The Reverse Merger Process

The Fastest Lowest Cost Highest Valuation and Most Liquid ... ...Process for going public

Prepared April, 2004

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Presentation Liability Statement

Liability Statement: This proposal has been assembled based upon information provided by the MacLellan Group, Inc., TriPoint Capital Advisors, LLC and Amaroq Capital, LLC. Significant work product and intellectual property held by these three firms is disclosed in this presentation and any of their advisors, affiliates, subsidiaries, subcontractors and or its contents are subject to an acknowledged confidentiality, nondisclosure and non-circumvention agreement. Any use of the information enclosed without the written permission of and compensation to the MacLellan Group, Inc., TriPoint Capital Advisors, LLC and Amaroq Capital, LLC. will be considered a significant breach of this acknowledged confidentiality, nondisclosure and non-circumvention agreement. In the event of a breach, the firms named above may together or separately seek fines, penalties, damages remedies and relief in U.S. Federal or state courts where they are organized.

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Why Complete an RTO?

Increase your Companys ability to raise capital Expands the scope of your Investor base; Provides a liquidity path for your shareholders and creates the opportunity for greater diversification of shareholder wealth; Private equity investors are difficult to attract to the your Company as long as it is private; A typical IPO is extremely difficult for smaller companies (under 100M in revenues); Typical small-cap IPO cost averages up to US$1-3 million in expenses and professional fees, plus commissions on the capital that is raised; The RTO process for a small-cap company typically runs approximately US$350,000 in fees and expenses, plus approximately 12-15 percent of the shares issued; and

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Market Comparisons
US Liquidity Valuation Capital Regulatory Fees Partners Transparency Acquisitions Timing $$$$$ 20x - 25x $$$$$ $$$$ $350-500,000 $$$$ $$$$$ $$$$$ $$$$ HK $$ 10x $$ $ $1.1m - $1.5m $$$ $ $$ $$ Singapore $$ 10x - 12x $$ $ $1.4m $$ $$ $$ $$ China $ 25x - 40x $ $ $2.2m $ $ $ $

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Our Reverse Merger Approach

Members of our team have advised and been actively involved in numerous reverse mergers over the past 11 years Our RTO process relies on a team of professionals possessing the required talents in critical areas of the transaction. These specialized areas include:

Transaction management Contract & SEC legal work, Target shell company sourcing, Investor relations, Business planning, research Investment banking / capital raising

We assumes an role on the Board of Directors and actively promotes the strategic vision of the Company. We typically focuses on 2-3 transactions per year. One such success in 2003 was AXM Pharma currently operating with a +100M Market Capitalization.
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Professional Advisory Process - A Two-Stage Approach

A more detailed description of our process is outlined in our Professional Advisory Agreement.

Our aim is to position your Company to raise significant capital at a high valuation with maximum liquidity. The costs associated related to our advisory work are spread out over a 6months and is approximately $250,000.

Stage 1 - Commences immediately following the execution of our Professional Advisory Agreement. During this stage we will work with the Company and its international auditors, construct the deal structure, begin drafting all relevant documents, conduct due diligence, write the business plan, undertake a preliminary valuation, speak with potential investors. Stage 2 - We execute the transaction including the share swap agreement and all US SEC filings, the completion of private equity or debt financings, the writing of a Research report and the beginning of the Investor relations program and the eventual listing on a major stock exchange.

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Our Reverse Merger Team

Mr. Douglas MacLellan: Team Leader, CEO, of the MacLellan Group,Inc. (Los Angeles) Mr. Joe Cunningham: Financial Advisor, Origination and Execution Specialist, Business Plan & Research Coordinator, President, Amaroq Capital,LLP (Minneapolis) Mr. Curtis Hollister: Adviser and Origination specialist - based in Canada. Mr. Mark Elenowitz: Financial Advisor & Equity Structure, Managing Director, TriPoint Capital Advisors, LLC (NYC) Mr. Louis Taubman, Esq.: Securities and Exchange Commission (SEC) Lawyer, General Counsel of TriPoint Capital Advisors, LLC(New York) Tom Madden: Key Investor Relations Specialist, President, Madden Consulting, LLP (Seattle) John Steinmetz: Investment Banking, TerraNova Capital Inc., New York Andre Schwegler: Sales, TerraNova Capital, New York Charles li: China Attorney, T&C Law Offices, Beijing Lifeng Zhang: China based transaction specialist

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The Five Pillars of a Successful RTO

Our aim is to provide the company with the money it needs to execute its strategy.
1). Develop a growth focused Business Plan. - We will assist in the development of the business plan and financial model 2). Ensure profitability is reached in the year preceding the RTO. - It needs to be US GAPP based accounting profit 3). Follow the process outlined of the advisory team.

- We have executed this process many several times before - You are paying us, please listen to our advice - We have worked with many companys in their first overseas venture
4). The Board of Directors and most importantly the CEO must be 100% behind the transaction

- Assign a dedicated Transaction manager with a team he / she can rely upon - The demands on managements time can be intensive - Document and process control are critical
5). Plan to become one of the leading businesses in your industry

- The RTO will transform your business, be prepared for the changes that will take place

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Your Companys Reverse Merger Process

Follow our Proven Reverse Merger Process and together we will create and enhanced path to new equity investment. Our unique process provides a channel for your Company to receive a premium valuation on raising capital, through a tiered multi-round financing strategy.

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RTO Timetable (Sample Transaction)

Wk1-2 Sign Appointment Lett er Due D iligence Audit Draft Agre nt eme s Valuation an ys al is Execute Sh are Swa Agre nt p eme s Begin tra ding on OTC Inve Relations stor Program File w SEC ith PrintPPM Mar $ Cl s on ket oe PIPE Inves en tm t File Re gistra n tio Stat m e ent File w A ith MEX Road Show t o Inve stors Registra tion Stat m e ent Appr oved Wk3-4 Wk5 Wk6 Wk7 Wk8 Month 3 Month 4 Month 5 Month 6

April 2004: Sign Advisory Agreement. Shell Company review & negotiations. New Business Plan drafting is commenced. Auditors are retained & they commence audit process. June 2004: Definitive Agreement between Xian Film Group & Shell Company is executed. Audit is completed. Business Plan is Completed. Initial Research Report is drafted. July, 2004: The Merger is completed. Drafting of the Private Placement Memorandum. Initial Research Report is published. The Stock starts trading & your Company is a publicly listed company! August, 2004: PPM is completed & the Offering commences. September, 2004: PPM is closed US$15 million is raised. October, 2004: SB-2 Registration Statement is drafted and filed with the SEC and Xian Film Group files for AMEX or NASDAQ listing. December 2004: SB-2 is approved by the SEC and XFG gains listing on AMEX or NASDAQ .

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Potential RTO Structure USA AMEX

Shell
Effective ownership

China

OTC

Chinese Company

Company

Share Swap
US New Company

Share Swap

JV WOFE

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Variations of this structure are possible where circumstances permit

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Reverse Merger Process: The Shell

Step One: Locating suitable Shell merger candidate

We have many sources for shell companies and can have a transaction ready in a matter of weeks. Undertake due diligence on the Shell (i.e. SEC filings, audit, legal records) Due Diligence: legal records, accounts, articles of incorporation and legal records. Negotiations: Structuring transaction, defining terms and conditions Complete US GAAP Audit of your Company. The official merger: Share Exchange, Share Purchase and/or Asset Purchase Agreements, issuance of new shares, etc. SEC Filings: Form 8K, Form 14C, Form 14F, Form 3 and others as required Maintain SEC Filings: Quarterly and Annual Reports, other filings as required.

Step Two: Due Diligence Deal Structuring with your Company

Step Three: The Merger

Step Four: Public Company

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Typical Transaction Overview

Employ our methodology to create a publicly traded company that will facilitate raising capital and will drive higher valuation multiples. Create new business plan based upon public merger and possible acquisition strategy. Merge your Company with existing Public Company. Assist with initial SEC filings and corporate compliance requirements. Deploy comprehensive Investor Relations & Public Relations campaigns in order to stimulate active trading of the your Company Companys stock. Raise additional capital through a private placement (typically convertible preferred shares) to facilitate the growth and expansion of the business. Provide initial research coverage & assist with investor relations and support services Apply for a senior listing on the American Stock Exchange (AMEX) or the NASDAQ SC.

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Reverse Merger Highlights

Merger of your Company and the Shell Company will take approximately 90 days. New Financing within 180 days. China Shareholders would own approximately up to 80% or more of the Company post merger & prefinancing. Example The total share pool would likely be kept at approximately 15 million shares (post merger & financing) in order to try and maintain a per share price US$3.50 or higher. Based upon existing cash assets and expected private placement the Company would immediate moved to an Amex or NASDAQ. (ie:4th Qtr03).

Original Company

Public Shell

Your Company shares are purchased or swapped by the public shell company

Public Shell

Convertible Securities issued for US$15 million

The ultimate amount of capital raised and the value of the offering could adjust down the total amount of dilution, wherein the china shareholders maintain a higher percentage ownership in the business.
Capitalization: Industry Valuation18 X 2004P/E. Stock issued to Investors @ a minimum of a $36M preinvestment valuation for 30% of the Company. US$250,000 in fees & expenses and 15% of the stock will go to pay for Public Shell, Merchant Banking, Investor Relations, Legal and Accounting services.

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Shareholder Structure Post Merger

The following is an example of a capital structure

Based upon a total of 10 million shares outstanding immediately after the merger between your Company & the Shell Company. The initial target trading price is anticipated to be approximately US$3.50 per share. Shell Company Shareholders: Your Company: Advisory Interests: 0.45 million shares 8.5 million shares 1.05 million shares

Its anticipated that an additional 5 million shares would be issued in the private placement for raising US$15 million less fees and expenses associated with the underwriting. These fees are typically 7 - 10 percent plus underwriters warrants of the amount raised.

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Raising Capital with Direct Investors

Raising capital through a PIPE (Private Investment in a Public Equity) based on the following issues:

Market Capitalization Share Price Liquidity Float

Our Investor Relations program will stimulate demand and drive the market capitalization and liquidity of your Company We can expect to raise approximately 10% - 15% of the market capitalization of the company during the first round of financing

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US Exchanges and Markets

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AMEX Listing Requirements for US Companies

Standard 1 Shareholders' Equity Pre-tax income Distribution $4 million $750,000 in last fiscal year or in 2 of its last 3 fiscal years 800 public shareholders and 500,000 publicly held or 400 public shareholder and 1 million shares publicly held or 400 public shareholders, 500,000 shares publicly held and average daily trading volume of 2,000 shares for prior 6 months Shareholders' Equity History of Operations Distribution

Standard 2 $4 million 2 years 800 public shareholders and 500,000 publicly held or 400 public shareholder and 1 million shares publicly held or 400 public shareholders, 500,000 shares publicly held and average daily trading volume of 2,000 shares for prior 6 months

Price Market Value of Public Float

$3 per share $3 million Standard 3

Price Market Value of Public Float

$3 per share $15 million

Shareholders' Equity Total market Capitalization Distribution

Market Value of Public Float

$4 million $50 million 800 public shareholders and 500,000 publicly held or 400 public shareholder and 1 million shares publicly held or 400 public shareholders, 500,000 shares publicly held and average daily trading volume of 2,000 shares for prior 6 months $15 million

Note: Companies must also comply with other listing requirements such as having a majority (50% for SB filers) of independent directors, independent audit committee, and others.

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AMEX Listing Requirements for International Companies

Regular Financial Guidelines Pre-Tax Income $750,000 latest fiscal year or 2 of most recent 3 fiscal years $3 million $3 N/A $4 million Pre-Tax Income

Alternate Financial Guidelines N/A

Market Value of Public Float Share Price Operating History Stockholders' Equity

Market Value of Public Float Share Price Operating History Stockholders' Equity

$15 million $3 2 Years $4 million

Distribution Guidelines Alternative 1 Public Float Public Shareholders Average Daily Volume Alternative 3 Public Float Public Shareholders Average Daily Volume 500,000 400 2,000 Public Float Public Shareholders Average Daily Volume 500,000 800 N/A Public Float Public Shareholders Average Daily Volume Alternative 4 1 million (worldwide) 800 (worldwide) N/A Alternative 2 1 million 400 N/A

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AMEX Listing Process

Step 1

The Company files an original listing application and supporting documentation with the exchange and pays a $1,000 non-refundable fee

The Companys original listing application and supporting documentation are reviewed by Amex Listing Qualifications staff to ensure adherence to Exchange Listing guidelines

If necessary, the Company files an Exchange Act Registration Statement and exhibits with the SEC

Step 2

The Exchange reserves a Ticker symbol and approves listing

The SEC Orders the Exchange Act Registration Statement Effective

Notes: 1) Company must comply with all listing guidelines. 2) Companys application is approved by AMEX Listing Department

Step 3

The Company selects a Specialist

Step 4

Security is admitted to dealings

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Nasdaq National Market Listing Requirements

Requirements Standard 1 Marketplace Rule 4420 (a) $15 million N/A

Initial Listing Standard 2 Marketplace Rule 4420 (b) $30 million N/A Standard 3 Marketplace Rule 4420 (c) N/A $75 million or $75 million and $75 million N/A

Continued Listing Standard 1 Marketplace Rule 4450 (a) $10 million N/A Standard 2 Marketplace Rule 4450 (b) N/A $50 million or $50 million and $50 million N/A

Stockholders' equity Market Value of listed securities or Total Assets and Total Revenue Income from continuing operations before income taxes (in latest fiscal year or 2 of last 3 years) Publicly held shares Market value of publicly held shares Minimum bid price Shareholders (round lot holders) Market makers Operating History Corporate governance

$1 million

N/A

N/A

1.1 million $8 million $5 400 3 N/A Yes

1.1 million $18 million $5 400 3 2 years Yes

1.1 million $20 million $5 400 4 N/A Yes

750,000 $5 million $1 400 2 N/A Yes

1.1 million $15 million $1 400 4 N/A Yes

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Nasdaq SMALLCAP Market Listing Requirements

Companies must meet minimum initial and continued financial requirements

Requirements Stockholders' equity or Market Value of listed securities or Net Income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) Publicly held shares Market value of publicly held shares Minimum bid price Shareholders (round lot holders) Market makers Operating history or Market Value of listed securities or Corporate governance

Initial Listing $15 million or $50 million or $750,000 1 million $5 million $4 300 3 1 year or $50 million Yes

Continued Listing $2.5 million or $35 million or $500,000 500,000 $1 million $1 300 2 N/A Yes

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AXM A Recent RTO Experience

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Can You Picture Yourself ?

AXM Pharmas Inc., Chairperson, Madam Wang Wei Shi, rings the opening bell At the American Stock Exchange (AMEX) 27 April 2004.

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AXM Pharma Experience

Pharmaceutical company based in the Shenyang, PRC Wholly-owned subsidiary Shenyang Tianwei Werke Pharmaceuticals, Co. Ltd.

OTC and prescription pharmaceutical products

Currently trading on American Stock Exchange under symbol AXJ

Recent traded as high as $7.50 per share Average daily volume of 110,000

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2003- 2004 Highlights

Record sales of US$10.4 million

Operating income of US$2.25 million

Initial listing on Companys Stock Raised US$8.0 million Groundbreaking of new US cGMP manufacturing plant In-licensing of Sunkist brand of vitamin & supplement products Expanding sales into three new markets Gained senior listing on Amex Attracted experience senior management

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AXM Pharma Trading History

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Contact Information
Mr. Douglas C. MacLellan CEO The MacLellan Group, Inc. 8324 Delgany Avenue Playa del Rey, California 90293 e-mail: maclellangroup@cs.com tel: 310-301-7728 fax: 310-301-7748 US cel: 310-283-4201 China cel: 011-861-369-121-3337 Mr. Joseph T. Cunningham President Amaroq Capital, LLC 18 Pheasant Lane North Oaks, Minnesota 55127 SA e-mail: joe.cunningham@amaroqcapital.com tel: 651-204-2048 tel 2: 651-490-0038 cel: 612-306-0527

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