Q9 Technology Announced 2001 Annual 3Q Results

Turnover Achieved A Satisfactory Growth of 20.1%

 

**Pursue Business Opportunities to Tap the PRC Market Potential**

 

(March 22, 2002, HONG KONG) ¡V Q9 Technology Holdings Limited ('Q9', the 'Company', together with its subsidiaries, the 'Group'; stock code: 8129) announced today its annual results for the year ended December 31, 2001. During the period under review, turnover surged by 20.1%, or approximately HK$1.35 million, and amounted to HK$8.047 million.

 

The growth in turnover was mainly attributable to the increase in sales of the Q9 CIS software in the Hong Kong market, which increased by HK$2 million, representing an increase of 38% from the previous year. Such an increase helped offset the drop in sales of Qcode CIS, third party software and computer accessories.

 

Q9¡¦s effort to introduce its Q9 CIS to the Hong Kong market was reflected during the year under review. The Company sold Q9 CIS directly to about 500 schools and universities, over 350 corporations and non-profit organizations, and about 30 Government departments in Hong Kong. It is evident that no other numeric keypad-based Chinese input system has ever achieved such an extensive user base in Hong Kong.

 

During the year, the Company implemented successful market penetration strategies in Hong Kong and launched its Q9 CIS through various channels in the PRC.

 

First of all, Q9 formed a wholly owned subsidiary and established an office in Shenzhen, the PRC in September 2001, and set up a liaison office in Guangzhou, the PRC. In addition, the Company appointed the distribution company of the Guangzhou Daily Group to distribute and promote its Q9 CIS. Guangzhou Daily Group is one of the largest media groups in the PRC and has an extensive distribution network in Guangzhou and other cities in the Guangdong province. By the end of the year, Q9 CIS was distributed through over 80 shops in Shenzhen and over 200 distribution points in the Guangdong province.

 

Secondly, Q9 launched a promotional licensing program for the computer installation of Q9 CIS in primary and secondary schools in the PRC, starting from the Guangdong province. As of year-end, Q9 CIS was installed in more than 400 schools to benefit over 400,000 students in total. Moreover, along with continuous marketing and promotional efforts from distributors in the PRC, Q9 CIS was recommended to the Education Department in Shangdong, which is considering to include Q9 CIS in the school curriculum.

 

Another effective method to reach consumers is to license the Q9 CIS to electronic device manufacturers. The Company has signed agreements with both TCL and Nokia and embedded its Q9 CIS into mobile phones. The launch of such products is scheduled for March and April 2002. The Company also signed licensing agreements with five other PRC-based mobile phone manufacturers and one leading mobile phone manufacturer, as well as non¡Vdisclosure agreements with six international and seven PRC-, Taiwan- or Hong Kong-based mobile phone manufacturers. Last but not least, the Group also signed licensing agreements with two PRC-based desktop phone manufacturers and non-disclosure agreements with two other PRC-based desktop phone manufacturers.

 

Mr Mark Leung, Chairman of Q9, said, 'For 2002, the Company will focus its efforts on establishing Q9 CIS as the industry standard in Hong Kong, and to replicate its success and popularity in Hong Kong to penetrate the end user markets and OEM markets in China and Taiwan.'

 

In the future, the Group will target its marketing and promotional activities to reach the mass market through cost effective means. The Company signed an MOU with a wholly owned subsidiary of Xinhua News Agency (¡¥Xinhua¡¦) to form a joint venture in Beijing, the PRC. Xinhua will be responsible for introducing Q9 CIS to various government departments and education departments in the PRC, as well as private business enterprises to assist the establishment of Q9 CIS as a de facto Chinese input standard. Furthermore, the Company intends to enter a share purchase agreement with its Taiwan distributor to penetrate the OEM manufacturers and the end user markets in Taiwan. To date, the Taiwanese distributor has already successfully signed NDAs with 2 international mobile manufacturers.
The Company will continue to dedicate efforts on the research and development of new products, to work closely with OEM customers to define features and user requirements on CIS for other languages and to apply the matrix mapping system on different electronic devices.

 

Commenting on the future development of Q9, Mr. Leung concluded, 'We believe Q9 CIS will become the standard Chinese CIS in the Greater China region in the foreseeable future. We will continue to maintain our business focus and progress in penetrating the Greater China markets, and to establish Q9 CIS as the de facto standard for all Chinese. Management will maintain its business focus and marketing thrust in the most cost effective manner, and strive to achieve profitability and create positive values for the shareholders within the shortest time.'