  customers
such as the government bureaus, medium to large corporates and universities. Our
physical separation software,  developed based on the technique transferred from
the ICT,  helps  protecting the intranet from the possible  attacks  through the
Internet  and  selectively  categorizing  and  collecting  information  from the
Internet  at the same time.  The  product  is well  accepted  by the  government
bureaus  such as the Press  Office of the State  Council  and the Beijing TV and
which will be used by all military units starting from this year.

     In  view of the  success,  the  Company  will  focus  on the  research  and
development of new network  security  software and technology for the PRC market
to cater for the demand of network security products in the PRC. We will further
repackage our existing leading  technologies into ready for sale products.  With
the continuous transfer of advanced scientific research results from the ICT, we
believe the variety of products  can be increased  and the market  demand can be
best fitted.  Our focuses in the coming year will be data  encryption and secure
channel,  information  management  platform based on security  server,  database
management tools and built-in visual information interface and exchange system.

     Reliability and easy management will be the characteristics of our products
in future, in order to fit the generally lower level of network knowledge of the
customers  in the PRC. We believe our  customers  can use them  efficiently  and
effectively through simple training,  which, we believe, can further promote the
brand name of us.

     Change of business focus from system integration to software development

     In view of the lower profit margin of the system integration  service,  the
Company will shift its resources to research and  development of high performing
network security  software.  With the assistance by and the cooperation with the
ICT,  the Company  believes our product and  technology  can always stand at the
leading position, thus can generate the highest level of profit when competition
is still rare at this moment.

     The  purpose of this change is to maximise  the profit of the  Company,  to
secure a constant inflow of cash to support the development of the Company. As a
pioneer of the industry,  we believe, even the profit margin of the PRC software
market  may  reduce  in the  coming  year as a  result  of keen  competition,  a
relatively  higher profit margin of network  security  product,  especially that
provided by us, can remain stable due to: -

1.   increased usage of localised network security software;

2.   increased  consciousness  of  network  security  by the  advocating  of the
     government;

3.   most of the  competitors  are small  sized  companies  with no more than 50
     staffs and they are usually engaged as agents of finished  low-end products
     such as firewall and anti-virus software.

<PAGE>
                                      -22-


     We  believe  our focus on the server  based  product  causes us  relatively
unique. There existed very few competitors,  or even the competitors provide the
same products,  we focus on different  target  customers.  Some of them focus on
petroleum  industry or finance and banking  industry but our good  relationships
with Beijng Holdings secures our solid base of government customers. The Company
will  penetrate  into other industry but we have not yet confirmed our marketing
plan.

     Merger and acquisition

     The  Company  believes  we can expand the market  share and  diversify  the
customers  into  different  industries  by merging  with and  acquiring  certain
leading  companies  in the  industries  they serve.  Our ability to maintain our
competitiveness  will  depend  largely on our  ability to enhance  the  existing
products,  to develop and acquire new products and to develop and  integrate the
acquired products.

     We  are  targeting  to  acquire  a  network   security  company  to  supply
professional  security  consultancy and education  services.  We plan, after the
acquisition,  to position the target as a service  provider of network  security
testing, training,  consulting and emergency rescuing services. We are currently
cooperating  with the ICT in forming the Network  Security  Joint  Laboratory to
provide  network  security  testing  and  consulting  services.  We believe  the
existing  development  ability can be further  expanded  while the  services and
products can be diversified after the acquisition.

     In order to  build a full  line of  network  management  solutions,  we are
planning to acquire a network and information  management  software developer to
sell software to small and medium size  enterprises and government  bureaus.  We
believe,  after the  acquisition,  a  complementary  benefit  can be obtained by
combining  the strengths of our products  sold,  as an upgrading or  value-added
function to customers.

     The network  security  industry in the PRC is  experiencing  a  significant
amount of  consolidation.  As part of our  growth  strategy,  we may  acquire or
invest in complementary companies, products and technologies. It is our strategy
to  achieve  this by issuing  new shares of the  Company so that our fund can be
saved for business development of these targets after the acquisitions. There is
no  assurance  that the  payment  of shares is well  accepted  by the  potential
vendors. Our liquidity level will be materially adversely affected if we need to
settle these acquisitions by cash.

     International co-operations

     We believe the co-operations with internationally professional companies is
key to our growth and  success.  We will  continue  to develop  our sales  agent
business by selecting  quality and famous branded  products  overseas.  Also, we
intend to invest in or invite as  shareholders  of Tramford by certain  overseas
professional  companies. We expect, after this, the overseas advanced technology
can assist in further  upgrading our products and our brand name can go into the
international market, thus significantly improve the image of the Company in the
NASDAQ and world-wide IT market.

     Although certain  negotiations are in progress,  details of which will only
be disclosed,  at the request of the  counter-parties,  at an  appropriate  time
acceptable  to us. We  believe  our  variety of  products  and  services  can be
increased and our technology level can be advanced after these co-operations.

     Description of Products and Services

     The Company believes we are aiming at becoming one of the leading suppliers
of  software  and  solutions  for  network  security,   network  management  and
e-business in the PRC. Our products focus on three  important  areas of Internet
application:  network  security,  network  management  and  e-business  software
development  and we are focusing our effort in building a line of  complementary
network  security  and  network  management  solutions.  Except  the  e-business
software development is separately

<PAGE>
                                      -23-


performed in the Zhuhai  Branch,  for reason of easy access,  fast  reaction and
better  communications  to our Hong Kong customers,  the network  management and
network security  products will complement each other in order to provide a full
range services to our customers.  We usually provide  solutions to our customers
which  include  the  design,  installation,  testing,  consulting  and  training
services.

     Network security, which primarily include the IPSSS, Secure Channel, Secure
Server and the Secure Suite CA V1.1 Certified Service System. These products are
currently mostly sold to the government authorities and universities. We believe
the  potential  of which is  growing  as the  trend of using  locally  developed
software by enterprises in the PRC is increasing.

     Network management,  which primarily include the BHL LDAP Catalogue Server,
BHL  Search  Engine  V2.0,  BHL  Charging  Proxy  of  Network  Expenses  and BHL
Re-broadcasting system V2.0. These products are high performing, high efficient,
intelligent  and  initiative  which assists the  enterprises  in increasing  the
automatic  abstracting and  classification of information influx and controlling
network expenses simultaneously.

     E-business  software  development,  which primarily include the tailor-made
software  developed  in the  Zhuhai  Branch,  which  are  currently  mostly  for
development  of e-business  such as port business,  on-line  banking and on-line
brokerage.  The  software is entirely  tailored  made  according to the specific
requirements of the customers in Hong Kong. Through years of experience, we have
accumulated   thorough   understandings  of  these  business  and  the  specific
requirements.

     In  network  security,   we  strengthen  our   Internet/intranet   physical
separation security system and data encryption products,  which are particularly
suitable for customers in the PRC. In network  management,  we supply our secure
web server,  combined with our search  engine,  billing system and network asset
management system to maximize the cost savings and convenience to customers.  We
are  continuously  seeking  to expand  our  product  lines.  In order to be more
effectively  meeting the demand of the customers,  we will integrate the quality
network  security  products of other companies to provide total solutions to our
customers  based on our  experience  of sales agent of  internationally  branded
suppliers.

     The following is the specific features of certain well recognized  outlined
above: -

     Internet/Intranet Physical Separation Security Solution ("IPSSS")

     Networking program is emphasized by the PRC government, however, the public
sharing, open and interlocking  characteristics of networks cause high degree of
concern over network security by the government. There existed a regulation "The
computer  systems  related to national  secret  cannot  connect with Internet or
other public net directly and  indirectly.  They must be separated  physically."
Accordingly, we advocate the IPSSS to against illegal attacks from both external
and  internal   sources.   The  IPSSS  also  centralizes  the  data  management,
prohibiting the storage of data in  end-users-working-stations,  to minimize the
opportunities  of illegal  extracting of data through this media. We also set up
end-users'  specific  authorization  to guide the right person  accessing to the
right  and  approved  areas  only  through  a  small  smart  card.  Through  the
intelligent  security  hub,  signals  sent  from the  working  stations  will be
identified to connect or disconnect the networks automatically. IPSSS adopts the
single cabling technology to simplify the cable installation.  Easy installation
and  easy  management  are  the   characteristics  of  IPSSS.  This  product  is
particularly  welcomed  by the  government  authorities  and  also  accepted  by
corporate customers, usually high security sensitive companies such as financial
institutions, using it in protecting their intranet.

     Secure Channel

     The Secure  Channel  supports  PKI-based  authentication  and SSL protocol.
Through the Secure Channel, all standardized WWW browsers can carry out enhanced
encrypted communication with

<PAGE>
                                      -24-


standard  128  bit  domestic-made   algorithm  servers,   capable  of  end-users
management  for  e-commerce  system  and  secure  data  communication,   thereby
providing  the secure  channel for domestic  e-commerce  data  transaction.  The
features of the product include: -

     1.   support http, telnet, ftp and sock;

     2.   128 bit domestic-made high-strengthened symmetrical algorithm;

     3.   support popular CA certificate (Overseas: Verisign, Entrust; Domestic:
          ECICA, SHECA, CNCA, CFCA);

     4.   CRL and OSCP search;

     5.   Certificate  is  bi-directional,  cascade  connected  and  interactive
          authentication;

     6.   Support popular  platform,  support popular  browser,  support popular
          server;

     7.   Perfect transaction log; and

     8.   Having obtained State Authority accreditation.

     Security Web Server

     The workflow of the Security Server is as follows: -

     1.   The  access  request  from  Internet  will  be  filtered  through  the
          firewall,  to be sent to the proxy server of the  demilitarized  zone,
          which is an externally visible WWW server,  providing only service but
          not data so as to conceal the inner real server;

     2.   Through the reverse proxy function,  it retrieves the data at the real
          server  in  resource   sub-nut   after   passing  the   filtering  and
          verification of the second firewall, then, returning them to the user.

     3.   File integrity detecting system is classified as detecting clients and
          detecting  server.  The  detecting  server  runs at various  hosts and
          conducts  encrypted  copying  for  documents  in  need  of  detection.
          Detecting  clients adopt  heart-beat  monitoring  technology,  issuing
          detecting   orders  towards   detecting   server   through   encrypted
          communication.

     4.   In  case  of  illegal   alteration  of  documents,   the  system  will
          automatically  restore  the  document.  Should  it fail  to  correctly
          restore  or the  detecting  server  is unable to  proceed  for  normal
          operation,  the system  will  automatically  disconnect  the  external
          network to ensure the non-diffusion of the impact of the mistakes.

     Secure Suite CA Certified Service System

     Secure Suite CA is a certified service system of multi-distributive  server
to realize communication, data sharing and possessing through LDAP and HTTP. The
product features include:

     1.   Support a wide range of certified specification, including SSL Client,
          SSL Server, SMIME and Object Sign;

     2.   Support a kind of customer  applications,  including  popular browser,
          Secure Suite Desktop 1.0 or above;

<PAGE>
                                      -25-


     3.   Support  X.509  V3  expansion,   providing   certified   level  allied
          interactive   accreditation   service  and  certifying   strategy  for
          expansion.  Capable of  interactive  operation  with  product from the
          third party;

     4.   Reinforced  user  management,   certifying   service  may  be  renewed
          smoothly;

     5.   Distributive  RA design,  the user may  complete  the  procedures  for
          certificate application (registration) and application for approval at
          the localities.

     The other products of the Company include: -

     1.   BHL LDAP Catalogue Server, the first domestically  developed catalogue
          server,  is capable of storing huge amount of network  information  in
          the form of catalogue for inquiry;

     2.   BHL Search  Engine  V2.0,  which is capable of  automatic  information
          tracking, classifying, abstracting, relevant grading and pushing; and

     3.   Secure Mail Server, which is capable of securing the data exchange.

     Software application development

     Our branch in Zhuhai has over five years'  experience in  developing  large
scaled database management systems.  Certain main projects completed in the past
years include: -

<TABLE>
<CAPTION>
Projects                        Functions                    Platform                     Tools
--------                        ---------                    --------                     -----
<S>                             <C>                          <C>                          <C>
Inmarsat Billing Management     Charging proxy system for    Oracle 7.3.2 Database        SQL_Windows 5.0, PL/SQL,
System                          the container terminals      Management System            Pro*c and Unix Shell

World Bank Conference Hot       Charging Proxy specially     HP Unix Server, Window 95    SQL_Windows 5.0, PL/SQL
Billing System                  designed for the World       and Oracle 7.3.2             and Pro*C
                                Bank Conference held in
                                Hong Kong

Handover Event Hot Billing      Charging Proxy specially     HP Unix Server, Windows 95   PowerBuilder, PL/SQL and
System                          designed for the handover    and Oracle 7.3.2             Pro*C
                                of Hong Kong to the PRC in
                                1997

Resources Management System II  Resources management         DEC2100, Windows NT 4.0      Oracle Developer 2000
                                system to manage the         and Oracle 7.3.4
                                vehicles, equipments and
                                labours for the container
                                terminals

Customer Marketing              System to manage the         Windows NT 4.0 and Oracle    Silver Stream Application
Information System              market information           8.1.5                        Server 2.5 and Jreport
                                provided to customers
</TABLE>

<PAGE>
                                      -26-


<TABLE>
<S>                             <C>                          <C>                          <C>
Risk Analysis Design System     System to design, access     Windows NT 4.0 and Oracle    Jbuilder 3.0 (Java) and
                                and manage all kind of       8.1.5                        SQL Server 6.5
                                insurance of a company

Executive Information System    System to provide            Windows NT 4.0, Solaris 7    Jbuilder 2.01, Java
                                management information       and Oracle 8.1.5             Servlet, Webserver and IE
                                within the company to                                     4.0
                                senior management

BAItrans E-commerce Business    E-commerce system included   HP Unix Server, Oracle       Silver Stream 2.5.3, Java
System                          e-Document (for management   8.1.1.5 and Windows NT 4.0   and Javascript
                                of bill of lading, cargo
                                receipt, freight charge,
                                notice to customer and
                                exchange of these data
                                among trading partners),
                                Trade Declaration,
                                E-commerce (e-custom and
                                e-import/export) and
                                Marine Procurement System
                                (for quotation and
                                ordering of marine and air
                                carriages)

IGES Stock Trading System       System for securities        Sun Solaris 7.0 and Oracle   VC++, VB, Oracle Developer
                                trading, delivery,           8.1.1.5                      2000 and PL/SQL
                                charging, client account
                                management, system
                                maintenance and
                                information and
                                announcement for financial
                                institution and securities
                                firm in Hong Kong
</TABLE>

     The Company is in partnership with Oracle, IBM, SUN, HP, Silverstream, EMC,
Novel, DEA, Legend Group, Founder Group, Hangzhou Hensen,  Capital Trust and the
Future Group in providing quality products and services to customers.

C.   Organizational structure.

     Control of the Company

     Except as  disclosed in the  footnotes to the table  contained in paragraph
(b) of this Item 4 below,  the  Company,  to the best of its  knowledge,  is not
directly or  indirectly  owned or controlled  by another  corporation  or by any
foreign government.

<PAGE>
                                      -27-


     The following table sets forth as of May 31, 2001, (i) all persons known to
the  Company to be the owner of more than ten  percent of the  Company's  Common
Stock and the Common Stock owned by the officers and directors as a group.

<TABLE>
<S>                    <C>                                                <C>              <C>
     Common Stock      Beijing Holdings                                   2,548,730        36.91%
                       34th Floor, West Tower, Shun Tak Centre,
                       200 Connaught Road Central, Hong Kong.               (2)

     Common Stock      China C & Y International                          1,694,915        24.54%
                       Holdings Limited ("China C & Y")
                       19/F., Wing On House,                                (3)
                       71 Des Voeux Road Central, Hong Kong.

     Common Stock      CMEC Ceramics Holdings Limited ("CMEC")             974,576         14.11%
                       34th Floor, West Tower, Shun Tak Centre,
                       200 Connaught Road Central, Hong Kong.               (2)

     Common Stock      Oriental Patron China                               849,576         12.30%
                       Investment Limited ("Oriental Patron")
                       42/F., COSCO Tower,                                  (4)
                       183 Queen's Road Central, Hong Kong.

     Common Stock      All officers and directors                         6,067,797        87.86%
                        As a group (four persons)
                                                                          (2)(3)(4)
</TABLE>

(1)  Unless  otherwise noted, the Company believes that all persons named in the
     table have sole voting and  investment  power with respect to all shares of
     Common Stock beneficially owned by them.

(2)  CMEC was  previously  owned by CMEC-GE  Capital  China  Industrial  Holding
     Limited.  Pursuant to a sale and  purchase  agreement  dated June 30, 2000,
     Beijing Holdings  acquired the entire interest of CMEC. Mr. Li Xiao Hong is
     the Deputy  General  Manager of Beijing  Holdings  and  therefore he may be
     deemed to  beneficially  own the  shares of Common  Stock  owned by Beijing
     Holdings.  Mr. Li disclaims any beneficial interest in the shares of Common
     Stock  owned by Beijing  Holdings.  In  addition  to Mr.  Li,  the  Beijing
     Municipal  Government  of the PRC,  the  principal  shareholder  of Beijing
     Holdings,  may be deemed to  beneficially  own the  shares of Common  Stock
     owned by Beijing Holdings.

(3)  China C&Y is owned by various investors,  none of which owns more than a 5%
     equity interest in or otherwise  controls such  corporation.  No person has
     been nominated by China C&Y as a director of the Company.

(4)  Zhang Gaobo,  a Director of the Company,  is Managing  Director of Oriental
     Patron and  therefore  he may be deemed to  beneficially  own the shares of
     Common Stock owned by Oriental  Patron.  Mr. Zhang disclaims any beneficial
     interest  in the  shares of  Common  Stock  owned by  Oriental  Patron.  In
     addition to Mr. Zhang, Oriental Patron Holdings Limited and Oriental Patron
     Asia Limited, the principal  shareholders of Oriental Patron, may be deemed
     to beneficially own the shares of Common Stock owned by Oriental Patron.

<PAGE>
                                      -28-


     Significant Subsidiaries

     The Company owns 100%  interest in Jing Tai.  Jing Tai was  previously  the
holding  vehicle of the 60%  interest in each of Baoquan  and Xinhua.  Since the
disposals  of Baoquan  and Xinhua in 1999,  Jing Tai became the cash  management
vehicle of the Company, holding the cash assets of the Company in Hong Kong.

     The Company  owns 76%  interest in Beijing BHL  Networks,  an equity  joint
venture  incorporated in the PRC, through its indirect wholly owned  subsidiary,
BHL  Networks,  incorporated  in the  Cayman  Islands,  which  is  owned  by the
Company's wholly owned direct subsidiary,  Jingle,  incorporated in the BVI. BHL
Networks and Jingle are investment-holding vehicles. All principal activities of
the Company are done through Beijing BHL Networks in the PRC.

     Beijing BHL Networks is a  specialized  network  technology  company.  With
network security and information security technology and support software as its
main  engagement,  the company has established its brand image with  specialized
technology,  system products and comprehensive service. The principal technology
of the  company  include:  accreditation  and  encryption,  coding,  information
protection  and  testing,   network  security  technical  standard  and  related
technology  as  well  as  products  and  solutions  in  the  aspect  of  network
information processing.

     An illustration of the Company's structure is as follows: -

                         ------------------------------
                         Tramford International Limited

                               (BVI incorporated)
                         ------------------------------

                  100%                                    100%
         ------------------------                ----------------------
           Jing Tai Industrial                   Jingle Technology Ltd.
           Investment Co. Ltd.
                                                   (BVI incorporated)
         (Hong Kong incorporated)                ----------------------
         ------------------------

                                                          100%
                                             -------------------------------
                                             BHL Networks Technology co. Ltd.

                                               (Cayman Island incorporated)
                                             -------------------------------

                                                           76%
                                             -------------------------------
                                             Beijing BHL Networks Technology
                                                         Co. Ltd.

                                                    (PRC incorporated)
                                             -------------------------------

<PAGE>
                                      -29-


D.   Property, plants and equipment.

     The Company shares its office, free of charge,  from Beijing Holdings,  the
controlling  shareholder,  which is situated at 34th Floor, West Tower, Shun Tak
Centre, 200 Connaught Road Central, Hong Kong. Jing Tai, Jingle and BHL Networks
are situated at the same office of the Company.

     Beijing  BHL  Networks  leases its office at 8th Floor,  Anhua  Development
Building, No. 35, Anding Street,  Chaoyang District,  Beijing,  100029, PRC at a
monthly rent of Rmb88,  870 for a period of two years  commencing from September
23, 2000.

     The Company's principal fixed assets is computer equipment.  As at December
31,  2000,  the total  net book  value of the  computer  equipment  amounted  to
approximately  Rmb1,574,  which represented 61% of the total fixed assets of the
Company.

     The Company  believes that the physical  facilities are adequate to conduct
the Company's business during the next 12 months.

Item 5.  Operating and Financial Review and Prospects

     MANAGEMENT'S DISCUSSION AND ANALYSIS

     The  following  discussion  of  the  financial  condition  and  results  of
operations  should  be read  in  conjunction  with  the  consolidated  financial
statements and related notes thereto.  The following discussion contains certain
forward-looking  statements  that  involve  risk and  uncertainties.  Our actual
results could differ materially from those discussed herein.  Factors that could
cause or contribute to such differences  include,  but are not limited to, risks
and uncertainties  related to the need for additional funds, the rapid growth of
the  operations and our ability to operate  profitably  after the initial growth
period is completed.

     All financial data referred to in the following management's discussion has
been prepared in accordance with U.S. GAAP.

     Results of operations for the years ended December 31, 1998,  1999 and 2000
refers to the  audited  consolidated  results of the Company for the years ended
December 31, 1998,  1999 and 2000.  The results of operations for the year ended
December 31, 1999  incorporate  the results of the PRC  Operations up to July 2,
1999, the effective date of its disposal. The results of operations for the year
ended December 31, 2000 incorporate the results of the Newly Acquired Operations
since July 1, 2000, the effective date of its acquisition.

A.   Results of Operations

     The  following  table  presents  selected   statement  of  operations  data
expressed  as a percentage  of net sales for the years ended  December 31, 1998,
1999 and 2000.  General  and  administrative  expenses  and other  non-operating
expenses,  net for the  years  ended  December  1998 are  restated  to show such
expenses incurred by the continuing  operations only. All such expenses incurred
by and  the  income/  (loss)  attributable  to  the  minority  interests  of the
discontinued  operations  are  grouped  into the "Loss  from  operations  of the
disposed subsidiaries".

<PAGE>
                                      -30-


<TABLE>
<CAPTION>
                                                               1998            1999            2000
                                                               ----            ----            ----
<S>                                                           <C>             <C>              <C>
Net sales..............................................       100.0%          100.0%           100.0%

Cost of goods sold.....................................        99.7%           92.0%            61.9%

Gross profit/(loss)....................................         0.3%            8.0%            38.1%

Selling, general and administrative expenses...........        10.0%           24.5%            51.0%

Non-operating income...................................        10.1%           14.9%            21.4%

Income/(loss) from
   continuing operations...............................         0.0%            9.6%             8.5%

Loss from operations of disposed
   subsidiaries........................................       (87.7%)          77.4%             0.0%

Gain on disposal of subsidiaries.......................         --            104.1%             0.0%

Income/(loss) for the year.............................       (87.7%)          17.1%             9.2%
</TABLE>

Year ended December 31, 2000 compared to year ended December 31, 1999

     Net sales. Net sales decreased by Rmb 3.5 million,  or 18.2%, from Rmb 19.2
million of the year ended December 31, 1999 ("1999 Period"), to Rmb 15.7 million
of the year ended  December  31,  2000  ("2000  Period").  Net sales of the 1999
Period  represented  solely the net sales of the disposed PRC Operations,  while
that of the 2000 Period  represented  solely the net sales of the Newly Acquired
Assets since the effective acquisition date of July 1, 2000.

     Cost of good sold. Cost of goods sold decreased 45.2% from Rmb 17.7 million
of the 1999  Period to Rmb 9.7  million  in the 2000  Period,  while the cost of
goods sold, as a percentage of net sales,  decreased to 61.9% in the 2000 Period
from 92.0% in the 1999  Period.  The  decrease is due  primarily  to a generally
higher margin of our new businesses acquired.

     Gross  Profit.  Gross  Profit for the 2000 Period was Rmb 6.0  million,  an
increase of Rmb 4.5 million,  or 300%, from Rmb 1.5 million for the 1999 Period.
The increase was due primarily to an improvement of profit margin obtained after
the acquisition of the Newly Acquired Operations.

     Selling,  general  and  Administrative   expenses.   Selling,  general  and
administrative  expenses was Rmb 8.0 million, an increase of Rmb 3.3 million, or
70.2%,  from  Rmb  4.7  million  for  the  1999  Period,  due  primarily  to the
acquisition  of  the  Newly  Acquired  Operations.  General  and  administrative
expenses of the continuing  operations  were Rmb 2.7 million,  a decrease of Rmb
2.0 million,  or 42.6%, from Rmb 4.7 million for the 1999 Period,  due primarily
to professional  fees were incurred in the 1999 Period for due diligence and the
acquisition of the Newly Acquired Operations and other targets.

<PAGE>
                                      -31-


     Net income/(loss).  The net income for the 2000 Period was Rmb 1.4 million,
a decrease  of Rmb 1.9  million,  or 57.6%,  from Rmb 3.3  million  for the 1999
Period.  Last year's profit was mainly  caused by an one-off  profit earned from
the disposals of the PRC Operations amounting to Rmb 5.1 million.

     Non-operating income. Non-operating income increased by Rmb 1.6 million, or
55.6%,  compared to Rmb 2.8 million for the 1999 Period, which was primarily due
to an income of Rmb 300 earned from securities trading in the 2000 Period.

Year ended December 31, 1999 compared to the year ended December 31, 1998

     Net sales. Net sales for the 1999 Period decreased by Rmb 23.9 million,  or
55.4%, from Rmb 43.1 million to Rmb 19.2 million for the year ended December 31,
1998 ("1998 Period") due to the disposal of the PRC Operations on July 2, 1999.

     Cost of Goods Sold.  Cost of goods sold deceased  58.8% to Rmb 17.7 million
in the 1999 Period,  while the cost of goods sold decreased to 91.9% in the 1999
Period  from 99.7% in the 1998  Period.  The  decrease is due  primarily  to the
reduction in raw materials and direct labor costs due to the improved efficiency
in manufacturing since the completion of the technological  advancement in March
1998 and the disposal of the PRC Operations on July 2, 1999.

     Gross  Profit.  Gross  Profit for the 1999 Period was Rmb 1.5  million,  an
increase  of Rmb 1.4  million,  or  1027.7%,  from Rmb 0.1  million for the 1998
Period.  The increase was due  primarily to a saving in cost of goods sold and a
result of the improved efficiency in manufacturing as described above.

     General and Administrative  Expenses.  General and administrative  expenses
for the  continuing  operations  were Rmb 4.7  million,  an  increase of Rmb 0.4
million,  or  9.1%  compared  to Rmb  4.3  million  for the  1998  Period.  As a
percentage of net sales,  it increased from 10.0% in the 1998 Period to 24.5% in
the 1999 Period, which is primarily attributable to the increase in professional
fee in performing due diligence on the potential target companies. Such expenses
incurred  by the  discontinued  operations  for the  1999  Period  were Rmb 16.3
million, a decrease of Rmb 10.7 million, or 39.6%,  compared to Rmb 27.0 million
for the 1998 Period.  As a percentage of sales,  it increased  from 62.6% in the
1998 Period to 84.9% in the 1999 Period,  due primarily to the decrease in sales
and the reasons described above.

     Net income/(loss).  The net income for the 1999 Period was Rmb 3.3 million,
an increase of Rmb 19.5 million from the interim loss of Rmb 16.2 million, which
was due to a gain on the disposal of PRC Operations  recognized amounting to Rmb
20 million.

     Non-operating Income.  Non-operating income decreased by Rmbl.5 million, or
33.9%,  compared to Rmb 4.3 million for the 1998 Period, which was primarily due
to the  absence  of gain on  marketable  securities  and  the  decrease  in bank
interest  income as a result of the decreases in deposits and bank interest rate
in the 1999 Period.

     Gain on disposal.  The gain on disposal was the difference between the fair
value  of the  proceeds  received  from  the  disposal  of the  PRC  Operations,
including shares  repurchased from a principal  shareholder,  and the net assets
value of the PRC  Operations  as at July 2, 1999,  less the  portion of the gain
attributable to the shares repurchased.

Year ended December 31, 1998 compared to the year ended December 31, 1997

     Net  Sales.  Net sales for the year  ended  December  31,  1998 (the  "1998
Period") were Rmb43.0  million,  a decrease of Rmb25.8 million or 37.5% compared
to Rmb68.8 million for the year ended December 31, 1997 (the "1997 Period"). The
decrease  in net sales  during the 1998  Period as  compared  to the 1997 Period
arose primarily due to: (1) the continuous downturn of the properties market;

<PAGE>
                                      -32-


(2)  strong  competition  causing  reductions  in  selling  prices  and  (3) the
Company's  internal  reduction of its prices to reduce  inventory  levels.  Such
changes  adversely  impacted the Company's sales.  Baoquan Bathtub accounted for
30.0%  of the  Company's  net  sales  in the  1998  Period  with  the  remainder
representing sales of sanitary wares and ceramic tiles.

     Cost of Goods Sold.  Cost of goods sold decreased  44.4% to Rmb42.9 million
in the 1998  Period,  while  cost of goods  sold as a  percentage  of net  sales
increased to 99.7% in the 1998 Period from 12.1% in the 1997 Period. Even though
costs  of  raw  materials  decreased  approximately  6%,  it was  offset  by the
reductions in selling prices of the Company's products and the relatively higher
portion of fixed costs attributable to such products.

     Gross profit. Gross profit for the 1998 Period was Rmb0.1 million, a change
from the loss of Rmb8.3  million of the 1997 Period,  due  primarily to a higher
gross profit margin earned from high-end products manufactured since June 1998.

     General and Administrative  Expenses.  Selling,  general and administrative
expenses for the continuing  operations were Rmb 4.3 million,  a decrease of Rmb
3.5  million,  or 44.6%  compared to Rmb 7.8 million for the 1997  Period.  As a
percentage of sales,  it decreased from 11.4% in the 1997 Period to 10.0% in the
1998 Period, which remained steady in the 1998 Period. Such expenses incurred by
the  discontinued  operations  for the 1998  Period  were Rmb  27.0  million,  a
decrease of Rmb 16.5  million,  or 37.9%,  compared to Rmb 43.5  million for the
1997 Period.  As a  percentage  of sales,  it  decreased  from 63.3% in the 1997
Period to 62.6% in the 1998 Period, due primarily to a decrease in provision for
doubtful  accounts  amounting  to  approximately  Rmbl0.0  million,  compared to
Rmb18.2 million in the 1997 Period, as a result of a prudent reassessment of the
Company's trade accounts  receivables by management in the 1998 Period. There is
also a specific provision of inventories of Rmb7.5 million in the 1997 Period.

     Non-operating income. Non-operating income decreased by Rmb 5.9 million, or
57.8%,  compared  to Rmb 10.3  million for the 1997  Period.  The  decrease  was
primarily due to the significant decrease in gain on marketable  securities from
Rmb 8.3 million for the 1997 Period to Rmb 0.9 million for the 1998 Period, as a
result of the Asian financial turmoil.

Taxation

     No Hong Kong taxation is charged for Jing Tai and Jolly Mind as there is no
estimated assessable profit for the 1998, 1999 and 2000 Periods. The Company was
incorporated  under the laws of the  British  Virgin  Islands  (BVI),  and under
current  BVI law,  was not  subject  to tax on  income or  capital  gains as the
Company did not carry out business in BVI. For Beijing BHL Networks, pursuant to
the  applicable  PRC income tax laws,  they were fully exempt from the PRC state
income tax for two years, starting from the first profit-making year followed by
a 50%  reduction  over the ensuing  three years  ("tax  holidays").  Beijing BHL
Networks incurred loss for the 2000 Period, therefore, the tax holidays were not
started.

B.   Liquidity and capital resources

     The Company's cash and cash equivalents on hand as at December 31, 2000 was
Rmb$71.6  million,  including  a balance of Rmb 20.3  million  deposited  in the
accounts  of Beijing  Holdings  Investment  Management  Center,  a wholly  owned
subsidiary of Beijing Holdings, a substantial shareholder, who will pay interest
according to the one month saving interest rate announced by the PBOC.

     The Company  believes  that its working  capital  will  provide  sufficient
capital for the balance of the Company's  fiscal year ending  December 31, 2001.
At December 31, 2000, the Company, after netting off the total liabilities,  had
cash resources of Rmb 43.9 million, a decrease of Rmb 26.3 million from Rmb

<PAGE>
                                      -33-


70.2 million for the 1999 Period,  mainly due to the  acquisitions  of the Newly
Acquired  Operations and purchases of intangible  assets and fixed assets during
the 2000 Period.

     The Company  anticipates,  based on  management's  internal  forecasts  and
assumptions  relating  to its  operations,  that its  existing  cash  and  funds
retained will be sufficient  to meet the Company's  working  capital and capital
expenditure  requirements  for the  foreseeable  future.  In the event  that the
Company's plans change,  its assumption change or prove inaccurate,  or if other
capital  resources and projected cash flow otherwise prove to be insufficient to
fund operations (due to unanticipated expenses, technical problems, difficulties
or otherwise), the Company could be required to seek additional financing sooner
than currently anticipated. The Company has no current arrangements with respect
to  sources  of  additional  financing  and there can be no  assurance  that the
Company would be able to obtain additional  financing on terms acceptable to the
Company, or at it all.

C.   Research and development, patents and licenses, etc.

     The Company acquired,  through Beijing BHL Networks,  the following patents
and licenses from the Institute of Computing  Technology of the China Academy of
Science at a cash consideration of Rmb 4 million.

Item 6.  Directors, Senior Management and Employees

A.   Directors and senior management.

     The directors and executive officers of the Company are as follows:

     Name                        Age       Position
     ----                        ---       --------

     Li Xiao Hong                48        Chairman of the Board and President

     Jiang Xinhao                36        Chief Executive Officer and Director

     Zhang Gaobo, Gary           36        Director

     Michael Siu                 32        Secretary and Chief Financial Officer

     Li Guo Jie                  58        Director

     Jin De Zhen                 56        Director

     Yu Xiang Dong               35        Director

     Benjamin Wah                50        Director

     Li Xiao Hong, as nominee of Beijing Holdings, was appointed the Chairman of
the Board and  President of the Company and Jing Tai in March 2000.  Mr. Li also
served as the Deputy General Manager of Beijing Holdings.  Mr. Li graduated form
the Chinese  University of Industry with a master degree.  From 1992 to 2000, he
served as the  Vice-Chairman  of the Beijing First Light  Industry  Corporation.
Prior  thereto,  he  served  as  the  general  manager  of the  Beijing  Glasses
Corporation. Mr. Li has over 15 years experience in enterprise management.

<PAGE>
                                      -34-


     Jiang  Xinhao,  as a nominee of Beijing  Holdings,  is the Chief  Executive
Officer and a Director of the Company and the General  Manager of Jing Tai since
July 1996. Mr. Jiang  graduated from the Fudan  University with a master degree.
From  1995 to 1996,  he served as a manager  of the  Beijing  Holdings  and Vice
President  of Jing Tai.  From 1992 to 1995,  he  served  as the  Manager  of the
securities department of Dong Fong Finance Company Limited,  which was the first
finance company  incorporated by large  enterprise in the PRC. He also served as
the General  Manager of  investment  department  of Heng Tong  Group,  the first
public listed company of the China Staq Exchange. Prior thereto, Mr. Jiang was a
tutor of Beijing  University.  Mr. Jiang has more than ten years'  experience in
investment and corporate management

     Zhang Gaobo,  Gary, a nominee of Oriental Patron,  has served as a Director
of the Company since June 1996. Since May 1993, Mr. Zhang has served as Managing
Director of Oriental  Patron,  a principal  shareholder  of the Company which is
principally  engaged in  corporate  financial  services and  securities  trading
services  in Hong Kong.  From  October  1992 to May 1993,  Mr.  Zhang  served as
managing director of Lucky Unicorn Investments Limited. Prior thereto, he served
as Deputy  director of the  Financial  Administration  of the  People's  Bank of
China,  Hainan  Provincial  Branch.  Mr. Zhang has over 10 years'  experience in
corporate financial services.

     Michael Siu has served as the Chief Financial  Officer and Secretary of the
Company since  September 1997 and is responsible  for the financial  planning of
the Company and its joint  ventures in the PRC. Mr. Siu graduated  from the City
University of Hong Kong with a bachelor's  degree.  He is a fellow member of the
Association of Chartered  Certified  Accountants and an associate  member of the
Hong Kong Society of Accountants. Prior to his service with the Company, Mr. Siu
served in  international  accounting  firms and has over 6 years'  experience in
business assurance and advisory services.

     Li Guo Jie was  appointed a Director of the Company since  September  2000.
Mr.  Li is the Dean of the ICT of the CAS  since  1999.  From  1987 to 1999,  he
worked in the CAS as senior  researcher  and was  responsible  for  advanced and
intelligent  computing technology projects of the PRC. Mr. Li regularly releases
research reports and valuable  articles to international  journals and currently
is the Chief Editor of the Journal of Computer  Science and  Technology.  Mr. Li
obtained  a  bachelor's  degree  from the  Faculty  of  Physics  in the  Beijing
University in 1968. He later  obtained his master's  degree at the University of
Science  and  Technology  in  Beijing in 1981 and a  Doctorate  Degree at Purdue
University in 1985.

     Jin De Zhen was appointed a Director of the Company since  September  2000.
Ms. Jin is the General Manager of the Beijing Enterprise Development Corporation
since 1997. In 1985, she joined the Beijing Municipal Bureau of Supervision as a
supervision  officer and was promoted as a senior  officer in 1987.  Since 1997,
she was  appointed  the  Committee  Member  of the  Beijing  Municipal  People's
Political Consultative Conference.  Ms. Jin was engaged as an Assistant Profesor
at Beijing  Institute of Economics  since 1974 and was promoted as the Vice Dean
in 1984.

     Yu Xiang Dong, has served as an  independent  director of the Company since
June 2000. Mr. Yu graduated from the Fudan University with a master's degree. In
September 1997, he was appointed the Vice-President of the China  Communications
Securities  Co. Ltd. and was  appointed in April 2000 the  President of the 21st
High-tech Investment Co. Ltd., a fund company specializing in investments in the
high-tech  industry.  In 1995,  he was  appointed  the  General  Manager  of the
Shanghai  Branch of the CMS. He served from 1991 to 1994, as an assistant to the
General  Manager  and the  Manager  of the IPO  Division  of the China  Merchant
Securities Ltd. ("CMS"), the third largest securities company in the PRC, with a
registered capital of Rmb 3.2 billion.  Mr. Yu has over ten years' experience in
investing banking.

     Profession  Benjamin  W. Wah has served as an  independent  director of the
Company since June 2000.  Mr. Wah graduated  from the  University of California,
Berkley with a doctorate  degree.  Mr. Wah was appointed the Vice  President for
publications of the IEEE Computer Society in 1998 and he became

<PAGE>
                                      -35-


its  President in 2000.  In 1990,  Mr. Wah was  appointed  the  professor of the
Department  of ECE of the  University of Illinois in Urbana and later became the
R.T. Chien Professor of Engineering in the same  university.  From 1988 to 1989,
Mr. Wah served as the Program  Director of the National  Science  Foundation  in
Washington  DC. He served from 1979 to 1988 as the  associate  professor  in the
Purdue  University  of the United  States of America.  Mr.  Wah's  research  has
focused  on  the  development   and   improvement  of  non-linear   optimization
algorithms,  parallel  algorithms,  design of  computer  network  protocols  and
automated  design of algorithms using  high-speed  computers.  Mr. Wah is also a
keen  contributor  of  articles  published  in   well-recognized   journals  and
magazines.

B.   Compensation.

     During  2000,  the  Company  has paid  compensation  to Mr.  Jiang  Xinhao,
director, and Mr. Michael Siu, the Secretary and the Chief Financial Officer, in
respect of their service performed for their offices, respectively, amounting to
approximately Rmb 456 and Rmb 522. Except as aforesaid, the Company has not paid
any compensation to other directors and executive officers.

     The Company has granted stock options to certain  officers and directors as
described in Item 6E.

C.   Board practices.

     The directors listed above were elected to serve as directors at the annual
meeting of the shareholders held on September 5, 2000 for the ensuing year until
the next annual meeting of the  shareholders.  There is no employment  contracts
signed with the directors.

     Mr. Michael Siu, Mr.  Benjamin Wah and Yu Xiang Dong constitute the members
of the audit committee.

     The  Company's  By-laws  did not  require  the  establishment  of an  audit
committee.  The Company's  audit committee is established in accordance with the
requirement of the NASD  Marketplace  Rules 4460 (d). There is no formal meeting
of the  committee  during  the year but  members  often  meet  and  discuss  the
Company's matters by an informal way.

D.   Employees.

     As at  December  31,  2000,  corporate  and  administrative  staff  at  the
Company's  head  office  consisted  of three  employees,  and total staff at the
offices of the Company's subsidiaries  consisted of [97] employees,  compared to
three  staff in head  office  only as at  December  31,  1999.  The  increase in
employees is due to acquisitions by the Company described elsewhere in this Form
20-F.

     An analysis of the employees by function and by education  background is as
follows: -

<PAGE>
                                      -36-


      Analysed by function                   Analysed by education
                                             background

      Corporate administration     14        Secondary school             3

      Finance                       5        Bachelor degree             85

      Technology                   73        Master degree                9

      Sales and services            8        Doctorate degree             3


     There is no  collective  bargaining  agreement  in the PRC.  We have  never
experienced  any  material  labour  disruption  and are  unaware of any  current
efforts  or plans to  organize  employees.  The  Company  believes  we have good
relationships with our employees.

E.   Share ownership.

     The following table sets out the names and titles of the executive officers
and directors of the Company and their respective share ownership in the Company
as at June 15, 2001:

<TABLE>
<CAPTION>
                                         Common Shares

          Name                       Title/Office                    As a % of Outstanding Shares
     --------------------   --------------------------------------   ----------------------------
<S>                         <C>                                                    <C>
     Li Xiao Hong           Chairman of the Board and President                    0%

     Jiang Xin Hao          Chief Executive Officer and Director                   0%

     Zhang Gao Bo           Director                                               0%

     Yu Xiang Dong          Director                                               0%

     Benjamin Wah           Director                                               0%

     Li Guo Jie             Director                                               0%

     Jin De Zhen            Director                                               0%

     Michael Siu            Chief Financial Officer and Secretary                  0%
</TABLE>

     The names and titles of the executive officers and directors of the Company
to whom  options have been granted by the Company  which are  outstanding  as of
June 15, 2001 and the number of Common  Shares  subject to such  options are set
forth in the following table:

<PAGE>
                                      -37-


<TABLE>
<CAPTION>
                                                      Common Shares

                                                                 Number       Exercise
            Name                    Title/Office              of Shares(1)    Price(US$)      Expiry Date
     ----------------------   -----------------------------   ------------    ----------    -----------------
<S>                           <C>                                <C>             <C>        <C>
     Li Xiao Hong             Chairman, President and            50,000          1.15       December 28, 2009
                              Director

     Jiang Xin Hao            Chief Executive Officer and        50,000          1.15       December 28, 2009
                              Director

     Zhang Gao Bo             Director                           30,000          1.15       December 28, 2009


     Michael Siu              Chief Financial Officer and        40,000          1.15       December 28, 2009
                              Secretary

                                                                170,000
                                                                -------
</TABLE>

(1)  All options were granted pursuant to a board resolution  passed on December
     28, 1999.

     Executive Officers and Directors

     1996 Stock Option Plan

     Pursuant  to a members'  resolution  passed on October 10,  1996,  the 1996
Stock  Option Plan was  approved,  authorizing  the Board of  Directors to grant
option to  employees  and  directors  of the  Company up to a maximum of 200,000
shares.  The  1996  Stock  Option  Plan is to be  administered  by the  Board of
Directors or a committee of the Board of Directors,  which  determines the terms
of the options  exercised,  including the exercise  price,  the number of shares
subject  to the  option  and the terms and  conditions  of  exercise.  No option
granted under the 1996 Stock Option Plan is  transferable  by the optionee other
than by will or the  laws  of  descent  and  distribution  and  each  option  is
exercisable during the lifetime of the optionee only by such optionee.

     The exercise  price of all stock  options  under the 1996 Stock Option Plan
must be at least  equal to the fair  market  value of such shares on the date of
grant.  With respect to any participant who owns stock  possessing more than 10%
of the voting rights of the Company's  outstanding  capital stock,  the exercise
price of any  Incentive  Stock  Option  must be not less  than  110% of the fair
market value on the date of grant.  The term of each option granted  pursuant to
the  Stock  Option  Plan may be  established  by the  Board of  Directors,  or a
committee  of the  board in its sole  discretion;  provided,  however,  that the
maximum term of each Incentive  Stock Option granted  pursuant to the 1996 Stock
Option Plan is ten years.  With respect to any Incentive Stock Option granted to
a  participant  who owns stock  possessing  more than 10% of the total  combined
voting  power of all classes of the  Company's  outstanding  capital  sock,  the
maximum term is five years.  Options shall become  exercisable at such times and
in such  installments as the Board of Directors,  or a committee of the Board of
Directors, shall provide in the terms of each individual option.

     Please refer to the above for details of the options granted under the 1996
Stock Option plan.

     2000 Stock Option Plan

     Pursuant to another members' resolution passed on September 20, 2000 at the
2000 Members' Meeting,  the 2000 Stock Option Plan was approved.  The details of
the option plan are as follows: -

<PAGE>
                                      -38-


     Types of Grants and Eligibility

     The 2000 Stock  Option  Plan is  designed  to provide an  incentive  to key
employees  (including  officers  and  directors  who are key  employees)  of the
Company and to  consultants  and  directors who are not employees of the Company
and its present and future subsidiaries and to offer an additional inducement in
obtaining the services of such individuals.

     Shares Subject to the 2000 Stock Option Plan

     The  aggregate  number of shares of Common  Stock for which  options may be
granted  under the 2000  Stock  Option  Plan may not exceed  400,000;  provided,
however, that the maximum number of shares of Common Stock with respect to which
options  may be granted  to any  individual  in any  fiscal  year may not exceed
100,000.  Such shares of Common Stock may consist  either in whole or in part of
authorized but unissued shares of Common Stock or shares of Common Stock held in
the treasury of the Company.  Shares of Common Stock  subject to an option which
for any reason expires, is canceled or is terminated unexercised or which ceases
for any reason to be exercisable may again become  available for the granting of
options under the 2000 Stock Option Plan.

     Administration of the 2000 Stock Option Plan

     Except in the case of  non-employee  director  options,  in which  case the
Stock  Option Plan is  administered  by the Board of  Directors,  the 2000 Stock
Option  Plan is  administered  by a  committee  of the Board of  Directors  (the
"Committee") consisting of not less than two directors,  each of whom shall be a
"non-employee  director" within the meaning of rules and regulations promulgated
by the Securities and Exchange Commission.

     Subject to the  express  provisions  of the 2000  Stock  Option  Plan,  the
Committee has the authority, in its sole discretion, with respect to options, to
determine,  among other things: the key employees,  consultants and advisors who
are to receive options;  the times when they may receive options;  the number of
shares of Common  Stock to be subject to each  option;  the term of each option;
the date  each  option  is to  become  exercisable;  whether  an option is to be
exercisable in whole, in part or in installments,  and, if in installments,  the
number of shares of Common Stock to be subject to each installment;  whether the
installments  are to be  cumulative;  the date  each  installment  is to  become
exercisable and the term of each installment;  whether to accelerate the date of
exercise of any  installment;  whether  shares of Common  Stock may be issued on
exercise  of an  option as partly  paid,  and,  if so,  the  dates  when  future
installments  of the  exercise  price are to become due and the  amounts of such
installments;  the  exercise  price of each  option;  the form of payment of the
exercise price;  whether to restrict the sale or other disposition of the shares
of Common  Stock  acquired  upon the exercise of an option and to waive any such
restriction;  and  whether to subject  the  exercise of all or any portion of an
option to the fulfillment of  contingencies  as specified in an applicable stock
option contract.  With respect to all options, the Committee has such discretion
to determine the amount, if any,  necessary to satisfy the Company's  obligation
to  withhold  taxes;  with the consent of the  optionee,  to cancel or modify an
option,  provided  such option as modified  would be  permitted to be granted on
such date under the terms of the 2000 Stock Option Plan; to prescribe, amend and
rescind  rules and  regulations  relating to the 2000 Stock Option Plan;  and to
make all other determinations  necessary or advisable for administering the 2000
Stock Option Plan. The Board of Directors has the authority described above with
respect to the granting of non-employee director options.

     Exercise Price

     The exercise price of the shares of Common Stock under each option is to be
determined by the  Committee.  The exercise  price of the shares of Common Stock
under each non-employee  director option is to be equal to the fair market value
of the Common Stock subject to such option on the date of grant.

<PAGE>
                                      -39-


     Term

     The term of each option  granted  pursuant to the 2000 Stock Option Plan is
established by the Committee, in its sole discretion, at or before the time such
option is granted.  Subject to early  termination,  each  non-employee  director
option is to be exercisable on a term of ten years from the date of grant.

     Exercise

     An  option  (or any  part  or  installment  thereof),  to the  extent  then
exercisable,  is to be exercised by giving  written notice to the Company at its
principal  office.  Payment in full of the aggregate  exercise price may be made
(a) in  cash  or by  certified  check,  or (b) if the  applicable  stock  option
contract  at the  time of  grant  so  permits,  with  the  authorization  of the
Committee,  with previously  acquired shares of Common Stock having an aggregate
fair market  value,  on the date of exercise,  equal to the  aggregate  exercise
price of all  options  being  exercised,  or (c) with any  combination  of cash,
certified check or shares of Common Stock.

     The Committee may, in its discretion,  permit payment of the exercise price
of an option by delivery by the optionee of a properly executed exercise notice,
together with a copy of his irrevocable  instructions to a broker  acceptable to
the  Committee  to deliver  promptly  to the  Company the amount of sale or loan
proceeds sufficient to pay such exercise price.

     Termination of Relationship

     Any employee holder of an option whose employment or relationship  with the
Company (and its parent and  subsidiaries)  has  terminated for any reason other
than his death or disability may exercise such option, to the extent exercisable
on the date of such termination,  at any time within three months after the date
of  termination,  but not  thereafter  and in no event after the date the option
would  otherwise  have expired;  provided,  however,  that if his  employment is
terminated either (a) for cause, or (b) without the consent of the Company, said
option terminates immediately. Options granted to employees under the 2000 Stock
Option  Plan are not  affected by any change in the status of the holder so long
as he or she continues to be a full-time employee of the Company,  its parent or
any  of its  subsidiaries  (regardless  of  having  been  transferred  from  one
corporation to another).

     Death or Disability

     If an  optionee  dies (a) while he is an  employee  or  consultant  to, the
Company,  its parent or any of its  subsidiaries,  (b) within three months after
the termination of such  relationship  (unless such termination was for cause or
without  the  consent of the  Company),  or (c) within  one year  following  the
termination  of such  relationship  by reason of  disability,  an option  may be
exercised,  to the  extent  exercisable  on the date of death,  by an  executor,
administrator  or other person at the time  entitled by law to the rights of the
optionee  under such option,  at any time within one year after  death,  but not
thereafter  and in no event  after  the date the  option  would  otherwise  have
expired.

     Any optionee whose  relationship has terminated by reason of disability may
exercise his option,  to the extent  exercisable upon the effective date of such
termination, at any time within one year after such date, but not thereafter and
in no event after the date the option would otherwise have expired.

     Adjustments Upon Changes in Common Stock

     Notwithstanding  any other provisions of the 2000 Stock Option Plan, in the
event  of any  change  in the  outstanding  Common  Stock by  reason  of a share
dividend, recapitalization,  merger or consolidation in which the Company is the
surviving corporation,  split-up, combination or exchange of shares or the

<PAGE>
                                      -40-


like,  the aggregate  number and kind of shares subject to the 2000 Stock Option
Plan, the aggregate number and kind of shares subject to each outstanding option
and the exercise  price thereof will be  appropriately  adjusted by the Board of
Directors, whose determination will be conclusive.

     In the event of (a) the  liquidation or dissolution of the Company or (b) a
merger or consolidation  in which the Company is not the surviving  corporation,
any outstanding options will terminate,  unless other provision is made therefor
in the transaction.

     Amendments and Termination of the 2000 Stock Option Plan

     No option may be granted  under the 2000 Stock  Option  Plan after  October
2007.  The  Board  of  Directors,  without  further  approval  of the  Company's
stockholders,  may at any time suspend or terminate  the 2000 Stock Option Plan,
in whole or in part,  or amend it from time to time in such  respects  as it may
deem advisable,  including, without limitation, to comply with the provisions of
certain  rules  and  regulations  promulgated  by the  Securities  and  Exchange
Commission,  among other  things;  provided,  however,  that no amendment may be
effective without the requisite prior or subsequent  shareholder  approval which
would (a) except as required for anti-dilution adjustments, increase the maximum
number of shares of Common Stock for which options may be granted under the 2000
Stock Option Plan, (b) materially  increase the benefits to  participants  under
the 2000 Stock  Option  Plan,  or (c) change the  eligibility  requirements  for
individuals entitled to receive options under the 2000 Stock Option Plan.

     Non-Transferability of Options

     No option  granted  under the 2000 Stock  Option  Plan may be  transferable
otherwise than by will or the laws of descent and distribution,  and options may
be exercised,  during the lifetime of the holder thereof, only by such holder or
such  holder's  legal  representatives.  Except to the  extent  provided  above,
options may not be assigned,  transferred,  pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise)  and may not be subject to
execution, attachment or similar process.

     No  optionee  has any rights as a  shareholder  with  respect to any shares
subject  to an option  prior to the date of the  issuance  of a  certificate  or
certificates for such shares.

     As of December  31,  2000,  no options  were  granted  under the 2000 Stock
Option Plan.

Item 7.  Major Shareholders and Related Party Transactions

A.   Major shareholders.

     See Item 4 (C) of the details of the major shareholders.

B.   Related party transactions.

(a) During the year ended  December  31,  2000,  the Company  had related  party
transactions with certain related parties as follows: -

     Services render income

     Net sales of services rendered by Beijing BHL Networks to Beijing Holdings,
a  substantial  shareholder,   Beijing  Holdings  Investment  Management  Center
("BHIMC"),  Beijing  Enterprises  Development  Corporation  ("BEDC") and Kong De
Company Limited ("Kong De'),  fellow  subsidiaries,  amounted to an aggregate of
Rmb 8,548.

<PAGE>
                                      -41-


     Interest income

     Interest  income  earned from Beijing  Holdings and BHIMC for funds held in
trust amounted to Rmb 433.

     Rental expenses

     Rental expenses paid to Jing Tai securities  Limited,  a fellow subsidiary,
for our corporate office in Hong Kong amounted to Rmb 267.

     Due from related companies

     Service income due from BEDC,  Beijing Ming Jun Information  System Company
Ltd. and Kong De, fellow subsidiaries,  amounted to Rmb 1,950, Rmb 3,333 and Rmb
1,804 respectively.

     Expenses advanced on behalf of BHIMC, a fellow subsidiary,  amounted to Rmb
152.

     Due to a related company

     Working capital advanced from Beijing  Enterprises  Investments  Limited, a
fellow subsidiary, amounted to Rmb 321.

     Funds held on trust

     The funds held by BHIMC on behalf of the  Company as at  December  31, 2000
amounted to Rmb 20,325.

(b) To the best of the  knowledge  of  management  of the  Company,  other  than
information  already  disclosed  elsewhere in this Form 20-F,  no person who has
been an  insider  of the  Company  since  January  1, 2000 or any  associate  or
affiliate of such insider has had any  material  direct or indirect  interest in
any  transaction  with the  Company  since  January  1, 2000 or in any  proposed
transaction which has materially affected or would materially affect the Company
or its subsidiaries.

C.   Interests of experts and counsel.

     Not Applicable.

Item 8.  Financial Information

A.   Consolidated Statements and Other Financial Information.

     The Company's  consolidated  financial statements are included herein under
Item 18.

     Except an interim  dividend was paid in 1997,  the Company has not paid any
dividends on its Common Shares.  The payment of dividends in the future, if any,
is within the  discretion  of the Board of  Directors  of the  Company  and will
depend upon the  Company's  earnings,  its capital  requirements  and  financial
condition and other relevant factors.  The Company does not anticipate declaring
or paying any dividends in the foreseeable future.

B.   Significant Changes.

     Not Applicable

<PAGE>
                                      -42-


Item 9.  The Offer and Listing.

A.   Offer and listing details.

     The  annual  high and low  market  prices  for the five  most  recent  full
financial years are as set forth below:

                                      Common Stocks               Warrants
                                    -----------------         -----------------
     NASDAQ Small Cap Market

     (Year Ending)                   High        Low           High        Low

     December 31, 2000              2.500       0.219         0.938       0.031

     December 31, 1999              0.938       0.094         0.188       0.063

     December 31, 1998              3.125       0.313         0.438       0.063

     February 28, 1997              7.125       2.125         2.000       0.188

     The high and low market prices for each financial quarter over the two most
recent full financial years are as set forth below:

                                      Common Stocks               Warrants
                                    -----------------         -----------------
     NASDAQ Small Cap Market

     (Quarter Ending)                High        Low           High        Low

     December 31, 2000              1.500       0.219         0.125       0.063

     September 20, 2000             1.750       1.313         0.250       0.031

     June 30, 2000                  2.500       1.125         0.438       0.250

     March 31, 2000                 2.250       0.438         0.938       0.313

     December 31, 1999              0.500       0.250         0.125       0.063

     September 30, 1999             0.938       0.094         0.125       0.063

     June 30, 1999                  0.625       0.188         0.125       0.063

     March 31, 1999                 0.625       0.219         0.188       0.094

     For the most  recent  six  months,  the high and low  market  prices of the
Company's Common Shares and Warrants are as set forth below:

<PAGE>
                                      -43-


                                      Common Stocks               Warrants
                                    -----------------         -----------------
     NASDAQ Small Cap Market

     (Month Ending)                  High        Low           High        Low

     May 31, 2001                   0.444       0.290          N/A         N/A

     April 30, 2001                 0.440       0.090          N/A         N/A

     March 31, 2001                 0.219       0.188          N/A         N/A

     February 28, 2001              0.375       0.219         0.063       0.063

     January 31, 2001               0.375       0.219         0.063       0.063

     December 31, 2000              1.500       0.219         0.063       0.063


     The Company's  warrants were  de-listed from the NASDAQ Small Cap Market on
May 15, 2001 due to the  Company's  failure in  complying  the NASD  Marketplace
Rules 4310 (c) (1),  which  requires the Company to maintain  two active  market
makers for the warrants.  The Company received the Staff Determination on May 7,
2001.

     N/A: Information not available.

B.   Plan of Distribution.

     Not Applicable.

C.   Markets.

     The Company's  Common Stock and Warrants were included for quotation on the
NASDAQ  National  Market on  December  13,  1996 under the  symbols  "TRFDF" and
"TRFWF"  respectively.  Pursuant  to  the  implementation  of  the  new  listing
requirements  since February 1998, the Company moved the listing of Common Stock
and  Warrants to the NASDAQ Small Cap Market on  October12,  1998 under the same
symbols.

     Subsequent  to the  de-listing  of the  Company's  Warrants from the NASDAQ
Small  Cap  Market as stated in Item 9A above.  As at  December  31,  2000,  the
Company's  Common  Shares and Warrants  were listed for  quotation on the NASDAQ
Small Cap Market and not on any other public trading market.

D.   Selling Shareholders.

     The followings are details of the Company's  shareholders  that had filed a
Form 3 Registration  Statement to register the entire shares held by them during
the year: -

<PAGE>
                                      -44-


              Name of Shareholders     No. of shares held      % of total
              --------------------     ------------------      ----------
                                                            outstanding shares
                                                            ------------------

              Beijing Holdings             2,548,730             36.91%

              CMEC                          976,576              14.11%

              Oriental Patron               849,576              12.30%


     Beijing Holdings, CMEC and Oriental Patron,  subsequent to the registration
which was declared effective by the SEC on March 9, 2001, are able to sell their
Common  Stocks at the open market  without  limitation  on the  volume.  Beijing
Holdings and CMEC have  indicated  that they will not sell the shares as all the
shares owned are pledged to the Bank of China, Hong Kong Branch to secure a loan
of US$2.5 million  borrowed by Beijing  Holdings on March 17, 2000, for a period
of three years, for acquiring the entire interest in CMEC on June 30, 2000.

     Dilution.

     As of May 31, 1999,  the Company has issued  513,950  Common Stock Purchase
warrants,  of which 13,950  Common Stock  Purchase  warrants  were issued to the
underwriters who had exercised their over-allotment options in January 1997. The
Company also issued  1,500,000  Bridge warrants in October 1996. The Company has
authorized  the issuance,  pursuant to the 1996 Stock Option Plan, of options to
purchase 200,000 shares of Common Stock to the Company's existing  shareholders,
employees,  officers, directors and consultants.  Pursuant to a board resolution
passed on December 28,  1999,  options  were  granted to certain  directors  and
officers at an exercise price of US$1.15 each.  The Company has also  authorized
the issuance of up to 1,000,000 Class C Warrants to purchase Common Stock to the
Company's  existing  shareholders  and  management  at terms  identical to other
issued Warrants except that they may not be registered or publicly traded.

E.   Expenses of the issue.

     Not Applicable.

Item 10. Additional Information.

A.   Share capital.

     Not Applicable.

B.   Memorandum and articles of association.

     The  Memorandum  and articles of association of the Company was included in
the  Form  1  Registration  Statement  filed  to  the  Securities  and  Exchange
Commission  upon the Initial  Public  Offering of the  Company.  Its  subsequent
amendments  were  included  as  resolutions  in the  proxy  statements  for  the
shareholders'  meeting  filed to the  Securities  and Exchange  Commission  when
occurred.

     Our  corporate  affairs are  governed  by our  Memorandum  and  Articles of
Association  and by the  International  Business  Companies  Act of the  British
Virgin Islands. Principles of law relating to such

<PAGE>
                                      -45-


matters as the validity of corporate  procedures,  the  fiduciary  duties of our
management,  directors  and  controlling  shareholders  and  the  rights  of our
shareholders  differ  from those that would apply if we were  incorporated  in a
jurisdiction within the United States. Further, the rights of shareholders under
British  Virgin  Islands  law are not as  clearly  established  as the rights of
shareholders under legislation or judicial precedent in existence in most United
States jurisdictions.  Thus, our public shareholders may have more difficulty in
protecting  their interests in the face of actions by the management,  directors
or  controlling   shareholders  than  they  might  have  as  shareholders  of  a
corporation  incorporated in a United States jurisdiction.  Please refer to Item
3(D) for a detailed discussion of such risk.

C.   Material contracts.

     Not Applicable

D.   Exchange controls.

Exchange Rates

     The following table sets forth-certain information concerning exchange rate
between Renminbi and U. S. dollars for the periods indicated:

<TABLE>
<CAPTION>
                               Noon Buying Rate (1)                        Shanghai Swap Centre Rate (2)
                    --------------------------------------------- -----------------------------------------------
                      Period                                         Period

Period                 End    Average (3)      High       Low         End     Average (3)      High        Low
----------------------------------------------------------------- -----------------------------------------------

                                   (RMB Per US$)                                    (RMB Per US$)
<S>                   <C>        <C>          <C>        <C>         <C>         <C>           <C>        <C>
1991.............     5.4478     5.3431       5.4478     5.2352      5.8980      5.8534        5.9290     5.7490

1992.............     5.7662     5.5309       5.9007     5.4124      7.7060      6.7497        7.7700     5.8970

1993.............     5.8145     5.7776       5.8245     5.7076      8.7000      9.0437       10.9230     8.1450

1994.............     8.4662     8.6303       8.7409     8.4662      8.4461      8.5790        8.7080     8.4459

1995.............     8.3374     8.3852       8.5000     8.2916      8.3179      8.3494        8.4448     8.5764

1996.............     8.3284     8.3387       8.5000     8.3267      --          --            --         --

1997.............     8.3255     8.3247       8.3283     8.3200      --          --            --         --

1998.............     8.2789     8.2969       8.3000     8.2778      --          --            --         --

1999.............     8.2795     8.2797       8.2785     8.2276      --          --            --         --

2000.............     8.2774     8.2784       8.2799     8.2773      --          --            --         --

2001 (1st Qtr)...     8.2777     8.2780       8.2783     8.2777      --          --            --         --
</TABLE>

<PAGE>
                                      -46-


(1)  The noon  buying  rate in New York for cable  transfers  payable in foreign
     currencies as certified for customs purposes by the Federal Reserve Bank of
     New York.  Prior to 1994,  the noon buying  rate was based on the  Official
     Exchange Rate. Since April 1994, the noon buying rate has been based on the
     People's Bank of China  ("PBOC")  Rate. As a result,  since April 1994, the
     noon buying rate and the PBOC Rate have been substantially similar.

(2)  Obtained  from the  Shanghai  Swap  Center and the Bank of China,  Shanghai
     Branch.  Shanghai  Swap  Center  rates  for  1996,  1997  and  1998 are not
     available.

(3)  Determined  by averaging  the rates on the last  business day of each month
     during the relevant period.

     In February 1993, the State  Administration  of Exchange  Control  ("SAEC")
imposed limits on foreign  currency  exchange  rates  available at swap centers.
Under such  limitations,  the  Renminbi/United  State Dollar  exchange  rate was
officially  capped  at  approximately  Rmb  8.40 to  $1.00.  These  limitations,
together with continued  devaluation  of the Renminbi and increasing  demand for
foreign  currency  in early 1993,  gave rise to the  development  of  unofficial
foreign  currency  markets  which are not  subject  to such  restrictions.  As a
result,  there were  periodic  shortages of foreign  currency at swap centers in
1993. On June 1, 1993, the ceilings on swap center rates were removed, and these
rates  promptly were  adjusted to reflect  prevailing  market rates.  On June 1,
1993,  the  Renminbi/United  States  Dollar  exchange  rate at the Shanghai swap
center was Rmb l0.170 to $1.00.  Thereafter,  the Renminbi/United  States Dollar
exchange rate declined at the Shanghai swap center to  approximately  Rmb 8.7 to
$1.00 at December 31, 1993.

E.   Taxation.

     The  following  discussion  is a summary  of certain  anticipated,  British
Virgin  Islands,  Cayman  Islands,  Hong  Kong  and PRC tax  consequences  of an
investment in the Common Stock and warrants.  The discussion  does not deal with
all possible tax consequences  relating to an investment in the Common Stock and
warrants 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 state,
local and other national  (e.g.,  United States,  non-British  Virgin Island and
non-Hong Kong) tax laws.  Accordingly,  each prospective investor should consult
its own tax  advisor  regarding  the  particular  tax  consequences  to it of an
investment in the Common Stock and warrants.  The following  discussion is based
upon laws and relevant interpretations there of in effect as of the date of this
Annual Report, all of which 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 the British  Virgin  Islands is exempt from British Virgin Islands income tax
on  dividends  paid with  respect to the Common  Stock and all holders of Common
Stock are not  liable to British  Virgin  Islands  income tax on gains  realized
during the year on sale or disposal of such shares;  the British  Virgin Islands
does not impose a withholding tax on dividends paid by the 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.

<PAGE>
                                      -47-


     Hong Kong Taxation

     Under the laws of Hong Kong,  as  currently  in effect,  a holder of Common
Stock is not  subject to Hong Kong tax on  dividends  paid with  respect to such
shares  and no  holder  of  Common  Stock is  liable  for Hong Kong tax on gains
realized on sale or other  disposition  of such Common  Stock  except that those
persons who are  classified  for Hong Kong  purposes as dealers in securities in
Hong Kong may be subject to Hong Kong tax in  respect of any gain  resulting  on
the disposition of Common Stock.  Hong Kong does not impose a withholding tax on
dividends paid by the Company or its subsidiaries. In addition, the Company will
not be subject to Hong Kong taxes as a result of its receipt of  dividends  from
any of its subsidiaries.

     PRC Taxation

     There are no  material  PRC tax  consequences  to holders  of Common  Stock
solely as a result of the  purchase,  ownership and  disposition  of such Common
Stock.  There is income tax treaty in effect  between the United  States and the
PRC.

     Cayman Island Taxation

     The Cayman Islands  currently have no exchange control  restrictions and no
income,  corporate or capital gains tax, estate duty,  inheritance tax, gift tax
or  withholding  tax  applicable  to  the  Company  or  any  holder  of  shares.
Accordingly,  payment of dividends  on, and any transfer of, the shares will not
be subject to taxation in the Cayman Islands,  no Cayman Islands withholding tax
will be  required on such  payments  to any holder of a share and gains  derived
from  the sale of  shares  will not be  subject  to  Cayman  Islands  income  or
corporation  tax.  The  Cayman  Islands  are not  party to any  double  taxation
treaties.

F.   Dividends and paying agents.

     The future  payment of dividends is within the  discretion  of the Board of
Directors  and will be dependent,  upon among other  factors,  earnings  capital
requirements,  financing  agreement  covenants,  the financial  condition of the
Company and  applicable  law. The Board does not intend to declare any dividends
further in the  foreseeable  future,  but  instead  intends to retain all future
earning,  if any, for use in the Company's  business  operations.  To the extent
that the Board may decide to pay cash  dividends in the future,  such  dividends
will be declared from the retained  earnings,  i.e.,  surplus,  as determined by
resolution of the Board of Directors,  subject to the availability and existence
of such retained  earnings will also be limited by the amount of dividends which
can be declared by its subsidiaries.

     Applicable  PRC laws and  regulations  required that before a  Sino-foreign
equity  joint  venture  enterprise  distributes  profits  to its  joint  venture
partners,  it must first  satisfy  all tax  liabilities,  provide  for losses in
previous years and make allocations, in proportions determined at the discretion
of the Board of Directors,  to a capital reserve fund and a public welfare fund.
Distribution  of  profits  is  required  to be in  proportion  of  each  party's
investment in the joint venture.

G.   Statement by experts.

     Not Applicable.

H.   Documents on display.

     Documents  concerning the Company that are referred to in this document may
be inspected at the office of the Company, which is 34th Floor, West Tower, Shun
Tak Centre, 200 Connaught Road Central, Hong Kong.

<PAGE>
                                      -48-


I.   Subsidiary Information.

     Not Applicable

Item 11. Quantitative and Qualitative Disclosures About Market Risk.

     The  Company  is  exposed  to  risk  of  foreign  currency   exchange  rate
fluctuation.  The Company has never tried to hedge its exchange rate risks, does
not plan to do so, and may not be  successful  should it attempt to do so in the
future.  Nevertheless,  the Company  believes such risk is low due to no foreign
currency  liabilities  are incurred  and the  principal  operations  are limited
solely to the PRC market.

Item 12. Description of Securities Other than Equity Securities.

     Not Applicable.

<PAGE>
                                      -49-


                                    PART II

Item 13. Default, Dividend Arrearages and Delinquencies.

None

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

Not applicable

Item 15. [Reserved]

Item 16. [Reserved]

<PAGE>
                                      -50-


                                    PART III

Item 17. Financial Statements.

The Company has elected to provide Financial Statements pursuant to Item 18 (see
below).

Item 18. Financial Statements.

The  following  documents  are filed as  Attachment A hereto and are included as
part of this Annual report on Form 20-F.

     Financial Statements.

     Report of Independent Accountants.

     Consolidated  Statements of Operations of the Company for each of the three
     years in the period ended December 2000.

     Consolidated Balance Sheets of the Company as of December 31, 1999 and 2000

     Consolidated  Statements of Cash Flows of the Company for each of the three
     years in the period ended December 31, 2000

     Consolidated  Statements of Changes in Shareholders'  Equity of the Company
     for each of the three years in the period ended December 31, 2000

     Notes to these Financial Statements

Item 19. Exhibits.

The following exhibits are filed as part of this annual report:

1.  List  of  Company's   significant   subsidiaries,   their   jurisdiction  of
incorporation  and the names under which they do  business,  if  different  from
their name.

<PAGE>
                                      -51-


                                   SIGNATURES

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


                                    TRAMFORD INTERNATIONAL LIMITED


Date: June   , 2001
                                    ---------------------------------
                                    Name:  Michael Siu
                                    Title: Chief Financial Officer and Secretary




                                      -52-

<PAGE>

                         TRAMFORD INTERNATIONAL LIMITED

                          INDEX TO FINANCIAL STATEMENTS



Report of Independent Accountants                                          F - 2

Consolidated Statements of Operations of the Company for each of
the three years in the period ended December 31, 2000                      F - 3

Consolidated Balance Sheets of the Company as of December 31,
1999 and 2000                                                              F - 4

Consolidated Statements of Cash Flows of the Company for each of
the three years in the period ended December 31, 2000                      F - 5

Consolidated Statements of Changes in Shareholders' Equity of the
Company for each of the three years in the period ended December
31, 2000                                                                   F - 6

Notes to these Financial Statements                                        F - 7









                                       -1-
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders of Tramford International Limited


         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Tramford  International  Limited and subsidiaries (the "Company") as of December
31,  2000  and 1999  and the  related  consolidated  statements  of  operations,
shareholders'  equity,  and cash flows for each of the three years in the period
ended December 31, 2000. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the consolidated  financial  position of the
Company  as of  December  31,  2000 and 1999,  and the  consolidated  results of
operations  and cash  flows  for each of the  three  years in the  period  ended
December 31, 2000, in conformity with generally accepted  accounting  principles
in the United States of America.







PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, June 27, 2001




                                       -2-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in thousands, except per share data)


<TABLE>
<CAPTION>
                                              Note   Year ended        Year ended        Year ended        Year ended
                                                       December          December          December          December
                                                       31, 1998          31, 1999          31, 2000          31, 2000
                                                    -------------     -------------    --------------    -------------
                                                            Rmb               Rmb               Rmb             US$

<S>                                           <C>                     <C>              <C>               <C>
Net sales
Product sales                                                 -                 -            10,353           1,251
Rendering of services                                         -                 -             5,374             649
                                                    -------------     -------------    --------------    -------------
                                                              -                 -            15,727           1,900

Costs of sales                                                -                 -            (9,732)         (1,176)
                                                    -------------     -------------    --------------    -------------
Gross profit                                                  -                 -             5,995             724

General and administrative expenses                      (4,325)           (4,717)           (8,024)           (969)
                                                    -------------     -------------    --------------    -------------
Operating loss                                           (4,325)           (4,717)           (2,029)           (245)

Non-operating income                             4        4,334             2,862             3,373             407
                                                    -------------     -------------    --------------    -------------
Income/(loss) from continuing
  operations before income tax provision                      9            (1,855)            1,344             162
Income tax provision                             5            -                 -                 -               -
                                                    -------------     -------------    --------------    -------------
Income/(loss) from continuing operations                      9            (1,855)            1,344             162
Discontinued operations :                        6
Loss from operations of disposed
   Subsidiaries                                         (37,760)          (14,875)                -               -
Gain on disposal of subsidiaries                              -            20,011                 -               -
                                                    -------------     -------------    --------------    -------------
Net (loss)/income before minority interests             (37,751)            3,281             1,344             162
Minority interests                                            -                 -                96              12
                                                    -------------     -------------    --------------    -------------
Net (loss)/income for the year                          (37,751)                              1,440             174
                                                                            3,281
                                                    =============     =============    ==============    =============

Earnings/(loss) per share from continued        18
   operations
   - Basic                                                 0.01            (0.23)              0.21              0.03
                                                    =============     =============    ==============    =============

Earnings/(loss) per share from discontinued     18
   operations
   - Basic                                               (4.20)              0.65               N/A               N/A
                                                    =============     =============    ==============    =============
</TABLE>


         For the convenience of the reader, translation of amounts from Renminbi
(Rmb) into United States  Dollars (US$) has been made at the noon buying rate in
New York City for cable transfer in foreign  currencies as certified for customs
purposes  by the  Federal  Reserve  Bank of New  York on  December  31,  2000 of
Rmb8.2774 = US$1.00.  No  representation is made that the Rmb amounts could have
been, or could be, converted into US$ at that rate or at any other certain rate.

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




                                       -3-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             (Amounts in thousands)


<TABLE>
<CAPTION>
                                                              Note     Year ended       Year ended         Year ended
                                                                     December 31,         December           December
                                                                             1999         31, 2000           31, 2000
                                                                    --------------    -------------     --------------
                                                                            Rmb               Rmb                US$

<S>                                                           <C>                     <C>               <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                     7       46,803            51,302              6,198
    Trade accounts receivable, net                               8            -               307                 37
    Inventories                                                  9            -                92                 11
    Due from related parties                                    10            -             7,239                875
   Prepaid expenses and other assets                            11       28,000            21,995              2,657
                                                                   --------------    -------------     --------------
TOTAL CURRENT ASSETS                                                     74,803            80,935              9,778

Property, plant and equipment, net                              12            -             2,583                312
Intangible asset                                                13            -             3,800                459
Goodwill                                                        14            -            16,810              2,031
                                                                   --------------    -------------     --------------
TOTAL ASSETS                                                             74,803           104,128             12,580
                                                                   ==============    =============     ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
    Trade accounts payable                                                    -               648                 78
    Due to a related party                                      15            -               321                 39
   Other liabilities and accrued expenses                       16        4,562            26,774              3,234
                                                                   --------------    -------------     --------------
TOTAL CURRENT LIABILITIES                                                 4,562            27,743              3,351

Contingencies and commitments                                   23            -             2,000                242

Minority interests                                                            -             4,704                569

SHAREHOLDERS' EQUITY
    Shareholders' equity                                        22      187,751           187,751             22,682
    Accumulated losses                                                 (117,440)         (116,000)           (14,014)
    Cumulative translation adjustment                                       (70)              (70)                (8)
                                                                   --------------    -------------     --------------
TOTAL SHAREHOLDERS' EQUITY                                               70,241            71,681              8,660
                                                                   --------------    -------------     --------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                               74,803           104,128             12,580
                                                                   ==============    =============     ==============
</TABLE>

         For the convenience of the reader, translation of amounts from Renminbi
(Rmb) into United States  Dollars (US$) has been made at the noon buying rate in
New York for cable  transfers in foreign  currencies  as  certified  for customs
purposes  by the  Federal  Reserve  Bank of New  York on  December  29,  2000 of
Rmb8.2774 = US$1.00.  No  representation is made that the Rmb amounts could have
been, or could be, converted into US$ at that rate or at any other certain rate.

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




                                       -4-
<PAGE>


                 TRAMFORD INTERANTIONAL LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)


<TABLE>
<CAPTION>
                                                                     Year ended       Year ended       Year ended      Year ended
                                                                       December         December         December        December
                                                                       31, 1998         31, 1999         31, 2000        31, 2000
                                                                   ------------      -----------     ------------     -----------
                                                                          Rmb              Rmb              Rmb              US$

<S>                                                                <C>               <C>             <C>              <C>
     Cash flows from operating activities
        Net income/(loss)                                                   9           (1,855)           1,344             162
         Adjustments to reconcile net income/
         (loss) to net cash provided by/(used
          in) operating activities
            Amortisation of intangible asset and                            -                -              341              41
          goodwill
            Depreciation                                                  131                -              432              52
              Realised and unrealised gains on
               marketable securities                                     (916)               -             (300)            (36)
          Loss on disposal of fixed assets                                  -                -               21               3
          Others                                                          (85)              49               --
     Changes in assets and liabilities, net of effects
      from acquisitions:
        Accounts receivable                                                 -                -              466              56
        Inventories                                                         -                -            1,055             127
        Decrease/(increase) in prepaid
         expenses and other assets                                      7,826          (27,644)           4,272             517
        Increase in other liabilities and accrued
        expenses                                                          817            1,499            2,204             267
                                                                   ------------      -----------     ------------     -----------
      Net cash provided by/(used in) operating                          7,782          (27,951)           9,835           1,189
     activities

     Cash flows from investing activities
         Acquisition of subsidiaries, net of                                -                -              794              96
        cash  acquired
         Purchase of marketable securities                                  -                -           (1,063)           (128)
         Proceeds from disposal of marketable                           1,729                -            1,363             164
     securities
         Purchases of property, plant and                                  (3)               -           (2,430)           (294)
        equipment
         Purchase of intangible asset                                       -                -           (4,000)           (483)
                                                                   ------------      -----------     ------------     -----------
     Net cash provided by/(used in) investing                           1,726                -           (5,336)           (645)
     activities

     Cash flows from financing activities
         Purchase of own shares                                        (1,421)            (238)               -               -
                                                                   ------------      -----------     ------------     -----------
     Net cash (used in) /provided by financing                         (1,421)            (238)               -               -
     activities

     Net cash (used in) /provided by
      discontinued operations                                          (7,019)          29,588                -               -
                                                                   ------------      -----------     ------------     -----------

     Net increase in cash and cash equivalents                          1,068            1,399            4,499             544

     Cash and cash equivalents at beginning of                         44,336           45,404           46,803           5,654
     year
                                                                   ------------      -----------     ------------     -----------

     Cash and cash equivalents at end of year                          45,404           46,803           51,302           6,198
                                                                   ============      ===========     ============     ===========
</TABLE>

         For the convenience of the reader, translation of amounts from Renminbi
(Rmb) into United States  Dollars (US$) has been made at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes  by the  Federal  Reserve  Bank of New  York on  December  31,  2000 of
Rmb8.2774 = US$1.00.  No  representation is made that the Rmb amounts could have
been, or could be, converted into US$ at that rate or at any other certain rate.

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




                                       -5-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                                Total
                                        Note    Shareholders'          Retained      Translation        shareholders'
                                                       equity          earnings      adjustments               equity
                                               ---------------    --------------    -------------    -----------------
                                                          Rmb               Rmb              Rmb                  Rmb

<S>                                     <C>                       <C>               <C>              <C>
Balance, December 31, 1997                            193,701          (82,970)              (34)            110,697

Net loss                                                    -          (37,751)                -             (37,751)
Purchase of own shares                   22            (1,421)               -                 -              (1,421)
Translation adjustment                                      -                -               (85)                (85)
                                               ---------------    --------------    -------------    -----------------
Balance, December 31, 1998                            192,280         (120,721)             (119)             71,440

Net income                                                  -            3,281                 -               3,281
Purchase of own shares                   22            (4,529)               -                 -              (4,529)
Translation adjustment                                      -                -                49
                                                                                                                  49
                                               ---------------    --------------    -------------    -----------------
Balance, December 31, 1999                            187,751         (117,440)              (70)             70,241

Net income                                                  -            1,440                 -               1,440
                                               ---------------    --------------    -------------    -----------------
Balance, December 31, 2000                            187,751         (116,000)              (70)             71,681
                                               ===============    ==============    =============    =================

                                                          US$               US$              US$                 US$

Balance, December 31, 2000                             22,682          (14,014)               (8)              8,660
                                               ===============    ==============    =============    =================
</TABLE>

         For the convenience of the reader, translation of amounts from Renminbi
(Rmb) into United States  Dollars (US$) has been made at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes  by the  Federal  Reserve  Bank of New  York on  December  31,  2000 of
Rmb8.2774 = US$1.00.  No  representation is made that the Rmb amounts could have
been, or could be, converted into US$ at that rate or at any other certain rate.

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




                                       -6-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


1        Nature of operations and basis of presentation

         Tramford  International Limited ("Tramford") was incorporated under the
laws of the British  Virgin  Islands on September 19, 1995 as a holding  company
for its wholly owned subsidiary,  Jing Tai Industrial Investment Company Limited
("Jing Tai"). Jing Tai is a Hong Kong company, incorporated on October 27, 1994,
which previously owned  controlling  interests in two Sino-foreign  equity joint
venture enterprises as described below.

         Pursuant to two separate  agreements,  effective June 1, 1995, Jing Tai
purchased  60% joint  venture  interests in each of two  operations  of Shandong
Linyi Industrial Enamel Holdings Company Limited ("Linyi  Industrial"),  a joint
stock limited company established in the People's Republic of China (the "PRC"):
Linyi Baoquan Bathtub Co. Ltd. ("Baoquan Bathtub") and Linyi Xinhua Ceramics Co.
Ltd. ("Xinhua Ceramics") (hereinafter referred to collectively as the "Operating
Subsidiaries"). Baoquan Bathtub and Xinhua Ceramics manufacture and sell bathtub
and ceramics products respectively. Subsequent to Tramford's formation, Tramford
exchanged  its  outstanding  shares  for a  100%  interest  in  Jing  Tai.  This
transaction was considered a reorganization of entities under common control.

         Effective October 1, 1996,  Tramford  purchased 100% interests in Jolly
Mind Company  Limited  ("Jolly  Mind").  Jolly Mind is a Hong Kong company which
owns 35% interests in the Operating Subsidiaries.

         Effective July 2, 1999,  Tramford  disposed of its 60% interests in the
Operating  Subsidiaries,  held  through  Jing Tai, to Shandong  Luozhuang  Group
Company, a related company of Linyi Industrial for a cash consideration of Rmb28
million. On the same date, Tramford also disposed of its 100% interests in Jolly
Mind to Linyi Industrial in consideration  for 1,952,291 shares in Tramford held
by Linyi Industrial.  Subsequent to these disposals, Tramford held no beneficial
interests  in Jolly  Mind,  Baoquan  Bathtub  and Xinhua  Ceramics  (hereinafter
referred to collectively as the "Disposed Subsidiaries").

         Effective July 1, 2000, a wholly owned  subsidiary of Tramford,  Jingle
Technology Limited ("JTL"),  purchased 100% interests in BHL Networks Technology
Co. Ltd.  ("BHL"),  which holds 76% interest in Beijing BHL Networks  Technology
Co. Ltd  ("BBHL"),  for a cash  consideration  of  Rmb18,964.  JTL was formed by
Tramford  on 8 May  2000  to  act  as  investment  holding  company.  BBHL  is a
Sino-foreign  equity joint  venture and is  principally  engaged in the sales of
hardware and software  products and the provision of information  technology and
network security  consultancy services and sales of computer related products in
the PRC.  BHL and BBHL  are  collectively  referred  as to the  "Newly  Acquired
Subsidiaries" in these financial statement.

         The consolidated  financial statements of the Company for the two years
ending  December  31,1999  present the Disposed  Subsidiaries  as a discontinued
business segment in accordance with Accounting  Principles Board Opinion No. 30.
The consideration  used in the computation of the gain on the disposal of entire
interests in the Operating Subsidiaries is the aggregate of the cash proceeds of
Rmb28 million (the "cash consideration") and the fair value of Tramford's shares
acquired from Linyi Industrial (the "share consideration").  The portion of gain
on  disposal  attributable  to  the  cash  consideration  is  recognized  in the
Statements  of  Operations  while the other  portion  attributable  to the share
consideration is recognized as a movement in shareholders' equity.

The accompanying  financial  statements,  which have been prepared in accordance
with generally  accepted  accounting  principles in the United States of America
("US GAAP"), present the consolidated results of the operations of Tramford. All
intercompany  balances and transactions have been eliminated in the consolidated
financial statements of the Company.

         The  preparation  of financial  statements in  conformity  with US GAAP
requires  management to make estimates and assumptions  that affect the reported
amounts of assets,  liabilities,  revenues and expenses  and the  disclosure  of
contingent  assets and liabilities.  Accounting  estimates have been employed in
these   financial   statements   to  determine   reported   amounts,   including
realisability of receivables and other assets, useful lives of assets and income
taxes. Actual results could differ from those estimates.

         The  financial  information  has been prepared in Renminbi  (Rmb),  the
national  currency  of the PRC and also the  functional  currency of the Company
(see also footnote 2(k)). Unless indicated  otherwise,  amounts in Renminbi have
been rounded to the nearest thousand.


                                       -7-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


2        Summary of significant accounting policies

         The following is a summary of significant  accounting policies followed
by the Company in the preparation of the financial statements.

(a)      Net sales

         Net sales  comprise  product sales and  rendering of services.  Product
sales represent the invoiced value of goods,  net of value-added tax ("VAT") and
discounts,  supplied  to  customers.  Sales  are  recognized  upon  delivery  to
customers and when title has passed.  VAT is accounted for on an accrual  basis.
The Company is subject to the  assessment  of VAT at the  standard  rate of 17%.
Rendering  of  services  represent  fee,  net of  business  tax,  charged on the
provision of information  technology and network security consultancy  services.
Fee on such  services  is  recognised  upon  the  completion  of the  underlying
services.

(b)      Taxation

         Deferred  income taxes are provided  using the  liability  method under
Statement of Financial  Accounting  Standards  ("SFAS") No.109,  "Accounting for
Income Taxes". Under the liability method,  deferred income taxes are recognized
for  all  significant  temporary  differences  between  the  tax  and  financial
statement  bases  of  assets  and  liabilities.  The tax  consequences  of these
differences are classified as current or non-current based on the classification
of the related asset or liability for financial reporting.

(c)      Concentration of credit risk and major customers

         The Company is engaged in the sales of hardware and  software  products
and the provision of information  technology and network security  services to a
wide range of industries and end users within the PRC. All the Company's revenue
is derived from sales to Chinese  customers.  Accordingly,  the Company's  trade
accounts  receivable  are  concentrated  with respect to geography.  The Company
performs  ongoing  credit  evaluations  of its customers and generally  does not
require collateral.

(d)      Foreign currency transaction gains and losses

         All foreign  currency  transaction  gains and losses are  recognized as
other non-operating (expense)/income in the Statements of Operations.

         The Renminbi is not freely convertible into foreign currencies. The PRC
Government  has  instituted a single  regulated  floating  exchange  rate system
principally  based on market supply and demand.  Under this system, a nationwide
inter-bank  foreign market has been established by designating  certain banks as
authorized  foreign  exchange banks where Renminbi can be converted into foreign
currencies  subject  to prior  approval  from the PRC  State  Administration  of
Exchange Control.

(e)      Property, plant and equipment

         Property,  plant  and  equipment  are  stated at  historical  cost less
accumulated  depreciation.  Depreciation  is  computed  using the  straight-line
method over the estimated useful lives of the respective assets. Upon retirement
or sale, the cost of disposed  assets and the related  accumulated  depreciation
are deducted  from the  respective  accounts and the  resulting  gain or loss is
included as other non-operating (expense)/income in the Statement of Operations.
Maintenance  and repair  costs are expensed as incurred.  The  estimated  useful
lives of property, plant and equipment are as follows:

         Motor vehicles ................................... 5 years
         Furniture, fixtures and office equipment ......... 5 years
         Leasehold improvements............................ shorter of 3 years
                                                            or over leased term


(f)      Intangible asset

         Intangible asset represents  technology platform for the development of
server switch and network  security  device acquired by the Company for cash. It
is recognised at cost and is amortized on a straight-line  basis over its useful
life.


                                       -8-
<PAGE>


                  TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


2        Summary of significant accounting policies (continued)

(g)      Goodwill

         Goodwill  represents  cost in  excess of the fair  value of net  assets
acquired  and is  amortized  on a  straight-line  basis  over a period of twenty
years.

(h)      Impairment of long-lived assets

         The Company periodically evaluates the carrying value of its long-lived
assets,  including goodwill and intangible assets, for impairment.  The carrying
value of a  long-lived  asset is  considered  impaired by the  Company  when the
anticipated  undiscounted  cash flow from such asset is separately  identifiable
and less than its carrying value.  In that event, a loss is recognized  based on
the amount by which the  carrying  value  exceeds the fair  market  value of the
long-lived  asset.   Fair  market  value  is  determined   primarily  using  the
anticipated cash flows discounted at a rate  commensurate with the risk involved
or based on independent appraisals.

(i)      Inventories

         Inventories  are valued at the lower of cost or net  realizable  value.
Cost includes the purchase  cost of products at invoiced  value using a first-in
first-out  method.  Net realizable value is determined by reference to the sales
proceeds  of items sold in the  ordinary  course of business  subsequent  to the
balance  sheet  date or to a  management  estimate  based on  prevailing  market
conditions.

(j)      Cash and cash equivalents

         Cash and cash  equivalents  include cash on hand,  demand deposits with
banks and liquid  investments with an original maturity of three months or less.
The book value of cash equivalents  approximates their fair value because of the
short-term maturity of these instruments.

(k)      Translation of foreign currencies

         The  functional  currency of the Newly  Acquired  Subsidiaries  was the
Renminbi.  The  financial  statements  of the Newly  Acquired  Subsidiaries  had
therefore  not  required  translation  in the  preparation  of the  consolidated
financial statements of the Company.

         The functional  currency of Tramford and its other  subsidiaries is the
Hong Kong dollar.  The financial  statements of Tramford and these  subsidiaries
are  translated  into  Renminbi  using  exchange  rates in effect at period end,
wherever  appropriate,  for assets and  liabilities  and average  exchange rates
during each reporting  period for results of operations.  Adjustments  resulting
from the  translation  of  financial  statements  are  reflected  as a  separate
component of shareholders' equity.

 (l)     Marketable securities

         Marketable  securities  are  defined  as trading  securities  under the
provisions  of  Statement  of Financial  Accounting  Standards  ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity  Securities".  Marketable
securities  are stated at market value and  unrealised  holding gains and losses
are reflected in the Statement of Operations.

(m)      Earnings per share

         The  Company  adopted  the  provisions  of SFAS No. 128  "Earnings  per
share".  This  statement  establishes  guidelines  for computing and  presenting
earnings per share  ("EPS") and applies to entities  with  publicly  held common
stock or potential common stock. It also requires dual presentation of basic and
diluted EPS for all entities with complex capital structures.


                                       -9-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


2        Summary of significant accounting policies (continued)

(n)      Stock options

         The Company applies Accounting Principles Board ("APB") Opinion No. 25,
"Accounting  for Stock  Issued to  Employees"  and  related  interpretations  in
accounting for its employee stock options. Under APB Opinion No. 25, because the
exercise price of all the options issued by the Company equals or is higher than
the market price of the underlying  stock on the date of grant,  no compensation
expense is recognised.

(m)      Recent accounting pronouncements

         The Financial  Accounting  Standards  Board ("FASB") has issued certain
pronouncements  which  are  not  effective  with  respect  to the  fiscal  years
presented in the consolidated financial statements. These pronouncements are not
applicable to the company's operations.

(o)      Appropriations of retained earnings

         In accordance with  requirements in the PRC, the Boards of Directors of
the  Operating  Subsidiaries  determine  on an annual  basis  the  amount of the
appropriations  to  discretionary  dedicated  capital,  which includes a capital
reserve fund and a public welfare fund. These funds are not distributable to the
shareholders.  As of December  31,  2000,  there are no such  appropriations  to
dedicated capital.

3        Business acquisition

         As discussed in Note 1, Tramford acquired controlling  interests in the
Newly  Acquired  Subsidiaries  on July  1,  2001.  The  purchase  price  for the
acquisition is Rmb18,964.  The  acquisition was accounted for using the purchase
method of accounting.  Accordingly,  a portion of the acquisition  cost has been
allocated  to the  assets  acquired  and  liabilities  assumed  based upon their
estimated  fair values at the date of  acquisition.  The excess of the  purchase
price over the fair  value of net assets  acquired  was  Rmb16,951  and has been
recorded  as  goodwill  which is being  amortized  over 20 years.  The amount of
goodwill amortization in the year ended December 31, 2000 was Rmb141.

         The  following  unaudited   information   presents  a  summary  of  the
consolidated  results of  operations  of the Company as if the  acquisition  had
occurred at the beginning of the fiscal year for each of the period presented.

                                                        Year ended December 31,
                                                      --------------------------
                                                          1999          2000
                                                           Rmb           Rmb

           Net sales                                    11,865        23,585
           Net income/(loss)                            (1,223)        1,822
           Earnings/(loss) per share (amounts
               in dollars)                               (0.15)         0.26


         These pro forma  results have been  prepared for  comparative  purposes
only and include certain adjustments such as amortization expense as a result of
goodwill.  They do not purport to be  indicative  of the  results of  operations
which actually would have resulted had the combination been in effect on January
1, 1999 or of future results of operations of the consolidated entities.


                                      -10-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


4        Non-operating income

         Non-operating income consisted of the following:


<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                                          ---------------------------------------------
                                                              1998             1999              2000
                                                          ----------       ----------        ----------
                                                               Rmb               Rmb               Rmb

<S>                                                       <C>              <C>               <C>
         Realised and unrealised gains on marketable
          securities                                           916                 -               300
         Bank interest                                       3,418             2,654             3,066
         Other                                                   -               208                 7
                                                          ----------       ----------        ----------

                                                             4,334             2,862             3,373
                                                          ==========       ==========        ==========
</TABLE>

5        Income tax provision

         Tramford was incorporated  under the laws of the British Virgin Islands
(BVI),  and under  current  BVI law,  is not subject to tax on income or capital
gains as it does not carry out business in the BVI.

         The  Company's  subsidiary  operating  in  Hong  Kong  acts  only as an
investment  holding  company and does not generate  assessable  profits or incur
deductible expenses for Hong Kong profits tax purposes.

         The  Company's  subsidiaries  operating  in the PRC are  under  the tax
exemption period and therefore no PRC income tax has been provided for.





                                      -11-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


6        Discontinued operations

(i)      Loss from operations of disposed subsidiaries for the periods prior to
         the date of disposal is analysed as follows:-

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                           -----------------------------------
                                                                                     1998                1999
                                                                           ---------------     ---------------
                                                                                      Rmb                 Rmb

<S>                                                                        <C>                  <C>
         Net Sales                                                                 43,080              19,225
         Loss before and after income tax provision                               (37,760)            (14,875)

(ii)     Net assets of discontinued operations are analysed as follows:-


                                                                                                 As at July 2,
                                                                                                         1999
                                                                                               ---------------
                                                                                                          Rmb

         Cash and cash equivalents                                                                      5,354
         Accounts receivable, net of provision                                                         13,115
         Prepayments and other assets                                                                   4,698
         Inventories, net of provision                                                                 11,227
         Furniture, fixtures and office equipment                                                      94,233
         Goodwill, net of amortization                                                                  8,065
                                                                                               ---------------
                                                                                                      136,692

         Less:
         Short-term bank and other loans                                                              (56,262)
         Trade accounts payable                                                                       (38,987)
         Other liabilities and accrued expenses                                                       (18,300)
         Due to a shareholder                                                                          (2,261)
         Deferred taxes                                                                                  (597)
                                                                                               ---------------
                                                                                                     (116,407)

         Net assets                                                                                    20,285
                                                                                               ===============
</TABLE>


7        Cash and cash equivalents

         Cash and cash  equivalents  consisted of time deposits of Rmb42,905 and
Rmb29,585 as of December 31, 1999 and 2000 respectively.




                                      -12-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


8        Trade accounts receivable, net

         Trade accounts receivable, net consisted of the following:

<TABLE>
<CAPTION>
                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                  Rmb
<S>                                                                           <C>                  <C>
         Trade accounts receivable                                                         -                  307
         Less: allowance for doubtful accounts                                             -                    -
                                                                              ----------------    -----------------
                                                                                           -                  307
                                                                              ================    =================


9        Inventories

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                  Rmb

         Merchandise for resale                                                            -                   92
                                                                              ================    =================

10       Due from related parties

         The  amounts are due from  fellow  subsidiaries  of the Company and are
unsecured, interest-free and have no fixed terms of repayment.

11       Prepaid expenses and other assets

         Prepaid expenses and other assets consisted of the following:

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                 Rmb

         Rental and utility deposits                                                       -                  542
         Prepayment for inventories                                                        -                  685
         Funds held in trust by a related company                                     28,000               20,523
         Others                                                                            -                  245
                                                                              ----------------    -----------------
                                                                                      28,000               21,995
                                                                              ================    =================

12       Property, plant and equipment, net

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                 Rmb

         Leasehold improvements                                                            -                  805
         Computer equipment                                                                -                2,493
         Furniture, fixtures and office equipment                                        298                1,418
         Motor vehicles                                                                    -                  107
         Less: accumulated depreciation                                                 (298)              (2,240)
                                                                              ----------------    -----------------
                                                                                           -                2,583
                                                                              ================    =================
</TABLE>


                                      -13-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


<TABLE>
<CAPTION>
13       Intangible asset

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                 Rmb
<S>                                                                           <C>                  <C>
         Acquisition of network security and server switch technology                      -                4,000

         Less: amortisation                                                                -                 (200)
                                                                              ----------------    -----------------
                                                                                           -                3,800
                                                                              ================    =================

14       Goodwill

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                          Rmb                 Rmb

         Arising from acquisitions of subsidiaries (note 19)                               -               16,951

         Less: amortisation                                                                -                 (141)
                                                                              ----------------    -----------------
                                                                                           -               16,810
                                                                              ================    =================

15       Due to a related party

         The  amount  is due  to a  fellow  subsidiary  of  the  Company  and is
unsecured, interest-free and has no fixed terms of repayment.

16       Other liabilities and accrued expenses

                                                                                 December 31,         December 31,
                                                                                         1999                 2000
                                                                              ----------------    -----------------
                                                                                         Rmb                  Rmb

         Consideration payable on the acquisition of the Newly Acquired
           Subsidiaries                                                                    -               18,964
         Accrued professional fees                                                     2,973                1,397
         Temporary receipt                                                                 -                1,191
         Accrued salaries and staff benefits                                               -                1,316
         Others                                                                        1,589                3,906
                                                                              ----------------    -----------------
                                                                                       4,562               26,774
                                                                              ================    =================

17       Leases

         Lease rental costs  incurred by the Company for the year ended December
31, 1999 and 2000 amounted to Rmb196 and Rmb1,121 respectively.


18       Earnings/(loss) per share

                                                                                  Year ended December 31,
                                                                         ------------------------------------------
                                                                               1998           1999            2000
                                                                         -----------    -----------    ------------
                                                                                Rmb            Rmb             Rmb

         (Loss)/income available to common shareholders:                   (37,751)          3,281           1,440
                                                                         ===========    ===========    ============

         Shares used in computing basic and diluted earnings per share        8,993          7,906           6,906
                                                                         ===========    ===========    ============

         Earnings/(loss) per share from continuing operations
            - Basic (amounts expressed in dollars)                             0.01         (0.23)            0.21
                                                                         ===========    ===========    ============

         Earnings/(loss) per share from discontinued operations
            - Basic (amounts expressed in dollars)                           (4.20)           0.65             N/A
                                                                         ===========    ===========    ============
</TABLE>

                                      -14-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


18       Earnings/(loss) per share (continued)

         In 1998,  1999 and 2000,  exercise of the  warrants  and stock  options
would  have  been  antidilutive  and,  therefore,  was  not  considered  in  the
computation of diluted earnings per share.

19       Supplemental cash flow disclosure

         On  July 1,  2000,  a  wholly  owned  subsidiary  of  Tramford,  Jingle
Technology Limited ("JTL"),  purchased 100% interests in BHL Networks Technology
Co. Ltd.  ("BHL"),  which holds 76% interest in Beijing BHL Networks  Technology
Co.  Ltd  ("BBHL").  The  following  table  summarises  non-cash  investing  and
financing activities related to this acquisition:

                                                                             Rmb
         Fair value of assets acquired:

           Cash and cash equivalents                                     794
           Trade accounts receivable, net                                773
           Inventories                                                 1,147
           Due from related parties                                    3,180
           Due from minority shareholders                              4,800
           Prepaid expenses and other assets                           1,321
           Property, plant and equipment, net                            606
           Due to a related party                                     (3,795)
           Other liabilities and accrued expenses                     (2,013)
           Minority interests                                         (4,800)
                                                                  ------------
                                                                           2,013
         Goodwill arising on acquisition (note 14)                    16,951
                                                                  ------------
         Cash consideration payable (note 16)                         18,964
                                                                  ============

         Cash consideration paid as at 31 December 2000                    -
         Less : cash acquired                                            794
                                                                  ------------
         Net cash acquired during the acquisition                        794
                                                                  ============


20       Related party transactions

         As described in Note 1 of these financial statements,  the Company sold
all its interests in Disposed  Subsidiaries to Linyi  Industrial and its related
company,  Shandong Luozhuang Group Company.  Apart from this transaction,  other
transactions and balances with related parties are analysed as follows:-

<TABLE>
<CAPTION>
                                                                                  Year ended December 31,
                                                                         ------------------------------------------
                                                                               1998           1999            2000
                                                                         -----------    -----------    ------------
                                                                                Rmb            Rmb             Rmb

<S>                                                                      <C>            <C>            <C>
         Transactions with related parties
            Sales                                                                 -              -           8,265
           Purchase of technology (note 13)                                       -              -           4,000
           Interest income                                                        -              -             433
           Rental income                                                        386             46               -
           Rental expense                                                         -            196             267

<CAPTION>
                                                                              December 31,         December 31,
                                                                                      1999                 2000
                                                                              -------------        -------------
                                                                                      Rmb                  Rmb
<S>                                                                           <C>                  <C>
         Balances with related parties
           Funds held in trust by a related company                                28,000               20,523
           Due from related parties                                                     -                7,239
           Due to a related party                                                       -                  321
</TABLE>

         Apart from the  purchase  of  technology  from a minority  shareholder,
substantially  all  related  party  transactions  are  entered  into with fellow
subsidiaries of the Company.


                                      -15-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


21       Retirement plans

         As  stipulated  by  the   regulations   of  PRC,  the  Newly   Acquired
Subsidiaries are required to make  contributions to the retirement plan at rates
of 19% of the base  salaries of their staff.  Contributions  made in  connection
with the plan,  which are  expensed as  incurred,  were Rmb95 for the year.  The
Newly  Acquired  Subsidiaries  have no  obligation  for the  payment  of pension
benefits beyond the annual  contributions  described above. The Company does not
participate in any retirement plans in the year 1999 and 1998.

22       Movement in share capital

         Changes in share capital of Tramford are analysed as follows:

<TABLE>
<CAPTION>
                                              Common Stock
                                      -------------------------------
                                                                           Additional
                                          No. of             9(par           paid-in
                             Ref          shares            US$0.01)         capital            Warrants          Total
                            ------    --------------    -------------    -----------------    ------------    -----------
                                                                Rmb                 Rmb               Rmb            Rmb

<S>                         <C>       <C>               <C>              <C>                  <C>             <C>
December 31, 1997                        9,044,888              753             190,037             2,911        193,701
                                      --------------    -------------    -----------------    ------------    -----------

January 1, 1998                          9,044,888              753             190,037             2,911        193,701
Purchase of own shares       (d)          (138,700)             (12)             (1,409)                -         (1,421)
                                      --------------    -------------    -----------------    ------------    -----------

December 31, 1998                        8,906,188              741             188,628             2,911        192,280
                                      --------------    -------------    -----------------    ------------    -----------

January 1, 1999                          8,906,188              741             188,628             2,911        192,280
Purchase of own shares       (e)        (2,000,391)            (166)             (4,363)                -         (4,529)
                                      --------------    -------------    -----------------    ------------    -----------

December 31, 1999                        6,905,797              575             184,265             2,911        187,751
                                      ==============    =============    =================    ============    ===========

December 31, 2000                        6,905,797              575             184,265             2,911        187,751
                                      ==============    =============    =================    ============    ===========

</TABLE>

         (a) On  October  10,  1996,  a stock  option  plan  was set up to grant
options to certain  employees  and  directors  of the  Company  for a maximum of
200,000  shares.  The stock  option  plan  provides  for a grant of  options  to
employees,  officers, directors and consultants of the Company. The stock option
plan,  which was  established in October 1996, is  administered  by the Board of
Directors or a committee  appointed by the Board,  which determines the terms of
option's grant,  including the exercise  price,  the number of shares subject to
the  option and  option's  exercisability.  The  exercise  price of all  options
granted  under the stock  option  plan must be at least equal to the fair market
value of such shares on the date of grant.  The maximum term of options  granted
under the stock option plan is 10 years. As of December 31, 1998, no options had
been granted under the stock option plan.  Pursuant to a board resolution passed
on December 28, 1999,  200,000  options  were granted to certain  directors  and
officers at an exercise  price of US$1.15 each.  These  options are  exercisable
within  ten years  commencing  from  December  28,  1999.  During the year ended
December 31, 2000, no other options were issued under this stock option plan. In
addition,  the Company has authorised the issuance,  pursuant to the above stock
option  plan,  of  1,000,000   Class  C  Warrants  to  the  Company's   existing
shareholders, employees, officers, directors and consultants. As of December 31,
1998, 1999 and 2000, the Company has not issued any Class C Warrants.

         (b) The Company applies Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for its employee stock options. Under APB Opinion No. 25, because the
exercise price of all the options issued by the Company equals or is higher than
the market price of the underlying stock on the date of grant, no compensation
expense is recognised.


                                      -16-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


22       Movement in share capital (continued)

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123 "Accounting for Stock-Based Compensation",  and has been determined
as if the Company had  accounted  for its employee  stock options under the fair
value method of SFAS No. 123. The fair value of options  granted during the year
ended  December  31,  1999 was  RMB720.  The fair  value for these  options  was
estimated at the date of grant using a Black-Scholes Option Valuation model with
the following weighted-average assumptions for the year ended December 31, 1999;
risk-free  interest rate of 5.3%; no dividend  yield;  volatility  factor of the
expected  market  price  of  the  Company's  common  share  of  233.5%;   and  a
weighted-average expected life of the option of ten years.

For purposes of pro forma disclosure, the estimated fair value of the options is
amortised  to expense over the options'  vesting  period.  The Company pro forma
information is as follows:

                                                      Year ended December 31,
                                                      -----------------------
                                                           1999         2000
                                                      ----------   ----------
                                                           Rmb          Rmb

         Net income

         As reported                                     3,281        1,440
         Pro forma                                       2,561        1,440

         Basis earnings per share
           (amounts expressed in dollars)

         As reported                                      0.42         0.21
         Pro forma                                        0.32         0.21


Because  compensation  expense  associated  with an award is recognised over the
vesting  period,  the  initial  impact  on  pro  forma  net  income  may  not be
representative  of compensation  expense in future years, when the effect of the
amortisation of multiple awards would be reflected in the income statement.

         (c) In January 1997, the Company issued 24,800 US$0.01 par value shares
at a price of US$5.00  together  with a further  13,950  Common  Stock  Purchase
Warrants at US$0.10 per  warrant,  giving net proceeds of  approximately  US$109
(Rmb 902).

         (d)  Pursuant  to a  resolution  passed on June 23,  1998,  the Company
announced a buyback  program for its Common Stock.  For the year ended  December
31,  1998, a total of 140,300  shares of Common  Stocks were  repurchased  at an
average price of US$1.25 per share.  The shares  repurchased will be reserved to
warrant  holders and 1996 option  holders,  if any,  upon the  exercise of their
rights in future.

         (e) For the year ended  December 31, 1999, a total of 46,500  shares of
Common Stock were repurchased at an average price of US$0.67 per share. Also the
Company  received  1,952,291  shares of Common  Stock as  consideration  for the
disposal  of Jolly Mind (note 1). The shares  repurchased  will be  reserved  as
treasury stocks.

         (f) For  the  year  ended  December  31,  2000,  no  Common  Stock  was
repurchased by the Company.


                                      -17-
<PAGE>


                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (Amounts expressed in thousands, unless otherwise stated)


23       Contingencies and commitments

         The Company had no material  contingencies  as at December 31, 1999 and
2000. As of December 31, 2000, the aggregate future minimum lease payments under
all non-cancelable operating lease are as follows:

                                                                   Rmb
         Year ending December 31,
         2001                                                    1,200
         2002                                                      800
                                                             ----------
                                                                 2,000
                                                             ==========

24       Segment information

         The Group's operations have been classified into two business segments:
product sales and rendering of services.  Summarized  financial  information  by
business segment for 2000 is as follows:

<TABLE>
<CAPTION>
                                                                                Depreciation
                                                Operating     Identifiable               and          Capital
                               Net sales      profit/(loss)         assets      amortisation      expenditures
                               ----------     ------------    ------------    ----------------    -------------
                                     Rmb              Rmb             Rmb               Rmb               Rmb

<S>                            <C>            <C>             <C>             <C>                 <C>
Year 2000
Product sales                     10,353           (1,565)         19,773               433              6,001
Rendering of services              5,374            1,164           5,634               199                429
                               ----------     ------------    ------------    ----------------    -------------
Total operating segments          15,727             (401)         25,407               632              6,430
Corporate                              -            1,841          34,168               141             16,951
                               ----------     ------------    ------------    ----------------    -------------
Group                             15,727            1,440          59,575               773             23,381
                               ==========     ============    ============    ================    =============
</TABLE>


         The  Company  does not  operate  in  distinguishable  segments  for the
continuing operations during the years ended December 31, 1998 and 1999.


                                      -18-
<PAGE>


                                 EXHIBITS INDEX

                                    EXHIBIT 8

8.   The following is a list of all of the Company's  significant  subsidiaries,
     their  jurisdiction  of  incorporation  and the names  under  which they do
     business, if different from their name.

     ---------------------------------------------------------------------------
     Company                            Jurisdiction      Any other name under
                                                          which they do business
     ---------------------------------------------------------------------------
     Jing Tai Industrial Investment
     Co. Ltd.                           Hong Kong         N/A
     ---------------------------------------------------------------------------
     Jingle Technology Co. Ltd.         BVI               N/A
     ---------------------------------------------------------------------------
     BHL Networks Technology Co. Ltd.   Cayman Island     N/A
     ---------------------------------------------------------------------------
     Beijing BHL Networks Technology
     Co. Ltd.                           PRC               N/A
     ---------------------------------------------------------------------------