SOURCE: Diguang International Development Co. Ltd.

March 17, 2006 14:40 ET

Diguang Development and Diguang Holdings Complete Business Combination and $12 Million Financing Led by Chardan Capital Markets and Maxim Group

ROCKWALL, TX and SHENZHEN, CHINA -- (MARKET WIRE) -- March 17, 2006 -- Diguang International Development Co. Ltd. (formerly Online Processing Inc.) (OTC BB: DGNG) ("Diguang Development") and privately held Diguang International Holdings, Limited ("Diguang" or the "Company"), a British Virgin Islands company with operating subsidiaries in The People's Republic of China and Hong Kong, announced today that Diguang Development completed a share exchange with the shareholders of Diguang, by which Diguang Development acquired Diguang. Diguang, whose principal operations are based in Shenzhen, China, is a rapidly growing manufacturer of backlights for LED displays, such as those used in cell phones, digital cameras and similar applications.

In the transaction, Diguang Development acquired 100% of the issued and outstanding stock of Diguang in exchange for 18,250,000 common shares of Diguang Development. As part of fulfilling conditions to the closing of the transaction, Diguang Development had previously changed its name from Online Processing, Inc. to Diguang International Development Co., Ltd. and now trades under the symbol (OTC BB: DGNG).

Simultaneously with the share exchange, Diguang Development raised $12,000,000 in gross proceeds in the private placement of 2,400,000 of its common shares to accredited investors. The placement was co-managed by Chardan Capital Markets, LLC and Maxim Group LLC. The Company plans to use the net proceeds of the placement to accelerate the growth and expand distribution of the Company's products.

Following the closing of the share exchange and the private placement, the company has a total of 22,593,000 common shares issued and outstanding and approximately $20 million of cash and cash equivalents on the balance sheet.

In addition, the current owners of Diguang will be entitled to receive an additional 6,000,000 common shares of stock over four years if the Company has after tax profits, subject to certain adjustments, of $15,700,000, $22,800,000, $31,900,000, $43,100,000 for the years ending December 31st 2006, 2007, 2008 and 2009, respectively.

More About Diguang

Diguang is one of the largest and fastest growing companies in China that specializes in the research, development, production, sale and distribution of backlights and backlight technologies. Its manufacturing subsidiary is headquartered in Shenzhen, PRC, with additional offices and manufacturing operations in Dongguan, China. Diguang had revenues of $6.2 million, $24.5 million and $35.7 million for the years ended December 31, 2003, 2004, and 2005, respectively, and net income of $1.0 million, $6.6 million and $9.1 million in the same periods.

A backlight is the light source of a liquid crystal display (LCD). The Company is focused on providing light emitting diode ("LED") and cold cathode fluorescent lamp ("CCFL") backlights for international producers of cellular phones, digital cameras, DVDs and other consumer electronics and plans to expand into the large-size, flat-panel television display market during 2006. Diguang develops 30-50 new products per month for its customers on average, and it has the ability to expand its production capacity at its current facilities to approximately 300,000 backlight units per day to accommodate continued growth.

Terri Wonderly, CEO of Diguang Development, commented, "We have been searching for over a year for a merger partner that would dramatically enhance the value to our shareholders, and we are extremely pleased that Diguang and Diguang Development have been able to conclude a transaction that will allow our shareholders to participate in the benefits associated with Diguang's growth."

Diguang Development engaged Chardan Capital, LLC ("Chardan") to assist in the acquisition of Diguang. Chardan is a merchant bank dedicated to working with reputable, profitable and growing medium-sized enterprises in the People's Republic of China. With offices in San Diego, New York and Beijing, it is responsible for identifying Diguang as a potential merger partner for Diguang Development and developing the relationship between Diguang Development and Diguang and attracting to the deal the investment banking firms that raised the required capital. Chardan's multinational team is highly experienced in working with Chinese companies and in arranging both private and public financing for profitable and growing Chinese companies.

Chardan has also recently been involved in the establishment of three publicly traded Specified Purpose Acquisition Corporations™ ("SPAC's™") for the express purpose of merging them with China-based operating companies. These include Chardan China Acquisition Corp. (NASDAQ: SEED) which last year completed the acquisition of Origin Agritech, one of the largest and fastest growing hybrid crop seed companies in China, and Chardan North China Acquisition Corp. (OTC BB: CNCA) and Chardan South China Acquisition Corp. (OTC BB: CSCA), both of which had successful IPOs in August 2005. Chardan North China has announced its entry into an agreement to acquire a controlling interest in HollySys, one of China's leading automation and process control systems companies.

Dr. Richard Propper, President of Chardan, commented that the qualities that attracted Chardan to Diguang are its "strong management team, focus on developing proprietary intellectual property, dynamic business model and low cost labor force, all of which we expect will help it maintain its position as a leading Chinese company in the backlight industry. The company is cash flow positive and is experiencing a high level of growth in revenues and profits, all of which should help it to maintain its competitive advantage. Since the inception of Diguang's subsidiary, Shenzhen Diguang Electronics Co., Ltd. in 1996, the Company has experienced an impressive average annual growth rate in excess of 50%. Due to its management's successful execution of a unique global strategy, Diguang's growth has accelerated in recent years."

Dr. Propper continued, "Diguang's management is committed to meeting and exceeding their profit targets. Based on their strong pipeline of new product offerings, existing brand name clientele and the increasing global demand for LCDs and related components, we are excited about the future prospects for the company. With a current global market share of less than 1%, and with one of the largest and most modern backlight production facilities in the world, Diguang is well positioned to capture significant additional share in this $5 billion global market."

Diguang's President, Mr. Song Yi, stated, "We are very excited about becoming a publicly traded entity in the United States. This transaction will enhance our visibility and further strengthen our cash position. In addition, the working capital generated from the transaction will enable us to further enhance our industry leading R&D efforts, grow our global distribution channels and improve our ability to make strategic acquisitions that will add to the profitability of the Company."

This presss release is not an offer for sale of the shares of Diguang Development or the Company in the United States. Such shares may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended. All shares of Diguang Develoment mentioned above have been sold in transactions exempt from or not subject to such registration requirements.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about Diguang Development, Diguang and Chardan and the combined business of Diguang Development and the Company after completion of the proposed transaction. Forward looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Diguang Development's, Diguang's and Chardan's management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Diguang is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of backlights; timing approval and market acceptance of new products introduction; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks not included herein. The information set forth herein should be read in light of such risks. Diguang Development, Diguang or Chardan do not assume any obligation to update the information contained in this press release.

Contact Information

  • Contact:
    Jackie You Kazmerzak
    Diguang International Development Co., Ltd.
    (925) 457 1445

    Mark Brewer
    Chardan Capital, LLC
    (619) 795-4627