Audited Financial Statements of Wells-Eastern Asia Displays


    


    
 

    
      


      


      


      


      


      


      


      


      


      


      WELLS
        EASTERN ASIA DISPLAYS (M) SDN. BHD.

      (Incorporated
        in Malaysia)

      Company
        No: 501396-U

      


      Financial
        Statements and Supplementary Data

      for
        the financial year ended 31 December 2006

      


      


      


      


      


      


      Table
        of Contents

      


      


      
        	
                 

              	
                Page

              
	
                 

              	
                 

              
	
                Report
                  of Independent Registered Public Accounting Firm

              	
                1

              
	
                 

              	
                 

              
	
                Balance
                  Sheets as of 31 December 2006 and 2005

              	
                2

              
	
                 

              	
                 

              
	
                Income
                  Statements for the Years Ended 31 December 2006, 2005 and
                  2004

              	
                3

              
	
                 

              	
                 

              
	
                Statements
                  of Changes in Equity for the Years Ended 31 December 2006, 2005
                  and
                  2004

              	
                4

              
	
                 

              	
                 

              
	
                Cash
                  Flows Statements for the Years Ended 31 December 2006, 2005 and
                  2004

              	
                5

              
	
                 

              	
                 

              
	
                Notes
                  to Financial Statements.

              	
                6-15

              
	
                 

              	
                 

              
	
                 

              	
                 

              


      

      


      


      


      



      


      


      


      


      


      


      


      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE
          OF CONTENTS

      

       

      Report
        Of Independent Registered Public Accounting Firm 

      To
        The Members of 

      WELLS
        EASTERN ASIA DISPLAYS (M) SDN. BHD.

      (Incorporated
        in Malaysia)

      


      


      We
        have
        audited the accompanying balance sheets of Wells Eastern Asia Displays (M)
        Sdn.
        Bhd. as of December 31, 2006 and 2005 and the related income statements,
        statements of changes in equity and cash flows statement for each of two
        years
        ended December 31, 2006. These financial statements are the responsibility
        of
        the Company’s management. Our responsibility is to express an opinion on these
        financial statements based on our audits.

      


      


      We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statements presentation. We believe that our audit provide a
        reasonable basis for our opinion.

      


      


      In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Wells Eastern Asia Displays
        (M)
        Sdn. Bhd. as of December 31, 2006 and 2005 and the results of its operations
        and
        its cash flows for each of the two years in the period ended December 31,
        2006
        in conformity with accounting principles generally accepted in the United
        States
        of America.

      


      


      Without
        qualifying our opinion, we draw attention to Note 12 to the financial statements
        pertaining to the ongoing discussions on the future plan and direction of
        the
        Company. 

      


      


      


      


      


      
        	
                Horwath
                  

              	
                 

              
	
                Penang,
                  Malaysia

              	
                 

              
	
                 

              	
                 

              


      

      


      Dated:
        March 6, 2007

      


      



      
        
          
             

          

          
          

        

        
          1

          
            

          

        

        
          
          

        

        
          TABLE
            OF CONTENTS

        

        WELLS
          EASTERN ASIA DISPLAYS (M) SDN. BHD.

        (Incorporated
          in Malaysia)

        Company
          No: 501396-U

      


       

      
        
          	 BALANCE
                  SHEETS
	 
	
                   

                	
                   

                	
                   

                	
                   

                	
                  As
                    of December 31,

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                  2006

                	
                   

                	
                  2005

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                  USD

                	
                   

                	
                  USD

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  ASSETS

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Current
                    Assets

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Cash
                    and cash equivalents

                	
                  2,115,164
                    

                	
                   

                	
                  285,467
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts receivable

                	
                  0
                    

                	
                   

                	
                  22,801
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts receivable, related party

                	
                  2,258,493
                    

                	
                   

                	
                  4,198,586
                    

                
	
                   

                	
                   

                	
                  Inventories

                	
                  727,742
                    

                	
                   

                	
                  1,650,066
                    

                
	
                   

                	
                   

                	
                  Prepaid
                    and other current assets

                	
                  18,465
                    

                	
                   

                	
                  43,012
                    

                
	
                   

                	
                   

                	
                  Income
                    taxes receivable

                	
                  37,859
                    

                	
                   

                	
                  0
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Current Assets

                	
                  5,157,723
                    

                	
                   

                	
                  6,199,932
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Property
                    and equipment, net

                	
                  184,920
                    

                	
                   

                	
                  262,423
                    

                
	
                   

                	
                  Deferred
                    tax assets

                	
                  0
                    

                	
                   

                	
                  25,618
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Assets

                	
                  5,342,643
                    

                	
                   

                	
                  6,487,973
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  LIABILITIES
                    AND SHAREHOLDERS' EQUITY

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Current
                    Liabilities

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Trade
                    accounts payable

                	
                  123,095
                    

                	
                   

                	
                  205,491
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts payable, related party

                	
                  314,984
                    

                	
                   

                	
                  990,637
                    

                
	
                   

                	
                   

                	
                  Other
                    accounts payable, related party

                	
                  427,316
                    

                	
                   

                	
                  790,837
                    

                
	
                   

                	
                   

                	
                  Accrued
                    expenses and others

                	
                  188,704
                    

                	
                   

                	
                  292,615
                    

                
	
                   

                	
                   

                	
                  Bank
                    borrowings

                	
                  1,377,602
                    

                	
                   

                	
                  1,361,905
                    

                
	
                   

                	
                   

                	
                  Income
                    taxes payable

                	
                  0
                    

                	
                   

                	
                  49,495
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Current Liabilities

                	
                  2,431,701
                    

                	
                   

                	
                  3,690,980
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Stockholders'
                    equity:

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Common
                    stock, RM1.00

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  (equivalent
                    to USD 0.2632) par value

                	
                  1,315,789
                    

                	
                   

                	
                  1,315,789
                    

                
	
                   

                	
                   

                	
                  (10,000,000
                    shares authorized,

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  5,000,000
                    shares issued and outstanding 

                  2006
                    and 2005, respectively)

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Exchange
                    translation reserve

                	
                  185,927
                    

                	
                   

                	
                  0
                    

                
	
                   

                	
                   

                	
                  Retained
                    earnings

                	
                  1,409,226
                    

                	
                   

                	
                  1,481,204
                    

                
	
                   

                	
                  Total
                    Stockholders' Equity

                	
                  2,910,942
                    

                	
                   

                	
                  2,796,993
                    

                
	 	 	 	 	 
	 	 Total
                  Liabilities and Stockholders'
                  Equity                                	
                  5,342,643
                    

                	 	
                  6,487,973 

                
	 	 	 	 	 


        
    

      


       


      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          2

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


       

      
        	 Income
                Statements 
	 	 	 	 
	
                 

              	
                 

              	
                 

              	
                For
                  the Years Ended December 31,

              
	
                 

              	
                 

              	
                 

              	
                2006

              	
                 

              	
                2005

              	
                 

              	
                2004

              
	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                REVENUE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  related party revenue

              	
                6,278,848
                  

              	
                 

              	
                16,549,707
                  

              	
                 

              	
                19,319,539

              
	
                 

              	
                Net
                  third party revenue

              	
                4,210
                  

              	
                 

              	
                38,697
                  

              	
                 

              	
                503,134
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  revenue

              	
                6,283,058
                  

              	
                 

              	
                16,588,404
                  

              	
                 

              	
                19,822,673
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                COST
                  OF REVENUE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Related
                  party cost of revenue

              	
                1,184,812
                  

              	
                 

              	
                8,523,179
                  

              	
                 

              	
                9,408,104
                  

              
	
                 

              	
                Third
                  party cost of revenue

              	
                4,555,820
                  

              	
                 

              	
                6,698,545
                  

              	
                 

              	
                8,939,091
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Cost
                  of revenue

              	
                5,740,632
                  

              	
                 

              	
                15,221,724
                  

              	
                 

              	
                18,347,195
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Gross
                  profit

              	
                542,426
                  

              	
                 

              	
                1,366,680
                  

              	
                 

              	
                1,475,478
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                OPERATING
                  EXPENSE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Selling,
                  general and administrative

              	
                295,556
                  

              	
                 

              	
                566,814
                  

              	
                 

              	
                476,353
                  

              
	
                 

              	
                Research
                  and development

              	
                0
                  

              	
                 

              	
                165,401
                  

              	
                 

              	
                120,848
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Total
                  operating expense

              	
                295,556
                  

              	
                 

              	
                732,215
                  

              	
                 

              	
                597,201
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Profit
                  from operations

              	
                246,870
                  

              	
                 

              	
                634,465
                  

              	
                 

              	
                878,277
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Interest
                  income

              	
                7,699
                  

              	
                 

              	
                6,481
                  

              	
                 

              	
                3,044
                  

              
	
                 

              	
                Interest
                  expense

              	
                (105,338)

              	
                 

              	
                (183,644)

              	
                 

              	
                (95,511)

              
	
                 

              	
                Other
                  income

              	
                49,427
                  

              	
                 

              	
                77,774
                  

              	
                 

              	
                21,348
                  

              
	
                 

              	
                Loss
                  on foreign exchange

              	
                (254,755)

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                (Loss)/Profit
                  before income taxes

              	
                (56,097)

              	
                 

              	
                535,076
                  

              	
                 

              	
                807,158
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Tax
                  expense

              	
                (15,881)

              	
                 

              	
                (71,978)

              	
                 

              	
                (90,837)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  (loss)/profit

              	
                (71,978)

              	
                 

              	
                463,098
                  

              	
                 

              	
                716,321
                  

              


      

      


      


       

      


      


      


      


      


      


      


      


      



      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          3

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


       

      
        	 Statements
                Of Changes in Equity
	 	 	 	 	 	 	 	 	 
	
                 

              	
                 

              	
                Common
                  Stock

              	
                 

              	
                Exchange

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                translation

              	
                 

              	
                Retained

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                Shares

              	
                 

              	
                Amount

              	
                 

              	
                reserve

              	
                 

              	
                earnings

              	
                 

              	
                Total

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2003

              	
                2,508,000
                  

              	
                 

              	
                660,000
                  

              	
                 

              	
                0
                  

              	
                 

              	
                957,574
                  

              	
                 

              	
                1,617,574
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  profit for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                716,321
                  

              	
                 

              	
                716,321
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Issuance
                  of bonus stock

              	
                2,492,000
                  

              	
                 

              	
                655,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                (655,789)

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2004

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                1,018,106
                  

              	
                 

              	
                2,333,895
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  profit for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                463,098
                  

              	
                 

              	
                463,098
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2005

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                1,481,204
                  

              	
                 

              	
                2,796,993
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Exchange
                  translation differences recognised directly in equity

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  loss for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                (71,978)

              	
                 

              	
                (71,978)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Total
                  recognised income and expenses

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                (71,978)

              	
                 

              	
                113,949
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2006

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                1,409,226
                  

              	
                 

              	
                2,910,942
                  

              


      

      


      


       

      


      


      


      


      


      



      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          4

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


       

      
        	 Cash
                Flows Statements
	 	 	 	 
	
                 

              	
                 

              	
                 

              	
                For
                  the Years Ended December 31,

              
	
                 

              	
                 

              	
                 

              	
                2006

              	
                 

              	
                2005

              	
                 

              	
                2004

              
	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                CASH
                  FLOWS FROM OPERATING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  (loss)/profit

              	
                (71,978)

              	
                 

              	
                463,098
                  

              	
                 

              	
                716,321

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Adjustments
                  for:-

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Depreciation
                  

              	
                63,628
                  

              	
                 

              	
                78,793
                  

              	
                 

              	
                78,955
                  

              
	
                Loss
                  on sale of property, plant and equipment

              	
                0
                  

              	
                 

              	
                1,667
                  

              	
                 

              	
                0
                  

              
	
                Property,
                  plant and equipment written-off

              	
                1,274
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                Changes
                  in net assets and liabilities

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Trade
                  accounts receivable

              	
                22,801
                  

              	
                 

              	
                91,791
                  

              	
                 

              	
                (114,592)

              
	
                 

              	
                Trade
                  accounts receivable - related party

              	
                1,940,093
                  

              	
                 

              	
                3,005,322
                  

              	
                 

              	
                (2,813,946)

              
	
                 

              	
                Inventories

              	
                922,324
                  

              	
                 

              	
                361,038
                  

              	
                 

              	
                (537,331)

              
	
                 

              	
                Prepaid
                  and other current assets

              	
                24,547
                  

              	
                 

              	
                (21,673)

              	
                 

              	
                (7,019)

              
	
                 

              	
                Income
                  tax receivable

              	
                (37,859)

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                Deferred
                  tax assets

              	
                25,618
                  

              	
                 

              	
                (25,618)

              	
                 

              	
                30,789
                  

              
	
                 

              	
                Trade
                  accounts payable

              	
                (82,396)

              	
                 

              	
                (1,000,515)

              	
                 

              	
                661,612
                  

              
	
                 

              	
                Trade
                  accounts payable - related party

              	
                (675,653)

              	
                 

              	
                (1,596,866)

              	
                 

              	
                167,471
                  

              
	
                 

              	
                Accrued
                  expenses and others

              	
                (467,432)

              	
                 

              	
                674,449
                  

              	
                 

              	
                178,554
                  

              
	
                 

              	
                Income
                  taxes payable

              	
                (49,495)

              	
                 

              	
                37,899
                  

              	
                 

              	
                1,201
                  

              
	
                Net
                  cash from/(used in) operating activities

              	
                1,615,472
                  

              	
                 

              	
                2,069,385
                  

              	
                 

              	
                (1,637,985)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                CASH
                  FLOWS FROM INVESTING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Proceeds
                  from sale of property, plant and equipment

              	
                30,835
                  

              	
                 

              	
                5,789
                  

              	
                 

              	
                0
                  

              
	
                Purchase
                  of property, plant and equipment

              	
                (1,644)

              	
                 

              	
                (15,070)

              	
                 

              	
                (18,952)

              
	
                Net
                  cash from/(used in) investing activities

              	
                29,191
                  

              	
                 

              	
                (9,281)

              	
                 

              	
                (18,952)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                CASH
                  FLOW S FROM FINANCING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Increase/(Decrease)
                  in bank borrowings

              	
                15,697
                  

              	
                 

              	
                (2,042,864)

              	
                 

              	
                1,531,085
                  

              
	
                Net
                  cash from/(used in) financing activities

              	
                15,697
                  

              	
                 

              	
                (2,042,864)

              	
                 

              	
                1,531,085
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  increase/(decrease) in cash and cash equivalents

              	
                1,660,360
                  

              	
                 

              	
                17,240
                  

              	
                 

              	
                (125,852)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Effect
                  of exchange rate changes

              	
                169,337
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  and cash equivalents brought forward

              	
                285,467
                  

              	
                 

              	
                268,227
                  

              	
                 

              	
                394,079
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  and cash equivalents carried forward

              	
                2,115,164
                  

              	
                 

              	
                285,467
                  

              	
                 

              	
                268,227
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Supplemental
                  cash flow information

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  paid for interest 

              	
                105,338
                  

              	
                 

              	
                183,644
                  

              	
                 

              	
                95,511

              
	
                Cash
                  paid for income tax

              	
                77,492
                  

              	
                 

              	
                59,697
                  

              	
                 

              	
                58,847

              


      

      


      


      


      


      


      



      
        
          
            The
              annexed notes form an integral part of these financial
              statements

          

          
          

        

        
          5

          
            

          

        

        
          TABLE
            OF CONTENTS

          
            WELLS
              EASTERN ASIA DISPLAYS (M) SDN. BHD.

            (Incorporated
              in Malaysia)

            Company
              No: 501396-U

          

        

      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      1. General
        Information

      


      The
        Company was incorporated in year 2000, principally engaged in the manufacture
        of
        colour video monitors. There are two major stockholders, Wells-Gardner
        Electronics Corporation and Eastech Electronics (M) Sdn. Bhd., each holding
        50%
        of the paid up capital of the Company.

      


      The
        registered office of the Company is located at 57-2, Persiaran Bayan Indah,
        Bayan Bay, Sungai Nibong, 11900 Penang, Malaysia and the principal place
        of
        business of the Company is located at Lot 316 & 317, Jalan PKNK 3/2, Kawasan
        Perindustrian Sungai Petani, 08000 Sungai Petani, Kedah, Malaysia.

      


      


      2. Summary
        of Significant Accounting Policies

      


      2.1 Basis
        of Preparation of Financial Statements

      


      The
        financial statements of the Company are prepared under the historical cost
        convention, modified to include other bases of measurement as disclosed in
        other
        sections of the significant accounting policies, and in compliance with the
        accounting principles generally accepted in the United States of
        America.

      


      
        
          2.2
            Property,
            Plant and Equipment

        

      

      



      Property,
        plant and equipment are stated at cost less accumulated depreciation and
        accumulated impairment losses, if any.

    

    
      Property,
        plant and equipment are depreciated on a straight-line method over the estimated
        useful lives of the assets using the following annual rates:

      


      
        	
                Plant
                  and machinery

              	
                10-20%

              
	
                Electrical
                  installation and renovation

              	
                10%

              
	
                Motor
                  vehicles

              	
                20%

              
	
                Office
                  equipment

              	
                20%

              
	
                Furniture
                  and fittings 

              	
                10%

              
	
                Computer

              	
                10-20%

              
	
                Factory
                  tools and equipment

              	
                20%

              
	
                Mould

              	
                10%

              


      

      


      


      


      


      


      


      


      



      
        
          
          

        

        
          6

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      2. Significant
        Accounting Policies (cont’d)

      


      2.3 Impairment
        of Assets

      


      The
        carrying amounts of assets, other than deferred tax assets, inventories and
        financial assets, are reviewed at each balance sheet date to determine whether
        there is any indication that an item of asset may be impaired. If any such
        indication exists, the recoverable amount of the asset is estimated. Any
        excess
        of the carrying amount of the asset over its recoverable amount represents
        an
        impairment loss and is recognised as an expense in the income
        statement.

      


      An
        impairment loss is reversed if there has been a change in the estimates used
        to
        determine the recoverable amount and it is reversed only to the extent that
        the
        increased carrying amount does not exceed the carrying amount that would
        have
        been determined, net of depreciation or amortisation, had no impairment loss
        been recognised. The reversal is recognised in the income
        statement.

      


      There
        were no impairment loss recognized in the income statements for the year
        ended
        December 31 2006, 2005 and 2004.

      


      2.4 Inventories

      Inventories
        are valued at the lower of cost (determined on the first-in, first-out basis)
        and net realisable value after making due allowance for any obsolete or
        slow-moving items. Cost consists of all costs of purchase, costs of conversion
        and other costs incurred in bringing the inventories to their present location
        and condition.

      


      2.5 Receivables

      


      Receivables
        are carried at anticipated realisable values. Bad debts are written off when
        identified. An estimate is made for doubtful debts based on a review of all
        outstanding amounts as at the balance sheet date.

      


      2.6 Payables

      


      Payables
        are recognised at cost which is the fair value of the consideration to be
        paid
        in the future for goods and services received.

      


      2.7 Loans
        and Borrowings

      


      All
        loans and borrowings are initially recognised at cost which is the fair value
        of
        the proceeds received. The loans and borrowings are subsequently stated at
        amortised cost using the effective yield method. The effective interest rate
        is
        the historical rate for a fixed rate instrument and the current market rate
        for
        a floating rate instrument. 

      


      All
        borrowing costs are recognised as an expense in the period in which they
        are
        incurred.

      



      
        
          
          

        

        
          7

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      2. Significant
        Accounting Policies (cont’d)

      


      2.8 Provisions

      


      A
        provision is recognised when it is probable that an outflow of resources
        embodying economic benefits will be required to settle a present obligation
        (legal or constructive) as a result of a past event and a reliable estimate
        can
        be made of the amount.

      


      2.9 Foreign
        Currency Transactions and Translation

      


      Transactions
        in foreign currencies are converted into the functional currency at the rates
        of
        exchange ruling at the transaction dates. Monetary assets and liabilities
        denominated in foreign currencies at the balance sheet date are translated
        into
        the functional currency at the rates of exchange ruling at that date.
        Non-monetary assets and liabilities which are stated at cost denominated
        in
        foreign currencies are translated into the functional currency at the rates
        of
        exchange ruling at the transaction dates. Exchange gains and losses arising
        on
        foreign currency transactions and translation are recognised in the income
        statement.

      


      2.10 Share
        Capital

      


      The
        Company has only one class of share capital, i.e. ordinary shares of RM1.00
        (equivalent to USD0.2632) each, which is classified as equity. External costs
        directly attributable to the issue of new shares are written-off to the share
        premium account or, where there is no such account, charged to the income
        statement.

      


      2.11 Income
        Recognition

      


      Income
        from the sale of goods is recognised upon delivery of goods and customer’s
        acceptance. Interest income is recognised on an accrual basis.

      


      2.12 Income
        Taxes

      


      Income
        taxes for the year comprise current tax and deferred tax.

      


      Current
        tax represents the expected amount of income taxes payable in respect of
        the
        taxable profit for the year and is measured using the tax rates that have
        been
        enacted or substantially enacted by the balance sheet date.

      


      Deferred
        tax is provided for under the balance sheet liability method in respect of
        all
        temporary differences between the carrying amount of an asset or liability
        in
        the balance sheet and its tax base except for those temporary differences
        associated with goodwill, negative goodwill or the initial recognition of
        an
        asset or liability in a transaction which is not a business combination and
        affects neither accounting nor taxable results at the time of the
        transaction.


      
        
          
          

        

        
          8

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      2. Significant
        Accounting Policies (cont’d)

      


      2.12 Income
        Taxes (cont’d)

      


      A
        deferred tax liability is recognised for all taxable temporary differences
        whereas a deferred tax asset is recognised for all deductible temporary
        differences, unused tax losses and unused tax credits to the extent that
        it is
        probable that future taxable profit will be available against which the
        deductible temporary differences, unused tax losses and unused tax credits
        can
        be utilised. Deferred
        tax assets and liabilities are measured at the tax rates that are expected
        to
        apply to the period when the asset is realised or the liability is settled,
        based on the tax rates that have been enacted or substantially enacted by
        the
        balance sheet date.

      


      2.13 Research
        and Development Expenditure

      


      Research
        and development expenditure is recognised as an expense in the period in
        which
        the expenditure is incurred unless the development expenditure meets the
        asset
        recognition criteria in which case the expenditure will be
        capitalised.

      


      2.14 Employee
        Benefits

      


      Short-term
        Employee Benefits

      


      Short-term
        employee benefits such as wages, salaries, bonuses and social security
        contributions are recognised as an expense in the period in which the associated
        services are rendered by the employees.

      


      Defined
        Contribution Plans

      


      As
        required by law, employers in Malaysia make contributions to the state pension
        scheme, Employees Provident Fund (“EPF”). Such contributions are recognised as
        an expense in the period in which the associated services are rendered by
        the
        employees.

      


      2.15 Cash
        and Cash Equivalents

      


      Cash
        and cash equivalents comprise cash in hand, bank balances, demand deposits,
        deposits pledged with financial institutions, bank overdrafts and short-term,
        highly liquid investments that are readily convertible to known amounts of
        cash
        and which are subject to an insignificant risk of changes in value.

      


      


      


      


      


      



      
        
          
          

        

        
          9

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      2. Significant
        Accounting Policies (cont’d)

      


      2.16 Financial
        Instruments

      


      Recognised
        and Unrecognised

      


      The
        accounting policies for recognised financial instruments are disclosed in
        the
        individual policies associated with each item. The Company does not have
        any
        unrecognised financial instruments.

      


      Fair
        Values

      


      The
        carrying amounts of financial assets and liabilities with short maturity
        periods
        are assumed to approximate their fair values due to the short term nature
        of the
        instruments. The fair value of related party accounts receivable and payable
        are
        not practical to estimate based upon the related party nature of the underlying
        transactions.

      


      2.17 Estimates

      


      The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements and reported amounts of revenues and expenses during
        the reporting period. Actual results could differ from those
        estimates.

      


       

      3. Financial
        Risk Management

      


      The
        activities of the Company expose it to certain financial risks, including
        currency risk, interest rate risk, credit risk, liquidity risk and cash flow
        risk. The overall financial risk management objective of the Company is to
        maximise shareholders’ value by minimising the potential adverse impacts of
        these risks on its financial position, performance and cash flows.

      


      The
        Board of Directors explicitly assumes the responsibilities of financial risk
        management which is carried out mainly through risk reviews and internal
        control
        systems.

      


      Currency
        Risk

      


      The
        Company’s exposure to currency risk arises mainly from normal trading
        transactions denominated in foreign currencies.

      


      The
        Company does not use any derivative financial instruments to manage its exposure
        to currency risk as the directors are of the opinion that the net exposure
        is
        not significant.

      



      
        
          
          

        

        
          10

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      3. Financial
        Risk Management (cont’d)

      


      Interest
        Rate Risk

      


      The
        Company’s exposure to interest rate risk arises mainly from
        borrowings.

      


      The
        Company manages its exposure to interest rate risk by seeking to obtain the
        most
        favourable interest rates available without increasing its other financial
        risk
        exposures.

      


      Credit
        Risk

      


      The
        Company’s exposure to credit risk arises mainly from receivables. The maximum
        credit risk exposure is best represented by the total carrying amount of
        these
        financial assets in the balance sheet.

      


      The
        Company manages its exposure to credit risk by assessing counter parties’
financial standings on an ongoing basis, setting and monitoring counter parties’
limits and credit terms. The Company does not have any major concentration
        of
        credit risk other than the significant amount owing by a related party as
        disclosed in the financial statements.

      


      Liquidity
        and Cash Flow Risks

      


      The
        Company’s exposure to liquidity and cash flow risks arises mainly from general
        funding and business activities.

      


      The
        Company practises prudent liquidity risk management by maintaining sufficient
        cash and the availability of funding through certain committed credit
        facilities. 

      


      


      4. Property
        and Equipment

      


      Property
        and equipment consist of the following as of December 31, 2006 and 2005
        :-

      


      
        	
                 

              	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Plant
                  and machinery, factory tools and equipment

              	
                572,565

              	 	
                570,837

              
	
                Electrical
                  installation and renovation

              	
                15,013

              	 	
                13,952

              
	
                Motor
                  vehicles

              	
                14,974

              	 	
                13,916

              
	
                Office
                  equipment, furniture and fittings and computers

              	
                34,553

              	 	
                44,776

              
	 	 	 	 
	
                Total

              	
                637,105

              	 	
                643,481

              
	
                Less
                  : Accumulated depreciation

              	
                (452,185)

              	 	
                (381,058)

              
	 	 	 	 
	
                Property
                  and equipment, net

              	
                184,920

              	 	
                262,423

              


      

      



      
        
          
          

        

        
          11

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      5. Inventories

       

      Inventories
        consist of the following as of December 31, 2006 and 2005: 

      


      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Raw
                  materials

              	
                586,548

              	 	
                        1,417,906

              
	
                Work-in-progress

              	
                163,548

              	 	
                157,848

              
	
                Finished
                  goods

              	
                22,661

              	 	
                124,734

              
	
                Goods-in-transit

              	
                1,133

              	 	
                0

              
	 	 	 	 
	
                Total

              	
                773,890

              	 	
                1,700,488

              
	
                Inventory
                  obsolescence reserve

              	
                (46,148)

              	 	
                (50,422)

              
	 	 	 	 
	 	
                727,742

              	 	
                1,650,066

              


      

      


      


      6. Prepaid
        and Other Current Assets

       

      Prepaid
        and other current assets consists of the following as of December 31, 2006
        and
        2005:

      


      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Sundry
                  deposits

              	
                953

              	 	
                361

              
	
                Advance
                  to suppliers 

              	
                974

              	 	
                34,624

              
	
                Prepaid
                  expenses

              	
                15,481

              	 	
                7,629

              
	
                Other

              	
                1,057

              	 	
                398

              
	 	 	 	 
	
                Total

              	
                18,465

              	 	
                43,012

              


      

      


      7. Accrued
        Expenses and Other

       

      Accrued
        expenses and other consists of the following as of December 31, 2006 and
        2005:

      


      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Accrued
                  expenses

              	
                47,981

              	 	
                4,762

              
	
                Employee
                  payables

              	
                0

              	 	
                73,824

              
	
                Other
                  payables

              	
                52,346

              	 	
                139,466

              
	
                Provisions

              	
                88,377

              	 	
                74,563

              
	 	 	 	 
	
                Total

              	
                188,704

              	 	
                292,615

              


      

      



      
        
          
          

        

        
          12

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      8. Bank
        Borrowings - Secured

      


      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Banker
                  acceptance I

              	
                434,376

              	 	
                239,683

              
	
                Banker
                  acceptance II

              	
                0

              	 	
                352,381

              
	
                Banker
                  acceptance III

              	
                0

              	 	
                401,852

              
	
                Banker
                  acceptance IV

              	
                81,269

              	 	
                47,355

              
	
                Export
                  credit refinancing I

              	
                379,442

              	 	
                160,317

              
	
                Export
                  credit refinancing II

              	
                482,515

              	 	
                160,317

              
	 	
                1,377,602

              	 	
                1,361,905

              


      

      


      The
        details of bank borrowings are as follows:

      


      
        	
                Facility

              	
                Bank

              	
                Maturity

              	
                Interest

              
	 	 	 	 
	
                Banker
                  acceptance I

              	
                Affin
                  Bank Berhad

              	
                January
                  - April 2007

              	
                3.75%
                  - 3.80%

              
	 	 	 	 
	
                Banker
                  acceptance IV

              	
                Malayan
                  Banking Berhad

              	
                January
                  2007

              	
                3.47%

              
	 	 	 	 
	
                Export
                  Credit Refinancing I

              	
                Malayan
                  Banking Berhad

              	
                January
                  - April 2007

              	
                4.25%

              
	 	 	 	 
	
                Export
                  Credit Refinancing II

              	
                Southern
                  Bank Berhad

              	
                February
                  - March 2007

              	
                4.25%

              


      

      


      Banker
        acceptance I is secured by one of the fixed deposits of the Company and
        guaranteed by Eastern Asia Technology Limited, which is the holding corporation
        of a substantial shareholder of the Company. All other bank borrowing are
        secured by the fixed deposits of the Company. The bank borrowings have been
        settled when payments are due.

      


      


      9. Tax
        Expense

      


      
        	 	
                2006

              	 	
                2005

              	 	
                2004

              
	 	
                USD

              	 	
                USD

              	 	
                USD

              
	
                Tax
                  based on results for the year:

              	 	 	 	 	 
	
                Malaysian
                  income tax

              	
                1,379

              	 	
                97,596

              	 	
                60,281

              
	
                Deferred
                  tax

              	
                0

              	 	
                (25,367)

              	 	
                30,789

              
	 	
                1,379

              	 	
                72,229

              	 	
                91,070

              
	
                Tax
                  (over)/underprovided in prior year:-

              	 	 	 	 	 
	
                Malaysian
                  income tax

              	
                (12,132)

              	 	
                0

              	 	
                (233)

              
	
                Deferred
                  tax

              	
                26,634

              	 	
                (251)

              	 	
                0

              
	 	
                15,881

              	 	
                71,978

              	 	
                90,837

              


      

      


      


      



      
        
          
          

        

        
          13

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      9. Tax
        Expense
        (cont’d)

       

      The
        numerical reconciliation between the applicable tax rate, which is the statutory
        income tax rate, and the average effective tax rate is as follows:

      


      
        	 	
                2006

              	 	
                2005

              	 	
                2004

              
	 	
                %

              	 	
                %

              	 	
                %

              
	 	 	 	 	 	 
	 Applicable
                tax rate	
                (28.00)

              	 	
                28.00

              	 	
                28.00

              
	 Non-deductible
                expenses	
                8.77

              	 	
                1.75

              	 	
                0.46

              
	 Tax
                exempt income from pioneer status	
                0.00

              	 	
                (15.88)

              	 	
                (17.18)

              
	 Unrecognised
                in deferred tax assets	
                21.57

              	 	
                0.00

              	 	
                0.00

              
	 Average
                effective tax rate 	
                2.34

              	 	
                13.87

              	 	
                11.28

              


      

      


      As
        at
        31 December 2006, the Company has sufficient tax credits and tax exempt accounts
        to frank its retained profits in full if paid out as dividends. 

      


      


      10. Deferred
        Tax Assets

      


      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Balance
                  at 1 January

              	
                25,618

              	 	
                0

              
	
                Deferred
                  tax relating to origination and reversal of temporary
                  differences

              	
                0

              	 	
                25,367

              
	
                Deferred
                  tax - prior year

              	
                (25,618)

              	 	
                251

              
	
                Balance
                  at 31 December

              	
                0

              	 	
                25,618

              
	 
	
                The
                  deferred tax assets are in respect of the deductible/(taxable)
                  temporary
                  differences at December 31, 2006 and 2005 as follows:

              
	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Basis
                  difference in property and equipment

              	
                0

              	 	
                (35,710)

              
	
                Inventory
                  obsolescence reserve

              	
                0

              	 	
                14,193

              
	
                Accrued
                  expenses and other

              	
                0

              	 	
                47,135

              
	 	
                0

              	 	
                25,618

              


      

      


      


      


      


      


      



      
        
          
          

        

        
          14

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      


      


      


      


      


      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      


      11. Significant
        Transactions With Related Parties

       

      The
        following represent related party transactions for each of the financial
        years
        ended December 31 :-

      


      
        	 	
                2006

                USD

              	 	
                2005

                USD

              	 	
                2004

                USD

              
	
                Sale
                  of goods to Wells-Gardner Electronics Corporation *

              	
                6,278,848

              	 	
                16,549,707

              	 	
                19,319,539

              
	
                Purchase
                  of goods from Wells-Gardner Electronics Corporation *

              	
                765,240

              	 	
                4,481,625

              	 	
                4,365,523

              
	
                Management
                  fee charged by Eastech Electronics (M) Sdn. Bhd. **

              	
                63,468

              	 	
                132,740

              	 	
                149,114

              
	
                Purchase
                  of goods from Eastech Electronics (M) Sdn. Bhd. **

              	
                419,572

              	 	
                4,041,554

              	 	
                5,042,581

              
	
                Rental
                  of premises charged by Eastech Electronics (M) Sdn. Bhd.
                  **

              	
                53,337

              	 	
                51,340

              	 	
                51,340

              


      

      


      * A
        substantial shareholder which holds 50% of the equity interest in the
        Company.

      ** A
        substantial shareholder which holds 50% of the equity interest in the
        Company.

      


      


      12. Significant
        Development

       

      The
        shareholders of the Company are in the midst of discussions on the future
        plan
        and direction of the Company. A possible outcome of the final decision is
        to
        transfer the operations of the Company to Eastech Electronics (M) Sdn. Bhd.,
        a
        substantial shareholder. The shareholders expect the ultimate outcome of
        the
        plan to be determined by the second half of 2007 or early 2008. The associated
        costs for the possible transfer of operations cannot be presently determined
        and
        are not expected to have a material effect on the Company’s financial position
        and operations.


      
        
          
          

        

        
          15

          
            

          

        

        
          TABLE
            OF CONTENTS