<Page>

                                  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, 2001

                                       OR

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                             COMMISSION FILE NUMBER

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


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                 (Translation of Registrant's name into English)

                             BRITISH VIRGIN ISLANDS
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                 (Jurisdiction of incorporation or organisation)

               34TH FLOOR, WEST TOWER, SHUN TAK CENTRE, HONG KONG
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                    (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
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                 None                              Not Applicable
       -------------------------     -----------------------------------------

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

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

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

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

                                      None
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                                (Title of Class)


As of June 25, 2002, there were 6,895,697 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.

                                                                 Yes |X|  No |_|

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

                                                        |_| Item 17  |X| Item 18
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                                     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 of the Statement of Operations for the two
years in the period ended December 31, 1997 and 1998 and the selected financial
data of the Balance Sheet as of December 31, 1997, 1998 and 1999 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")
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<Table>
<Caption>
                                                              (Amounts in thousands, except per share data)

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

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

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

                                                 1997         1998         1999         2000         2001           2001

                                                 Rmb          Rmb          Rmb          Rmb          Rmb           US$(1)
                                               --------     --------     --------     --------     --------       --------
<S>                                            <C>          <C>          <C>          <C>          <C>            <C>
STATEMENT OF OPERATIONS
DATA:

Operating loss .............................     (7,810)      (4,325)      (4,717)      (2,029)     (13,361)        (1,614)

Non-operating income .......................     10,273        4,334        2,862        3,373        2,555            309

Income/(loss) from continuing
   operations before income
   tax provision ...........................      2,463            9       (1,855)       1,344      (10,806)        (1,305)

Discontinued operations

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

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

(Loss)/earnings per share ..................      (9.70)       (4.20)        0.42         0.21        (1.32)         (0.16)

Earnings/(loss) per share from
   continuing operations ...................       0.27         0.01        (0.23)        0.21        (1.32)         (0.16)

(Loss)/earnings per share from
   discontinued operations .................     (10.03)       (4.20)        0.65          N/A          N/A            N/A

SUPPLEMENTAL DATA TO STATEMENTS
   OF OPERATIONS

Net sales (2) ..............................     68,754       43,080       19,226       15,727        7,305            882

Cost of goods sold (2) .....................     77,076       42,943       17,680       12,612        5,203            628

Gross Profit/(loss)(2) .....................     (8,322)         137        1,545        3,115        2,102            254

BALANCE SHEET DATA:

Cash and cash equivalents ..................     51,631       45,404       46,803       51,302       54,025          6,527

Total assets ...............................    221,881       74,503       74,803      104,128       93,407         11,285

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

Shareholders' equity .......................    110,697       71,440       70,241       71,681       62,522          7,554
</Table>
<Page>

(1)      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, 2001 of Rmb 8.2766 = $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.
         The table set forth the average, high, low and period-end noon buying
         rate between the Rmb and the U.S. dollar (in Rmb per U.S.dollar) is set
         out in Item 10 (D). The Renminbi is not freely convertible into foreign
         currencies. The China 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 exchange
         banks where Renminbi can be converted into foreign currencies subject
         to prior approval from the China State Administration of Exchange
         Control.

(2)      Net sales, cost of goods sold and gross profit/(loss) for each of the
         three years in the period ended December 31, 1999 refers to that of
         Linyi Baoquan Bathtub Company Limited ("Baoquan") and Linyi Xinhua
         Building Ceramics Company Limited ("Xinhua") disposed in July 2, 1999.
         Baoquan and Xinhua are hereinafter referred to, collectively, as the
         "PRC Operations"). Net sales, cost of goods and gross profit/(loss) for
         each of the two years in the period ended December 31, 2000 and 2001
         refers to that of the BHL Networks Technology Co. Ltd. ("BHLNet") and
         Beijing BHL Networks Technology Co. Ltd. ("BBHL") acquired in June 30,
         2000. BHLNet and BBHL are hereinafter referred to, collectively, as the
         "Newly Acquired Operations".

(3)      Readers may refer to Item 4 (A) - "Information of the Company" to
         obtain additional information of the change of business of the Company
         in 2000.

B.       CAPITALIZATION AND INDEBTEDNESS.

         Not Applicable.

C.       REASONS FOR THE OFFER AND USE OF PROCEEDS.

         Not Applicable.

D.       RISK FACTORS.

         Certain risks associated with your investment in our common stock are
described below. These risks and other additional risks not presently known to
us or that we deem immaterial may impair our business operations and could
materially adversely affect our business, operating results and financial
condition and could result in a complete loss of your investment. You should
carefully consider the risks described below and other information in this
annual report before deciding to invest in Tramford International Limited.

         WE HAVE LIMITED EXPERIENCE IN MANAGING OUR NEW BUSINESS IN A NEW AND
HIGHLY COMPETITIVE MARKET.

         Prior to the acquisition of our new business in June 2000, we were
engaged in manufacture of enameled steel and cast iron bathtubs and ceramic wall
tiles. Accordingly, we have had a limited experience in establishing and
managing the new business. Besides, we are subject to all of the risks,
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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.

         The potential competitors may come from:

         -        competitors who have greater financial and marketing resources
                  and greater name recognition;

         -        competitors have better definition in their products and have
                  selected better market position for their entry;

         -        providers of Chinese language Internet tools and services who
                  are acquired by, receive investments from or enter into other
                  commercial relationships with large, well-established and
                  well-financed Internet, media or other companies.

         -        the large global competitors after the opening of market by
                  China as a result of its participation into the World Trade
                  Organisation (the "WTO").

         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 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 China;

         -        our research and development and marketing abilities;

         -        the acquisition costs of technology or businesses;

         -        fluctuation in subsidiaries' 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.
<Page>

         These facts make 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 would 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, or additions of new employees can be disruptive and could materially
adversely impact our business, including our ability of new products
development, existing products upgrading and products sales and marketing.
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 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.

         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

         Following the increase in computer crimes in China, computer hackers
may create viruses to sabotage or otherwise attack our products. Although no
such event has occurred or discovered to date, the adverse impact arising from
any virus sabotage or attacks cannot be ignored. If sabotage or attacks on our
products do happen, our customers' computer systems could be seriously damaged.
Consequently, our business will be adversely impacted as a result of damaged
professional image.

         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
strategies to acquire 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
significant non-recurring charge to earnings when occurred.
<Page>

         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.

         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 be 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. Although the
number of networks has increased dramatically in China, the network management
and network security markets continue to be emerging
<Page>

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 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.

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

         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

         Our joint venture agreements provide for an initial term of 50 years.
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.
<Page>

         WE EXPECT THE VOLATILITY OF OUR STOCK PRICE WILL CONTINUE

         Our stock price was volatile and ranged from a per-share high of
US$0.44 to low of US$0.188. On May 14, 2002, the per share closing price for
common stock was US$0.22. 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.

         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 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. Critical
issues concerning the commercial use of the Internet in China and Asia such as
security reliability, cost, ease of deployment, administration and quality of
service may affect the adoption of the Internet to solve business needs.

         OUR BUSINESS MAY BE ADVERSELY AFFECTED BY CHINESE GOVERNMENT REGULATION
OF INTERNET COMPANIES.

         China has 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.

         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.

         Besides, 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
<Page>

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'S ENTRY INTO THE WTO. Following the approval of China's entry
into the WTO recently, China formally became a member of this global trade
system. 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 and the impact of which on China's economy and our business would
remain uncertain.

         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. 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. Although the Renminbi/United States dollar exchange rate has been
relatively stable since 1994 and we are confident of keeping the exchange risk
at its lowest level due to the existing major assets of the Company is cash kept
in foreign currencies, we can give no assurance that this exchange rate will not
become volatile again or that the Renminbi will not devalue further against the
United States dollar. We currently do not engage in any hedging activities in
order to minimize the effects of exchange rate risks, the exchange rate
fluctuations may adversely affect our financial performance.
<Page>

         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 China, the government of China 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 China. China
has agreed that:

      - 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,";

      - 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, even it is well adopted in the past few years, the Basic
      Law will be adopted in its present form will not be changed in the future
      or that any such changes would not be given retroactive effect.
      Accordingly, future political developments could make it impractical,
      inefficient or impossible for us to conduct business in or from Hong Kong.

         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
<Page>

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 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", "can",
"could", "will" and "would" 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 China. A
wholly owned subsidiary of Jing Tai, Beijing Taigong Sanitary Wares Company
Limited ("Taigong"), was also incorporated in Beijing in 1997 under the laws of
China 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 Jing Tai'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.
<Page>

         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 for a voluntary dissolution which 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. ("BHLNet"), a company incorporated under the laws
of the BVI, which owns a 76% interest in Beijing BHL Networks Technology Co.
Ltd. ("BBHL"), a company incorporated under the laws of China. BHLNet and BBHL
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 office is located at 34th Floor, West
Tower, Shun Tak centre, 200 Connaught Road Central, Hong Kong.

B.       BUSINESS OVERVIEW.

         COMPANY OVERVIEW

         The Company was transformed to a network technology service company
after our acquisition in 2000. Our new business focuses on the network security
and related 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
capability. 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.

         Upon the acquisition, we positioned ourselves as a provider of system
integration services, network security and network management solutions. With
limited investment in research and development at the initial stage, which is
caused by our difficulties in recruiting qualified staff and our reliance on
shift of mature technologies from the Institute of Computing Technology ("ICT"),
the products of us are as general as that provided by other competitors. In
2001, we changed our business focus to self-developed security software. We've
experienced a year of change in product development, marketing strategy and
management team in 2001.

         PRODUCT DEVELOPMENT

         The Company experienced a period of inadequate effort invested in
research and development of products when we first entered into our new
business. In 2001, we recognised this weakness and reinforced our efforts in
research and development. Our achievements on product development in 2001
included: -

         -        Developing and upgrading the purchased technology to extend
                  the industrial coverage;
<Page>

         -        Extending the applicability of our products in different
                  platforms and operating systems; and

         -        Self-developing the Intranet/Internet Physical Separation
                  Security Solution ("IPSSS") and obtaining all necessary
                  approvals and certifications from the State Security Bureau
                  and other related government authorities.

         Our different mix of products available can now meet different customer
demands. As a result of the new product development listed above, we believe we
have well positioned ourselves to furtherextending to more industrial sectors
than before.

         MARKETING STRATEGY

         The Company's limitations in expanding the security market in 2000
included: -

         -        the absence of a lead product;

         -        limited market recognition in the security industry due to
                  limited history; and

         -        inappropriate allocation of resources into system integration
                  sector which actually we are hard to compete with our
                  competitors who had longer operating history and better
                  financial support.

         The Chinese security market is still an infant market, which is
characterised by:

         -        no unique standards established but the security issue is
                  widely concerned throughout the whole country, especially in
                  the central government level;

         -        the purchase of security products by the customers is
                  particularly careful in order to minimize their costs and
                  risks at the same time;

         In 2001, we changed our target market to government authorities.
Accordingly, we changed our sales and marketing strategy as follows: -

         -        the cancellation of our agency relationship with overseas'
                  security software suppliers and reemphasised on our
                  self-developed products;

         -        organised exhibitions and forums with the government
                  authorities to increase the awareness of our customers towards
                  the security and its sensitivity to their operations;

         Through our new strategy, our achievements included: -

         -        the establishment of good working relationship with the
                  government authorities from our highly regarded reputation
                  from our unique products and services; and

         -        the State Security Bureau has agreed to work with us to
                  publishmedia materials to introduce and advocate the security
                  concept. The materials will be delivered to all government
                  authorities which allowed us a chance to promote our image and
                  thus, we believe, extending our network to all government
                  authorities at the minimal cost;

         MANAGEMENT TEAM
<Page>

         Starting in 2000, we have been reorganizing our departments and
reengineering our working procedures to enhance efficiency of the Company. Our
efforts include the recruitment of a new general manager and a new research and
development manager. Recently, we have also recruited a manager specializing in
the application software to extend our product coverage to different industries,
including the banking industry and the army. The new team was characterised by:
-

         -        young professionals who have been engaged in the security
                  industry for a long-time since their university studies; and

         -        have good relationships with the existing users of security
                  products and this has helped keep us abreast of market needs;

         After the reorganization, the operation was improved. Our new contracts
signed in the first quarter of 2002 are more than double of that of last year.
We expect the situation will continue in 2002.

         BUSINESS STRATEGY

         Tramford intends to achieve our business goal primarily through the
following strategies:

         CAPITALIZE ON THE STRENGTHS OF THE ESTABLISHED GOODWILL

         Our Newly Acquired Operations had, prior to our acquisitions,
established recognised goodwill in the market in previous years. The Company
will continue capitalising 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

         Beijing, being the capital of China, is a base for headquarters of
large local and overseas enterprises and government bureaus. Beijing Holdings,
the controlling shareholder of the Company, is the sole window company of the
Beijing Municipal Government established in Hong Kong. Since its incorporation
in 1979, it had established long-term and good relationships with majority of
local enterprises and government bureaus, which, we believe, can directly
contribute to our future 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 Beijing Holdings's specific background will help
developing our business faster than our competitors in future.

         CAPITALISE ON THE STRENGTHS OF THE ICT

         The ICT is a shareholder of BBHL. The ICT, an institution of the
Chinese Academy of Science ("CAS"), is well recognized in China and globally in
terms of its academic reputation and is specializing in research and development
of high-performance computer systems. The mission of the ICT is "Invigorate
China through Science and Education". 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 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
<Page>

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, particularly the IPSSS, are well accepted by the high
security sensitive customers such as the government bureaus, medium to large
corporations 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.

         In view of the success, the Company will focus on the research and
development of new network security software and technology for the China market
to cater for the demand of network security products in China. 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 China. 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 shifts our 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 Chinese 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>

         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 Beijing 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 our
products and services to 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. The Company also believes that, due to adequate fund retained
by the Company, there is no need to raise additional equity or loans to finance
our acquisitions, if any, in the foreseeable future.

         DESCRIPTION OF PRODUCTS AND SERVICES

         Our products focus on three important areas of Internet application:
network security, network management and e-business software development. 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 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 China 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.

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>

         The following table sets forth as of May 30, 2002, (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     36.96%
                         34th Floor, West Tower, Shun Tak Centre,
                         200 Connaught Road Central, Hong Kong.          (2)

        Common Stock     China C & Y International                     1,694,915     24.58%
                         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      14.13%
                         34th Floor, West Tower, Shun Tak Centre,
                         200 Connaught Road Central, Hong Kong.          (2)

        Common Stock     Oriental Patron China                          849,576      12.32%
                         Investment Limited ("Oriental Patron")
                         42/F., COSCO Tower,                           (2)(4)
                         183 Queen's Road Central, Hong Kong.

        Common Stock     All officers and directors                    6,067,797     87.99%
                          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. Pursuant to
         another sale and purchase agreement entered into between Beijing
         Holdings and Oriental Patron on April 19, 2002, Oriental Patron's
         entire interests in the Company will be sold to Beijing Holdings. The
         expected completion date of the transaction is May 31, 2002. Subsequent
         to the completion, Beijing Holdings will in aggregate hold 63.32%
         beneficial ownership of the Company. 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. Pursuant
         to a sale and purchase agreement dated April 30, 2002,
<Page>

         China C&Y's entire interests in the Company will be sold to China
         Internet and Great Legend. The transaction is expected to be completed
         on June 30, 2002. Subsequent to the completion, China Internet and
         Great Legend hold, respectively, 17.21% and 7.37% beneficial ownership
         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. Pursuant to a sale and purchase agreement,

         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, subsidiaries
engaged in bathtub and ceramic tiles business. Since the disposals of Baoquan
and Xinhua in 1999, Jing Tai became the cash management vehicle of the Company,
holding the foreign currencies of our cash assets in Hong Kong.

         The Company owns 76% interest, through BHLNet, a wholly owned Cayman
Island incorporated subsidiary, in BBHL, an equity joint venture incorporated in
China. BHLNet is wholly owned by Jingle, a wholly owned subsidiary of the
Company incorporated in the BVI. BHLNet and Jingle are investment-holding
vehicles. All principal activities of the Company are done through BBHL in
China.

         BBHL is specialized in network technology. 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: -

                               [GRAPHIC OMITTED]
<Page>

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.

         BBHL leases its office at 8th Floor, Anhua Development Building, No.
35, Anding Street, Chaoyang District, Beijing, 100029, China at a monthly rent
of Rmb 88,870 for a period of two years commencing from September 23, 2000. In
December 2001, we've terminated approximately half of the rental area to reduce
the rental expenses in 2002

         The Company's principal fixed assets is computer equipment. As at
December 31, 2001, the total net book value of the computer equipments amounted
to approximately Rmb 1 million, which represented 66.75% 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 in future.

         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, 1999, 2000 and 2001 refers to the audited consolidated
results of the Company for the years ended December 31, 1999, 2000 and 2001. 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.

         The Company believes the following critical accounting policies may
affect its judgments and estimates used in the preparation of this consolidated
financial statements: -

         REVENUE RECOGNITION. Revenue for product sale is recognized upon the
title of the good passed to the customer. Should the contract include product
sale together with the installation service, revenue is recognized after the
successful installation of the product, which is evidenced by a completion
certificate
<Page>

signed by the customer. Revenue from rendering of service is charged on a
monthly basis, which is based on contracted professional fee multiplied by
number of staff assigned to the project. Number of professional staff required
is usually determined two months in advance according to the progress of the
project managed by our customers.

         SOFTWARE DEVELOPMENT COST. The Company follows the suggested accounting
treatment of the FASB 2 "Accounting for Research and Development Costs" to
account for the research and development costs. Costs that are related to the
conceptual formulation and design of licensed programs are expensed as research
and development costs in the consolidated income statements. The Company will
capitalize the direct costs attributable to the research and development of
software as assets during the period commencing from the establishment of
technical feasibility of the licensed program and ending when the products are
generally released to the market for sale. Capitalized costs will be amortized
over the lesser of the amount computed based on the estimated revenue
distribution over the products' revenue-producing lives, or the straight line
method, and is applied over periods ranging up to two years, starting from the
year when the product is released to the market. Accordingly, a total of Rmb 0.2
million was capitalized in the year ended December 31, 2001 (the "2001 Period").
No amortization was charged to the consolidated income statements in the 2001
Period as the product is still under development at the end of the year.

         AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS. The Company
periodically reviews and evaluates the amortization policy of goodwill and
intangible assets, with reference to the lives of techniques acquired, the
acceptance of the products by the market, the policies adopted by other
companies in the same industry and the estimated future economic benefits
generated by the products. Impairment loss will be recognized in the
consolidated income statements if the anticipated undiscounted cash flow from
these assets is less than its carrying value. In the 2001 Period, the Company
performed a review of the amortization period and had reassessed the
amortization period of goodwill and intangible assets from twenty years and five
years to, respectively, five years to three years. The revised accounting
estimates had been adopted prospectively from January 1, 2001 and the effect to
the change was to increase amortization charge for the 2001 Period by,
respectively, Rmb 2.9 million and Rmb 0.7 million.

         IMPAIRMENT OF LONG-LIVED ASSETS. The Company periodically evaluates the
carrying value of its long-lived assets, including property, plant and
equipment, 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 .

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, 1999,
2000 and 2001.

<Table>
<Caption>
                                               1999        2000          2001
                                             --------    --------      --------

<S>                                           <C>         <C>          <C>
Net sales.................................    100.0%      100.0%        100.0%

<Page>

Cost of goods sold........................     92.0%       80.2%         71.2%

Gross profit..............................      8.0%       19.8%         28.8%

General and administrative expenses.......     24.5%       32.7%        211.7%

Non-operating income......................     14.9%       21.4%         35.0%

Income/(loss) from
   continuing operations..................      9.6%        8.5%       (147.9%)

Loss from operations of disposed
   subsidiaries...........................     77.4%        0.0%          0.0%

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

Net income/(loss) for the year............     17.1%        9.2%       (125.1%)
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

         NET SALES. Net sales decreased by Rmb 8.4 million, or 53.5%, from Rmb
15.7 million of the year ended December 31, 2000 ("2000 Period"), to Rmb 7.3
million of the 2001 Period. Analysed by activities, net sales of products, which
was mainly represented by our self-developed software, amounted to Rmb 0.7
million in the 2001 Period, which was decreased by Rmb 9.6 million, or 93.2%,
from Rmb 10.3 million of the 2000 Period, as a result of our termination of the
system integration business and the agency business in 2001 due to the keen
competitions and unacceptable low profit margins of these markets. Sales of
services rendering represented professional fee charged to our customers is
based on the actual number of professional staffs assigned to the projects. Net
sales of which for the 2001 Period amounted to Rmb 6.6 million, which was
increased by Rmb 1.2 million, or 22.7%, from Rmb 5.4 million of the 2000 Period
to Rmb 6.6 million of the 2001 Period, as a result of the increase in the number
of professional staffs hired by our customers. The termination of the system
integration and agency businesses represented our shift to the market of
self-developed security software. Security software market is still in an infant
stage in China. The Chinese government has spent efforts in emphasising and
encouraging the network security concept in China. Its acceptance and awareness
in the government institutions and universities has been growing. Among the
products in the market, users prefer the locally developed products and this has
created an ample market for our future growth. Also due to the existing
customers are usually sponsored by the government, they are not price sensitive
and thus higher profit margin can be obtained from the services provided if
satisfactory solutions are provided.

         Currently, Kong De, a related company incorporated in Macau, was the
sole agent of all service rendering contracts since it was the signing party of
the unexpired contracts succeeded upon the acquisitions of the Newly Acquired
Operations in the 2000 Period. All contracts will expire in 2002 and, as agreed
by the customers, will be renewed in name of the BHLNet or BBHL

         COST OF SALES. Cost of sales of product sales represented the direct
material costs of our self-developed software sold to customers. Cost of sales
of services rendering represented the direct costs such as staff costs, rental
expenses, depreciation of the equipments and other related charges. Cost of
sales of product sales was decreased by Rmb 9.2 million, or 94.8%, from Rmb 9.7
million of the 2000 Period to Rmb 0.7 million of the 2001 Period. The decrease
was due primarily to the termination of the system
<Page>

integration business. Cost of sales of services rendering was increased by
Rmb1.8 million, or 63.0%, from Rmb 2.9 million of the 2000 Period to Rmb 4.7
million of the 2001 Period. The increase was due primarily to the increase in
number of professional staffs assigned to the projects and the increase in staff
salaries and benefits.

         GROSS PROFIT. Gross profit of product sales was decreased by Rmb 0.4
million, or 67.9%, from Rmb 0.6 million of the 2000 Period to Rmb 0.2 million of
the 2001 Period. As a percentage of sales, gross profit of product sales was
increased by 22%, from 6.0% of the 2000 Period to 28.0% of the 2001 Period. The
increase was due primarily to higher margin generated from the sales of
self-developed products. Gross profit of services rendering was decreased by Rmb
591 million, or 23.7%, from Rmb 2.4 million of the 2000 Period to Rmb 1.9
million of the 2001 Period. As a percentage of sales, gross profit of services
rendering was decreased by 17.6% from 46.4% of the 2000 Period to 28.8% of the
2001 Period. The decrease was due primarily to increased staff salaries and
benefits.

          SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses was increased by Rmb 10.3 million, or 200.6%, from Rmb
5.1 million of the 2000 Period to Rmb 15.4 million of the 2001 Period. The
increase was due primarily to: -

         -        a revision to the amortization period of the intangible assets
                  and goodwill from 5 years and 20 years to 3 years and 5 years,
                  respectively, after management's review on the product life
                  with reference to the techniques acquired and policies adopted
                  by other companies in the same industry. The effect of the
                  changes were accounted for prospectively in the 2001 Period.
                  Accordingly, the full year amortization of intangible assets
                  and goodwill incurred in the 2001 Period amounted to,
                  respectively, Rmb 1.5 million and Rmb 3.8 million, which was
                  increased by, respectively, Rmb 1.3 million and Rmb 3.7
                  million, compared to a three months effect of, respectively,
                  Rmb 0.2 million and Rmb 0.1 million of the 2000 Period; and

         -        all expenses of the 2000 Period were incurred after September
                  1, 2000, the date of the acquisitions completed, while the
                  expenses of the 2001 Period reflected a full year result of
                  the expenses incurred.

         NON-OPERATING INCOME. Non-operating income was decreased by Rmb 0.8
million, or 24.3%, from Rmb 3.4 million of the 2000 Period to Rmb 2.6 million of
the 2001 Period. The decrease was due primarily to the significant decrease in
the bank deposit interest rate in Hong Kong, which was directly caused by the
global economic recession in the 2001 Period, especially after the 911 disaster.

         NET LOSS. Net loss for the 2001 Period was Rmb 9.1 million, which was
increased by Rmb 10.5 million, or 735%, from a profit of Rmb 1.4 million in the
2000 Period, due primarily to the reasons as described above.

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 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.
<Page>

         COST OF GOODS 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.

         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 short-term investments in the
2000 Period.

         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.

TAXATION

         No Hong Kong taxation is charged for Jing Tai as there is no estimated
assessable profit for the 1999, 2000 and 2001 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 BBHL, 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"). BBHL incurred loss for
both 2000 and 2001 Periods, therefore, the tax holidays were not started.

B.       LIQUIDITY AND CAPITAL RESOURCES

         The Company is neither engaged in any kind of off-balance sheet
arrangements and other relationships with unconsolidated entities or other
persons that are reasonably likely to affect materially liquidity and the
availability of or requirements for capital resources, nor any trading
activities that include non-exchange traded contracts accounted for at fair
value. Except for the operating lease commitment and the capital commitment for
purchase of a property for and on behalf of a related company, as fully
disclosed in the financial statements, we are not involved in any kind of other
commitments, both expressed or contingent, which may cause us to make future
payments under contracts.

         The Company's cash and cash equivalents on hand as at December 31, 2001
was Rmb 54.0 million, which was increased by Rmb 2.7 million, or 5.2%, from Rmb
51.3 million at the beginning of the year.
<Page>

         The cash inflow of the operating activities of the 2001 Period was Rmb
1.8 million, which was decreased by Rmb 8.0 million, or 81.9%, from Rmb 9.8
million of the 2000 Period, due primarily to the decrease in sales of the
Company in the 2001 Period.

         The cash inflow of the investing activities of the 2001 Period was Rmb
1.0 million, which was increased by Rmb 6.2 million, or 117.9%, from a cash
outflow of Rmb 5.3 million of the 2000 Period. The decrease was due primarily to
increased profit earned from disposals of available-for-sale securities and no
additional intangible assets were acquired during the 2001 Period.

         The additional buyback of shares by the Company in the 2001 Period
caused a cash outflow of Rmb 0.02 million in the 2001 Period.

           At December 31, 2001, the Company, after deducting the total
liabilities, had cash resources of Rmb 26.1 million. ALTHOUGH SIGNIFICANT LOSS
OF RMB 9.1 MILLION WAS INCURRED IN THE 2001 PERIOD, OPERATING ACTIVITIES
GENERATED A CASH INFLOW BECAUSE AN AGGREGATE OF RMB 6.4 MILLION EXPENSES WERE
NON-CASH IN NATURE, WHICH WERE MAINLY COMPRISED OF DEPRECIATION AND AMORTIZATION
OF GOODWILL AND INTANGIBLE ASSETS. MOREOVER, THE COMPANY HAD COMPLETED ITS
MARKET REPOSITIONING AT THE END OF THE 2001 PERIOD. THE COMPANY BELIEVES, THE
FUTURE REPOSITIONED BUSINESS WILL GENERATE NET CASH INFLOW TO THE COMPANY APART
FROM THE CASH AND CASH EQUIVALENTS OF RMB 26.1 MILLION, AN AGGREGATE OF RMB 14
MILLION WAS ALSO KEPT IN THE COMPANY'S SHORT-TERM INVESTMENTS WHICH CAN BE
WITHDRAWN WITHOUT ANY RESTRICTION AND WHICH CAN BE CONSIDERED AS A SOURCE OF OUR
FINANCE WHEN CONSIDERED NECESSARY. WE DO NOT HAVE ANY EXISTING PLAN TO OBTAIN
ADDITIONAL FUNDS BY LOANS OR BY ISSUING NEW SHARES.

         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.

C.       RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

         The Company acquired, through BBHL, a technological platform for the
development of internet security devices from the ICT of the CAS at a cash
consideration of Rmb 4 million in 2000.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.       DIRECTORS AND SENIOR MANAGEMENT.

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

         NAME                  AGE       POSITION
         ----                  ---       --------

         Li Xiao Hong          49        Chairman of the Board and President

         Jiang Xin Hao         37        Chief Executive Officer and Director

         Zhang Gao Bo, Gary    38        Director

         Li Guo Jie            59        Director

         Jin De Zhen           57        Director

         Yu Xiang Dong         36        Director

         Benjamin Wah          51        Director

         Michael Siu           33        Secretary and Chief Financial Officer

         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.

         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.

         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 China. 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.
<Page>

         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 ("BEDC") 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 Professor at Beijing Institute of Economics since 1974
and was promoted as the Vice Dean in 1984.

         Yu Xiang Dong, was appointed 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
China, with a registered capital of Rmb 3.2 billion. Mr. Yu has over ten years'
experience in investing banking.

         Profession Benjamin W. Wah was appointed 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 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 international journals and magazines.

         Michael Siu was appointed the Chief Financial Officer and Secretary of
the Company since September 1997 and is responsible for the financial planning
of the Company and our joint ventures in China. 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.

B.       COMPENSATION.

         During 2001, the Company had 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 538 and Rmb 522. Except as aforesaid, the Company did 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 March 15, 2002 for the ensuing year
until the next annual meeting of the shareholders. There is no employment
contracts signed with the directors.
<Page>

         Mr. Michael Siu, Mr. Benjamin Wah and Yu Xiang Dong constitute the
members of the Company's 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 discuss the Company's matters
by an informal way.

D.       EMPLOYEES.

         As at December 31, 2001, total staff of the Company consisted of 80
employees, compared to 97 staff as at December 31, 2000. The decrease was due to
the termination of the system integration division in the 2001 Period.

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

<Table>
<Caption>
      ANALYSED BY FUNCTION                  ANALYSED BY EDUCATION BACKGROUND
<S>                                 <C>     <C>                                 <C>
      Corporate administration      12      Secondary school                      3

      Finance                        3      Bachelor degree                      66

      Technology                    50      Master degree                         8

      Sales and services            15      Doctorate degree                      3
                                    ----                                         ----
                                    80                                           80
                                    ====                                         ====
</Table>

         There is no collective bargaining agreement in China. 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 May 15, 2002:

<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%
<Page>

<Caption>
                                        Common Shares

             NAME                       TITLE/OFFICE               AS A % OF OUTSTANDING SHARES
             ----                       ------------               ----------------------------
<S>                        <C>                                     <C>
         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 May 15, 2002 and the number of Common Shares subject to such options are
set forth in the following table:

<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,
                            Director                                                            2009

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

         Michael Siu        Chief Financial Officer and        40,000          1.15         December 28,
                            Secretary                                                           2009
                                                           -------------
                                                              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
<Page>

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: -

         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
<Page>

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.

         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).
<Page>

         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 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.
<Page>

         As of December 31, 2001, 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. Except as
disclosed below, there was no significant related party transactions made with
major shareholders

B.       RELATED PARTY TRANSACTIONS.

(a) During the years ended December 31, 1999, 2000 and 2001, the Company had
related party transactions with certain related parties as follows: -

<Table>
<Caption>
                                                                  Year ended December 31,

                                                           1999            2000               2001

                                                         Rmb'000          Rmb'000            Rmb'000
<S>                                                        <C>            <C>                <C>
TRANSACTIONS WITH RELATED PARTIES

Service income received from Kang De                          -            8,265              6,598

Purchase of technology from ICT                               -            4,000                  -

Interest income received from fellow subsidiaries             -              433                  -

Rental income received from fellow subsidiaries              46                -                  -

Rental expenses paid to holding company                     196              267                248

Service fee paid to a fellow subsidiary                       -                -                142
</Table>

<Table>
<Caption>
                                                             December 31,    December 31,
                                                                     2000            2001
<S>                                                               <C>             <C>
BALANCES WITH RELATED PARTIES                                     Rmb'000         Rmb'000

Funds held in trust by a fellow subsidiary as short-term           20,523             868
   investments

Due from related companies (note a)                                 5,096           4,596

Due from fellow subsidiaries                                        2,143             225

Due to a related company (note b)                                     321             321
</Table>
<Page>

NOTE

(a) It represented expenses advanced in the normal course of business on behalf
of Beijing Ming Jun Information System Company Ltd., a company held by BEDC,
amounted to Rmb 4,291. The expenses included staff costs, rental expenses and
other utility expenses incurred by a team of professional staff of the related
company stationed in Zhuhai.

(b) Working capital advanced from Beijing Enterprises Investments Limited, a
related company, amounted to Rmb 321.

(c) Other than information already disclosed elsewhere in this Form 20-F, no
person who has been an insider of the Company since January 1, 2001 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, 2001 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

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:

<Table>
<Caption>
                                           Common Stocks             Warrants
                                           -------------             --------

         NASDAQ Small Cap Market

         (Year Ending)                     High      Low           High      Low
<S>                                       <C>       <C>           <C>       <C>
         December 31, 2001                0.444     0.090          N/A       N/A

         December 31, 2000                2.500     0.219         0.938     0.031
<Page>

<Caption>
                                           Common Stocks             Warrants
                                           -------------             --------
<S>                                       <C>       <C>           <C>       <C>
         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
</Table>

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

<Table>
<Caption>
                                          Common Stocks         Warrants
                                          -------------         --------

         NASDAQ Small Cap Market

         (Quarter Ending)                  High     Low       High      Low
<S>                                       <C>      <C>
         December 31, 2001                0.400    0.130      N/A       N/A

         September 30, 2001               0.400    0.150      N/A       N/A

         June 30, 2001                    0.444    0.090      N/A       N/A

         March 31, 2001                   0.375    0.188      N/A       N/A

         December 31, 2000                1.500    0.219     0.125     0.063

         September 30, 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
</Table>

         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:

<Table>
<Caption>
                                             Common Stocks

         NASDAQ Small Cap Market

         (Month Ending)                   High            Low
<S>                                      <C>             <C>
         April 30, 2002                  0.430           0.220
         March 31, 2002                  0.430           0.190
         February 28, 2002               0.250           0.250
         January 31, 2002                0.250           0.170
         December 31, 2001               0.410           0.132
         November 30, 2001               0.198           0.130
</Table>

         According to the terms of issuance, the Company's Warrants had expired
on December 13, 1999 and was subsequently extended for additional two years to
December 13, 2001 pursuant to a Board resolution passed on December 3, 1999. 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
<Page>

Rules 4310 (c) (1), which requires the Company to maintain two active market
makers for the Warrants. On December 13, 2001, the Company's Warrants expired.

         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, 2001, the
Company's Common Shares were listed for quotation on the NASDAQ Small Cap Market
and not on any other public trading market.

D.       SELLING SHAREHOLDERS.

         Not applicable

         DILUTION.

         The following warrants were issued by the Company: -

         COMMON STOCK PURCHASE WARRANTS - As of May 31, 1999, the Company had
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 upon the completion of the Initial Public
Offering of the Company. The warrants were delisted by the NASDAQ market on May
7, 2001 and were expired on December 13, 2001.

         BRIDGE WARRANTS - The Company also issued 1,500,000 Bridge warrants in
October 1996. The terms of which were identical to that of the Common Stock
Purchase Warrants. The warrants were delisted by the NASDAQ market on May 7,
2001 and were expired on December 13, 2001.

         CLASS C WARRANTS - The Company had 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. The warrants were expired on
December 31, 2001.

         1996 STOCK OPTION PLAN - The Company had 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, for an exercise period of ten years, to certain
directors and officers at an exercise price of US$1.15 each.

E.       EXPENSES OF THE ISSUE.
<Page>

         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 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
<Page>

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..............    8.2766     8.2772       8.2786     8.2676        -            -           -           -

January 2002....      8.2765     8.2771       8.2800     8.2765        -            -           -           -

February 2002...      8.2765     8.2767       8.2770     8.2765        -            -           -           -

March 2002......      8.2787     8.2786       8.2795     8.2777        -            -           -           -

April 2002.......     8.2799     8.2793       8.2799     8.2785        -            -           -           -

May 2002........      8.2773     8.2781       8.2799     8.2768        -            -           -           -
</Table>

(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 the years ending December 31,
         1996 to 2001 and the period ended March 31, 2002 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.
<Page>

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 are subject to change.

         BRITISH VIRGIN ISLANDS TAXATION.

         Under the International Business Companies Act of the British Virgin
Islands as currently in effect, a holder of Common Stock who is not a resident
of 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.

         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
<Page>

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.

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 used derivative instruments 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 China market.

         In the normal course of business, we also face risks that are either
non-financial or non-quantifiable. Such risks principally include country risk,
credit risk and legal risk.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

         Not Applicable.
<Page>

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]

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 2001.

         Consolidated Balance Sheets of the Company as of December 31, 1999 and
         2001.

         Consolidated Statements of Cash Flows of the Company for each of the
         three years in the period ended December 31, 2001.

         Consolidated Statements of Changes in Shareholders' Equity of the
         Company for each of the three years in the period ended December 31,
         2001.

         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>

                         TRAMFORD INTERNATIONAL LIMITED

                              FINANCIAL STATEMENTS
<Page>

                         TRAMFORD INTERNATIONAL LIMITED

                          INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                                                      Page

<S>                                                                                                   <C>
Report of Independent Accountants                                                                      2

Consolidated Statements of Operations of the Group for each of the three years in the period
ended December 31, 2001                                                                                3

Consolidated Balance Sheets of the Group as of December 31, 2000 and 2001                              4

Consolidated Statements of Cash Flows of the Group for each of the three years in the period
ended December 31, 2001                                                                                5

Consolidated Statements of Changes in Shareholders' Equity of the Group for each of the three
years in the period ended December 31, 2001                                                            6

Notes to Consolidated Financial Statements                                                            7-18
</Table>
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Tramford International Limited:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, cash flows and changes in shareholders'
equity present fairly, in all material respects, the financial position of
Tramford International Limited and its subsidiaries at December 31, 2001 and
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. 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 of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.


/s/ PRICEWATERHOUSECOOPERS
------------------------------
PRICEWATERHOUSECOOPERS
Certified Public Accountants
Hong Kong, June 26, 2002
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

<Table>
<Caption>
                                             Note         1999              2000             2001              2001
                                                   -------------    --------------    -------------     -------------
                                                           Rmb              Rmb               Rmb               US$
<S>                                                  <C>               <C>              <C>               <C>
Revenues
Product sales                                                -           10,353               707                85
Rendering of services                                        -            5,374             6,598               797
                                                   -------------    --------------    -------------     -------------
                                                             -           15,727             7,305               882

Costs of sales
Product sales                                                -           (9,732)             (508)              (61)
Rendering of services                                        -           (2,880)           (4,695)             (567)
                                                   -------------    --------------    -------------     -------------
                                                             -          (12,612)           (5,203)             (628)

                                                   -------------    --------------    -------------     -------------
Gross profit                                                 -            3,115             2,102               254

General and administrative expenses                     (4,717)          (5,144)          (15,463)           (1,868)
                                                   -------------    --------------    -------------     -------------
Operating loss                                          (4,717)          (2,029)          (13,361)           (1,614)

Non-operating income                            4        2,862            3,373             2,555               309
                                                   -------------    --------------    -------------     -------------
(Loss)/income from continuing
  operations before income tax provision                (1,855)           1,344           (10,806)           (1,305)
Income tax provision                            5            -                -                 -                 -
                                                   -------------    --------------    -------------     -------------
(Loss)/income from continuing operations                (1,855)           1,344           (10,806)           (1,305)
Discontinued operations :                       6
Loss from operations of disposed
  subsidiaries                                         (14,875)               -                 -                 -
Gain on disposal of subsidiaries                        20,011                -                 -                 -
                                                   -------------    --------------    -------------     -------------
Net income/(loss) before minority                        3,281            1,344           (10,806)           (1,305)
interests
Minority interests                                           -               96             1,665               201
                                                   -------------    --------------    -------------     -------------
Net income/(loss) for the year                                            1,440            (9,141)           (1,104)
                                                         3,281

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

(Loss)/earnings per share from continued
  operations                                   12
   - Basic                                              (0.23)             0.21            (1.32)            (0.16)
                                                   =============    ==============    =============     =============

Earnings per share from
  discontinued operations                      12
   - Basic                                                0.65              N/A               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, 2001 of
Rmb8.2766 = 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 consolidated
financial statements.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             (AMOUNTS IN THOUSANDS)
                          AT DECEMBER 31, 2000 AND 2001

<Table>
<Caption>
                                                  Note         2000             2001              2001
                                                        -------------    -------------     -------------
                                                                Rmb              Rmb               US$
<S>                                                       <C>              <C>               <C>
ASSETS

CURRENT ASSETS
    Cash and cash equivalents                                51,302           54,025             6,527
    Short-term investments                                   20,523           15,222             1,839
    Trade accounts receivable, net                              307               13                 1
    Inventories - merchandise for resale                         92               80                10
    Due from related parties                        14        7,239            4,794               579
    Prepaid expenses and other assets                7        1,472            2,210               267
                                                        -------------    -------------     -------------
TOTAL CURRENT ASSETS                                         80,935           76,344             9,223

Property, plant and equipment, net                   8        2,583            1,564               189
Intangible asset                                     9        3,800            2,333               282
Software development cost                                         -              170                21
Goodwill                                            10       16,810           12,996             1,570
                                                        -------------    -------------     -------------
TOTAL ASSETS                                                104,128           93,407            11,285
                                                        =============    =============     =============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Trade accounts payable                                      648              387                46
    Due to a related party                          14          321              321                39
    Other liabilities and accrued expenses          11       26,774           27,138             3,279
                                                        -------------    -------------     -------------
TOTAL CURRENT LIABILITIES                                    27,743           27,846             3,364

Contingencies and commitments                       17

Minority interests                                            4,704            3,039               367

SHAREHOLDERS' EQUITY
    Shareholders' equity                            16      187,751          187,733            22,682
    Accumulated losses                                     (116,000)        (125,141)          (15,120)
    Cumulative translation adjustment                           (70)             (70)               (8)
                                                        -------------    -------------     -------------
TOTAL SHAREHOLDERS' EQUITY                                   71,681           62,522             7,554
                                                        -------------    -------------     -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  104,128           93,407            11,285
                                                        =============    =============     =============
</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 31, 2001 of
Rmb8.2766 = 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 consolidated
financial statements.
<Page>

                 TRAMFORD INTERANTIONAL LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

<Table>
<Caption>
                                                            1999        2000        2001         2001
                                                           -------     -------     -------     -------
                                                             Rmb         Rmb         Rmb          US$
<S>                                                       <C>         <C>         <C>          <C>
Cash flows from operating activities
   Net (loss)/income ..................................      3,281       1,440      (9,141)     (1,104)
    Adjustments to reconcile net (loss)/income
    to net cash (used in)/provided by
     operating activities
       Loss from operations of disposed subsidiaries ..     14,875          --          --          --
       Gain on disposal of subsidiaries ...............    (20,011)         --          --          --
       Minority interest in loss of consolidated
        subsidiaries ..................................         --         (96)     (1,665)       (201)
       Amortization of intangible asset and goodwill ..         --         341       5,281         638
       Depreciation ...................................         --         432       1,133         137
        Realized gains on securities available for sale         --        (300)     (1,242)       (150)
     Loss on disposal of fixed assets .................         --          21          --          --
     Others ...........................................         49          --          --          --
    Changes in assets and liabilities, net of effects
     from acquisitions and disposals:
         Accounts receivable ..........................         --         466         294          36
         Inventories ..................................         --       1,055          12           1
         (Increase)/decrease in prepaid
          expenses and other assets ...................    (27,644)      4,272       7,008         846
         Increase in other liabilities and accrued
         expenses .....................................      1,499       2,204         103          12
                                                           -------     -------     -------     -------
 Net cash (used in)/provided by operating activities ..    (27,951)      9,835       1,783         215

Cash flows from investing activities
    Acquisition of subsidiaries, net of cash acquired .         --         794          --          --
    Purchase of securities available for sale .........         --      (1,063)     (1,437)       (174)
    Proceeds from disposal of securities available for
     sale                                                       --       1,363       2,679         324
    Purchases of property, plant and equipment ........         --      (2,430)       (114)        (14)
    Payment for software development cost capitalized .         --          --        (170)        (20)
    Purchase of intangible asset ......................         --      (4,000)         --          --
                                                           -------     -------     -------     -------
Net cash (used in)/provided by investing activities ...         --      (5,336)        958         116

Cash flows from financing activities
    Purchase of own shares ............................       (238)         --         (18)         (2)
                                                           -------     -------     -------     -------
Net cash used in financing activities .................       (238)         --         (18)         (2)

Net cash provided by
 discontinued operations ..............................     29,588          --          --          --
                                                           -------     -------     -------     -------

Net increase in cash and cash equivalents .............      1,399       4,499       2,723         329

Cash and cash equivalents at beginning of year ........     45,404      46,803      51,302       6,198
                                                           -------     -------     -------     -------

Cash and cash equivalents at end of year ..............     46,803      51,302      54,025       6,527
                                                           =======     =======     =======     =======
</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, 2001 of
Rmb8.2766 = 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 consolidated
financial statements.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

<Table>
<Caption>
                                                                                                               TOTAL
                                               SHAREHOLDERS'      ACCUMULATED         TRANSLATION      SHAREHOLDERS'
                                        NOTE          EQUITY          LOSSES          ADJUSTMENTS             EQUITY

                                                         RMB             RMB                  RMB                RMB
<S>                                               <C>            <C>                       <C>             <C>
Balance at December 31, 1998                         192,280        (120,721)                (119)            71,440

Net income                                                 -           3,281                    -              3,281
Purchase of own shares                   16           (4,529)              -                    -             (4,529)
Translation adjustment                                     -               -                   49                 49
                                               ---------------    ---------------    --------------    ----------------
Balance at December 31, 1999                         187,751        (117,440)                 (70)            70,241

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

Net loss                                                   -          (9,141)                   -             (9,141)
Purchase of own shares                   16              (18)              -                    -                (18)
                                               ---------------    ---------------    --------------    ----------------
Balance at December 31, 2001                         187,733        (125,141)                 (70)            62,522
                                               ===============    ===============    ==============    ================

                                                         US$             US$                  US$                US$

Balance at December 31, 2001                          22,682         (15,120)                  (8)             7,554
                                               ===============    ===============    ==============    ================
</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, 2001 of
Rmb8.2766 = 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 consolidated
financial statements.
<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. The consolidated financial statements
include the accounts of the Tramford and its subsidiaries (hereinafter
collectively referred to as the "Group").

         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 ("Cash Consideration"). 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 ("Share Consideration").
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 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 "PRC Subsidiaries" in these financial statements. The PRC subsidiaries
continue to engage in the provision of information technology and network
security consultancy services and the development of network security software
for the year ended December 31, 2001.

         The consolidated financial statements of the Group for the two year
ended December 31,1999 present the Disposed Subsidiaries as a discontinued
business segment in accordance with Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions". 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 Consideration and the fair value of 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 accounting principles generally accepted in the United States of
America ("US GAAP"), present the consolidated results of the operations of the
Group. All intercompany balances and transactions have been eliminated in the
consolidated financial statements of the Group.

         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 at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Accounting estimates have been employed in these financial statements to
determine reported amounts, including realizability 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 Group (see
also footnote 2(d)). Unless indicated otherwise, amounts in Renminbi have been
rounded to the nearest thousand.
<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 Group in the preparation of the financial statements.

(A)      REVENUES

         Revenues comprise product sales and rendering of services. Revenue is
generally recognized when all of the following criteria are met (i) persuasive
evidence of an arrangement exists; (ii) delivery has occurred or services have
been rendered; (iii) the sellers' price to the buyer is fixed or determinable,
and (iv) collectibility is reasonably assured. Specifically, product sales
represent the invoiced value of goods, net of discounts, supplied to customers.
Sales are recognized upon delivery to customers and when title has passed.
Rendering of services represent fees charged on the provision of information
technology and network security consultancy services. Fees on such services are
recognized 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 tax assets and liabilities
are recognized for the estimated future tax consequences attributable to
differences between the carrying amounts of existing assets and liabilities in
the financial statements and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. 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 Group is engaged in the provision of information technology and
network security services to a wide range of industries and end users within the
PRC. All the Group's revenue is derived from sales to Chinese customers.
Accordingly, the Group's trade accounts receivable are concentrated with respect
to geography. The Group performs ongoing credit evaluations of its customers and
generally does not require collateral.

(D)      FOREIGN CURRENCY TRANSACTION GAINS AND LOSSES AND TRANSLATION OF
         FOREIGN CURRENCIES

         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.

         The functional currency of the PRC Subsidiaries was Renminbi. The
financial statements of the PRC Subsidiaries had therefore not required
translation in the preparation of the consolidated financial statements of the
Group.

         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.

(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:

<Table>
<S>                                                               <C>
         Motor vehicles.........................................  5 years
         Furniture, fixtures, office and computer equipment.....  3 years
         Leasehold improvements.................................  shorter of 3 years or over leased term
</Table>
<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)

(F)      INTANGIBLE ASSET

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

         During the year, after considering the current business environment and
the expected pattern of future economic benefit inflow from the intangible
asset, the Group revised its amortization period from five years to three years.
The revised estimate had been adopted prospectively from January 1, 2001 and
resulted in an increased amortization charge of Rmb 667 for the year.

(G)      SOFTWARE DEVELOPMENT COSTS

         Costs that are related to the conceptual formulation and design of
licensed programs are expensed as incurred. Capitalization of costs will happen
during the period when a technological feasibility of the licensed program is
established to the product is produced for general release to the market. The
annual amortization of the capitalized amounts is the greater of the amount
computed based on the estimated revenue distribution over the products'
revenue-producing lives, or the straight-line method, and is applied over
periods ranging up to two years commencing when the products are generally
released to the market. For year ended December 31, 2001, no amortization on
software development costs was charged against net income as the licensed
programs are still under development at the year end . The Group performs
periodic reviews to ensure that unamortized costs remain recoverable from future
revenue. The Group charges costs to support or service licensed programs against
net income as the costs are incurred.

(H)      GOODWILL

         Goodwill represents cost in excess of the fair value of net assets
acquired and was amortized on a straight-line basis over a period of twenty
years. During the year, after considering the current business environment and
the expected pattern of future economic benefit inflow from this goodwill, the
Group revised its amortization period to five years. The revised estimate had
been adopted prospectively from January 1, 2001 and resulted in an increased
amortization charge of Rmb 2,967 for the year.

(I)      IMPAIRMENT OF LONG-LIVED ASSETS

         The Group periodically evaluates the carrying value of its long-lived
assets, including property, plant and equipment, goodwill and intangible assets,
for impairment. The carrying value of a long-lived asset is considered impaired
by the Group 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.

(J)      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.

(K)      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. The Group had time deposits of
Rmb29,585 and Rmb30,450 as of December 31, 2000 and 2001 respectively.
<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)

(L)      SHORT-TERM INVESTMENTS

         The Group invests in highly liquid investments with maturity less than
one year, at the time of purchase that are considered to be short-term
investments. The carrying amount of the investments approximates fair value due
to their short maturity. The Group maintains cash and cash equivalents and
short-term investments with a related company and a PRC security firm. Periodic
evaluations are performed on the relative credit standing of these parties that
are considered in the Group's investment strategy.

(M)      MARKETABLE SECURITIES

         Marketable securities are defined as securities available-for-sale
under the provisions of Statement of Financial Accounting Standards ("SFAS") No.
115 "Accounting for Certain Investments in Debt and Equity Securities".
Marketable securities are carried at fair value, with unrealized gains and
losses, if any, reported, net of tax, in other comprehensive income until
realized.

(N)      EARNINGS PER SHARE

         The Group 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 EPS, which
is based on the weighted-average number of common shares outstanding, and
diluted EPS, which is based on the weighted-average number of common shares
outstanding plus all potential dilutive common shares outstanding.

(O)      STOCK OPTIONS

         The Group 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 recognized.

(P)      RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the FASB issued SFAS No. 141, " Business Combinations",
and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires
the use of the purchase method of accounting and prohibits the use of the
pooling-of-interests method of accounting for business combinations initiated
after June 30, 2001. SFAS No. 141 also requires that the Group recognized
acquired intangible assets apart from goodwill if the acquired intangible assets
meet certain criteria. SFAS No. 141 applies to all business combinations
initiated after June 30, 2001 and for purchase business combinations completed
on or after July 1, 2001. It also requires, upon adoption of SFAS No. 142, that
the Group reclassifies the carrying amounts of intangible assets and goodwill
based on the criteria in SFAS No. 141.

         SFAS No. 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill impairment at least annually. In
addition, SFAS No. 142 requires that the Group identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS No. 142. SFAS No. 142 is required to be
applied in fiscal years beginning after December 31, 2001 to all goodwill and
other intangible assets recognized at that date, regardless of when those assets
were initially recognized. SFAS No. 142 requires that the Group complete a
transitional goodwill impairment test six months from the date of adoption. Upon
adoption of SFAS No.142, anticipated undiscounted cash flow attributable to the
intangible asset and the goodwill will be reviewed to assess whether there are
any impairment losses.

         In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations". SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation to be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002. The Group is currently assessing the effect that adoption
of SFAS No. 143 will have on its financial position and results of operations.
<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)

(P)      RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", but retains its fundamental provisions for
recognizing and measuring impairment of long-lived assets to be held and used.
SFAS No. 144 standardizes the accounting and presentation requirements for all
long-lived assets to be disposed of by sale, superceding previous guidance for
discontinued operations of business segments. It requires that all long-lived
assets to be disposed of by sale are carried at the lower of carrying amount or
fair value less cost to sell, and that depreciation should cease to be recorded
on such assets. This standard is effective for fiscal years beginning after
December 15, 2001. The Group anticipates that implementation of SFAS No. 144
will have no immediate impact on its financial statements.

         In April 2002, the FASB issued SFAS No. 145, "Rescission of FAS Nos. 4,
44, and 64, Amendment of FAS 13, and Technical Corrections as of April 2002".
This Statement rescinds FASB Statement No. 4, "Reporting Gains and Losses from
Extinguishment of Debt", and an amendment of that Statement, FASB Statement No.
64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". This
Statement also rescinds FASB Statement No. 44, "Accounting for Intangible Assets
of Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. The provisions of this Statement related to the rescission of
Statement 4 shall be applied in fiscal years beginning after May 15, 2002 with
early application encouraged.

         The directors do not expect a material impact on the financial
statements upon adoption of the above pronouncements.

(q)      Comparative figures

         Certain comparative figures have been reclassified or extended to
comply with current year's presentation.

3        BUSINESS ACQUISITION

         As discussed in Note 1, Tramford acquired controlling interests in the
Newly Acquired Subsidiaries on July 1, 2000. 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 costs 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 a period of anticipated
economic benefit inflow.

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

<Table>
<Caption>
                                            Years ended December 31,
                                           ---------------------------
                                                 1999             2000
                                           ------------     ----------
                                                  Rmb              Rmb
<S>                                            <C>              <C>
         Net sales                             11,865           23,585
         Net (loss)/income                     (1,223)           1,822
         (Loss)/earnings per share              (0.15)            0.26
</Table>

         The 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 future results of operations of the consolidated entities.
<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,
                                                          -----------------------------------------------
                                                                1999             2000             2001
                                                          ------------     ------------     -------------
                                                                 Rmb              Rmb              Rmb
<S>                                                           <C>              <C>              <C>
           Realized gains on marketable securities                 -              300            1,242
           Bank interest                                       2,654            3,066            1,286
           Other                                                 208                7               27
                                                          ------------     ------------     -------------
                                                               2,862            3,373            2,555
                                                          ============     ============     =============
</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
holiday and therefore no PRC income tax has been provided for. Tax credit from
these PRC subsidiaries can be carried forward for 5 years. As the realization of
the current tax credit after the tax holiday period is uncertain, full valuation
allowances against deferred tax assets as at December 31, 2001 has been
provided.

6        DISCONTINUED OPERATIONS

(i)      Loss from operations of Disposed Subsidiaries for the period prior to
         the date of disposal is analyzed as follows:-

<Table>
<Caption>
                                                                      Year ended December 31,
                                                          -----------------------------------------------
                                                              1999             2000             2001
                                                          ------------     ------------     -------------
                                                               Rmb              Rmb              Rmb
<S>                                                          <C>                  <C>             <C>
           Net Sales                                          19,225                -                -
           Loss before and after income tax provision        (14,875)               -                -
</Table>

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

<Table>
<Caption>
                                                            As at
                                                          July 2, 1999

                                                              Rmb
<S>                                                         <C>
           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>
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

7        PREPAID EXPENSES AND OTHER ASSETS

         Prepaid expenses and other assets consisted of the following:

<Table>
<Caption>
                                                                                   December 31,       December 31,
                                                                                           2000               2001
                                                                                            Rmb                Rmb
<S>                                                                                       <C>                <C>
           Rental and utility deposits                                                      542                781
           Prepayment for inventories                                                       685                962
           Others                                                                           245                467
                                                                                  ---------------    ---------------
                                                                                          1,472              2,210
                                                                                  ===============    ===============
</Table>

8        PROPERTY, PLANT AND EQUIPMENT, NET

<Table>
<Caption>
                                                                                   December 31,       December 31,
                                                                                           2000               2001
                                                                                            Rmb                Rmb
<S>                                                                                     <C>                <C>
           Leasehold improvements                                                           805                805
           Computer equipment                                                             2,493              2,596
           Furniture, fixtures and office equipment                                       1,418              1,429
           Motor vehicles                                                                   107                107
           Less: accumulated depreciation                                                (2,240)            (3,373)
                                                                                  ---------------    ---------------
                                                                                          2,583              1,564
                                                                                  ===============    ===============
</Table>

         No depreciation was incurred for the year ended December 31, 1999.
Depreciation for the year ended December 31, 2000 and 2001 amounted to Rmb432
and Rmb1,133 respectively.

9        INTANGIBLE ASSET

<Table>
<Caption>
                                                                                   December 31,       December 31,
                                                                                           2000               2001
                                                                                            Rmb                Rmb
<S>                                                                                       <C>                <C>
           Acquisition of network security and server switch technology                   4,000              4,000

           Less: amortization                                                              (200)            (1,667)
                                                                                  ---------------    ---------------
                                                                                          3,800              2,333
                                                                                  ===============    ===============
</Table>

         No amortization was incurred for the year ended December 31, 1999.
Amortization for the year ended December 31, 2000 and 2001 amounted to Rmb200
and Rmb1,467 respectively.

10       GOODWILL

<Table>
<Caption>
                                                                                   December 31,       December 31,
                                                                                           2000               2001
                                                                                            Rmb                Rmb
<S>                                                                                      <C>                <C>
           Arising from acquisitions of subsidiaries (note 13)                           16,951             16,951

           Less: amortization                                                              (141)            (3,955)
                                                                                  ---------------    ---------------
                                                                                         16,810             12,996
                                                                                  ===============    ===============
</Table>

         No amortization was incurred for the year ended December 31, 1999.
Amortization for the year ended December 31, 2000 and 2001 amounted to Rmb141
and Rmb3,814 respectively.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

11       OTHER LIABILITIES AND ACCRUED EXPENSES

<Table>
<Caption>
                                                                                   December 31,       December 31,
                                                                                           2000               2001
                                                                                            Rmb                Rmb
<S>                                                                                     <C>                <C>
           Consideration payable on the acquisition of the PRC Subsidiaries              18,964             18,964
             (note 13)
           Accrued professional fees                                                      1,397              1,172
           Temporary receipt                                                              1,191                819
           Accrued salaries and staff benefits                                            1,316              1,472
           Others                                                                         3,906              4,711
                                                                                  ---------------    ---------------
                                                                                         26,774             27,138
                                                                                  ===============    ===============
</Table>

12       (LOSS)/EARNINGS PER SHARE

<Table>
<Caption>
                                                                                Year ended December 31,
                                                                      ---------------------------------------------
                                                                            1999             2000             2001
                                                                      ------------     ------------     -----------
                                                                             Rmb              Rmb              Rmb
<S>                                                                       <C>              <C>             <C>
           Income/(loss) available to common shareholders:                 3,281            1,440           (9,141)
                                                                      ============     ============     ===========

           Weighted-average shares used in computing basic and
           diluted                                                         7,906            6,906            6,902
             earnings per share
                                                                      ============     ============     ===========

           (Loss)/earnings per share from continuing operations
              - Basic                                                      (0.23)            0.21            (1.32)
                                                                      ============     ============     ===========

           Earnings per share from discontinued operations
              - Basic                                                       0.65              N/A              N/A
                                                                      ============     ============     ===========
</Table>

         In 1999, 2000 and 2001, exercise of the warrants and stock options
would have been antidilutive and, therefore, was not considered in the
computation of diluted earnings per share.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

13       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 summarizes non-cash investing and
financing activities related to this acquisition:

<Table>
<Caption>
                                                                      Year ended
                                                                    December 31,
                                                                            2000
                                                                             Rmb
<S>                                                                      <C>
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 10)                                16,951
                                                                        -------
Cash consideration payable (note 11)                                     18,964
                                                                        =======

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

14       RELATED PARTY TRANSACTIONS

         The transactions and balances with related parties are analyzed as
follows:-

<Table>
<Caption>
                                                           Year ended December 31,
                                                -----------------------------------------------
                                                      1999             2000             2001
                                                ------------     ------------     -------------
                                                       Rmb              Rmb              Rmb
<S>                                                 <C>              <C>              <C>
           TRANSACTIONS WITH RELATED PARTIES

               Sales                                     -            8,265            6,598
             Purchase of technology (note 9)             -            4,000                -
             Interest income                             -              433                -
             Rental income                              46                -                -
             Rental expense                            196              267              248
             Service fee                                 -                -              142
</Table>

<Table>
<Caption>
                                                   December 31,    December 31,
                                                           2000            2001
                                                            Rmb             Rmb
<S>                                                     <C>              <C>
           BALANCES WITH RELATED PARTIES

             Funds held in trust by a related
               company as short-term investments         20,523              868
             Due from related companies                   5,096            4,596
             Due from fellow subsidiaries                 2,143              225
             Due to a related company                       321              321
</Table>

         Apart from sales to a related company of Rmb6,598 (2000: Rmb5,374) and
the purchase of technology from a minority shareholder in 2000, substantially
all related party transactions are entered into with fellow subsidiaries of the
Group. The balances with related parties are unsecured and interest-free, and
have no fixed terms of repayment.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

15       RETIREMENT PLANS

         As stipulated by the regulations of PRC, the PRC 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 and Rmb272 for the years 2000 and
2001. The PRC Subsidiaries have no obligation for the payment of pension
benefits beyond the annual contributions described above. The Group did not
participate in any retirement plan in the year 1999.

16       MOVEMENT IN SHARE CAPITAL

         Changes in share capital of Tramford are analyzed as follows:

<Table>
<Caption>
                                                     Common Stock
                                               --------------------------
                                                                             Additional
                                                  No. of          (par         paid-in
                                       Ref        shares         US$0.01)      capital        Warrants        Total
                                      -----    ------------    ----------    -----------     ----------    ----------
                                                                   Rmb           Rmb             Rmb           Rmb
<S>                                            <C>                 <C>        <C>              <C>         <C>
           January 1, 1999                     8,906,188            741        188,628          2,911       192,280
           Purchase of own shares     (c)      (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
                                               ============    ==========    ===========     ==========    ==========

           January 1, 2001                     6,905,797            575        184,265          2,911       187,751
           Purchase of own shares     (d)        (10,100)            (1)           (17)             -           (18)
           Expiration of warrants     (e)              -              -          2,911         (2,911)            -
                                               ------------    ----------    -----------     ----------    ----------

           December 31, 2001                   6,895,697            574        187,159              -       187,733
                                               ============    ==========    ===========     ==========    ==========
</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 Group. 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. No other options were
issued, exercised, forfeited or expired under this stock option plan for the
year ended December 31, 2000 and 2001. In addition, the Company has authorized
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, 1999, 2000 and 2001 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 recognized.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

16       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 Group 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 amortized to expense over the options' vesting period. The pro forma
information of the Group is as follows:

<Table>
<Caption>
                                             December 31,   December 31,     December 31,
                                                     1999           2000             2001
                                                      Rmb            Rmb              Rmb
<S>                                                 <C>            <C>             <C>
           Net income/(loss)

           As reported                              3,281          1,440           (9,141)
           Pro forma                                2,561          1,440           (9,141)

           Basic earnings/(loss) per share

           As reported                               0.42           0.21            (1.32)
           Pro forma                                 0.32           0.21            (1.32)
</Table>

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

         (c) 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 Share Consideration for the
disposal of Jolly Mind (note 1). The shares repurchased will be reserved as
treasury stocks.

         (d) For the year ended December 31, 2001, a total of 10,100 shares of
Common Stock were repurchased at an average price of US$0.20 per share.

         (e) All warrants issued by the Company were expired during the year.
<Page>

                 TRAMFORD INTERNATIONAL LIMITED AND SUBSIDIARIES
                       NOTES TO THESE FINANCIAL STATEMENTS

            (AMOUNTS EXPRESSED IN THOUSANDS, UNLESS OTHERWISE STATED)

17       CONTINGENCIES AND COMMITMENTS

         The Group had no material contingencies as at December 31, 2001. As of
December 31, 2001, the aggregate future minimum lease payments under all
non-cancelable operating lease are as follows:

<Table>
<Caption>
                                                                  December 31,
                                                                          2001
                                                                           Rmb
<S>                                                                        <C>
           Year ending December 31,
           2002                                                            924
                                                                  ============
</Table>

         Lease rental costs incurred by the Group for the year ended December
31, 1999, 2000 and 2001 amounted to Rmb196, Rmb1,121 and Rmb2,014 respectively.

         As of December 31, 2001, the Group had commitments to acquire a
commercial property on behalf of a related party from a third party for an
aggregate consideration of Rmb773 of which Rmb300 had been paid as deposit. The
deposit is classified as prepaid expenses and other assets in the financial
statements.

18       SEGMENT INFORMATION

         Segments were determined based on products and services provided by
each segment. Accounting policies of the segments are the same as those
described in the summary of significant accounting policies. Segment performance
is evaluated based on profit or loss from operations before interest, other
income/expense and taxes. Product sales constitute the sale of network security
softwares and devices. Rendering of services represents the provision of
information technology services. The Group's operations have been classified
into two business segments: product sales and rendering of services. Summarized
financial information by business segment for 2001 and 2000 is as follows:

<Table>
<Caption>
                                                       Operating              Net      Depreciation
                                                         profit/       identifiable             and          Capital
                                           Revenue        (loss)           assets      amortization      expenditures
                                         ----------    ------------    ------------    --------------    -------------
                                               Rmb           Rmb              Rmb               Rmb              Rmb
<S>                                       <C>            <C>             <C>                 <C>               <C>
           Year 2001
           Product sales                       707        (6,330)          13,443             2,238               97
           Rendering of services             6,598          (610)           5,024               362               16
                                         ----------    ------------    ------------    --------------    -------------
           Total operating segments          7,305        (6,940)          18,467             2,600              113
           Corporate                             -        (2,201)          34,098             3,814                -
                                         ----------    ------------    ------------    --------------    -------------
           Group                             7,305        (9,141)          52,565             6,414              113
                                         ==========    ============    ============    ==============    =============

           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 Group did not operate in distinguishable segments for the
continuing operations during the years ended December 31, 1999.
<Page>

                                   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 28, 2002                 /s/ Michael Siu
                                    --------------------------------------------
                                    Name:  Michael Siu
                                    Title: Chief Financial Officer and Secretary