Further, on April 5, 2004, Dr. Tsui, Shenzhen Wonderland Communication Science & Technology Company Limited ("Wondial"), a subsidiary of SKI, and a PRC bank signed an assignment agreement making Wondial the obligor of debt amounting to RMB200 million (approximately US$25 million), which Dr. Tsui personally owed to a PRC bank. Accordingly, subsequent to April 5, 2004, Wondial owed the bank RMB200 million. Moores Rowland contends that the assignment occurred before Wondial was seized by the Chinese government on April 27, 2004, which would have been a violation of the Sarbanes-Oxley Act as a related-party transaction had the closing of the SKI Disposal occurred after the April 5, 2004 Assignment. However, the Company maintains that the transaction did not occur in that manner. It is the Company's position that SKI and, accordingly, Wondial, was disposed of on March 29, 2004 in the sale to Dr. Tsui and not as a result of the April 27, 2004 bankruptcy seizure as alleged by Moores Rowland. Since the April 5, 2004 Assignment and Wondial Bankruptcy Order occurred after the effective date of the SKI Disposal, it is the Company's position that any transaction between Dr. Kit Tsui and Wondial subsequent to that date would not be deemed a related party transaction.

     Finally, Moores Rowland stated that it was unable to complete its review of the March 31, 2004 Form 10-Q Quarterly Report because it was unable to examine a full set of accounting books and records of Wondial for the three months ended March 31, 2004. Such information with respect to the finances and accounting of Wondial had not been provided to Moores Rowland because Wondial's documents had been seized and its offices closed by the Shenzhen Intermediate People's Court pursuant to a Bankruptcy Order on April 27, 2004. Moores Rowland noted in its correspondence to the Company that it did not fully review the March 31, 2004 Form 10-Q Quarterly Report and did not have adequate information about Wondial's operations for the three months ended March 31, 2004. The Company believes that Moores Rowland did have access to this information prior to its seizure. Nevertheless, Moores Rowland believes these issues were not addressed to its satisfaction.

     Information may have come to the attention of Moores Rowland that could, if further investigated, materially impact the fairness, reliability or presentation of the financial statements issued subsequent to the date of the December 31, 2003 audited financial statements. However, because of Moores Rowland's resignation, it was not able to conduct a further investigation. Moores Rowland, in correspondence dated May 14, 2004, advised the Company to file a notice of late filing and cautioned directors not to file the March 31, 2004 Form 10-Q Quarterly Report until its review was complete. Moreover, on May 18, 2004, Moores Rowland advised directors of the Company to (i) file an amendment to the March 31, 2004 Form 10-Q Quarterly Report to notify the Securities and Exchange Commission that a full accounting review had not been completed, (ii) obtain legal advice as to that issue, and (iii) attend to any unresolved matters. The Company maintains that it received correspondence from Moores Rowland indicating that it did review the financial statements contained in the March 31, 2004 Form 10-Q Quarterly Report. The Company is investigating these matters further and will continue to disclose any further information as it arises.