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GENERAL OVERVIEW OF THE GROUP
HISTORY AND DEVELOPMENT
Mr. Lok, the founder of the Group, commenced his career in the development of system software in the 1980s and was subsequently engaged in the development and sale of customized systemsoftware in Hong Kong. In 1986, recognising the huge market potential for enterprise application software, he started to concentrate his efforts on the development of such category of applicationsoftware. In 1987, Mr. Lok established FlexSystem Limited for the development and provision ofenterprise application software. The Group’s first series of enterprise application software waslaunched under the “FlexAccount” brandname within the same year. In 1988, an enhanced version ofthe FlexAccount products was released.
In 1990, the Group adopted an object-oriented programming technology for the purpose of building applications based on reusable objects or components. The Directors believe that suchadoption allowed the Group to greatly reduce its development and maintenance costs of applicationsoftware as compared to using traditional programming methods. Based on this programming concept,the Group re-designed and re-organized various modules of the FlexAccount products for enhancedperformance. In 1996, “FlexAccount for Windows” was launched as a result of the Group’s efforts inadapting the FlexAccount products for the Windows environment.
In early 1997, the Group extended its business to the PRC by setting up a subsidiary in Shanghai and commenced the localisation of FlexAccount products for the PRC market. The Shanghai officeprovides sales and marketing, programming, research and development, customer support and qualitycontrol services. In the same year, the Group’s finance and accounting application software wascertified by the Shanghai Municipal Finance Bureau to be in compliance with the accounting standardsin the PRC and for its capability to fulfil the requirements of various PRC government units.
In 1997, the Group, in collaboration with SiTech, developed and launched SiTechFlex, an Internet-based workflow and accounting software package. The Directors believe that the result ofsuch co-operation represented a technological breakthrough for the Group and for the PRC market atthat time. Based on the experience gained in developing SiTechFlex, the Group commenced researchin developing its own Internet enabling technology, which subsequently led to the development ofSoma*AI. During the same year, another upgraded version of FlexAccount products was also releasedto the market.
The Group’s second research and development center, which focuses on object-based development, was set up in Macau in February 1999. This arrangement enables the Group tostrengthen its research and development capabilities and exploit the relatively lower operating costenvironment in Macau. Object-based development refers to the design and development of basiccomponents to be used as building blocks for construction of application software.
During the first half of 1999, the Group completed development of its own Internet enabling technology — “N-Terprise Server” which was later renamed as “Soma*AI”. In the same year, theGroup developed its ASP model by deploying FlexAccount products on the Internet using theSoma*AI technology.
In April 1999, the Group entered into a distribution agreement with Beijing Winner for the distribution of FlexAccount products in Beijing. The Directors believe that such alliance was animportant milestone for the Group’s expansion into the PRC market as Beijing Winner was one of the GENERAL OVERVIEW OF THE GROUP
leading software houses in Beijing and its established distribution network would facilitate theintroduction of FlexAccount products into the PRC market. In addition, the Group strengthened itsdistribution network in the PRC by establishing distribution channels in Beijing in early 1999 tocoordinate sales activities in the respective areas.
In early 2000, three additional distribution channels for the FlexAccount products were set up The Group first tapped into the ASP market in March 2000 by launching the FlexAccount Data Center. This service allows users to outsource application deployment and IT infrastructure by meansof subscribing to a wide range of application software developed by the Group via the Internet.
The Company was incorporated on 8th May, 2000 and became the holding company of the Group pursuant to the group reorganisation exercise which is described in the section headed “Corporatereorganisation” in Appendix IV to this prospectus.
The Group is currently preparing for the establishment of another new research and development centre in Malaysia. This set up is expected to further the Group’s research and development effortswhile allowing it to take advantage of the relatively low operating cost environment in Malaysia.
STATEMENT OF ACTIVE BUSINESS PURSUITS
The following is a statement of active business pursuits of the Group for the two years ended 31st March 2000 and for the period from 1st April, 2000 to the Latest Practicable Date: For the year ended 31st March, 1999
Launched the Group’s official homepage (www.flexsystem.com) which provides corporateinformation about the Group and brief descriptions of the products and services of theGroup Set up implementation team (comprising 13 members as at the Latest Practicable Date) toprovide additional advisory services customers relating to the implementation ofFlexAccount products as part of a complete enterprise solution Set up distribution channel in Beijing by appointing distributors in the northern parts of thePRC to complement marketing efforts of the Group’s Shanghai office Set up research and development center in Macau with a focus on object based developmentwhich relates to the design and development of basic components to be used as buildingblocks for construction of an application software Completed the development of SiTechFlex, an Internet-based workflow and accountingsoftware package GENERAL OVERVIEW OF THE GROUP
Commenced the development of Soma*AI, the Group’s proprietary Internet enablingtechnology Continued the development of the infrastructure for the FlexAccount Data Center Ranked as the foreign finance software house with the largest number of installationsapproved by the Shanghai Municipal Finance Bureau in 1998 For the year ended 31st March, 2000
Commenced sales and marketing activities including advertisements in various media andparticipation in trade shows and exhibition, to promote its ASP services in Hong Kong Set up distribution channels and appointed additional distributors for sales activities inGuangzhou, Dalian and Changshu Completed the development of its proprietary Internet enabling technology, Soma*AI Integrated existing FlexAccount products with the FlexAccount Data Center and studied thepotential for other applications to be deployed via the FlexAccount Data Center Prepared for the establishment of a new research and development center in Malaysia forbusiness logic development, which relates to the design and integration of functions whichcan execute rules for business logic into software products Formed a distribution alliance with Beijing Winner, a software house for distributingFlexAccount products in Beijing Selected by JETRO as one of the twelve Hong Kong companies to exhibit their products atthe annual World PC EXPO 2000 to be held in Japan in October 2000 For the period from 1st April, 2000 to the Latest Practicable Date
Continued to focus on sales and marketing activities for FlexAccount Data Center in HongKong Set up distribution channel in Changshu to coordinate sales activities GENERAL OVERVIEW OF THE GROUP
Set up a branch office in Taiwan for coordinating sales and marketing of the FlexAccountproducts and preparation for the expansion of FlexAccount Data Center to the Taiwanmarket Increased the number of sales and marking personnel in Hong Kong and the PRC to 33 Liaised with potential business partners with a view to facilitating the introduction of theservices of FlexAccount Data Center in Hong Kong, the PRC, Taiwan, Malaysia andSingapore and entered into letters of intent with various partners for ASP services in HongKong, the PRC and Taiwan. For details of these alliances, please refer to the paragraphheaded “Strategic alliance” on pages 62 to 64 Completed the initial phase of integration of FlexAccount products (including accounting,distribution and logistics, manufacturing, payroll, human resources management, onlinepoint-of-sales and online stock brokerage) with Soma*AI Completed the development of the infrastructure for FlexAccount Data Center Completed the prototype of an enhanced version of the FlexAccount Financial ManagementSystem and continued to fine-tune its functionality, which offers more options in reporting,new inquiry functions and more powerful consolidation functions Continued to improve its efficiency and performance of one of the FlexAccount products- FlexAccount Financial Information ON-line by increasing its data retrieval speed by fivetimes Commenced the operation of the research and development center in Macau Continued to prepare for the establishment of a research and development center forbusiness logic development in Malaysia Commenced the localization of the FlexAccount products for Taiwan Submitted applications to register its trademarks for “FLEXSYSTEM & device” in HongKong Submitted applications to register its trademarks for “Soma*AI” in Hong Kong, the PRC,Taiwan, Malaysia and Singapore Submitted applications to register its trademarks for “FlexAccount” in the PRC, Taiwan,Malaysia and Singapore Submitted application to register its trademark for “FION” for FlexAccount FinancialInformation ON-line software in Hong Kong GENERAL OVERVIEW OF THE GROUP
Recognized by the Shanghai Municipal Finance Bureau, SCSTDC and SSBA as the only Hong Kong-based finance and accounting software company in Shanghai Certified by NSTC in recognition of the high standards of the technological capabilities of GROUP STRUCTURE
The structure of the Company’s principal subsidiaries upon the listing of the Shares on GEM and their respective places of incorporation and principal activities are as follows: The Company
SomaFlex
International Inc.
Soma Software
Millenium Magic
FlexPro Limited
FlexSystem Limited
Services Ltd.
FlexSystem
Flex System
Software Limited
(Shanghai) Co. Ltd.

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