##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended March 31, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report:

For the transition period from
                                         
            to

GLOBAL-TECH ADVANCED INNOVATIONS INC.



(Exact Name of Registrant as
Specified in its charter and Translation of Registrants Name into English)

British Virgin Islands



(Jurisdiction of incorporation
or organization)

12/F., Kin Teck Industrial Building, 26 Wong Chuk Hang Road, Aberdeen, Hong Kong



(Address of principal executive
offices)

Attn: John C.K. Sham

12/F., Kin Teck Industrial Building

26 Wong Chuk Hang Road

Aberdeen, Hong Kong

Tel.: (852) 2814 0601

Fax: (852) 2873 0591

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                                         |  |  |  |                                           
|---------------------------------------- |  |  |  | ------------------------------------------
|Title of each class:                     |  |  |  | Name of each exchange on which
registered:
|Common Shares, par value $0.04 per share |  |  |  | The NASDAQ Stock Market LLC               

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Not Applicable

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Not Applicable



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##### Table of Contents

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as
of the close of the period covered by the annual report:

3,229,590 Common Shares, par value $0.04 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   ̈ Yes  x No

If this report is
an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.   ̈ Yes  x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   ̈ No

Indicate by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).   ̈ Yes   ̈ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in
this filing:



|             |  |                                                       |  |         
|------------ |  | ----------------------------------------------------- |  | --------
|U.S. GAAP  x |  | International Financial Reporting Standards as issued |  | Other   ̈
|             |  | by the International Accounting Standards Board   ̈    |  |         

If Other has been checked in response to the previous question, indicate by check mark which financial
statement item that the registrant has elected to follow.   ̈ Item 17   ̈ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ̈ Yes  x No









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##### Table of Contents

TABLE OF CONTENTS



|                                                              |  |      |    | 
|------------------------------------------------------------- |  | ---- | -- | 
|                                                              |  | Page |   
|Item 1. Identity of Directors, Senior Management and Advisers |  |      | 2  | 
|A. Directors and senior management                            |  |      | 2  | 
|B. Advisers                                                   |  |      | 2  | 
|C. Auditors                                                   |  |      | 2  | 
|                                                              | 
|Item 2. Offer Statistics and Expected Timetable               |  |      | 2  | 
|A. Offer statistics                                           |  |      | 2  | 
|B. Method and expected timetable                              |  |      | 2  | 
|                                                              | 
|Item 3. Key Information                                       |  |      | 3  | 
|A. Selected financial data                                    |  |      | 3  | 
|B. Capitalization and indebtedness                            |  |      | 4  | 
|C. Reasons for the offer and use of proceeds                  |  |      | 4  | 
|D. Risk factors                                               |  |      | 4  | 
|                                                              | 
|Item 4. Information on the Company                            |  |      | 12 | 
|A. History and development of the Company                     |  |      | 12 | 
|B. Business overview                                          |  |      | 12 | 
|C. Organizational structure                                   |  |      | 22 | 
|D. Property, plant and equipment                              |  |      | 24 | 
|                                                              | 
|Item 4A. Unresolved Staff Comments                            |  |      | 24 | 
|                                                              | 
|Item 5. Operating and Financial Review and Prospects          |  |      | 25 | 
|A. Operating results                                          |  |      | 25 | 
|B. Liquidity and Capital Resources                            |  |      | 34 | 
|C. Research and development, patents and licenses, etc.       |  |      | 36 | 
|D. Trend information                                          |  |      | 37 | 
|E. Off-balance sheet arrangements                             |  |      | 37 | 
|F. Tabular Disclosure of Contractual Obligations              |  |      | 37 | 
|                                                              | 
|Item 6. Directors, Senior Management and Employees            |  |      | 37 | 
|A. Directors and senior management                            |  |      | 37 | 
|B. Compensation                                               |  |      | 38 | 
|C. Board practices                                            |  |      | 39 | 
|D. Employees                                                  |  |      | 40 | 
|E. Share ownership                                            |  |      | 41 | 
|                                                              | 
|Item 7. Majority Shareholders and Related Party Transactions  |  |      | 44 | 
|A. Major shareholders                                         |  |      | 44 | 
|B. Related party transactions                                 |  |      | 44 | 
|C. Interests of experts and counsel                           |  |      | 45 | 
|                                                              | 
|Item 8. Financial Information                                 |  |      | 45 | 
|A. Consolidated statements and other financial information    |  |      | 45 | 
|B. Significant changes                                        |  |      | 49 | 
|                                                              | 
|Item 9. The Offer and Listing                                 |  |      | 50 | 
|A. Offer and listing details                                  |  |      | 50 | 
|B. Plan of distribution                                       |  |      | 50 | 
|C. Markets                                                    |  |      | 50 | 
|D. Selling shareholders                                       |  |      | 50 | 
|E. Dilution                                                   |  |      | 51 | 
|F. Expenses of the issue                                      |  |      | 51 | 



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|                                                                                      |  |  |     | 
|------------------------------------------------------------------------------------- |  |  | --- | 
|Item 10. Additional Information                                                       |  |  | 51  | 
|A. Share capital                                                                      |  |  | 51  | 
|B. Memorandum and articles of association                                             |  |  | 51  | 
|C. Material contracts                                                                 |  |  | 54  | 
|D. Exchange controls                                                                  |  |  | 54  | 
|E. Taxation                                                                           |  |  | 54  | 
|F. Dividends and paying agents                                                        |  |  | 59  | 
|G. Statement by experts                                                               |  |  | 59  | 
|H. Documents on display                                                               |  |  | 60  | 
|I. Subsidiary information                                                             |  |  | 60  | 
|                                                                                      | 
|Item 11. Quantitative and Qualitative Disclosures about Market Risk                   |  |  | 60  | 
|                                                                                      | 
|Item 12. Description of Securities Other than Equity Securities                       |  |  | 61  | 
|A. Debt securities                                                                    |  |  | 61  | 
|B. Warrants and rights                                                                |  |  | 61  | 
|                                                                                      | 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |  |  | 61  | 
|                                                                                      | 
|Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds |  |  | 61  | 
|                                                                                      | 
|Item 15. Controls and Procedures                                                      |  |  | 62  | 
|                                                                                      | 
|Item 16. [Reserved]                                                                   |  |  | 63  | 
|                                                                                      | 
|Item 16A. Audit Committee Financial Expert                                            |  |  | 63  | 
|                                                                                      | 
|Item 16B. Code of Ethics                                                              |  |  | 63  | 
|                                                                                      | 
|Item 16C. Principal Accountant Fees and Services                                      |  |  | 63  | 
|                                                                                      | 
|Item 16F. Change in Registrants Certifying Accountant                                |  |  | 64  | 
|                                                                                      | 
|Item 16G. Corporate Governance                                                        |  |  | 64  | 
|                                                                                      | 
|Item 17. Financial Statements                                                         |  |  | 65  | 
|                                                                                      | 
|Item 18. Financial Statements                                                         |  |  | 65  | 
|                                                                                      | 
|Item 19. Exhibits                                                                     |  |  | 65  | 
|                                                                                      | 
|Index to Consolidated Financial Statements                                            |  |  | F-1 | 
|Exhibit Index                                                                         |  |  | E-1 | 



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##### Table of Contents

The terms Global-Tech, we, the Company, the Group,
us and our as used in this annual report on Form 20-F, or annual report, refer to Global-Tech Advanced Innovations Inc. (formerly known as Global-Tech Appliances Inc.), a British Virgin Islands corporation, and its
consolidated subsidiaries, except where the context requires otherwise. The terms China, Hong Kong and Macau as used in this annual report refer to the Peoples Republic of China (the PRC), the
Hong Kong Special Administrative Region of China and the Macau Special Administrative Region of China, respectively.

References throughout
this annual report to a fiscal year refer to the fiscal year ended on March 31 of that year. Fiscal 2011, for example, refers to the fiscal year ended March 31, 2011.

Our financial statements are reported in U.S. dollars (see Note 3(p) of Notes to Consolidated Financial Statements) and in accordance with generally accepted accounting principles in the United States, or
U.S. GAAP. All references to dollars or $ in this annual report are to U.S. dollars. All references to HK$ are to Hong Kong dollars.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains
forward-looking statements that are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to our future plans, objectives, expectations and intentions and involve inherent risks and
uncertainties. We use words such as expect, anticipate, project, believe, plan, intend, seek, should, estimate, future, or
variations of such words and other similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Forward-looking statements contained herein (including future cash contractual
obligations, liquidity, cash flow, orders, results of operations, and trends, among other matters) or in other statements made by us are made based on managements expectations and beliefs concerning future events impacting us and are subject
to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed
or implied by forward-looking statements. We believe that the following factors, among others (including those described in Item 3.D. Risk Factors), could affect our future performance and the liquidity and value of our securities
and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf:



| |  |  | the cyclicality of the markets which we serve and the vulnerability of those markets to economic downturns;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the impact of the recent global economic and financial crisis;
| | - |  | --------------------------------------------------------------



| |  |  | the loss of, or a significant reduction or delay in purchases by our customers;
| | - |  | -------------------------------------------------------------------------------



| |  |  | competition in our markets;
| | - |  | ---------------------------



| |  |  | financial distress of third parties;
| | - |  | ------------------------------------



| |  |  | general economic, political, business and market risks associated with our global operations;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | fluctuations in foreign currency exchange and interest rates;
| | - |  | -------------------------------------------------------------



| |  |  | our ability to control our costs while maintaining customer relationships and core business resources;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | the pricing and availability of raw materials;
| | - |  | ----------------------------------------------



| |  |  | litigation and disputes involving us, including the extent of product liability, warranty, pension, employment and other similar claims asserted
against us;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impairment of our goodwill and other indefinite-lived intangible assets;
| | - |  | ----------------------------------------------------------------------------



| |  |  | labor costs and disputes and the deterioration of our relations with our employees;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | additional liabilities related to taxes;
| | - |  | ----------------------------------------



| |  |  | our ability to continue our technical innovation in our product lines;
| | - |  | ----------------------------------------------------------------------



| |  |  | our ability to protect our intellectual property and know-how;
| | - |  | --------------------------------------------------------------



| |  |  | claims that our products or processes infringe intellectual property rights of others;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | regulations governing the export of our products;
| | - |  | -------------------------------------------------



| |  |  | fluctuations in the price of our stock; and
| | - |  | -------------------------------------------



| |  |  | other factors described in this annual report.
| | - |  | ----------------------------------------------

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this annual report and are expressly qualified in their entirety by the cautionary statements
included in this annual report. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.



1



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##### Table of Contents

PART I



|Item 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------



|A. | Directors and senior management.
|-- | --------------------------------

Not applicable.



|B. | Advisers.
|-- | ---------

Not applicable.



|C. | Auditors.
|-- | ---------

Not applicable.



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------



|A. | Offer statistics.
|-- | -----------------

Not applicable.



|B. | Method and expected timetable.
|-- | ------------------------------

Not applicable.



2



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|Item 3. | Key Information
|------- | ---------------



|1A. | Selected financial data.
|--- | ------------------------

The selected consolidated statement of operations data for the fiscal years ended March 31, 2009, 2010 and 2011 and the selected consolidated balance
sheets data as of March 31, 2010 and March 31, 2011 set forth below have been prepared in accordance with U.S. GAAP and are derived from our consolidated financial statements and notes thereto included elsewhere in this annual report. The
selected consolidated statement of operations data for the fiscal years ended March 31, 2007 and 2008 and the selected consolidated balance sheets data as of March 31, 2007, 2008 and 2009 set forth below have been prepared in
accordance with U.S. GAAP and are derived from our consolidated financial statements and notes thereto not included elsewhere in this annual report. The selected consolidated financial data set forth below should be read in conjunction with
Item 5Operating and Financial Review and Prospects, the consolidated financial statements and the notes thereto and other financial information which appear elsewhere in this annual report.

Please see Item 4.AInformation on the CompanyRecent Developments on page 12 of this annual report for a detailed
discussion of the Companys plans to exit the home appliances business.



|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|---------------------------------------------------------------------- |  | ----------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                       |  | Fiscal Year Ended March 31,               |        
|                                                                       |  | 2007                                      |         |   | 2008 |   |         | 2009 |  |   | 2010    |   |  | 2011 |        
|                                                                       |  | (In thousands, except for per share data) |        
|Statement of operations data:                                          |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net sales                                                              |  | $                                         | 60,291  |   |      | $ | 105,543 |      |  | $ | 87,387  |   |  | $    | 101,929 |   |  | $ | 100,955 |  
|Cost of goods sold                                                     |  |                                           | (56,763 | ) |      |   | (94,976 | )    |  |   | (81,500 | ) |  |      | (84,889 | ) |  |   | (91,062 | )
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Gross profit                                                           |  |                                           | 3,528   |   |      |   | 10,567  |      |  |   | 5,887   |   |  |      | 17,040  |   |  |   | 9,893   |  
|Selling, general and administrative expenses                           |  |                                           | (12,454 | ) |      |   | (12,803 | )    |  |   | (13,075 | ) |  |      | (14,096 | ) |  |   | (15,829 | )
|Other operating income (loss), net                                     |  |                                           | 608     |   |      |   | (143    | )    |  |   | 1,674   |   |  |      | 180     |   |  |   | 1,106   |  
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Operating profit (loss)                                                |  |                                           | (8,318  | ) |      |   | (2,379  | )    |  |   | (5,514  | ) |  |      | 3,124   |   |  |   | (4,830  | )
|Interest income, net                                                   |  |                                           | 1,437   |   |      |   | 1,704   |      |  |   | 533     |   |  |      | 276     |   |  |   | 536     |  
|Other income (expenses), net                                           |  |                                           | 1,728   |   |      |   | (1,809  | )    |  |   | 432     |   |  |      | 455     |   |  |   | 311     |  
|Loss on dissolution of a subsidiary                                    |  |                                           |        |   |      |   |        |      |  |   | (1,029  | ) |  |      |        |   |  |   |        |  
|Gain on disposal of subsidiaries                                       |  |                                           | 3,952   |   |      |   |        |      |  |   | 158     |   |  |      |        |   |  |   |        |  
|Share of losses of jointly-controlled entities                         |  |                                           | (187    | ) |      |   | (346    | )    |  |   |        |   |  |      |        |   |  |   |        |  
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income (loss) before income taxes                                  |  |                                           | (1,388  | ) |      |   | (2,830  | )    |  |   | (5,420  | ) |  |      | 3,855   |   |  |   | (3,983  | )
|Benefit from (provision for) income taxes                              |  |                                           | 144     |   |      |   | (1,597  | )    |  |   | (421    | ) |  |      | (389    | ) |  |   | (204    | )
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income (loss) before non-controlling interests                     |  |                                           | (1,244  | ) |      |   | (4,427  | )    |  |   | (5,841  | ) |  |      | 3,466   |   |  |   | (4,187  | )
|Non-controlling interests                                              |  |                                           | 77      |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   | 175     |  
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income (loss)                                                      |  | $                                         | (1,167  | ) |      | $ | (4,427  | )    |  | $ | (5,841  | ) |  | $    | 3,466   |   |  | $ | (4,012  | )
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic and diluted net income (loss) per share of common stock          |  | $                                         | (0.38   | ) |      | $ | (1.45   | )    |  | $ | (1.91   | ) |  | $    | 1.14    |   |  | $ | (1.32   | )
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic and diluted weighted average number of shares of common stock(1) |  |                                           | 3,056   |   |      |   | 3,057   |      |  |   | 3,051   |   |  |      | 3,038   |   |  |   | 3,039   |  
|                                                                       |  |                                           |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  



|(1) | The Company executed a 4-for-1 reverse stock split of its common stock effective as of December 10, 2008. All numbers have been adjusted to reflect this reverse
stock split on a retroactive basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                     |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                     |  | At March 31,   |        
|                     |  | 2007           |         |  | 2008 |   |         | 2009 |  |   | 2010    |  |  | 2011 |        
|                     |  | (In thousands) |        
|Balance sheet data:  |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Working capital1     |  | $              | 50,559  |  |      | $ | 43,995  |      |  | $ | 46,362  |  |  | $    | 51,870  |  |  | $ | 45,170  | 
|Total assets         |  |                | 100,281 |  |      |   | 108,725 |      |  |   | 103,914 |  |  |      | 111,087 |  |  |   | 119,936 | 
|Net assets2          |  |                | 79,380  |  |      |   | 78,243  |      |  |   | 74,201  |  |  |      | 77,736  |  |  |   | 76,337  | 
|Total debt3          |  |                |        |  |      |   | 1,600   |      |  |   |        |  |  |      |        |  |  |   | 12,585  | 
|Shareholders equity |  |                | 79,380  |  |      |   | 78,243  |      |  |   | 74,201  |  |  |      | 77,736  |  |  |   | 76,337  | 





|(1) | Working capital is
the excess of current assets over current liabilities.
|--- | -------------------------------------------------------------------------

|(2) | Net assets are the
excess of total assets over total liabilities and non-controlling interests.
|--- | -----------------------------------------------------------------------------------------------

|(3) | Total debt is the
summation of short-term borrowings, current portion of long-term bank borrowings and non-current portion of long-term bank borrowings.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



3



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##### Table of Contents

|B. | Capitalization and indebtedness.
|-- | --------------------------------

Not applicable.



|C. | Reasons for the offer and use of proceeds.
|-- | ------------------------------------------

Not applicable.



|D. | Risk factors
|-- | ------------

The global economic and financial crisis.The global economic and financial market crisis that began in 2008 continues to cause, among other things, a general tightening in the
credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and reduced consumer spending, all of which has had and will continue to have a negative effect on our business, results of operations and financial
condition. Demand for our products depends in large part upon the level of capital and maintenance expenditures by many of our customers and end users. Recent economic conditions have reduced the willingness or ability of our customers and
prospective customers to commit funds to purchase our products and services, and may reduce their ability to pay for our products and services after purchase. Similarly, our suppliers may not be able to supply us with needed raw materials or
components on a timely basis, may increase prices or go out of business, which could result in our inability to meet customer demand, fulfill our contractual obligations or affect our gross margins. We cannot predict the timing or duration of these
negative market conditions or the timing or strength of any economic recovery. If the economy or markets in which we operate remain weak or deteriorate further, our business, financial condition and results of operations will be materially and
adversely impacted.

Inflation and increased labor costs.The economy of China has
been experiencing significant growth, leading to inflation and increased labor costs. We generate all revenues from sales of products that we manufacture at our facilities in the PRC. The economy in China has grown significantly over the past 20
years, which has resulted in an increase in inflation and the average cost of labor, especially in the coastal cities. Chinas consumer price index, the broadest measure of inflation, rose 4.9% in January 2011 from the level in January 2010.
Chinas overall economy and the average wage in the PRC are expected to continue to grow. For example, wages of our direct labor workforce increased substantially in fiscal 2011 and at March 31, 2011, average wage level was approximately
55.6% higher than that at March 31, 2010. Continuing increases in Chinas inflation and material increases in the cost of labor would diminish our competitive advantage and, unless we are able to pass on these increased labor costs to our
customers by increasing prices for our products and services, our profitability and results of operations could be materially and adversely affected.

Dependence on major customers. In fiscal 2011, over 96.6% of our sales of home appliances and 41.6% of our consolidated net sales were to one customer, the Electrolux Group. Electrolux is
not contractually obligated to purchase floor care products from us, and we only sell to them on the basis of individual purchase orders when received.

In June 2011, the Companys Board of Directors approved a plan to exit the home appliances business. The Company expects production of floor care products to continue until the earlier of
January 15, 2012 or such time as Electrolux successfully transitions to alternate vendors. For a more detailed discussion of the Companys plans to exit the home appliances business, see Item 4.AInformation on the
CompanyRecent Developments on page 12 of this annual report.

Our five largest Electronic Components
and EMS customers represent 68.4% and 98.3% of net sales of their respective segments, respectively, and 28.9% and 14.4%, respectively of consolidated net sales in fiscal 2011. We have no contractual arrangements with these customers and only sell
to them based on purchase orders received. We expect that a limited number of customers will continue to represent a substantial portion of our sales for the foreseeable future. The loss of any of our major customers or a decrease or delay in orders
or anticipated spending by such customers could materially reduce our revenues and profitability. Our largest customers could also engage in business combinations, which could increase their size, reduce their demand for our products as they
recognize synergies or rationalize assets and increase or decrease the portion of our total sales concentration to any single customer.

Penalties for workforce reductions.In June 2007, the National Peoples Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became
effective on January 1, 2008. It formalizes workers rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, this
new law requires an employer to conclude an open-ended employment contract with any employee who either has worked for the employer for 10 years or more or has had two consecutive fixed-term contracts. An open-ended employment
contract is in effect a lifetime, permanent contract, which is terminable only in specified circumstances, such as a material breach of the employers rules and regulations, or for a serious dereliction of duty. Under the new law,
downsizing by 20% or more of each individual entity may occur only under specified circumstances, such as a restructuring undertaken pursuant to Chinas Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production
and/or business operations. Also, if we lay off more than 20 employees at one time, we have to communicate with the labor union of our Company and report to the District Labor Bureau. We can expect to incur much higher costs under Chinas labor
laws if in the future, we downsize our workforce in any significant manner and such costs could have a material adverse effect on our financial results and financial condition.



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As discussed in more detail in Item 4.AInformation on the
CompanyRecent Developments on page 12 of this annual report, the Companys board of directors has approved a plan for exiting the home appliance business, which will likely necessitate a restructuring of the
Companys labor force, which will likely result in the Company incurring penalties under the Labor Contract Law.

PRC Social Insurance Law.In October 2010,China promulgated the Social Insurance Law of the Peoples Republic
of China (the Social Insurance Law), which became effective as of July 1, 2011. Before its promulgation, Chinas social insurance policies were implemented through a web of rules and regulations at both national and local
levels. The Law unifies previous, scattered laws that relate to social insurance matters. The Social Insurance Law expressly clarifies that the social insurance system in China includes pension insurance, medical insurance, unemployment insurance,
work-related injury insurance and maternity insurance, all of which are mandatory for employees of companies operating in the PRC. Both employers and employees are required to make contributions for pension, medical and unemployment insurance, while
only employers are required to make contributions for work-related injury insurance and maternity insurance.

The Social
Insurance Law does not specify the contribution rates or the basis for calculating each kind of social insurance, which leaves room for local governments to implement the Social Insurance Law in light of their local economic realities and consistent
with the national policy. Currently, contribution rates are determined at the provincial or municipal level and many local governments have not yet established contribution rates.

Previously, the Company adhered to a policy of accruing and expensing social insurance premiums equivalent to two years of such costs,
without regard to actual payments. The Company has assessed the potential for retroactive application of the Social Insurance Law and concluded that such retroactive application is neither likely nor calculable. In prior years, new accruals were
offset by a resulting reversal of accruals made two years prior. However, should the local government rates or applicability ultimately differ from those used by the Company, it could have a material adverse effect on our financial results and
financial condition.

Cost and availability of labor. There is an emerging trend of a shortage of supply of
migrant workers in China, particularly in Guangdong Province where our factory is located. Both in numbers and in skill, the labor force in China cannot keep up with the current speed of economic development and labor organizations have begun to
initiate industrial action to raise wages. We continually adjust salaries and fringe benefits in order to attract and retain an adequate labor force. This trend of labor shortages is expected to continue and will likely result in further increases
in wages as companies seek to retain their existing work forces. In the coming year, we expect that both a potential shortage of labor and increasing costs will impact our manufacturing operations, which could adversely affect gross margins.

Cancellation or delays in purchase orders placed by our customers. Sales to our customers are primarily based
on purchase orders and forecasts we receive. We generally purchase and stock raw materials and components upon receiving orders; however, we will purchase the raw materials and components for certain customers based on their rolling forecasts. When
there is an acute shortage of raw materials and components such as plastic resins and metal, we are required to purchase such raw materials on an occasional or continuous basis in the expectation of receiving purchase orders for products that use
these raw materials and components. In the event the actual orders are delayed or cancelled, we would have increased inventory levels or possible write-downs of our raw material inventory that could materially and adversely affect our business and
results of operations.



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Foreign sales, operations and assets. Substantially all of our products are
currently manufactured in China and over 98% of the net book value of our total long-lived assets is located there. We sell products to companies based principally in North America, China and Europe. Consequently, our international operations and
sales may be subject to the following risks, among others:



| |  |  | political and economic risks, including political instability, currency controls and exchange rate fluctuations;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | changes in import/export regulations;
| | - |  | -------------------------------------



| |  |  | changes in the rate of inflation;
| | - |  | ---------------------------------



| |  |  | changes in tariff and freight rates; and
| | - |  | ----------------------------------------



| |  |  | changes in tax rates.
| | - |  | ---------------------

In particular, changes in tariff structures or other trade policies could adversely affect our customers or suppliers or decrease our competitors costs of production.

Renminbi revaluation. We sell a significant portion of our products to North America customers FOB China. These sales are
generally denominated in U.S. dollars. The majority of our expenses, including salaries and wages and other production and administrative costs are denominated in Hong Kong dollars and Chinese Renminbi. Although certain raw materials, material
components and capital equipment are purchased using a variety of currencies, including the U.S. dollar, Chinese Renminbi, Japanese yen and EURO, the majority are purchased with Hong Kong dollars. The Hong Kong dollar is currently pegged to the U.S.
dollar at a rate of approximately HK$7.8 to US$1.0. In the aggregate, we have not been significantly affected by exchange rate fluctuations and therefore have not hedged our positions.

From 1998 until 2005, the Peoples Bank of China (PBOC) kept the Renminbis exchange rate against the U.S. dollar
steady at approximately 8.3 Renminbi to the U.S. dollar. In March 2005, Chinas Premier introduced a number of conditions, including but not limited to, Chinese financial and economic stability that must be achieved before China could implement
greater exchange flexibility. At that time the Premier indicated that the Renminbi was likely to be revalued, but gave no timetable for such revaluation.

On July 21, 2005, the PBOC decided to abandon its policy of pegging the Renminbi to the U.S. dollar and instead decided to link the Renminbi to a basket of currencies. The PBOC also strengthened the
exchange rate of the Renminbi to 8.11 to the U.S. dollar from 8.28 as the Chinese government took its first step towards a floating currency. During fiscal 2011 the Renminbi was allowed to appreciate to between 6.5662 and 6.8274 to the U.S. dollar
and subsequently it has appreciated to 6.4442, as of July 29, 2011. This appreciation has made Chinese products more expensive for U.S. companies. To the extent our operations are based in China, we are exposed to foreign exchange risk with
respect to the Renminbi, which could continue to adversely impact our financial position and results of operations.

Credit terms in the PRC.Some of the Companys major customers in the PRC are granted credit terms of up to 210 days.
Most of the other customers are granted 60 days from the end of the month of shipment. The Company obtains credit insurance when available but a default by any of our major customers in their obligation to pay us would have a material adverse effect
on our financial position and results of operations.

Government regulation. Our operations and assets in China
are subject to significant political, economic, legal and other uncertainties. Any of the following could result from policy changes by the Chinese government and could have a material adverse effect on our business, results of operations and
financial condition:



| |  |  | legal or regulatory changes, or changes in interpretation of current laws or regulations;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | new labor laws restricting flexibility in employment and added social security costs;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | confiscatory or increased taxation;
| | - |  | -----------------------------------



| |  |  | restrictions on currency conversion, imports and sources of supply;
| | - |  | -------------------------------------------------------------------



| |  |  | import duties;
| | - |  | --------------



| |  |  | currency devaluations; or
| | - |  | -------------------------



| |  |  | expropriation of private enterprise.
| | - |  | ------------------------------------

Under its current leadership, the Chinese government has been pursuing economic reform policies, including the encouragement of private economic activity and greater economic decentralization. In 2001,
China was admitted to the World Trade Organization (WTO), and is now entitled to the full trading rights afforded a WTO member country. There can be no assurance, however, that China will continue to pursue and implement favorable
economic reform policies, that such policies will be successful if pursued or that such policies will not be significantly altered from time to time without prior notice.



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The municipal authorities in each township in China have a certain amount of discretion to
impose or waive a large number of fees and taxes including value-added tax, stamp duty, licenses and permits. In the Companys manufacturing location, it is subject to the laws and regulations of the township of Dongguan, Guangdong Province and
the PRC. To the extent the government authorities decide to exercise their discretion to increase or impose new fees, our operations could be materially affected.

Change in PRC taxation. Under PRC tax law before 2008, the Company was subject to a lower overall effective tax rate than some U.S. domiciled corporations because of the location of its
business operations. However, on March 16, 2007, the Chinese government enacted a unified enterprise income tax law or EIT, which became effective on January 1, 2008. Prior to the EIT, as a foreign invested enterprise, or FIE,
some of our subsidiaries enjoyed preferential tax treatment. Under the EIT, most domestic enterprises and FIEs are subject to a single PRC enterprise income tax rate of 25%. We base our tax position upon the anticipated nature and conduct of our
business and upon our understanding of the tax laws of the various administrative regions and countries in which we have assets or conduct activities. However, our tax position is subject to review and possible challenge by the tax authorities and
to possible changes in law, which may have retroactive effect. We cannot determine in advance the extent to which some jurisdictions may require us to pay taxes or make payments in lieu of taxes.

PRC taxation on deemed income. The PRC tax authorities could determine that any inter-company payable account in accordance
with the PRC GAAP could be deemed income if such inter-company payables can not to be settled and therefore subject to taxation. In accordance with FIN 48, we evaluated our position and determined that such inter-company payables will be settled,
and particularly, since prior year tax assessment have been confirmed with the PRC tax authorities, deeming such inter-company payables as income was not more likely than not . However, if the PRC tax authorities deem our inter-company payables of
our PRC subsidiaries as income, it would have a material impact on our financial position and results of operations

PRC
taxation on worldwide income. We may be deemed a PRC resident enterprise under the EIT Law and be subject to PRC taxation on our worldwide income. The EIT Law provides that enterprises established outside of China whose de facto
management bodies are located in China are considered resident enterprises and are generally subject to the uniform 25% enterprise income tax rate as to their worldwide income. Under the implementation regulations for the EIT Law
issued by the PRC State Council, de facto management body is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and treasury, and
acquisition and disposition of properties and other assets of an enterprise. Also, on April 22, 2009, the State Administration of Tax (SAT) issued a Tax Circular, Guoshuifa [2009] No. 82, Notice on the Recognition of
Overseas Incorporated Domestically Controlled Enterprises as PRC Resident Enterprises Based on the Place of Effective Management Criteria, or Circular 82, with retrospective effect from 1 January 2008. According to Circular 82, any
enterprise established under the law of a country or region other than the PRC but whose main investor is a PRC enterprise or Group shall be recognized as a resident enterprise for PRC tax purposes if all the following criteria are met: (i) the
senior executives responsible for its daily production or business operations and the place where such responsibilities are carried out are mainly located in China; (ii) decisions about its finances (such as borrowing, lending, financing and
managing financial risk) and human resources (such as staff recruitment, termination, and remuneration policies) are made or approved by organizations or individuals located in China; (iii) its major properties, accounting books and records,
company seal, board minutes and resolutions, shareholders meeting minutes, etc. are kept in China; and (iv) 50% or more of its voting directors or its senior executives habitually reside in China. The principle of substance over
form applies when determining the place of effective management. Although Circular 82 was issued to regulate the PRC tax resident judgment of companies established overseas and controlled by PRC companies, which is not applicable in our case,
the criteria in Circular 82 should be used as a reference to the SATs view on this issue. We believe the risk of being recognized as a PRC resident enterprise under the EIT Law is very low. If we are treated as a resident enterprise for PRC
tax purposes, we will be subject to PRC tax on our worldwide income at the 25% uniform tax rate, which could have an impact on our effective tax rate and an adverse effect on our results of operations.

Potential taxes on dividends and sale of our stock.Under the EIT Law and implementation regulations issued by the State
Council, PRC income tax at the rate of 10% is applicable to dividends payable to investors that are non-resident enterprises which do not have an establishment or place of business in the PRC, or which have such establishment or place of
business but the relevant income is not effectively connected with the establishment or place of business, to the extent that such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of shares by such investors
is also subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC. If we are considered a PRC resident enterprise, it is unclear whether dividends we pay with respect to our common shares, or
the gain our investors may realize from the transfer of our common shares, would be treated as income derived from sources within the PRC and be subject to PRC tax. If we are required under the EIT Law to withhold PRC income tax on dividends payable
to our non-PRC investors that are non-resident enterprises, or if our investors are required to pay PRC income tax on the transfer of our common shares, the value of their investment in common shares may be materially and adversely
affected.



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Passive foreign investment company. Based on our financial statements,
relevant market data and the projected composition of our income and valuation of our assets, including goodwill, we do not believe that we were a passive foreign investment company, or PFIC, for fiscal 2011, and we do not expect to be a PFIC in
fiscal 2012 or to become one in the foreseeable future, although there can be no assurance in this regard. If, however, we become a passive foreign investment company, such characterization could result in adverse U.S. tax consequences to our
investors if they are a U.S. investor. For example, if we become a PFIC, our U.S. investors will become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to burdensome reporting requirements.

If we are a PFIC for any taxable year during which a U.S. investor holds our common shares, unless the U.S. investor made a
mark-to-market election the U.S. investor would be subject to special tax rules with respect to any excess distribution received and any gain realized from a sale or other disposition, including a pledge, of common shares. Distributions
received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or a U.S. investors holding period for the common shares will be treated as excess
distributions. Under these special tax rules:



| |  |  | the excess distribution or gain will be allocated ratably over the U.S. investors holding period for the common shares,
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated
as ordinary income, and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition, non-corporate U.S. investors will not be eligible for reduced rates of taxation on any dividends received from us in taxable years beginning prior to January 1, 2013, if we are a PFIC in the taxable year in which such dividends are
paid or in the preceding taxable year.

The determination of whether or not we are a PFIC is made on an annual basis and
depends on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for U.S. tax purposes if either: (i) 75% or more of our gross income in a taxable year is passive income, or (ii) the
average percentage of our assets (which include cash) by (determined on a quarterly average) value in a taxable year which produce or are held for the production of passive income (which includes cash) is at least 50%. The calculation of the value
of our assets will be based, in part, on the then prevailing market value of our common shares, which is subject to change. We cannot assure that we will not be a PFIC for 2011 or any future taxable year. See Item 10. Additional
InformationE. TaxationMaterial United States Federal Income Tax Consequences.

Cost of raw
materials. We are dependent upon outside suppliers for all of our raw material needs, including plastic resins, and are subject to price increases in these raw materials. The plastic resins we use are derived from natural gas liquids, and
prices of these plastic resins have fluctuated in line with the fluctuation in natural gas and crude oil prices, as well as the relative capacity, supply and demand for the resin and petrochemical intermediates from which plastic resins are
produced. During fiscal 2011, the price of plastic increased 56.7% overall but subsequently has increased as a result of the recovery in crude oil prices. We have no long-term supply contracts for the purchase of plastic resin, but we generally
maintain a 30-day supply. We have limited ability to increase product prices in response to plastic resin or other material cost increases. We closely monitor crude oil prices that normally affect the price of plastic resin and our inventory levels
to ensure we can complete our orders on hand. If our reserves are not sufficient for our production requirements, we have to buy plastic resin at potentially higher prices in order to meet our delivery schedules. There can be no assurance that we
will be able to purchase the necessary quantities of plastic resin and other raw materials at reasonable prices. Any future increase in the cost of plastic resins or other raw materials or our continuing inability to pass the increased cost of these
or other raw materials onto our customers or to purchase sufficient quantities of plastic resins will have a material adverse effect on our business, results of operations and financial condition.

Security of bank accounts in the PRC. The Company has a number of bank accounts in the PRC to satisfy lines of credit,
exchange regulations and banking facilities and to support its operations. None of these accounts are insured by the government. In the event there was a credit crisis in the PRC or a run on the bank, our accounts would be vulnerable for loss and
this would have a material adverse effect on our financial condition.

Unsecured cash, cash equivalents and short-term
investments.We have cash and short-term cash equivalent instruments, available-for-sale investments which are invested with third party financial institutions that may not be insured or exceed the insurance limits of the Federal Deposit
Insurance Corporation (FDIC) or other government insurance agencies. While we make an effort to monitor the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the
underlying financial institutions fail or become subject to other adverse conditions in the financial markets. We have not experienced any loss in our cash and cash equivalents to date or lack of access to cash in our operating accounts. We also
invest excess cash in immediately available and short-term interest bearing cash equivalent instruments. If a commercial bank or financial institution in which we have our funds deposited should become insolvent or be taken over by the FDIC or other
governmental



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insurance agencies, we could have significant unrecoverable cash deposits. A loss in cash deposits would have an adverse impact on our business, results of operations and financial condition.

New products and rapid technological change. The technology incorporated in many of our products, particularly
consumer electronics, is characterized by rapid change in the marketplace. In addition, the emergence of new technologies can quickly render existing products obsolete or unmarketable. Our ability to anticipate changes in technology and industry
standards or consumer demand and successfully develop and introduce new or enhanced products that gain market acceptance will be a critical factor in our ability to grow and remain competitive. There can be no assurance that we will timely or
successfully complete the development of new or enhanced products or successfully manage the transition from one product release to the next, or that our future products will achieve market acceptance. The failure to realize such goals could have a
material adverse effect on our business, results of operations and financial condition.

Proprietary technology; patent
protection. We rely on a combination of internal procedures, nondisclosure agreements, intellectual property rights assignment agreements, as well as licenses, patents, trademarks and copyright law to protect our intellectual property and
know-how. Our intellectual property rights may not be successfully asserted in the future or may be invalidated, circumvented or challenged. For example, we frequently explore and evaluate potential relationships and projects with other parties,
which often requires that we provide the potential partner with confidential technical information. While confidentiality agreements are typically put in place, there is a risk the potential partner could violate the confidentiality agreement and
use our technical information for its own benefit or the benefit of others or compromise the confidentiality. In addition, the laws of certain foreign countries in which our products may be sold or manufactured do not protect our intellectual
property rights to the same extent as the laws of the United States. For example, laws in China may not protect our intellectual property rights to the same extent as in the United States. Failure or inability to protect our proprietary
information could result in a decrease in our sales or profitability. The protection of our intellectual property may require expensive investment in protracted litigation and the investment of substantial management time and there is no assurance
we ultimately would prevail or that a successful outcome would lead to an economic benefit that is greater than the investment in the litigation. In addition, we may be unable to prevent third parties from using our intellectual property rights and
know-how without our authorization or from independently developing intellectual property that is the same as or similar to ours, particularly in those countries where the laws do not protect our intellectual property rights as fully as in the
United States. We compete in a number of industries that are small or specialized, which makes it easier for a competitor to monitor our activities and increases the risk that ideas will be stolen. The unauthorized use of our know-how by third
parties could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business or increase our expenses as we attempt to enforce our rights.

Potential patent infringement or similar claims.Although it is our intention to avoid infringing or otherwise violating
the intellectual property rights of others, third parties may nevertheless claim (and in the past have claimed) that our processes and products infringe their intellectual property and other rights. Our strategy of developing new innovative products
across multiple business lines presented significant infringement claim risks both internationally and in the United States. We compete with other companies for contracts in some small or specialized industries, which increases the risk that the
other companies will develop overlapping technologies leading to an increased possibility that infringement claims will arise. Whether or not these claims have merit, we may be subject to costly and time-consuming legal proceedings, and this could
divert our managements attention from operating our businesses. In order to resolve such proceedings, we may need to obtain licenses from these third parties or substantially re-engineer or rename our products in order to avoid infringement.
In addition, we might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to re-engineer or rename our products successfully.

Product liability. We may be subject to substantial product liability costs if claims arise out of problems associated with our products. We provide a warranty for limited manufacturing
defects to certain of our customers. We do not provide warranties, however, that extend to the ultimate consumers of the product. Nevertheless, there can be no assurance that we will not be subject to a suit by a consumer who uses one of our
products if the product causes an injury to any person or does not perform properly. We maintain product liability insurance in an amount we believe is sufficient. There can be no assurance, however, that our insurance coverage will be adequate or
that all product liability claims will be covered by our current product liability insurance. In addition, these policies must be renewed annually. To date, we have not been subject to any material product liability claim. While we have been able to
obtain product liability insurance in the past, premiums continue to increase in cost and may not be available in the future on terms acceptable to us, if at all. The failure to maintain insurance coverage, or a successful claim against us not
covered by or in excess of the insurance coverage, could have a material adverse effect on our business, results of operations and financial condition. In addition, product liability claims, regardless of their merit or eventual outcome, may have a
material adverse effect on our business reputation.

Product safety. We may be responsible for ensuring that our
products are safe and satisfy all of the requirements of the consumer products safety commission (CPSC) in the United States. This may also apply to OEM products manufactured by us to customer specifications. In the event of a recall
required by the CPSC, our customers may require us to provide replacement conforming units at our cost, which could have a material adverse effect on our business, quality reputation and results of operations.



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Product safety; delays in regulatory approval. Our products include several
electrical components, which may cause fires if not properly installed. Although we have experienced no significant safety problems with our products in the past and believe that our products do not present safety risks, there can be no assurance
that safety problems will not occur in the future. Prior to the commercial introduction of our products into the market, we always obtain approval of our products by at least one of the organizations engaged in testing product safety. The
application process for securing these approvals requires a significant commitment of time and resources by our technical staff and could delay the introduction of our products. Our inability to obtain regulatory approval within the projected
timeframe for commercial introduction of our products or other product introduction delays could have a material adverse effect on our business, results of operations and financial condition.

Risks of manufacturing in China; property damage. All of our products are manufactured at our factory complex located in
Dongguan, China. In addition to the political and economic risks of operations in China, firefighting and disaster relief assistance in China is not as sophisticated as in certain Western countries. We currently maintain property damage insurance in
the aggregate of approximately $71.1 million which covers our inventory, furniture, equipment, machinery and buildings and also maintain business interruption insurance in the aggregate of approximately $21.9 million for losses relating to our
factory. Material damage to, or the loss of, our facilities due to fire, severe weather, flood, force majeure or other act of God or cause, even if insured against, would have a material adverse effect on our business, results of operations and
financial condition.

Impact of environmental regulations. We are subject to Chinese laws that regulate
environmental quality, the utilization of natural resources and the reduction of pollution. Environmental regulation in China is currently evolving and could become more stringent or more stringently enforced in the future, which could require us to
make substantial additional capital expenditures in the future to maintain compliance. As a manufacturer, we are subject to annual inspections by the local branch of the State Environment Protection Administration (SEPA). Although
compliance with environmental regulations has not had a material adverse effect on us in the past, failure to comply with these laws or to pass an inspection in the future could have a material adverse effect on our business, results of operations
and financial condition.

Dependence on distributions from operating subsidiaries and currency fluctuation. We
have no direct business operations, other than our ownership of our subsidiaries. If we decide to pay dividends in the future, as a holding company, our ability to pay dividends and meet other obligations would depend upon the receipt of dividends
or other payments from our operating subsidiaries and our other holdings and investments. In addition, our operating subsidiaries may also be subject to restrictions on their ability to make distributions to us, including, among others, restrictive
covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions, particularly as it relates to our PRC subsidiaries. Since we do not engage in hedging or other
similar transactions, extraordinary currency fluctuations could have a material adverse effect on our business, results of operations and financial condition.

Concentration of ownership. Wing Shing Holdings Company Limited, a British Virgin Islands company (Wing Shing Holdings), directors and family members of directors of the Company
beneficially own approximately 67.3% of our outstanding common shares (issued net of treasury shares). The share ownership of Wing Shing Holdings is held 44.0% by the estate of Kwong Ho Sham, who prior to his passing, served as the Chairman of the
Companys Board of Directors, and 56.0% by our Chief Executive Officer, John Sham, who currently serves as a director. Voting control of Wing Shing Holdings was held approximately 34.3% by Kwong Ho Sham and approximately 65.7% by John Sham. As
a result, Wing Shing Holdings and its shareholders and their family members are in a position to control our activities and policies, including possessing the voting power to elect our board of directors and approve all matters requiring shareholder
approval and the ability to generally direct our affairs. In June 2011, Kwong Ho Sham established a trust that would own his portion of Wing Shing Holdings shares in the Company. Upon his passing, 303,070 shares currently owned by Wing Shing
Holdings would go into this trust and 385,757 shares owned by Wing Shing Holdings would be transferred to John C.K. Sham. As of July 31, 2011, the transfers had not been officially executed but are expected to occur during fiscal 2012. John
C.K. Sham, as a trustee of his fathers charitable trust, declines beneficial ownership of any of the trusts shares.

Service and enforcement of legal process. We are organized under the laws of the British Virgin Islands. All but two of our
directors and executive officers reside outside the United States, and most of our assets are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process on these persons within the
United States or to enforce against these persons judgments obtained in U.S. courts, including judgments predicated on the civil liability provisions of the federal securities laws of the United States. In particular, judgments of U.S. courts
predicated upon the civil liability provisions of the federal securities laws of the United States may be difficult to enforce in British Virgin Islands courts and it is uncertain whether British Virgin Islands courts will enter judgments in
original actions brought in British Virgin Islands courts predicated solely upon the civil liability provisions of the federal securities laws of the United States.



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British Virgin Islands company. Our corporate affairs are governed by our
memorandum and articles of association and by the International Business Companies Act of the British Virgin Islands. Principles of law relating to such matters as the validity of corporate procedures, the fiduciary duties of management and the
rights of our shareholders may differ from those that would apply if we were incorporated in the United States or another jurisdiction. The rights of shareholders under British Virgin Islands law are not as clearly established as are the rights of
shareholders in many other jurisdictions. Thus, our shareholders may have more relative difficulty protecting their interests against certain actions by our board of directors or principal shareholders than similarly situated shareholders of a
corporation incorporated in another jurisdiction. Please see details under Item 10Additional Information.

Director actions without shareholder approval. Under our memorandum and articles of association and the laws of the British
Virgin Islands, our memorandum and articles of association may be amended by our board of directors without shareholder approval. This includes:



| |  |  | increasing or reducing our authorized capital;
| | - |  | ----------------------------------------------



| |  |  | authorizing the issuance of different classes of shares, including preference shares; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | increasing or reducing the par value of our shares.
| | - |  | ---------------------------------------------------

Our ability to amend our memorandum and articles of association by a resolution of directors or a resolution of members could have the effect of delaying, deterring or preventing a change in control of
the Company without any further action by the shareholders including, but not limited to, a tender offer to purchase our common shares at a premium over then current market prices.

Our status as a foreign private issuer. We are a foreign private issuer within the meaning of rules promulgated under the
Securities Exchange Act of 1934 as amended (the Exchange Act). As such, we are exempt from certain of the reporting requirements under the Exchange Act and corporate governance standards of the Nasdaq Stock Market (Nasdaq).
Because of these exemptions, investors are not afforded the same protection or information generally available to investors holding shares in public companies organized in the United States or traded on the Nasdaq. However, Nasdaq does not exempt
foreign private issuers from independent audit committee requirements and we are required to disclose any significant ways our current corporate governance practices differ from those followed by domestic companies under Nasdaq listing standards. In
addition, our Chief Executive Officer must notify Nasdaq if one of our executive officers becomes aware of any material non-compliance with any applicable Nasdaq corporate governance listing standards to Nasdaq. Please see Item
16GCorporate Governance for more information.

Reciprocal enforcement of foreign judgments. No
treaty exists between Hong Kong and the United States providing for the reciprocal enforcement of foreign judgments. Accordingly, Hong Kong courts might not enforce judgments predicated on the federal securities laws of the United States, whether
arising from actions brought in the United States or, if permitted, in Hong Kong.

Delisting of our common
shares. Our Common Stock is currently quoted on the Nasdaq Capital Market. The Company must satisfy certain minimum listing maintenance requirements to maintain such quotation, including a series of financial tests relating to shareholders
equity or net income or market value, public float, number of market makers and shareholders, market capitalization, and maintaining a minimum bid price of $1.00 per share for the Common Stock. If our Common Stock is delisted from the Nasdaq Capital
Market, then our Common Stock may trade on the Over-the-Counter-Bulletin Board, which is viewed by most investors as a less desirable and less liquid market place. Delisting from The Nasdaq Capital Market could make trading our Common Stock more
difficult and expensive for the Company to raise additional capital and may have an adverse impact on the overall value of our Common Stock.

Inherent limitation on Internal Control. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent
limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management decision. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these
inherent limitations are known features of the financial reporting process. Therefore, it may be possible to design into the process safeguards to reduce, though not eliminate, this risk.

Inherent uncertainty in preparation of financial statements. The consolidated and condensed consolidated financial
statements included in the periodic reports we file with the SEC are prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP involves making estimates, judgments and assumptions that affect
reported amounts of assets, liabilities and related reserves, revenues, expenses and income. Estimates, judgments and assumptions are inherently subject to changes in the future, and any such changes could result in corresponding changes to the
amounts of assets, liabilities, revenues, expenses and income. Any such changes could have a material adverse effect on our financial position and results of operations.



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|Item 4. | Information on the Company
|------- | --------------------------



|A. | History and development of the Company.
|-- | ---------------------------------------

Our legal name is Global-Tech Advanced Innovations Inc. (formerly known as Global-Tech Appliances Inc.). The Company was organized as an international business company under the laws of the British Virgin
Islands on May 2, 1991 and became a publicly traded entity on April 7, 1998. The address of our registered office in the British Virgin Islands is TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands, and the
telephone number at that address is (284) 494-5296.

The address of our principal place of business, and the location of
our executive and administrative offices, is 12/F., Kin Teck Industrial Building, 26 Wong Chuk Hang Road, Aberdeen, Hong Kong, and the telephone number at that address is (852) 2814-0601. Our e-mail address is
investorrelations@global-webpage.com. Our website is located at http://www.global-webpage.com. The information contained on our website does not constitute a part of this annual report.

Recent Developments

In recent years, profit margins in the home
appliance business have been rapidly decreased, at least in part, due to the rising cost of raw materials and labor in the PRC together with the unwillingness on the part of customers to offset these costs through price increases or reimbursements.
Current customer pricing demands no longer reflect actual production costs and as a result, the Companys home appliances segment suffered significant operating losses in fiscal 2011. Based on recent pricing data and estimated production
forecasts, we expected that the Companys continued production at fiscal 2011 levels would have resulted in our incurring both operating and actual cash losses in fiscal 2012.

In response to the foregoing, on June 3, 2011, our Board of Directors approved plans to exit the home appliances business. The
Company expects production of certain floor care products to continue until January 15, 2012 by which time Electrolux, our sole remaining customer in the home appliances segment, will have successfully transitioned production to alternate
vendors (the Transition Period). We intend to exhaust all remaining inventory during the Transition Period and any orders for additional raw materials made during the Transition Period will be made based on purchase orders received.

Substantial pricing adjustments have been accepted by Electrolux which will ensure that margins are returned to acceptable
levels during the Transition Period.

Prior to reaching the decision to disengage from the home appliances business, the
Company was engaged in prolonged negotiations with current customers in an effort to adjust pricing to levels necessary to achieve acceptable margins. Unfortunately, we were unable to secure long-term pricing adjustments that returned us to
practical margin levels. In addition, as an alternative to exiting the home appliances business, we entered into discussions with potential joint venture partners, but the slowdown in the economy together with increasingly slim margins in the home
appliances business prevented any such arrangements from being made.

By exiting the home appliances business, the Company
will be free to devote its full focus and efforts on its other business segments, specifically the electronic components and EMS segments, which we believe have greater potential for growth. Our exit from the home appliances business may result in
short-term losses resulting from one-time costs related to work-force reductions and other wrap-up activities, which we are hopeful will be offset, at least in part, by revenue generated by the higher margins in effect during the
Transition Period. Any financial statement effects will be determined and disclosed in our annual report immediately following the completion of our disengagement from the home appliances business. Aside from these one-time costs, we are hopeful
that by exiting the home appliances business, the Company will generate significant cash savings and improved earnings. The Company intends to lease the facilities which previously housed our home appliances business, which, if successful, could
generate additional income while creating little or no additional costs.



|B. | Business overview.
|-- | ------------------

Historically, the Company was primarily an exporter of a wide range of small electrical appliances to North American and European markets. However, the Companys continuing efforts to diversify its
business has resulted in nearly half of its revenues for fiscal 2011 being derived from the Chinese domestic telecommunications market.

During fiscal 2011, the Company operated in four business segments: (i) home appliances; (ii) electronic components; (iii) electronic manufacturing services (EMS); and
(iv) others. (See Item 4.AInformation on the CompanyRecent Developments for a full discussion regarding the Companys plans to exit the home appliances business in fiscal 2012.)

The electronic components and EMS businesses became reportable segments in fiscal 2007 and fiscal 2010, respectively, as a result of the
separation of management functions for the businesses. The others segment is comprised of a number of product lines/units, which individually are not material and have not met the quantitative thresholds for a reportable segment, in
addition to development programs that have not materialized to date into full product businesses. The results of each segment are routinely evaluated in assessing performance and allocating resources amongst the segments.



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Home Appliances

Please see Item 4.AInformation on the CompanyRecent Developments for a full discussion regarding the Companys plans to exit the home appliances business in
fiscal 2012.

At its inception, the focus of our home appliance business was personal beauty products, and over time,
gravitated towards the manufacture of small kitchen electronics and floor care products, the latter category ultimately becoming the sole focus of our home appliance business. In connection with our production of small kitchen electronics and floor
care products, we partnered with many of the leading brands in the United States and Europe, as market conditions in their home markets required them to procure finished products from the Far East to remain competitive. However, we were ultimately
unable to remain competitive in the small kitchen electronics category as competitors offered increasingly less expensive products and mass market retailers drove down retail prices. As a result, in fiscal 2011, we produced only vacuum cleaners as
they require sophisticated and complex manufacturing equipment and processes and/or significant investment in motor manufacturing equipment and large scale plastic injection molding machines.

Strategy

Due to decreasing profit margins, the home appliances business is
no longer sufficient to support a development staff and has become purely an original equipment manufacturer (OEM) business. Our business strategy for fiscal 2011 was to remain a reliable manufacturer for major brand marketers in North
America and Europe and to concentrate exclusively on those products that required complex manufacturing equipment. However, significant cost increases, both in raw materials and labor, left our customers with no choice other than to accept price
increases or seek alternative vendors for the manufacturing of their products as production at current pricing levels is no longer practical.

Accordingly we established a cooperative transition program with our customers that provided pricing relief for us and allowed our customers to organize the transition of their tooling to other vendors
while at the same kind building their inventories of finished goods. During the Transition Period, our efforts will be focused on manufacturing quality products in an efficient manner while operating in a potentially disruptive environment. Cost
control will be critical during this period.

We expect to lease some or all of the facilities currently utilized for the home
appliance business. Discussions are ongoing with potential lessees wishing to utilize the facilities, including the existing equipment. In the alternative, in the event we are unable to secure a tenant who will utilize the equipment, we believe that
we will be able to lease the space to potential lessees who will use the space as a warehouse. Real estate, especially space as large and contiguous as ours, is at a premium in Dongguan, the city in which our facilities are located.

Please see Item 4.AInformation on the CompanyRecent Developments for a full discussion regarding
the Companys plans to exit the home appliances business in fiscal 2012.

Products

During fiscal 2011, we primarily manufactured floor care products along with a few small electrical household appliance products, based on
product specifications provided by customers. In fiscal 2011, we produced approximately 1.7 million appliance units, compared to 2.4 million units in fiscal 2010.

The following table reflects our net sales for each product category in fiscal 2011, 2010 and 2009:



|                    |  |                              |        |  |      |   |        |      |  |   |        | 
|------------------- |  | ---------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                    |  | Fiscal Years Ended March 31, |       
|                    |  | 2011                         |        |  | 2010 |   |        | 2009 | 
|                    |  | (In thousands)               |       
|Product category:   |  |                              |        |  |      |   |        |      |  |   |        | 
|Floor care products |  | $                            | 39,877 |  |      | $ | 51,880 |      |  | $ | 45,410 | 
|Kitchen appliances  |  |                              | 1,081  |  |      |   | 559    |      |  |   | 1,177  | 
|Others (1)          |  |                              | 2,528  |  |      |   | 1,451  |      |  |   | 4,219  | 
|                    |  |                              |        |  |      |   |        |      |  |   |        | 
|Total               |  | $                            | 43,486 |  |      | $ | 53,890 |      |  | $ | 50,806 | 
|                    |  |                              |        |  |      |   |        |      |  |   |        | 



|(1) | Includes electric motors for floor care, travel products, environmental care products and accessories for each of our product categories as well as tooling income for
procurement, design and manufacturing of tooling and molds.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Floor care products. We started manufacturing floor care products in fiscal
2000. Our floor care products included hand-held steam vacuum cleaners, upright vacuum cleaners and extractors. Floor care products represented 91.7%, 96.3% and 89.4% of our net sales in our home appliance business in fiscal 2011, 2010 and 2009,
respectively. As a contract manufacturer, our sales in this category were principally driven by our product quality, testing systems, sophisticated electric motor production, and our existing tooling and injection molding machinery for large plastic
parts.

Kitchen appliances. We began manufacturing kitchen appliances in fiscal 1992. We manufactured a broad
line of kitchen appliances, including blenders, breadmakers, coffeemakers, electric knives, espresso machines, food choppers, food processors, food steamers, ice cream makers, and indoor grills. However, by fiscal 2002, we were unable to maintain
adequate operating margins as these products became heavily commoditized. Accordingly, we ceased our marketing efforts for this category following fiscal 2002. Kitchen appliances represented 2.5%, 1.0% and 2.3% of our net sales in our home appliance
business in fiscal 2011, 2010 and 2009, respectively.

Product Design and Development

During fiscal 2011, our design and development efforts were limited to supporting our existing customers programs. As a result of
the business becoming increasingly commoditized, no investments were made in fiscal 2011 to support any further independent design or product development efforts, except for some limited design work on products we hoped to market in the PRC.

Our expenditures for design and development of home appliance products were approximately $0.2 million in fiscal 2009, $0.3
million in fiscal 2010 and $0.2 million in fiscal 2011.

Manufacturing

Our principal production facility for the home appliances business is located in the township of Dongguan, Guangdong Province, China,
within a self-contained 207,300 square meter vertically-integrated manufacturing complex. Vertical integration in the home appliance business enabled us to manufacture high-quality products cost effectively. It also allowed us to emphasize quality
control and provide the flexibility in the manufacturing process necessary to better service our customers needs. We have made a significant investment in machinery to create the tooling and components used in the manufacturing process for
many of our products. This machinery, along with the use of relatively inexpensive labor, enabled us to efficiently produce many of our components and assemble these components to create our finished products. We manufactured most of our motors and
other components, including thermostats, plastic parts, metal and die-casting parts, switches and circuit boards. We also have a multi-faceted coatings line and pad printing capability. We sub-contracted the production of certain components when
they could be purchased from other suppliers at lower prices, when we did not have the specialized machinery to produce the component, or when we could allocate our production capacity more efficiently to alternative tasks. However, we did not
generally depend on other manufacturers to provide key parts or accessories.

Generally, our production schedule was based on
purchase orders and forecasts received from our customers once tooling was completed, typically covering a period of three to six months. The first 45 days of orders to be shipped pursuant to the forecasts were generally firm. Later shipments often
varied from initial forecasts, depending on the needs of the customer. There were no binding agreements for forecasted orders and thus forecasted orders could be canceled at any time without penalty to the customer or recourse to us.

Our physical space is less than fully utilized. Excluding dormitories, cafeterias and recreation areas, roads and portions of land
reserved for future expansion, the completed production area dedicated to home appliances is approximately 88,490 square meters.

During fiscal 2011, on average we utilized approximately 60% of our manufacturing facilitys production capacity; however, at peak periods utilization exceeded 90% and many of our larger injection
molding machines and our electric motor line were operating at capacity. Specialized skills are generally not required for most of our manufacturing workforce, however, due to demand for labor in Guangdong Province exceeding supply, the cost of
labor has increased substantially and is expected to continue for the foreseeable future.

We ship our home appliance products
primarily free on board (FOB) from ports in Hong Kong and China, with customers generally liable for any losses resulting from the transportation of finished products from the port to their final destination. Title to the goods passes to
the customer when the truck is unloaded and the container is accepted by the carrier located in the ports of Hong Kong or China. Transportation of components and finished products between Dongguan, China and port is by truck. Component parts
purchased from areas outside Guangdong Province are generally shipped by sea.



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Quality Control

We are committed to manufacturing products of the highest quality and we achieve this goal by engaging in quality control testing at each stage of the manufacturing process. All incoming raw materials and
components are inspected by our quality control personnel. Quality control personnel inspect all work-in-process at several points in the production process. We are able to test the reliability and consistent performance of our products by testing
both individual components and the fully-assembled finished product. We provide access to our manufacturing facility for representatives of our major customer to allow them to monitor production and provide direct access to our manufacturing
personnel.

Our quality control system has been certified by Det Norske Veritas QA Ltd., an accredited unit of the ISO, as
conforming to Quality System Standard ISO 9001 for the manufacture of electrical household appliances. Our receipt of ISO 9001 certification demonstrates that our manufacturing, installation and servicing of products have met specified requirements.

Suppliers

During fiscal 2011, we obtained over 5,236 different component parts from approximately 400 major suppliers and were not dependent upon
any single supplier. Certain of our major component parts, such as plastic, metal sheets and packaging, were purchased solely from outside suppliers. Others, such as motors and electrical and electronic parts, were either manufactured by us or
purchased from outside suppliers, depending on the complexity of the component and the capacity of our facilities at the time. We believe that we could obtain all of these components from alternate sources if necessary. Raw materials, electronic
components and other parts are either sourced in China or from other countries, primarily the United States, Japan and Germany. Raw materials from outside China are generally shipped through Hong Kong and then transported by truck to our factory in
China. Transactions with our suppliers are based on purchase orders issued by us from time to time and we have no other written agreements with our suppliers. Orders for components are based on actual orders and forecasts that we receive from our
customers that reflect anticipated shipments during the production cycle for a particular model. Many of the raw materials used in our products including plastics that are purchased outside China are subject to any applicable duties.

Since we are dependent upon outside suppliers for all of our raw material needs, including plastic resins, the results of our operations
are subject to price fluctuations in these raw materials. The plastic resins used by us are derived from natural gas liquids. Plastic resin prices may fluctuate as a result of changes in natural gas and crude oil prices, and the relative capacity,
supply and demand for resin and petrochemical intermediates from which the resins are produced. We have no long-term supply contracts for the purchase of plastic resin, although we do generally maintain a 30-day supply. We work closely with our
customers and suppliers in order to minimize the amount of inventory of raw materials we keep on hand and we are working on improving our automated inventory maintenance and control system to assist us in doing this. In order to expedite the
production process and reduce the risk of delays caused by the non-delivery of supplies, it is our general policy to source each component from two or more suppliers. This multi-source approach is intended to ensure the delivery of the components
necessary in the manufacturing process should one supplier be unable to deliver. Historically, we have not experienced any difficulty in obtaining component parts.

Major Customers

Sales to Electrolux commenced in 2004 and represented
47.8%, 51.9% and 41.6% of our consolidated net sales in the three consecutive fiscal years ended March 31, 2011, respectively. As discussed in more detail above, the Company is in the midst of disengaging from the home appliances business and
Electrolux is currently in the process of transitioning its production needs to alternate vendors. Please see Item 4.AInformation on the CompanyRecent Developments for a full discussion regarding the
Companys plans to exit the home appliances business in fiscal 2012.

Competition

We believe that the markets for home appliance products are mature and highly competitive and that competition is based upon several
factors, primarily price, but also product features and enhancements and new product introductions. During fiscal 2011, we competed with established companies in Hong Kong and China, a number of which have substantially greater technical, financial
and marketing resources than us. Competition for contract manufacturing products is based primarily on unit price, product quality and availability and service.

Intellectual Property Rights

We currently hold 31 patents, none of which
were approved in fiscal 2011. Our patents are registered in various jurisdictions, including the United States, the United Kingdom, China and France. We hold the exclusive rights with respect to certain technology included in our products. We rely
primarily upon a combination of trademark, copyright, know-how, trade secrets and contractual restrictions to protect our intellectual property rights. We believe that such measures afford only limited protection and, accordingly, there can be no
assurance that the steps taken by us to protect these proprietary rights will be adequate to prevent misappropriation of the technology or the independent development of similar technology by others. We no longer manufacture many products
incorporating our patents and intellectual property and do not consider any of our intellectual property rights to have a material impact on our business.



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Discontinued Operations

Assuming the successful completion of our exit strategy from the home appliances business in fiscal 2012, the home appliances segment will be accounted for as a discontinued operation for reporting
purposes in our annual report on Form 20-F for fiscal 2012.

Electronic Components

We continue to acquire new technologies in an effort to expand our capabilities in manufacturing finished products and components. These
transactions are part of our long-term business strategy to gradually diversify and transform a portion of our manufacturing facility into a facility capable of producing higher-value, technology-oriented products that will allow us to leverage our
existing research and development and technical management staff in Hong Kong, as well as our manufacturing infrastructure in China.

Initially we acquired Lite Array, Inc. a U.S. based technology company involved in thin film electroluminescent (TFEL) and organic light emitting diode (OLED) displays. We sold
Lite Arrays TFEL factory in China in 2003, but maintained its OLED program.

Due to the market prices for OLED displays
falling, we decided to revise our OLED strategy. Accordingly, we combined our efforts with Anwell Technologies Limited (Anwell), a public company in Singapore, by establishing a jointly controlled entity to develop a more cost effective
process for producing OLED equipment rather than just marketing OLED displays.

Our main interest in developing OLED displays
was focused on cellular phone displays, and as a result of our business contacts in the telecommunications industry in the PRC, we determined that making camera modules for cell phones was a promising business opportunity for us.

In late fiscal 2005, we established a new entity, Global Optics Limited, to produce and market complementary metal oxide semiconductor
(CMOS) camera modules (CCMs) to cell phone manufacturers in China and to develop household electronic products incorporating optical systems. In fiscal 2011 our net sales of CCMs were $42.6 million, which represents a 9.5%
increase over fiscal 2010 net sales of $38.9 million.

We believe the opportunity to sell CCMs and other electronic
components to cellular phone and personal digital assistant, or PDA, manufacturers in the PRC is a promising business for us, albeit currently at commodity- type margins. At present we source the sensors and lenses so that we can apply our resources
to operate a top quality clean room in our manufacturing facility in the PRC for low-cost assembly and concurrently concentrate on product enhancements, particularly higher pixel count cameras and differentiation. We also are developing products
that incorporate CCMs for non-telecommunication applications, our primary focus being on document photo scanners, security products and disposable medical instruments for the Chinese market. All of our customers for electronic components are
presently in the PRC or Hong Kong and we sell in U.S. dollars or Renminbi.

Strategy

Our strategy for electronic components is to expand our CCM business by providing higher resolution camera modules, initially to the
domestic Chinese telecommunications market, and eventually expand into PDAs and into other non-telecommunication applications utilizing miniature cameras, such as home security systems and medical devices. Allied with our production
capabilities that will be transferred from home appliances and in the electronic manufacturing services group we expect to offer finished products incorporating CCMs in addition to providing components. Other key aspects of our strategy are:

Partnership with vendors.The sensors and lenses utilized in CMOS cameras are highly specialized and are only
available from a few vendors. While the Company has no binding agreements with its vendors, we have established a long-standing and mutually beneficial relationship with a major sensor company that views our PRC-based operations as an opportunity to
access many of the PRC cellular phone manufacturers. It is by virtue of this relationship, as well as relationships with other vendors, that the Company receives valuable technical support essential to the business and product development programs.
These relationships are critical to the development of new products and the expansion of existing product lines.

Innovative product development.We research applications for CCMs, either as a component or a critical feature
of an electronic product. Our main emphasis currently is in developing higher pixel count and clearer resolution CCMs as well as some innovative finished products incorporating CCMs for the home security market.

Superior quality PRC based manufacturing.Utilizing our clean room expertise derived from OLED production, we have
been able to produce CCMs with high quality standards and excellent reliability, which allows our PRC-based customers to purchase CCMs in the PRC at lower cost rather than importing them from Korea or Taiwan.



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Expansion of manufacturing capabilities.We have
invested in all of the equipment needed to assemble modules in a Class 1,000 clean room. We have added precision mounting equipment and a full range of testing apparatus to support and maintain high quality production. We expanded our facility from
inception through fiscal 2008 as demand for CCMs continued to grow, and now have sufficient capacity to sustain steady growth in this business with limited additional investment.

Products

We started
manufacturing CCMs early in fiscal 2006 primarily utilizing 0.3 megapixel CMOS sensors. Sales in fiscal 2011, 2010 and 2009 were $42.6 million, $38.9 million and $34.5 million respectively. As pricing for VGA cell phone cameras continued to
decline by at least 20% per annum, we developed higher pixel count camera modules and introduced 1.3 and 2.0 megapixel versions in fiscal 2009 and 3.0 and 5.0 megapixel versions in fiscal 2010. The original VGA business has developed into a low
margin commodity, which adversely impacts unit revenues and overall profitability. However, we will continue to provide our customers with these products as well as continue developing higher pixel units in 2012 and work on developing other features
such as automatic focusing. Our aim in 2011 was to reduce the share of 0.3 megapixel units to less than 50% of our unit volume and we advanced this, going forward we will direct our resources to selling more of our higher pixel units with more
satisfactory margins.

Product Design and Development

The development group for electronic components consists of a small team of software and optical engineers supported by a large number of process, electronic and clean room engineers in our factory in
Dongguan. We also rely extensively on our principal sensor supplier for new technology and expanded features.

Our
expenditures for design and development of electronic components were $0.4 million, $0.4 million and $0.3 million in fiscal 2011, 2010 and 2009, respectively.

Manufacturing

Two of the buildings in our manufacturing complex in
Dongguan have been converted into a high-tech facility for our electronic component and telecommunication manufacturing service business operated as Dongguan Lite Array Company Limited (DGLAD). Class 1000 clean rooms of over 1,680 square
meters have been constructed out of a total of 8,000 square meter production and office space for the electronic component business. Since our CCM manufacturing capacity was constrained throughout fiscal 2008, we expanded our DGLAD clean rooms four
times in fiscal 2008 and added surface mount, assembly and testing equipment. Subsequently as the business matured and we produced less of the commodity modules, we were able to improve our mix and profitability without further investment in
equipment. We now have in place the capacity to produce up to 3 million CCMs a month but operated at over 90% of capacity in 2011. However, we expect to be operating at close to capacity at certain peak demand periods in fiscal 2012.

We ship our CCMs directly to our PRC customers, most of whom are located in Guangdong province or ship to export
customers from our warehouse in Hong Kong. Title in the PRC is transferred when the delivery note is acknowledged by the customer. Title for shipments from our warehouse passes when the customer takes physical delivery of the goods.

Quality Control

Superior quality control procedures are essential for electronic components. The expected life of a cell phone requires that each critical component performs reliably for many years. We test every CCM
before shipment and our customers test every one during their assembly process. Any rejects are returned to us for rework and this is considered a standard operating procedure in the industry.

Suppliers

We obtain
lenses, connectors and others components from a numbers of different vendors in Taiwan, Korea and the PRC and are not reliant on any one vendor. However for the CMOS sensors, we have a close relationship with one vendor and purchase a majority of
our sensors from them. There are approved alternative vendors that we have certified and also purchase from who could satisfy all of our demand if necessary at minimal additional cost.

Major customers

Sales to our largest CCM customer in fiscal 2011 (Lenovo
Mobile Communication Technology Company Limited) accounted for $12.7 million or 12.6% of consolidated net sales in fiscal 2011.

Our top five customers represented 28.9% of our consolidated net sales in fiscal 2011 and 68.4% of segment sales. Three of them were EMS
as well as electronic component customers.



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Marketing

For electronic components, marketing is designed to give exposure to our innovative, high-quality and cost-effective product and production capabilities. Generally, we emphasize personal contact with our
customers and potential customers in our facilities. While our customers rely on us for high-quality products, the ultimate consumers of the products rely on the customers brand name and generally do not know the identity of the manufacturer.
The primary concern of our customers in maintaining a relationship with us is buying better products at lower prices. We believe that innovation is the key for both our customers and us in this regard.

Currently our CCM business is primarily a commodity business with price and production capacity being the main criteria in securing
sales. However, if our development programs are successful and result in technical advances, we will be able to market our products to top tier consumer electronic brands in China and this should improve our profit margins.

Competition

Competition
in the electronic components market is intense as productive capacity comes on line from many companies. However, since the market for cellular phone cameras has expanded in China and continues to grow, we believe that demand will continue to meet
or exceed our capacity, notwithstanding that margins may not remain at current levels without productivity improvements. As we become a more significant supplier to certain large PRC cell phone manufacturers and continue expanding our capacity, we
are starting to gain a small competitive advantage which should improve our margins.

Intellectual Property Rights

We currently hold 25 patents, primarily registered in the PRC. We rely primarily upon a combination of trademark, copyright, know-how,
trade secrets and contractual restrictions to protect our intellectual property rights. There can be no assurance that steps taken by us to protect these proprietary rights will be adequate to prevent misappropriation of the technology or the
independent development of similar technology by others.

Electronic Manufacturing Services (EMS)

At present our EMS business consists of two primary services: (i) surface mount technology (SMT) for printed circuit
board assembly; and (ii) cell phone assembly, which usually incorporates our CCMs and printed circuit board and packaging. We invested in SMT machines and assembly equipment along with clean rooms and areas in late 2008 and revenues in
fiscal 2009 were $1.8 million. The first full year of EMS business in fiscal 2010 saw expansion of the business to $9.0 million in revenues and a further expansion of capacity was implemented in 2011. Revenues in fiscal 2011 increased to $14.7
million. All of our customers for EMS are in the PRC and we charge them for our services in Renminbi.

Strategy

Our strategy for EMS is to build on our electronic components business by offering manufacturing services to firstly our existing
telecommunication customers but also to new customers that want to outsource some of their products. The first service we offered was automated SMT assembly for printed circuit boards which was then followed by final cell phone assembly including
all relevant testing procedures. Our strategy is to establish close relationships with our telecommunication customers and potentially establish partnerships and/or joint ventures.

EMS requires significant investment not only in expensive SMT Machines and testing equipment but also in working capital. Large
telecommunication customers in the PRC expect up to 150 day terms and vendors only grant 15 to 30 day terms. Since we are effectively debt free we can use our resources to maintain necessary capital expenditures and support working capital.

With our existing systems and capabilities we are also offering assembly services to non-telecommunication customers. We
secured two major customers for fiscal 2011 and will continue to explore further opportunities going forward. We believe the growth potential for EMS far exceeds our other segments.

Manufacturing

Our EMS business currently occupies 25,600 square meters of
production space in two of our buildings in our Dongguan, PRC facility.

We have one clean room containing ten SMT machines,
three of which we acquired in 2011. We also have twenty assembly and eleven packing lines.

For fiscal 2012 we will have the
capacity to produce over fifteen million circuit boards and assemble over fifteen million cell phones. Our capital investment to date is US$10.9 million of which we spent US$3.6 million in 2011.

Labor is the most significant cost in EMS so we are continually being impacted by rising wages in
Dongguan. (see Item 3.D Risk Factors). We also have to account for all customer supplied materials, which requires the establishment of extensive documentation processes.

We ship the assembled finished products to our customers transportation facilities in the PRC for distribution to their customers.
It is our responsibility (and cost) to deliver product according to their shipping schedule requirements.



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Quality Control

Our quality control procedures are extensive since any undocumented loss of customer supplied product is charged to us. Therefore we inspect every item and have established procedures to handle rejected
components and product. Any rejects are inspected and verified by our customers QC staff at our facility.

Our
experience and processes in quality control gained through our other businesses is being applied effectively in our EMS operation.

Major
Customers

Revenues from our largest EMS customer in fiscal 2011 (Shenzhen TINNO Mobile Technology Co., Ltd.) amounted to
$13.7 million or 13.6% of consolidated net sales in fiscal 2011, of which $8.3 million or 8.2% were contributed from the EMS segment.

Revenues from our top five EMS customers represented 14.4% of our consolidated net sales and 98.4% of segment sales in fiscal 2011, respectively.

Marketing

Our marketing efforts were initially directed towards existing
telecommunication customers for electronic components in the PRC. As their businesses, particularly exports to the third world continued to grow, they sought subcontract partners that would also be able to defray some of their working capital
investment.

Our willingness to invest in the necessary equipment and the quality and reliability of our production team
satisfied our potential customers that subcontracting was a cost efficient way for them to continue to grow their business. As our relationship with a number of key PRC telecommunication brands has flourished, we expect an increase in their
outsourcing activities, particularly final assembly and packing. We continue seeking new customers since many of our large existing customers are able to resist necessary price increase to compensate for labor inflation.

Competition

The EMS
business, while capital intensive, is extremely competitive as it does not require complex proprietary technology. In order to compete effectively we need to emphasize our quality and reliability rather that trying to match competitors prices.
Major telecommunication companies primarily require timeliness, quality and reliability, and will place a higher emphasis on these factors rather than focusing exclusively on price. At less than US$1 in assembly cost, lower competitive pricing is
unlikely to be the only factor impacting their choice of vendor.

Others

We continue to experiment and carry out modest development work in a number of areas, most notably in disposable medical instruments and
solar energy components, but none are material either in expense or investment. Our focus remains on technical innovations in products suited to the Chinese domestic market. We may choose to partner with others if we believe our expertise is
insufficient to develop a business alone.

Strategy

Our strategy in expanding and diversifying our business is best described as opportunistic. We study the Chinese Market to determine where our in place assets might give us a competitive advantage. We
also focus on products and markets where the Chinese government is providing grants and subsidies in order to defray some of the required investment. Our success rate to date is not high but neither is our level of investment.

Product Design and Development

The principle development work in others over the last two years has been devoted to disposable medical devices and some solar devices. Development expenses for others were approximately
$60,000, $169,000 and $137,000 in fiscal 2009, 2010 and 2011, respectively.

Foreign Issuer Considerations

Because we are a foreign issuer incorporated in the British Virgin Islands and we conduct our operations and own assets primarily in China
and Hong Kong, our operations and assets are subject to significant political, economic, legal and other uncertainties in China, Hong Kong and, in some instances, the British Virgin Islands. These uncertainties include the following:



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Conditions in China. China is a socialist state which, since 1949, has been
controlled by the Communist Party of China. Changes in the top political leadership of the Chinese government may have a significant impact on policy and the political and economic environment in China. Moreover, economic reforms and growth in China
have been more successful in certain provinces than in others and the continuation or increase of such disparities could affect political or social stability. In December 2001, China was admitted to the WTO and was granted the full trading rights of
a WTO member country, but is still considered to be a high risk nation for business and investment in the Asian region. Although recently China has permitted greater provincial and local economic autonomy and private economic activities, the
government of China has exercised and continues to exercise substantial control over virtually every section of the Chinese economy through regulation and state ownership. Accordingly, government actions in the future, including any decision not to
continue to support the economic reform program that commenced in the late 1970s and possibly to return to the more centrally-planned economy that existed prior thereto, could have a significant effect on economic conditions in China and on our
operations. Also, the legal system of China relating to foreign investments is both new and continually evolving, and there can be no certainty as to the application of its laws and regulations in particular instances.

On June 29, 2003, HKSAR entered the CEPA, which was implemented on January 1, 2004. Under CEPA, Hong Kong companies can benefit
from liberalized measures beyond the scope of Chinas commitments in its WTO accession treaty. The arrangement covers three areas: trade in goods, trade in services and trade and investment facilitation. Under CEPA, 90% of Hong Kong domestic
exports to China can enjoy zero tariffs. CEPA also opens 18 service sectors to Hong Kong companies. In this respect, China has given Hong Kong an advantage under CEPA in that Hong Kong companies can enjoy more benefits under CEPA compared with the
provisions of the WTO. The arrangement presently has limited direct positive impact on us since most of our products are shipped to overseas customers but it could possibly benefit our electronic components business in the future.

All of our products are currently manufactured in China and over 98% of the net book value of our total fixed assets is located in China.
We sell products to entities based principally in North America and Europe as well as domestic sales of CCMs electronic components (commencing in fiscal 2007) and performing electronic manufacturing services for PRC based companies (commencing
in fiscal 2009). International operations and sales may be subject to political and economic risks, including political instability, currency controls and exchange rate fluctuations, and changes in import/export regulations, tariff and freight
rates. In addition, various forms of protectionist trade legislation have been proposed on occasion in the United States and certain European countries. Changes in tariff structures or other trade policies could adversely affect us.

Our location in Southern China offers us relatively low overhead and competitive (although higher than the Northern provinces in China)
labor rates, although recently labor shortages and unrest have led to a significant increase in wage rates, albeit from a low base. The location of our factory in the township of Dongguan, Guangdong Province provides us with the ability to manage
factory operations from Hong Kong and facilitates transportation of our products to markets outside China.

Chinese
government regulation. Our operations and assets in China are subject to significant political, economic, legal and other uncertainties. Changes in policies by the Chinese or local governments resulting in:



| |  |  | changes in laws and regulations, or the interpretation and enforcement of existing laws and regulations,
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | confiscatory or increased taxation,
| | - |  | -----------------------------------



| |  |  | restrictions on currency conversion, imports and sources of supply,
| | - |  | -------------------------------------------------------------------



| |  |  | import duties,
| | - |  | --------------



| |  |  | currency revaluation, or
| | - |  | ------------------------



| |  |  | the expropriation of private enterprise
| | - |  | ---------------------------------------

The occurrence of any of the events listed above could have a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the Chinese government
has been pursuing economic reform policies, including the encouragement of private economic activity and greater economic decentralization. There can be no assurance, however, that the Chinese government will continue to pursue such policies, that
such policies will be successful if pursued or that such policies will not be significantly altered from time to time without notice. Following the Chinese governments program of privatizing many state-owned enterprises, the government has
attempted to augment its revenues through increased tax collection. Continued efforts to increase tax revenues could result in increased taxation expense being incurred by us. Economic development may be limited as well by:



| |  |  | the imposition of austerity measures intended to reduce inflation, increase taxes or reform unprofitable state owned enterprises,
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | the inadequate development of infrastructure, and
| | - |  | -------------------------------------------------



| |  |  | the potential unavailability of adequate power and water supplies, transportation, communications and raw materials and parts.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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The Chinese government regulates the import into China of certain raw materials used by us
in our manufacturing process and taxes the importation of certain capital equipment. The approval of imports by the government is based to some extent on the lack of qualified domestically-produced products and strategic plans for the development of
local Chinese industry. There can be no assurance that the governments policies will continue to allow the raw materials we require to be imported into China. There also can be no assurance that the governments policies will not impose
import fees which raise the cost of raw materials or capital equipment. Imposing such fees could have a material adverse effect on our business, results of operations and financial condition.

Chinese legal system. Chinas legal system is a civil law system that is based on written statutes and in which
decided legal cases have little precedential value. China does not have a well-developed, consolidated body of laws governing foreign investment enterprises. As a result, the administration of laws and regulations by government agencies may be
subject to considerable discretion. As legal systems in China develop, foreign business entities may be adversely affected by new laws, changes to existing laws or interpretations of existing laws and preemption of provincial or local laws by
national laws. In circumstances where adequate laws exist, it may not be possible to obtain swift and equitable enforcement of the laws.

Chinese environmental law. Environmental protection in China is regulated in accordance with the Environmental Protection Law of the Peoples Republic of China, which became effective
on December 26, 1989. The law sets national standards for environmental quality and monitoring, as well as the utilization of natural resources and the reduction of pollution. As a manufacturer, we are subject to annual inspections by the local
branch of the SEPA. We have passed our most recent inspection and believe that we are in material compliance with all applicable environmental laws. There can be no assurance, however, that we will continue to pass future inspections or that we will
continue to be in material compliance with all applicable environmental laws in the future. Environmental regulation is evolving in China and the imposition of additional or more stringent environmental laws by China, or more stringent enforcement
of existing laws, could cause us to have to make substantial additional capital expenditures to maintain compliance in the future. The necessity to make such additional capital expenditures could have a material adverse effect upon our results of
operations and financial condition.

Conditions in Hong Kong. Hong Kong, the jurisdiction of incorporation of
seven of our subsidiaries and the location of our headquarters, was restored to China on July 1, 1997. We conduct marketing, product design and development, administration and other activities in Hong Kong. Accordingly, we may be materially
adversely affected by factors affecting Hong Kongs political situation and its economy or its international political and economic relations.

No treaty exists between Hong Kong and the United States providing for the reciprocal enforcement of foreign judgments. Accordingly, Hong Kong courts might not enforce judgments predicated on the federal
securities laws of the United States, whether arising from actions brought in the United States or, if permitted, in Hong Kong.



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|C. | Organizational structure.
|-- | -------------------------

The following chart sets forth the significant subsidiaries owned, directly or indirectly, by the Company.

LOGO



|                                                                |  |              |  |                                                                             |  |                        |  |                                 
|--------------------------------------------------------------- |  | ------------ |  | --------------------------------------------------------------------------- |  | ---------------------- |  | --------------------------------
|Name                                                            |  | Abbreviation |  | Principal Activities                                                        |  | Place of
Incorporation |  | Percentageof EquityInterest Held
|Global Appliances Holding Limited                               |  | GAH          |  | Investment Holding                                                          |  | British Virgin Islands |  | 100.0                           
|Global Display Holdings Limited                                 |  | GDH          |  | Investment Holding                                                          |  | British Virgin Islands |  | 100.0                           
|Kwong Lee Shun Trading Company Limited                          |  | KLS          |  | Management Services                                                         |  | Hong Kong              |  | 100.0                           
|Global Rich Innovation Limited                                  |  | GRI          |  | Inactive                                                                    |  | Hong Kong              |  | 100.0                           
|Wing Shing Overseas Limited                                     |  | WSO          |  | Inactive                                                                    |  | British Virgin Islands |  | 100.0                           
|GT Investment (BVI) Limited                                     |  | GTI          |  | Investment Holding                                                          |  | British Virgin Islands |  | 100.0                           
|Consortium Investment (BVI) Limited                             |  | CIBL         |  | Investment Holding                                                          |  | British Virgin Islands |  | 100.0                           
|Global Optics Limited                                           |  | GOL          |  | Trading                                                                     |  | Hong Kong              |  | 100.0                           
|Dongguan Wing Shing Electrical Products Factory Company Limited |  | DWS          |  | Manufacturing                                                               |  | China                  |  | 100.0                           
|Dongguan Lite Array Company Limited                             |  | DGLAD        |  | Manufacturing                                                               |  | China                  |  | 100.0                           
|Dongguan Microview Medical Technology Company Limited           |  | DMC          |  | Research & Development                                                      |  | China                  |  | 100.0                           
|Global Auto Limited                                             |  | GAL          |  | Inactive                                                                    |  | Hong Kong              |  | 70.0                            
|Lite Array Holding Limited                                      |  | LAH          |  | Investment Holding                                                          |  | British Virgin Islands |  | 30.0                            
|Litewell Technology (HK) Limited                                |  | LWH          |  | Design and trading of OLED production equipment and corresponding materials |  | Hong Kong              |  | 30.0                            
|Dongguan Litewell (OLED) Technology Limited                     |  | DLW          |  | Research & Development                                                      |  | China                  |  | 30.0                            
|Global Household Products Limited                               |  | GHP          |  | Trading                                                                     |  | Hong Kong              |  | 100.0                           
|Pentalpha Medical Limited                                       |  | PEL          |  | Inactive                                                                    |  | Hong Kong              |  | 100.0                           
|Pentalpha Hong Kong Limited                                     |  | PHK          |  | Inactive                                                                    |  | Hong Kong              |  | 100.0                           
|Global-Tech USA, Inc.                                           |  | GTU          |  | Investor Relations and Consulting                                           |  | United States          |  | 100.0                           



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|                                          |  |     |  |                    |  |                        |  |      
|----------------------------------------- |  | --- |  | ------------------ |  | ---------------------- |  | -----
|Global Digital Imaging Limited            |  | GIB |  | Trading            |  | British Virgin Islands |  | 100.0
|MasterWerke Limited                       |  | MAS |  | Inactive           |  | United States          |  | 100.0
|Wing Shing Products (BVI) Company Limited |  | WSP |  | Dissolved          |  | British Virgin Islands |  | 100.0
|Global Lite Array (BVI) Limited           |  | GLA |  | Investment Holding |  | British Virgin Islands |  | 76.75
|Lite Array OLED (BVI) Company             |  | LAO |  | Inactive           |  | British Virgin Islands |  | 76.75
|Lite Array, Inc.                          |  | LAI |  | Inactive           |  | United States          |  | 76.75

Global-Tech (GAI) is a holding company, which does not engage in daily business operations
other than owning subsidiaries and holding investments in operating and trading companies. GT Investment (BVI) Limited is the immediate holding company of Wing Shing Overseas Limited, Pentalpha Hong Kong Limited, Pentalpha Medical Limited, Global
Rich Innovation Limited and Global Household Products Limited.

Consortium Investment (BVI) Limited is the immediate holding
company of Lite Array Holdings Limited and Kwong Lee Shun Trading Company Limited. On March 17, 2006, CIBL entered into an agreement with Anwell, a publicly listed company in Singapore, to form a joint venture company which Anwell invested in
by purchasing a 70% interest in LAH. LAH is the holding company of Litewell Technology (HK) Limited and Dongguan Litewell (OLED) Technology Limited. LAH and its subsidiaries fiscal year end is December 31, which is different from the
Company.

Global Display Holdings Limited is the immediate holding company of Global Optics Limited and Global Digital Imaging
Limited.

Global Lite Array (BVI) Limited is the immediate holding company of Lite Array OLED (BVI) Company Limited and Lite
Array, Inc.

Global-Tech USA, Inc. is an immediate holding company of MasterWerke Ltd.

Dongguan Microview Medical Technology Company Limited was incorporated in China on June 18, 2009.

Wing Shing Products (BVI) Company Limited was dissolved on November 15, 2010.



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|D. | Property, plant and equipment.
|-- | ------------------------------

China

Our manufacturing facility located in Dongguan, China has a land use
area of 207,300 square meters. We have the right to use such land, which we acquired from the Dongguan local government.

We
have obtained a land use right certificate for a substantial portion of land with an aggregate area of 183,900 square meters as well as the related property ownership certificates for our production premises. The formal grant of land rights is
required should we decide to sell this property. Although we presently have no intention to pursue this option, the local government still has the right to demand additional transfer fees before issuance of any land use right certificates. The
application for the remaining portion of land is currently in process with the appropriate governmental agencies in China. Upon expiration of the 50-year lease term of the land, we have the right to extend the lease for a further 20 years upon
payment of a fee of approximately $23.00 per square meter for the whole land use right extension. The land use rights lease for the Dongguan facility between us and the Peoples Government of Qingxi Township, Dongguan City, Guangdong Province
is for a term of 50 years ending August 7, 2043.

In the event that we wish to rent a portion of our facilities, we may
be required to accelerate land use payments.

The manufacturing complex includes 34 buildings, of which 15 buildings are
dormitories with accommodation for up to 4,500 employees and cafeterias and recreational areas. The remaining buildings house manufacturing, quality control, warehousing, product development and administrative functions. We have obtained a portion
of the property ownership certificates for its buildings (25 out of total of 34 properties) and have freely transferable land use rights for a period of 50 years for the land upon which our buildings and facilities are located. Excluding
dormitories, cafeterias and recreation areas, roads and a portion of land reserved for future expansion, our completed production area is approximately 174,000 square meters.

We maintain an office in Shenzhen, which is a sales office for the electronic components and EMS businesses which are managed totally in the PRC, and for an accounting department for our PRC subsidiaries.
The lease agreement commenced April 30, 2008 and will expire on April 30, 2014 and covers a total area of 672 square meters leased at a monthly rent of approximately US$12,000.

Hong Kong

In April 2006, we entered into three renewal lease agreements
with Wing Shing Products Company Limited, a company owned by one of our directors and his family with a total area of 25,690 square feet of space leased for our executive offices, administrative group and warehouse at a rate of approximately
$167,400 per annum. On April 18, 2008, we entered into a renewal lease agreement with Wing Shing Products Company Limited to lease the same area of 25,690 square feet at an annual rent of approximately $173,000.

We believe that our administrative office space in Hong Kong and China will be adequate for the operation of our business for the
foreseeable future. We believe that with further utilization of our manufacturing facility in Dongguan, we have sufficient manufacturing capacity for at least the next several years. The factory is currently utilized at considerably less than full
capacity except at peak periods. We anticipate that any further expansion of our Electronic Component or EMS businesses could increase utilization at the Dongguan facility and eventually require us to renovate some of the infrastructure and purchase
additional equipment.



|Item 4A. | Unresolved Staff Comments.
|-------- | --------------------------

Not applicable.



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|Item 5. | Operating and Financial Review and Prospects.
|------- | ---------------------------------------------

Except for statements of historical facts, this section contains forward-looking statements such as expect, anticipate, project, believe, plan,
intend, seek, should, estimate, future or variations of such words and other similar expressions to identify forward looking statements. You should not place undue reliance on these
forward-looking statements. Forward-looking statements are not a guarantee of our future performance or results and our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including those set forth under the sections of this Report entitled Item 3DRisk factors and Item 4BBusiness overview. This section should be read in conjunction with our Consolidated Financial
Statements included in Item 18 of this annual report.

Managements Discussion and Analysis of Financial Condition and Results of
Operations.



|A. | Operating Results.
|-- | ------------------

Fiscal Year Ended March 31, 2011 Compared with Fiscal Year Ended March 31, 2010

During fiscal 2011, we operated in four segments: Home Appliances, Electronic Components, EMS (new in fiscal 2010) and Others. These
segments are operated and managed as separate strategic business units that offer different products. These segments were each managed separately because they manufacture and distribute products with different production processes.

Home Appliances segment



|                                             |  |                              |       |    |      |  |       |      |  |  |       |   
|-------------------------------------------- |  | ---------------------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2011                         |       |    | 2010 |  |       | 2009 | 
|Net sales                                    |  |                              | 100.0 | %  |      |  | 100.0 | %    |  |  | 100.0 | % 
|Cost of goods sold                           |  |                              | (93.5 | )  |      |  | (83.8 | )    |  |  | (91.3 | ) 
|                                             |  |                              |       |    |      |  |       |      |  |  |       |   
|Gross profit                                 |  |                              | 6.5   |    |      |  | 16.2  |      |  |  | 8.7   |   
|Selling, general and administrative expenses |  |                              | (10.4 | )  |      |  | (10.7 | )    |  |  | (9.1  | ) 
|                                             |  |                              |       |    |      |  |       |      |  |  |       |   
|Operating income (loss)                      |  |                              | (3.9  | )% |      |  | 5.5   | %    |  |  | (0.4  | )%
|                                             |  |                              |       |    |      |  |       |      |  |  |       |   

Net Sales. Our net sales include sales of finished goods, parts and accessories, and tooling
income from procuring, designing and manufacturing molds for certain products that our customers choose to own. Net sales consist of gross amounts invoiced less discounts. Revenues from product sales are recognized at the time of shipment when title
and risk of loss passes. Under the Companys standard terms and conditions of sale, which are mainly FOB shipment point, title and risk of loss transfer to the customer at the time product is delivered to the customers freight forwarder,
and revenue is recognized accordingly.

Net sales in fiscal 2011 were $43.5 million, down 19.3% from $53.9 million in fiscal
2010. Sales to our largest customer in fiscal 2011, Electrolux, decreased $10.9 million to $42.0 million. Sales of kitchen appliances in fiscal 2011 increased $0.5 million from the prior year to $1.1 million but we have not actively been pursuing
business for these products for some time.

The decline in sales to Electrolux was primarily due to a special thanksgiving
promotion at a major retailer that occurred in 2010 but was not repeated in 2011.

Gross profit. Gross profit consists
of net sales less costs of goods sold, which includes the costs of raw materials, production materials, labor, transportation, deprecation and factory overheads. Gross profit in fiscal 2011 was $2.8 million or 6.5% of net sales, as compared to a
gross profit of $8.7 million or 16.2% of net sales in fiscal 2010. Gross profit declined due to i) significant increases in labor, energy and commodity costs not being offset by adequate price increases and ii) overhead being absorbed over lower
volume. The Companys ability to raise prices has been severely limited by the availability of other OEM suppliers in China and Korea. Accordingly the Company has initiated a transition and exit plan with Electrolux (see
Item 3DRisk factors and Item 4BBusiness overview.) and intends to abandon the home appliances segment in fiscal 2012 or possibly fiscal 2013 depending or schedule negotiation and finalization.

In fiscal 2011, our material cost as a percentage of net sales was 72.7% as compared to 66.8% in fiscal 2010 reflecting
severe inflation in commodity costs, particularly copper and resins derived from petrochemicals only offset by price increases capped at 50% of our bill of material cost increases.



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Direct labor and overhead expenses as a percentage of sales were 6.6% and 14.2% respectively
in fiscal 2011. Direct labor and overhead as a percentage of sales were 5.1% and 11.9% respectively in fiscal 2010. Included in overhead of $6.1 million in fiscal 2011 was depreciation of $1.6 million and utility costs of $1.6 million. Overhead in
fiscal 2010 was $6.4 million including $2.1 million in depreciation charges and utilities of $1.8 million. Direct labor costs in China are rising between 10% and 30% per annum depending on skill levels. This is occurring primarily due to
government action in establishing more encompassing labor laws concerning minimum wages and overtime payments. Additionally the more than 4.0% appreciation in the RMB versus the US dollar has impacted our labor cost. Excluding depreciation, overhead
increased approximately 5.0% despite lower volume. Electricity costs per Rwh increased substantially in US$ terms and the increase also reflected the impact of the new social insurance requirements in the PRC.

Selling, general and administrative expenses. The primary components of our selling, general and administrative
(SG&A) expenses are related to transportation of finished goods and salaries for our marketing and technical personnel. SG&A expenses in fiscal 2011 were $4.5 million or 10.4% of our net sales, as compared to $5.7 million or
10.7% of net sales in fiscal 2010. Shipping, handling or other costs that are incurred for the sales of products are classified as selling expenses. The shipping expense relates to inland freight from the factory to the port, where title is passed
to the customer. During the fiscal years ended March 31, 2011 and 2010, shipping costs charged to selling expenses were approximately $0.7 million and $0.9 million, respectively.

We continued taking steps to reduce our non-variable SG&A expenses by controlling headcount and eliminating all development efforts.
General and administrative costs in 2011 were $3.6 million and we do not believe the business could have been operated at lower administrative cost in fiscal 2012. However, our transition program and exit plan for this business reflects an orderly
reduction of our administrative and customer service staff during fiscal 2012 including transfers within the Company as well as employment terminations.

Operating income (loss), net. In fiscal 2011, we incurred an operating loss of $1.7 million, as compared to an operating income of $3.0 million in fiscal 2010.

Other income (expense), net.Losses on exchange were immaterial in 2011 and 2010. Sundry income approximately of $59,000,
primarily from the sale of scrap, was generated in fiscal 2011, compared to $161,000 in fiscal 2010.

Segment income
(loss). In fiscal 2011, we incurred a segment loss of approximately $1.8 million compared to an income of $3.1 million in fiscal 2010.

Electronic Components segment



|                                             |  |                              |       |   |      |  |       |      |  |  |       |   
|-------------------------------------------- |  | ---------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | --
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2011                         |       |   | 2010 |  |       | 2009 | 
|Net sales                                    |  |                              | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | % 
|Cost of goods sold                           |  |                              | (88.8 | ) |      |  | (87.5 | )    |  |  | (94.3 | ) 
|                                             |  |                              |       |   |      |  |       |      |  |  |       |   
|Gross profit                                 |  |                              | 11.2  |   |      |  | 12.5  |      |  |  | 5.7   |   
|Selling, general and administrative expenses |  |                              | (7.1  | ) |      |  | (6.9  | )    |  |  | (7.5  | ) 
|                                             |  |                              |       |   |      |  |       |      |  |  |       |   
|Operating income (loss)                      |  |                              | 4.1   | % |      |  | 5.6   | %    |  |  | (1.8  | )%
|                                             |  |                              |       |   |      |  |       |      |  |  |       |   

Net sales. Our net sales include sales of electronic components (primarily CCMs) and raw
materials for customer prototypes. Net sales consist of gross amounts invoiced less discounts and VAT, if applicable. Sales are typically denominated in US$ and RMB for those customers even they are based in the PRC. Our material costs are also
typically denominated in dollars but all our other costs are in local currency.

The CCM business which constitutes the bulk
of our net sales of electronic components was established in mid fiscal 2006, and expanded rapidly until the worldwide economic slowdown impacted business in the fall of 2008 but the business has been gradually improving since than as the Chinese
telecommunication market has resumed its growth. Net sales in fiscal 2011 increased 9.5% to $42.6 million from net sales of $38.9 million in fiscal 2010. Unit sales increased 10.7% and despite the increase in sales of higher pixel count CCMs the
increase did not compensate fully for the continuing decline in market prices. The video graphics array (VGA) units that have become commodity items were 48.2% of unit sales in 2011 versus 68.2% in 2010. More importantly 2.1% of unit
sales in 2011 were new products (5.0 megapixel CCMs) and 2.0, 3.0 and 5.0 megapixel units now account for 50% of sales versus 26% in the prior year.

We anticipate that unit volume will increase modestly in fiscal 2012 when compared to fiscal 2011. However, the sale of higher pixel count units in fiscal 2012 and beyond should increase operating
margins.



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We are managing carefully since the growth of local competition together with current
weaknesses in the export markets for Chinese manufacturers, particularly in Europe, could impact growth in fiscal 2012.

Gross profit.Gross profit in fiscal 2011 was $4.8 million or 11.2% of net sales compared to $4.9 million or 12.5% of net sales in
fiscal 2010. The CCM and other electronic components businesses are increasingly competitive with the proprietary technology being maintained by the sensor and lens suppliers, thus margins reflect a commodity type business. Margins in 2011 were
helped by higher margins on the higher pixel units and better inventory management matching price reductions with cost reductions as well as 11% higher production absorbing fixed overhead offset by increasing labor costs. Margins in 2010 were also
impacted by falling prices occurring before component costs decreased. Direct labor and overhead in fiscal 2011 were 3.9% and 6.6% respectively of net sales compared to 3.1% and 5.7% respectively in fiscal 2010. Labor costs in US dollars increased
substantially in 2011 due to wage inflation, the implementation of new labor laws and strength of the RMB. CCM production requires skilled labor which is still in high demand in Guangdong province and we need to continue offering competitive wages
and benefits so we expect our labor costs to increase at least 10.0% in local currency in 2012. Overhead excluding depreciation of $0.3 million in 2011 and increased approximately $0.5 million from 2010 primarily due to the impact of the new social
security law on labor benefits and the increase in electricity costs due to higher oil prices. Material cost in fiscal 2011 was 78.4% of net sales, a slight improvement from 78.8% in the prior year. Since inception, material cost has fluctuated
around 80.0% of net sales as prices and sensor costs decreased, and depending on the type of connector required and we expect those levels to continue except for proprietary items. In such a commodity type environment, volume growth remains critical
to improving profitability.

Selling, general and administrative expenses. SG&A expenses in fiscal 2011 were $3.0
million or 7.1% of net sales compared to $2.7 million or 6.9% of net sales in fiscal 2010. The primary components of SG&A are personnel costs, occupancy costs for our PRC staff where the entire CCM operation is located, and development and
prototyping expense. Our personnel costs rose primarily due to the impact of currency appreciation. We spent $0.4 million on development programs in fiscal 2011 and do not expect it to increase significantly in fiscal 2012.

Operating income, net. Operating income in fiscal 2011 was approximately $1.8 million or 4.1% of net sales compared to an
operating income of approximately $2.2 million or 5.6% in fiscal 2010.

Other income (expenses), net. Other income
(expense), net in fiscal 2011 was a loss of approximately of $80,000 compared to income of $744,000 in fiscal 2010.

Segment income (loss).Segment profit in fiscal 2011 was $1.4 million compared to a segment profit of $2.9 million in fiscal 2010.

EMS segment

EMS consists of two allied functions: SMT automated processing for printed circuited board assembly and final assembly and testing of cell phones. Both functions serve telecommunication customers in the
PRC.

This business became a separate segment in fiscal 2010. EMS results in fiscal 2009, the first year of operation, were
included in the others segment in fiscal 2009 since the results were not material. We have separated the results for fiscal 2009 from the others segment for purposes of comparison.



|                                             |  |                              |       |    |      |  |       |      |  |  |        |   
|-------------------------------------------- |  | ---------------------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ------ | --
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2011                         |       |    | 2010 |  |       | 2009 | 
|Net revenues                                 |  |                              | 100.0 | %  |      |  | 100.0 | %    |  |  | 100.0  | % 
|Operating costs                              |  |                              | (82.8 | )  |      |  | (59.5 | )    |  |  | (117.3 | ) 
|                                             |  |                              |       |    |      |  |       |      |  |  |        |   
|Gross profit (loss)                          |  |                              | 17.2  |    |      |  | 40.5  |      |  |  | (17.3  | ) 
|Selling, general and administrative expenses |  |                              | (21.4 | )  |      |  | (19.3 | )    |  |  | (68.7  | ) 
|                                             |  |                              |       |    |      |  |       |      |  |  |        |   
|Operating income (loss)                      |  |                              | (4.2  | )% |      |  | 21.2  | %    |  |  | (86.0  | )%
|                                             |  |                              |       |    |      |  |       |      |  |  |        |   

Net revenues. Our net revenues include fees for SMT processing and assembly of mobile phones.
Revenues in fiscal 2011 were $14.7 million compared to $9.0 million in fiscal 2010 although the assembly of mobile phones did not start until the fourth quarter of 2010 and the SMT facility expansion was under construction for most of the first half
of that year.

At the revenue levels achieved in 2011, we were operating at less than 75% of optimal production. Delays in
securing key new customers due primarily to export market uncertainties impacted the business significantly.

As discussed
elsewhere in this annual report, we have made significant capital investments in the expansion of the EMS business in order to double production capacity. Ultimately, we plan to have the capacity for up to $25 million in annual sales and it will
only take an immaterial investment in capital to achieve this.



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Gross profit (loss). Gross profit in fiscal 2011 was $2.5 million or 17.2% of
revenues compared to a gross profit of $3.6 million in fiscal 2010. Direct labor was $4.6 million and overhead excluding depreciation was $6.6 million or 31.2% and 45.0% respectively of net sales compared to $2.1 million and $3.0 million in fiscal
2010 which were 22.8% and 32.8% of net sales respectively. Labor inflation in China impacted this segment far more than out other business particularly since we were unable to get any price concessions from our customers. Labor turnover was
unacceptably high and productivity and efficiency far poorer than planned. In our factory overhead the electricity cost to run the SMT machine and clean rooms doubled and the staff benefits including mandatory social insurance benefits for all of
the PRC based staff also contributed to the doubling of factory overhead. Depreciation in fiscal 2011 was approximately $0.8 million compared to $0.5 million in fiscal 2010. Steps have been taken to address many of these issues, but the key to
improving margins is to secure new customers that will pay at appropriate levels for our services, reflecting the realities of labor costs today.

Selling, general & administrative expenses. SG&A expenses in fiscal 2011 were $3.2 million or 21.4% of sales and were $1.7 million or 19.3% in fiscal 2010. The primary components of
SG&A are personal and travel and entertainment costs for the sales and marketing group. The compensation programs for our sales staff are currently being amended to focus on adding new customers and achieving price increases. Included in
SG&A in fiscal 2011 were development costs of $0.3 million compared to $0.7 million in 2010.

Operating income (loss),
net. Operating loss in fiscal 2011 was approximately $0.6 million or 4.2% of net sales compared to a income of approximately $1.9 million or 21.1% of net sales in fiscal 2010.

Other income, net. Other income, net in fiscal 2011 and 2010 were approximately $71,000 and $6,000, respectively.

Segment income (loss). Segment loss in fiscal 2011 was approximately $0.7 million compared to segment profit of approximately $1.9
million in fiscal 2010.

Others segment

Net sales of other products in fiscal 2011 were approximately $0.1 million which were primarily from sales of home security devices and medical devices. Net sales of other products in fiscal 2010, which
were also primarily sales of home security devices, were approximately $0.2 million.

We incurred a gross loss of
approximately of $0.17 million in fiscal 2011 which also reflected our start up costs for medical, compared to approximately $0.19 million gross loss in fiscal 2010.

The operating loss in fiscal 2011 was approximately $1.0 million, compared to approximately $1.0 million in fiscal 2010 and the segment loss in fiscal 2011 was $1.0 million, compared to $1.0 million in
fiscal 2010. In both years the primarily cause for the loss was our initial development and distribution programs for medical products.

Corporate

Selling, general and administrative expenses.Non-allocable corporate expenses were $4.3 million in fiscal 2011 compared to $3.1
million in fiscal 2010. Expenses in fiscal 2011 included non-cash stock compensation expense of approximately $500,000 compared to $14,000 in the prior year. Corporate expenses in fiscal 2011 reflected an increase of $1.2 million mainly due to an
increase of stock compensation expenses, donation and corporate salaries. The primary components of corporate expenses are audit fees, legal and professional fees (approximately $0.9 million in fiscal 2011 as compared to approximately $0.8 million
in fiscal 2010) and the cost of senior management and administrative staff of $1.7 million compared to $1.4 million in fiscal 2010. Corporate expenses in fiscal 2011 increased primarily due to the realignment of senior management among the various
operating segments.

Other operating income (expenses), net.Other operating income of approximately $1.1 million in
fiscal 2011 occurred mainly as a result of a reversal of an accrual for loss contingencies related to pending litigation. Other operating income in fiscal 2010 of $180,000 represents proceeds from a settlement of a lawsuit offset by additional
accruals for loss contingencies.

Interest income, net and other income (expenses). Interest income of approximately
$308,000 and $64,000 resulted in fiscal 2011 and fiscal 2010 respectively from a reversal of potential interest related to potential tax adjustments. Interest income from bank deposits and other short-terms investments in fiscal 2011 and fiscal 2010
was approximately $0.5 million and $0.3 million respectively. In fiscal 2011, we had an average invested fund balance, which includes cash and cash equivalents, time deposits, restricted cash and available-for-sale investments, of approximately
$40.2 million, with an average rate of return of 1.2% as compared to an average invested balance of approximately $40.6 million, with an average rate of return of 0.7% in fiscal 2010. In fiscal 2011, the major components of other income (expenses),
net, in corporate included foreign exchange losses of approximately $612,000, loss from the disposal of fixed assets of $4,000 and other sundry income of $1.1 million. In fiscal 2010, the major components of other income (expenses), net, in
corporate included foreign exchange losses of approximately $130,000, loss from disposal of fixed assets of $292,000 and other sundry income of $2,000. (See Note 17Other income (expenses), net of Notes to Consolidated Financial Statements for
a detailed breakdown of the components of Other income (expenses), net).



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Income tax. Our financial statements include a provision for profits tax of
approximately $110,000 in fiscal 2011 primarily for CIT profit tax in the PRC and of $0.4 million in fiscal 2010. The significant provision in fiscal 2010 when we had an operating loss was due to an evaluation of uncertain tax positions relating to
transfer pricing in accordance with FIN 48 at certain of our subsidiaries, which were subsequently reversed when the corresponding subsidiary was dissolved in fiscal 2011. Since taxes are assessed at the individual subsidiary level, losses can only
be carried forward or back at each subsidiary.

We are not subject to taxation in the British Virgin Islands in accordance
with British Virgin Islands tax regulations. We are subject to income tax in each jurisdiction where our subsidiaries do business. Certain of our income is earned in China, where the standard tax rate is 25.0%, and in Hong Kong, where the corporate
tax rate is 16.5% for both fiscal 2011 and 2010, on income from operations but excluding interest, dividend income and capital gains. In Hong Kong, estimated taxes for each fiscal year are paid during the year based on the prior years taxable
earnings from operations. An adjustment in the form of additional taxes paid or refunds to us is then made in the following fiscal year based on actual taxable earnings. Therefore, in each fiscal year, our statement of operations reflects a
provision for estimated taxes for the current fiscal year and adjustments for over- or under-provision with respect to the prior fiscal year.

Our Chinese subsidiaries are subject to income tax based upon the taxable income as reported in the statutory financial statements prepared under Chinese accounting regulations. Our subsidiaries in China
were entitled to a tax concession period (Tax Holiday), whereby they were exempted from corporate income tax for their first two profit-making years and were entitled to a 50% tax reduction for the succeeding three years. Effective
January 1, 2004, Dongguan Wing Shing has been subject to the full tax rate of 27.0%. This Chinese subsidiary is our manufacturing facility for home appliances and common charges that incurs a significant portion of our manufacturing overhead.
This subsidiary makes sales of finished goods to our other subsidiaries and transfer pricing has to be within acceptable norms. In fiscal 2004, we established a new subsidiary in China, Dongguan Lite Array, which was also entitled to a Tax Holiday.
Dongguan Lite Array started its first profitable year under the Tax Holiday for the calendar year ended December 31, 2007. During the 5thSession of the 10thNational Peoples Congress of the PRC, which was concluded on March 16, 2007, a unified enterprise income
tax law, or EIT, was approved and became effective on January 1, 2008. The EIT Law introduced a wide range of changes which included the unification of income tax rates for domestic-invested and foreign-invested enterprises at 25%. Taxes in
China are based upon the financial statements of our two PRC subsidiaries based upon their preparation in accordance with PRC GAAP. Certain inter-company transactions could be interpreted by the local authorities as taxable transactions. In
accordance with the provisions of FIN 48, such transactions have been assessed and reflected in the computation of income taxes payable. To the extent that we have income effectively connected with the conduct of a U.S. trade or business in any
fiscal year, we would be subject to U.S. taxes at an effective rate up to 55%. We do not believe that our current method of operations subjects us to U.S. taxes. We also established a subsidiary in Macau, China where we conducted sales, marketing,
administration and other activities but it was dissolved effective July 2008. Similar to our subsidiaries established in the British Virgin Islands, we are not subject to taxation in Macau although the Hong Kong Inland Revenue Department
HKIRD has challenged the tax position taken by the Company and we may be subject to additional profits tax in Hong Kong. One of the Companys wholly-owned subsidiaries is currently under examination by the HKIRD. The final outcome
of this tax audit is not determinable at this time.

Net income (loss). Net loss for the group for fiscal 2011 was $4.0
million, or $1.32 per share, as compared to a net income of $3.5 million, or $1.14 per share for fiscal 2010.

Fiscal Year Ended
March 31, 2010 Compared with Fiscal Year Ended March 31, 2009

We operated in four segments: Home
Appliances, Electronic Components, EMS (new in fiscal 2010) and Others. These segments were operated and managed as separate strategic business units that offer different products. These segments were each managed separately because they manufacture
and distribute products with different production processes.

Home Appliances segment



|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|-------------------------------------------- |  | ---------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2010                         |       |   | 2009 |  |       | 2008 | 
|Net sales                                    |  |                              | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|Cost of goods sold                           |  |                              | (83.8 | ) |      |  | (91.3 | )    |  |  | (89.9 | )
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|Gross profit                                 |  |                              | 16.2  |   |      |  | 8.7   |      |  |  | 10.1  |  
|Selling, general and administrative expenses |  |                              | (10.7 | ) |      |  | (9.1  | )    |  |  | (7.3  | )
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|Operating income (loss)                      |  |                              | 5.5   | % |      |  | (0.4  | )%   |  |  | 2.8   | %
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  

Net Sales. Our net sales include sales of finished goods, parts and accessories, and tooling
income from procuring, designing and manufacturing molds for certain products that our customers choose to own. Net sales consist of gross amounts invoiced less discounts. Revenues from product sales are recognized at the time of shipment when title
and risk of loss passes. Under the Companys standard terms and conditions of sale, which are mainly FOB shipment point, title and risk of loss transfer to the customer at the time product is delivered to the customers freight forwarder,
and revenue is recognized accordingly.



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Net sales in fiscal 2010 were $53.9 million, up 6.1% from $50.8 million in fiscal 2009.
Sales to our largest customer in fiscal 2010, Electrolux, increased $11.1 million to $52.9 million and sales to the TTI group declined $7.0 million. Sales of kitchen appliances in fiscal 2010 declined $0.6 million from the prior year to $0.6 million
as we are no longer actively pursuing business for these products.

The increase in sales to Electrolux was primarily due to
them winning a special thanksgiving promotion at a major retailer. Additionally US retailers slowly restocked their inventories as the economic environment improved modestly.

The TTI group would not accept price increases from us, therefore during the latter part of fiscal 2008 we ceased taking orders for their opening price point (OPP) bagged upright vacuum
cleaner due to our manufacturing margin being unacceptably low. In fiscal 2009 TTI decided to move their remaining products manufactured by us to their own factories and we expect minimal business with them going forward.

Gross profit. Gross profit consists of net sales less cost of goods sold, which includes the costs of raw materials, production
materials, labor, transportation, depreciation and factory overheads. Gross profit in fiscal 2010 was $8.7 million or 16.2% of net sales, as compared to a gross profit of $4.4 million or 8.7% of net sales in fiscal 2009. The increase in gross margin
as a percentage of net sales was primarily due to production levels increasing more than our costs, particularly labor and depreciation. In general, we incurred significant material cost increases during the year, some of which were recovered from
our customers but this was also offset by our product mix improving significantly with the end of production of TTIs OPP bagged unit. We were able to take advantage of a temporary favorable pricing in plastic in the futures market,
particularly for Electroluxs promotional order, which saved us a significant amount. Such opportunities are not often available. Clearly our ability to raise selling prices is severely limited by the availability of other OEM suppliers in
China and Korea that are willing to work on lower margins or with lower quality standards than us. In fiscal 2010, our material cost as a percentage of net sales was 66.8% as compared to 74.1% in fiscal 2009. We believe that increases in raw
material commodity pricing will continue to accelerate in fiscal 2011 and we will make further attempts to get price increases from our customers.

Direct labor and overhead expenses as a percentage of sales were 5.1% and 11.9% respectively in fiscal 2010. Direct labor and overhead as a percentage of sales were 4.7% and 12.5% respectively in fiscal
2009. Included in overhead of $6.4 million in fiscal 2010 was depreciation of $2.1 million and utilities of $1.8 million. Overhead in fiscal 2009 was $6.3 million including $2.3 million in depreciation charges and utilities of $1.5 million.
Excluding depreciation, overhead increased approximately 7.1% in fiscal 2010 from the prior year while production increased approximately 6.1%.

Selling, general and administrative expenses. The primary components of our selling, general and administrative (SG&A) expenses are related to transportation of finished goods, and
salaries for our marketing and technical personnel. SG&A expenses in fiscal 2010 were $5.7 million or 10.7% of our net sales, as compared to $4.6 million or 9.1% of net sales in fiscal 2009. Shipping, handling or other costs that are incurred
for the sales of products are classified as selling expenses. The shipping expense relates to inland freight from the factory to the port, where title is passed to the customer. During the fiscal years ended March 31, 2010 and 2009, shipping
costs charged to selling expenses were approximately $0.9 million and $0.8 million, respectively.

Due to the pressure on
margins we were experiencing in our home appliance business in prior years, we determined that our SG&A needed to be reduced. Steps were taken in fiscal 2007 to reduce the technical and marketing staff commensurate with our decision to drop our
ODM program for the home appliance business. Additionally, we reduced our administrative costs by not replacing managers and executives that had left the Company and by transferring many functions to China. The increase in SG&A in 2010 primarily
reflects a higher allocation of personnel costs from executives with dual business and corporate responsibilities. Our personnel costs in 2010 were $2.4 million and we expect that to remain at a similar level going forward.

The primary components of design and development expenses included in SG&A include design and prototyping costs, patent fees, testing
charges, inspection fees and salaries for engineers and designers. In fiscal 2010, total product development expenses were approximately $0.3 million, as compared to $0.2 million in fiscal 2009.

Operating income (loss), net. In fiscal 2010, we generated an operating income of $3.0 million, as compared to an operating loss
of $0.2 million in fiscal 2009.

Other income (expense), net.A loss on exchange of approximately $16,000 was incurred
in fiscal 2010 compared to a loss of $243,000 in fiscal 2009. Sundry income of $161,000, primarily from the sale of scrap, was generated in fiscal 2010, compared to $335,000 in fiscal 2009.

Segment income (loss). In fiscal 2010, we incurred a segment income of approximately $3.1 million compared to a loss of $0.1
million in fiscal 2009.



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Electronic Components segment



|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|-------------------------------------------- |  | ---------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2010                         |       |   | 2009 |  |       | 2008 | 
|Net sales                                    |  |                              | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|Cost of goods sold                           |  |                              | (87.5 | ) |      |  | (94.3 | )    |  |  | (89.4 | )
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|Gross profit                                 |  |                              | 12.5  |   |      |  | 5.7   |      |  |  | 10.6  |  
|Selling, general and administrative expenses |  |                              | (6.9  | ) |      |  | (7.5  | )    |  |  | (5.5  | )
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  
|Operating income (loss)                      |  |                              | 5.6   | % |      |  | (1.8  | )%   |  |  | 5.1   | %
|                                             |  |                              |       |   |      |  |       |      |  |  |       |  

Net sales. Our net sales include sales of electronic components (primarily CCMs) and raw
materials for customer prototypes. Net sales consist of gross amounts invoiced less discounts and VAT, if applicable.

The CCM
business which constitutes the bulk of our net sales of electronic components was established in mid fiscal 2006, and expanded rapidly until the worldwide economic slowdown impacted business in the fall of 2008 but the business has been gradually
improving since than as the Chinese telecommunication market has resumed its growth. Net sales in fiscal 2010 increased 12.8% to $38.9 million from net sales of $34.5 million in fiscal 2009. Unit sales increased 10.5% and despite the increase in
sales of higher pixel count CCMs the increase only partially compensated for the continuing decline in market prices. The video graphics array (VGA) units that have become commodity items were 68.2% of unit sales in 2010 versus
86.1% in 2009. More importantly 5.0% of unit sales in 2010 were new products (3.0 and 5.0 megapixel CCMs).

We
anticipate that unit volume will decrease in fiscal 2011 when compared to fiscal 2010. However, the sale of higher pixel count units in fiscal 2011 and beyond will increase operating margins.

Additionally, the growth of local competition together with current weaknesses in the export markets for Chinese manufacturers,
particularly in Europe, could also contribute to slower growth in fiscal 2011.

Gross profit.Gross profit in fiscal
2010 was $4.9 million or 12.5% of net sales compared to $2.0 million or 5.7% of net sales in fiscal 2009. The CCM and other electronic components businesses are increasingly competitive with the proprietary technology being maintained by the sensor
and lens suppliers, thus margins reflect a commodity type business. Margins in 2010 were helped by higher margins on the higher pixel units and better inventory management matching price reductions with cost reductions as well as 16% higher
production with only a 13.2% increase in labor and overhead. Margins in 2009 were also impacted by falling prices occurring before component costs decreased. Direct labor and overhead in fiscal 2010 were 3.1% and 5.7% respectively of net sales
compared to 3.4% and 5.7% respectively in fiscal 2009. Overhead included depreciation of $0.3 million and $0.3 million in fiscal 2010 and 2009 respectively. Excluding depreciation, overhead increased approximately $0.2 million or 12.0% compared to a
16.2% increase in production in fiscal 2010 compared to fiscal 2009. Material cost in fiscal 2010 was 78.8% of net sales, a significant improvement from 85.3% in the prior year. Since inception material cost had fluctuated around 80% of net sales as
prices and sensor costs decreased, and depending on the type of connector required and we expect to return to those levels except for proprietary items. In such a commodity type environment, volume growth remains critical to improving profitability.

Selling, general and administrative expenses. SG&A expenses in fiscal 2010 were $2.7 million or 6.9% of net sales
compared to $2.6 million or 7.5% of net sales in fiscal 2009. The primary components of SG&A are personnel costs, occupancy costs for our PRC staff where the entire CCM operation is located, and development and prototyping expense. We spent $0.4
million on development programs in fiscal 2010 and do not expect it to increase significantly in fiscal 2011.

Operating
income, net. Operating income in fiscal 2010 was approximately $2.2 million or 5.6% of net sales compared to an operating loss of approximately $0.6 million or 1.7% in fiscal 2009.

Other income (expenses), net. Other income (expense), net in fiscal 2010 was income approximately of $744,000 compared to income
of $48,000 in fiscal 2009.

Segment income (loss).Segment profit in fiscal 2010 was $2.9 million compared to a segment
loss of $0.5 million in fiscal 2009.



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EMS segment

EMS consists of two allied functions: SMT automated processing for printed circuited board assembly and final assembly and testing of cell phones. Both functions serve telecommunication customers in the
PRC.

This business became a separate segment in fiscal 2010. EMS results in fiscal 2009, the first year of operation, were
included in the others segment in fiscal 2009 since the results were not material. We have separated the results for fiscal 2009 from the others segment for purposes of comparison.



|                                             |  |                              |       |   |      |  |        |      |  |  |     | 
|-------------------------------------------- |  | ---------------------------- | ----- | - | ---- |  | ------ | ---- |  |  | --- | 
|                                             |  | Fiscal Years Ended March 31, |      
|                                             |  | 2010                         |       |   | 2009 |  |        | 2008 | 
|Net revenues                                 |  |                              | 100.0 | % |      |  | 100.0  | %    |  |  | N/A | 
|Operating costs                              |  |                              | (59.5 | ) |      |  | (117.3 | )    |  |  |    | 
|                                             |  |                              |       |   |      |  |        |      |  |  |     | 
|Gross profit (loss)                          |  |                              | 40.5  |   |      |  | (17.3  | )    |  |  |    | 
|Selling, general and administrative expenses |  |                              | (19.3 | ) |      |  | (68.7  | )    |  |  |    | 
|                                             |  |                              |       |   |      |  |        |      |  |  |     | 
|Operating income (loss)                      |  |                              | 21.2  | % |      |  | (86.0  | )%   |  |  |    | 
|                                             |  |                              |       |   |      |  |        |      |  |  |     | 

Net revenues. Our net revenues include fees for SMT processing and assembly of mobile phones.
Revenues in fiscal 2010 were $9.0 million compared to $1.8 million in fiscal 2009 although the assembly of mobile phones did not start until the fourth quarter of 2009 and the SMT facility was under construction for most of the first half of that
year.

As discussed elsewhere in this annual report, we expect to make significant capital investments in the expansion of the
EMS business in order to double production capacity. Once the expansion is complete, we will have the capacity for up to $25 million in annual sales. Assuming the timely completion of the expansion, we anticipate that revenues in fiscal 2011 will
increase significantly when compared to fiscal 2010, as we are unable to fulfill all customer requests at current capacity. However, an increase in sales will be partially offset by increased labor costs and expansion of dormitory space for
additional personnel.

Gross profit (loss). Gross profit in fiscal 2010 was $3.6 million or 40.5% of revenues compared
to a gross loss of $0.3 million during the development and initial production in fiscal 2009. Direct labor was $2.1 million and overhead excluding depreciation was $3.0 million or 22.8% and 32.8% respectively of net sales compared to $0.6 million
and $1.0 million in fiscal 2009 which were 33.7% and 56.9% respectively. Depreciation in fiscal 2010 was $0.5 million compared to $0.4 million in fiscal 2009.

Selling, general & administrative expenses. SG&A expenses in fiscal 2010 were $1.7 million or 19.3% of sales and were $1.2 million or 68.7% in fiscal 2009. The primary components of
SG&A are personal and travel and entertainment costs for the sales and marketing group. Included in SG&A in fiscal 2010 were development costs of $0.7 million compared to $0.1 million in 2009.

Operating income (loss), net. Operating income in fiscal 2010 was approximately $1.9 million or 21.1% of net sales compared to a
loss of approximately $1.6 million or 86.0% of net sales in fiscal 2009.

Other income, net. Other income, net in
fiscal 2010 and 2009 were approximately $6,000 and $109,000, respectively.

Segment income (loss). Segment profit in
fiscal 2010 was approximately $1.9 million compared to segment loss of approximately $1.4 million in fiscal 2009.

Others segment

Net sales of other products in fiscal 2010 were approximately $0.2 million which were primarily from sales of home
security devices. Net sales of other products in fiscal 2009, which were also primarily sales of home security devices, were approximately $0.3 million.

We incurred a gross loss of approximately of $0.2 million in fiscal 2010 which also reflected our start up costs for medical, compared to approximately $0.2 million gross loss in fiscal 2009.

The operating loss in fiscal 2010 was approximately $1.0 million, compared to approximately $1.4 million in fiscal 2009 and the segment
loss in fiscal 2010 was $1.0 million, compared to $1.5 million in fiscal 2009.



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Corporate

Selling, general and administrative expenses.Non-allocable corporate expenses were $3.1 million in fiscal 2010 compared to $3.4 million in fiscal 2009. Expenses in fiscal 2010 included non cash
stock compensation expense of approximately $14,000 compared to $42,000 in the prior year. The primary components of corporate expenses are audit fees, legal and professional fees (approximately $0.8 million in fiscal 2010 as compared to
approximately $1.0 million in fiscal 2009) and the cost of senior management and administrative staff of $1.4 million compared to $1.5 million in fiscal 2009. Corporate expenses in fiscal 2010 declined primarily due to the realignment of senior
management among the various operating segments and a reduction in administrative personnel.

Other operating income
(expenses), net.Other operating income of approximately $180,000 in fiscal 2010 was incurred mainly as a result of a reversal of an accrual for loss contingencies related to pending litigation. Other operating income in fiscal 2009 of $1.7
million represents proceeds from a settlement of a lawsuit offset by additional accruals for loss contingencies.

Interest
income, net, other income (expenses), net loss on dissolution of subsidiary and gain on disposal of subsidiaries.Interest expense of approximately $64,000 and $171,000 was incurred in fiscal 2010 and fiscal 2009 respectively from a reversal and
an accrual for potential interest related to potential tax adjustments. Interest income from bank deposits and other short-terms investments in fiscal 2010 and fiscal 2009 was approximately $0.3 million and $0.7 million respectively. During fiscal
2010 there was a continuing decrease in interest rates on the funds invested in low risk financial instruments. In fiscal 2010, we had an average invested fund balance, which includes cash and cash equivalents, time deposits, restricted cash and
available-for-sale investments, of approximately $40.6 million, with an average rate of return of 0.7% as compared to an average invested balance of approximately $33.9 million, with an average rate of return of 2.1 % in fiscal 2009. Other
income (expenses), net loss on dissolution of a subsidiary and gain on disposal of subsidiaries in fiscal 2009 was approximately a loss of $850,000 whereas there were no such items in fiscal 2010. In fiscal 2010, the major components of other income
(expenses), net, in corporate included foreign exchange losses of approximately $130,000, loss from the disposal of fixed assets of $292,000 and other sundry income of $2,000. In fiscal 2009 other income (expenses) included foreign exchange losses
(non cash) on dissolution of a subsidiary of approximately $1.0 million and accruals for potential penalties in relation to uncertain tax positions in compliance with FIN 48 of approximately $105,000 (See Note 18Other income (expenses), net of
Notes to Consolidated Financial Statements for a detailed breakdown of the components of Other income (expenses), net).

Income tax. Our financial statements include a provision for profits tax of approximately $0.4 million in fiscal 2010 primarily
for CIT profit tax in the PRC and of $0.4 million in fiscal 2009. The significant provision in fiscal 2009 when we had an operating loss was due to an evaluation of uncertain tax positions relating to transfer pricing in accordance with FIN 48 at
certain of our subsidiaries. Since taxes are assessed at the individual subsidiary level, losses can only be carried forward or back at each subsidiary.

We are not subject to taxation in the British Virgin Islands in accordance with British Virgin Islands tax regulations. We are subject to income tax in each jurisdiction where our subsidiaries do
business. Certain of our income is earned in China, where the standard tax rate is 25.0%, and in Hong Kong, where the corporate tax rate is 16.5% for both fiscal 2010 and 2009, on income from operations but excluding interest, dividend income and
capital gains. In Hong Kong, estimated taxes for each fiscal year are paid during the year based on the prior years taxable earnings from operations. An adjustment in the form of additional taxes paid or refunds to us is then made in the
following fiscal year based on actual taxable earnings. Therefore, in each fiscal year, our statement of operations reflects a provision for estimated taxes for the current fiscal year and adjustments for over- or under-provision with respect to the
prior fiscal year.

Our Chinese subsidiaries are subject to income tax based upon the taxable income as
reported in the statutory financial statements prepared under Chinese accounting regulations. Our subsidiaries in China were entitled to a tax concession period (Tax Holiday), whereby they were exempted from corporate income tax for
their first two profit-making years and were entitled to a 50% tax reduction for the succeeding three years. Effective January 1, 2004, Dongguan Wing Shing has been subject to the full tax rate of 27.0%. This Chinese subsidiary is our
manufacturing facility for home appliances and common charges that incurs a significant portion of our manufacturing overhead. This subsidiary makes sales of finished goods to our other subsidiaries and transfer pricing has to be within acceptable
norms. In fiscal 2004, we established a new subsidiary in China, Dongguan Lite Array, which was also entitled to a Tax Holiday. Dongguan Lite Array started its first profitable year under the Tax Holiday for the calendar year ended December 31,
2007. During the 5thSession of the 10thNational Peoples Congress of the PRC, which was concluded on
March 16, 2007, a unified enterprise income tax law, or EIT, was approved and became effective on January 1, 2008. The EIT Law introduced a wide range of changes which included the unification of income tax rates for domestic-invested and
foreign-invested enterprises at 25%. Taxes in China are based upon the financial statements of our two PRC subsidiaries based upon their preparation in accordance with PRC GAAP. Certain inter-company transactions could be interpreted by the local
authorities as taxable transactions. In accordance with the provisions of FIN 48, such transactions have been assessed and reflected in the computation of income taxes payable. To the extent that we have income effectively connected with the conduct
of a U.S. trade or business in any fiscal year, we would be subject to U.S. taxes at an effective rate up to 55%. We do not believe that our current method of operations subjects us to U.S. taxes. We also established a subsidiary in Macau, China
where we conducted sales, marketing, administration and other activities but it was dissolved effective July 2008. Similar to our subsidiaries established in the British Virgin Islands, we are not subject to taxation in Macau although the Hong Kong
Inland Revenue Department HKIRD has challenged the tax position taken by the Company and we may be subject to additional profits tax in Hong Kong. One of the Companys wholly-owned subsidiaries is currently under examination by the
HKIRD. The final outcome of this tax audit is not determinable at this time.



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Net income (loss). Net income for the group for fiscal 2010 was $3.5 million, or
$1.14 per share, as compared to a net loss of $5.8 million, or $1.91 per share for fiscal 2009.



|B. | Liquidity and Capital Resources.
|-- | --------------------------------

Our primary source of financing historically has been cash generated from operating activities. During fiscal 2011, our net cash used in operating activities was approximately $10.0 million as compared to
approximately $5.0 million net cash by provided by operating activities in fiscal 2010. This reflects a net loss of $4.0 million in fiscal 2011 compared to a net income of $3.5 million in fiscal 2010, but also our receivables in fiscal 2011 rose
$12.4 million, our inventory rose $1.4 million and our other operating assets and liabilities declined $3.0 million compared to a rise in receivables, inventories and decline in other operating assets and liabilities in fiscal 2010 of $4.8 million,
$1.0 million and $3.3 million, respectively. The decrease in working capital in fiscal 2011 of $6.6 million was due primarily to our $12.4 million increase in our receivables being financed by short-term debt and a reduction in our cash due to
operating losses.

Working capital as of March 31, 2011 was $45.2 million compared to $51.9 million as of March 31,
2010. Cash and cash equivalents, time deposits, restricted cash and short-term investments decreased $5.0 million, inventories increased $1.4 million and accounts and bills receivable increased $12.4 million from the prior year. We offset some of
the increase in receivable by borrowing short term and discounting bills in the PRC. Our borrowing capacity however is limited to the amount of cash we have on deposit so we have not effectively been extended credit and we are not likely to be
extended credit in the PRC in the future. All of our cash and related short term deposits and short-term investments are in very short term safe securities.

Accounts and bills receivable were $35.6 million at the end of fiscal 2011, compared to $23.2 million at the end of fiscal 2010. Receivables at March 31, 2011 represented 129 days of sales compared
to 83 days of sales at March 31, 2010, primarily due to the credit terms extended to our customers. Accounts and bills receivable for electronic components and EMS businesses represented 141 days and 151 days of sales in fiscal 2011 compared to
109 days sales for home appliances. Sales to Electrolux represented 41.6% of sales in fiscal 2011. Our large CCM customers in China are granted credit terms and as is customary in the PRC, the bills they issue typically mature after 90 days,
therefore we expect our domestic receivables to continue increasing in fiscal 2012 as sales increase. Offsetting this will be a major decrease in home appliance receivables since the returns of sales during the transition period have been
established as cash on delivery.

Our aggregate capital expenditures including payments for land use rights during fiscal 2011
and 2010 were $4.7 million and $2.0 million, respectively. Capital expenditures in fiscal 2011 primarily included expansion of existing clean room space and purchase of equipment and machinery, most of which was devoted to our EMS programs. Our
capital commitments as of March 31, 2011 and 2010 were approximately $86,782 and $52,919 respectively for the purchase of equipment.

Our revolving credit facilities are with Standard Chartered Bank and China Construction Bank with an aggregate facilities limit of approximately $0.3 million and $18.2 million respectively as of
March 31, 2011. The banking facilities provided by Standard Chartered Bank bear interest at floating commercial bank lending rates in Hong Kong. The amounts payable each month on the revolving credit facilities varies depending upon the amounts
drawn at the time. Our outstanding borrowings traditionally vary according to our seasonal working capital requirements but as of March 31, 2011, banking facilities of US$12,585,504 and RMB8,381,848 (equivalent to US$1,278,754) was utilized.
(See Note 15 - Bills Payable, short-term bank loans and Banking Facilities of Notes to Consolidated Financial Statements.)

We
are in compliance with all of the covenants entered into with our banks in connection with the revolving credit agreements and have been in compliance during all periods presented. In addition, we have not entered into any cross-default provision in
our debt agreements with our banks. However, since the agreements are subject to periodic review by our banks, which may result in changes of their terms and conditions, there can be no assurance that our agreements will not be subject to
cross-default provisions in the future.

We anticipate that cash from operating activities and our quick assets should be
adequate to satisfy our capital requirements for at least the next two years.



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Inflation. For the last five years inflation in Hong Kong has ranged from
(1.6%) to 6.3% (approximately 2.4% during 2010 and 4.0% for the first four months of 2011). Currently inflation in Hong Kong has little effect on our operations as much of the costs are fixed and no wage increases have been given to senior
management or executives.

Along with the appreciation of the Renminbi, inflation in China has recently affected the Company
significantly. Electricity and labor rates had been increasing more than 55% per annum until the economic slowdown and along with the Renminbi appreciation, our labor costs have increased 52% and power costs have increased 3% in fiscal 2011 in
US dollars terms. Additionally worldwide commodity prices particularly for plastics, steel and packaging have significantly increased our cost of manufacturing home appliances.

Currency and exchange rates. The functional currency of the Company is the U.S. dollar. The functional currencies of our
subsidiaries in the locations outside the U.S. are either the respective local currencies or the U.S. dollar. A majority of our sales are denominated in U.S. dollars but our sales in Chinese Renminbi have increased significantly with the growth of
our domestic telecom business. The majority of our expenses, including salaries and wages and other production and administrative costs are denominated in Hong Kong dollars and Chinese Renminbi. Certain raw materials and capital equipment are
purchased using a variety of currencies including the U.S. dollar, Chinese Renminbi, Japanese yen and EURO, but the majorities are purchased using Hong Kong dollars which is pegged to the U.S. dollar. In prior years, we have not been significantly
affected by exchange rate fluctuations and therefore have not needed to hedge our positions but with the Renminbi now appreciating versus the U.S. dollar we may need to reconsider whether hedging our positions is appropriate. See Note 3(p) of Notes
to Consolidated Financial Statements.

Application of Critical Accounting Policies.The Company believes the
following critical accounting policies and estimates used in the preparation of its consolidated financial statements can affect its results of operations. The policies set forth below require managements most subjective or complex judgments,
often as a result of the need to estimate the effect of matters that are inherently uncertain.



| |  |  | Valuation of long-lived assets. The Company evaluates long-lived assets, such as property, plant and equipment or asset group, for impairment whenever
events or changes in circumstances (such as a significant adverse change to market conditions that will have impact on the future use of the assets) indicate that the carrying amount of an asset or a group of long-lived assets may not be recoverable
in accordance with FASB ASC 360 Property, Plant and Equipment. When these events occur, the Company evaluates the impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the
use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the excess of the carrying amount of the
assets over their recoverable amount. During the fiscal years ended March 31, 2011, 2010 and 2009, impairment losses of nil, $4,786 and $200,407, respectively related to property, plant and equipment were recognized in the consolidated
statements of operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warranty cost. The Company estimates the warranty cost for defective products based on various factors including the likelihood of defects, an
evaluation of our quality controls over the manufacturing processes, technical analysis, industry information on comparable companies and our history. Based on the above criteria, the Company has accrued for warranty costs of $296,410, $180,151 and
$191,459 as of March 31, 2011, 2010 and 2009, respectively. The basis and the amount of the warranty accrual are reviewed and adjusted to reflect actual experience.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deferred tax valuation allowance. The Company accounts for income taxes in accordance with FASB ASC 740 Income Taxes, using the liability
method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the
differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be
realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. For financial reporting purposes, the Company established valuation allowances by tax jurisdiction for
deferred tax assets which management believes it is more likely than not that the deferred tax assets will not be realized in the foreseeable future. As of March 31, 2011 and 2010, the Company had tax losses carried forward of $23,656,479 and
$22,623,542, respectively which included tax losses of $4,562,595 and $3,992,542 respectively that are available indefinitely for offsetting future taxable income of companies in which these losses arose. Tax losses of $19,093,884 and $18,631,000 as
at March 31, 2011 and 2010, respectively, may be carried back for 2 years or carried forward for 20 years from the year the tax losses arose. Since tax returns have to be filed for each subsidiary in the jurisdiction in which it operates,
management has to assess whether transfer pricing or expense allocations could be challenged by the authorities based on the technical merits of the tax positions taken and probable outcome of a tax assessment. Based on an evaluation of these
uncertain tax positions, we have to estimate the potential income tax expense and any related penalties and interest. This has resulted in significant income tax expense being accrued in previous loss years since not all subsidiaries are in a loss
position for tax purposes and there is no off setting allowed between subsidiaries in the PRC and Hong Kong.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Inventory reserves. Inventories are stated at the lower of cost or market value. Cost, calculated on the weighted average basis, comprises direct
materials and, where applicable, direct labor and an appropriate proportion of production overheads. For the fiscal years ended March 31, 2011 and 2010, write-downs of inventories to fair market value of $405,313 and $398,474, respectively,
were recognized in the consolidated statements of operations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of our
customers to make required payments. Whenever it is clear that the amounts are deemed to be uncollectible, receivables are written off against the allowance for doubtful accounts.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contingencies. The Company accounts for various uncertain events, or contingencies in accordance with FASB ASC 450 Contingencies. Under
SFAS No. 5, contingent losses must be accrued if available information indicates it is probable that the loss has been or will be incurred given the likelihood of the uncertain event, and the amount of the loss can be reasonably estimated.
Management judgment is required in deciding the amount and timing of any accrual for a contingency. For example, legal proceedings are inherently uncertain, and in order to determine the amount of any reserves required, the Company assesses the
likelihood of any adverse judgment or outcomes in any litigation, as well as potential ranges of probable losses. However, the actual results may differ from such estimates and the difference may be material.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Uncertain tax provision. As of March 31, 2011, the Company recognized US$4,983,146 of liabilities for unrecognized tax benefits and, in addition,
US$1,537,510 of related interest and penalties. The unrecognized tax benefits relate mainly to potential transfer pricing arrangements reflected in the Hong Kong and PRC income tax returns of certain subsidiaries of the Company. The final outcome of
these tax uncertainties is dependent upon various matters including tax examinations, legal proceedings, certain authority proceedings, changes in regulatory tax laws and interpretations of those tax laws, or expiration of statues of limitation.
However, based on the number of jurisdictions, the uncertainties associated with litigation, and the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, which could include formal legal proceedings,
there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of March 31, 2011, the Company classified US$4,983,146 of its liabilities for unrecognized tax benefits and US$1,537,510 of
interest and penalties as current liabilities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Recent issues in accounting standards



|(i) | In August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, Fair Value Measurements and Disclosures, Measuring Liabilities at Fair
Value (ASU 2009-05) which is now codified as FASB ASC 820 Fair Value Measurements and Disclosures. ASU 2009-05 provides amendments to FASB ASC 820-10, Fair Value Measurements and Disclosures  Overall
(FASB ASC 820-10), for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to
measure fair value using a valuation technique that uses a quoted price of the identical liability when traded as an asset, a quoted price for similar liabilities or similar liabilities when traded as an asset, or another valuation technique that is
consistent with the principles of ASC 820. This ASU is effective for the first period (including interim periods) beginning after issuance. The Company does not expect the adoption of ASC 2009-05 to have a material impact on the Companys
financial position, results of operations and cash flows.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | In April 2010, the FASB issued ASU No. 2010-13, CompensationStock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades which is now codified as FASB ASC 718 CompensationStock Compensation. This Update provides amendments to Topic 718 to clarify that an
employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entitys equity securities trades should not be considered to contain a condition that is not a market,
performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. The Company does not expect the adoption of ASC 2010-13 will have a material impact on the Companys financial position, results of operations and cash flows.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | In June 2011, the FASB issued ASU No. 2011-05 Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The objective of this Update is to improve
the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate
convergence of U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), the FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of
changes in stockholders equity, among other amendments in this Update. The amendments in this Update shall be applied retrospectively and is effective for public entities, for fiscal years, and interim periods within those years, beginning
after December 15, 2011. The Company would adopt this pronouncement for the year ended March 31, 2012.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|C. | Research and development, patents and licenses, etc.
|-- | ----------------------------------------------------

We spent approximately $1.1 million, $1.6 million and $0.7 million, respectively, on product design and development in each of fiscal 2011, 2010 and 2009. The expense was primarily attributable to the
salaries and wages for the technical staff and prototyping and the cost of samples. For a more complete description of our research and development, patents and licenses, etc., see Item 4.BBusiness Overview.



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|D. | Trend information.
|-- | ------------------

See Item 5.Managements Discussion and Analysis of Financial Condition and Results of Operation for discussion of the most significant recent trends in our business since the
last fiscal year.



|E. | Off-balance sheet arrangements.
|-- | -------------------------------

The Company has no off-balance-sheet arrangements such as guarantees, derivative securities, retained interests or variable interests that have, or are reasonably likely to have, a material effect on the
Companys financial condition, revenue and expenses, results of operations, liquidity, capital expenditures and capital resources.



|F. | Tabular Disclosure of Contractual Obligations:
|-- | ----------------------------------------------

The following is a schedule reflecting our aggregate financial commitments as of March 31, 2011:



|                                |  |       |            |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |           | 
|------------------------------- |  | ----- | ---------- |  | --------------- |  | ------- | --------- |  |  | --------- |  |  | ---------------- | ------- |  |  |  | --------- | 
|Contractual Obligations         |  | Total |            |  | Less than1 year |  |         | 1-3 years |  |  | 4-5 years |  |  | More than5 years |        
|Capital Commitments (1)         |  |       | 86,782     |  |                 |  | 86,782  |           |  |  |          |  |  |                  |        |  |  |  |          | 
|Operating Lease Commitments (2) |  |       | 11,447,398 |  |                 |  | 629,677 |           |  |  | 993,288   |  |  |                  | 689,108 |  |  |  | 9,135,325 | 
|                                |  |       |            |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |           | 
|Total Contractual Obligations   |  |       | 11,534,180 |  |                 |  | 716,459 |           |  |  | 993,288   |  |  |                  | 689,108 |  |  |  | 9,135,325 | 
|                                |  |       |            |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |           | 



|(1) | Our capital commitments are for the purchase of property, plant and equipment.
|--- | ------------------------------------------------------------------------------

|(2) | The Company has various operating lease agreements for parking lots, motor vehicles, equipment and real estate that extend through 2043.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



|Item 6. | Directors, Senior Management and Employees.
|------- | -------------------------------------------



|A. | Directors and senior management.
|-- | --------------------------------

Our directors and senior management at March 31, 2011 are set forth below:



|                         |  |     |    |  |          |                                                            
|------------------------ |  | --- | -- |  | -------- | -----------------------------------------------------------
|Name                     |  | Age |    |  | Position
|Kwong Ho Sham(1)         |  |     | 78 |  |          | Chairman of the Board of Directors                         
|John C.K. Sham (2)       |  |     | 48 |  |          | President, Chief Executive Officer and Director            
|Brian Yuen (2)(3)        |  |     | 55 |  |          | Chief Executive Officer, Global-Tech USA, Inc. and Director
|Patrick Po-On Hui (3)(4) |  |     | 53 |  |          | Director                                                   
|Ken Ying-Keung Wong (4)  |  |     | 62 |  |          | Director                                                   
|Barry J. Buttifant (4)   |  |     | 66 |  |          | Director                                                   
|Kin Shek Leung (5)       |  |     | 47 |  |          | Acting Chief Financial Officer                             
|Ryan L. Long             |  |     | 32 |  |          | Vice President and General Counsel, Lite Array Inc.        



|(1) | Mr. Sham passed away on July 11, 2011. As of the date of this annual report, the board has not yet selected Mr. Shams replacement as Chairman.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Member of the finance committee.
|--- | --------------------------------

|(3) | Member of the compensation committee.
|--- | -------------------------------------

|(4) | Member of the audit committee.
|--- | ------------------------------

|(5) | Effective April 1, 2011, Mr. Leung was terminated from his position as Acting Chief Financial Officer.
|--- | ------------------------------------------------------------------------------------------------------

Kwong Ho Sham passed away on July 11, 2011. Mr. Sham, the Companys founder, served as our Chairman of the
Board of Directors since our inception. Mr. Sham areas of expertise included production engineering and manufacturing. He served as the Honorary Chairman of the Hong Kong-Shantou Chamber of Commerce, Honorary Chairman of the Hong Kong Chiu Chou
Plastics Business Association, and Honorary Chairman of the Overseas Chinese Association of Chiu Chou and was Honorary Chairman and Treasurer of the Hong Kong-Guangdong Committee for the Celebration of the Reunification. Mr. Sham was the father
of our President and Chief Executive Officer, Mr. John C.K. Sham.

John C.K. Sham has served as our
President and Chief Executive Officer since June 1992 and has served as a director of Global-Tech since July 1991. Effective April 1, 2011 Mr. Sham assumed the role of Acting Chief Financial Officer following the termination of
Mr. Leung. Mr. Sham was our Chief Financial Officer from June 1992 through January 2002. Mr. Sham joined us in 1984 as managing director of Kwong Lee Shun Trading Company Limited, a wholly owned subsidiary of ours. From 1982 to 1984,



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Mr. Sham served as President of Wesi Corp., a New York corporation which specialized in the marketing and distribution of household goods. Mr. Sham is the son of our founder and
Chairman, Mr. Kwong Ho Sham.

Brian Yuen joined us in January 1997, was elected to our Board of Directors
in August 1997 and became the Chief Executive Officer of our subsidiary Global-Tech USA, Inc. in October 1997. Mr. Yuen serves as the chairman of the finance committee of our Board of Directors and was a consultant to us from March 1994 to
December 1996. Prior to joining us, Mr. Yuen served as purchasing manager of Magla Products, Inc., a manufacturer, importer and distributor of household products, from December 1992 to December 1996.

Patrick Po-On Hui has served as a director of Global-Tech since March 2000. Mr. Hui is a practicing attorney who since
June 2010 became a consultant at Messrs. Iu, Lai & Li. From June 1988 to 2008, he was a consultant to, and then appointed a partner of Robin Bridge & John Liu in 2008, a law firm based in Hong Kong. Mr. Hui was an
Associate Partner of the law firm of Johnson Stokes & Master from March 1996 to May 1998 and an Assistant Solicitor of that firm from September 1989 to February 1996.

Ken Ying-Keung Wonghas served as a director of Global-Tech since June 2001. Dr. Wong is a medical doctor who, since 1995, has maintained a medical practice in Hong Kong. Dr. Wong
previously practiced family medicine in Canada from 1977 to 1995.

Barry John Buttifanthas served as a
director of Global-Tech since November 2003. Mr. Buttifant is currently an executive director of Hsin Chong Construction Group (HCCG). Prior to joining HCCG, Mr. Buttifant was the Chief Executive Officer of
the IDT International Limited. In October 2009, Mr. Buttifant was a director - corporate finance of Mission Hills Group (MHG) and prior to this appointment, he was the consultant to the Group since December 2008. Prior to
joining MHG, Mr, Buttifant served as a principal of KLC Kennic Lui & Company (KLC), a professional accounting firm, and managing director of KLC Transactions Limited. Prior to joining KLC, Mr. Buttifant was the executive
director - finance of MHG from February 2008 till November 2008. From December 2004 to December 2007, Mr. Buttifant was the managing director of Hsin Chong International Holdings Limited, a controlling shareholder of HCCG (which was acquired by
MHG in November 2007) and Synergis Holdings Ltd (Synergis) (which was acquired by HCCG in September 2008). Mr. Buttifant was also an alternate director to both public companies. Mr. Buttifant was an operating partner of Baring
Private Equity Asia Limited. He was also the managing director of Wo Kee Hong (Holdings) Limited (WKH) from 2001 to 2002 and was the Advisor to the board of directors of WKH from November 2002 to April 2004. Prior to joining WKH, he was
the managing director of IDT International Limited for over eight years and had worked for Polly Peck Group and Sime Darby Hong Kong Limited for more than 11 years in the capacity of finance director and managing director. He has over 35 years of
experience in corporate and financial management. Mr. Buttifant is an independent non-executive director of Giordano International Limited and Daiwa Associates Holdings Limited; a non-executive director of Synergis, all of which are publicly
listed companies in Hong Kong. Mr. Buttifant also serves as an non-executive director of China Nepstar Chain Drugstore Limited, a NYSE listed public company. Mr. Buttifant is a fellow member of the Association of Chartered Certified
Accountants; the Hong Kong Institute of Certified Public Accountants; the Chartered Management Institute, the Hong Kong Management Association and the Hong Kong Institute of Directors.

Kin Shek Leunghas been our Group Accounting Manager with overall responsibility for the group accounting and finance
functions since August 1994. Mr. Leung served as the Companys acting Chief Financial Officer from January 2002 until April 2011. Mr. Leung is now a consultant to the Company.

Ryan L. Longjoined us in December 2009 as Vice President and General Counsel of our subsidiary, Lite Array, Inc. Prior to
joining us, Mr. Long was an Associate with the law firms of Calfee, Halter & Griswold LLP from 2007 to 2009 and Kohrman Jackson & Krantz PLL from 2005 to 2007.

No family relationship exists among any of our directors and senior management, except for the following:



| |  |  | Kwong Ho Sham and John Sham are father and son.
| | - |  | -----------------------------------------------

No arrangement or understanding exists between any director or member of senior management and any other person pursuant to which any director or member of senior management was elected to such a position
with us.



|B. | Compensation.
|-- | -------------

The aggregate direct remuneration paid to all directors and senior management as a group (8 persons) during fiscal 2011 was approximately $1.7 million (including a housing allowance for two directors).
This includes amounts set aside or accrued to provide pension, retirement or similar benefits, but does not include amounts (including business travel, professional and business association dues and expenses) reimbursed to officers and other fringe
benefits commonly reimbursed or paid for by companies in Hong Kong.



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|C. | Board practices.
|-- | ----------------

Our articles of association provide for a board of directors of not less than five or more than nine members. Each director is elected to serve until the next annual general meeting of shareholders and
until his or her successor has been elected unless a different term is specified. Currently, there are five directors of which three are independent directors, serving on the board of the Company. See Item 6ADirectors and senior
management for the service time of our directors.

Audit committee. The purpose of the audit committee is
to fulfill the board of directors oversight responsibility to the shareholders, potential shareholders and the investment community relating to the integrity of the Companys financial statements and the financial reporting process, the
Companys compliance with legal and regulatory requirements, the independent auditors qualification and independence, the performance of the Companys independent auditors and the annual independent audit of the Companys
financial statements. In discharging its oversight role, the audit committee is empowered by the Companys board of directors to investigate any matter brought to its attention. Such investigation can include but is not limited to full access
to all books, records, facilities and personnel of the Company and the authority to retain outside counsel or other experts for this purpose.

The Companys audit committee is governed by a written charter. The functions of the audit committee as enumerated in its charter include:



| |  |  | assisting the board of directors oversight of (1) the integrity of the Companys financial statements and the financial reporting
process, (2) the companys compliance with legal and regulatory requirements, (3) the independent auditors qualifications and independence, (4) the performance of the Companys independent auditors, and (5) the
annual independent audit of the Companys financial statements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the direct responsibility for the appointment, compensation and retention of the independent auditors for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | regularly reviewing with the independent auditors any audit problems or difficulties encountered during the course of the audit work, including any
restrictions on the scope of the independent auditors activities or access to requested information;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | meeting with the independent auditors to discuss the scope and plans of their audit engagement;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | meeting with our financial management and independent auditors together, and periodically separately, to review matters relating to internal accounting
controls over financial reporting;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing our critical accounting policies and practices and other matters relating to our financial condition including any significant written
communications between the independent auditors and management; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing with the full board of directors any issues that arise with respect to the quality or integrity of the companys financial statements,
compliance with legal or regulatory requirements and the performance and independence of the independent auditors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The audit committee is currently comprised of Barry J. Buttifant, Patrick Po-On Hui, and Ken Ying-Keung Wong. Mr. Barry J. Buttifant is the chairman of the audit committee.

BDO Limited (BDO) was appointed as our independent auditor for the fiscal year ended March 31, 2010, replacing
Ernst & Young, who served as the Companys previous independent auditor.

Compensation
committee. Our Board of Directors also has a compensation committee. The compensation committee reviews and determines compensation for officers, directors and consultants, as well as bonuses and other incentive programs for employees. As of
March 31, 2011, the compensation committee was comprised of Patrick Po-On Hui and Brian Yuen. Mr. Brian Yuen is not considered to be independent since he is also a member of management of the Company.

We do not have, and none of our subsidiaries have, service contracts with any of our directors providing benefits upon termination of
employment. We do have an employment agreement with John C.K. Sham that provides for severance benefits in certain circumstances. If Mr. Sham resigns as a result of certain material changes relating to his employment, his agreements entitle him
to a lump sum payment equal to the aggregate amount of salary and performance bonus that would have been payable to him through the end of the term of his agreement, continued receipt of other benefits under the agreement for the remainder of the
term of his agreement and immediate vesting of his outstanding equity awards. The agreement also generally entitles Mr. Sham to the same severance benefits if he terminates his employment, or his employment is terminated, as a result of a
change in control of Global-Tech. If a liquidation plan for Global-Tech is approved by a court or agency of pertinent jurisdiction, Mr. Sham is also entitled to a lump sum payment equal to the aggregate amount of salary and performance bonus
that would have been payable to him through the end of the term of his agreement.



39



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##### Table of Contents

|D. | Employees.
|-- | ----------

At March 31, 2011, 2010 and 2009, we employed 4,216, 3,420 and 2,718 persons, respectively, on a full-time basis. Of our employees at
March 31, 2011, 41 were located in Hong Kong and, 4,175 in China. A breakdown of persons employed by main category of activity is as follows:



|                               |  |     |       | 
|------------------------------ |  | --- | ----- | 
|Category                       |  | No. |      
|Manufacturing                  |  |     | 3,220 | 
|Production management          |  |     | 43    | 
|Finance and administration     |  |     | 250   | 
|Receiving and warehousing      |  |     | 117   | 
|Quality control                |  |     | 279   | 
|Production engineering         |  |     | 59    | 
|Product design and development |  |     | 163   | 
|Sales and marketing            |  |     | 75    | 
|Human resources                |  |     | 10    | 
|                               |  |     |       | 
|                               |  |     | 4,216 | 
|                               |  |     |       | 

Since our production levels fluctuate, the number of employees varies from time to time based on our
production requirements. During peak production periods in fiscal 2011, we employed a maximum of approximately 4,431 people in our Dongguan factory. Our manufacturing personnel are paid a monthly salary and periodic incentive bonuses and are
provided with housing, medical care and subsidized meals in our dormitory complex adjacent to each factory. We have not experienced any significant labor stoppages and we believe that relations with our employees are satisfactory.

Our relationships with our employees in China are subject to the Labor Law of the Peoples Republic of China which went into effect
on January 1, 1995. The Labor Law regulates, among other things, the number of hours employees may work on a daily and weekly basis, provides allowances for legal holidays, regulates working conditions such as safety and hygiene and provides
for various social welfare and employment benefits. We believe that we are in compliance with such regulations. Availability of labor in the future may have a negative impact on our results of operations since demand in Guangdong Province for
unskilled manufacturing labor currently exceeds supply.

In June 2007, the National Peoples Congress of the PRC enacted
new labor legislation called the Labor Contract Law, which became effective on January 1, 2008. It formalizes workers rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one
of the strictest labor laws in the world, among other things, this new law requires an employer to conclude an open-ended employment contract with any employee who either has worked for the employer for 10 years or more or has had two
consecutive fixed-term contracts. An open-ended employment contract is in effect a lifetime, permanent contract, which can only be terminated in specified circumstances, such as a material breach of the employers rules and
regulations, or for a serious dereliction of duty. Under the new law, downsizing by 20% or more may occur only under specified circumstances, such as a restructuring undertaken pursuant to Chinas Enterprise Bankruptcy Law, or where a company
suffers serious difficulties in production and/or business operations. The Company has taken the Labor Contract Law into account in its decision to exit the home appliances business and incorporated its requirements into its transition program. If
the Company faces future periods of decline in business activity generally or adverse economic periods specific to the Companys business, this new law can be expected to exacerbate the adverse effect on the Companys economic environment
and its results of operations and financial condition.



40



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##### Table of Contents

|E. | Share ownership.
|-- | ----------------

The following table sets forth information regarding the share ownership in Global-Tech as of July 31, 2011 held by the directors and senior management and options granted to them on our common
shares:



|                                                     |  |                  |           |  |             |  |      |  
|---------------------------------------------------- |  | ---------------- | --------- |  | ----------- |  | ---- | -
|Name of Owner(1)                                     |  | Number of Shares |           |  | Percentage# | 
|Wing Shing Holdings Company Limited(2)               |  |                  | 688,797   |  |             |  | 22.7 | %
|Kwong Ho Sham(3)                                     |  |                  | 688,797   |  |             |  | 22.7 |  
|John C.K. Sham(4)                                    |  |                  | 1,263,624 |  |             |  | 41.6 |  
|Brian Yuen(5)                                        |  |                  | 73,751    |  |             |  | 2.4  |  
|Barry J. Buttifant(6)                                |  |                  | 11,250    |  |             |  | *    |  
|Patrick Po-On Hui(6)                                 |  |                  | 3,250     |  |             |  | *    |  
|Ken Ying-Keung Wong(6)                               |  |                  | 1,250     |  |             |  | *    |  
|Ryan Long (6)(7)                                     |  |                  | 5,000     |  |             |  | *    |  
|All officers and directors as a group (7 persons)(8) |  |                  | 1,358,125 |  |             |  | 44.7 |  



|* | Less than 1%
|- | ------------

|# | In accordance with SEC rules, each beneficial owners holdings have been calculated assuming full exercise of outstanding options covering our common shares, if
any, exercisable by such owner within 60 days after July 31, 2011, but no exercise of options covering our common shares held by any other person.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Unless otherwise indicated, the persons named in the table above have sole voting and dispositive power with respect to all common shares beneficially owned by them.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The share ownership of Wing Shing Holdings Company Limited is held 44.0% by the estate of Kwong Ho Sham and 56.0% by John Sham. Prior to the passing of Kwong Ho Sham,
voting control of Wing Shing Holdings Company Limited was held approximately 34.3% by Kwong Ho Sham and 65.7% by John Sham. During fiscal 2012, the shares of the Company owned by Wing Shing Holdings will be distributed to its two shareholders. The
estate of Kwong Ho Sham will receive 303,070 shares, which will be gifted to a charitable trust, and 385,727 shares of the Company will be distributed to John C.K. Sham. John Sham currently disclaims any beneficial ownership in any of the common
shares of Global-Tech owned by Wing Shing Holdings Company Limited.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 688,797 shares owned by Wing Shing Holdings Company Limited, which, following the passing of Kwong Ho Sham, shall be distributed as described above in footnote
2.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 688,797 shares owned by Wing Shing Holdings Company Limited and 131,250 common shares issuable to John C.K. Sham within 60 days after July 31, 2011 upon
exercise of options granted under our 1997 and 2005 Plans. Excludes 900,000 shares owned by the wife, mother of Mr. Sham who disclaims any beneficial ownership in such shares.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 73,751 common shares issuable to Brian Yuen within 60 days after July 31, 2011 upon exercise of options granted under our 1997 and 2005 Plans. Excludes
1,975 shares owned by the wife and son of Mr. Yuen who disclaims any beneficial ownership in such shares.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Each of Barry J. Buttifant, Patrick Po-On Hui, Ken Ying-Keung Wong and Ryan L. Long own less than 1% of the issued and outstanding common shares as of July 31,
2011.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes 5,000 shares issuable to Mr. Long within 60 days after July 31, 2011 upon exercise of options granted under the 2005 Plan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes 688,797 common shares owned by Wing Shing Holdings Company and 224,501 common shares beneficially owned by or issuable to various officers and directors within
60 days after July 31, 2011 upon exercise of options granted under our 1997 and 2005 Plans.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our directors and senior
management do not have different voting rights.



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##### Table of Contents

Amended and Restated 1997 Stock Option Plan of Global-Tech. The Amended and
Restated 1997 Stock Option Plan (the 1997 Plan) was adopted by our Board of Directors in September 1997. Prior to its expiration, the 1997 Plan provided for the grant of:



| |  |  | options that are intended to qualify as incentive stock options, or ISOs, within the meaning of Section 422 of the U.S. Internal Revenue Code of
1986 to employees; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | options not intended to qualify as ISOs to employees and consultants.
| | - |  | ---------------------------------------------------------------------

The 1997 Plan is administered by the Board of Directors, or a committee of directors appointed by the Board, which determines:



| |  |  | the terms of the options, including the exercise price;
| | - |  | -------------------------------------------------------



| |  |  | the number of common shares subject to the option; and
| | - |  | ------------------------------------------------------



| |  |  | the terms and conditions of exercise.
| | - |  | -------------------------------------

No option granted under the 1997 Plan is transferable by the optionee other than by will or the laws of descent and distribution and each vested option is exercisable during the contractual life of the
options by such optionee. The exercise price of all ISOs granted under the 1997 Plan must be at least equal to the fair market value of such common shares on the date of grant. With respect to any participant who owns (or is deemed to own) stock
possessing more than 10% of the voting rights of our outstanding capital stock, the exercise price of any ISO must be not less than 110% of the fair market value on the date of grant. The term of each option granted under the 1997 Plan may be
established by the Board of Directors, or a committee of the board, in its sole discretion; provided, however, that the maximum term of each ISO granted under the 1997 Plan is 10 years. With respect to any ISO granted to a participant who owns (or
is deemed to own) stock possessing more than 10% of the total combined voting power of all classes of our outstanding capital stock, the maximum term is 5 years.

During fiscal 2009, an aggregate of 9,324 options with exercise prices ranging from $13.20 to $30.56 per share were forfeited upon resignation of the relevant participants, 56,930 options with an exercise
price of $25.00 per share expired.

During fiscal 2010, an aggregate of 18,830 options with exercise prices between $20.00 and
$25.00 expired including 17,055 options granted to Directors.

No options issued pursuant to the 1997 Plan were exercised or
expired during fiscal 2011.

The 1997 Plan expired on September 17, 2008, after which date no further grants were made.

1999 Employee Stock Purchase Plan of Global-Tech. The 1999 Employee Stock Purchase Plan (the 1999
Plan) was adopted by our Board of Directors in January 1999. The 1999 Plan was approved by our stockholders at our annual meeting of stockholders in March 1999. Prior to its expiration, the total number of common shares available for issuance
under the 1999 Plan was 45,000 common shares.

The 1999 Plan is administered by our Board of Directors, or a committee of the
board, which determines:



| |  |  | the participants to be awarded stock grants;
| | - |  | --------------------------------------------



| |  |  | the number of shares subject to each stock grant, or the formula pursuant to which such number will be determined;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the date of award and the vesting; and
| | - |  | --------------------------------------



| |  |  | expiration terms applicable to each stock grant.
| | - |  | ------------------------------------------------

Up to the plans expiration in 2009, we granted, in the aggregate, net of forfeiture, 63,753 common shares under the 1999 Plan.

2005 Stock Option Plan of Global-Tech. The 2005 Stock Option Plan (the 2005 Plan) was adopted by our Board of
Directors in October 2005 and approved by the Companys shareholders in November 2005. The plan provides for the grant of:



| |  |  | options that are intended to qualify as incentive stock options, or ISOs, within the meaning of Section 422 of the U.S. Internal Revenue Code of
1986 to employees; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | options not intended to qualify as ISOs to employees and consultants.
| | - |  | ---------------------------------------------------------------------

The plan is administered by the Board of Directors, or a committee of outside directors appointed by the board, which determines:



| |  |  | the terms of options, including the exercise price;
| | - |  | ---------------------------------------------------



| |  |  | the number of common shares subject to the option; and
| | - |  | ------------------------------------------------------



| |  |  | the terms and conditions of exercise.
| | - |  | -------------------------------------



42



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##### Table of Contents

No option granted under the 2005 Plan is transferable by the optionee other than by will or
the laws of descent and distribution and each option is exercisable during the lifetime of the optionee only by such optionee. The exercise price of all ISOs granted under the 2005 Plan must be at least equal to the fair market value of such common
shares on the date of grant. With respect to any participant who owns (or is deemed to own) stock possessing more than 10% of the voting rights of our outstanding capital stock, the exercise price of any ISO must be not less than 110% of the fair
market value on the date of grant. The term of each option granted under the 2005 Plan may be established by the Board of Directors, or a committee of the board, in its sole discretion; provided, however, that the maximum term of each ISO granted
under the 2005 Plan is 10 years. With respect to any ISO granted to a participant who owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of all classes of our outstanding capital stock, the maximum term is 5
years.

The total number of common shares available for options under the 2005 Plan is 450,000 shares. We have granted options
to purchase on the dates, in the amounts and at the prices indicated below:



| |  |  | During fiscal 2008, 250 options with an exercise price of $13.20 were forfeited upon the resignation of the participant.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | During fiscal 2009, no options were granted and none were forfeited.
| | - |  | --------------------------------------------------------------------



| |  |  | During fiscal 2010, 20,000 options were granted and none were forfeited.
| | - |  | ------------------------------------------------------------------------



| |  |  | During fiscal 2011, no options were granted and none were forfeited.
| | - |  | --------------------------------------------------------------------

Under the 2005 Plan the total number available was 450,000 shares.

Global-Tech Advanced Innovations Inc. 2011 Omnibus Equity Plan. The Global-Tech Advanced Innovations Inc. 2011 Omnibus
equity Plan (the Omnibus Plan) was adopted by our Board of Directors in October 2010 and approved by the Companys shareholders in November 2010. The plan provides for the grant of stock options (non-statutory and incentive), stock
appreciation rights, restricted stock units, performance shares and common shares.

A committee authorized by the Board of
Directors (the Committee) will administer the Omnibus Plan. Unless otherwise determined by the Board of Directors, the Compensation Committee will administer the Omnibus Plan. Subject to the terms of the Omnibus Plan, the Committee has
the sole discretion to select the employees, consultants, and non-employee directors who will receive awards, determine the terms and conditions of awards, and to interpret the provisions of the Omnibus Plan and outstanding awards. The Committee may
not, without the approval of the Companys shareholders, institute an exchange program under which outstanding awards are amended to provide for a lower exercise price or surrendered or cancelled in exchange for awards with a lower exercise
price.

Awards granted under the Omnibus Plan are generally not transferable, and all rights with respect to an award granted
to a participant generally will be available during a participants lifetime only to the participant. If the Committee makes an award transferable, such award will contain such additional terms and conditions as the committee deems appropriate.

The total number of common shares available for awards under the Omnibus Plan is 400,000 shares.

During fiscal 2011, no share was granted under Omnibus Plan.

Share compensation. Effective April 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123 (R))
which is now codified as FASB ASC 718 Compensation-Stock Compensation and related interpretations in accounting for its employee stock-based compensation plans. Accordingly, stock compensation cost is measured on the date of grant, based
on fair value which is estimated using the Black-Scholes option pricing model. The compensation cost is amortized over the vesting period of the options using the straight-line method provided that the amount of compensation cost recognized at any
date must at least equal the portion of the grant-date value of the award that is vested at that date. Prior to the adoption of SFAS No. 123 (R), we applied the intrinsic-value basis prescribed in Accounting Principles Board (APB)
opinion No, 25, Accounting for Stock Issued to Employees and related interpretations in accounting for employee stock options.

As permitted by SFAS No. 123 (R), the Company has elected to apply the modified prospective method for the transition, in which compensation cost is recognized beginning with the
effective date based on the requirements of SFAS No. 123 (R) (i) for all share-based payments granted after the effective date and (ii) for all awards granted to employees prior to the effective date of SFAS No. 123
(R) that remained unvested on the effective date.

As of March 31, 2011 and 2010, there was an unrecognized
share-based compensation cost of $1,969 and $3,938, respectively, relating to options granted under our 1997 and 2005 Plans and stocks granted under our 1999 Plan. The unrecognized compensation cost for options granted and stock granted are expected
to be recognized over a weighted-average vesting period of two years and five years, respectively. To the extent that the actual forfeiture rate is different from the original estimate, actual share-based compensation relating to these awards may be
different from the expectations.

We also granted options to consultants and accounted for such options under the fair value
method. We amortize share-based compensation expense over the vesting periods of the related options.



43



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##### Table of Contents

|Item 7. | Major Shareholders and Related Party Transactions.
|------- | --------------------------------------------------



|A. | Major shareholders.
|-- | -------------------

The following table sets forth information regarding the share ownership in Global-Tech as of July 31, 2011 of shareholders that are beneficial owners of 5% or more of our outstanding common shares:



|                                          |  |                  |         |  |            |  |      |  
|----------------------------------------- |  | ---------------- | ------- |  | ---------- |  | ---- | -
|Name of Owner                             |  | Number of Shares |         |  | Percentage | 
|Shun Chi Hui                              |  |                  | 900,000 |  |            |  | 29.6 | %
|Wing Shing Holdings Company Limited(1)(2) |  |                  | 688,797 |  |            |  | 22.7 | %
|John C.K. Sham(2)                         |  |                  | 443,577 |  |            |  | 14.6 | %



|(1) | Based on a schedule 13G/A filed with the SEC on March 22, 2007, Wing Shing Holdings Company Limited owned 1,888,797 of the issued and outstanding common shares.
The share ownership of Wing Shing Holdings Company Limited was held 44.0% by Kwong Ho Sham and 56.0% by John Sham. Voting control of Wing Shing Holdings Company Limited was held approximately 34.3% by Kwong Ho Sham and 65.7% by John Sham. Kwong Ho
Sham passed away on July 11, 2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In June 2011, Kwong Ho Sham established a trust that would own his portion of Wing Shing Holdings shares in the Company. Upon his passing, 303,070 shares owned by Wing
Shing Holdings would go into this trust and 385,727 shares owned by Wing Shing Holdings would be transferred to John C.K. Sham. As of July 31, 2011, the transfer had not been officially executed but is expected to occur during fiscal 2012. John
C.K. Sham as a trustee of his fathers charitable trust declines beneficial ownership of any of the trusts shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our major shareholders have the same voting rights as all holders of our common shares.

As of July 31, 2011, approximately 33.6%, of our outstanding common shares were held in the United States by 9 holders registered on the books of our transfer agent.

To the best of our knowledge, and other than as disclosed in this annual report, we are not directly or indirectly controlled or owned by
any other corporation, foreign government or any other natural or legal person, and we are not subject to any arrangements the operation of which may at a subsequent date result in a change in control of Global-Tech.



|B. | Related party transactions.
|-- | ---------------------------

Lease and Car Rental Agreements with Related Companies:



| |  |  | On April, 2008, we entered into renewal lease agreements with Wing Shing Products Company Limited, a company owned by the Sham family, for offices and
warehouses with a total area of 25,690 square feet occupied by our executive officers, administrative group and warehouse staff at a rate totaling approximately $173,000 per annum.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On December 1, 2004, we entered into an amendment of a lease agreement with Kenmore Assets Limited, a company owned by an officer and director,
for an executive apartment in Hong Kong at a monthly rate of approximately $5,100. The rent is at fair market for such a property, which is used to accommodate business visitors from overseas. This apartment was sold in July 2011 and no further rent
is being paid.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We rent a company car from Wing Shing Products Company Limited, a company owned by the Sham family. Monthly rental for the vehicle is approximately
$4,800, which is the estimated fair value of rental or lease rates in Hong Kong for such vehicles.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Rental income and
management fee income:



| |  |  | Rental income of nil and $6,393 was earned from a jointly-controlled entity for the fiscal years ended March 31, 2011 and 2010. The rentals were
charged on mutually agreed terms.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Management fee income of nil and $9,313 was earned for the fiscal years ended March 31, 2011 and 2010, from a jointly-controlled entity. The
management fees were charged with reference to the actual costs incurred.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe the leases are on
terms no less favorable than could have been received from unaffiliated third parties.

Our Policy Concerning Related Party Transactions

All transactions with our executive officers and directors must be approved by a majority of our disinterested directors.



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##### Table of Contents

|C. | Interests of experts and counsel.
|-- | ---------------------------------

Not applicable.



|Item 8. | Financial Information.
|------- | ----------------------



|A. | Consolidated statements and other financial information.
|-- | --------------------------------------------------------

Our consolidated financial statements for fiscal 2011, 2010 and 2009 have been prepared in accordance with U.S. GAAP and audited by an
independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States). A consolidated balance sheet is presented for each of fiscal 2011 and 2010 along with a consolidated
statement of operations, statement of cash flows and statement of changes in shareholders equity which are presented for each of fiscal 2011, 2010 and 2009. See Item 18Financial Statements for detailed financial information.

Percentage of Export Sales

Export sales constitute approximately 42.2% of our total sales volume. For a breakdown of our export sales by market during the past three fiscal years, see Note 24(b) of Notes to Consolidated Financial
Statements. We did not conduct any activities nor make any sales in any regions or countries subject to U.S. economic sanctions.

Legal
Proceedings

Except as set forth below, Global-Tech and its subsidiaries are not a party in any material litigation or
arbitration, and know of no material litigation, arbitration or claim threatened against them or their properties.

SEB v. Sunbeam v.
Pentalpha Enterprises

On March 10, 1998, SEB, S.A. filed a patent infringement suit against Sunbeam Corporation and
Sunbeam Products, Inc. (collectively Sunbeam) in the U.S. District Court for the District of New Jersey. SEB later amended its complaint to add Global-Tech and one of its subsidiaries, Pentalpha Enterprises Limited, (now named Pentalpha
Medical Limited (Pentalpha)), as additional defendants in the case. SEB alleged that the defendants infringed a patent issued to SEB concerning a deep fryer model. SEB sought to recover unspecified monetary damages. In addition, Sunbeam
asserted a third-party claim and a cross-claim against Global-Tech and Pentalpha for breach of an alleged obligation to indemnify Sunbeam from SEBs patent infringement claims. Global-Tech and Pentalpha moved to dismiss the complaint of SEB for
lack of personal jurisdiction. By order dated July 16, 1999, the District Court granted the motion and dismissed the complaint against Global-Tech and Pentalpha. Sunbeam then paid SEB $2.0 million to settle its claim. Sunbeams third-party
complaint against Global-Tech and Pentalpha remained.

On December 15, 1999, Pentalpha asserted counterclaims against
Sunbeam in connection with a product supply agreement. In July 2002, after the case had been transferred to the U.S. District Court for the Southern District of Florida, Sunbeam moved for summary judgment on all claims. By memorandum decision dated
February 19, 2003, the District Court granted Sunbeams motion insofar as it related to the claim of Pentalpha for fraud in the inducement of the product supply agreement, but denied the motion with respect to the claims of Pentalpha for
breach of contract. In addition, the District Court granted Sunbeams motion for summary judgment on its claims for indemnity against Pentalpha as to liability, but ruled that a trial was necessary to determine the amount of damages that
Sunbeam was entitled to recover on its indemnity claim in addition to the $2.0 million Sunbeam previously paid to settle SEBs claims of patent infringement.

The trial on the claims of Sunbeam for indemnity and the claim of Pentalpha for breach of contract began on January 12, 2004. On January 16, 2004, the Jury returned a verdict in favor of
(i) Sunbeam on its claim for indemnity and awarded Sunbeam approximately $2.5 million against Pentalpha, and (ii) Pentalpha on its claim for breach of contract and awarded Pentalpha $6.6 million. The district court granted a final judgment
on February 11, 2004 to add prejudgment interest to the Jurys award, and awarded Sunbeam approximately $3.4 million and Pentalpha $6.6 million.

After a number of appeals and calculations of pre and post judgment interest, both parties and the Court confirmed the final judgment and Sunbeam agreed to make payment.

Sunbeam wire transferred to the escrow account of Cooper & Dunham, the attorneys for SEB, a total of $5.7 million.
Cooper & Dunham acknowledged receipt of that money and agreed to hold it in an escrow account titled Cooper & Dunham as escrow agent pursuant to Court order pursuant to the September 7, 2005 order in the action SEB
S.A., v. Montgomery Ward pending in the United States District Court for the Southern District of New York. Sunbeams payment of the funds into escrow eliminated its obligation to pay post-judgment interest on the amount that it paid into
escrow. In fiscal 2009, the Court released approximately $800,000 from the escrow account to the Company.



45



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##### Table of Contents

SEB v. Montgomery Ward

On August 28, 1999, SEB commenced an action in the U.S. District Court for the Southern District of New York against the Company, its subsidiary Pentalpha, and Montgomery Ward, then a customer, for
infringement of SEBs patent relating to a deep fryer model. On December 15, 1999, the district court entered a preliminary injunction against the sale of the deep fryer that was the subject of the case. This was affirmed on appeal. On
August 3, 2000, SEB moved for a further preliminary injunction and a citation for contempt against the Company based upon the sale of a modified deep fryer product. While that motion was pending, Montgomery Ward filed for bankruptcy protection.
That filing stayed the action as against Montgomery Ward. On March 20, 2001, the district court found that the modified deep fryer infringed the patent under the doctrine of equivalents. However, the district court denied SEBs application
for a contempt citation.

SEB then moved to amend its complaint to add certain of our other subsidiaries and John C.K. Sham as
additional defendants. The district court, in an opinion dated September 30, 2002, denied SEBs motion.

The Company
and Pentalpha moved on December 3, 2002, for summary judgment on liability on the ground that neither engaged in any conduct that infringed the patent because of the extra-territoriality of their acts and for partial summary judgment on the
claim of SEB for lost profits.

SEB moved for an order attaching the judgment in favor of the Company in the
action SEB v. Sunbeam v. Pentalpha Enterprises. The parties resolved the motion by consenting to an order that required the Company, among other things, to give notice to SEB of any attempt to collect the judgment against Sunbeam. On August 19,
2005, the Company notified SEB that it anticipated taking action to enforce the judgment against Sunbeam from the District of Florida. On August 24, 2005, SEB served a renewed motion to attach the entire proceeds of the judgment. The district
court attached the entire judgment by order dated September 7, 2005. The Company and Pentalpha filed a motion on September 22, 2005 to reduce the amount of the attachment to no more than US$500,000. The Court denied the motion and refused
to modify the order of attachment.

By decision dated January 9, 2006, the district court denied our motion for summary
judgment, meaning that the district court would require a trial to resolve SEBs claims.

The district court conducted a
trial beginning on April 17, 2006. On April 21, 2006, the jury returned a verdict finding that the Company and Pentalpha had infringed the SEB patent in violation of 35 U.S.C. § 271 (a) and (b), with respect to both the original
deep fryer and the modified deep fryer, that the infringement with respect to both deep fryers were willful and that SEB was entitled to a reasonable royalty in the total amount of $4.65 million, representing $3.6 million for its sales to Sunbeam,
$0.54 million for sales to Fingerhut and $0.51 million for sales to Montgomery Ward.

Both sides made post-trial motions. The
Company and Pentalpha moved for judgment as a matter of law on a wide range of issues and for a new trial. SEB moved to enhance damages with the addition of treble damages, prejudgment interest and attorneys fees. The motions have been fully
briefed. The district court heard oral arguments on April 11, 2007, and June 21, 2007. The court also heard testimony from a SEB witness on July 19, 2007 with respect to Pentalphas motion for judgment as a matter of law on
certain issues based upon SEBs failure to produce certain documents during discovery.

In a memorandum opinion and
decision dated October 9, 2007, the district court denied all of the post-trial motions of the Company and Pentalpha, except that the court reduced the amount of the jury verdict by $2 million based upon SEBs receipt of that amount from
Sunbeam. The district court also granted SEBs motion for enhanced damages of $2.65 million, awarded SEB its attorneys fees of $0.9 million, and prejudgment interest at the prime interest rate amounting to $1.8 million.

On October 2, 2008, the district court granted the motion of the Company and Pentalpha to vacate the award of enhanced damages and
entered an amended judgment in favor of SEB for $4.9 million.

The Company and Pentalpha thereafter sought to amend the order
of attachment to release amounts beyond those necessary to provide security pending appeal. By order dated November 25, 2008, the district court granted that motion and released all amounts in excess of $5.16 million and the attorneys for SEB
released $0.8 million of the amount in escrow to Pentalpha.

Both Pentalpha and SEB appealed the decisions of the district
court on a number of issues.

The Court of Appeals heard oral argument on October 6, 2009 and rendered a decision on
February 5, 2010 affirming the judgment of the district court. Pentalpha petitioned for reargument en banc, which the Federal Circuit denied on March 25, 2010.

After the Mandate of the Court of Appeals, SEB requested the district court modify the order of attachment to allow SEB to satisfy the outstanding judgment from the escrow funds that its counsel is
holding from the order of attachment. As of April 30, 2010, the escrow fund held $5,090,763.



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The district court heard oral argument on May 19, 2010 on Pentalphas Rule 60(b)
motion and on SEBs application to modify the order of attachment to allow disbursement of the funds in the escrow account to satisfy its judgment. On August 4, 2010, the district court issued an order authorizing the attorneys for SEB to
use the funds in the escrow account to satisfy the judgment, including pre-judgment interest, and pay certain expenses associated with it. If a balance remains, SEBs attorneys have been ordered to pay the balance to Pentalpha, after
withholding income tax. In the event a deficit remains, Pentalpha will be required to pay the balance of the judgment.

Pentalpha filed a petition for certiorari in the Supreme Court of the United States on July 23, 2010. The Supreme Court granted the
writ of certiorari on October 12, 2010. After the appeal was fully briefed, the Supreme Court heard oral argument on February 23, 2011. On May 31, 2011, the Court affirmed the judgment of the Federal Circuit by an 8-1 vote,
effectively ending the matter.

Pentalpha v. Cooper & Dunham

On April 9, 2009, Global-Tech and its subsidiary Pentalpha Enterprises, Ltd., now known as Pentalpha Medical Limited, commenced an
action in New York State Supreme Court, New York County against Cooper & Dunham LLP, Wendy E. Miller, Norman H. Zivin, and SEB S.A. (SEB). The action alleges that the defendants fraudulently misrepresented to the Court in the
action SEB S.A. v. Montgomery Ward & Co., et al., Index No. 99 Civ. 9284 (SCR), S.D.N.Y. (the Federal Action) that they had no documents regarding markings on SEBs deep fryers other than a one page document they
produced. As alleged in the Complaint, the defendants fraud enabled SEB S.A. to obtain a judgment in the Federal Action that was nearly $4 million greater than it would have obtained if defendants they had not made the misrepresentations. The
Complaint asserts claims against SEB and its attorneys under New York Judiciary Law § 487, as well as common law fraud and related torts.

On May 1, 2009, the defendants filed a notice of removal, removing this action to the Southern District of New York, where it was assigned to District Judge Stephen Robinson, who had presided over
the Federal Action. On May 21, 2009, the Company filed a motion to remand the action to state court. On June 29, 2009, defendants filed a motion to dismiss the complaint. On January 6, 2010, the federal court granted the
Companys motion to remand, and accordingly denied defendants motion to dismiss.

On March 29, 2010,
defendants filed a motion in state court to dismiss the complaint, and for sanctions against the Company. On June 1, 2010, defendants filed their papers opposing plaintiffs motion. By order entered September 3, 2010, the Court
dismissed the action. It held that the prior judgment in the action SEB S.A. v. Montgomery Ward & Co. barred the action under the doctrines of res judicata and collateral estoppel. The Court also denied the motion for sanctions against the
Company.

By notice filed October 14, 2010, the Company appealed to the Appellate Division of the Supreme Court of the
State of New York, First Department. On June 29, 2011, the Company filed its brief on appeal.

Wing Shing Products v. Simatelex

On February 9, 2001, Wing Shing Products (BVI) Company Limited (Wing Shing Products), commenced an action
in the United States District Court for the Southern District of New York against Simatelex Manufactory Ltd. claiming infringement of U.S. Patent No.348,585.

On November 7, 2005, the parties filed cross-motions for summary judgment on the issue of liability for design patent infringement. The district court heard oral arguments on October 24, 2006.

On March 29, 2007, the district court entered an order denying the motions of Simatelex for summary judgment and
granting the motion of Wing Shing Products for a summary judgment on its claim that Simatelex actively induced infringement in violation of 35 U.S.C. § 271(b). A trial on the issue of the monetary recovery of Wing Shing Products was scheduled
for October 24, 2007.

The Court adjourned the trial without date, at the request of Simatelex, on the grounds that
Sunbeam has claimed, in the action involving the AD Series coffeemaker described below, that Wing Shings design patent is invalid.

On May 30, 2008, Wing Shing Products and Simatelex entered into an agreement to settle this action. Pursuant to that settlement agreement, Simatelex agreed (i) to pay Wing Shing Products $1.8
million, (ii) to consent to the entry of a final judgment and permanent injunction restraining further infringements of the design patent and admitting that the design patent is valid and that the AD Series products Simatelex sold infringed it,
(iii) to dismiss with prejudice the counterclaim and affirmative defenses concerning the validity and enforceability of the design patent in the action Wing Shing Products v. Simatelex, and (iv) to an exchange of releases. Since the
execution of that settlement agreement, Simatelex paid Wing Shing Products the $1.8 million in June 2008. The Court has entered the final judgment and permanent injunction. Wing Shing Products recognized such $1.8 million in the consolidated
statement of operations in the fiscal year ended March 31, 2009.



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Wing Shing Products v. Sunbeam Products and Simatelex

On May 9, 2006, our subsidiary, Wing Shing Products (BVI) Company Limited (Wing Shing Products), filed an action in the
United States District Court for the Southern District of New York against Sunbeam Products, Inc. and Simatelex Manufactory Co. Ltd. for infringement of United States Patent Des. No. 348,585 based upon their sale of the coffeemakers designated
as the AR Series. Defendants have responded to the complaint and counterclaimed for a declaratory judgment that the patent is invalid. Sunbeam moved for summary judgment on numerous grounds, including that the design patent is invalid. The parties
completed briefing on the summary judgment motion on November 19, 2007.

Pursuant to the settlement agreement in the
action Wing Shing Products v. Simatelex, Simatelex on May 30, 2008 stipulated to dismiss with prejudice its affirmative defenses and counterclaim concerning the validity of the design patent and stipulated that the design patent was valid and
enforceable. The Court so ordered that stipulation on June 4, 2008.

The Court, in an order filed on September 18,
2008, denied defendants motions without prejudice to renewal after the Court of Appeals decided a case which may affect its decision. After the Court of Appeals rendered a decision in that case, the defendants re-filed their motions for
summary judgment. On September 30, 2009, the district court held as a matter of law that Sunbeams accused coffeemakers did not infringe the Design Patent as a matter of law.

Wing Shing filed its notice of appeal on October 13, 2009. Wing Shing filed its brief on appeal on December 22, 2009. Sunbeam
filed its brief on February 1, 2010. The Court of Appeals heard oral arguments on May 3, 2010.

On May 5, 2010,
the Court of Appeals affirmed the judgment of the district court. This concluded the matter.

Hanks v. Hamilton Beach Brans Inc. and Global
Household Products Limited

On May 19, 2010, Kevin and Tammy Hanks filed an Amended Original Complaint and Jury Demand
in the United States District Court for the Eastern District of Texas, Beaumont Division, naming Hamilton Beach Brands, Inc. a defendant and joining Global Household Products Limited as a defendant. The case was a property damages suit arising out
of a fire that occurred at Plaintiffs home on April 25, 2009.

Global Household filed a motion to dismiss asserting
that the court lacked personal jurisdiction because Global Household had insufficient minimum contacts with the State of Texas.

Hamilton Beach contested the propriety of Global Households jurisdictional defense. In so doing, Hamilton Beach served Global
Household with jurisdictional discovery, filed numerous discovery motions, and even sought sanctions against Global Household for alleged failures to comply with court orders.

During the course of these discovery disputes, Global Household engaged in discussions with Plaintiffs counsel to resolve the underlying products liability litigation.

On June 13, 2011, Hamilton Beach filed its Cross-Claim against Global Household.

On June 16, 2011, Global Household and Plaintiffs reached an agreement to settle the underlying litigation. Following the settlement
with the Plaintiffs, the only remaining claim before the court was Hamilton Beachs Cross-Claim for indemnity as to its attorneys fees and costs.

On July 26, 2011 Global Household and Hamilton Beach reached an agreement to settle Hamilton Beachs Cross-Claim for indemnity and attorneys fees. This concluded the matter.

Unasserted Claims and Assessments

Eastman Kodak/Lite Array OLED License Agreement Dispute

By an agreement
dated as of July 13, 2000 and a restatement and amendment to that agreement dated as of August 31, 2005, our subsidiary, Lite Array, Inc., entered into an OLED licensing agreement with Eastman Kodak Company (Kodak). In essence,
those agreements licensed our subsidiary to use certain intellectual property rights of Kodak in exchange for the promise of Lite Array to, among other things, pay certain royalties to Kodak. By letter dated September 20, 2005, Kodak served
notice that it terminated the license agreement based upon the failure of Lite Array to pay certain minimum royalties, subject to the right of Lite Array to cure the claimed default within 60 days. By letter dated November 14, 2005, Lite Array
notified Kodak that it had rescinded the license agreement based upon misrepresentations that Kodak made to induce Lite Array to enter into the license agreement and demanded the return of $3.85 million Lite Array has paid to Kodak under the license
agreement. The outcome of any litigation seeking the return of that $3.85 million would be uncertain. The Company cannot eliminate the possibility that Kodak may claim that the $0.5 million minimum royalty remains due, but the company would
aggressively dispute this should it occur. Additionally, because Kodak has



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terminated the License Agreement, the Company has no obligation to pay ongoing license fees. Neither party has filed any legal action with respect to this dispute.

Any adverse decision that may result above what we have accrued in any of these legal proceedings could have a material adverse effect on
our business, results of operations and financial condition.

Included in accrued expenses in our consolidated
balance sheets as of March 31, 2011, 2010 and 2009 were provisions for legal fees of approximately $217,700, $67,600 and $113,500, respectively in relation to certain of the above cases. Unless noted above, we have not included in our financial
statements any asset or liability resulting from litigation that has not resulted in a cash deposit into or payment from bank accounts of Global-Tech or its subsidiaries.

Dividends

We are a holding company and have no business operations other
than ownership of our subsidiaries. In the event that we should decide to pay cash dividends, as a holding company, our ability to pay dividends and meet other obligations would depend upon the receipt of dividends or other payments from our
operating subsidiaries and our other holdings and investments. In addition, our operating subsidiaries from time to time may be subject to restrictions on their ability to make distributions to us as a result of restrictive covenants in loan
agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions, including withholding tax on dividend income and contribution to statutory reserve. Restrictions on currency
conversion may be in effect from time to time but have not had a material effect on us to date.



|B. | Significant changes.
|-- | --------------------

Please seeItem 4.AInformation on the CompanyRecent Developments for a full discussion regarding the Companys plans to exit the home appliances
business in fiscal 2012, which was approved by the Companys board of directors on June 3, 2011.



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|Item 9. | The Offer and Listing.
|------- | ----------------------



|A. | Offer and listing details.
|-- | --------------------------

Our common shares began trading on the New York Stock Exchange, or NYSE, under the symbol GAI on April 8, 1998. Effective December 10, 2008, Global-Techs common stock was no
longer traded on the NYSE and commenced trading on the Nasdaq Stock Market (Nasdaq). The following table lists the high and low market prices on the NYSE and Nasdaq for the periods indicated.



|                        |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|----------------------- |  | --------- | ---- |  | ------------------------------------------------- |  | ---- | ---- |  |  | ----- |  |  |  | ----- | 
|                        |  | Pre-split |      |  | Adjustment to 
reflect4-for-1 reverse stock split | 
|                        |  | High      |      |  | Low                                               |  |      | High |  |  | Low   | 
|Fiscal 2007:            |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|Annual                  |  |           | 6.65 |  |                                                   |  | 2.38 |      |  |  | 26.60 |  |  |  | 9.52  | 
|                        |  |           |      | 
|Fiscal 2008:            |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|Annual                  |  |           | 5.85 |  |                                                   |  | 2.57 |      |  |  | 23.40 |  |  |  | 10.28 | 
|                        |  |           |      | 
|Fiscal 2009:            |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|First Quarter           |  |           | 4.02 |  |                                                   |  | 2.42 |      |  |  | 16.08 |  |  |  | 9.68  | 
|Second Quarter          |  |           | 3.88 |  |                                                   |  | 2.29 |      |  |  | 15.52 |  |  |  | 9.16  | 
|Third Quarter           |  |           |     |  |                                                   |  |     |      |  |  | 12.00 |  |  |  | 6.00  | 
|Fourth Quarter          |  |           |     |  |                                                   |  |     |      |  |  | 11.48 |  |  |  | 6.20  | 
|Annual                  |  |           |     |  |                                                   |  |     |      |  |  | 16.08 |  |  |  | 6.00  | 
|                        |  |           |      | 
|Fiscal 2010:            |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|First Quarter           |  |           |     |  |                                                   |  |     |      |  |  | 10.75 |  |  |  | 6.40  | 
|Second Quarter          |  |           |     |  |                                                   |  |     |      |  |  | 9.96  |  |  |  | 7.31  | 
|Third Quarter           |  |           |     |  |                                                   |  |     |      |  |  | 12.48 |  |  |  | 6.82  | 
|Fourth Quarter          |  |           |     |  |                                                   |  |     |      |  |  | 13.37 |  |  |  | 10.41 | 
|Annual                  |  |           |     |  |                                                   |  |     |      |  |  | 13.37 |  |  |  | 6.40  | 
|                        |  |           |      | 
|Fiscal 2011:            |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|First Quarter           |  |           |     |  |                                                   |  |     |      |  |  | 12.51 |  |  |  | 9.52  | 
|Second Quarter          |  |           |     |  |                                                   |  |     |      |  |  | 10.00 |  |  |  | 8.42  | 
|Third Quarter           |  |           |     |  |                                                   |  |     |      |  |  | 12.40 |  |  |  | 8.05  | 
|Fourth Quarter          |  |           |     |  |                                                   |  |     |      |  |  | 9.40  |  |  |  | 6.78  | 
|Annual                  |  |           |     |  |                                                   |  |     |      |  |  | 12.51 |  |  |  | 6.78  | 
|                        |  |           |      | 
|Most Recent Six Months: |  |           |      |  |                                                   |  |      |      |  |  |       |  |  |  |       | 
|February 2011           |  |           |     |  |                                                   |  |     |      |  |  | 8.32  |  |  |  | 7.61  | 
|March 2011              |  |           |     |  |                                                   |  |     |      |  |  | 7.98  |  |  |  | 6.78  | 
|April 2011              |  |           |     |  |                                                   |  |     |      |  |  | 7.53  |  |  |  | 5.74  | 
|May 2011                |  |           |     |  |                                                   |  |     |      |  |  | 6.21  |  |  |  | 4.66  | 
|June 2011               |  |           |     |  |                                                   |  |     |      |  |  | 5.42  |  |  |  | 4.00  | 
|July 2011               |  |           |     |  |                                                   |  |     |      |  |  | 4.65  |  |  |  | 3.03  | 



|B. | Plan of distribution.
|-- | ---------------------

Not applicable.



|C. | Markets.
|-- | --------

See Item 9.AThe Offer and ListingOffer and Listing Details above.



|D. | Selling shareholders.
|-- | ---------------------

Not applicable.



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|E. | Dilution.
|-- | ---------

Not applicable.



|F. | Expenses of the issue.
|-- | ----------------------

Not applicable.



|Item 10. | Additional Information.
|-------- | -----------------------



|A. | Share capital.
|-- | --------------

Not applicable.



|B. | Memorandum and articles of association.
|-- | ---------------------------------------

Objects and Purposes

Our objects and purposes are described in
Clause 5 of our memorandum of association and generally allow us to engage in any act or activity that is not prohibited under British Virgin Islands law.

Directors

British Virgin Islands law and our articles of association
provide that no agreement or transaction between us and one or more of our directors or any entity in which any director has a financial interest or to which any director is related, including as a director of that other entity, is void or voidable
for this reason only or by reason only that the director is present at the meeting of directors or at the meeting of the committee of directors that approves the agreement or transaction or that the vote or consent of the director is counted for
that purpose if the material facts of the interest of each director in the agreement or transaction and his or her interest in or relationship to any other party to the agreement or transaction are disclosed in good faith or are known by the other
directors. In addition, a director who has an interest in any particular business to be considered at a meeting of directors or shareholders may be counted for the purposes of determining whether the meeting is duly constituted.

Our articles of association provide that the directors may, by a resolution of directors, fix the emoluments of directors with respect to
services to be rendered in any capacity to us.

British Virgin Islands law and our articles of association provide that our
business and affairs shall be managed by our directors, who in addition to the powers and authorities expressly conferred by our articles of association, may also exercise all such powers of the Company as are not by our memorandum, articles of
association or British Virgin Islands law required to be exercised by the shareholders.

British Virgin Islands law and our
articles of association do not contain an age limit requirement for our directors. Our articles of association do not contain a share qualification for directors.

Rights of Shareholders

Our memorandum authorizes the issuance of
12,500,000 ordinary shares of $0.04 each and 250,000 preference shares of $0.04 each. We do not have any preference shares currently outstanding. The preference shares may be issued by our directors, without further action by shareholders. Our
directors also have the right to fix by resolution of directors the designations, powers, preferences, rights, qualifications, limitations and restrictions of the preference shares, such as voting rights (including the right to vote as a series on
particular matters), preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions.

Dividend rights. Subject to the preferential and other dividend rights of any outstanding series of preference shares,
holders of our common shares will be entitled to equal dividends per share when, as and if declared by our board of directors. The board may declare interim dividends and recommend a final annual dividend from retained earnings available for cash
dividends as determined for statutory purposes at such times and in such amounts as they may determine. Dividends may only be declared and paid out of surplus. See Item 8.AConsolidated Statements and Other Financial
InformationDividend Policy. According to our articles of association, all dividends that remain unclaimed for a period of three years after their declaration may be forfeited by our board of directors for our benefit.

Voting rights. Holders of our common shares have one vote for each share held on all matters submitted to a vote of
shareholders. Our board of directors is not classified and therefore, all the directors stand for reelection at the same interval.

Liquidation rights. In the event we are liquidated or wound up, the holders of our common shares will be treated equally on a per share basis and will be entitled to receive all of our
remaining assets following distribution of the preferential and/or other amounts to be distributed to the holders of our preference shares.



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Other provisions. We have no provisions in either our memorandum or articles
of association for redemption or sinking fund provisions, or providing that any shareholder has a right to share in our profits. Our common shares are not subject to further capital calls by us. We have no provisions in our memorandum or articles of
association that discriminate against any existing or prospective holder of our common shares as a result of the existing or prospective holders owning a substantial number of our common shares.

Changes to Rights of Shareholders

Under our memorandum and articles of association and British Virgin Islands law, our memorandum and articles of association may be amended by a resolution of directors or a resolution of members. This
includes amendments



| |  |  | increasing or reducing our authorized capital,
| | - |  | ----------------------------------------------



| |  |  | authorizing the issuance of different classes of shares, including preference shares, and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | increasing or reducing the par value of our shares.
| | - |  | ---------------------------------------------------

The directors may also increase our capital without shareholder approval by transferring a portion of our surplus to capital. Or the directors may reduce our capital without shareholder approval, subject
to the requirements of British Virgin Island law, by transferring a portion of our capital to surplus. Our memorandum and articles of association provide that differences which may rise between us and any of our shareholders, their executors,
administrators or assigns relating to our memorandum and articles of association shall, unless the parties agree to a single arbitrator, be referred to two arbitrators to be chosen by each of the differing parties. No amendment to our memorandum and
articles of association will be effective unless and until it is filed with the Companies Registry of the British Virgin Islands.

Annual,
General and Extraordinary Meetings of Shareholders

British Virgin Islands law and our articles of association do not
require us to hold an annual meeting. We do, however, typically hold an annual meeting of shareholders for the election of directors and for such other business as may come before the meeting.

Under British Virgin Islands law, unless otherwise provided by a companys memorandum or articles of association, the directors may
call meetings of shareholders at any time. Our articles of association require the directors to call meetings upon a written request from shareholders holding 30% or more of the outstanding voting shares.

Our articles of association provide that notice of all meetings of shareholders shall be given not fewer than seven days before the date
of the proposed meeting to those persons whose names appear as a shareholder in our share register on the date notice is given and are entitled to vote at the meeting. A meeting of shareholders may be called on shorter notice, however, if members
holding, in general, at least 90% of the total number of shares entitled to vote on all matters to be considered at the meeting consent or all the shareholders holding shares entitled to vote on all matters to be considered at the meeting waive the
right of notice.

Limitations on Share Ownership

British Virgin Islands law and our memorandum and articles of association do not impose any limitations on the right of anyone to own, hold or exercise voting rights to our common shares. British Virgin
Islands law does not impose any limitation on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our common shares.

Indemnity and Insurance

Our articles of association provide that we may
indemnify directors, officers, liquidators and other individuals who act on our behalf or upon our request for liabilities and expenses that they may incur as a result of their actions. We may only indemnify a person who acted honestly and in good
faith with a view to our best interests and, in the case of criminal proceedings, if the person had no reasonable cause to believe that his or her conduct was unlawful. The decision of the directors as to whether a person acted honestly and in good
faith is, in the absence of fraud, conclusive unless a question of law is involved. We also are entitled under our articles of association to purchase and maintain directors and officers liability insurance.

Certain Anti-Takeover Matters

Under our memorandum and articles of association and the laws of the British Virgin Islands, our memorandum and articles of association may be amended by a resolution of directors or a resolution of
members. This includes amendments authorizing the creation of different classes of shares, including preference shares. Our ability to amend our memorandum and articles of association by a resolution of directors could have the effect of delaying,
deterring or preventing a change in control of us without any further action by our shareholders including but not limited to, a tender offer to purchase our common shares at a premium over then current market prices. In addition, the issuance of
preference shares without shareholder approval, on terms as the board of directors may determine, could adversely affect the voting power of the holders of our common shares, including the loss of voting control to others. Written consent or
resolution passed at a meeting of the holders of the relevant shares is required to vary class shareholders right.



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Ownership Information

British Virgin Islands law and our memorandum and articles of association do not provide that information about our shareholders, even those owning significant percentages of our shares, must be
disclosed.

Differences from United States Law

In general, the laws of the British Virgin Islands governing the provisions of our memorandum and articles of association discussed above are not significantly different than the laws governing similar
provisions in the charter documents of Delaware companies, other than with respect to the holding of an annual meeting for our shareholders and the amendment of our memorandum and articles of association. We are not required by the laws of the
British Virgin Islands to hold an annual meeting for our shareholders but we would be required to hold an annual meeting if we were incorporated under Delaware law. If we choose not to hold an annual meeting, then the ability of our shareholders to
submit and vote on proposals would be significantly less than that of shareholders in U.S. companies incorporated in Delaware. In addition, our board of directors may amend our memorandum of association under certain circumstances without
shareholder approval, whereas Delaware law requires shareholders to approve any amendments to a Delaware corporations certificate of incorporation.

We are a British Virgin Islands company and our affairs are governed by, among other things, the International Business Companies Act (IBCA) of the British Virgin Islands. IBCA of British
Virgin Islands differs from laws applicable to United States corporations and their shareholders. Since it is impractical and burdensome to list all the difference items, set forth below is a brief description of identifiable differences between the
provisions of IBCA applicable to us and those followed by domestic companies under the Nasdaq listing standards.

Board composition

Pursuant to section 42 of IBCA, the business and affairs of a BVI company shall be managed by a board of directors that
consists of one or more persons but it is silent on the requirement of having a majority of independent directors. In addition, there is no requirement to evaluate directors independence from management.

Scheduled independent director meeting

There is no requirement that non-management directors must meet at regularly scheduled executive meetings not attended by management. Under Section 48(1) of IBCA, the directors may meet at such times
and in such manner and places within or outside the British Virgin Islands as the directors may determine to be necessary or desirable.

Nominating/corporate governance committee

The Nasdaq listing standards require companies to have a nominating/corporate governance committee comprised of independent directors governed by a written charter establishing minimum requirements. There
is no such requirement under BVI rules.

Compensation committee

The Nasdaq listing standards require companies to have a compensation committee comprised entirely of independent directors governed by a
written charter establishing certain minimum requirements. There is no such requirement under the BVI rules.

Audit committee

The Nasdaq listing standards require companies to have an audit committee, consisting of a minimum of three independent
members of the board of directors governed by a written charter establishing the duties and responsibilities of the audit committee. There is no such requirement under BVI rules. However, we have an audit committee governed by a written charter
consisting of three independent directors as defined in Rule 10A-3 of the Exchange Act.

CEO Certification

The Chief Executive Officer must notify the Nasdaq in writing if an executive officer of the Company becomes aware of any material
non-compliance with the Nasdaq corporate governance listing requirements, notwithstanding our status as a foreign private issuer.

Code of
business conduct and ethics

The Nasdaq standards require that each listed company adopt and disclose a code of business
conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. We have such a Code adopted for senior financial officers, as is permitted for a foreign private issuer.



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Indemnification

Pursuant to subsection 57(1) of IBCA, a company under its Articles or Memorandum, may provide for indemnification for directors and officers, except where their actions are a violation of their fiduciary
duties or are performed in a willfully negligent manner. It also provides for reimbursement of all expenses including legal fees and indemnifications against civil fraud or the consequence of committing a crime. However, the SEC provides for
reimbursement to the Company by chief executive officers and chief financial officers of bonuses, or other incentive-based compensation and stock sale profits during the year following an accounting restatement due to material noncompliance or as a
result of misconduct.

Inspection of books and records

Subsection 67(4) of IBCA allows a company to refuse a request from shareholders or their attorneys to inspect the share register, the books and records and contracts kept by a company, if the Company, by
resolution of its directors, determines that it is not in the best interest of the Company to do so. However, we are required to provide shareholders and the Nasdaq certain material information under Nasdaq rules.



|C. | Material contracts.
|-- | -------------------

On March 17, 2006, we contributed our OLED fixed assets (including a clean room and prototyping equipment) in Dongguan Lite Array Company Limited into Lite Array Holdings Limited (Lite
Array) and also transferred all of our know-how and personnel associated with our OLED development program into Lite Array.

Effective April 3, 2006, we sold 70% of Lite Array to Anwell for a $5.6 million convertible note. The transaction resulted in a net gain in fiscal 2007. The Company accounts for its interests in Lite
Array and its subsidiaries (the jointly-controlled entities), in which the company does not have unilateral control, but joint control, under the equity method. The Company has discontinued the recognition of its share of losses of the
jointly-controlled entities exceeded the Companys interests in the jointly-controlled entities.

In June 2009, the
convertible note was paid in full in cash.



|D. | Exchange controls.
|-- | ------------------

General

There are
currently no limitations either under British Virgin Islands or U.S. law or in our articles of association to the rights of shareholders to hold or vote common shares, or to pay dividends, interest or other payments to nonresident shareholders.
There are currently no restrictions in the British Virgin Islands regarding our export and import of capital, including the availability of cash and cash equivalents for use by our affiliated companies.



|E. | Taxation.
|-- | ---------

Material United States Federal Income Tax Consequences

The discussion
below is for general information only and is not, and should not be interpreted to be, tax advice to any holder of our common shares. Each holder or a prospective holder of our common shares is urged to consult his, her or its own tax advisor.

General

This section is a general summary of the material United States federal income tax consequences to U.S. Holders, as defined below, of the
ownership and disposition of our common shares as of the date of this report. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Code, the applicable Treasury regulations promulgated and proposed
thereunder, judicial decisions and current administrative rulings and practice, all of which are subject to change, possibly on a retroactive basis. The summary applies to you only if you hold our common shares as a capital asset within the meaning
of Section 1221 of the Code. In addition, this summary generally addresses certain U.S. federal income tax consequences to U.S. Holders if we were to be classified as a PFIC. The United States Internal Revenue Service, or the IRS, may challenge
the tax consequences described below, and we have not requested, nor will we request, a ruling from the IRS or an opinion of counsel with respect to the United States federal income tax consequences of acquiring, holding or disposing of our common
shares. This summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to the ownership of our common shares. In particular, the discussion below does not cover tax consequences that depend upon
your particular tax circumstances nor does it cover any state, local or foreign law, or the possible application of the United States federal estate or gift tax. You are urged to consult your own tax advisors regarding the application of the United
States federal income tax laws to your particular situation as well as any state, local, foreign and United States federal estate and gift tax consequences of the ownership and disposition of the common shares. In addition, this summary does not
take into account any special United States federal income tax rules that apply to a particular U.S. or Non-U.S. holder of our common shares, including, without limitation, the following:



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| |  |  | a dealer in securities or currencies;
| | - |  | -------------------------------------



| |  |  | a trader in securities that elects to use a market-to-market method of accounting for its securities holdings;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | a financial institution or a bank;
| | - |  | ----------------------------------



| |  |  | an insurance company;
| | - |  | ---------------------



| |  |  | a tax-exempt organization;
| | - |  | --------------------------



| |  |  | a person that holds our common shares in a hedging transaction or as part of a straddle or a conversion transaction;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | a person whose functional currency for United States federal income tax purposes is not the U.S. dollar;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | a person liable for alternative minimum tax;
| | - |  | --------------------------------------------



| |  |  | a person that owns, or is treated as owning, 10% or more, by voting power or value, of our common shares;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | certain former U.S. citizens and residents who have expatriated; or
| | - |  | -------------------------------------------------------------------



| |  |  | a person who receives our shares pursuant to the exercise of employee stock options or otherwise as compensation.
| | - |  | -----------------------------------------------------------------------------------------------------------------

U.S. Holders

For
purposes of the discussion below, you are a U.S. Holder if you are a beneficial owner of our common shares who or which is:



| |  |  | an individual United States citizen or resident alien of the United States (as specifically defined for United States federal income tax purposes);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a corporation, or other entity treated as a corporation for United States federal income tax purposes, created or organized in or under the laws of the
United States, any State or the District of Columbia;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate whose income is subject to United States federal income tax regardless of its source; or
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | a trust (x) if a United States court can exercise primary supervision over the trusts administration and one or more United States persons
are authorized to control all substantial decisions of the trust or (y) if it was in existence on August 20, 1996, was treated as a United States person prior to that date and has a valid election in effect under applicable Treasury
regulations to be treated as a United States person.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If a partnership holds our common shares, the tax
treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner of a partnership holding our common shares, you should consult your tax advisor.

Distributions

Subject
to the passive foreign investment company (PFIC) rules discussed below, for cash dividends, the gross amount of any such distribution (other than in liquidation) that you receive with respect to our common shares generally
will be taxed to you as dividend income to the extent such distribution does not exceed our current or accumulated earnings and profits (E&P), as calculated for U.S. federal income tax purposes. Such income will be includable in your
gross income as ordinary income on the date of receipt. Dividends received by individuals and certain other non-corporate taxpayers in tax years before January 1, 2011 from qualified foreign corporations are taxed at the rate of
either 5 percent (zero, for tax years beginning in 2009, 2010 and 2011) or 15 percent, depending upon the particular taxpayers U.S. federal income tax bracket; provided that the recipient-shareholder has held his or her shares as a
beneficial owner for more than 60 days during the 121-day period beginning on the date which is 60 days before the shares ex-dividend date. Dividends received in tax years beginning after December 31, 2012 will be taxed at
higher ordinary income tax rates. A foreign corporation is a qualified foreign corporation if the stock with respect to which it pays dividend is traded on an established securities market in the United States, provided that the foreign
corporation is not a PFIC. Our stock is traded on an established securities market in the United States, although we cannot guarantee that our stock will be so traded in the future.



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We believe that we were not a PFIC for U.S. federal income purposes for our fiscal years ended March 31, 2010 or 2011. No assurance can be given, however, that the IRS may not disagree and
seek to treat us as a PFIC. See Passive Foreign Investment Company (PFIC) below. If we are a PFIC with respect to a particular U.S. Holder, dividends received from us will be taxed at regular ordinary income tax rates. Holders of our
shares should consult their own tax advisers regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.

To the extent any distribution exceeds our E&P, the distribution will first be treated as a tax-free return of capital to the extent of your adjusted tax basis in our common shares and will be applied
against and reduce such basis on a dollar-for-dollar basis (thereby increasing the amount of gain and decreasing the amount of loss recognized on a subsequent disposition of such shares). To the extent that such distribution exceeds your adjusted
tax basis, the distribution will be taxed as gain recognized on a sale or exchange of our common shares. See Sale, Exchange or Other Disposition of Our Common Shares, below. Because we are not a U.S. corporation, no dividends-received
deduction will be allowed to corporations with respect to dividends paid by us.

For United States foreign tax credit
limitation purposes, dividends received on our common shares will be treated as foreign source income and will generally be passive category income, or in the case of certain holders, general category income. You may be
eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of foreign withholding taxes, if any, imposed on dividends paid on our common shares. The rules governing United States foreign tax credits are complex,
and we recommend that you consult your tax advisor regarding the applicability of such rules to you.

Sale, Exchange or Other Disposition
of Our Common Shares

Subject to the PFIC rules discussed below, generally, in connection with the sale, exchange or other
taxable disposition of our common shares:



| |  |  | you will recognize capital gain or loss equal to the difference (if any) between:
| | - |  | ---------------------------------------------------------------------------------



| |  |  | the amount realized on such sale, exchange or other taxable disposition and
| | - |  | ---------------------------------------------------------------------------



| |  |  | your adjusted tax basis in such common shares (your adjusted tax basis in the shares you hold generally will equal your U.S. dollar cost of such
shares);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | such gain or loss will be long-term capital gain or loss if your holding period for our common shares is more than one year at the time of such sale or
other disposition;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | such gain or loss will generally be treated as United States source for United States foreign tax credit purposes; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | your ability to deduct capital losses is subject to limitations.
| | - |  | ----------------------------------------------------------------

Passive Foreign Investment Company (PFIC)

A U.S. Holder generally would be
subject to a special tax regime (that differs in certain material respects from that described above) if we were a PFIC at any time during which such Holder held our shares.

An actual determination of PFIC status is factual in nature and cannot be made until the close of the applicable tax year. Based on the composition of our annual gross income and the nature and book value
of our assets and the total market value, or market cap, of our shares at the end of each quarter of our fiscal years ended March 31, 2010 and 2011, we believe that we were not a PFIC for U.S. federal income purposes for our fiscal years ended
March 31, 2010 or 2011. No assurance can be given, however, that the IRS may not disagree and seek to treat us as a PFIC.

We have not conducted an appraisal of the actual fair market value of our assets to support our conclusion regarding our PFIC status. If
we conducted such appraisal, it might not result in a fair market value of our assets being sufficiently greater than the aggregate value of our market cap to support our conclusion regarding our PFIC status. Even if such appraisal did so support
our conclusion as to our PFIC status, such appraisal may not be enough to establish to the satisfaction of the IRS that the fair market value of our assets, which would, or we believe should, not be considered passive, was sufficiently
greater than the aggregate value of our market cap.

A foreign corporation will be treated as a PFIC for United States federal
income tax purposes if, after applying relevant look-through rules with respect to the income and assets of subsidiaries, 75% or more of its gross income consists of certain types of passive income (the income test) or 50% or more of the
gross value of its assets is attributable to assets that produce passive income



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or are held for the production of passive income (the asset test). For this purpose, passive income generally includes dividends, interest, royalties, rents (other than rents and
royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income.

As a result of the classification as a PFIC, a special tax regime would apply to both (a) any excess distribution by us
(generally, the U.S. Holders ratable share of distributions in any year that are greater than 125% of the average annual distributions received by such U.S. Holder in the three preceding years or its holding period, if shorter) and
(b) any gain recognized on the sale or other disposition of your ordinary shares. Under the PFIC regime, any excess distribution and recognized gain would be treated as ordinary income. The U.S. federal income tax on such ordinary income is
determined under the following steps: (i) the amount of the excess distribution or gain is allocated ratably over the US Holders holding period for our ordinary shares; (ii) tax is determined for amounts allocated to the first year
in the holding period in which we were classified as a PFIC and all subsequent years (except the year in which the excess distribution was received or the sale occurred) by applying the highest applicable tax rate in effect in the year to which the
income was allocated; (iii) an interest charge is added to this tax calculated by applying the underpayment interest rate to the tax for each year determined under the preceding sentence from the due date of the income tax return for such year
to the due date of the return for the year in which the excess distribution or sale occurs; and (iv) amounts allocated to a year prior to the first year in the U.S. Holders holding period in which we were classified as a PFIC or to the
year in which the excess distribution or the disposition occurred are taxed as ordinary income and no interest charge applies. The interest charge is non-deductible by individuals but is generally deductible by corporations.

If we were treated as a PFIC, a U.S. Holder of our shares would generally be subject to the PFIC rules described above with respect to
distributions by us, and dispositions by us of the stock of, any direct or indirect subsidiaries of ours that are classified as PFICS under either the asset test or the income test, as if such holder received directly its
pro-rata share of the proceeds from such disposition.

A U.S. Holder may generally avoid the PFIC regime by making a
qualified electing fund election which generally provides that, in lieu of the foregoing treatment, our earnings, on a pro rata basis, would be currently included in their gross income. However, we may be unable or unwilling to provide
information to our U.S. Holders that would enable them to make a qualified electing fund election; thus, such election may not be available.

In addition, U.S. Holders may generally avoid the PFIC regime by making the mark-to-market election with respect to our common shares as long as we are a PFIC and our common shares are
considered to be readily tradable on an established securities market within the United States. Marking-to-market, in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of our
common shares over your tax adjusted basis in such common shares as of the end of each year. This mark-to-market election generally enables a U.S. Holder to avoid the deferred interest charge that would otherwise be imposed on them if we
were to be classified as a PFIC. However, if we were a PFIC, such election would not be available for any of our subsidiaries that also may be classified as PFICs, and those subsidiaries would continue to be subject to the PFIC rules described
above.

If we are treated as a PFIC at any time that you hold our shares but cease to be classified as a PFIC in a later year,
we will continue to be classified as a PFIC with respect to you unless you make a deemed sale election in a timely manner to be taxed as if you sold your shares on the last day of our last year during which we were treated as a PFIC. In this case,
you would pay tax on the gain on the deemed sale treated as ordinary income and an interest charge, and no loss will be allowed to you. A timely deemed sale election can also be made with respect to our subsidiaries that are treated as PFICs, in
which case you will be taxed on the amount of gain treated as ordinary income and pay an interest charge as if the stock of such subsidiaries had been actually sold or disposed of by us while we were a PFIC and you held our shares. If we
subsequently become a PFIC, you will again be subject to the general PFIC rules discussed herein. We do not expect to monitor our status (or the status of any of our subsidiaries) as a PFIC for the current taxable year or in any future taxable year
and, therefore, we may not be able to inform you as whether we have become a PFIC in any given year or whether we have subsequently ceased to be a PFIC.

If we were treated as a PFIC, each U.S. Holder would be required to make an annual return on IRS Form 8621, reporting, among other things, distributions received and gain realized with respect to
each PFIC in which such holder holds a direct or indirect interest, and may be required to provide other information as specified by the IRS. In this regard, we note, in particular, that under recently enacted legislation U.S. Holders may be subject
to further reporting requirements in connection with the annual filing of their respective U.S. federal income tax returns with respect to shareholdings in foreign corporations, which may include affirming whether or not a foreign corporation in
which such U.S. Holder has invested is (or is not) a PFIC irrespective of whether any distributions have been received, the U.S. Holder has disposed of any stock of the foreign corporation, or the foreign corporation has disposed of any stock of its
foreign subsidiaries in the relevant taxable year.



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An actual determination of PFIC status is highly factual in nature. Given the complexity of
the issues that may result if we are classified as or become a PFIC, you are urged to consult your own tax advisors with respect to the tax consequences to you in the event that this should occur, in view of your particular circumstances.

Non-U.S. Holders

If you are not a U.S. Holder, you are a Non-U.S. Holder.

Distributions on Our
Common Shares

You generally will not be subject to U.S. federal income tax, including withholding tax, on distributions
made on our common shares unless:



| |  |  | you conduct a trade or business in the United States and
| | - |  | --------------------------------------------------------



| |  |  | the distributions are effectively connected with the conduct of that trade or business (and, if an applicable income tax treaty so requires as a
condition for you to be subject to U.S. federal income tax on a net income basis in respect of income from our common shares, such distributions are attributable to a permanent establishment that you maintain in the United States).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If you meet the two tests above, you generally will be subject to tax in respect of such dividends in the
same manner as a U.S. Holder, as described above. In addition, any effectively connected dividends received by a non-U.S. corporation may also, under certain circumstances, be subject to an additional branch profits tax at a
30 percent rate or such lower rate as may be specified by an applicable income tax treaty.

Sale, Exchange or Other Disposition of Our
Common Shares

Generally, you will not be subject to U.S. federal income tax, including withholding tax, in respect of gain
recognized on a sale or other taxable disposition of our common shares unless:



| |  |  | your gain is effectively connected with a trade or business that you conduct in the United States (and, if an applicable income tax treaty so requires
as a condition for you to be subject to U.S. federal income tax on a net income basis in respect of gain from the sale or other disposition of our common shares, such gain is attributable to a permanent establishment maintained by you in the United
States), or
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | you are an individual Non-U.S. Holder and are present in the United States for at least 183 days in the taxable year of the sale or other
disposition, and certain other conditions exist.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You will be subject to tax in respect of any gain
effectively connected with your conduct of a trade or business in the United States generally in the same manner as a U.S. Holder, as described above. Effectively connected gains realized by a non-U.S. corporation may also, under certain
circumstances, be subject to an additional branch profits tax at a rate of 30 percent or such lower rate as may be specified by an applicable income tax treaty.

Backup Withholding and Information Reporting

Payments, including dividends
and proceeds of sales, in respect of our common shares that are made in the United States or by a United States related financial intermediary will be subject to United States information reporting rules. In addition, such payments may be subject to
United States federal backup withholding tax. You will not be subject to backup withholding provided that:



| |  |  | you are a corporation or other exempt recipient, or
| | - |  | ---------------------------------------------------



| |  |  | you provide your correct United States federal taxpayer identification number and certify, under penalties of perjury, that you are not subject to
backup withholding.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amounts withheld under the backup withholding rules may be credited against your United
States federal income tax, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS in a timely manner.



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British Virgin Islands Tax Consequences

Under the International Business Companies Act of the British Virgin Islands as currently in effect, a holder of common equity, such as
our common shares, who is not a resident of the British Virgin Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the common equity and all holders of common equity are not liable to the British Virgin Islands
for income tax on gains realized on sale or disposal of such shares: The British Virgin Islands does not impose a withholding tax on dividends paid by a company incorporated under the International Business Companies Act.

There are no capital gains, gift or inheritance taxes levied by the British Virgin Islands on companies incorporated under the
International Business Companies Act. In addition, our common shares are not subject to transfer taxes, stamp duties or similar charges. There is no income tax treaty or convention currently in effect between the United States and the British Virgin
Islands.

Peoples Republic of China Taxation

We are a holding company incorporated in the British Virgin Islands and conduct our business in China solely through our wholly owned subsidiaries. The new EIT Law and its implementation rules, both of
which became effective on January 1, 2008, provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its overseas parent, will normally be subject to PRC withholding tax at a rate of 10.0%, unless
there are applicable treaties that reduce such rate. Under a special arrangement between China and Hong Kong, such dividend withholding tax rate is reduced to 5.0% if a Hong Kong resident enterprise owns over 25% of the PRC company distributing the
dividends.

Under the new EIT Law, enterprises established under the laws of jurisdictions outside China with their
de factomanagement bodies located within China may be considered to be PRC tax resident enterprises for tax purposes. If we are considered a PRC tax resident enterprise under the above definition, then our global income will be
subject to PRC enterprise income tax at the rate of 25.0%. See Item 3.D. Risk FactorsPotential taxation on dividends and sale of our common stockAny changes to our tax incentives could have a material adverse effect on our
operating results. Our foreign holders may be subject to PRC withholding tax on the dividends payable by us and upon gains realized on their sales of our common shares if we are classified as a PRC resident enterprise.



|F. | Dividends and paying agents.
|-- | ----------------------------

Not Applicable.



|G. | Statement by experts.
|-- | ---------------------

Not Applicable.



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|H. | Documents on display.
|-- | ---------------------

For further information with respect to us and our common shares, we refer you to the filings we have made with the SEC. Statements contained in this annual report concerning the contents of any contract
or any other documents are not necessarily complete. If a contract or document has been filed as an exhibit to any filing we have made with the SEC, we refer you to the copy of the contract or document that has been filed. Each statement in this
annual report relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. We are subject to certain of the informational requirements of the Exchange Act and, in accordance with the Exchange Act, file
reports and other information with the SEC. Our registration statements, including the exhibits and schedules thereto, and such reports and other information, can be inspected and copied at the following public reference facilities maintained by the
SEC:

Woolworth Building

233 Broadway

New York, New York 10279

175 W. Jackson Boulevard

Suite 900

Chicago, Illinois 60604

Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Section of the SEC, 100 F Street,
NE, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains registration statements, reports and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.



|I. | Subsidiary information.
|-- | -----------------------

Not Applicable.



|Item 11. | Quantitative and Qualitative Disclosures about Market Risk.
|-------- | -----------------------------------------------------------

We are exposed to the impact of foreign currency fluctuations, interest rate changes and the potential increases in cost of plastic resins and metals. We have not entered into foreign currency hedges,
interest rate swaps or commodity futures for speculative purposes or otherwise.

We sell a majority of our products in U.S.
dollars and Chinese Renminbi and pay for our materials and components in U.S. dollars, Hong Kong dollars and Chinese Renminbi. We pay labor and overhead expenses in Renminbi, Hong Kong dollars and U.S dollars. The exchange rate of the Hong Kong
dollar to the U.S. dollar has been fixed by the Hong Kong Government since 1983 at approximately HK$7.80 to US$1.00 through the currency-issuing banks in Hong Kong. Consequently, the Company has not experienced any currency exchange risk exposure
relating to the Hong Kong dollar in the past. This could change in the future if those in Hong Kong who are proposing a floating currency system prevail in the ongoing debate over whether to continue to peg the Hong Kong dollar to the U.S. dollar.

Effective January 1, 1994, China adopted a floating currency system whereby the official exchange rate equals the market
rate. Since the market rate and official rates were unified, the value of the Renminbi against the Hong Kong dollar and U.S. dollar was stable until 2006. On July 21, 2005, the Peoples Bank of China (PBOC) decided to abandon
its policy of pegging the Renminbi to the U.S. dollar and link the Renminbi to a basket of currencies. The PBOC also strengthened the exchange rate of the Renminbi at that time to 8.11 to the U.S. dollar from 8.28. The Chinese authorities had
therefore taken their first step towards a floating currency. As of March 31, 2011, the exchange rate was 6.5564 and as of August 2, 2011 the exchange rate was 6.4442, a 1.7% depreciation since our fiscal year end. Any appreciation costs
U.S. companies more to buy Chinese products. Revaluation will have a different impact on different segments of our business but we believe our most significant foreign exchange risk results from our manufacturing operations in China. Labor and other
overhead expenses (excluding non-cash depreciation charges) in our Chinese factory incurred in Renminbi were approximately 21.5 % and 15.1% of our net sales in fiscal 2011 and 2010, respectively. We believe any future appreciation of the
Renminbi would result in an increase in our operating costs in China and materially impact our financial results. A 1% appreciation in the Renminbi would decrease our operating profit by approximately $56,754. Our foreign currency exposure in our
assets and liabilities were immaterial at March 31, 2011.



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We are dependent upon outside suppliers for all of our raw material needs, including plastic
resins and various metals. Consequently, the results of our operations are subject to price fluctuations in these raw materials. The plastic resins used by us are derived from natural gas liquids, which may fluctuate as a result of changes in
natural gas and crude oil prices, and the relative capacity, supply and demand for resin and petrochemical intermediates from which the resins are produced. We have no long-term supply contracts for the purchase of plastic resin, although we do
generally maintain a 30-day supply. In the past, we have had limited ability to increase prices to offset plastic resin price increases. Currently, plastic resin prices are increasing significantly due to the international supply and demand for oil
and the political instability in the Middle East. We expect that plastic resin prices will continue to increase in the near future and that it will be difficult for us to pass these cost increases on to our customers. Our total purchase of plastic
resins in fiscal 2009, 2010 and 2011 were $9 million, $11 million and $11 million, respectively. If plastic resins prices in fiscal 2012 were to increase on an average of 10.0% from March 31, 2011 prices, and assuming we use the same
amount of plastic resins as during fiscal 2011, the additional annual expense to us in fiscal 2012 would be approximately $1.1 million. As of July 30, 2011, resin prices had already increased 0.6% from their March 31, 2011 level and our
customers have not to date to compensated us in any way for the additional cost.

We also use significant quantities of
stainless steel and copper wire. Copper used primarily in our electric motors and wiring has been particularly volatile. The spot price in cents per pound has risen from $383 as of March 31, 2008 to $426.33 as of March 31, 2011. Since our
year end copper has increased by 3.5% to $441.34 as of July 29, 2011.



|Item 12. | Description of Securities Other than Equity Securities.
|-------- | -------------------------------------------------------



|A. | Debt securities.
|-- | ----------------

Not applicable.



|B. | Warrants and rights.
|-- | --------------------

Not applicable.

PART II



|Item 13. | Defaults, Dividend Arrearages and Delinquencies.
|-------- | ------------------------------------------------

We are not in material default of any of our obligations relating to indebtedness. We are not delinquent with respect to the payment of dividends.



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds.
|-------- | -----------------------------------------------------------------------------

During our last fiscal year, we have not materially modified any of the rights or instruments defining the rights of our security holders.
We do not have any registered securities that are secured by our assets. The trustees or paying agents for our securities have not changed during the last fiscal year.

Use of Proceeds

On April 7, 1998, the SEC declared effective our
Registration Statement on Form F-1, File No. 333-8462, for the registration of 4,830,000 pre four-for-one reverse split common shares in our initial public offering. Net proceeds from the initial public offering were approximately
$81.0 million. As of April 2003, we had used the net proceeds of the offering as follows: approximately $16.5 million for a payment of a dividend; $9.8 million for the acquisition of a majority interest in Lite Array; $6.6 million for the
expansion of the Dongguan facility and the purchase of fuel energy saving equipment; $2.0 million for the purchase of machinery, tooling and equipment; and $10.4 million for the repayment of indebtedness as reported in prior filings. After our
listing on the NYSE for five years, we no longer keep track of the use of proceeds as there are continuous inflows and outflows of cash from operating and financing activities. We believe we can finance our existing business and new projects from
the cash generated from our operating, financing and investing activities and we are able to maintain an adequate level of funds for potential business development or acquisition. Most of our fund balance continues to remain in temporary
investments, including short-term marketable securities, U.S. dollar denominated interest-bearing savings accounts, a money market funds, and other cash-related instruments.



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|Item 15. | Controls and Procedures
|-------- | -----------------------



|(a) | Disclosure controls and procedures
|--- | ----------------------------------

As of March 31, 2011, an evaluation was performed, under the supervision and with the participation of the Companys management including the Companys Chief Executive Officer and Acting
Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. Based upon this evaluation and for the reasons stated below, such
officers concluded that the Companys disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act (1) is recorded,
processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms and (2) is accumulated and communicated to the Companys management including the Chief Executive
Officer and Acting Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.



|(b) | Managements annual report on internal control over financial reporting
|--- | -----------------------------------------------------------------------

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting. The
Companys internal control over financial reporting is a process designed under the supervision of the Companys principal executive and financial officers to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Companys financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

The Companys internal control over financial reporting includes policies and procedures that:



| |  |  | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that
could have a material effect on the Companys financial statements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management has assessed the
effectiveness of its internal control over financial reporting as of March 31, 2011 based on the framework established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on this assessment, management has determined that the Companys internal control over financial reporting is not effective as of March 31, 2011. In making its assessment, management identified a material weakness
concerning the Companys internal accounting staffs lack of understanding of complex accounting issues related to U.S. generally accepted accounting principles (GAAP), including accounting for income taxes. In response,
external consultants were engaged to perform a number of tasks to prepare specific accounting analysis and necessary corrections were made prior to any public announcements or filings with the SEC. Additionally, as part of its ongoing efforts to
address the potential weakness described above, the Company intends to retain external consultants and employees who have sufficient and appropriate technical skills to help the Company identify and resolve accounting and reporting issues.



|(c) | Attestation report of the registered public accounting firm
|--- | -----------------------------------------------------------

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal controls over financial reporting. As a non-accelerated filer, our report
was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only our report on internal controls over financial reporting in this annual report.



|(d) | Changes in Internal Control over financial reporting
|--- | ----------------------------------------------------

Except as indicated in section (b) above, there were no changes that occurred during the period covered by this Form 20-F, that materially affected, or are likely to affect our internal control over
financial reporting.



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|Item 16. | [Reserved]
|-------- | ----------

Not
applicable.



|Item 16A. | Audit Committee Financial Expert
|--------- | --------------------------------

The audit committee is composed entirely of independent directors and is responsible for reviewing, and making recommendations to the Board of Directors regarding the Companys accounting policies,
reporting practices, internal controls, annual and quarterly financial statements and financial information included in the Companys reporting and disclosure documents with the SEC. The Committee also reviews significant audit findings,
material litigation and claims whether asserted or unasserted and any issues between management and the external auditors.

The audit committee closely monitors the requirements of the Sarbanes-Oxley Act of 2002. Additionally, the audit committee assesses its
mandate and performance at least annually.

The audit committee is currently comprised of three independent directors, Barry
J. Buttifant, Patrick Po-On Hui and Ken Ying-Keung Wong. Mr. Buttifant is the chairman of the audit committee. The board of directors has determined that Barry J. Buttifant meets or exceeds the training, knowledge and requirements for a
financial expert and is thus designated as the Companys financial expert on the audit committee.

Mr. Buttifant is a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified
Public Accountants. He is also a fellow member of the Chartered Management Institute, the Hong Kong Management Association and the Hong Kong Institute of Directors. See Item 6A.Directors and senior management for his biography.



|Item 16B. | Code of Ethics
|--------- | --------------

The
Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. (See Exhibit 11.1)



|Item 16C. | Principal Accountant Fees and Services
|--------- | --------------------------------------

BDO became our independent auditors in fiscal 2010. In prior years, Ernst & Young were our independent auditors. Fees payable for the fiscal years ended March 31, 2011 and 2010 to BDO is
detailed below:



|                   |  |                                  |         |  |                                  |   |         | 
|------------------ |  | -------------------------------- | ------- |  | -------------------------------- | - | ------- | 
|                   |  | Fiscal Year EndedMarch 
31, 2011 |         |  | Fiscal Year EndedMarch 
31, 2010 |  
|Audit fees         |  | $                                | 209,000 |  |                                  | $ | 250,000 | 
|Audit-related fees |  |                                  | Nil     |  |                                  |   | Nil     | 
|Tax fees           |  |                                  | Nil     |  |                                  |   | Nil     | 
|All other fees     |  |                                  | Nil     |  |                                  |   | Nil     | 
|                   |  |                                  |         |  |                                  |   |         | 
|Total fees         |  | $                                | 209,000 |  |                                  | $ | 250,000 | 
|                   |  |                                  |         |  |                                  |   |         | 

The nature of each category of fee is described below:

Audit Fees.The audit fees include fees for audit or review of the Companys financial reports plus fees for services that generally an auditor can reasonably provide. The services
include the statutory audit and review of documents filed with SEC.

Audit-Related Fees.We did not engage BDO or
Ernst & Young, for any other audited-related services arrangement.

Tax Fees.We did not engage BDO or Ernst &
Young for any other tax services arrangement.

All Other Fees.We did not engage BDO or Ernst & Young for any other
services arrangement.

Pre-Approval Polices and Procedures.The audit committee has determined that the provision of services
other than audit services should be provided by a firm other than the one that performs our audit. The audit committee, pursuant to its written charter, pre-approves all audit services provided by BDO. To the extent BDO provides any non-audit
services in the future the audit committee is empowered to also pre-approve such services. Currently, our independent auditor is BDO and we engage PricewaterhouseCoopers as our main tax advisor.



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##### Table of Contents

|Item 16F. | Change in Registrants Certifying Accountant.
|--------- | ---------------------------------------------



|(a) | Dismissal of Principal Accountant
|--- | ---------------------------------

We dismissed Ernst & Young as our independent registered public accounting firm on December 15, 2009. Such dismissal of independent registered public accounting firm was previously reported
under Item 16F(a) of our annual report on Form 20-F for the fiscal year ended March 31, 2010.



|(b) | Engagement of New Principal Accountant
|--- | --------------------------------------

As previously reported under Item 16F of our annual report on Form 20-F for the fiscal year ended March 31, 2010, the Company retained BDO limited as its independent registered public accounting
firm following the dismissal of Ernst & Young.



|Item 16G. | Corporate Governance
|--------- | --------------------

The
Companys corporate governance practices are governed by applicable British Virgin Islands law, as well as by its Memorandum and Articles of Association. We have securities that are registered with the SEC and are listed on the Nasdaq, and are
therefore subject to corporate governance requirements applicable to foreign private issuers listed on the Nasdaq. Nasdaq Marketplace Rule 5615(a)(1)(3) provides that foreign private issuers listed on Nasdaq may elect to follow home country
corporate governance practices in lieu of certain of the corporate governance requirements set forth in the Rule 5400 series, Rule 5250(d), and Rules 5210(c) and 5255, with the exception that all such issuers shall: (i) comply with Rule 5625
(Notification of Material Noncompliance); (ii) have an audit committee that satisfies Rule 5605(c)(3) that consists of members that meet the criteria for independence referenced in Rule 5605(c)(2)(A)(ii); and (iii) comply with Rules
5210(c) and 5255 (Direct Registration Program) unless prohibited from complying by law or regulation in its home country. Furthermore, foreign private issuers electing to follow home country practice in lieu of a requirement of Rules 5600, 5250(d),
5210(c) or 5255 are required to submit to Nasdaq a written statement from an independent counsel in such issuers home country certifying that the issuers practices are not prohibited by the home countrys laws and, in the case of
Rules 5210(c) and 5255, certifying they a law or regulation in the home country prohibits compliance. The Company submitted the required certification in connection with its listing application on November 26, 2008.



|                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                                                          
|------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Rules                                                              |  | Requirements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Company Compliance                                                                                                                                       
|Rule 5605(b)(1) Majority Independent Board                         |  | A majority of the board of directors must be comprised of Independent Directors as defined in Rule 5605(a)(2).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | It is not mandatory for Global-Tech to comply with this provision. However, Global-Techs board consists of five members, of which three are independent.
|                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Rule 5605(a)(2) and 5605(b)(1) Definition of Independent Directors |  | (a)    Independent director should be a person other than an officer or
employee of the Company or its subsidiaries or any other individual having a relationship, which, in the opinion of the Companys board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. 
(b)    The following persons shall not be considered independent:
 (i)     A director
who is, or during the past three years was, employed by the Company;  (ii)    A director who accepts or who has a Family Member who accepts any payments from the Company in excess of $120,000 during any period of twelve consecutive months within the
three years preceding the determination of independence, other than compensation for board service, compensation paid to a Family Member who is an employee of the Company, benefits under a tax-qualified retirement plan, or non-discretionary
compensation;  (iii)  A
director who is a Family Member of an individual who is, or during the post three years was employed by the Company as an executive officer; 
(iv)   A director who is, or has a Family Member who is, a current partner of the Companys
outside auditor, or was a partner or employee of the Companys outside auditor who worked on the Companys audit at any time during any of the past three years; |  | Global-Tech considers whether its board members meet the requirements of being independent.                                                            
|                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Rule 5605(b)(2) Executive Sessions                                 |  | The board must have regularly scheduled (at least twice a year) meetings at which only independent directors are present.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Global-Tech is not required to hold regularly scheduled meetings of independent directors.                                                               



64



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|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                            
|----------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Rules                                                                         |  | Requirements                                                                                                                                                                                                                                                                                                                                                                                    |  | Company Compliance                                                                                                                                                                                         
|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  | Accordingly, the board does not hold regularly scheduled sessions of the independent directors.                                                                                                            
|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                
|Rule 5605(e)(1) Independent Director Oversight of Nominations of Directors    |  | Director nominees must be selected or recommended for the Boards selection by (a) a majority of independent directors on the board or (b) by a nominating committee comprised
solely of independent directors.                                                                                                                                                                                 |  | Global-Tech is not required to have a nominating committee. However, any director nominees must be selected by a majority of independent directors.                                                        
|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                
|Rule 5405(d) Independent Director Oversight of Executive Officer Compensation |  | Compensation of the chief executive and other executive officers must be determined or recommended to the board by majority vote of only Independent Directors or a compensation
committee comprised solely of Independent Directors. The chief executive officer may not be present during voting or deliberations regarding the determination of compensation of the chief executive officer. |  | Mr. Brian Yuen, one member of Global-Techs compensation committee, is not considered independent since he is a member of management of the Company.                                                       
|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                
|Rule 5605(c)(1)Audit Committee Charter                                        |  | The Company has adopted a formal written Audit Committee Charter specifying the items enumerated in Rule 5605(c)(1), and that the Audit Committee will review and assess the adequacy
of the charter on an annual basis.                                                                                                                                                                        |  | The Company has a formal charter that is reviewed annually.                                                                                                                                                
|                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                
|Rule 5610 Code of Conduct                                                     |  | Each Company must adopt a code of conduct applicable to all directors, officers and employees, which shall be publicly available.                                                                                                                                                                                                                                                               |  | Global-Tech has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions.

PART III



|Item 17. | Financial Statements.
|-------- | ---------------------

Not applicable.



|Item 18. | Financial Statements.
|-------- | ---------------------

See pages F-1 through F-52 incorporated herein by reference.



|Item 19. | Exhibits.
|-------- | ---------

See
Exhibit Index on page E-1.



65



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##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Date: August 31, 2011



GLOBAL-TECH ADVANCED INNOVATIONS INC.By:

/s/ John C.K. ShamJohn C.K. ShamPresident, Chief Executive Officer and
Acting Chief Financial Officer




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##### Table of Contents

Audited Consolidated Financial Statements

GLOBAL-TECH ADVANCED INNOVATIONS INC.

(Incorporated in the British Virgin Islands with limited liability)



F - 1



---

##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONTENTS



|                                                                                                              |  |       |             | 
|------------------------------------------------------------------------------------------------------------- |  | ----- | ----------- | 
|                                                                                                              |  | Pages |            
|                                                                                                              | 
|Report of Independent Registered Public Accounting Firm (BDO Limited)                                         |  |       | F-3         | 
|                                                                                                              | 
|Report of Independent Registered Public Accounting Firm (Ernst & Young)                                       |  |       | F-4         | 
|                                                                                                              | 
|Consolidated:                                                                                                 |  |       |             | 
|                                                                                                              | 
|Balance Sheets as of March 31, 2011 and 2010                                                                  |  |       | F-5         | 
|                                                                                                              | 
|Statements of Operations for each of the three years in the period ended March 31,
2011                       |  |       | F-6         | 
|                                                                                                              | 
|Statements of Changes in Shareholders Equity for each of the three years in the period ended March 31,
 2011 |  |       | F-7 - F-8   | 
|                                                                                                              | 
|Statements of Cash Flows for each of the three years in the period ended March 31,
2011                       |  |       | F-9 - F-10  | 
|                                                                                                              | 
|Notes to Consolidated Financial Statements                                                                    |  |       | F-11 - F-50 | 



F - 2



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Global-Tech Advanced Innovations Inc.

We have
audited the accompanying consolidated balance sheets of Global-Tech Advanced Innovations Inc. (the Company) as of March 31, 2011 and 2010 and the related consolidated statements of operations, changes in shareholders equity
and cash flows for each of the two years in the period ended March 31, 2011. 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. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Global-Tech Advanced Innovations Inc. at March 31, 2011 and 2010, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2011, in conformity with accounting principles generally
accepted in the United States of America.



|                          
|--------------------------
|/s/ BDO Limited           
|                          
|BDO Limited               
|Hong Kong, August 31, 2011



F - 3



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

Global-Tech Advanced Innovations Inc.

(Formerly
known as Global-Tech Appliances Inc.)

We have audited the accompanying consolidated statements of operations, changes in shareholders
equity, and cash flows of Global-Tech Advanced Innovations Inc. and its subsidiaries for the year ended March 31, 2009. 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 audit.

We conducted our audit 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. We were not engaged to perform an audit
of the Companys internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement 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 consolidated results of the
operations and cash flows of Global-Tech Advanced Innovations Inc. and its subsidiaries for the year ended March 31, 2009, in conformity with U.S. generally accepted accounting principles.



|                  
|------------------
|/s/ Ernst & Young 
|                  
|Hong Kong         
|September 26, 2009



F - 4



---

##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31,
2011 and 2010



|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | ------ |  | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                                                                                                             |  | Notes |        |  | 2011 |  |             | 2010 | 
|                                                                                                                                             |  |       |        |  | US$  |  |             | US$  | 
|ASSETS                                                                                                                                       |  |       |        |  |      |  |             |      |  |  |             |  
|Current assets:                                                                                                                              |  |       |        |  |      |  |             |      |  |  |             |  
|Cash and cash equivalents                                                                                                                    |  |       | 4      |  |      |  | 19,205,184  |      |  |  | 24,808,596  |  
|Time deposits                                                                                                                                |  |       | 5      |  |      |  | 1,534,204   |      |  |  |            |  
|Restricted cash                                                                                                                              |  |       | 6      |  |      |  | 19,460,845  |      |  |  | 4,397,602   |  
|Available-for-sale investments                                                                                                               |  |       | 7      |  |      |  | 6,692       |      |  |  | 15,989,430  |  
|Accounts and bills receivable, net                                                                                                           |  |       | 8      |  |      |  | 35,632,294  |      |  |  | 23,244,365  |  
|Inventories                                                                                                                                  |  |       | 9      |  |      |  | 10,849,371  |      |  |  | 9,409,801   |  
|Prepaid expenses                                                                                                                             |  |       |        |  |      |  | 282,391     |      |  |  | 277,938     |  
|Deposits and other assets                                                                                                                    |  |       |        |  |      |  | 1,711,820   |      |  |  | 1,914,871   |  
|Legal claims receivable                                                                                                                      |  |       | 21     |  |      |  | 15,681      |      |  |  | 5,090,153   |  
|Amount due from a related party                                                                                                              |  |       | 10     |  |      |  | 28,737      |      |  |  | 28,818      |  
|Amount due from a jointly-controlled entity                                                                                                  |  |       | 10     |  |      |  | 13,694      |      |  |  | 21,631      |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total current assets                                                                                                                         |  |       |        |  |      |  | 88,740,913  |      |  |  | 85,183,205  |  
|                                                                                                                                             |  |       |       
|Interests in jointly-controlled entities                                                                                                     |  |       | 13     |  |      |  |            |      |  |  |            |  
|Property, plant and equipment, net                                                                                                           |  |       | 11     |  |      |  | 25,013,340  |      |  |  | 22,708,372  |  
|Land use rights, net                                                                                                                         |  |       | 12     |  |      |  | 3,060,555   |      |  |  | 3,033,152   |  
|Deposits paid for purchase of property, plant and equipment                                                                                  |  |       |        |  |      |  | 112,126     |      |  |  | 57,716      |  
|Deferred tax assets                                                                                                                          |  |       | 18     |  |      |  |            |      |  |  | 104,381     |  
|Available-for-sale investments                                                                                                               |  |       | 7      |  |      |  | 3,009,200   |      |  |  |            |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total assets                                                                                                                                 |  |       |        |  |      |  | 119,936,134 |      |  |  | 111,086,826 |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                         |  |       |        |  |      |  |             |      |  |  |             |  
|Current liabilities:                                                                                                                         |  |       |        |  |      |  |             |      |  |  |             |  
|Short term bank loans                                                                                                                        |  |       | 15     |  |      |  | 12,585,054  |      |  |  |            |  
|Accounts payable                                                                                                                             |  |       |        |  |      |  | 10,352,938  |      |  |  | 5,131,151   |  
|Bills payable                                                                                                                                |  |       | 15     |  |      |  | 1,278,754   |      |  |  | 1,503,595   |  
|Discounted bills                                                                                                                             |  |       |        |  |      |  |            |      |  |  | 3,363,543   |  
|Customer deposits                                                                                                                            |  |       |        |  |      |  | 821,288     |      |  |  | 965,282     |  
|Accrued salaries, allowances and other employee benefits                                                                                     |  |       |        |  |      |  | 5,607,570   |      |  |  | 3,777,337   |  
|Accrual for loss contingencies                                                                                                               |  |       | 21     |  |      |  | 31,458      |      |  |  | 5,966,820   |  
|Other accrued liabilities                                                                                                                    |  |       | 14, 22 |  |      |  | 7,576,062   |      |  |  | 6,896,715   |  
|Income tax payable                                                                                                                           |  |       |        |  |      |  | 5,318,002   |      |  |  | 5,708,526   |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total current liabilities                                                                                                                    |  |       |        |  |      |  | 43,571,126  |      |  |  | 33,312,969  |  
|                                                                                                                                             |  |       |       
|Deferred tax liabilities                                                                                                                     |  |       | 18     |  |      |  | 27,549      |      |  |  | 38,112      |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total liabilities                                                                                                                            |  |       |        |  |      |  | 43,598,675  |      |  |  | 33,351,081  |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Commitments and contingencies                                                                                                                |  |       | 20, 21 |  |      |  |             |      |  |  |             |  
|Shareholders equity:                                                                                                                        |  |       |        |  |      |  |             |      |  |  |             |  
|Common stock, par value US$0.04 per share; 12,500,000 shares authorized; 3,229,314 and 3,228,564 shares issued as of
March 31, 2011 and 2010 |  |       | 16     |  |      |  | 129,173     |      |  |  | 129,143     |  
|Preferred stock, par value US$0.04 per share; 250,000 shares authorized; no shares issued                                                    |  |       |        |  |      |  |            |      |  |  |            |  
|Additional paid-in capital                                                                                                                   |  |       |        |  |      |  | 84,752,105  |      |  |  | 84,280,027  |  
|Accumulated deficit                                                                                                                          |  |       |        |  |      |  | (11,101,203 | )    |  |  | (7,088,232  | )
|Accumulated other comprehensive income                                                                                                       |  |       |        |  |      |  | 7,395,275   |      |  |  | 5,078,128   |  
|Less: Treasury stock, at cost, 189,587 shares as of March 31, 2011 and 2010                                                                  |  |       |        |  |      |  | (4,663,321  | )    |  |  | (4,663,321  | )
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total Global-Tech Advanced Innovations Inc. shareholders equity                                                                             |  |       |        |  |      |  | 76,512,029  |      |  |  | 77,735,745  |  
|Non-controlling interests                                                                                                                    |  |       |        |  |      |  | (174,570    | )    |  |  |            |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total equity                                                                                                                                 |  |       |        |  |      |  | 76,337,459  |      |  |  | 77,735,745  |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  
|Total liabilities and shareholders equity                                                                                                   |  |       |        |  |      |  | 119,936,134 |      |  |  | 111,086,826 |  
|                                                                                                                                             |  |       |        |  |      |  |             |      |  |  |             |  

The accompanying notes are an integral part of the consolidated financial statements.



F - 5



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE
FISCAL YEARS ENDED MARCH 31, 2011, 2010 AND 2009



|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|------------------------------------------------------------------------------------------------- |  | ----- | -- | --- | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ----------- | -
|                                                                                                  |  | Notes |    |     | 2011 |  |             | 2010 |  |  | 2009        |  
|                                                                                                  |  |       |    |     | US$  |  |             | US$  |  |  | US$         |  
|Net sales                                                                                         |  |       |    |     |      |  | 100,954,504 |      |  |  | 101,929,489 |   |  |  | 87,387,372  |  
|Cost of goods sold                                                                                |  |       |    |     |      |  | (91,061,868 | )    |  |  | (84,888,868 | ) |  |  | (81,500,506 | )
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Gross profit                                                                                      |  |       |    |     |      |  | 9,892,636   |      |  |  | 17,040,621  |   |  |  | 5,886,866   |  
|Selling, general and administrative expenses                                                      |  |       |    |     |      |  | (15,829,340 | )    |  |  | (14,096,417 | ) |  |  | (13,074,795 | )
|Other operating income, net                                                                       |  |       |    |     |      |  | 1,105,590   |      |  |  | 179,565     |   |  |  | 1,674,332   |  
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Operating profit (loss)                                                                           |  |       |    |     |      |  | (4,831,114  | )    |  |  | 3,123,769   |   |  |  | (5,513,597  | )
|Interest income, net                                                                              |  |       |    |     |      |  | 536,187     |      |  |  | 276,778     |   |  |  | 533,486     |  
|Other income, net                                                                                 |  |       | 17 |     |      |  | 311,050     |      |  |  | 454,919     |   |  |  | 431,993     |  
|Loss on dissolution of a subsidiary                                                               |  |       |    |     |      |  |            |      |  |  |            |   |  |  | (1,028,875  | )
|Gain on disposal of subsidiaries                                                                  |  |       |    |     |      |  |            |      |  |  |            |   |  |  | 157,597     |  
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Profit (loss) before income taxes                                                                 |  |       |    |     |      |  | (3,983,877  | )    |  |  | 3,855,466   |   |  |  | (5,419,396  | )
|Income tax expense                                                                                |  |       | 18 |     |      |  | (204,122    | )    |  |  | (389,135    | ) |  |  | (421,026    | )
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Net income (loss)                                                                                 |  |       |    |     |      |  | (4,187,999  | )    |  |  | 3,466,331   |   |  |  | (5,840,422  | )
|Net loss attributable to non-controlling interests                                                |  |       |    |     |      |  | 175,028     |      |  |  |            |   |  |  |            |  
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Net income (loss) attributable to shareholders of Global-Tech Advanced Innovations Inc.           |  |       |    |     |      |  | (4,012,971  | )    |  |  | 3,466,331   |   |  |  | (5,840,422  | )
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|Basic and diluted earnings (loss) per share of common stock                                       |  |       | 19 |     |      |  | (1.32       | )    |  |  | 1.14        |   |  |  | (1.91       | )
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|                                                                                                  |  |       |    |    
|                                                                                                  |  |       |    |     |      |  | Number      |      |  |  | Number      |   |  |  | Number      |  
|                                                                                                  |  |       |    |    
|Basic and diluted weighted average number of shares of common stock                               |  |       | 19 |     |      |  | 3,039,454   |      |  |  | 3,037,969   |   |  |  | 3,051,216   |  
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  
|                                                                                                  |  |       |    |    
|                                                                                                  |  |       |    |     |      |  | US$         |      |  |  | US$         |   |  |  | US$         |  
|                                                                                                  |  |       |    |    
|Rental expense paid to related parties (included in selling, general and administrative expenses) |  |       | 10 | (a) |      |  | 713,103     |      |  |  | 769,540     |   |  |  | 738,697     |  
|Rental income earned from a related party (included in other income (expenses), net)              |  |       | 10 | (b) |      |  |            |      |  |  | 6,393       |   |  |  | 50,812      |  
|Management income earned from a related party (included in other income (expenses), net)          |  |       | 10 | (c) |      |  |            |      |  |  | 9,313       |   |  |  | 106,677     |  
|                                                                                                  |  |       |    |     |      |  |             |      |  |  |             |   |  |  |             |  

The accompanying notes are an integral part of the consolidated financial statements.



F - 6



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

FOR THE FISCAL YEARS ENDED MARCH 31, 2011, 2010 AND 2009



|                                                                                                           |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|---------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- |  | ------------- |  | -------- | ----------- |  |  | ------------------------ |  |  | ------------------- | ---------- |  | ------------- |  | ----------- | --------------------------------------------- |  |  | ----------------------------------- | - |  | ------------------------ | --------- |  | ----------- |  | ---------- | - |  |  | - |  |  |  | ---------- | -
|                                                                                                           |  | Number of shares |           |  | Amounts       | 
|                                                                                                           |  | Commonstock      |           |  | Treasurystock |  |          | Commonstock |  |  | Additionalpaid-incapital |  |  | Accumulateddeficits |            |  | Treasurystock |  |             | Accumulated othercomprehensiveincome (losses) |  |  | TotalGlobal-Techshareholdersequity |   |  | Non-controllinginterests |           |  | Totalequity | 
|                                                                                                           |  |                  |           |  |               |  |          | US$         |  |  | US$                      |  |  | US$                 |            |  | US$           |  |             | US$                                           |  |  | US$                                 |   |  | US$                      |           |  | US$         | 
|Balance as of March 31, 2008                                                                               |  |                  | 3,227,064 |  |               |  | (169,787 | )           |  |  | 129,083                  |  |  |                     | 84,222,582 |  |               |  | (4,714,141  | )                                             |  |  | (4,493,447                          | ) |  |                          | 3,098,761 |  |             |  | 78,242,838 |   |  |  |  |  |  |  | 78,242,838 |  
|Net loss for the year                                                                                      |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | (5,840,422  | )                                             |  |  |                                    |   |  |                          |          |  |             |  | (5,840,422 | ) |  |  |  |  |  |  | (5,840,422 | )
|Other comprehensive income:                                                                                |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|    unrealized gain on available-for-sale investments, net of income tax of nil                           |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 10,064    |  |             |  | 10,064     |   |  |  |  |  |  |  | 10,064     |  
|    release of realized foreign currency translation arising from dissolution of a
subsidiary             |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 1,028,875 |  |             |  | 1,028,875  |   |  |  |  |  |  |  | 1,028,875  |  
|    foreign currency translation adjustments                                                              |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 883,566   |  |             |  | 883,566    |   |  |  |  |  |  |  | 883,566    |  
|                                                                                                           |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|Total net comprehensive income (loss)                                                                      |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | (5,840,422  | )                                             |  |  |                                    |   |  |                          | 1,922,505 |  |             |  | (3,917,917 | ) |  |  |  |  |  |  | (3,917,917 | )
|Shares repurchased as treasury stock                                                                       |  |                  |          |  |               |  | (19,600  | )           |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  | (167,738                            | ) |  |                          |          |  |             |  | (167,738   | ) |  |  |  |  |  |  | (167,738   | )
|Shares issued to an employee                                                                               |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     | 1,969      |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 1,969      |   |  |  |  |  |  |  | 1,969      |  
|Stock compensation expense                                                                                 |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     | 41,861     |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 41,861     |   |  |  |  |  |  |  | 41,861     |  
|                                                                                                           |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|Balance as of March 31, 2009                                                                               |  |                  | 3,227,064 |  |               |  | (189,387 | )           |  |  | 129,083                  |  |  |                     | 84,266,412 |  |               |  | (10,554,563 | )                                             |  |  | (4,661,185                          | ) |  |                          | 5,021,266 |  |             |  | 74,201,013 |   |  |  |  |  |  |  | 74,201,013 |  
|Net income for the year                                                                                    |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | 3,466,331   |                                               |  |  |                                    |   |  |                          |          |  |             |  | 3,466,331  |   |  |  |  |  |  |  | 3,466,331  |  
|Other comprehensive income:                                                                                |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|    unrealized gain on available-for-sale investments, net of income tax of nil                           |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 953       |  |             |  | 953        |   |  |  |  |  |  |  | 953        |  
|    release of unrealized loss on available-for-sale investments, net of income tax of nil, upon
disposal |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 12,488    |  |             |  | 12,488     |   |  |  |  |  |  |  | 12,488     |  
|    foreign currency translation adjustments                                                              |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 43,421    |  |             |  | 43,421     |   |  |  |  |  |  |  | 43,421     |  
|                                                                                                           |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|Total net comprehensive income                                                                             |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | 3,466,331   |                                               |  |  |                                    |   |  |                          | 56,862    |  |             |  | 3,523,193  |   |  |  |  |  |  |  | 3,523,193  |  
|Shares repurchased as treasury stock                                                                       |  |                  |          |  |               |  | (200     | )           |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  | (2,136                              | ) |  |                          |          |  |             |  | (2,136     | ) |  |  |  |  |  |  | (2,136     | )
|Stock compensation expenses                                                                                |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     | 11,646     |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 11,646     |   |  |  |  |  |  |  | 11,646     |  
|Shares issued to an employee                                                                               |  |                  | 1,500     |  |               |  |         |             |  |  | 60                       |  |  |                     | 1,969      |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 2,029      |   |  |  |  |  |  |  | 2,029      |  
|                                                                                                           |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |   |  |  |  |            |  
|Balance as of March 31, 2010                                                                               |  |                  | 3,228,564 |  |               |  | (189,587 | )           |  |  | 129,143                  |  |  |                     | 84,280,027 |  |               |  | (7,088,232  | )                                             |  |  | (4,663,321                          | ) |  |                          | 5,078,128 |  |             |  | 77,735,745 |   |  |  |  |  |  |  | 77,735,745 |  



F - 7



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (continued)

FOR THE FISCAL YEARS
ENDED MARCH 31, 2011, 2010 AND 2009



|                                                                                               |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |          |   |  |  |            |  
|---------------------------------------------------------------------------------------------- |  | ---------------- | --------- |  | ------------- |  | -------- | ----------- |  |  | ------------------------ |  |  | ------------------- | ---------- |  | ------------- |  | ----------- | --------------------------------------------- |  |  | ----------------------------------- | - |  | ------------------------ | --------- |  | ----------- |  | ---------- | - |  |  | -------- | - |  |  | ---------- | -
|                                                                                               |  | Number of shares |           |  | Amounts       | 
|                                                                                               |  | Commonstock      |           |  | Treasurystock |  |          | Commonstock |  |  | Additionalpaid-incapital |  |  | Accumulateddeficits |            |  | Treasurystock |  |             | Accumulated othercomprehensiveincome (losses) |  |  | TotalGlobal-Techshareholdersequity |   |  | Non-controllinginterests |           |  | Totalequity | 
|                                                                                               |  |                  |           |  |               |  |          | US$         |  |  | US$                      |  |  | US$                 |            |  | US$           |  |             | US$                                           |  |  | US$                                 |   |  | US$                      |           |  | US$         | 
|Balance as of March 31, 2010                                                                   |  |                  | 3,228,564 |  |               |  | (189,587 | )           |  |  | 129,143                  |  |  |                     | 84,280,027 |  |               |  | (7,088,232  | )                                             |  |  | (4,663,321                          | ) |  |                          | 5,078,128 |  |             |  | 77,735,745 |   |  |  |         |   |  |  | 77,735,745 |  
|Net loss for the year                                                                          |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | (4,012,971  | )                                             |  |  |                                    |   |  |                          |          |  |             |  | (4,012,971 | ) |  |  | (175,028 | ) |  |  | (4,187,999 | )
|Other comprehensive income:                                                                    |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |          |  
|    unrealized gain on available-for-sale investments, net of income tax of nil               |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 11,092    |  |             |  | 11,092     |   |  |  |         |   |  |  | 11,092     |  
|    release of realized foreign currency translation arising from dissolution of a
subsidiary |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 1,877     |  |             |  | 1,877      |   |  |  |         |   |  |  | 1,877      |  
|    foreign currency translation adjustments                                                  |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  |            |                                               |  |  |                                    |   |  |                          | 2,304,178 |  |             |  | 2,304,178  |   |  |  | 458      |   |  |  | 2,304,636  |  
|                                                                                               |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |          |   |  |  |            |  
|Total net comprehensive income (loss)                                                          |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     |           |  |               |  | (4,012,971  | )                                             |  |  |                                    |   |  |                          | 2,317,147 |  |             |  | (1,695,824 | ) |  |  | (174,570 | ) |  |  | (1,870,394 | )
|Stock compensation expenses                                                                    |  |                  |          |  |               |  |         |             |  |  |                         |  |  |                     | 470,109    |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 470,109    |   |  |  |         |   |  |  | 470,109    |  
|Shares issued to an employee                                                                   |  |                  | 750       |  |               |  |         |             |  |  | 30                       |  |  |                     | 1,969      |  |               |  |            |                                               |  |  |                                    |   |  |                          |          |  |             |  | 1,999      |   |  |  |         |   |  |  | 1,999      |  
|                                                                                               |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |          |   |  |  |            |  
|Balance as of March 31, 2011                                                                   |  |                  | 3,229,314 |  |               |  | (189,587 | )           |  |  | 129,173                  |  |  |                     | 84,752,105 |  |               |  | (11,101,203 | )                                             |  |  | (4,663,321                          | ) |  |                          | 7,395,275 |  |             |  | 76,512,029 |   |  |  | (174,570 | ) |  |  | 76,337,459 |  
|                                                                                               |  |                  |           |  |               |  |          |             |  |  |                          |  |  |                     |            |  |               |  |             |                                               |  |  |                                     |   |  |                          |           |  |             |  |            |   |  |  |          |   |  |  |            |  

The accompanying notes are an integral part of the consolidated financial statements.



F - 8



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE
FISCAL YEARS ENDED MARCH 31, 2011, 2010 AND 2009



|                                                                                                   |  |      |             |   |      |  |            |      |  |  |            |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                                                                                                   |  | 2011 |             |   | 2010 |  |            | 2009 | 
|                                                                                                   |  | US$  |             |   | US$  |  |            | US$  | 
|Cash flows from operating activities:                                                              |  |      |             |   |      |  |            |      |  |  |            |  
|Net income (loss)                                                                                  |  |      | (4,187,999  | ) |      |  | 3,466,331  |      |  |  | (5,840,422 | )
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |      |             |   |      |  |            |      |  |  |            |  
|Amortization                                                                                       |  |      | 93,780      |   |      |  | 117,550    |      |  |  | 76,285     |  
|Depreciation                                                                                       |  |      | 3,238,356   |   |      |  | 3,661,352  |      |  |  | 3,830,549  |  
|Accretion of a convertible note discount                                                           |  |      |            |   |      |  |           |      |  |  | (181,084   | )
|Gain on disposal of subsidiaries                                                                   |  |      |            |   |      |  |           |      |  |  | (157,597   | )
|Loss on dissolution of a subsidiary                                                                |  |      |            |   |      |  |           |      |  |  | 1,028,875  |  
|Loss on disposal of property, plant and equipment                                                  |  |      | 3,662       |   |      |  | 292,208    |      |  |  | 39,645     |  
|Impairment of property, plant and equipment                                                        |  |      |            |   |      |  | 4,786      |      |  |  | 200,407    |  
|Allowance for doubtful accounts                                                                    |  |      | 768         |   |      |  | 56,336     |      |  |  |           |  
|Stock compensation expense                                                                         |  |      | 470,109     |   |      |  | 11,706     |      |  |  | 41,861     |  
|Shares issued to an employee                                                                       |  |      | 1,999       |   |      |  | 1,969      |      |  |  | 1,969      |  
|Deferred tax benefit                                                                               |  |      | 93,907      |   |      |  | (93,553    | )    |  |  | (39,319    | )
|Foreign exchange                                                                                   |  |      | 560,399     |   |      |  | 40,815     |      |  |  | (168,485   | )
|                                                                                                   |  |      |            
|Changes in operating assets and liabilities:                                                       |  |      |             |   |      |  |            |      |  |  |            |  
|Accounts and bills receivable, net                                                                 |  |      | (11,621,410 | ) |      |  | (4,844,657 | )    |  |  | 3,915,827  |  
|Prepaid expenses                                                                                   |  |      | 156         |   |      |  | (13,638    | )    |  |  | (48,200    | )
|Deposits and other assets                                                                          |  |      | 175,148     |   |      |  | (422,108   | )    |  |  | 221,121    |  
|Legal claims receivable                                                                            |  |      | 5,077,737   |   |      |  | 10,089     |      |  |  | 522,312    |  
|Amount due from a related party                                                                    |  |      |            |   |      |  |           |      |  |  | (40,777    | )
|Amount due from a jointly-controlled entity                                                        |  |      | 7,937       |   |      |  | 47,892     |      |  |  | 24,862     |  
|Inventories                                                                                        |  |      | (1,034,585  | ) |      |  | (947,813   | )    |  |  | 4,342,192  |  
|Interest receivable                                                                                |  |      |            |   |      |  |           |      |  |  | (168,000   | )
|Accounts payable                                                                                   |  |      | 4,714,234   |   |      |  | (1,335,020 | )    |  |  | (297,899   | )
|Discounted bills                                                                                   |  |      | (3,354,398  | ) |      |  | 3,361,966  |      |  |  |           |  
|Accrued salaries, allowances and other employee benefits                                           |  |      | 1,767,644   |   |      |  | 703,679    |      |  |  | 362,868    |  
|Other accrued liabilities                                                                          |  |      | 397,948     |   |      |  | 774,995    |      |  |  | (1,133,707 | )
|Accrual for loss contingencies                                                                     |  |      | (5,928,553  | ) |      |  | (99,776    | )    |  |  | 317,074    |  
|Amount due to a related party                                                                      |  |      |            |   |      |  | 51,843     |      |  |  |           |  
|Income tax payable                                                                                 |  |      | (499,067    | ) |      |  | 195,982    |      |  |  | 641,302    |  
|                                                                                                   |  |      |             |   |      |  |            |      |  |  |            |  
|Net cash provided by (used in) operating activities                                                |  |      | (10,022,228 | ) |      |  | 5,042,934  |      |  |  | 7,491,659  |  
|                                                                                                   |  |      |             |   |      |  |            |      |  |  |            |  

continued/



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

FOR THE FISCAL YEARS ENDED MARCH 31, 2011,
2010 AND 2009



|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|-------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                                           |  | 2011 |             |   | 2010 |  |             | 2009 | 
|                                                                           |  | US$  |             |   | US$  |  |             | US$  | 
|Cash flows from investing activities:                                      |  |      |             |   |      |  |             |      |  |  |             |  
|Proceeds from disposal of property, plant and equipment                    |  |      | 1,458       |   |      |  | 11,350      |      |  |  |            |  
|Deposits paid for purchase of property, plant and equipment                |  |      |            |   |      |  | (12,508     | )    |  |  | (200,696    | )
|Purchases of property, plant and equipment                                 |  |      | (4,663,368  | ) |      |  | (1,963,301  | )    |  |  | (2,174,170  | )
|Increase in land use rights                                                |  |      |            |   |      |  | (72,213     | )    |  |  | (403,243    | )
|Decrease (increase) in time deposits                                       |  |      | (1,494,953  | ) |      |  | 4,380,440   |      |  |  | (4,380,440  | )
|Proceeds from disposal of available-for-sale investments                   |  |      | 15,986,532  |   |      |  | 31,962,236  |      |  |  | 9,979,200   |  
|Purchases of available-for-sale investments                                |  |      | (3,000,000  | ) |      |  | (31,977,976 | )    |  |  | (25,949,992 | )
|Proceeds from maturity of convertible note and related interest receivable |  |      |            |   |      |  | 6,102,487   |      |  |  |            |  
|Proceeds from disposal of subsidiaries, net of cash and cash equivalents   |  |      |            |   |      |  |            |      |  |  | (194        | )
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Net cash provided by (used in) investing activities                        |  |      | 6,829,669   |   |      |  | 8,430,515   |      |  |  | (23,129,535 | )
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Cash flows from financing activities:                                      |  |      |             |   |      |  |             |      |  |  |             |  
|Deposits of restricted cash                                                |  |      | (14,503,181 | ) |      |  | (19,044     | )    |  |  | (4,374,697  | )
|Proceeds from short-term bank loans                                        |  |      | 21,479,662  |   |      |  |            |      |  |  |            |  
|Settlement of short-term bank loans                                        |  |      | (9,216,587  | ) |      |  |            |      |  |  |            |  
|Purchases of treasury stock                                                |  |      |            |   |      |  | (2,136      | )    |  |  | (167,738    | )
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Net cash used in financing activities                                      |  |      | (2,240,106  | ) |      |  | (21,180     | )    |  |  | (4,542,435  | )
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Effect of foreign exchange rate changes on cash                            |  |      | (170,747    | ) |      |  | 43,445      |      |  |  | (179,392    | )
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Net increase (decrease) in cash and cash equivalents                       |  |      | (5,603,412  | ) |      |  | 13,495,714  |      |  |  | (20,359,703 | )
|Cash and cash equivalents at beginning of fiscal year                      |  |      | 24,808,596  |   |      |  | 11,312,882  |      |  |  | 31,672,585  |  
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Cash and cash equivalents at end of fiscal year                            |  |      | 19,205,184  |   |      |  | 24,808,596  |      |  |  | 11,312,882  |  
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  
|Supplemental disclosure information:                                       |  |      |             |   |      |  |             |      |  |  |             |  
|Cash paid for interest                                                     |  |      | 270,823     |   |      |  | 69,665      |      |  |  | 1,563       |  
|Cash paid for taxes                                                        |  |      | 623,151     |   |      |  | 222,438     |      |  |  | 92,415      |  
|                                                                           |  |      |             |   |      |  |             |      |  |  |             |  

The accompanying notes are an integral part of the consolidated financial statements



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | ORGANIZATION AND PRINCIPAL ACTIVITIES
|-- | -------------------------------------

Global-Tech Advanced Innovations Inc. (Global-Tech) (formerly known as Global-Tech Appliances Inc.) is primarily an investment holding company, which was incorporated in the British Virgin
Islands on May 2, 1991. Global-Tech and its subsidiaries (hereinafter collectively referred to as the Company) is primarily a manufacturer of consumer electrical products, including, but not limited to, floor care products and small
household appliances, electronic and optical components, and is also involved in the assembly of cellular phones. The Companys manufacturing operation is located in Dongguan, the Peoples Republic of China (the PRC). The
Companys products are primarily sold to customers located in the United States of America (the U.S.A. or the U.S.), Europe and the PRC.

Effective December 10, 2008, Global-Techs common stock was no longer traded on the New York Stock Exchange and commenced trading on the Nasdaq Capital Market (Nasdaq) under the
symbol GAI. Global-Tech also changed its name to Global-Tech Advanced Innovations Inc., effective as of the close of business on December 10, 2008.

To satisfy the minimum bid price requirement of Nasdaq, Global-Techs Board of Directors authorized an amendment to Global-Techs Memorandum of Association to effect a 4-for-1 reverse stock
split of the issued and outstanding shares of common stock of Global-Tech, effective as of the close of business on December 10, 2008 (the Effective Date). Global-Tech also proportionally reduced the authorized number of its common
and preferred stock by four to 12,500,000 and 250,000, respectively. These financial statements present common stock, preferred stock and share option information to reflect the above-mentioned reverse stock split on a retroactive basis.



|2. | SUBSIDIARIES
|-- | ------------

Details of
Global-Techs subsidiaries as of March 31, 2011 were as follows:



|                                       |  |                                    |  |                                                        |     |  |                      |                                 
|-------------------------------------- |  | ---------------------------------- |  | ------------------------------------------------------ | --- |  | -------------------- | --------------------------------
|Name                                   |  | Place ofincorporation/registration |  | Percentage ofequity interestattributable tothe Company |     |  | Principal activities
|Global Appliances Holdings Limited     |  | British Virgin Islands             |  |                                                        | 100 |  |                      | Investment holding              
|                                       |  |                                    | 
|Global Display Holdings Limited        |  | British Virgin Islands             |  |                                                        | 100 |  |                      | Investment holding              
|                                       |  |                                    | 
|Kwong Lee Shun Trading Company Limited |  | Hong Kong                          |  |                                                        | 100 |  |                      | Provision of management services
|                                       |  |                                    | 
|Global Rich Innovation Limited         |  | Hong Kong                          |  |                                                        | 100 |  |                      | Inactive                        
|                                       |  |                                    | 
|Wing Shing Overseas Limited            |  | British Virgin Islands             |  |                                                        | 100 |  |                      | Inactive                        



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|2. | SUBSIDIARIES (continued)
|-- | ------------------------



Details of Global-Techs subsidiaries as of March 31, 2011 were as follows:
(continued)



|                                                                        |  |                                      |  |                                                        |       |  |                      |                                                                                                     
|----------------------------------------------------------------------- |  | ------------------------------------ |  | ------------------------------------------------------ | ----- |  | -------------------- | ----------------------------------------------------------------------------------------------------
|Name                                                                    |  | Place of
incorporation/ registration |  | Percentage ofequity interestattributable tothe Company |       |  | Principal activities
|GT Investments (BVI) Limited                                            |  | British Virgin Islands               |  |                                                        | 100   |  |                      | Investment holding                                                                                  
|                                                                        |  |                                      | 
|Consortium Investment (BVI) Limited                                     |  | British Virgin Islands               |  |                                                        | 100   |  |                      | Investment holding                                                                                  
|                                                                        |  |                                      | 
|Global Optics Limited                                                   |  | Hong Kong                            |  |                                                        | 100   |  |                      | Trading of raw materials and electronic and optical components                                      
|                                                                        |  |                                      | 
|Dongguan Wing Shing Electrical Products Factory Company Limited (DWS) |  | PRC                                  |  |                                                        | 100   |  |                      | Manufacturing of household appliance products                                                       
|                                                                        |  |                                      | 
|Dongguan Lite Array Company Limited (DGLAD)                           |  | PRC                                  |  |                                                        | 100   |  |                      | Manufacturing of electronic and optical components and provision of cellular
phone assembly services
|                                                                        |  |                                      | 
|Dongguan Microview Medical Technology Company Limited                   |  | PRC                                  |  |                                                        | 100   |  |                      | Research and development                                                                            
|                                                                        |  |                                      | 
|Global Auto Limited                                                     |  | Hong Kong                            |  |                                                        | 70    |  |                      | Inactive                                                                                            
|                                                                        |  |                                      | 
|Global Household Products Limited                                       |  | Hong Kong                            |  |                                                        | 100   |  |                      | Trading of household appliance products                                                             
|                                                                        |  |                                      | 
|Pentalpha Medical Limited                                               |  | Hong Kong                            |  |                                                        | 100   |  |                      | Inactive                                                                                            
|                                                                        |  |                                      | 
|Pentalpha Hong Kong Limited (Pentalpha)                               |  | Hong Kong                            |  |                                                        | 100   |  |                      | Inactive                                                                                            
|                                                                        |  |                                      | 
|Global-Tech USA, Inc.                                                   |  | State of Delaware, U.S.A.            |  |                                                        | 100   |  |                      | Provision of consultation services                                                                  
|                                                                        |  |                                      | 
|Global Digital Imaging Limited                                          |  | British Virgin Islands               |  |                                                        | 100   |  |                      | Trading of raw materials and digital products                                                       
|                                                                        |  |                                      | 
|MasterWerke Limited                                                     |  | State of Delaware, U.S.A.            |  |                                                        | 100   |  |                      | Inactive                                                                                            
|                                                                        |  |                                      | 
|Wing Shing Products (BVI) Company Limited                               |  | British Virgin Islands               |  |                                                        | 100   |  |                      | Dissolved                                                                                           
|                                                                        |  |                                      | 
|Global Lite Array (BVI) Limited                                         |  | British Virgin Islands               |  |                                                        | 76.75 |  |                      | Investment holding                                                                                  
|                                                                        |  |                                      | 
|Lite Array (OLED) BVI Company Limited                                   |  | British Virgin Islands               |  |                                                        | 76.75 |  |                      | Inactive                                                                                            
|                                                                        |  |                                      | 
|Lite Array, Inc.                                                        |  | State of Delaware, U.S.A.            |  |                                                        | 76.75 |  |                      | Inactive                                                                                            



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



| | (a) | Basis of preparation
| | --- | --------------------

These
consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP).



| | (b) | Basis of consolidation
| | --- | ----------------------

The
consolidated financial statements include the financial statements of Global-Tech and its subsidiaries. The fiscal year end date of Lite Array Holdings Limited (Lite Array Holdings), a jointly-controlled entity of the Company, is
December 31. There have been no significant transactions in Lite Array Holdings and its subsidiaries, which would materially affect the Companys financial position and results of operations during each of the period from Lite Array
Holdings fiscal year end date to March 31, 2011, 2010 and 2009, respectively.

All significant intercompany balances
and transactions between group companies are eliminated on consolidation.



| | (c) | Use of estimates
| | --- | ----------------

The
preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the amounts that are reported in these financial statements
and accompanying disclosures. The most significant accounting estimates with regard to these consolidated financial statements that require the most significant and subjective judgments include, but are not limited to, valuation of investments and
determination of other-than-temporary impairments, useful lives of property, plant and equipment, recoverability of long-lived assets, determination of impairment losses, assessment of market value of inventories and provision for inventory
obsolescence, allowance for doubtful accounts, provision for employee benefits, provision for warranty, recognition and measurement of current and deferred income taxes (including income tax benefit (expense)), valuation allowance for deferred tax
assets, assumptions used for the valuation of options to purchase Global-Techs common stock, provision for loss contingencies, and measurement of fair values of financial instruments. Changes in facts and circumstances may result in revised
estimates.



| | (d) | Cash and cash equivalents
| | --- | -------------------------

Cash
and cash equivalents consist of cash on hand and bank deposits, which are unrestricted to withdraw and use, and other investments that are readily convertible into cash with original maturities of three months or less.



| | (e) | Restricted cash
| | --- | ---------------

Restricted cash
consists of bank deposits, which may only be used to settle pre-arranged general banking facilities.



| | (f) | Investments
| | --- | -----------

Debt and equity
investments designated as available-for-sale investments are stated at fair value. Unrealized gains or losses, net of tax, on available-for-sale investments are included in accumulated other comprehensive income (losses), a separate component of
shareholders equity. Realized gains and losses and any declines in fair value judged to be other-than-temporary on available-for-sale investments are included in the consolidated statement of operations. Gains or losses on sale of investments
and amounts reclassified from accumulated other comprehensive income (losses) to earnings are computed based on the specific identification method. Interest or dividend income on securities classified as available-for-sale investments is included in
interest income or dividend income, respectively.

Non-derivative securities with fixed or determinable payments and fixed
maturities are classified as held-to-maturity investments if the Company has both the positive intention and ability to hold the financial assets to maturity. Investments intended to be held to maturity are measured at amortized cost. Interest on
securities classified as held-to-maturity investments is included in interest income.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (f) | Investments (continued)
| | --- | -----------------------

Prior
to April 1, 2009, declines in the fair value of held-to-maturity and available-for-sale securities below their amortized cost, that were deemed to be other-than-temporary, were all reported in investment gains (losses), net. Effective
April 1, 2009, the Company adopted new accounting guidance for impairment of debt securities that are deemed to be other-than-temporary. Factors considered in evaluating potential impairment include, but are not limited to, the current fair
value as compared to cost or amortized cost of the security, as appropriate, the length of time the investment has been below cost or amortized cost and by how much, our intent to sell a security and whether it is more-likely-than-not we will be
required to sell the security before the recovery of our amortized cost basis, and specific credit issues related to the issuer and current economic conditions. Under the new impairment model, the credit component of an other-than-temporary
impairment of a debt security is reported in investment gains (losses), net and the noncredit component is reported in other comprehensive income (loss). In addition, other-than-temporary declines in beneficial interests purchased or retained in a
securitization transaction which are classified as available-for-sale debt securities are recognized if there has been an adverse change in the cash flows as of the end of the reporting period. Interest and dividends, as well as amortization of
premiums and accretion of discounts, are reported in interest and dividend income. Amortization of premiums and accretion of discounts on debt securities are recognized over the remaining maturity under the interest method.

A jointly-controlled entity is a joint venture that is subject to joint control, resulting in none of the participating parties having
unilateral control over the economic activity of the jointly-controlled entity. The Companys investment in a jointly-controlled entity for which it, not being the unilateral controlling owner of the entity, but has the ability to exercise
joint control, is accounted for using the equity method. Under the equity method, the Companys proportionate share of the jointly-controlled entities net income or loss and amortization of any identifiable intangibles arising from the
investment is included in Share of income (losses) of jointly-controlled entities. The Company ceases to apply the equity method when its share of the jointly-controlled entities losses exceed the carrying value of its investment.

All other investments for which the Company does not have the ability to exercise joint control or significant influence
(generally, when the Company has an investment of less than 20% ownership and no representation on the investees board of directors) and for which there is not a readily determinable fair value, are accounted for using the cost method.
Dividends and other distributions of earnings from such investees, if any, are included in income when declared. The Company periodically evaluates the carrying value of its investments accounted for under the cost method for impairment with any
loss included in the consolidated statement of operations in the period when it is incurred.



| | (g) | Accounts and bills receivable, net
| | --- | ----------------------------------

Accounts and bills receivable are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible. The Company does not charge interest on accounts
receivable. The allowance for doubtful accounts is estimated based on historical experience, receivable aging, current economic trends and specific identification of certain receivables that are at the risk of not being paid. The Company reviews the
aged analysis of accounts and bills receivable on a regular basis. Whenever it is clear that the amounts are deemed to be uncollectible, receivables are written off against the allowance for doubtful accounts.



| | (h) | Inventories
| | --- | -----------

Inventories are
stated at the lower of cost or market. Cost, calculated on the weighted average basis, comprises direct materials and, where applicable, direct labor and an appropriate proportion of overheads.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (i) | Property, plant and equipment
| | --- | -----------------------------

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any accumulated
impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after an
item of property, plant and equipment has been put into operation, such as repairs and maintenance, is normally charged to the consolidated statement of operations in the period in which it is incurred. In situations where it can be clearly
demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure
is capitalized as an additional cost of that asset. Depreciation is calculated on the straight-line basis at annual rates over the assets estimated useful life.

The principal annual rates used for this purpose are as follows:



|                                  |  |                                                                 
|--------------------------------- |  | ----------------------------------------------------------------
|                                  |  | Annual rate                                                     
|Leasehold improvements            |  | Over the shorter of the lease terms or the estimated useful life
|Buildings                         |  | 4.5%                                                            
|Plant                             |  | 4.5%                                                            
|Machinery                         |  | 10%                                                             
|Moulds                            |  | 20% - 33%                                                       
|Transportation equipment          |  | 15% - 20%                                                       
|Furniture, fixtures and equipment |  | 15%                                                             

An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. The gain or loss arising on derecognition of an item of property, plant and equipment, calculated as the difference between the net disposal proceeds and the carrying amount of the
item, is included in the consolidated statement of operations in the period the item is derecognized.



| | (j) | Construction in progress
| | --- | ------------------------

Construction in progress represents property, plant and equipment under construction or installation and is stated at cost less any
accumulated impairment losses, and is not depreciated. Cost comprises the direct costs of construction, installation and other costs in making the asset ready for its intended use. Construction in progress is reclassified to the appropriate category
of property, plant and equipment when completed and ready for its intended use.



| | (k) | Impairment of long-lived assets
| | --- | -------------------------------

Long-lived assets are included in impairment evaluations when events and circumstances exist that indicate the carrying value of these
assets may not be recoverable. In accordance with Financial Accounting Standards Board (FASB) ASC 360 Property, Plant and Equipment the Company assesses the recoverability of the carrying value of long-lived assets by first
grouping its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the asset group) and, secondly, estimating the
undiscounted future cash flows that are directly associated with and expected to arise from the use of and eventual disposition of such asset group. The Company estimates the undiscounted cash flows over the remaining useful life of the primary
asset within the asset group. If the carrying value of the asset group exceeds the estimated undiscounted cash flows, the Company records an impairment charge to the extent the carrying value of the long-lived asset exceeds its fair value. The
Company determines fair value through quoted market prices in active markets or, if quotations of market prices are unavailable, through the performance of internal analysis using a discounted cash flow methodology or obtains external appraisals
from independent valuation firms. The undiscounted and discounted cash flow analyses are based on a number of estimates and assumptions, including the expected period over which the asset will be utilized, projected future operating results of the
asset group, discount rate and long-term growth rate.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (l) | Revenue recognition
| | --- | -------------------

The Company
recognizes revenues in accordance with the Securities and Exchange Commission (the SEC) Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, which requires that four basic criteria must be met before
revenue can be recognized: (1) there is persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectibility is reasonably assured.
Net sales represent the gross invoiced amount, net of discounts, and are recognized when goods are shipped and title has passed. To the extent products are required to meet customer specifications, such products are subject to technical and quality
tests that are designed to ensure compliance prior to shipment.

Under the Companys standard terms and conditions, which
are mainly Free On Board shipping point, title and risk of loss are transferred to the customer at the time the product is delivered to the customers freight forwarder.

Revenue related to the provision of assembly services is recognized upon the completion of such services and delivery of the related product using the same criteria of SAB No. 104 stated above.

Deposits or advance payments from customers prior to delivery and passage of title of merchandise are recorded as customer
deposits.

Revenue related to the provision of tooling income is recognized upon the completion of such services and delivery
of the related product using the same criteria of SAB No. 104 stated above.

In accordance with the relevant tax laws in
the PRC, value-added tax is levied on the invoiced value of sales of goods and is payable by the purchaser. Revenue is recognized net of all value-added tax imposed by governmental authorities and collected from customers concurrent with
revenue-producing transactions.



| | (m) | Advertising costs
| | --- | -----------------

Advertising
costs represent costs relating to promotional activities intended to stimulate, directly or indirectly, a customers purchase of goods, and are charged to the consolidated statement of operations as incurred and are included in Selling,
general and administrative expenses (SG&A). Advertising expenses were US$101,409, US$8,445 and US$8,438 for the fiscal years ended March 31, 2011, 2010 and 2009, respectively.



| | (n) | Design and development costs
| | --- | ----------------------------

Design and development costs primarily relate to the cost of samples and prototypes and salaries of our engineers.

The Company expenses all design and development costs when incurred. Included in the SG&A expenses line item in the consolidated
statement of operations were design and development costs of US$1,087,234, US$1,562,772 and US$685,126 for the fiscal years ended March 31, 2011, 2010 and 2009, respectively.



| | (o) | Shipping and handling costs
| | --- | ---------------------------

In
accordance with FASB ASC 605 Revenue Recognition, shipping and handling fees billed to customers are included in net sales in the consolidated statement of operations. Any shipping and handling costs incurred by the Company associated
with the sale of products are included in SG&A on the face of the consolidated statement of operations. During the fiscal years ended March 31, 2011, 2010 and 2009, shipping and handling costs charged to SG&A were US$877,415,
US$1,028,782 and US$802,664, respectively.

Any inbound freight charges, receiving, inspection, warehousing and internal
transfer costs incurred by the Company are expensed as cost of goods sold. During the fiscal years ended March 31, 2011, 2010 and 2009, inbound freight costs charged to cost of goods sold were US$42,347, US$171,686 and US$128,325, respectively.
Other related costs are included in manufacturing overheads.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (p) | Foreign currencies
| | --- | ------------------

All
transactions in currencies other than functional currencies during the year are translated at the exchange rates prevailing on the respective transaction dates. Monetary assets and liabilities existing at the balance sheet date denominated in
currencies other than functional currencies are remeasured at the exchange rates existing on that date. Exchange differences are recorded in the consolidated statement of operations.

The functional currency of Global-Tech is the U.S. Dollar (US$). The financial statements of all subsidiaries are
translated in accordance with FASB ASC 830 Foreign Currency Matters. All assets and liabilities are translated at the rates of exchange ruling at the balance sheet date and all income and expense items are translated at the average rates
of exchange over the year. All exchange differences arising from the translation of subsidiaries financial statements are recorded as a component of comprehensive income or loss.



| | (q) | Income taxes
| | --- | ------------

Deferred income
taxes are provided using the asset and liability method in accordance FASB 740 Income taxes. Under this method, deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as
current or non-current based upon the classification of the related asset or liability in the consolidated statements. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some
portion of, or all, the deferred tax asset will not be realized.

FASB ASC 740 clarifies the accounting for uncertainty in
income taxes recognized in an enterprises financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. It also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Interest and penalties from tax assessments, if any, are included in income taxes in
the consolidated statement of income.

The Company records its possible interest and penalties due to any potential
underpayment of income taxes, if and when required, in interest expense and other expenses, respectively.

The Company did not
provide for deferred income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries. The Company intends to permanently reinvest foreign subsidiaries earnings.



| | (r) | Stock compensation expense
| | --- | --------------------------

The
Company adopted FASB ASC 718 Compensation-Stock Compensation, and related interpretations in accounting for its employee share-based payment transactions. Accordingly, stock compensation cost is measured at the date of grant and
estimated using the option pricing model. Stock issued to an employee as compensation are measured at fair value based on the grant date quoted market price. The compensation cost for share-based awards with service conditions is amortized over the
vesting period of the awards using the straight-line method provided that the amount of compensation cost recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date.

The Company accounts for stock options granted to a counterparty other than an employee in accordance with FASB ASC 505
Equity. Fair value of the equity instruments is recognized on the measurement date which is the earlier of (i) a commitment for performance by the counterparty to earn the equity instruments being reached or (ii) the
counterpartys performance being completed.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (s) | Retirement costs
| | --- | ----------------

Retirement
cost contributions relating to defined contribution plans are made based on a percentage of the relevant employees salaries and are included in the consolidated statement of operations as they become payable. The assumptions used in
calculating the obligation for retirement cost contributions depend on the local economic environment, interpretations and practices in respect thereof.



| | (t) | Operating leases
| | --- | ----------------

Leases where
substantially all the rewards and risks of ownership remain with the lessor are accounted for as operating leases. Payments made under operating leases net of any incentives received from the lessors are charged to the consolidated statement of
operations on a straight-line basis over the period of the relevant leases.

Assets leased out under operating leases are
included in Property, plant and equipment in the consolidated balance sheet. They are depreciated over the expected useful lives on a basis consistent with similar owned items of property, plant and equipment. Rental income (net of any
incentives given to lessees) is recognized on a straight-line basis over the lease terms.



| | (u) | Earnings (loss) per share
| | --- | -------------------------

Basic
earnings or loss per share of common stock is computed by dividing the net income or loss available to common shareholders for the year by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings or loss per share of common stock reflects the potential dilution that could occur if securities or other
contracts/arrangements to issue shares of common stock were exercised or converted into shares of common stock. Common equivalent shares, comprised of incremental shares of common stock issuable upon the exercise of stock options, are included in
diluted earnings or loss per share if they have a dilutive effect by application of the treasury stock method.



| | (v) | Treasury stock
| | --- | --------------

The Company
accounts for the acquired shares of its own capital stock (treasury stock) in accordance with Accounting Research Bulletin (ARB) No. 43, Chapter 1B, and Accounting Principles Board Opinion No. 6, Status of
Accounting Research Bulletins. The cost of the acquired treasury stock is shown as a deduction from shareholders equity. Gains on sale of treasury stock not previously accounted for as constructively reissued are credited to additional
paid-in capital while losses are charged to additional paid-in capital to the extent that previous net gains from the sale or retirement of the same class of stock are included therein, otherwise the loss is charged to retained earnings/accumulated
deficit.



| | (w) | Comprehensive income (losses)
| | --- | -----------------------------

Comprehensive income (loss) is defined as the change in equity of the Company during a period from transactions and other events and
circumstances excluding transactions resulting from investments by owners and distributions to shareholders. Total net comprehensive income (loss) includes net income or loss for the year as well as additional other comprehensive income (loss). The
Companys other comprehensive income (loss) consists of the Companys share of other comprehensive income of jointly-controlled entities, unrealized gains and losses on available-for-sale investments and foreign currency translation
adjustments, all recorded net of tax.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



| | (x) | Accruals and loss contingencies
| | --- | -------------------------------

The Company makes provision for all loss contingencies when information available prior to the issuance of the consolidated financial
statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the consolidated financial statements and the amount of loss can be reasonably estimated.

For provision or accruals related to litigation, social insurance, property tax, etc, the company makes provisions based on information
from legal counsel and the best estimation of management. The company assesses the potential liability to be recorded if the contingency loss is probable and the amount of loss can be reasonably estimated. The actual resolution of the contingency
may differ from the Companys estimates. If the contingency was settled for an amount greater than the estimate, a future charge to income would result. Likewise, if the contingency was settled for an amount that is less than our estimates, a
future credit to income would result.



| | (y) | Segment reporting
| | --- | -----------------

The Company
follows FASB ASC 280 Segment Reporting.

The Company operates and manages its business in four segments. The
accounting policies used in its segment reporting are the same as those used in the preparation of its consolidated financial statements.



| | (z) | Warranty cost
| | --- | -------------

The Company
estimates its warranty provision for defective products based on various factors including the likelihood of defects, an evaluation of its quality controls, technical analysis, industry information on comparable companies and its own experience.
Based on the above consideration, the Company has accrued for warranty costs of US$296,410 for the year ended March 31, 2011 (2010: US$180,151 and 2009: US$191,459). The basis and the amount of the warranty accrual are reviewed and adjusted
periodically based on actual experience.



| | (aa) | Government grants
| | ---- | -----------------

Government
grants are recognized when received and the stipulated activities are achieved. Such amounts are included in other income of the consolidated statement of operations.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



Recent accounting pronouncements



| | (i) | In August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, Fair Value Measurements and Disclosures, Measuring Liabilities at Fair
Value (ASU 2009-05) which is now codified as FASB ASC 820 Fair Value Measurements and Disclosures. ASU 2009-05 provides amendments to FASB ASC 820-10, Fair Value Measurements and DisclosuresOverall
(FASB ASC 820-10), for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to
measure fair value using a valuation technique that uses a quoted price of the identical liability when traded as an asset, a quoted price for similar liabilities or similar liabilities when traded as an asset, or another valuation technique that is
consistent with the principles of ASC 820. This ASU is effective for the first period (including interim periods) beginning after issuance. The Company does not expect the adoption of ASC 2009-05 to have a material impact on the Companys
financial position, results of operations and cash flows.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | In April 2010, the FASB issued ASU No. 2010-13, CompensationStock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades which is now codified as FASB ASC 718 CompensationStock Compensation. This update provides amendments to Topic 718 to clarify that an
employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entitys equity securities trades should not be considered to contain a condition that is not a market,
performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. The Company does not expect that the adoption of ASC 2010-13 will have a material impact on the Companys financial position, results of operations and cash flows.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | In June 2011, the FASB issued ASU No. 2011-05 Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The objective of this Update is to improve
the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate
convergence of U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), the FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of
changes in stockholders equity, among other amendments in this Update. The amendments in this Update shall be applied retrospectively and is effective for public entities, for fiscal years, and interim periods within those years, beginning
after December 15, 2011. The Company would adopt this pronouncement for the year ended March 31, 2012.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|4. | CASH AND CASH EQUIVALENTS
|-- | -------------------------

|                                |  |               |            |  |               |  |            | 
|------------------------------- |  | ------------- | ---------- |  | ------------- |  | ---------- | 
|                                |  | March 31,2011 |            |  | March 31,2010 | 
|                                |  | US$           |            |  | US$           | 
|Cash on hand and at banks       |  |               | 7,734,976  |  |               |  | 23,023,987 | 
|Money market funds              |  |               | 11,470,208 |  |               |  | 1,784,609  | 
|                                |  |               |            |  |               |  |            | 
|Total cash and cash equivalents |  |               | 19,205,184 |  |               |  | 24,808,596 | 
|                                |  |               |            |  |               |  |            | 

The cash on hand and at banks in our PRC subsidiaries are denominated in Renminbi (RMB),
United States dollars (US$) and Hong Kong dollars (HK$) and amounted to RMB27,310,779 (equivalent to US$4,166,595) and RMB115,208,031 (equivalent to US$16,887,968) in total as of March 31, 2011 and 2010, respectively.
RMB is not freely convertible into other currencies; however, under Mainland Chinas Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Company is permitted to exchange
RMB for other currencies through banks authorized to conduct foreign exchange business. Other than RMB, the cash on hand and at banks of the Company are denominated in US$ and HK$. Cash on hand and at banks held by our PRC subsidiaries and
denominated in RMB amounted to RMB13,612,533 (equivalent to US$2,076,762) and RMB113,355,029 (equivalent to US$16,616,343) in total as of March 31, 2011 and 2010, respectively.



|5. | TIME DEPOSITS
|-- | -------------

As of
March 31, 2011, time deposits of RMB10,056,250 (equivalent to US$1,534,204) were deposited with a creditworthy bank with an original maturity of more than three months when acquired. The time deposits bear interest of 2.25% per annum and
matured in June 2011.



|6. | RESTRICTED CASH
|-- | ---------------

As of
March 31, 2011 and 2010, time deposits of RMB127,560,000 (equivalent to US$19,460,845) and RMB30,000,000 (equivalent to US$4,397,602) were deposited with and pledged to banks to secure credit facilities granted to the Company, including
revolving bank loans and bills payable.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|7. | AVAILABLE-FOR-SALE INVESTMENTS
|-- | ------------------------------



The following is a summary of available-for-sale debt and equity securities, which are all non-restricted, as of March 31, 2011 and
2010:



|                         |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 
|------------------------ |  | ------- | --------- |  | ---------------------------- |  | ---------- | ----------- |  |  | ------- |  |  | ------- | ------ | - | ------- |  | --------- |  |  |  | ---------- | 
|                         |  | Cost    |           |  | Net unrealizedgains (losses) |  |            | Fair values | 
|                         |  | 2011US$ |           |  | 2010US$                      |  |            | 2011US$     |  |  | 2010US$ |  |  | 2011US$ |        |   | 2010US$ | 
|Current assets:          |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 
|U.S. treasury bills      |  |         |          |  |                              |  | 15,986,532 |             |  |  |        |  |  |         | (1,892 | ) |         |  |          |  |  |  | 15,984,640 | 
|Listed equity securities |  |         | 3,129     |  |                              |  | 3,138      |             |  |  | 3,563   |  |  |         | 1,652  |   |         |  | 6,692     |  |  |  | 4,790      | 
|                         |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 
|                         |  |         | 3,129     |  |                              |  | 15,989,670 |             |  |  | 3,563   |  |  |         | (240   | ) |         |  | 6,692     |  |  |  | 15,989,430 | 
|Non-current assets:      |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 
|Unlisted investments     |  |         | 3,000,000 |  |                              |  |           |             |  |  | 9,200   |  |  |         |       |   |         |  | 3,009,200 |  |  |  |           | 
|                         |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 
|                         |  |         | 3,003,129 |  |                              |  | 15,989,670 |             |  |  | 12,763  |  |  |         | (240   | ) |         |  | 3,015,892 |  |  |  | 15,989,430 | 
|                         |  |         |           |  |                              |  |            |             |  |  |         |  |  |         |        |   |         |  |           |  |  |  |            | 

The Companys U.S. treasury bills as of March 31, 2010 were held with contractual maturities of
less than six months. As of March 31, 2011 and March 31,2010, investments totaling US$2,294 and US$15,988,741 were in unrealized loss positions of US$1,913 and US$3,770 respectively. During the fiscal years ended March 31, 2011, 2010
and 2009, no significant gain or loss was recognized on the disposal of the Companys available-for-sale debt securities.

Other investment

The fair values of listed equity securities are based on quoted market prices at the balance sheet date.

Unlisted investments which have the terms from 2 to 4 years are measured at fair value using a price quoted by a third party, such as
broker or bank, at the balance sheet date.

The net unrealized gains (losses) consisted of gross unrealized gains as at the
fiscal years ended March 31, 2011, 2010 and 2009 of US$5,476, US$3,530 and US$13,559, respectively, and gross unrealized losses as at the fiscal years ended March 31, 2011, 2010 and 2009 of US$1,913, US$3,770 and US$2,206, respectively.

The proceeds from the disposal of available-for-sale investments for the fiscal years ended March 31, 2011, 2010 and 2009
were US$15,986,532, US$31,962,236 and US$9,979,200, respectively.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|8. | ACCOUNTS AND BILLS RECEIVABLE, NET
|-- | ----------------------------------

|                                      |  |               |            |   |               |  |            |  
|------------------------------------- |  | ------------- | ---------- | - | ------------- |  | ---------- | -
|                                      |  | March 31,2011 |            |   | March 31,2010 | 
|                                      |  | US$           |            |   | US$           | 
|Accounts receivable                   |  |               | 24,669,150 |   |               |  | 16,666,133 |  
|Less: Allowance for doubtful accounts |  |               | (768       | ) |               |  | (115,024   | )
|                                      |  |               |            |   |               |  |            |  
|Accounts receivable, net              |  |               | 24,668,382 |   |               |  | 16,551,109 |  
|Bills receivable                      |  |               | 10,963,912 |   |               |  | 6,693,256  |  
|                                      |  |               |            |   |               |  |            |  
|Accounts and bills receivable, net    |  |               | 35,632,294 |   |               |  | 23,244,365 |  
|                                      |  |               |            |   |               |  |            |  



|                                                           |  |                    |          |   |               |  |         |               |  |  |        | 
|---------------------------------------------------------- |  | ------------------ | -------- | - | ------------- |  | ------- | ------------- |  |  | ------ | 
|                                                           |  | Fiscal years ended |         
|                                                           |  | March 31,2011      |          |   | March 31,2010 |  |         | March 31,2009 | 
|                                                           |  | US$                |          |   | US$           |  |         | US$           | 
|Allowance for doubtful accounts:                           |  |                    |          |   |               |  |         |               |  |  |        | 
|Balance at beginning of fiscal year                        |  |                    | 115,024  |   |               |  | 65,308  |               |  |  | 65,308 | 
|Additions                                                  |  |                    | 768      |   |               |  | 56,336  |               |  |  |       | 
|Amount written-off as uncollectible during the fiscal year |  |                    | (115,024 | ) |               |  | (6,362  | )             |  |  |       | 
|Exchange realignment                                       |  |                    |         |   |               |  | (258    | )             |  |  |       | 
|                                                           |  |                    |          |   |               |  |         |               |  |  |        | 
|Balance at end of fiscal year                              |  |                    | 768      |   |               |  | 115,024 |               |  |  | 65,308 | 
|                                                           |  |                    |          |   |               |  |         |               |  |  |        | 



|9. | INVENTORIES
|-- | -----------



|                 |  |               |            |  |               |  |           | 
|---------------- |  | ------------- | ---------- |  | ------------- |  | --------- | 
|                 |  | March 31,2011 |            |  | March 31,2010 | 
|                 |  | US$           |            |  | US$           | 
|Raw materials    |  |               | 5,697,795  |  |               |  | 4,197,027 | 
|Work in progress |  |               | 3,010,686  |  |               |  | 2,466,948 | 
|Finished goods   |  |               | 2,140,890  |  |               |  | 2,745,826 | 
|                 |  |               |            |  |               |  |           | 
|                 |  |               | 10,849,371 |  |               |  | 9,409,801 | 
|                 |  |               |            |  |               |  |           | 

For the fiscal years ended March 31, 2011, 2010 and 2009, a write-down of inventories to fair market
value of US$405,313, US$398,474 and US$688,020, respectively, was recognized in the consolidated statement of operations.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|10. | RELATED PARTY TRANSACTIONS
|--- | --------------------------



A related party is any party that controls, jointly controls or can significantly influence the management or operating policies of the
Company. Such parties would also include affiliates, investments accounted for by the equity method, principal shareholders, management, directors and the immediate family members of principal shareholders, management or directors.

In addition to the transactions and balances detailed elsewhere in the consolidated financial statements for the fiscal years ended
March 31, 2011, 2010 and 2009, the Company had the following material transactions with related parties during those years:



| | (a) | The Company incurred annual real estate rental expenses for the fiscal years ended March 31, 2011, 2010 and 2009 of approximately US$713,103, US$769,540 and
US$738,697, respectively, payable to two directors of Global-Tech and certain related companies of which certain of their directors are also the directors of Global-Tech. Included in the aforesaid annual real estate rental expenses were amounts of
US$478,635, US$479,808 and US$478,211 paid to two directors of Global-Tech during the fiscal years ended March 31, 2011, 2010 and 2009, respectively, which were included in their remuneration for the respective fiscal years as housing
allowances.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Rental income of nil, US$6,393 and US$50,812 was earned for the fiscal years ended March 31, 2011, 2010 and 2009, respectively, from a jointly-controlled entity.
The rentals were charged on mutually agreed terms.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Management fee income of nil, US$9,313 and US$106,677 was earned for the fiscal years ended March 31, 2011, 2010 and 2009, respectively, from a jointly-controlled
entity, which was charged with reference to the actual costs incurred.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amount due from a jointly-controlled
entity is unsecured, interest-free and has no fixed terms of repayment. The amount due from a related party, of which two of the directors of Global-Tech were shareholders as of March 31, 2011, 2010 and 2009, is unsecured, interest-free and has
no fixed terms of repayment.



|11. | PROPERTY, PLANT AND EQUIPMENT, NET
|--- | ----------------------------------



|                                     |  |               |             |   |               |  |             |  
|------------------------------------ |  | ------------- | ----------- | - | ------------- |  | ----------- | -
|                                     |  | March 31,2011 |             |   | March 31,2010 | 
|                                     |  | US$           |             |   | US$           | 
|Leasehold improvements and buildings |  |               | 27,022,596  |   |               |  | 25,964,631  |  
|Plant and machinery                  |  |               | 35,907,231  |   |               |  | 31,941,407  |  
|Moulds                               |  |               | 10,891,768  |   |               |  | 10,370,297  |  
|Transportation equipment             |  |               | 1,520,280   |   |               |  | 1,567,084   |  
|Furniture, fixtures and equipment    |  |               | 5,778,517   |   |               |  | 3,921,354   |  
|Construction in progress             |  |               | 63,129      |   |               |  |            |  
|                                     |  |               |             |   |               |  |             |  
|                                     |  |               | 81,183,521  |   |               |  | 73,764,773  |  
|                                     |  |              
|Less: Accumulated depreciation       |  |               | (56,170,181 | ) |               |  | (51,056,401 | )
|                                     |  |               |             |   |               |  |             |  
|Property, plant and equipment, net   |  |               | 25,013,340  |   |               |  | 22,708,372  |  
|                                     |  |               |             |   |               |  |             |  



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)





|11. | PROPERTY, PLANT AND EQUIPMENT, NET (continued)
|--- | ----------------------------------------------



| | (a) | During the fiscal years ended March 31, 2011, 2010 and 2009, impairment losses relating to property, plant and equipment of nil, US$4,786 and US$200,407,
respectively, were recognized in the consolidated statement of operations for certain moulds, plant and machinery, and furniture, fixtures and equipment which are no longer used in the operations of the Company. The impairment losses recognized
during the fiscal years ended March 31, 2011, 2010 and 2009 were included in Cost of goods sold and SG&A on the face of the consolidated statement of operations in the amounts of nil, nil and US$128,911,
respectively, and nil, nil and US$71,496, respectively. For the fiscal year ended March 31, 2010, an impairment loss of US$4,786 was included in Other income (expense), net.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | As of March 31, 2011 and 2010, buildings with aggregate net book values of approximately US$15,783 and US$98,773, respectively, were situated in Hong Kong and
manufacturing facilities with aggregate net book values of approximately US$11,890,017 and US$12,388,321, respectively, were situated in Mainland China. The land where the manufacturing facilities were situated is held under certain land use rights
that will expire in 2043. Up to March 31, 2011, the Company has obtained a sizable portion of the property ownership certificates for its buildings (25 out of a total of 34 properties). The application for the remaining property ownership
certificates will commence only after the land use right certificates for the relevant pieces of land are obtained.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The amounts of depreciation charged for the fiscal years ended March 31, 2011, 2010 and 2009 were US$3,238,356, US$3,661,352 and US$3,830,549 respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | The loss on disposal of property, plant and equipment recognized during the fiscal years ended March 31, 2011, 2010 and 2009 amounted to US$3,662, US$292,208 and
US$39,645, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|12. | LAND USE RIGHTS, NET
|--- | --------------------

Land use
rights represent prepayments under operating leases for land use for a predetermined time period. They are charged to the consolidated statement of operations over the lease periods on a straight-line basis. The Company has the rights to use certain
pieces of land located in China and has obtained or is in the process of obtaining the land use rights certificates covering a substantial portion of such lands. On August 26, 2006, the Company entered into a supplementary agreement with the
Dongguan local government regarding the use of a piece of land with a total area of 45,208 square meters which the Company had occupied. Pursuant to the supplementary agreement, the Company has vacated a portion of this land (13,698 square meters in
aggregate), which was previously used as a recreational area, and has arranged to use the remaining portion of the land (31,510 square meters) until August 6, 2043. However, the Company had to pay monthly fees of RMB59,248 (approximately
US$9,039) to the local government for the period from January 1, 2008 to December 31, 2008 and RMB193,048 (approximately US$29,452) from January 1, 2009 onwards until August 6, 2043. Up to March 31, 2011, the Company has
obtained a sizable portion of its land use rights certificates covering 183,900 square meters out of a total area of 207,300 square meters. The application of certain property ownership certificates as further detailed in note 11 to the financial
statements will commence only after the land use rights certificates for the relevant pieces of land have been obtained. The Company is in the process of obtaining the remaining land use rights and property ownership certificates. However, no
definitive timeframe has been provided by the Dongguan local government as to when the certificates will be provided to the Company.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|13. | INTERESTS IN JOINTLY-CONTROLLED ENTITIES
|--- | ----------------------------------------



During the fiscal year ended March 31, 2007, Consortium Investment (BVI) Limited (CIBL) effectively disposed of 70% of
its equity interest in Lite Array Holdings to Anwell as part of an arrangement to set up a joint venture in Mainland China to exploit the opportunity in the development and manufacturing of OLED equipment. Subsequent to the completion of the
disposal, the Company still retains 2,400,000 common stock of Lite Array Holdings, representing a 30% equity interest in Lite Array Holdings through CIBL. The Company accounts for its interest in Lite Array Holdings and its subsidiaries (the
jointly-controlled entities), in which the Company does not have unilateral control, but joint control, under the equity method.

Particulars of the jointly-controlled entities are as follows:



|                                             |  |                                      |  |                                                            |    |  |                      |                                                                                                         
|-------------------------------------------- |  | ------------------------------------ |  | ---------------------------------------------------------- | -- |  | -------------------- | --------------------------------------------------------------------------------------------------------
|Name                                         |  | Place of
incorporation/ registration |  | Percentage of ownershipinterest attributable tothe Company |    |  | Principal activities
|                                             |  |                                      | 
|Lite Array Holdings Limited                  |  | British Virgin Islands               |  |                                                            | 30 |  |                      | Investment holding                                                                                      
|                                             |  |                                      | 
|Dongguan Litewell (OLED) Technology Limited* |  | PRC                                  |  |                                                            | 30 |  |                      | Research and development of OLED equipment                                                              
|                                             |  |                                      | 
|Litewell Technology (HK) Limited*            |  | Hong Kong                            |  |                                                            | 30 |  |                      | Design and trading of OLED production equipment and trading of OLED products
and corresponding materials



|* | Wholly-owned subsidiaries of Lite Array Holdings Limited
|- | --------------------------------------------------------

The Company has discontinued the recognition of its share of losses of the jointly-controlled entities because the share of losses of the jointly-controlled entities exceeded the Companys interests
in the jointly-controlled entities. The Company has no further obligations to fund operations.

The following table illustrates the summarized
financial information of the Companys jointly-controlled entities:

As of or for the years ended December 31*



|                    |  |      |            |   |      |  |            |  
|------------------- |  | ---- | ---------- | - | ---- |  | ---------- | -
|                    |  | 2010 |            |   | 2009 | 
|                    |  | US$  |            |   | US$  | 
|Current assets      |  |      | 191,136    |   |      |  | 476,390    |  
|Non-current assets  |  |      | 2,045,408  |   |      |  | 1,835,513  |  
|Current liabilities |  |      | (4,462,464 | ) |      |  | (3,436,181 | )
|Revenue             |  |      |           |   |      |  |           |  
|Operating expenses  |  |      | (1,203,469 | ) |      |  | (1,234,121 | )
|Net loss            |  |      | (1,154,118 | ) |      |  | (883,519   | )
|                    |  |      |            |   |      |  |            |  



|* | The financial year end date of Lite Array Holdings Limited
|- | ----------------------------------------------------------



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|14. | WARRANTY PROVISION
|--- | ------------------



Included in other accrued liabilities are warranty provisions of US$296,410, US$180,151 and US$191,459 as of March 31, 2011, 2010 and
2009, respectively. The Companys warranty activity during the fiscal years ended March 31, 2011, 2010 and 2009 is summarized below:



|                                    |  |                    |         |   |               |  |         |               |  |  |         |  
|----------------------------------- |  | ------------------ | ------- | - | ------------- |  | ------- | ------------- |  |  | ------- | -
|                                    |  | Fiscal years ended |        
|                                    |  | March 31,2011      |         |   | March 31,2010 |  |         | March 31,2009 | 
|                                    |  | US$                |         |   | US$           |  |         | US$           | 
|Balance at beginning of fiscal year |  |                    | 180,151 |   |               |  | 191,459 |               |  |  | 235,315 |  
|Additional provision                |  |                    | 192,408 |   |               |  | 15,250  |               |  |  | 47,215  |  
|Reversal of unutilized amounts      |  |                    | (76,149 | ) |               |  | (26,558 | )             |  |  | (91,071 | )
|                                    |  |                    |         |   |               |  |         |               |  |  |         |  
|Balance at end of fiscal year       |  |                    | 296,410 |   |               |  | 180,151 |               |  |  | 191,459 |  
|                                    |  |                    |         |   |               |  |         |               |  |  |         |  



|15. | BILLS PAYABLE, SHORT TERM BANK LOANS AND BANKING FACILITIES
|--- | -----------------------------------------------------------

Global-Tech has provided a bank with: (i) an unlimited corporate guarantee for general banking facilities granted to certain subsidiaries of the Company; and (ii) an undertaking not to pledge,
mortgage or charge any of the assets of the Company in Hong Kong or Mainland China for general banking facilities granted to a subsidiary of the Company without obtaining written consent of the bank for general facilities granted to its H.K.
subsidiaries. The Company has made deposits to banks as security for credit facilities granted to our PRC subsidiaries, including bank loans and bills payable.

The facilities with various banks are denominated in United States dollars of US$9,000,000, Hong Kong dollars of HK$2,400,000 and in Renminbi of RMB60,000,000 (equivalent to US$18,462,022 in total) as of
March 31, 2011, and in Hong Kong dollars of HK$2,400,000 and in Renminbi of RMB50,000,000 (equivalent to US$7,638,483 in total) as of March 31, 2010. The facilities are secured by the Companys deposits which are restricted in use.

Banking facilities of US$12,585,054 and RMB8,381,848 (equivalent to US$1,278,754) were utilized as of March 31, 2011 and
RMB10,257,371 (equivalent to US$1,503,595) were utilized as of March 31, 2010.

Banking Facilities of HK$2,400,000
(equivalent to US$308,285) and RMB30,195,179 (equivalent to US$4,606,645) remained unutilized as of March 31, 2011 and HK$2,400,000 (equivalent to US$309,144) and RMB39,742,629 (equivalent to US$5,825,744) remained unutilized as of
March 31, 2010.

The weighted average interest rate of the bank loans for the year ended March 31, 2011 is
1.36% per annum with an average maturity of 59 days from March 31, 2011.



|16. | SHARE CAPITAL
|--- | -------------

Holders of common
stock of Global-Tech have one vote for each stock held on all matters submitted to vote at a shareholders meeting of Global-Tech. Subject to the rights of the holders of stock with preferential or other special rights which may be authorized
in the future, holders of common stock of Global-Tech are entitled to receive dividends pro rataout of assets legally available therefore and, in the event of the winding up of Global-Tech, to share ratably in all assets remaining after
payment of liabilities of Global-Tech. The Board of Directors of Global-Tech may declare interim dividends and recommend a final annual dividend from retained earnings available for cash dividends as determined for statutory purposes at such times
and in such amounts as they may determine. Dividends may only be declared and paid out of surplus.

During the fiscal year
ended March 31, 2009, the Board of Directors of Global-Tech authorized an amendment to Global-Techs Memorandum of Association to effect a 4-for-1 reverse stock split (the Reverse Stock Split) of the issued and outstanding
common stock of Global-Tech, effective from December 10, 2008 (the Effective Date). During the fiscal year ended March 31, 2009, Global-Tech also proportionally reduced the authorized number of shares of its common and
preferred stock to 12,500,000 and 250,000, respectively. On the Effective Day, every four shares of common stock of Global-Tech issued and outstanding as of the Effective Date were consolidated into one share of post-reverse split common stock.



F - 27



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|17. | OTHER INCOME (EXPENSES), NET
|--- | ----------------------------

|                                                  |  |      |          |   |      |  |          |      |  |  |          |  
|------------------------------------------------- |  | ---- | -------- | - | ---- |  | -------- | ---- |  |  | -------- | -
|                                                  |  | 2011 |          |   | 2010 |  |          | 2009 | 
|                                                  |  | US$  |          |   | US$  |  |          | US$  | 
|Foreign exchange losses, net                      |  |      | (549,771 | ) |      |  | (144,313 | )    |  |  | (93,073  | )
|Loss on disposal of property, plant and equipment |  |      | (3,662   | ) |      |  | (292,208 | )    |  |  | (39,645  | )
|Rental income from a related party                |  |      |         |   |      |  | 6,393    |      |  |  | 50,812   |  
|Rental income from other third parties            |  |      | 9,886    |   |      |  |         |      |  |  | 151,188  |  
|Management fee received from a related party      |  |      |         |   |      |  | 9,313    |      |  |  | 106,677  |  
|Management fee received from other third party    |  |      | 18,641   |   |      |  |         |      |  |  | 57,218   |  
|Reversal (accrual) for potential tax surcharge    |  |      | (80,472  | ) |      |  | 9,946    |      |  |  | (104,806 | )
|Government grants                                 |  |      | 856,372  |   |      |  | 687,190  |      |  |  | 58,127   |  
|Others                                            |  |      | 60,056   |   |      |  | 178,598  |      |  |  | 245,495  |  
|                                                  |  |      |          |   |      |  |          |      |  |  |          |  
|                                                  |  |      | 311,050  |   |      |  | 454,919  |      |  |  | 431,993  |  
|                                                  |  |      |          |   |      |  |          |      |  |  |          |  



|18. | INCOME TAXES
|--- | ------------

Global-Tech and
its subsidiaries are subject to income taxes on an entity basis on the taxable income arising in or derived from the respective tax jurisdictions in which they are domiciled or deemed to operate. Global-Tech and its investment holding subsidiaries
incorporated in the British Virgin Islands (BVI) are not subject to tax in the BVI in accordance with the BVI tax regulations. The Company conducts substantially all of its businesses and operations through its subsidiaries located in
Hong Kong and Mainland China.

The Companys operating subsidiaries are subject to various statutory tax rates, according
to the respective jurisdictions in which they operate. The Companys subsidiaries in Hong Kong are subject to Hong Kong profits tax at a rate of 16.5% on their assessable income arising in Hong Kong during the fiscal years ended March 31,
2011, 2010 and 2009. The Companys former subsidiary in Macau was exempted from Macau Complementary Tax.

The Companys subsidiaries registered in the PRC, including DWS and DGLAD, are subject to PRC corporate income tax on income as reported in their PRC statutory accounts, adjusted in accordance with
relevant PRC income tax laws and regulations. DWS and DGLAD are located in a coastal open economic zone in Mainland China and, accordingly, were entitled to a preferential tax rate of 27% (24% reduced tax rate and 3% local income tax rate) for the
calendar years ended prior to December 31, 2008. During the 5thSession of the 10thNational Peoples Congress of the PRC, which was concluded on March 16, 2007, a unified enterprise income tax law, or EIT was approved and became effective on January 1, 2008. The New EIT
Law introduced a wide range of changes which include the unification of the income tax rate for domestic-invested and foreign-invested enterprises at 25%. DGLAD is entitled to a tax concession period (Tax Holiday), whereby it was
exempted from corporate income tax for its first two profit-making years and is entitled to a 50% tax reduction for the succeeding three years. DGLAD started its first profit-making year under the Tax Holiday for the calendar year ended
December 31, 2007. Accordingly, the EIT of DSW and DGLAD for fiscal 2011 was 25% and 12.5%, respectively.

Income tax
expense consists of:



|                              |  |      |         |  |      |  |         |      |  |  |         |  
|----------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | -
|                              |  | 2011 |         |  | 2010 |  |         | 2009 | 
|                              |  | US$  |         |  | US$  |  |         | US$  | 
|Income tax expense (benefit): |  |      |         |  |      |  |         |      |  |  |         |  
|Current                       |  |      | 110,215 |  |      |  | 482,688 |      |  |  | 460,345 |  
|Deferred                      |  |      | 93,907  |  |      |  | (93,553 | )    |  |  | (39,319 | )
|                              |  |      |         |  |      |  |         |      |  |  |         |  
|Total income tax expense      |  |      | 204,122 |  |      |  | 389,135 |      |  |  | 421,026 |  
|                              |  |      |         |  |      |  |         |      |  |  |         |  



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|18. | INCOME TAXES (continued)
|--- | ------------------------



The reconciliation of income tax expense (benefit) computed at the Hong Kong statutory
income tax rate to profit (loss) before income taxes as stated in the consolidated statement of operations of the Company at the effective income tax rate is as follows:



|                                                                         |  |      |            |    |      |  |          |      |  |  |           |   
|------------------------------------------------------------------------ |  | ---- | ---------- | -- | ---- |  | -------- | ---- |  |  | --------- | --
|                                                                         |  | 2011 |            |    | 2010 |  |          | 2009 | 
|                                                                         |  | US$  |            |    | US$  |  |          | US$  | 
|Income tax expenses (benefit) at the Hong Kong statutory income tax rate |  |      | (657,339   | )  |      |  | 636,152  |      |  |  | (894,200  | ) 
|Foreign rate differential                                                |  |      | (69,068    | )  |      |  | 138,201  |      |  |  | 26,140    |   
|Non-taxable other income                                                 |  |      | (79,153    | )  |      |  | (521,405 | )    |  |  | (558,829  | ) 
|Non-tax deductible expenses                                              |  |      | 554,564    |    |      |  | 22,140   |      |  |  | 1,056,179 |   
|Under provision of tax in prior periods                                  |  |      | 149,531    |    |      |  | 149,679  |      |  |  | 52,596    |   
|Unrecognized (utilized) tax benefits                                     |  |      | (1,110,579 | )  |      |  | (97,381  | )    |  |  | 402,496   |   
|Changes in valuation allowance                                           |  |      | 1,416,168  |    |      |  | 61,749   |      |  |  | 336,644   |   
|                                                                         |  |      |            |    |      |  |          |      |  |  |           |   
|Total income tax expense at the Companys effective income tax rate      |  |      | 204,124    |    |      |  | 389,135  |      |  |  | 421,026   |   
|                                                                         |  |      |            |    |      |  |          |      |  |  |           |   
|Hong Kong statutory income tax rate                                      |  |      | 16.5       | %  |      |  | 16.5     | %    |  |  | 16.5      | % 
|Effective income tax rate                                                |  |      | (5.0       | )% |      |  | 10.1     | %    |  |  | (7.8      | )%
|                                                                         |  |      |            |    |      |  |          |      |  |  |           |   

Deferred tax assets and liabilities as of March 31, 2011 and 2010 comprise the following:



|                                                            |  |                |            |   |                |  |            |  
|----------------------------------------------------------- |  | -------------- | ---------- | - | -------------- |  | ---------- | -
|                                                            |  | March 31, 2011 |            |   | March 31, 2010 | 
|                                                            |  | US$            |            |   | US$            | 
|Deferred tax assets:                                        |  |                |            |   |                |  |            |  
|Impairment of property, plant and equipment                 |  |                | 1,894,051  |   |                |  | 134,144    |  
|Provision for inventories                                   |  |                | 314,139    |   |                |  | 462,509    |  
|Provision for warranty                                      |  |                | 78,307     |   |                |  | 46,580     |  
|Operating losses carried forward                            |  |                | 3,771,019  |   |                |  | 3,484,191  |  
|Accruals and other liabilities                              |  |                |           |   |                |  | 530,644    |  
|                                                            |  |                |            |   |                |  |            |  
|Gross deferred tax assets                                   |  |                | 6,057,516  |   |                |  | 4,658,068  |  
|Less: Valuation allowance for deferred tax assets           |  |                | (6,057,516 | ) |                |  | (4,553,687 | )
|                                                            |  |                |            |   |                |  |            |  
|Net deferred tax assets                                     |  |                |           |   |                |  | 104,381    |  
|                                                            |  |                |            |   |                |  |            |  
|Deferred tax liabilities:                                   |  |                |            |   |                |  |            |  
|Other temporary differences                                 |  |                |           |   |                |  |           |  
|Tax over book depreciation of property, plant and equipment |  |                | (27,549    | ) |                |  | (38,112    | )
|                                                            |  |                |            |   |                |  |            |  
|Total deferred tax liabilities                              |  |                | (27,549    | ) |                |  | (38,112    | )
|                                                            |  |                |            |   |                |  |            |  



F - 29



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|18. | INCOME TAXES (continued)
|--- | ------------------------



|                                    |  |                    |           |  |               |  |           |               |  |  |           |  
|----------------------------------- |  | ------------------ | --------- |  | ------------- |  | --------- | ------------- |  |  | --------- | -
|                                    |  | Fiscal years ended |          
|                                    |  | March 31,2011      |           |  | March 31,2010 |  |           | March 31,2009 | 
|                                    |  | US$                |           |  | US$           |  |           | US$           | 
|Valuation allowance:                |  |                    |           |  |               |  |           |               |  |  |           |  
|Balance at beginning of fiscal year |  |                    | 4,553,687 |  |               |  | 4,503,573 |               |  |  | 4,147,116 |  
|Additions (reversal)                |  |                    | 1,416,168 |  |               |  | 61,749    |               |  |  | 470,357   |  
|Effect of change in tax rate        |  |                    |          |  |               |  |          |               |  |  | (23,551   | )
|Disposal of a subsidiary            |  |                    |          |  |               |  |          |               |  |  | (110,162  | )
|Exchange realignment                |  |                    | 87,661    |  |               |  | (11,635   | )             |  |  | 19,813    |  
|                                    |  |                    |           |  |               |  |           |               |  |  |           |  
|Balance at end of fiscal year       |  |                    | 6,057,516 |  |               |  | 4,553,687 |               |  |  | 4,503,573 |  
|                                    |  |                    |           |  |               |  |           |               |  |  |           |  

For financial reporting purposes, the Company has established valuation allowances by tax jurisdiction
for deferred tax assets, which management believes are more likely than not to be realized in the foreseeable future. As of March 31, 2011 and 2010, the Company had tax losses carried forward of US$23,656,479 and US$22,623,542, respectively,
which included tax losses of US$4,562,595 and US$3,992,542 respectively that are available indefinitely for offsetting against future taxable income of the companies in which these losses arose. Tax losses of US$19,093,884 and US$18,631,000 as at
March 31, 2011 and 2010, respectively, may be carried back for 2 years or carried forward for 20 years from the year the tax losses arose.

A reconciliation of the movements of unrecognized tax benefits under FASB ASC 740 during the fiscal years ended March 31, 2011 and 2010, exclusive of related interest and penalties, is as follows:



|                                                             |  |                    |           |   |               |  |           |  
|------------------------------------------------------------ |  | ------------------ | --------- | - | ------------- |  | --------- | -
|                                                             |  | Fiscal years ended |          
|                                                             |  | March 31,2011      |           |   | March 31,2010 | 
|                                                             |  | US$                |           |   | US$           | 
|Balance at beginning of fiscal year                          |  |                    | 7,301,091 |   |               |  | 7,288,627 |  
|Additions based on tax positions related to the current year |  |                    | 990,115   |   |               |  | 954,221   |  
|Reduction for tax positions related to prior year            |  |                    | (970,878  | ) |               |  | (953,704  | )
|Exchange realignment                                         |  |                    | 116,949   |   |               |  | 11,947    |  
|                                                             |  |                    |           |   |               |  |           |  
|Balance at end of fiscal year                                |  |                    | 7,437,277 |   |               |  | 7,301,091 |  
|                                                             |  |                    |           |   |               |  |           |  



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|18. | INCOME TAXES (continued)
|--- | ------------------------



As of March 31, 2011 and 2010, the Companys unrecognized tax benefits under
FIN 48 of US$4,983,146 and US$5,287,804, respectively, are presented in the consolidated balance sheets within income tax payable. The remaining balance of US$2,454,131 and US$2,013,287 as of March 31, 2011 and 2010, respectively, are set off
with the corresponding tax losses carried forward.

If the unrecognized tax benefits under FIN 48 as of March 31, 2011
were realized in a future period, it would result in a tax benefit of US$4,983,146 (US$5,287,804 as of March 31, 2010) and a reduction of the Companys effective tax rate.

For all the years presented and in accordance with FIN 48, the Company classified interest and potential penalties relating to any
underpayment of income taxes and uncertain tax positions, if and when required, as interest expense and other expenses, respectively. For the fiscal years ended March 31, 2011 and 2010, the Company reversed interest and potential penalties of
US$227,702 and US$73,643 relating to certain uncertain tax positions in its consolidated statement of operations respectively. For the fiscal years ended March 31, 2009, the Company recognized in its consolidated statement of operations total
interest and potential penalties relating to certain uncertain tax positions amounting to US$279,880. As of March 31, 2011 and 2010, the Company had accrued interest and potential penalties relating to certain uncertain tax positions amounting
to US$1,537,510 and US$1,767,030, respectively.

One of the Companys wholly-owned subsidiaries is currently under
examination by the Hong Kong tax authority. The tax period open for examination by the tax authority includes the fiscal years ended March 31, 2003 through 2010. While it is difficult to predict the timing and settlement of the final outcome of
the examination, the Company does not anticipate a significant change in its unrecognized tax benefits within the next 12 months; however, actual developments could differ from those currently expected.

The PRC tax authorities could determine that any inter-company payable account in accordance with the PRC GAAP could be deemed income if
such inter-company payables can not to be settled and therefore subject to taxation. In accordance with FIN 48, we evaluated our position and determined that such inter-company payables will be settled, and particularly, since prior year tax
assessment have been confirmed with the PRC tax authorities, deeming such inter-company payables as income was not more likely than not.

Based on existing tax regulations in the Companys various operating jurisdictions, tax years 1999-2010 remain open to possible tax examination by relevant tax authorities.

The Company has not provided for possible income taxes on the undistributed earnings of foreign subsidiaries that are considered to be
reinvested indefinitely.



|19. | BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
|--- | -------------------------------------------

Basic and diluted earnings (loss) per share of common stock of the Company for the fiscal years ended March 31, 2011, 2010 and 2009 is computed in accordance with FASB ASC 260 Earnings Per
Share by dividing the net earnings (loss) for each fiscal year attributable to common stockholders by the weighted average number of shares of common stock outstanding during that fiscal year.

The following table sets forth the computation of basic and diluted earnings (loss) per share:



|                                                             |  |        |            |   |        |  |           |        |  |  |            |  
|------------------------------------------------------------ |  | ------ | ---------- | - | ------ |  | --------- | ------ |  |  | ---------- | -
|                                                             |  | 2011   |            |   | 2010   |  |           | 2009   | 
|                                                             |  | US$    |            |   | US$    |  |           | US$    | 
|Numerator for basic and diluted earning (loss) per share:    |  |        |            |   |        |  |           |        |  |  |            |  
|Earnings (Loss) attributable to common stockholders          |  |        | (4,012,971 | ) |        |  | 3,466,331 |        |  |  | (5,840,422 | )
|                                                             |  |        |            |   |        |  |           |        |  |  |            |  
|                                                             |  |        |           
|                                                             |  | Number |            |   | Number |  |           | Number | 
|Denominator for basic and diluted earnings (loss) per share: |  |        |            |   |        |  |           |        |  |  |            |  
|Weighted average number of shares of common stock            |  |        | 3,039,454  |   |        |  | 3,037,969 |        |  |  | 3,051,216  |  
|                                                             |  |        |            |   |        |  |           |        |  |  |            |  
|                                                             |  |        |           
|                                                             |  | US$    |            |   | US$    |  |           | US$    | 
|Basic and diluted earnings (loss) per share of common stock  |  |        | (1.32      | ) |        |  | 1.14      |        |  |  | (1.91      | )
|                                                             |  |        |            |   |        |  |           |        |  |  |            |  



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|19. | BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (continued)
|--- | -------------------------------------------------------



365,369, 337,618 and 356,448 stock options of Global-Tech were excluded from the
computation of diluted earnings (loss) per share for the fiscal year ended March 31, 2011, 2010 and 2009, because their inclusion would have been anti-dilutive.



|20. | COMMITMENTS
|--- | -----------



| | (a) | Capital commitments
| | --- | -------------------

As of
March 31, 2011 and 2010, the Company had capital commitments contracted but not provided for of US$86,782 and US$52,919, respectively, for the purchase of property, plant and equipment.



| | (b) | Operating lease commitments
| | --- | ---------------------------

In
addition to the land use rights described in note 12 to the financial statements, the Company has entered into various operating lease arrangements for parking lots, motor vehicles, equipment, land and office premises. The Company recorded rental
expenses, excluding the land use rights payments described in note 12 to the financial statements, for the fiscal years ended March 31, 2011, 2010 and 2009 of US$445,327, US$440,132 and US$424,194, respectively, and recorded lease rental income
of US$9,886, US$6,393 and US$202,000 for the fiscal years ended March 31, 2011, 2010 and 2009, respectively. Future minimum lease payments under non-cancelable operating leases as of March 31, 2011 and 2010 were as follows:



|                                              |  |               |            |  |               |  |            | 
|--------------------------------------------- |  | ------------- | ---------- |  | ------------- |  | ---------- | 
|                                              |  | March 31,2011 |            |  | March 31,2010 | 
|                                              |  | US$           |            |  | US$           | 
|Payable:                                      |  |               |            |  |               |  |            | 
|Within one year                               |  |               | 629,677    |  |               |  | 1,008,261  | 
|Over one year but not exceeding two years     |  |               | 491,936    |  |               |  | 463,876    | 
|Over two years but not exceeding three years  |  |               | 501,352    |  |               |  | 472,446    | 
|Over three years but not exceeding four years |  |               | 355,086    |  |               |  | 481,489    | 
|Over four years but not exceeding five years  |  |               | 334,022    |  |               |  | 341,018    | 
|Over five years                               |  |               | 9,135,325  |  |               |  | 9,089,012  | 
|                                              |  |               |            |  |               |  |            | 
|                                              |  |               | 11,447,398 |  |               |  | 11,856,102 | 
|                                              |  |               |            |  |               |  |            | 

Apart from the above, subsequent to the year end date, the subsidiaries of the Company renewed the
tenancy agreements with the related companies and extended the leasing term for one year to March 31, 2012, with future lease payments of US$234,081.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|21. | CONTINGENCIES
|--- | -------------



| | (a) | Global-Tech and Pentalpha Medical Limited (formerly known as Pentalpha Enterprises Limited (Pentalpha Enterprises)), a subsidiary of Global-Tech, were
involved in certain breach of contract litigation with Sunbeam Corporation and Sunbeam Products, Inc. (collectively Sunbeam), with both parties claiming and counter-claiming. The trial on the claims of Sunbeam for indemnity and the claim
of Pentalpha Enterprises for breach of contract began on January 12, 2004. On January 16, 2004, the jury (the Jury) returned a verdict in favor of (i) Sunbeam on its claim for indemnity and awarded Sunbeam approximately
US$2.5 million against Pentalpha Enterprises; and (ii) Pentalpha Enterprises on its claim for breach of contract and awarded Pentalpha Enterprises US$6.6 million. The United States District Court for the Southern District of Florida (the
District Court) granted a final judgment on February 11, 2004 to add pre-judgment interest to the Jurys award, and awarded Sunbeam approximately US$3.4 million and Pentalpha Enterprises US$6.6 million.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

After the appeal, by an amended judgment dated December 12, 2005, the District Court awarded Pentalpha
Enterprises pre-judgment interest from June 30, 2001 to February 11, 2004, bringing the judgment entered in favor of Pentalpha Enterprises as of February 11, 2004 to approximately US$8 million, and leaving unchanged the judgment
entered against Pentalpha Enterprises in favor of Sunbeam.

After the appeal, the District Court, on its own initiative,
entered a second amended judgment on April 16, 2007 and on June 4, 2007 entered a third amended judgment that awarded Pentalpha Enterprises pre-judgment interest from June 30, 2001 until the entry of the second amended judgment on
December 12, 2005, at the interest rates required by Florida law and awarded Sunbeams pre-judgment interest until December 12, 2005. The post-judgment interest for both parties is calculated at 4.35% per annum from the date the
amended judgment was entered on December 12, 2005 until paid. On June 16, 2007, Pentalpha Enterprises filed a notice of appeal to the United States Court of Appeals (Court of Appeals) to challenge the portion of the judgment in
favor of Sunbeam that extends the pre-judgment interest until December 12, 2005.

Sunbeam posted a bond in the amount of
approximately US$5.2 million, which was attached pursuant to the September 7, 2005 order of the United States District Court for the Southern District of New York (the Court Order) in the action SEB S.A., (SEB) v.
Montgomery Ward, Pentalpha Enterprises and Global-Tech, pending in the district court, as further detailed in note 21(b) below. On July 13, 2007, Sunbeam wire transferred an amount of approximately US$5.5 million to an escrow account of
SEBs attorney. SEBs attorney is holding that money in trust in an escrow account pursuant to the Court Order for Pentalpha Enterprises. Sunbeams payment of the funds into escrow eliminated its obligation to pay post-judgment
interest on the amount that it paid into escrow.

On December 10, 2008, the Court of Appeals reversed the judgment of the
District Court and remanded to the District Court the elimination of the award of pre-judgment interest to Sunbeam after February 11, 2004. On or about February 5, 2009, Sunbeam and Pentalpha Enterprises reached an agreement with respect
to the satisfaction of the Fourth Amended Final Judgment entered on January 28, 2009. On February 10, 2009, accordingly, Sunbeam wire transferred approximately US$279,000 to the escrow account of SEBs attorney provided a satisfaction
of judgment to Sunbeam. The matter has now concluded.

Accordingly, the Pentalpha Enterprises recognized a gain of
approximately US$8.0 million from its claim against Sunbeam for breach of contract and a loss of approximately US$3.4 million on the claims of Sunbeam for indemnity in its consolidated statement of operations for the fiscal year 2006. Pentalpha
Enterprises recognized pre-judgment interest and gains of approximately nil, nil and US$279,000 in its consolidated statement of operations for the fiscal years 2011, 2010 and 2009, respectively.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|21. | CONTINGENCIES (continued)
|--- | -------------------------



| | (b) | SEB commenced an action in 1999 in the United States District Court for the Southern District of New York for patent infringement against Global-Tech, Pentalpha
Enterprises and Montgomery Ward, a then customer of Pentalpha Enterprises. The Court ordered Pentalpha Enterprises, among other things, to give notice to SEB of any attempt to collect the judgment against Sunbeam. The district court attached the
entire judgment by order dated September 7, 2005. The district court conducted a trial beginning on April 17, 2006. On April 21, 2006, the jury returned a verdict finding that Pentalpha Enterprises had infringed the SEB patent, that
the infringement was willful and that SEB was entitled to a reasonable royalty in a total amount of US$4.65 million.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Both sides have made post-trial motions. Global-Tech and Pentalpha Enterprises have moved for judgment as a matter of law on a wide range of issues, and for a new trial. SEB has moved to enhance damages
with the addition of treble damages, pre-judgment interest and attorneys fees. The motions have been fully briefed. The district court heard oral arguments on April 11, 2007 and June 21, 2007. The district court also heard testimony
from a SEB witness on July 19, 2007 with respect to Pentalpha Enterprises motion for judgment as a matter of certain issues based upon SEBs failure to produce certain documents during the discovery.

In a memorandum decision and order dated October 9, 2007, the district court denied all of Pentalpha Enterprises post-trial
motions, except that the court reduced the amount of the jury verdict by US$2 million based upon SEBs receipt of that amount from Sunbeam. The district court also granted SEBs motion for enhanced damages of US$2.65 million, awarded SEB
its attorneys fees of approximately US$0.9 million, and pre-judgment interest at the prime interest rate. SEB has submitted a claim for approximately US$1.8 million in pre-judgment interest and a supplemental claim for approximately US$0.25
million in attorneys fees and expenses. Pentalpha Enterprises disputed the claim for attorneys fees on the grounds that they resulted from the misconduct of SEB in concealing documents, but not the calculation of pre-judgment interest.

By motion filed on November 24, 2007, Pentalpha Enterprises moved for reconsideration of the award of enhanced damages
and attorneys fees, including any supplemental attorneys fees, in the district courts October 9, 2007 opinion based upon a decision of the Court of Appeals in a different case, on August 20, 2007 that imposed additional
requirements for a finding of willfulness that the jury did not consider in this case.

On October 2, 2008, the district
court granted the motion of Pentalpha Enterprises to vacate the award of enhanced damages and entered into an amended judgment in favor of SEB for enhanced damages of US$2.65 million and corresponding pre-judgment interests of approximately US$2.23
million. Pentalpha Enterprises filed a notice of appeal on October 30, 2008. SEB cross-appealed from the denial of an award of enhanced damages. Oral argument is set for October 6, 2009. The outcome of the appeal cannot be determined with
certainty.

Pentalpha Enterprises thereafter sought to amend the order of attachment to release amounts beyond those necessary
to provide security pending appeal. By an order dated November 25, 2008, the district court granted that motion and released all amounts in excess of US$5.1 million. SEB moved in the Court of Appeals to stay that order of the district court.
The Court of Appeals denied SEBs motion by an order dated March 4, 2009.

On January 18, 2008, Pentalpha
Enterprises filed a request with the United States Patent and Trademark Office (PTO) to re-examine the SEB patent that is the subject of this action. On July 3, 2009, the PTO issued an office action rejecting all claims of the SEB
patent on the grounds that they were obvious. SEB has 60 days from that office action to respond to it. On July 16, 2009, Pentalpha Enterprises filed a motion in the Court of Appeals to stay the appeal pending the re-examination. The Court of
Appeals denied the motion for a stay.

Based on the understanding of the Company, on August 12, 2009, the PTO conducted an
interview of SEB and on August 14, 2009, the PTO issued a report of the meeting stating that an agreement had been reached that the PTO would provide favorable treatment to the claims of the patent provided that SEB filed a satisfactory
memorandum with the PTO. SEB filed that response on September 2, 2009.

After receiving SEBs response, Pentalpha
Enterprises perceived an inconsistency between the arguments that SEB had made concerning the scope of its Patent in this action, to ensure Pentalpha Enterprises accused products and in the Patent office to sustain the validity of its Patent.
Pentalpha Enterprises therefore moved the district court for an order pursuant to Rule 60(b) of the Federal Rules of Civil Procedure for an order vacating the judgment against Pentalpha Enterprises on that ground. SEB opposed the motion.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|21. | CONTINGENCIES (continued)
|--- | -------------------------



| | (b) | (continued)
| | --- | -----------

The PTO on
December 16, 2009 issued an office action stating that the claims of the SEB Patent Pentalpha Enterprises in fact patentable.

The Court of Appeals heard oral argument on the appeal on October 6, 2009 and rendered a decision on February 5, 2010 affirming the judgment of the district court. Pentalpha Enterprises
petitioned for reargument en banc, which the Federal Circuit denied on March 25, 2010. Pentalpha Enterprises filed a petition for certiorari in the Supreme Court of the United States on July 23, 2010.

After the Mandate of the Court of Appeals, SEB requested the district court modify the order of attachment to allow SEB to satisfy the
outstanding judgment from the escrow funds that its counsel is holding from the order of attachment. As of April 30, 2010, the escrow fund held approximately US$5.1 million .

The district court heard oral argument on May 19, 2010 on Pentalpha Enterprises Rule 60(b) motion and on SEBs application
to modify the order of attachment to allow disbursement of the funds in the escrow account to satisfy its judgment.

On
August 4, 2010, the district court issued an order authorizing the attorneys for SEB to use the funds in the escrow account to satisfy the judgement, including pre-judgement interest, and pay certain expenses associated with it. If a balance
remained, SEBs attorneys were ordered to pay the balance to Pentalpha after withholding income tax. In the event a deficit remained, Pentalpha was required to pay the remaining amount of the judgement.

The Supreme Court granted the writ of certiorari on October 12, 2010. After the appeal was fully briefed, the Supreme Court heard
oral argument on February 23, 2011. On May 31, 2011, the court affirmed the judgment of Federal Circuit by an 8-1 vote, effectively ending the case.



| | (c) | On October 11, 2004, Best Hero Limited (Best Hero) issued a writ in the Court of First Instance of the High Court of Hong Kong (the High
Court) against a subsidiary of the Company for a claim of US$4,250,400. The claim relates to two purchase orders issued by the subsidiary on May 31, 2004 and June 1, 2004, respectively, to Best Hero for the purchase of LCD television
panels for a total purchase price of US$4,620,000. However, the LCD television panels which were paid for in the initial shipment were determined to be unacceptable to the subsidiary. Accordingly, further delivery of the remaining orders was
refused. Best Hero alleged that the subsidiary had repudiated the contract, and therefore Best Hero instituted legal proceedings to claim for damages. The subsidiary intended to defend the action on the grounds that it is justified in rejecting the
goods for breach of conditions as to descriptions and the sample provided to the subsidiary by Best Hero. A defence and counter-claim was filed by the subsidiary in the High Court on December 28, 2004. Best Hero filed a Reply and Defence to
Counterclaim on January 11, 2005. No further activity occurred in this case through March 31, 2011.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
accordance with FASB ASC 450 Contingencies, the Company believed that with such a lengthy interval between the claim being filed and there being no activity between the two parties. The Company considered the probability that the Company
will incur a loss is remote. Accordingly, the provision of this contingent liability of US$0.9 million was reversed during the year ended March 31, 2011.



| | (d) | As of March 31, 2011, the Company recognized US$4,983,146 of liabilities for unrecognized tax benefits and, in addition, US$1,537,510 of related interest and
penalties. The unrecognized tax benefits relate mainly to potential transfer pricing arrangements reflected in the Hong Kong and PRC income tax returns of certain subsidiaries of the Company. The final outcome of these tax uncertainties is dependent
upon various matters including tax examinations, legal proceedings, certain authority proceedings, changes in regulatory tax laws and interpretations of those tax laws, or expiration of statues of limitation. However, based on the number of
jurisdictions, the uncertainties associated with litigation, and the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, which could include formal legal proceedings, there is a high degree of
uncertainty regarding the future cash outflows associated with these tax uncertainties. As of March 31, 2011, the Company classified US$4,983,146 of its liabilities for unrecognized tax benefits and US$1,537,510 of interest and penalties as
current liabilities.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|22. | OTHER ACCRUED LIABILITIES
|--- | -------------------------

|                                         |  |               |           |  |               |  |           | 
|---------------------------------------- |  | ------------- | --------- |  | ------------- |  | --------- | 
|                                         |  | March 31,2011 |           |  | March 31,2010 | 
|                                         |  | US$           |           |  | US$           | 
|Accrued expenses                         |  |               | 2,829,692 |  |               |  | 2,561,787 | 
|Other tax payable                        |  |               | 2,119,312 |  |               |  | 2,640,826 | 
|Land use right payable  operating lease |  |               | 782,129   |  |               |  | 770,135   | 
|Other payable                            |  |               | 1,844,929 |  |               |  | 923,967   | 
|                                         |  |               |           |  |               |  |           | 
|                                         |  |               | 7,576,062 |  |               |  | 6,896,715 | 
|                                         |  |               |           |  |               |  |           | 



|23. | EMPLOYEE BENEFITS
|--- | -----------------

The Company
operates a Mandatory Provident Fund (MPF) scheme and an Occupational Retirement Schemes Ordinance (ORSO) scheme for all its qualified employees in Hong Kong. Both the MPF and the ORSO schemes are defined contribution schemes
and are administered by independently administered funds.

MPF is available to all employees aged 18 to 64 and with at least 60
days of service as an employee of the Company in Hong Kong. Under the MPF scheme, both the Company and each of the qualified employee contribute the lower of 5% of the employees basic salary and HK$1,000 (approximately US$129), subject to a
cap of a monthly basic salary of HK$20,000 (approximately US$2,569). Qualified employees are entitled to 100% of the Companys contributions together with accrued returns irrespective of their length of services with the Company, but the
benefits are required by law to be preserved until the retirement age of 65.

Certain full-time employees in Hong Kong who
joined the Company before December 2000 are eligible to participate in the ORSO scheme immediately following the date on which they have completed their probationary period. Under the ORSO scheme, both the Company and each of the eligible employee
contribute 5% of the employees basic salary.

The costs of these schemes recognized during the fiscal years ended
March 31, 2011, 2010 and 2009 were US$72,878, US$76,321 and US$78,745, respectively.

According to the relevant laws and
regulations in the PRC, the Company is required to contribute 16.8% of the stipulated salary set by the local government of Dongguan, the PRC to certain retirement benefit schemes to fund the benefits for certain of its employees. No forfeited
contributions may be used by the employer to reduce the existing level of contributions. The Company also provides housing, medical care and subsidized meals to all existing factory employees. The aggregate amounts incurred by the Company for all
such benefits were US$2,547,639, US$986,738 and US$814,728 during the fiscal years ended March 31, 2011, 2010 and 2009, respectively.



|24. | SEGMENT INFORMATION
|--- | -------------------

The Company
operates in four segments: Home Appliances, Electronic Components, Electronic Manufacturing Services (EMS) and Others. These segments are operated and managed as separate strategic business units that offer different products/services.
The Companys Home Appliances segment historically has been the core business of the Company and primarily involves the manufacturing of electrical household appliances for branded marketers in North America and Europe. The
Companys Electronic Components segment produces complementary metal oxide semiconductor (CMOS) camera modules (CCMs) for sale to cellular phone manufacturers in Mainland China. The Companys
Electronic Manufacturing Services consists of surface mount technology (SMT) processing of printed circuit boards and assembly services for cellular phone marketers in Mainland China. The Companys Others
segment comprises a number of immaterial product lines and development programs that have not materialized to date into full product businesses. None of these units has ever individually met the quantitative thresholds for determining reportable
segments. The chief operating decision maker evaluates the results of each segment in assessing performance and allocating resources among the segments.

There were no material intersegment sales or transfers during the fiscal years ended March 31, 2011, 2010 and 2009.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|24. | SEGMENT INFORMATION (continued)
|--- | -------------------------------



| | (a) | The following table provides operating financial information for the four reportable segments:
| | --- | ----------------------------------------------------------------------------------------------



|                                                                                                                          |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |              |  |            |    |  |  |             |  
|------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | -------------------- |  | ---------- | --- |  |  | ---------- | - |  | --------- | ---------- | - | ------------ |  | ---------- | -- |  |  | ----------- | -
|                                                                                                                          |  | HomeAppliances |            |   | ElectronicComponents |  |            | EMS |  |  | Others     |   |  | Corporate |            |   | Consolidated | 
|                                                                                                                          |  | US$            |            |   | US$                  |  |            | US$ |  |  | US$        |   |  | US$       |            |   | US$          | 
|As of or for the fiscal year ended March 31, 2011                                                                         |  |                |            |   |                      |  |            |     |  |  |            |   | 
|                                                                                                                          |  |                |            |   |                      | 
|Revenues from external customers                                                                                          |  |                | 43,485,638 |   |                      |  | 42,621,597 |     |  |  | 14,742,075 |   |  |           | 105,194    |   |              |  |           |    |  |  | 100,954,504 |  
|                                                                                                                          |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |              |  |            |    |  |  |             |  
|Capital expenditure                                                                                                       |  |                | 217,028    |   |                      |  | 807,077    |     |  |  | 3,598,918  |   |  |           | 40,345     |   |              |  |           |    |  |  | 4,663,368   |  
|Interest income                                                                                                           |  |                |           |   |                      |  |           |     |  |  |           |   |  |           |           |   |              |  | 498,837    |    |  |  | 498,837     |  
|Interest expense                                                                                                          |  |                |           |   |                      |  | (268,219   | )   |  |  | (2,604     | ) |  |           |           |   |              |  | 308,173    |    |  |  | 37,350      |  
|Depreciation and amortization                                                                                             |  |                | 1,599,996  |   |                      |  | 557,353    |     |  |  | 971,836    |   |  |           | 62,690     |   |              |  | 140,261    |    |  |  | 3,332,136   |  
|Segment profit (loss)                                                                                                     |  |                | (1,775,879 | ) |                      |  | 1,400,572  |     |  |  | (695,296   | ) |  |           | (960,777   | ) |              |  | (1,981,591 | )  |  |  | (4,012,971  | )
|Total assets                                                                                                              |  |                | 22,234,345 |   |                      |  | 23,809,159 |     |  |  | 15,066,413 |   |  |           | 703,412    |   |              |  | 58,122,805 |    |  |  | 119,936,134 |  
|                                                                                                                          |  |                |            |  
|As of or for the fiscal year ended March 31, 2010                                                                         |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |             
|Revenues from external customers                                                                                          |  |                | 53,889,863 |   |                      |  | 38,886,903 |     |  |  | 8,990,369  |   |  |           | 162,354    |   |              |  |           |    |  |  | 101,929,489 |  
|                                                                                                                          |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |              |  |            |    |  |  |             |  
|Capital expenditure                                                                                                       |  |                | 778,952    |   |                      |  | 29,461     |     |  |  | 1,144,038  |   |  |           | 166,369    |   |              |  |           |    |  |  | 2,118,820   |  
|Interest income                                                                                                           |  |                |           |   |                      |  |           |     |  |  |           |   |  |           |           |   |              |  | 282,746    |    |  |  | 282,746     |  
|Interest expense                                                                                                          |  |                | (4         | ) |                      |  | (65,356    | )   |  |  | (4,305     | ) |  |           |           |   |              |  | 63,697     |    |  |  | (5,968      | )
|Depreciation and amortization                                                                                             |  |                | 2,224,742  |   |                      |  | 534,343    |     |  |  | 647,932    |   |  |           | 164,697    |   |              |  | 207,188    |    |  |  | 3,778,902   |  
|Segment profit (loss)                                                                                                     |  |                | 3,124,689  |   |                      |  | 2,857,538  |     |  |  | 1,901,374  |   |  |           | (980,131   | ) |              |  | (3,437,139 | )  |  |  | 3,466,331   |  
|Total assets                                                                                                              |  |                | 15,140,905 |   |                      |  | 19,806,612 |     |  |  | 9,754,921  |   |  |           | 423,530    |   |              |  | 65,960,858 |    |  |  | 111,086,826 |  
|                                                                                                                          |  |                |            |  
|As of or for the fiscal year ended March 31, 2009                                                                         |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |             
|Revenues from external customers                                                                                          |  |                | 50,805,661 |   |                      |  | 34,466,153 |     |  |  | 1,802,771  |   |  |           | 312,787    |   |              |  |           |    |  |  | 87,387,372  |  
|                                                                                                                          |  |                |            |   |                      |  |            |     |  |  |            |   |  |           |            |   |              |  |            |    |  |  |             |  
|Capital expenditure                                                                                                       |  |                | 288,840    |   |                      |  | 279,433    |     |  |  | 2,164,929  |   |  |           | 68,985     |   |              |  |           |    |  |  | 2,802,187   |  
|Interest income                                                                                                           |  |                |           |   |                      |  |           |     |  |  |           |   |  |           |           |   |              |  | 705,922    |    |  |  | 705,922     |  
|Interest expense                                                                                                          |  |                | (1,511     | ) |                      |  | (52        | )   |  |  |           |   |  |           |           |   |              |  | (170,873   | )  |  |  | (172,436    | )
|Depreciation and amortization                                                                                             |  |                | (2,395,692 | ) |                      |  | (513,402   | )   |  |  | (534,527   | ) |  |           | (292,641   | ) |              |  | (170,572   | )  |  |  | (3,906,834  | )
|Segment profit (loss)                                                                                                     |  |                | (121,515   | ) |                      |  | (546,720   | )   |  |  | (1,441,697 | ) |  |           | (1,274,127 | ) |              |  | (2,456,363 | )# |  |  | (5,840,422  | )
|Total assets                                                                                                              |  |                | 17,710,936 |   |                      |  | 15,522,132 |     |  |  | 5,907,050  |   |  |           | 696,548    |   |              |  | 64,077,239 |    |  |  | 103,913,905 |  
|#   Including a gain on disposal of a subsidiary of US$157,597 and a loss on dissolution of a subsidiary of US$1,028,875. | 



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|24. | SEGMENT INFORMATION (continued)
|--- | -------------------------------



| | (b) | Net sales by geographic area based on the location of customers are as follows:
| | --- | -------------------------------------------------------------------------------



|              |  |      |             |  |      |  |             |      |  |  |            | 
|------------- |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ---------- | 
|              |  | 2011 |             |  | 2010 |  |             | 2009 | 
|              |  | US$  |             |  | US$  |  |             | US$  | 
|Australia     |  |      | 562,066     |  |      |  | 555,138     |      |  |  | 572,326    | 
|Europe        |  |      | 3,213,506   |  |      |  | 3,326,495   |      |  |  | 5,616,397  | 
|North America |  |      | 38,808,728  |  |      |  | 49,212,523  |      |  |  | 39,333,008 | 
|Asia          |  |      | 58,360,791  |  |      |  | 48,422,656  |      |  |  | 41,216,419 | 
|Other regions |  |      | 9,413       |  |      |  | 412,677     |      |  |  | 649,222    | 
|              |  |      |             |  |      |  |             |      |  |  |            | 
|              |  |      | 100,954,504 |  |      |  | 101,929,489 |      |  |  | 87,387,372 | 
|              |  |      |             |  |      |  |             |      |  |  |            | 



| | (c) | Net sales by product/service type
| | --- | ---------------------------------



|                                 |  |      |             |  |      |  |             |      |  |  |            | 
|-------------------------------- |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ---------- | 
|                                 |  | 2011 |             |  | 2010 |  |             | 2009 | 
|                                 |  | US$  |             |  | US$  |  |             | US$  | 
|Floor care products              |  |      | 40,013,087  |  |      |  | 51,922,848  |      |  |  | 46,603,666 | 
|Kitchen appliances               |  |      | 1,081,498   |  |      |  | 558,674     |      |  |  | 1,176,585  | 
|CCMs                            |  |      | 41,592,838  |  |      |  | 38,910,047  |      |  |  | 33,340,887 | 
|Cellular phone assembly services |  |      | 14,648,779  |  |      |  | 8,990,369   |      |  |  | 1,802,771  | 
|Others                           |  |      | 3,618,302   |  |      |  | 1,547,551   |      |  |  | 4,463,463  | 
|                                 |  |      |             |  |      |  |             |      |  |  |            | 
|                                 |  |      | 100,954,504 |  |      |  | 101,929,489 |      |  |  | 87,387,372 | 
|                                 |  |      |             |  |      |  |             |      |  |  |            | 



| | (d) | Long-lived assets*
| | --- | ------------------



|               |  |               |            |  |               |  |            | 
|-------------- |  | ------------- | ---------- |  | ------------- |  | ---------- | 
|               |  | March 31,2011 |            |  | March 31,2010 | 
|               |  | US$           |            |  | US$           | 
|Hong Kong      |  |               | 308,736    |  |               |  | 482,563    | 
|Mainland China |  |               | 27,765,159 |  |               |  | 25,258,961 | 
|               |  |               |            |  |               |  |            | 
|               |  |               | 28,073,895 |  |               |  | 25,741,524 | 
|               |  |               |            |  |               |  |            | 



| | * | Long-lived assets represent land use rights and property, plant and equipment.
| | - | ------------------------------------------------------------------------------



| | (e) | Impairment of property, plant and equipment
| | --- | -------------------------------------------

The impairment losses of property, plant and equipment for the fiscal years ended March 31, 2011, 2010 and 2009, amounting to nil, US$4,786 and US$200,407, respectively.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|24. | SEGMENT INFORMATION (continued)
|--- | -------------------------------



| | (f) | Major customers
| | --- | ---------------

Customers
accounting for 10% or more of the Companys net sales are as follows:



|                                                                                                         |  |      |            |  |      |  |            |      |  |  |            | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                                                                         |  | 2011 |            |  | 2010 |  |            | 2009 | 
|                                                                                                         |  | US$  |            |  | US$  |  |            | US$  | 
|Electrolux S.A. and subsidiaries (Electrolux)                                                          |  |      | 42,006,085 |  |      |  | 52,870,164 |      |  |  | 41,760,515 | 
|Shenzhen Tinno Mobile Technology Co. Ltd. (Tinno)                                                      |  |      | 13,677,827 |  |      |  | 7,455,144  |      |  |  | 139,980    | 
|Techtronic Industries Company Limited, including Royal Appliance Manufacturing Company Limited
(Royal) |  |      |           |  |      |  | 429,782    |      |  |  | 7,423,103  | 
|Lenovo Mobile Communication Technology Ltd. (Lenovo)                                                   |  |      | 12,712,077 |  |      |  | 10,595,989 |      |  |  | 1,941,647  | 
|                                                                                                         |  |      |            |  |      |  |            |      |  |  |            | 

During the fiscal years ended March 31, 2011, 2010 and 2009, 41.6%, 51.9% and 47.8%, respectively, of
the Companys total net sales were made to Electrolux, which is an unrelated customer. As of March 31, 2011, 2010 and 2009, 35.7%, 22.8% and 36.7%, respectively, of the Companys total accounts and bills receivable were from
Electrolux. Electrolux is the customer of the Companys home appliances segment.

During the fiscal years ended
March 31, 2011, 2010 and 2009, 0.3%, 0.4% and 8.5%, respectively, of the Companys total net sales were made to Royal, which is an unrelated customer. As of March 31, 2011, 2010 and 2009, 0.5%, 0.2% and 9.8%, respectively, of the
Companys total accounts and bills receivable were from Royal. Royal was the customer of the Companys home appliances segment.

The Company is a contract manufacturer of floor care products that are marketed by Electrolux and Royal under their respective brand names.

During the fiscal years ended March 31, 2011, 2010 and 2009, 12.6%, 10.4% and 2.2%, respectively of the Companys total net
sales were made to Lenovo, which is an unrelated customer. As of March 31, 2011, 2010 and 2009, 19.2%, 26.4% and 9.4%, respectively if the Companys total accounts and bills receivable were from Lenovo. Lenovo is a customer of the
Companys electronic components segment.

During the fiscal years ended March 31, 2011, 2010 and 2009, 13.6%, 7.3%
and 0.2%, respectively of the Companys total net sales were made to Tinno, which is an unrelated customer. As of March 31, 2011, 2010 and 2009, 9.6%, 10.0% and 0.5%, respectively if the Companys total accounts and bills receivable
were from Tinno. Tinno is a customer of the Companys electronic components and EMS segment.



|25. | CONCENTRATION OF RISKS
|--- | ----------------------

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, time deposits, restricted cash, available-for-sale
investments, financial assets included in deposits and other assets and accounts and bills receivable.

Substantially all of
the Companys cash and cash equivalents, time deposits, restricted cash, interest receivable, and available-for-sale investments were financial assets that management believes are of high credit quality.

The Companys concentration on a limited number of customers will continue to represent a substantial portion of our sales for the
foreseeable future. The loss of any major customers or a decrease or delay in order or anticipated spending by such customers could materially reduce our revenues and profitability. Our largest customers could also engage in business combinations,
which could increase their size, reduce their demand for our products as they recognize synergies or rationalize assets and increase or decrease the portion of our total sales concentration to any single customer.

The Company conducts credit evaluations of its customers but does not require collateral or other security from its customers. The Company
makes allowance for doubtful accounts primarily based on the age of receivables and factors surrounding the customers credit risk.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|25. | CONCENTRATION OF RISKS (continued)
|--- | ----------------------------------



Current vulnerability due to certain concentrations

The Companys operations are mainly conducted in Hong Kong and Mainland China with a majority of its sales to the U.S. and Asia. As a
result, the Companys businesses, financial condition, results of operations and cash flows may be influenced by the political, economic and legal environments in the U.S., Hong Kong and Mainland China, and by the general state of the U.S.,
Hong Kong and Mainland China economies.

The Companys operations may be adversely affected by significant political,
economic and social uncertainties in Mainland China. Although the PRC government has been pursuing economic reform policies for more than 20 years, no assurance can be given that the PRC government will continue to pursue such policies or that such
policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting its political, economic and social conditions. There is also no guarantee that the PRC
governments pursuit of economic reforms will be consistent or effective.

A significant portion of the Companys
businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the Peoples Bank
of China. However, the unification of the exchange rates does not imply the convertibility of RMB into United States dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the Peoples Bank
of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the Peoples Bank of China. Approval of foreign currency payments by the Peoples Bank of China or other institutions generally requires
submitting a payment application form together with suppliers invoices, shipping documents signed contracts and/or other documents, as appropriate.

A significant portion of the Companys sales are made to the U.S. and the Company is responsible for ensuring that its products are safe and satisfy all of the requirements of the consumer products
safety commission (CPSC) in the U.S. This may also apply to OEM products manufactured by the Group to customer specifications. In the event of a recall required by the CPSC, the customers may require the Group to provide replacement
conforming units at our cost, which could have a material adverse effect on its business, quality reputation and results of operations.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|26. | FINANCIAL INSTRUMENTS
|--- | ---------------------



The Companys financial instruments that are subject to credit risks are limited to its cash and cash equivalents, time deposits,
restricted cash, available-for-sale investments, accounts and bills receivable, financial assets included in deposits and other assets, amounts due from a jointly-controlled entity and a related party.

The Companys financial assets and liabilities are recognized initially at cost which is the fair value of the consideration given
(in the case of assets) or received (in the case of liabilities). Transaction costs are included in the initial measurement of all financial assets and liabilities. Subsequent to initial recognition, assets and liabilities are either valued at cost,
amortized cost using the effective interest rate method or fair value, depending on classification.

The following table sets
forth the carrying values and estimated fair values of the Companys financial assets and liabilities recognized as of March 31, 2011 and 2010. There were no material unrecognized financial assets and liabilities as of March 31, 2011
and 2010.



|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|------------------------------------------------------- |  | -------------- | ---------- |  | ---------- |  | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                                                        |  | Carrying value |            |  | Fair value | 
|                                                        |  | 2011           |            |  | 2010       |  |            | 2011 |  |  | 2010       | 
|                                                        |  | US$            |            |  | US$        |  |            | US$  |  |  | US$        | 
|Current financial assets:                               |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|Cash and cash equivalents                               |  |                | 19,205,184 |  |            |  | 24,808,596 |      |  |  | 19,205,184 |  |  |  | 24,808,596 | 
|Time deposits                                           |  |                | 1,534,204  |  |            |  |           |      |  |  | 1,534,204  |  |  |  |           | 
|Restricted cash                                         |  |                | 19,460,845 |  |            |  | 4,397,602  |      |  |  | 19,460,845 |  |  |  | 4,397,602  | 
|Available-for-sale investments                          |  |                | 6,692      |  |            |  | 15,989,430 |      |  |  | 6,692      |  |  |  | 15,989,430 | 
|Accounts and bills receivable, net                      |  |                | 35,632,294 |  |            |  | 23,244,365 |      |  |  | 35,632,294 |  |  |  | 23,244,365 | 
|Financial assets included in deposits and other assets  |  |                | 749,639    |  |            |  | 780,568    |      |  |  | 749,639    |  |  |  | 780,568    | 
|Amount due from a related party                         |  |                | 28,737     |  |            |  | 28,818     |      |  |  | 28,737     |  |  |  | 28,818     | 
|Amount due from a jointly-controlled entity             |  |                | 13,694     |  |            |  | 21,631     |      |  |  | 13,694     |  |  |  | 21,631     | 
|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|                                                        |  |                | 76,631,289 |  |            |  | 69,271,010 |      |  |  | 76,631,289 |  |  |  | 69,271,010 | 
|                                                        |  |                |            | 
|Non-current financial assets:                           |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|Available-for-sale investments                          |  |                | 3,009,200  |  |            |  |           |      |  |  | 3,009,200  |  |  |  |           | 
|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|Total financial assets                                  |  |                | 79,640,489 |  |            |  | 69,271,010 |      |  |  | 79,640,489 |  |  |  | 69,271,010 | 
|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|                                                        |  |               
|                                                        |  | Carrying value |            |  | Fair value | 
|                                                        |  | 2011           |            |  | 2010       |  |            | 2011 |  |  | 2010       | 
|                                                        |  | US$            |            |  | US$        |  |            | US$  |  |  | US$        | 
|Current financial liabilities:                          |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|Short term loans                                        |  |                | 12,585,054 |  |            |  |           |      |  |  | 12,585,054 |  |  |  |           | 
|Accounts payable and bills payable                      |  |                | 11,631,692 |  |            |  | 6,634,746  |      |  |  | 11,631,692 |  |  |  | 6,634,746  | 
|Discounted bills                                        |  |                |           |  |            |  | 3,363,543  |      |  |  |           |  |  |  | 3,363,543  | 
|Accrued salaries allowances and other employee benefits |  |                | 5,607,570  |  |            |  | 3,777,337  |      |  |  | 5,607,570  |  |  |  | 3,777,337  | 
|Other accrued liabilities                               |  |                | 7,576,062  |  |            |  | 6,896,715  |      |  |  | 7,576,062  |  |  |  | 6,896,715  | 
|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 
|Total financial liabilities                             |  |                | 37,400,378 |  |            |  | 20,672,341 |      |  |  | 37,400,378 |  |  |  | 20,672,341 | 
|                                                        |  |                |            |  |            |  |            |      |  |  |            |  |  |  |            | 



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|26. | FINANCIAL INSTRUMENTS (continued)
|--- | ---------------------------------



The carrying amounts of the Companys cash and cash equivalents, restricted cash,
time deposits, accounts and bills receivable, financial assets included in deposits and other assets, amounts due from a jointly-controlled entity and a related party, accounts payable, discounted bills, accrued salaries, allowances and other
employee benefits and other accrual liabilities approximate to their fair values because of their short maturities. The available-for-sale investments are stated at quoted market price.

The Companys cash and cash equivalents, restricted cash, and time deposits are placed primarily with banking institutions with high
credit ratings. The Company performs periodic credit standing evaluation of those banking institutions to limit the Companys exposure to any significant credit risks.

The Companys accounts and bills receivable largely represent amounts due from the Companys principal customers. Receivable balances are monitored on an ongoing basis and the Companys
exposure to bad debts is not significant. The Company does not require collateral or other credit enhancement for any of its financial assets.

If the counterparties to the above financial assets fail to perform completely under the terms of their contract/arrangement, the maximum loss, based on the gross fair value of the financial instruments,
due to this credit risk would be US$79,640,489 and US$69,271,010 as at March 31, 2011 and 2010, respectively.



|27. | FAIR VALUE MEASUREMENTS
|--- | -----------------------

FASB
ASC820 Fair Value Measurement and Disclosures, the Company adopted in fiscal 2009, clarify that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability, such as inherent risk, transfer
restrictions and risk of non-performance. As a basis for considering such assumptions, it establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1  Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2  Include other inputs that are directly or indirectly observable in the marketplace.

Level 3  Unobservable inputs which are supported by little or no market activity.

FASB ASC 820 Fair Value Measurements and Disclosures, describes three main approaches to measuring the fair value of assets
and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or
liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is
based on the amount that would currently be required to replace an asset. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Companys financial assets carried at fair value on a recurring basis are detailed in the table below. The fair values of such
financial assets are measured in accordance with FASB ASC 820 inputs, including quoted market price.

Assets measured at fair
value on a recurring basis as of March 31, 2011 and 2010 are summarized below:



|                                              |  |                                                     |           |  |               |  |            | 
|--------------------------------------------- |  | --------------------------------------------------- | --------- |  | ------------- |  | ---------- | 
|                                              |  | Fair Value Measurements                             |          
|                                              |  | March 31,2011                                       |           |  | March 31,2010 | 
|                                              |  | Quoted prices in activemarkets for identical assets |          
|                                              |  |                                                     |           |  |               |  |            | 
|                                              |  | US$                                                 |           |  | US$           | 
|Assets                                        |  |                                                     |           |  |               |  |            | 
|Level 1:                                      |  |                                                     |           |  |               |  |            | 
|Available-for-sale investments:               |  |                                                     |           |  |               |  |            | 
|U.S. dollar treasury bills                    |  |                                                     |          |  |               |  | 15,984,640 | 
|Listed equity securities                      |  |                                                     | 6,692     |  |               |  | 4,790      | 
|Level 2:                                      |  |                                                     |           |  |               |  |            | 
|Available-for-sale investments:               |  |                                                     |           |  |               |  |            | 
|Other investments                             |  |                                                     | 3,009,200 |  |               |  |           | 
|                                              |  |                                                     |           |  |               |  |            | 
|Total financial assets measured at fair value |  |                                                     | 3,015,892 |  |               |  | 15,989,430 | 
|                                              |  |                                                     |           |  |               |  |            | 



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|28. | STOCK COMPENSATION
|--- | ------------------



| | (a) | Amended and Restated 1997 Stock Option Plan of Global-Tech
| | --- | ----------------------------------------------------------

In September 1997, the Board of Directors of Global-Tech adopted Global-Techs 1997 Stock Option Plan (as amended, the 1997 Plan). The 1997 Plan provides for the grant of (i) options
that are intended to qualify as incentive stock options (Incentive Stock Options) within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the Code) to employees and (ii) options not
intended to qualify as Incentive Stock Options to employees and consultants. The total number of shares of common stock of Global-Tech for which options may be granted under the 1997 Plan is 400,000 shares. The 1997 plan expired on
September 17, 2008 and no further grants can be made from this plan after that date.

The 1997 Plan is administered by the
Board of Directors, or a committee of directors appointed by the Board, who determines the terms of options, including the exercise price, the number of stock subject to the options and the terms and conditions of exercise. No option granted under
the 1997 Plan is transferable by the optionee other than by will or the laws of descent and distribution and each vested option is exercisable within the contractual period of the option. With respect to any participant who owns (or is deemed to
own) stock possessing more than 10% of the voting rights of Global-Techs outstanding capital stock, the exercise price of any ISO must not be less than 110% of the fair market value of the stock on the date of grant. The term of each option
granted pursuant to the 1997 Plan may be established by the Board of Directors of Global-Tech, or a committee of the Board of Directors of Global-Tech, in its sole discretion; provided, however, that the maximum term of each ISO granted pursuant to
both the 1997 Plan is 10 years. With respect to any ISO granted to a participant who owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of all classes of Global-Techs outstanding capital stock, the
maximum term is five years. Shares of common stock distributed under the 1997 Plan will be from authorized, but unissued stock or common stock held in the treasury of the Company. Every option granted shall vest and become exercisable in accordance
with the terms of the applicable option agreement. Options can be exercised for a period not exceeding 10 years from the date of grant.

During fiscal 2009, an aggregate of 9,324 options with exercise prices ranging from $13.20 to $30.56 per share were forfeited upon resignation of the relevant participants, 56,930 options with an exercise
price of $25.00 per share expired.

During fiscal 2010, an aggregate of 18,830 options with exercise prices between $20.00 and
$25.00 were expired including 17,055 options granted to Directors.

No option issued pursuant to the 1997 Plan were exercised
or expired during fiscal 2011.



| | (b) | Amended and Restated 1997 Stock Option Plan of Global-Tech
| | --- | ----------------------------------------------------------

In October 2005, the Board of Directors of Global-Tech adopted Global-Techs 2005 Stock Option Plan (the 2005 Plan). The 2005 Plan provides for the grant of (i) incentive stock
options (ISOs) within the meaning of Section 422 of the Code; (ii) non-qualified stock options that do not qualify as ISOs (NQSOs); and (iii) stock appreciation rights. The total number of shares of
common stock of Global-Tech for which options may be granted under the 2005 Plan is 450,000 shares.

The 2005 Plan is
administered by the Board of Directors of Global-Tech or a committee appointed by the Board of Directors of Global-Tech, who determines the terms of options, including the exercise price, the number of stock subject to the options and the terms and
conditions of exercise. No option granted under the Plan is transferable by the optionee other than by will or the laws of descent and distribution and each vested option is exercisable within the contractual period of the option. With respect to
any participant who owns (or is deemed to own) stock possessing more than 10% of the voting rights of Global-Techs outstanding capital stock, the exercise price of any ISO must not be less than 110% of the fair market value of the stock on the
date of grant. The term of each option granted pursuant to the Plan may be established by the Board of Directors of Global-Tech, or a committee of the Board of Directors of Global-Tech, in its sole discretion; provided, however, that the maximum
term of each ISO granted pursuant to the 2005 Plan is 10 years. With respect to any ISO granted to a participant who owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of all classes of Global-Techs
outstanding capital stock, the maximum term is five years. Every option granted shall vest and become exercisable in accordance with the terms of the applicable option agreement. Options can be exercised for a period not exceeding 10 years from the
date of grant.

During fiscal 2009 and 2010, no options were granted and none were forfeited.

During fiscal 2011, 20,000 options were granted and none were forfeited.



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|28. | STOCK COMPENSATION (continued)
|--- | ------------------------------



| | (c) | Global-Tech Advanced Innovations Inc. 2011 Omnibus Equity Plan
| | --- | --------------------------------------------------------------

The Global-Tech Advanced Innovations Inc. 2011 Omnibus equity Plan (the Omnibus Plan) was adopted by our Board of Directors in November 2010 and approved by the Companys shareholders in
November 2010. The plan provides for the grant of stock options (non-statutory and incentive), stock appreciation rights, restricted stock units, performances shares and common shares.

A committee authorized by the Board of Directors (the Committee) will administer the Omnibus Plan. Unless otherwise determined
by the Board of Directors, the Compensation Committee will administer the Omnibus Plan. Subject to the terms of the Omnibus Plan, the Committee has the sole discretion to select the employees, consultants, and non-employee directors who will
received awards, determine the terms and conditions of awards, and to interpret the provisions of the Omnibus Plan and outstanding awards. The Committee may not, without the approval of the Companys shareholders, institute an exchange program
under which outstanding awards are amended to provide for a lower exercise price or cancelled in exchange for awards with a lower exercise price.

Awards granted under the Omnibus Plan are generally not transferable, and all rights with respect to an award granted to a participant generally will be available during a participants lifetime only
to the participant. If the Committee makes an award transferable, such award will contain such additional terms and conditions as the committee deems appropriate.

For the fiscal year ended March 31, 2011, no share was granted under the 2011 Omnibus Equity plan.

Under the 1997 Plan and the 2005 Plan (the Plans), which expire in 10 years, options granted generally vest 25% after the first year of service and ratably each month over a further 36-month
period.

The expected life of the options is based on the historical data and is not necessarily indicative of the exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcomes. The risk-free rate for periods within the expected life of
the options is based on the U.S. Treasury yield curve with maturity equal to the expected life of the options in effect at the time of grant.

The total compensation expense recognized in the SG&A line item in the consolidated statement of operations for the fiscal years ended March 31, 2011, 2010 and 2009 amounted to US$470,109,
US$11,706 and US$41,861, respectively.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|28. | STOCK COMPENSATION (continued)
|--- | ------------------------------



Changes in outstanding options under both the 1997 Plan and the 2005 Plan during the
fiscal years ended March 31, 2011, 2010 and 2009 are as follows:



|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|-------------------------------------------------- |  | ---------------- | ------- | - | --------------------- |  | ----------- | ---------------------------- |  |  | --------------------------------------- |  |  | ----------------------- | ---- |  |  |  | - | 
|                                                   |  | 2011             |        
|                                                   |  | Number ofoptions |         |   | Range ofexerciseprice |  |             | Weightedaverageexerciseprice |  |  | Weightedaverageremainingcontractualterm |  |  | Aggregateintrinsicvalue |     
|                                                   |  |                  |         |   | US$ (per share)       |  |             | US$ (per share)              |  |  | (years)                                 |  |  | US$                     |     
|Outstanding, at beginning of fiscal year           |  |                  | 403,118 |   |                       |  | 13.20-30.56 |                              |  |  | 18.44                                   |  |  |                         | 4.78 |  |  |  |  | 
|Granted                                            |  |                  | 20,000  |   |                       |  | 8.99        |                              |  |  | 8.99                                    |  |  |                         |      |  |  |  |   | 
|Expired                                            |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Exercised                                          |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Forfeited                                          |  |                  |        |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Outstanding, at end of fiscal year                 |  |                  | 423,118 |   |                       |  | 8.99-30.56  |                              |  |  | 18.00                                   |  |  |                         | 4.01 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Vested and expected to be vested at March 31, 2011 |  |                  | 423,118 |   |                       |  | 8.99-30.56  |                              |  |  | 18.00                                   |  |  |                         | 4.01 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Exercisable, at end of fiscal year                 |  |                  | 365,369 |   |                       |  | 8.99-30.56  |                              |  |  | 16.90                                   |  |  |                         | 3.94 |  |  |  |   | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|                                                   | 
|                                                   |  | 2010             |        
|                                                   |  | Number ofoptions |         |   | Range ofexerciseprice |  |             | Weightedaverageexerciseprice |  |  | Weightedaverageremainingcontractualterm |  |  | Aggregateintrinsicvalue |     
|                                                   |  |                  |         |   | US$ (per share)       |  |             | US$ (per share)              |  |  | (years)                                 |  |  | US$                     |     
|Outstanding, at beginning of fiscal year           |  |                  | 421,948 |   |                       |  | 13.20-30.56 |                              |  |  | 18.59                                   |  |  |                         | 5.55 |  |  |  |  | 
|Granted                                            |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Expired                                            |  |                  | (18,830 | ) |                       |  | 20.00-25.00 |                              |  |  | 21.68                                   |  |  |                         |      |  |  |  |   | 
|Exercised                                          |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Forfeited                                          |  |                  |        |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Outstanding, at end of fiscal year                 |  |                  | 403,118 |   |                       |  | 13.20-30.56 |                              |  |  | 18.44                                   |  |  |                         | 4.78 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Vested and expected to be vested at March 31, 2010 |  |                  | 403,118 |   |                       |  | 13.20-30.56 |                              |  |  | 18.44                                   |  |  |                         | 4.78 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Exercisable, at end of fiscal year                 |  |                  | 337,618 |   |                       |  | 13.20-30.40 |                              |  |  | 16.09                                   |  |  |                         | 4.99 |  |  |  |   | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 



F - 45



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|28. | STOCK COMPENSATION (continued)
|--- | ------------------------------



|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|-------------------------------------------------- |  | ---------------- | ------- | - | --------------------- |  | ----------- | ---------------------------- |  |  | --------------------------------------- |  |  | ----------------------- | ---- |  |  |  | - | 
|                                                   |  | 2009             |        
|                                                   |  | Number ofoptions |         |   | Range ofexerciseprice |  |             | Weightedaverageexerciseprice |  |  | Weightedaverageremainingcontractualterm |  |  | Aggregateintrinsicvalue |     
|                                                   |  |                  |         |   | US$ (per share)       |  |             | US$ (per share)              |  |  | (years)                                 |  |  | US$                     |     
|Outstanding, at beginning of fiscal year           |  |                  | 488,202 |   |                       |  | 13.20-30.56 |                              |  |  | 19.40                                   |  |  |                         | 5.82 |  |  |  |  | 
|Granted                                            |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Cancelled                                          |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Expired                                            |  |                  | (56,930 | ) |                       |  | 25.00       |                              |  |  | 25.00                                   |  |  |                         |      |  |  |  |   | 
|Exercised                                          |  |                  |        |   |                       |  |            |                              |  |  |                                        |  |  |                         |      |  |  |  |   | 
|Forfeited                                          |  |                  | (9,324  | ) |                       |  | 13.20-30.56 |                              |  |  | 22.42                                   |  |  |                         |      |  |  |  |   | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Outstanding, at end of fiscal year                 |  |                  | 421,948 |   |                       |  | 13.20-30.56 |                              |  |  | 18.59                                   |  |  |                         | 5.55 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Vested and expected to be vested at March 31, 2009 |  |                  | 421,948 |   |                       |  | 13.20-30.56 |                              |  |  | 18.59                                   |  |  |                         | 5.55 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 
|Exercisable, at end of fiscal year                 |  |                  | 356,448 |   |                       |  | 13.20-30.40 |                              |  |  | 16.39                                   |  |  |                         | 5.70 |  |  |  |  | 
|                                                   |  |                  |         |   |                       |  |             |                              |  |  |                                         |  |  |                         |      |  |  |  |   | 

In January 1999, the Board of Directors of Global-Tech adopted an employee stock purchase plan. The plan
was approved by the stockholders at the annual meeting of stockholders in March 1999. The total number of common stock which may be granted under the plan is 450,000 shares. Stock grants may be awarded under the plan to the employees, including
officers and directors, and non-employee directors and consultants in consideration for their services to the Group.

During
the fiscal year ended March 31, 2007, Global-Tech granted an aggregate of 3,750 shares of common stock of Global-Tech to an employee with an effective grant date of November 6, 2006. 750 shares of such common stock will vest and be issued
on the first anniversary of the date of the stock grant and 750 shares of such common stock will vest and be issued on the second, third, fourth, and fifth anniversaries of the date of the stock grant, respectively.

Changes in stock grants during the fiscal years ended March 31, 2011, 2010 and 2009 are as follows:



|                                        |  |       |       |   |                                     |  |        |       |  |  |                                     |   |  |       |        |  |                                     |  |       |   |  |  |        | 
|--------------------------------------- |  | ----- | ----- | - | ----------------------------------- |  | ------ | ----- |  |  | ----------------------------------- | - |  | ----- | ------ |  | ----------------------------------- |  | ----- | - |  |  | ------ | 
|                                        |  | 2011  |       |   | 2010                                |  |        | 2009  | 
|                                        |  | Stock |       |   | Weightedaveragegrant-datefair value |  |        | Stock |  |  | Weightedaveragegrant-datefair value |   |  | Stock |        |  | Weightedaveragegrant-datefair value | 
|                                        |  |       |       |   | US$                                 |  |        |       |  |  | US$                                 |   |  |       |        |  | US$                                 | 
|Non-vested, at beginning of fiscal year |  |       | 1,500 |   |                                     |  | 20,760 |       |  |  | 2,250                               |   |  |       | 31,140 |  |                                     |  | 3,000 |   |  |  | 41,520 | 
|Granted                                 |  |       |      |   |                                     |  |       |       |  |  |                                    |   |  |       |       |  |                                     |  |      |   |  |  |       | 
|Vested                                  |  |       | (750  | ) |                                     |  | 10,380 |       |  |  | (750                                | ) |  |       | 10,380 |  |                                     |  | (750  | ) |  |  | 10,380 | 
|                                        |  |       |       |   |                                     |  |        |       |  |  |                                     |   |  |       |        |  |                                     |  |       |   |  |  |        | 
|Non-vested, at end of fiscal year       |  |       | 750   |   |                                     |  | 10,380 |       |  |  | 1,500                               |   |  |       | 20,760 |  |                                     |  | 2,250 |   |  |  | 31,140 | 
|                                        |  |       |       |   |                                     |  |        |       |  |  |                                     |   |  |       |        |  |                                     |  |       |   |  |  |        | 

The total fair value of the 750 shares of common stock vested during the fiscal years ended March 31,
2011, 2010 and 2009 is US$5,085, US$8,925 and US$5,528, respectively.

The expense for employee stock purchase plan recognized
in the SG&A line item in the consolidated statement of operations for the fiscal years ended March 31, 2011, 2010 and 2009 amounted to US$1,969, US$1,969 and US$1,969 respectively.



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|28. | STOCK COMPENSATION (continued)
|--- | ------------------------------



Further details relating to the options granted under the 1997 Plan and the 2005 Plan that are
outstanding as of March 31, 2011 are as follows:



|                  |  |                                          |              |  |                                         |  |      |                                         |  |  |                  |  |  |                                         |         |  |  |  |       | 
|----------------- |  | ---------------------------------------- | ------------ |  | --------------------------------------- |  | ---- | --------------------------------------- |  |  | ---------------- |  |  | --------------------------------------- | ------- |  |  |  | ----- | 
|                  |  | Options outstanding as of March 31, 2011 |              |  | Options exercisableas of March 31, 2011 | 
|Number
of options |  | Range ofexercise 
priceperoption         |              |  | Weightedaverageremainingcontractuallife |  |      | Weightedaverageexercise 
priceperoption |  |  | Numberof options |  |  | Weightedaverageexercise 
priceperoption |        
|                  |  | US$ (per share)                          |              |  | (years)                                 |  |      | US$ (per share)                         |  |  |                  |  |  | US$ (per share)                         |        
|20,000            |  |                                          | 8.99         |  |                                         |  | 8.71 |                                         |  |  | 8.99             |  |  |                                         | 5,000   |  |  |  | 8.99  | 
|250,751           |  |                                          | 13.20 -15.60 |  |                                         |  | 5.29 |                                         |  |  | 14.87            |  |  |                                         | 250,751 |  |  |  | 14.87 | 
|83,867            |  |                                          | 19.00 -25.00 |  |                                         |  | 0.15 |                                         |  |  | 19.22            |  |  |                                         | 83,867  |  |  |  | 19.22 | 
|68,500            |  |                                          | 30.00 -30.56 |  |                                         |  | 2.71 |                                         |  |  | 30.55            |  |  |                                         | 25,751  |  |  |  | 30.54 | 
|                  |  |                                          |              |  |                                         |  |      |                                         |  |  |                  |  |  |                                         |         |  |  |  |       | 
|423,118           |  |                                          |              |  |                                         |  |      |                                         |  |  |                  |  |  |                                         | 365,369 |  |  |  |       | 
|                  |  |                                          |              |  |                                         |  |      |                                         |  |  |                  |  |  |                                         |         |  |  |  |       | 

As of March 31, 2011 and 2010, there was an unrecognized share-based compensation cost of US$1,969
and US$3,938, respectively, relating to options granted under the 1997 Plan and the 2005 Plan and stock granted to an employee under the 1999 Employee Stock Purchase Plan. The unrecognized compensation cost for options granted and stocks granted are
expected to be recognized over a weighted-average vesting period of two years and five years, respectively. To the extent that the actual forfeiture rate is different from the original estimate, actual share-based compensation relating to these
awards may be different from the expectations.

The fair value per option granted during the fiscal year ended March 31,
2011 was estimated on the date of grant using the Black-Scholes option pricing model and which amounted to US$6.82.

The fair
value of the options granted were estimated on the date of grant using the following assumptions:



|                                |  |      |         |   |      |  |   |      |  |  |   | 
|------------------------------- |  | ---- | ------- | - | ---- |  | - | ---- |  |  | - | 
|                                |  | 2011 |         |   | 2010 |  |   | 2009 | 
|Risk-free Interest Rate         |  |      | 3.45    | % |      |  |  |      |  |  |  | 
|Expected Dividend Yield         |  |      | 0       | % |      |  |  |      |  |  |  | 
|Expected Option Life            |  |      | 7 years |   |      |  |  |      |  |  |  | 
|Expected Stock Price Volatility |  |      | 59.00   | % |      |  |  |      |  |  |  | 



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|29. | CONDENSED FINANCIAL INFORMATION OF GLOBAL-TECH
|--- | ----------------------------------------------



Under the relevant PRC laws and regulations, the Companys PRC subsidiaries (the
PRC Subsidiaries) are restricted in their ability to transfer certain of their net assets to Global-Tech in the form of dividend payments, loans, or advances. The amounts restricted include net assets of the PRC Subsidiaries, as
determined pursuant to PRC generally accepted accounting principles, totaling RMB319,773,361 (approximately US$48,785,354 ) as of March 31, 2011.

The following is the condensed financial information of Global-Tech on a stand-alone basis:

Balance sheets



|                                                                                                                                             |  |               |             |   |               |  |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ------------- |  | ---------- | -
|                                                                                                                                             |  | March 31,2011 |             |   | March 31,2010 | 
|                                                                                                                                             |  | US$           |             |   | US$           | 
|ASSETS                                                                                                                                       |  |               |             |   |               |  |            |  
|Current assets:                                                                                                                              |  |               |             |   |               |  |            |  
|Cash and cash equivalents                                                                                                                    |  |               | 11,127,701  |   |               |  | 2,032,788  |  
|Available-for-sale investments                                                                                                               |  |               |            |   |               |  | 15,984,640 |  
|Prepaid expenses                                                                                                                             |  |               | 40,628      |   |               |  | 44,093     |  
|Deposits and other assets                                                                                                                    |  |               | 29,692      |   |               |  | 25,923     |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total current assets                                                                                                                         |  |               | 11,198,021  |   |               |  | 18,087,444 |  
|                                                                                                                                             |  |              
|Interests in subsidiaries                                                                                                                    |  |               | 62,358,045  |   |               |  | 59,883,699 |  
|Other investments                                                                                                                            |  |               | 3,009,200   |   |               |  |           |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total assets                                                                                                                                 |  |               | 76,565,266  |   |               |  | 77,971,143 |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                         |  |               |             |   |               |  |            |  
|Current liabilities:                                                                                                                         |  |               |             |   |               |  |            |  
|Other accrued liabilities                                                                                                                    |  |               | 227,807     |   |               |  | 235,398    |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total liabilities                                                                                                                            |  |               | 227,807     |   |               |  | 235,398    |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Shareholders equity:                                                                                                                        |  |               |             |   |               |  |            |  
|Common stock, par value US$0.04 per share; 12,500,000 shares authorized; 3,229,314 and 3,228,564 shares issued as of
March 31, 2011 and 2010 |  |               | 129,173     |   |               |  | 129,143    |  
|Preferred stock, par value US$0.04 per share; 250,000 shares authorized; no shares issued                                                    |  |               |            |   |               |  |           |  
|Additional paid-in capital                                                                                                                   |  |               | 84,752,105  |   |               |  | 84,280,027 |  
|Accumulated deficit                                                                                                                          |  |               | (11,101,203 | ) |               |  | (7,088,232 | )
|Accumulated other comprehensive income                                                                                                       |  |               | 7,395,275   |   |               |  | 5,078,128  |  
|Less: Treasury stock, at cost, 189,587 shares as of March 31, 2011 and 2010                                                                  |  |               | (4,663,321  | ) |               |  | (4,663,321 | )
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total Global-Tech Advanced Innovations Inc. shareholders equity                                                                             |  |               | 76,512,029  |   |               |  | 77,735,745 |  
|Non-controlling interests                                                                                                                    |  |               | (174,570    | ) |               |  |           |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total equity                                                                                                                                 |  |               | 76,337,459  |   |               |  | 77,735,745 |  
|                                                                                                                                             |  |               |             |   |               |  |            |  
|Total liabilities and shareholders equity                                                                                                   |  |               | 76,565,266  |   |               |  | 77,971,143 |  
|                                                                                                                                             |  |               |             |   |               |  |            |  



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GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|29. | CONDENSED FINANCIAL INFORMATION OF GLOBAL-TECH (continued)
|--- | ----------------------------------------------------------



Statements of operations



|                                             |  |                              |            |   |      |  |            |      |  |  |            |  
|-------------------------------------------- |  | ---------------------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                                             |  | Fiscal years ended March 31, |           
|                                             |  | 2011                         |            |   | 2010 |  |            | 2009 | 
|                                             |  | US$                          |            |   | US$  |  |            | US$  | 
|Net sales                                    |  |                              |           |   |      |  |           |      |  |  |           |  
|Cost of goods sold                           |  |                              |           |   |      |  |           |      |  |  |           |  
|                                             |  |                              |            |   |      |  |            |      |  |  |            |  
|Gross profit                                 |  |                              |           |   |      |  |           |      |  |  |           |  
|Selling, general and administrative expenses |  |                              | (1,252,554 | ) |      |  | (907,147   | )    |  |  | (919,168   | )
|                                             |  |                              |            |   |      |  |            |      |  |  |            |  
|Operating loss                               |  |                              | (1,252,554 | ) |      |  | (907,147   | )    |  |  | (919,168   | )
|Interest income, net                         |  |                              | 29,831     |   |      |  | 36,768     |      |  |  | 194,161    |  
|Equity in profits (losses) of subsidiaries   |  |                              | (2,155,198 | ) |      |  | 5,842,060  |      |  |  | (6,021,844 | )
|Other income (expenses), net                 |  |                              | (635,050   | ) |      |  | (1,505,350 | )    |  |  | 906,429    |  
|                                             |  |                              |            |   |      |  |            |      |  |  |            |  
|Net income (loss)                            |  |                              | (4,012,971 | ) |      |  | 3,466,331  |      |  |  | (5,840,422 | )
|                                             |  |                              |            |   |      |  |            |      |  |  |            |  



F - 49



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##### Table of Contents

GLOBAL-TECH ADVANCED INNOVATIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



|29. | CONDENSED FINANCIAL INFORMATION OF GLOBAL-TECH (continued)
|--- | ----------------------------------------------------------



Statements of cash flows



|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|---------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                                                         |  | Fiscal years ended March 31, |           
|                                                                                         |  | 2011                         |            |   | 2010 |  |             | 2009 | 
|                                                                                         |  | US$                          |            |   | US$  |  |             | US$  | 
|Cash flows from operating activities:                                                    |  |                              |            |   |      |  |             |      |  |  |             |  
|Net income (loss)                                                                        |  |                              | (4,012,971 | ) |      |  | 3,466,331   |      |  |  | (5,840,422  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                              |            |   |      |  |             |      |  |  |             |  
|Stock compensation expense                                                               |  |                              | 470,139    |   |      |  |            |      |  |  | 41,861      |  
|Shares issued to an employee                                                             |  |                              | 1,969      |   |      |  | 13,675      |      |  |  | 1,969       |  
|Equity in losses (profits) of subsidiaries                                               |  |                              | 2,155,198  |   |      |  | (5,842,059  | )    |  |  | 6,021,844   |  
|Changes in operating assets and liabilities:                                             |  |                              |            |   |      |  |             |      |  |  |             |  
|Prepaid expenses                                                                         |  |                              | 3,465      |   |      |  | (6,475      | )    |  |  | (1,344      | )
|Deposits and other assets                                                                |  |                              | (3,769     | ) |      |  | 5,127       |      |  |  | 2,148       |  
|Other accrued liabilities                                                                |  |                              | (7,591     | ) |      |  | (9,065      | )    |  |  | 14,013      |  
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Net cash provided by (used in) operating activities                                      |  |                              | (1,393,560 | ) |      |  | (2,372,466  | )    |  |  | 240,069     |  
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Cash flows from investing activities:                                                    |  |                              |            |   |      |  |             |      |  |  |             |  
|Purchases of available-for-sale investments                                              |  |                              | (3,000,000 | ) |      |  | (31,977,976 | )    |  |  | (25,949,992 | )
|Proceeds from disposal of available-for-sale investments                                 |  |                              | 15,986,532 |   |      |  | 31,926,236  |      |  |  | 9,979,200   |  
|Repayment of amounts due from (advances to) subsidiaries, net                            |  |                              | (639,128   | ) |      |  | (303,809    | )    |  |  | 5,877,276   |  
|Capital injection into subsidiaries                                                      |  |                              | (1,858,931 | ) |      |  | (53,440     | )    |  |  |            |  
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Net cash provided by (used in) investing activities                                      |  |                              | 10,488,473 |   |      |  | (408,989    | )    |  |  | (10,093,516 | )
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Cash flows from financing activities:                                                    |  |                              |            |   |      |  |             |      |  |  |             |  
|Purchase of treasury stock                                                               |  |                              |           |   |      |  | (2,136      | )    |  |  | (167,738    | )
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Net cash used in financing activities                                                    |  |                              |           |   |      |  | (2,136      | )    |  |  | (167,738    | )
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                              | 9,094,913  |   |      |  | (2,783,591  | )    |  |  | (10,021,185 | )
|Cash and cash equivalents at beginning of fiscal year                                    |  |                              | 2,032,788  |   |      |  | 4,816,379   |      |  |  | 14,837,564  |  
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  
|Cash and cash equivalents at end of fiscal year                                          |  |                              | 11,127,701 |   |      |  | 2,032,788   |      |  |  | 4,816,379   |  
|                                                                                         |  |                              |            |   |      |  |             |      |  |  |             |  



| | (a) | Basis of preparation
| | --- | --------------------

For the
purposes of the preparation of the parent company only condensed financial information, the Company records its interests in direct and indirect subsidiaries under the equity method of accounting as prescribed in FASB ASC 323
Investments-equity Method and Joint Ventures. Such interests, together with the advances to subsidiaries, are presented as Interests in subsidiaries on the balance sheets and share of the subsidiaries income and losses
is presented as Equity in losses of subsidiaries on the statements of operations.



| | (b) | Commitments
| | --- | -----------

Global-Tech has
provided a letter of support to certain of its subsidiaries indicating its commitment to provide continuing financial support to those subsidiaries.



|30. | SUBSEQUENT EVENT
|--- | ----------------

In June 2011,
the Companys Broad of Directors approved a plan to exit the home appliances business. The Company expects production of certain floor care products to continue until the earlier of January 20, 2012 or such time as Electrolux successfully
transitions to alternate vendors.



F - 50



---

##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                       
|1.1           |  | Memorandum of Association of Global-Tech, as amended (Incorporated herein by reference to Exhibit 1.4 to Global-Techs annual report on Form 20-F for the fiscal year ended
March 31, 2009)                                                                   
|              | 
|1.2           |  | Articles of Association of Global-Tech, as amended (Incorporated herein by reference to Exhibit 1.2 to Global-Techs annual report on Form 20-F for the fiscal year ended
March 31, 2005)                                                                     
|              | 
|1.3           |  | Resolution of the Board of Directors authorizing an amendment to the Articles of Association of Global-Tech, as amended (Incorporated herein by reference to Exhibit 1.3 to
Global-Techs annual report on Form 20-F for the fiscal year ended March 31, 2005)
|              | 
|4.1           |  | Commission Agreement between Global-Tech and Eyal Lior (Incorporated herein by reference to Exhibit 10.1 to the Registration Statement.)                                                                                                                      
|              | 
|4.2           |  | Employment Agreement between Global-Tech and Kwong Ho Sham (Incorporated herein by reference to Exhibit 10.2 to the Registration Statement.)                                                                                                                  
|              | 
|4.3           |  | Employment Agreement between Global-Tech and John C.K. Sham (Incorporated herein by reference to Exhibit 10.3 to the Registration Statement.)                                                                                                                 
|              | 
|4.4           |  | Supply Agreement between Global-Tech and Sunbeam Products, Inc. (Incorporated herein by reference to Exhibit 10.4 to the Registration Statement.)                                                                                                             
|              | 
|4.5           |  | Lease Agreement between Global-Tech and the Peoples Government of Qingxi Town, Dongguan City, Guangdong Province, together with the English language translation thereof
(Incorporated herein by reference to Exhibit 10.5 to the Registration Statement.)   
|              | 
|4.6           |  | License Agreement between Global-Tech and the Buji Economic Development Company, together with the English language translation thereof (Incorporated herein by reference to Exhibit
10.6 to the Registration Statement.)                                     
|              | 
|4.7           |  | Lease Agreement between Global-Tech and Wing Shing Products Company Limited (Incorporated herein by reference to Exhibit 10.7 to Global-Techs Annual Report on Form 20-F for
the fiscal year ended March 31, 1999.)                                          
|              | 
|4.8           |  | Amendment to Tenancy Agreement dated April 17, 2002 (Incorporated herein by reference to Exhibit 4.8 to Global-Techs Annual Report on Form 20-F for the fiscal year ended
March 31, 2002.)                                                                   
|              | 
|4.9           |  | Amended and Restated 1997 Stock Option Plan of Global-Tech (Incorporated herein by reference to Exhibit 10.8 to the Registration Statement.)                                                                                                                  
|              | 
|4.10          |  | 1999 Employee Stock Purchase Plan of Global-Tech (Incorporated herein by reference to Exhibit 1 to Global-Techs Report on Form 6-K for the month of February
1999.)                                                                                          
|              | 
|4.11          |  | Credit Facility Agreement between Global-Tech and Standard Chartered Bank (Incorporated herein by reference to Exhibit 10.11 to the Registration Statement.)                                                                                                  
|              | 
|4.12          |  | Supplemental advice letter dated April 26, 1999 from Standard Chartered Bank (Incorporated herein by reference to Exhibit 10.10 to Global-Techs Annual Report on Form 20-F
for the fiscal year ended March 31, 1999.)                                        



E-1



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##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                              
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                      
|4.14          |  | Supplemental advice letter dated July 10, 2000 from Standard Chartered Bank (Incorporated herein by reference to Exhibit 4.13 to Global-Techs Annual Report on Form 20-F
for the fiscal year ended March 31, 2001.)                                         
|              | 
|4.15          |  | Credit Facility Agreement with Hong Kong Bank (Incorporated herein by reference to Exhibit 10.12 to the Registration Statement.)                                                                                                                             
|              | 
|4.16          |  | Supplemental advice letter dated September 30, 2000 from Hong Kong Bank (Incorporated herein by reference to Exhibit 4.15 to Global-Techs Annual Report on Form 20-F for
the fiscal year ended March 31, 2001.)                                             
|              | 
|4.17          |  | Credit Facility Agreement dated April 7, 2000 with Citibank, N.A. (Incorporated herein by reference to Exhibit 4.16 to Global-Techs Annual Report on Form 20-F for the
fiscal year ended March 31, 2001.)                                                   
|              | 
|4.18          |  | Supplemental advice letter dated February 1, 2001 from Citibank, N.A. (Incorporated herein by reference to Exhibit 4.17 to Global-Techs Annual Report on Form 20-F for the
fiscal year ended March 31, 2001.)                                               
|              | 
|4.19          |  | Lease Agreement dated July 29, 2002 between Goman Limited and Pentalpha Hong Kong Limited (Incorporated herein by reference to Exhibit 4.19 to Global-Techs Annual Report
on Form 20-F for the fiscal year ended March 31, 2002.)                           
|              | 
|4.20          |  | Credit Facility Agreement dated May 27, 2002 between Standard Chartered Bank and Pentalpha HK Ltd. (Incorporated herein by reference to Exhibit 4.20 to Global-Techs
Annual Report on Form 20-F for the fiscal year ended March 31, 2003.)                  
|              | 
|4.21          |  | Credit Facility Agreement dated May 27, 2002 between Standard Chartered Bank and Wing Shing Products (BVI) Co, Ltd. (Incorporated herein by reference to Exhibit 4.21 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2003.) 
|              | 
|4.22          |  | Credit Facility Agreement dated May 27, 2002 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.22 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2003.)    
|              | 
|4.23          |  | Credit Facility Agreement dated December 5, 2002 with Citibank, N.A. (Incorporated herein by reference to Exhibit 4.23 to Global-Techs Annual Report on Form 20-F for the
fiscal year ended March 31, 2003.)                                                
|              | 
|4.24          |  | Credit Facility Agreement dated June 20, 2002 between Pentalpha Macau Commercial Offshore Ltd. with Hong Kong Bank (Incorporated herein by reference to Exhibit 4.24 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2003.)  
|              | 
|4.25          |  | Credit Facility Agreement dated March 26, 2003 between Pentalpha Hong Kong Ltd. with Hong Kong Bank (Incorporated herein by reference to Exhibit 4.25 to Global-Techs
Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)                 
|              | 
|4.26          |  | Banking facilities letter dated November 4, 2003 between Pentalpha Macau Commercial Offshore Ltd. and Hong Kong Bank (Incorporated herein by reference to Exhibit 4.26 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)



E-2



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##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                                                                       
|4.27          |  | Credit Facility Agreement dated November 3, 2003 between Pentalpha Hong Kong Ltd. with Hong Kong Bank (Incorporated herein by reference to Exhibit 4.27 to Global-Techs
Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)                                                                
|              | 
|4.28          |  | Credit Facility Agreement dated September 24, 2003 between Standard Chartered Bank and Pentalpha Hong Kong Ltd. (Incorporated herein by reference to Exhibit 4.28 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)                                                      
|              | 
|4.29          |  | Credit Facility Agreement dated July 28, 2003 between Standard Chartered Bank and Pentalpha Macau Commercial Offshore Ltd. (Incorporated herein by reference to Exhibit 4.29 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)                                           
|              | 
|4.30          |  | Credit Facility Agreement dated September 24, 2003 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.30 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2004.)                                               
|              | 
|4.31          |  | Credit Facility Letter dated September 22, 2004 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.31 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2005.)                                                  
|              | 
|4.32          |  | Credit Facility Letter dated September 22, 2004 between Standard Chartered Bank and Pentalpha Hong Kong Ltd. (Incorporated herein by reference to Exhibit 4.31 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2005.)                                                         
|              | 
|4.33          |  | Credit Facilities Agreement dated January 26, 2006 between Standard Chartered Bank and Pentalpha Hong Kong Ltd. (Incorporated herein by reference to Exhibit 4.35 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)                                                      
|              | 
|4.34          |  | Credit Facilities Agreement dated November 18, 2005 between Standard Chartered Bank and Pentalpha Macau Commercial Offshore Limited. (Incorporated herein by reference to
Exhibit 4.36 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)                                 
|              | 
|4.35          |  | Credit Facilities Agreement dated January 26, 2006 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.37 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)                                               
|              | 
|4.36          |  | Credit Facilities Agreement dated March 21, 2006 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.38 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)                                                 
|              | 
|4.37          |  | Credit Facilities Agreement dated January 26, 2006 between Standard Chartered Bank and Global Rich Innovation Ltd. (Incorporated herein by reference to Exhibit 4.39 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)                                                   
|              | 
|4.38          |  | 2005 Stock Option Plan of Global-Tech (Incorporated herein by reference to Exhibit 4.40 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31,
2006.)                                                                                                                                
|              | 
|4.39          |  | Shareholders Agreement and Share Sale and Purchase Agreement, each dated March 17, 2006, between Anwell Technologies Limited and Consortium Investment (BVI) Limited
(Incorporated herein by reference to Exhibit 4.41 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2006.)
|              | 
|4.40          |  | Banking Facility Letter dated November 30, 2006 between Standard Chartered Bank and Kwong Lee Shun Trading Co Ltd. (Incorporated herein by reference to Exhibit 4.42 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2007.)                                                   
|              | 
|4.41          |  | Banking Facility Letter dated September 20, 2006 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.43 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2007.)                                                 
|              | 
|4.42          |  | Banking Facility Letter dated November 30, 2006 between Standard Chartered Bank and Global Rich Innovation Ltd. (Incorporated herein by reference to Exhibit 4.44 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2007.)                                                      



E-3



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##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                                                            
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                                                    
|4.43          |  | Banking Facility Letter dated January 13, 2009 between Standard Chartered Bank and Global Optics Limited (Incorporated herein by reference to Exhibit 4.43 to Global-Techs
Annual Report on Form 20-F for the fiscal year ended March 31, 2009)                                           
|              | 
|4.44          |  | Banking Facility Letter dated January 13, 2009 between Standard Chartered Bank and Global Household Products Limited (Incorporated herein by reference to Exhibit 4.44 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2009)                               
|              | 
|4.45          |  | Banking Facility Letter dated January 13, 2009 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.45 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2009)                                 
|              | 
|4.46          |  | Banking Facility Letter dated February 2, 2010 between Standard Chartered Bank and Global Household Products Limited (Incorporated herein by reference to Exhibit 4.46 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2010)                               
|              | 
|4.47          |  | Banking Facility Letter dated January 29, 2010 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd. (Incorporated herein by reference to Exhibit 4.46 to
Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2010)                                 
|              | 
|4.48          |  | Banking Facility Letter dated November 26, 2009 between Standard Chartered Bank and Dongguan Wing Shing Electrical Products Factory Company Limited (Incorporated herein by
reference to Exhibit 4.46 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2010)
|              | 
|4.49          |  | Banking Facility Letter dated March 23, 2009 between China Construction Bank and Dongguan Wing Shing Electrical Products Factory Company Limited (Incorporated herein by
reference to Exhibit 4.46 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2010)   
|              | 
|4.50          |  | Banking Facility Letter dated September 2, 2009 between China Construction Bank and Dongguan Wing Shing Electrical Products Factory Company Limited (Incorporated herein by
reference to Exhibit 4.46 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2010)
|              | 
|4.51          |  | Global-Tech Advanced Innovations Inc. 2011 Omnibus Equity Plan (Incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-8 filed with the Commission
on December 22, 2010)                                                                                  
|              | 
|4.52          |  | Banking Facility Letter dated November 25, 2010 between Standard Chartered Bank and Global Household Products Limited*                                                                                                                                                                     
|              | 
|4.53          |  | Banking Facility Letter dated November 25, 2010 between Standard Chartered Bank and Kwong Lee Shun Trading Co. Ltd*                                                                                                                                                                        
|              | 
|4.54          |  | Foreign Exchange Loan Contract dated May 27, 2010 between China Construction Bank Corporation and Dongguan Lite Array Company Limited*                                                                                                                                                     
|              | 
|4.55          |  | Security Deposit Pledge Contract dated May 27, 2010 between China Construction Bank Corporation and Dongguan Lite Array Company Limited*                                                                                                                                                   
|              | 
|4.56          |  | Cooperation Agreement On Oversea Agency Payment Business dated March 25, 2011 between China Construction Bank Corporation and Dongguan Lite Array Company
Limited*                                                                                                                         
|              | 
|4.57          |  | Security Deposit Pledge Contract dated March 25, 2011 between China Construction Bank Corporation and Dongguan Lite Array Company Limited*                                                                                                                                                 
|              | 
|4.58          |  | General Agreement on Import Payment Agent Service dated December 17, 2010 between Industrial and Commercial Bank of China Limited and Dongguan Lite Array Company
Limited*                                                                                                                 
|              | 
|4.59          |  | General Import T/T Finance Agreement dated September 15, 2010 between Industrial and Commercial Bank of China Limited and Dongguan Lite Array Company Limited*                                                                                                                             
|              | 
|4.60          |  | Maximum Mortgage Contract dated February 21, 2011 between Industrial and Commercial Bank of China Limited and Dongguan Lite Array Company Limited*                                                                                                                                         



E-4



---

##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                     
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                             
|4.61          |  | Acceptance Agreement dated February 17, 2011 between China Construction Bank Corporation and Dongguan Wing Shing Electrical Products Factory Company Limited*                                       
|              | 
|4.62          |  | Acceptance Agreement dated January 21, 2011 between China Construction Bank Corporation and Dongguan Wing Shing Electrical Products Factory Company Limited*                                        
|              | 
|4.63          |  | Maximum Amount Rights Pledge Contract dated March 27, 2011 between China Construction Bank Corporation and Dongguan Wing Shing Electrical Products Factory Company
Limited*                         
|              | 
|4.64          |  | Maximum Amount Rights Pledge Contract dated September 2, 2009 between China Construction Bank Corporation and Dongguan Wing Shing Electrical Products Factory Company
Limited*                      
|              | 
|4.65          |  | Maximum Amount Rights Pledge Contract- Supplement Agreement dated September 2, 2010 between China Construction Bank Corporation and Dongguan Wing Shing Electrical Products
Factory Company Limited*
|              | 
|8.1           |  | List of Subsidiaries*                                                                                                                                                                               
|              | 
|11.1          |  | Code of Ethics (Incorporated by reference to Exhibit 14.1 to Global-Techs Annual Report on Form 20-F for the fiscal year ended March 31, 2004)                                                     
|              | 
|12.1          |  | Rule 13a-14(a) Certification by Chief Executive Officer*                                                                                                                                            
|              | 
|12.2          |  | Rule 13a-14(a) Certification by Acting Chief Financial Officer*                                                                                                                                     
|              | 
|13.1          |  | Certification by Chief Executive Officer*                                                                                                                                                           
|              | 
|13.2          |  | Certification by Acting Chief Financial Officer*                                                                                                                                                    
|              | 
|15.1          |  | Consent of Independent Registered Public Accounting Firm (BDO Limited)*                                                                                                                             
|              | 
|15.2          |  | Consent of Independent Registered Public Accounting Firm (Ernst & Young)*                                                                                                                           



|* | Filed Herewith
|- | --------------



E-5