DF China Technology Completes the Merger with DICHAIN Software HONG KONG, May 26 /Xinhua-PRNewswire-FirstCall/ -- DF China Technology, Inc. (BULLETIN BOARD: DFCT) today announced that the Company has completed the merger transaction with DICHAIN Software by the acquiring the entire issued share capital of DICHAIN Software. The merger transaction was approved by shareholders at the shareholders' meeting held on March 25, 2004. The merger transaction was closed on May 25, 2004 and has become effective despite of the trading of DFCT's stock on the OTCBB yesterday. 'We will file the initial listing application for this newly merged company for Nasdaq SmallCap market within next few days. We think the newly merged company has met all the initial listing requirements for Nasdaq SmallCap market,' stated Dr. Frank Fan, Chairman and Chief Executive Officer of DF China Technology. In a press interview in Hong Kong, Dr. Frank Fan said, 'Since May 2003, the new board and the management have made tremendous effort to maintain the Company's listing status by improving its business performance and increasing its equity. In February 2004, the Company raised US$4.5 million through a private placement to finance the on-going operations and to meet the minimum equity requirement for the continuing listing in NASDAQ. The management have been disclosing more information about the Company than ever before to the public.' When explaining the cause of the delisting, Dr. Fan said, 'When preparing the proxy card for voting the share placement resolution last December, the Company's legal counsel made a technical mistake of not including one of five required information items for the voting disclosure. Nasdaq Qualification Department examined the proxy statement and told us that due to this one missing item, US$4.3 million raised based on the proxy vote cannot be accounted as its equity for meeting the minimum equity requirement for continuous listing.' Dr. Fan further stated that 'the management made its best effort to remedy the problem including NASDAQ live hearing and seeking re-vote on the proxy with full disclosure. Unfortunately the Hearing Panel was not in favor to our appeal.' When asked about the future of the new company, Dr. Fan stated despite of delisting from Nasdaq, financially and operationally the Company is much stronger than before. The major shareholders, DICHAIN Holdings and China Merchants Group, will continue to support the Company's business development. In the latest audited financial report by Deloitte Touche Tohmatsu based on U.S. GAAP, DICHAIN Software reported US$4.17 million in revenue and US$1.75 million in net profit. The shareholders' equity value of DICHAIN Software for 2003 is US$16.55 million. About DICHAIN Software DICHAIN Software is a leading IT Application Solution Provider for supply chain management in China. The Company is ranked in top tier by IDC among SAP, Oracle, EXE in China market. DICHAIN Software's DAP platform and solutions have been successfully implemented over 300 clients in China and Hong Kong. The Company's new E-Commerce platform is also showing a very strong customer response both in China and U.S. Forward-Looking Statement Disclosure With the exception of historical matters, the matters discussed in this news release are forward-looking statements that involve risks and uncertainty. Forward-looking statements include, but are not limited to, statements relating to the delisting of the Company's stock from Nasdaq, closing of the Company's transaction with DICHAIN Software, development and sales of the Company's products, expected trends and growth in the Company's results of operations, projections concerning the Company's available cash flow and liquidity, anticipated penetration in new and existing markets for the Company's products and the size of such markets, anticipated acceptance of the Company's products by existing and new customers, the ability of the Company to achieve or sustain any growth in sales and revenue and the increase in sales representatives and other personnel. The Company's actual results could differ from such forward-looking statements. There can be no assurance that the Company will achieve the results set forth herein. For further information, please contact: Aaron Zhu, Executive Director and Chief Financial Officer, DF China Technology Tel: +852-2255-0688 DATASOURCE: DF China Technology, Inc. CONTACT: Aaron Zhu of DF China Technology, +852-2255-0688

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