UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 OR
 o
    
    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
 Commission file number 000-22161
 Corgi International Limited
 (Exact name of Registrant as specified in its charter)
 Hong Kong, S.A.R., China  (Jurisdiction of incorporation or organization)  Unit 711 - 717 , 7/F., Tower A, New Mandarin Plaza,
14 Science Museum Road, TST East, Kowloon,
Hong Kong, S.A.R., China  (Address of principal executive offices)  Securities registered or to be registered pursuant to Section 12(b) of the Act.
 Title of each class
    
    Name of each exchange on which registeredAmerican Depositary Shares, each representing one ordinary share
    
    NASDAQ Global Market
 Securities registered or to be registered pursuant to Section 12(g) of the Act.    Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
   o þ
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  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
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TABLE OF CONTENTS
 PRESENTATION OF INFORMATION
    
    
    3DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    4PART IItem 1. Identity of Directors, Senior Management and Advisers
    
    
    4Item 2. Offer Statistics and Expected Timetable
    
    
    4Item 3. Key Information
    
    
    4A. SELECTED FINANCIAL DATA
    
    
    4B. CAPITALIZATION AND INDEBTEDNESS
    
    
    7C. REASONS FOR THE OFFER AND USE OF PROCEEDS
    
    
    7D. RISK FACTORS
    
    
    7Item 4 Information on the Company
    
    
    15A. HISTORY AND DEVELOPMENT OF THE COMPANY
    
    
    15B. BUSINESS OVERVIEW
    
    
    18C. ORGANIZATIONAL STRUCTURE
    
    
    23D. PROPERTY, PLANTS AND EQUIPMENT
    
    
    23Item 4A. Unresolved Staff Comments
    
    
    23Item 5. Operating and Financial Review and Prospects
    
    
    24A. OPERATING RESULTS
    
    
    27B. LIQUIDITY AND CAPITAL RESOURCES
    
    
    29C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
    
    
    31D. TREND INFORMATION
    
    
    31E. OFF-BALANCE SHEET ARRANGEMENTS
    
    
    32F. CONTRACTUAL OBLIGATIONS
    
    
    32Item 6. Directors, Senior Management and Employees
    
    
    34A. DIRECTORS AND SENIOR MANAGEMENT
    
    
    34B. COMPENSATION
    
    
    37C. BOARD PRACTICES
    
    
    38D. EMPLOYEES
    
    
    39E. SHARE OWNERSHIP
    
    
    39Item 7. Major Shareholders and Related Party Transactions
    
    
    41A. MAJOR SHAREHOLDERS
    
    
    41B. RELATED PARTY TRANSACTIONS
    
    
    42Item 8. Financial Information
    
    
    44A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
    
    
    44B. SIGNIFICANT CHANGES
    
    
    45Item 9. The Offer and Listing
    
    
    47A4. HISTORICAL SHARE PRICE INFORMATION
    
    
    47B. PLAN OF DISTRIBUTION
    
    
    48C. NON-COMPLIANCE WITH MINIMUM BID PRICE
    
    
    48Item 10. Additional Information
    
    
    49A. SHARE CAPITAL
    
    
    49B. MEMORANDUM AND ARTICLES OF ASSOCIATION
    
    
    49C. MATERIAL CONTRACTS
    
    
    49D. EXCHANGE CONTROLS
    
    
    52E. TAXATION
    
    
    53H. DOCUMENTS ON DISPLAY
    
    
    56Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    56Item 12. Not applicable
    
    
    57PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    57
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Item 14. Not applicable
    
    
    57Item 15. Controls and Procedures
    
    
    57Item 16A. Audit Committee Financial Expert
    
    
    58Item 16B. Code of Ethics
    
    
    58Item 16C. Principal Accountant Fees and Services
    
    
    59Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    59PART IIIItem 18. Financial Statements
    
    
    59Item 19. Exhibits
    
    
    59SIGNATURES
    
    
    62INDEX TO FINANCIAL STATEMENTS
    
    
    65
   PRESENTATION OF INFORMATION
  As a result of the merger of historical Corgi with Master Replicas and the acquisition of
Cards, for accounting purposes, Master Replicas was deemed to be the accounting acquirer and,
accordingly, Master Replicas financial statements are presented herein as the historical financial
statements of Corgi subsequent to the merger
     Please note that we were not able to secure the report of our previous independent registered public
account firm, Eisner LLP, for the fiscal year ended March 31, 2007 and the three months ended March 31, 2006 as a result of our inability to pay
Eisner LLP and provide them with adequate time to review this filing on Form 20-F.  We have included the
report of our current independent registered public accounting firm,
Burr Pilger & Mayer LLP, for the fiscal
year ended March 31, 2008.  We are seeking to obtain the reports and consent from Eisner LLP and plan to amend
this Annual Report as soon as is practicable to include such reports
and consent.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
  
 PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 A. SELECTED FINANCIAL DATA
 For financial accounting purposes, Master Replicas was the accounting acquirer with respect to
historical Corgis 2006 merger with Master Replicas, and from the date of the acquisition forward,
the historical financial statements of Master Replicas have been reported as our historical
financial statements.
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Company Selected Financial Data
 Three-MonthPeriodEndedYear Ended December 31,
    
    
    March 31,
    
    
    Year Ended March 31,2004
    
    
    2005
    
    
    2006(1)
    
    
    2007(2)
    
    
    2008Consolidated Statements of
Operations Data:Net sales
    
    $
    9,956,572
    
    
    $
    47,194,243
    
    
    $
    6,747,665
    
    
    $
    35,497,317
    
    
    $
    85,089,482Cost of goods sold
    
    
    7,657,753
    
    
    
    31,109,570
    
    
    
    4,095,489
    
    
    
    28,140,004
    
    
    
    71,632,147Gross profit
    
    
    2,298,819
    
    
    
    16,084,673
    
    
    
    2,652,176
    
    
    
    7,357,313
    
    
    
    13,457,335Operating expenses
Administration, sales and
Marketing expenses
    
    
    5,836,224
    
    
    
    9,841,742
    
    
    
    1,719,596
    
    
    
    20,667,062
    
    
    
    48,864,645Impairment of intangible assets
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    8,275,921Income (loss) from operations
    
    
    (3,537,405
    )
    
    
    6,242,931
    
    
    
    932,580
    
    
    
    (13,309,749
    )
    
    
    (43,683,231
    )Other income (expense)
Interest expense
    
    
    (178,190
    )
    
    
    (252,078
    )
    
    
    (23,321
    )
    
    
    (538,273
    )
    
    
    (2,190,373
    )Change in Fair value of
derivative liability
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    380,000
    
    
    
    0Income (loss) before provision
(benefit) for income taxes
    
    
    (3,715,595
    )
    
    
    5,990,853
    
    
    
    909,259
    
    
    
    (14,228,022
    )
    
    
    (45,873,603
    )Provision (benefit) for income tax
    
    
    23,564
    
    
    
    1,664,000
    
    
    
    566,000
    
    
    
    (965,178
    )
    
    
    (606,767
    )Net income (loss)
    
    
    (3,739,159
    )
    
    
    4,326,853
    
    
    
    343,259
    
    
    
    (13,262,844
    )
    
    
    (45,266,837
    )Other comprehensive loss, net of
Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149,945
    )
    
    
    295,938Comprehensive Income (loss)
    
    
    (3,739,159
    )
    
    
    4,326,853
    
    
    
    343,259
    
    
    
    (13,412,789
    )
    
    
    (44,970,899
    )Income (Loss) per common share:Basic
    
    
    (115.04
    )
    
    
    115.57
    
    
    
    9.17
    
    
    
    (5.28
    )
    
    
    (4.22
    )Diluted
    
    
    (115.04
    )
    
    
    0.93
    
    
    
    0.07
    
    
    
    (5.28
    )
    
    
    (4.22
    )Weighted average ordinary shares:Basic
    
    
    32,503
    
    
    
    37,440
    
    
    
    37,440
    
    
    
    2,511,103
    
    
    
    10,718,436Diluted
    
    
    32,503
    
    
    
    4,645,000
    
    
    
    4,631,584
    
    
    
    2,511,103
    
    
    
    10,718,436
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As of December 31,
    
    
    
    
    
    
    As of March 31,2004
    
    
    2005
    
    
    2006(1)
    
    
    2007(2)
    
    
    2008Consolidated Balance Sheets Data:Cash
    
    $
    690,740
    
    
    $
    4,381,751
    
    
    $
    616,444
    
    
    $
    2,149,180
    
    
    $
    718,245Accounts receivable, net
    
    
    840,718
    
    
    
    7,446,118
    
    
    
    4,030,254
    
    
    
    11,462,229
    
    
    
    8,634,140Income tax receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    354,850
    
    
    
    1,340,958Inventory
    
    
    1,021,794
    
    
    
    6,487,656
    
    
    
    5,787,605
    
    
    
    14,791,241
    
    
    
    2,438,766Prepaid expenses and other assets
    
    
    382,161
    
    
    
    829,586
    
    
    
    381,568
    
    
    
    5,301,552
    
    
    
    1,904,993Deferred tax asset
    
    
    
    
    
    
    870,000
    
    
    
    485,000
    
    
    
    728,000
    
    
    
    0Assets held for sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,365,762Total current assets
    
    
    2,935,413
    
    
    
    20,015,111
    
    
    
    11,300,871
    
    
    
    34,787,052
    
    
    
    17,402,864Property, plant and equipment, net
    
    
    133,575
    
    
    
    242,654
    
    
    
    247,810
    
    
    
    620,151
    
    
    
    199,222Notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,415
    
    
    
    Tooling costs, net
    
    
    473,556
    
    
    
    188,238
    
    
    
    
    
    
    
    4,466,970
    
    
    
    385,388Assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,351,543Goodwill
    
    
    
    
    
    
    
    
    
    
    202,503
    
    
    
    14,639,284
    
    
    
    9,612,172Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,214,286
    
    
    
    1,109,210Restricted Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322,633Deferred tax, non-current
    
    
    
    
    
    
    56,975
    
    
    
    48,309
    
    
    
    
    
    
    
    Total assets
    
    $
    3,542,544
    
    
    $
    20,502,978
    
    
    $
    11,799,493
    
    
    $
    67,830,158
    
    
    $
    36,383,033Total Stockholders equity
    
    
    ($1,464,773
    )
    
    $
    5,755,010
    
    
    $
    3,478,533
    
    
    $
    29,888,432
    
    
    
    ($8,289,789
    )
 
 (1)
    
    In connection with the merger with historical Corgi, Master Replicas changed its fiscal year
ended from December 31 to March 31. We have therefore included consolidated statements of
operations data derived from the audited financial statements for the three-month period ended
March 31, 2006, to cover the period from January 1, 2006 to March 31, 2006.(2)
    
    The selected financial data for the year ended March 31, 2007 take into account the merger of
historical Corgi and Master Replicas in December 2006, the acquisition of Cards in December
2006, the closing of historical Corgis private financing for $17.6 million in December 2006,
the conversion of historical Corgis April 2006 convertible notes into ADSs in December 2006,
and historical Corgis sale of its Zindart Manufacturing division in China in December 2006. 6




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B. CAPITALIZATION AND INDEBTEDNESS
  
 C. REASONS FOR THE OFFER AND USE OF PROCEEDS
  
 D. RISK FACTORS
 Risks Related to our Business
 We may be unable to operate as a going concern due to deterioration in our liquidity and the
unavailability of trade credit on favorable terms. We may be required to file for bankruptcy
protection for the Company or one or more of its operating subsidiaries if we can not find
immediate equity or debt financing or a buyer for the business, and we may need to immediately reduce the size of the business.
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We may be delisted from the NASDAQ Global Market System
        We have incurred losses in prior periods and may incur losses in the future.
  
    
    we need additional capital to effect our business plan and to make additional investment
in product development and growth activities, and the cost of capital, and any inability to
raise additional capital, may limit our growth and reduce our profitability;
    
    as we seek to achieve organic growth or growth through acquisitions, additional
investment in product development activities will be necessary;
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
    
    we may fail to achieve our current strategic initiatives to increase market awareness of
the Company, our products and our brands;
    
    many of our expenses are fixed, and cannot be reduced if actual revenues are lower than
expected. As a result of such fixed expenses, revenue shortfalls could result in lower
profitability or greater losses than anticipated for any given period, which could have a
negative impact on our share price;
    
    competition in the collectibles, gift and toy industries is expected to continue to exert
price pressure and we may also face continued pressure from retailers to reduce our margins,
which will unfavorably effect our net sales;
    
    we may face increased costs relating to licensing of entertainment franchises and we may
not be able to obtain licenses for popular entertainment franchises in the future, either of
which could negatively affect our sales and profitability;
    
    our expenses may increase due to increased manufacturing costs, including higher labor
and raw materials costs, such as zinc for our die-cast products. In addition, recently
imposed requirements for additional lead testing at manufacturing facilities will further
increase our manufacturing costs;
    
    product costs and profit margins may be unfavorably affected due to foreign currency
fluctuations, particularly the appreciation of the Renminbi against the U.S. Dollar and the
British Pound;
    
    customer defaults, bankruptcies or poor financial conditions could result in the loss of
revenue or the decision not to continue, or to reduce, business with customers;
    
    ongoing efforts to comply with the regulations promulgated under the Sarbanes-Oxley Act
of 2002 will continue to increase general and administrative expenses;
    
    changes in accounting standards, such as recognition of compensation costs relating to
employee stock option plans in accordance with the Statement of Financial Accounting
Standards No. 123 (revised 2004), Share Based Payment, will increase our operating
expenses; and
    
    changes in regulatory law, taxes or the overall political conditions in China may cause
an increase in our operating expenses.
 Product liability, product quality controls, product recalls and other claims relating to the use
of our product, as well as compliance with governmental regulations by our manufacturing customers,
could increase our costs.
   9




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Competition for licenses could increase our licensing costs or limit our ability to market
products. We may lose our licenses in a bankruptcy filing
    If we fail to attract and retain qualified management and personnel, our performance may suffer.
  Our net sales and profitability depend on our ability to continue to conceive, design and market
products that appeal to consumers.
  10




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Sales of a majority of our products are seasonal and dependent on the timing of movie, DVD and
video game releases, which causes our operating results to vary from quarter to quarter.
   If we fail to comply with internal controls evaluation requirements our stock price could be
adversely affected.
       Competition in our markets could reduce our net sales and profitability.
  11




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We may not be able to collect our outstanding accounts receivable, and we depend on maintaining a
relationship with our largest customers for the successful operation of our business.
  We rely on a limited number of foreign suppliers in China to manufacture substantially all of our
products.
   Increases in the cost of the raw materials used to manufacture our products could increase our cost
of sales and reduce our gross margins.
  Currency exchange rate fluctuations could increase our expenses.
  12




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Failure to protect our proprietary intellectual property and information could have a material
adverse effect on our business, financial condition and results of operations.
  Risks Related to our Industry
 Our exports to foreign countries may be limited by applicable tariffs and quotas.
  We may be negatively affected by political, social and economic instability in the Peoples
Republic of China or elsewhere.
    13




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We
may not continue to qualify as a foreign private issuer
  As a foreign private issuer, we have limited reporting requirements.
  There may not be a liquid market for our ADSs, which may cause our ADSs to trade at lower prices
and make it difficult to sell your ADSs.
  If we are a passive foreign investment company, holders of our shares and ADSs may suffer adverse
tax consequences.
  Holders of our ADSs may have limited rights relative to holders of our ordinary shares in certain
circumstances.
  14




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Certain of our shareholders own a significant percentage of our ordinary shares and therefore may
be able to influence our business in ways that are less beneficial to you.
  We may incur liquidated damages if we fail to continue the effectiveness of our Registration
Statement on Form F-3.
   
 Item 4. Information on the Company
 
 A. HISTORY AND DEVELOPMENT OF THE COMPANY
    
    
    In May 2007, Mr. Denis Horton joined us as Managing Director, Europe, and in June 2007,
Bob Esterbrook joined us as Finance Director, Europe;
    
    Effective July 1, 2007, Jack Lawrence became our new Chief Financial Officer, Chief
Operating Officer and General Manager, U.S.;
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
    
    Effective August 22, 2007, we and the warrant holders amended the terms of the 1,070,654
warrants issued in December 2006 pursuant to an Amendment to Warrants, Commitment to Issue
Replacement Warrants, Amendment to Registration Rights Agreement and Waiver, to reduce
temporarily their exercise price from $7.80 per share to $5.00 per share if exercised by
September 5, 2007. Any warrant holder exercising their warrants received a new warrant on
substantially the same terms as the existing warrants but with an exercise price of $6.00
per share. The terms of any warrant not exercised by September 5, 2007 remained unchanged.
Holders of 368,863 warrants took advantage of the amendment and exercised such warrants for
approximately $1.844 million by September 5, 2007, and we issued 184,427 new warrants to
such holders.
    
    On November 9, 2007, we secured $976,560 of bridge
financing (including $776,560
from officers, employees and directors) with an interest rate of 15% per annum and with an aggregate of
97,656 warrants with an exercise price of par value or $3.00 Hong Kong dollars (or
approximately $0.38 per ADS). We converted approximately $473,763 of the bridge financing
into ADSs at $2.03 per ADS, $200,000 at $1.0 per ADS.
The remaining
balance as of March 31, 2008 was $344,734, including accrued
interest. Approximately one third of the principal amount of Michael
Cooksons note is still outstanding.
    
    On January 7, 2008, we finalized arrangements for a three-year asset based credit
facility with Burdale Financial Limited (Burdale), a member of Bank of Ireland Group for a
maximum credit availability of approximately $30 million. Alongside the Burdale financing,
our existing lenders, Barclays Bank PLC, Ropart Asset Management Fund LLC (RAM) and
Gateway Trade Finance LLC each agreed to extend the maturity of their existing credit
facilities with us and Gateway agreed to provide up to $3.3 million of inventory financing
for at least one year. In connection with the RAM extension, we granted RAM a
warrant to purchase 500,000 ADSs with an exercise price at par value or $3.00 Hong Kong
dollars (or approximately $0.38 per ADS). This Burdale facility was paid in full and
terminated in April 2008.
    
    On January 7, 2008, we closed a $2.2 million equity financing in a private placement of
our ADSs to existing investors for $1.00 per ADS for a total of 2.2 million ADSs of which
$200,000 was in exchange of existing bridge loan indebtedness as described above. We
agreed to use our best efforts to register the ADSs for resale with the SEC within 90 days.
To date, we have not filed a registration statement in respect of these shares.
    
    On March 15, 2008, Charles McGettigan became the new Chairman of the Board. Our then
current Chairman, John Clough, remained on the Board until he resigned on October 6, 2008. In
addition, the Company restructured the Board, reducing the number of Directors from seven to
five Directors. In order to effect this change, Leo Koulos and Darren Epstein made the
decision to resign from the Board. Darren Epstein remains as our Executive Vice President.
Mr. Timothy Steel joined the Companys audit committee and Mr. Daniel Widdicombe joined the
Companys compensation committee.
    
    On April 8, 2008, we sold our Cards Inc. trading card distribution business to Esdevium
for approximately US$2.25 million and approximately US$0.7 million of inventory. As a
result of this sale and pursuant to the terms of our purchase agreement with the
shareholders of Cards Inc. Limited, we released to the former Cards Inc. shareholders
612,213 ADSs which had been held in escrow to cover certain representations and warranties
under the purchase agreement.
    
    On April 15, 2008, we terminated our agreement with Burdale Financial Limited and were
able to refinance the Burdale credit facility with a $16 million accounts receivable
financing facility with CoFace Receivables Finance Limited. We also resumed the
production finance facility with Gateway Finance Inc. which allows additional capital for
bringing products to market.
    
    On April 30, 2008, existing directors and officers of the Company converted approximately
$602,018 of indebtedness (principally in the form of accrued and unpaid board fees and
expenses and portions of the remaining bridge loans to the company referred to above), at
$1.90 per ADS for 316,849 ADS. In addition, the Board has reduced Board fees for the
year ending March 31, 2009, by 50%.
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
    
    On May 2, 2008, we sold our Corgi collectibles die-cast business to Hornby Hobbies
Limited (Hornby), including the Corgi brand name and tooling, for consideration of
approximately £7.5 million (or approximately US$15 million). In addition, the related
existing inventory will be sold for consideration of approximately £0.8 million or
approximately US$1.6 million. The Corgi collectibles die-cast business was not profitable.
    
    On May 2, 2008, we used the proceeds from the sale of the Corgi collectibles die-cast
business to Hornby to repay our other lenders, Barclays Bank PLC and Ropart Asset Management
Fund LLC, $3.8 million in the aggregate and to repay in part various other trade creditors.
    
    On May 2, 2008, we, following information and consultation with our employees announced a
global workforce reduction of approximately 82 employees or about 58% of our staff, a number
of whom joined Hornby. This force reduction was completed in June of 2008, with a remaining
employee base of 58 people.
    
    On May 20, 2008, we ceased our relationship with Eisner LLP, independent registered
accounting firm. We have continued our relationship with our statutory
auditors, Baker Tilly LLP, in Hong Kong and the United Kingdom.
    
    On June 16, 2008, we received notice from the staff of The Nasdaq Stock Market, Inc.
indicating that we are not in compliance with The Nasdaq Stock Markets requirements for
continued listing because the bid price of our ADS has closed below the minimum $1.00 per
share requirement for continued inclusion under Nasdaq Marketplace Rule 4450(a)(5). We
have until December 15, 2008 (180 days from June 16, 2008) to regain compliance with the
Minimum Bid Price Rule. We can regain compliance with the Minimum Bid Price Rule if the bid
price of our ADSs closes at $1.00 per share or more for a minimum of 10 consecutive business
days before December 15, 2008.
    
    In June 2008, the Company executed a $5.0 million term loan agreement with Synergy Global
Finance Master Fund Limited (Synergy). $3.0 million of this term loan facility was drawn
in June 2008 and the remaining $2.0 million was drawn in July 2008. Both loans mature in
twenty four months and are payable in equal monthly installments beginning thirteen months
after the date of initial advance. In conjunction with the term loan agreement, the Company
agreed to issue to Synergy five year warrants to purchase 500,000 shares at an exercise
price of $3.0 Hong Kong dollars. Monthly interest payments are due at the rate of 1.5% per
annum. The loan is currently in default due to deficient asset levels
and variance to the fiscal year
2009 plan.
    
    On July 14, 2008 our audit committee have engaged Burr, Pilger & Mayer LLP (BPM) as its
independent registered public accounting firm. BPM is a regional accounting firm located in
California and operating in the San Francisco Bay Area, with four offices located in San
Francisco, San Jose, Palo Alto and Walnut Creek, California
    
    On
August 14, 2008, the Warner Brothers Corporation announced the
postponement of the Harry Potter and the Half-Blood Prince movie from
November 2008 to July 2009. This change in the movie release date
materially impacted the Companys projected revenue and its
ability to obtain financing. The late date of Warner Brothers
decision to postpone the movie also impacted our immediate cash flow
due to investments in design, tooling, manufacturing, sales and
marketing already taken place.
    
    On September 30, 2008, we received notice from the NASDAQ Stock Market that for the last
30 consecutive trading days, our ADSs have not maintained a minimum market value of
publicly held shares (MVPHS) of $5,000,000 as required for continued inclusion by
Marketplace Rule 4450(a)(2) (the Rule). Therefore, in accordance with Marketplace Rule
4450(e)(1), we will be provided 90 calendar days, or until December 29, 2008, to regain
compliance. If, at any time before December 29, 2008, the MVPHS of the our ADS is $5,000,000
or greater for a minimum of 10 consecutive trading days, Staff will provide written
notification that we comply with the Rule. If we fail to comply with the Rule by December
29, 2008, Staff will provide written notification that the Companys securities will be
delisted.
    
    On October 6, 2008, John Clough resigned from the Board of Directors. We have 180 days
from Mr Cloughs resignation to replace Mr. Clough with an independent director or we may be
delisted from NADSAQ Stock Market as described above.
 17




---



##### 



Registered Office
  
 B. BUSINESS OVERVIEW
 Business Segments and Principal Activities
    Products, Markets and Marketing Channels
   Master Replicas Brand: Prop Replica Collectible Memorabilia Products.
 
    
    Limited Edition Prop Replicas;
    
    Studio Scale Replicas; and
    
    Scaled Replicas.
 PopCo Brand: Die-Cast Collectibles .
 18




---



##### 



PopCo: Gifts and Toys .
 
    
    Harry Potter and Golden Compass toy lines (including action figures, play sets and
electronics); and
    
    Pop culture products, including movie memorabilia and gifts (bobble head dolls, plates,
cookie jars).
 PopCo Distribution
   Geographic Markets
   Channels of Distribution
  
    
    products with lower price points are generally sold in national accounts and chain
retailers such as Toys R Us, Tesco and Model Zone;
    
    products with higher prices are typically sold in specialty retailers such as hobby,
collector and gift shops, wholesalers and other international distributors; and
    
    PopCo and H2GO products are sold direct to consumers through our company websites, in addition
to traditional channels of distribution.
  Business Strategy
  
    
    producing innovative, high quality pop culture products targeting customers ranging from
younger enthusiasts to the most passionate and discerning high-end collectors;
 19




---



##### 




    
    building and expanding the Master Replicas brand for movie-prop replicas and high-end
collectibles and memorabilia;
    
    building and expanding a new brand called PopCo for lower-priced pop culture gift and
toys;
    
    increasing our sales of existing and new products to our current customers who
historically buy only one brand of our products by cross-selling other product brands to our
customers;
    
    building our base business and brands by targeting three key geographic markets for
growth: North America, Northern Europe and Japan;
    
    maintaining and growing a diversified portfolio of license relationships with the owners
of leading entertainment franchises;
    
    expanding our product categories of licensed products over time, either organically or
through acquisitions;
    
    leveraging a multi-prong distribution platform that includes (i) national accounts and
chain retailers; (ii) specialty channels of hobby/collector gift and toy shops; (iii)
international distributors; and (iv) direct-to-consumer sales; and
    
    utililizing third party manufacturing, primarily in China, to produce our products.
 Intellectual Property
 Trademarks
  Licenses
   Sales and Marketing
  20




---



##### 




    
    Digital Marketing.The Internet and other digital media are an increasingly important
part of our marketing plan because many consumers have adopted the Internet as a preferred
way to communicate with others about their product preferences and purchases. Our websites,
www.masterreplicas.com and www.popcoltd.com , highlight our products, list product release
dates and collect market data directly from consumers. The information contained on our
websites is not intended to be a part of this Annual Report, and shall not be deemed to be
incorporated by reference herein or filed or furnished herewith. We also gather consumer
information through consumer letters, e-mails, telephone calls, product surveys and focus
groups.
    
    Advertising.We place print advertisements in trade and consumer publications with high
circulation targeted to pop culture enthusiasts and collectors.
    
    Public Relations.We have developed a trade and consumer public relations effort to build
relationships with editors at publications targeted across all of our product lines.
    
    Co-op Advertising.We work closely with retail chains to plan and execute ongoing
retailer-driven promotions and advertising. The programs usually involve promotion of our
products in retail customers print circulars, mailings and catalogs, and sometimes include
placing our products in high-traffic locations within retail stores and end-cap displays. If we are not successful in raising additional capital, we may need to reduce our sales force.
 Competition
  Production
 Far East product
sourcing.
 Far East production.
 21




---



##### 



Tooling.
 Product safety.
  
    
    our vendors are made aware of their obligation to comply with the requirements of EN71 /
ASTM relating to lead-based standards in Toys. This is stated on each order form we send to
them;
    
    our products are independently tested by reputable international testing houses in order
to secure certificates of conformity (without which major customers will not accept the
products);
    
    in light of the recent issues relating to excess lead in paints used on toy products, we
have reviewed our control procedures and are further strengthening our quality assurance
testing requirements, in particular the frequency of testing of paint to ensure it continues
to conform to the approved standard; and
    
    collector models are not intended for use as toys. They have an age grading of 14+ and
are clearly marked A Die Cast Model for the Adult Collector. As such they are not subject
to EN71.
 Logistics.
 
    
    PopCo trading business operates two private warehouses in the U.K.;
    
    PopCo Classics (formerly Corgi Classics) utilizes one public warehouse in the U.K.;
    
    Master Replicas utilizes a public warehouse in California and one in Hong Kong.
   Seasonality and the Entertainment Industry
  22




---



##### 



Customers
  Employees
  Governmental Regulation
 Item 3D Risk Factors
 
 C. ORGANIZATIONAL STRUCTURE.
  
 D. PROPERTY, PLANTS AND EQUIPMENT
   
 Item 4A. Unresolved Staff Comments
  23




---



##### 



Item 5. Operating and Financial Review and Prospects
 Overview
 Business
    Recent Transactions
     Net Sales
   24




---



##### 



Cost of Good Sold, Gross Profits and Gross Margin.
      Selling, General and Administrative Expenses
   25




---



##### 



Seasonality.
  Going Concern
        26




---



##### 



A. OPERATING RESULTS
 Year over Year Comparisons of Audited Operating Results  Master Replicas as the Accounting Acquirer
  Three-Year
    
    
    
    
    
    
    monthEnd
    
    
    
    
    
    
    period ended,
    
    
    Year
    
    
    
    
    
    
    Year12/31/2005
    
    
    
    
    
    
    3/31/06(1)
    
    
    End
    
    
    
    
    
    
    EndMaster
    
    
    
    
    
    
    Master
    
    
    3/31/2007
    
    
    
    
    
    
    3/31/2008Replicas
    
    
    Percent
    
    
    Replicas
    
    
    Combined
    
    
    Percent
    
    
    Combined
    
    
    PercentSales
    
    $
    47,194
    
    
    
    100.0
    %
    
    
    6,748
    
    
    $
    35,497
    
    
    
    100.0
    %
    
    $
    85,089
    
    
    
    100.0
    %Cost of goods sold
    
    
    (31,109
    )
    
    
    -65.9
    %
    
    
    (4,096
    )
    
    
    (28,140
    )
    
    
    -79.3
    %
    
    
    (71,632
    )
    
    
    -84.2
    %Gross profit
    
    
    16,085
    
    
    
    34.1
    %
    
    
    2,652
    
    
    
    7,357
    
    
    
    20.7
    %
    
    
    13,457
    
    
    
    15.8
    %Selling, general and
administrative expenses
    
    
    (9,842
    )
    
    
    -20.9
    %
    
    
    (1,720
    )
    
    
    (20,667
    )
    
    
    -58.2
    %
    
    
    (48,864
    )
    
    
    -57.4
    %Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,276
    )
    
    
    -9.7
    %Operating income (loss)
    
    
    6,243
    
    
    
    13.2
    %
    
    
    932
    
    
    
    (13,310
    )
    
    
    -37.5
    %
    
    
    (43,683
    )
    
    
    -51.3
    %Other income (expense):Interest income
    
    
    33
    
    
    
    0.1
    %
    
    
    13
    
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Interest expense
    
    
    (285
    )
    
    
    -0.7
    %
    
    
    (36
    )
    
    
    (538
    )
    
    
    -1.5
    %
    
    
    (2,190
    )
    
    
    -2.6
    %Change in fair value of
derivative liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (380
    )
    
    
    -1.1
    %
    
    
    
    
    
    
    0.0
    %Other income (expense)
    
    
    46
    
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before income
taxes
    
    
    5,991
    
    
    
    12.7
    %
    
    
    909
    
    
    
    (14,228
    )
    
    
    -40.1
    %
    
    
    (45,873
    )
    
    
    -53.9
    %Income tax benefit (expense)
    
    
    (1,664
    )
    
    
    -3.5
    %
    
    
    (566
    )
    
    
    965
    
    
    
    2.7
    %
    
    
    607
    
    
    
    0.7
    %Income (loss)
    
    $
    4,327
    
    
    
    9.2
    %
    
    $
    343
    
    
    
    (13,263
    )
    
    
    -37.4
    %
    
    
    (45,266
    )
    
    
    -53.2
    %
 
 (1)
    
    In connection with the merger with historical Corgi, Master Replicas changed its fiscal year
ended from December 31 to March 31. We have therefore included consolidated statements of
operations data derived from the audited financial statements for the three-month period ended
March 31, 2006, to cover the period from January 1, 2006 to March 31, 2006. Results of Combined Operations  12 months Audited Financial Statements
  27




---



##### 



Year Ended March 31, 2008, Compared to Year Ended March 31, 2007
 Net sales.
 Costs of goods sold, gross profit and gross margin.
 Selling, general and administrative expenses.
 Impairment charge
 Operating income.
 Net
interest expense .
 Change in fair value of derivative liability.
 Income tax.
 Year Ended March 31, 2007, Compared to Year Ended December 31, 2005
 Net sales.
 28




---



##### 



Costs of goods sold, gross profit and gross margin.
 Selling, general and administrative expenses.
 Operating income.
 Net interest expense .
 Change in fair value of derivative liability.
 Income tax.
 
 B. LIQUIDITY AND CAPITAL RESOURCES
   29




---



##### 



30




---



##### 



Foreign Currency Fluctuations
  
 C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
  
 D. TREND INFORMATION
    31




---



##### 



E. OFF-BALANCE SHEET ARRANGEMENTS
  
 F. CONTRACTUAL OBLIGATIONS
 Payment Due by Periods(in thousands)MoreLess Than
    
    2-3 Years
    
    4-5 Years
    
    Than1 Year
    
    Years
    
    Years
    
    5 Years
    
    TotalOn-Balance Sheet:Short-term debt
    
    $
    12,459
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    12,459Long-term debt
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Obligations under capital leases
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Off-Balance Sheet:Capital commitment
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Licensing commitment
    
    
    2,829
    
    
    
    3,033
    
    
    
    60
    
    
    
    0
    
    
    
    5,922Operating lease
    
    
    1,362
    
    
    
    1,488
    
    
    
    561
    
    
    
    0
    
    
    
    3,411$
    16,650
    
    
    $
    4,521
    
    
    $
    621
    
    
    $
    0
    
    
    $
    21,792
  Critical Accounting Policies and Estimates
  Principles of Consolidation and Reverse Purchase Accounting
   32




---



##### 



Inventory
   Tooling Costs
  Revenue Recognition
   Income Taxes
  Foreign Currency Translation
  Goodwill and Intangible Assets
   33




---



##### 



Stock-Based Compensation
    
 Item 6. Directors, Senior Management and Employees
 
 A. DIRECTORS AND SENIOR MANAGEMENT
     Board of Directors
 Name
    
    Age
    
    PositionCharles C. McGettigan
    
    63
    
    Chairman of the BoardMichael Cookson
    
    52
    
    Chief Executive OfficerDaniel Widdicombe(1)(2)
    
    42
    
    DirectorTimothy Steel(1)(2)
    
    56
    
    Director
 
 (1)
    
    Member of our compensation committee.(2)
    
    Member of our audit committee.(3)
    
    Our Board has determined that Mr. Widdicombe qualifies as an audit committee financial
expert as defined in the applicable rules of the Securities and Exchange Commission. 
 34




---



##### 



Charles McGettigan, Chairman of the Board
 Michael Cookson, Chief Executive Officer
 Timothy Steel, Director
 Daniel Widdicombe, Director
 Executive Officers
 Name
    
    Age
    
    Position
    
    LocationMichael Cookson
    
    
    52
    
    
    Chief Executive Officer
    
    United KingdomDarren Epstein
    
    
    37
    
    
    Executive Vice President, Chief Strategy Officer
    
    United KingdomJack Lawrence
    
    
    47
    
    
    Chief Financial Officer, Chief Operating
Officer and General Manager, U.S.
    
    United StatesTrevor Hayes
    
    
    61
    
    
    Vice President of Global Product Development
    
    United KingdomDenis Horton
    
    
    57
    
    
    Managing Director, Europe
    
    United KingdomBob Esterbrook
    
    
    62
    
    
    Finance Director, Europe
    
    United Kingdom
 35




---



##### 



Michael Cookson, Chief Executive Officer
 Darren Epstein, Executive Vice Presiden
 Jack Lawrence, Chief Operating Officer, Chief Financial Officer and General Manager, U.S.
  Trevor Hayes, Vice President of Global Product Development
 Denis Horton, Managing Director, Europe
 Bob Esterbrook, Finance Director, Europe
 36




---



##### 



B. COMPENSATION
 Compensation of Directors and Executive Officers
     List of Cancelled and Replacement Options*
 Name
    
    Cancelled Grant Date
    
    New GrantMichael Cookson
    
    
    1/10/07
    
    
    
    550,0008/3/06
    
    
    
    182,919Jack Lawrence
    
    
    6/6/07
    
    
    
    100,0009/24/07
    
    
    
    25,000Denis Horton
    
    
    6/6/07
    
    
    
    87,5009/24/07
    
    
    
    25,000Darren Epstein
    
    
    12/27/06
    
    
    
    83,333Robert Esterbrook
    
    
    6/6/07
    
    
    
    25,0009/24/07
    
    
    
    10,000Dina Bohacek
    
    
    1/3/07
    
    
    
    12,5009/24/07
    
    
    
    10,000Trevor Hays
    
    
    1/3/07
    
    
    
    16,6671/6/06
    
    
    
    6,666Deidre Gonzalez
    
    
    9/24/07
    
    
    
    10,000Diane Burlando
    
    
    9/24/07
    
    
    
    10,000
 
 Share Ownership
 37




---



##### 



Certain Employment Contracts
 Item 7  Related Party Transactions
 
 C. BOARD PRACTICES
 Item 7  Related Party
Transactions
      38




---



##### 



D. EMPLOYEES
  Number ofEmployeesMarch 31, 2007
    
    March 31, 2008
    
    October 15, 2008Hong Kong
    
    
    24
    
    
    
    32
    
    
    
    11United Kingdom
    
    
    90
    
    
    
    75
    
    
    
    25United States of America
    
    
    45
    
    
    
    33
    
    
    
    22Total
    
    
    159
    
    
    
    140
    
    
    
    58
 
 E. SHARE OWNERSHIP
  Number of
    
    Exercise
    
    ExpirationName
    
    Options Granted
    
    Price (1)
    
    Date (2)Carrick John Clough
    
    
    
    
    
    
    
    
    Michael Cookson
    
    
    1,219,714
    
    
    $5.85 (with respect
to 550,000 shares);
$6.45 (with respect
to 182,919 shares)
and $0.55 (with
respect to 486,295
shares)
    
    August 2016 (with respect to 182,919
shares); January
2017 (with respect
to 550,000 shares);
and June 2015 (with
respect to 486,798
shares)Darren Epstein
    
    
    83,333
    
    
    
    $5.50
    
    December 2016Charles C. McGettigan
    
    
    
    
    
    
    
    
    Daniel Widdicombe
    
    
    
    
    
    
    
    
    Timothy Steel
    
    
    
    
    
    
    
    
    Jack Lawrence
    
    
    125,000
    
    
    $5.35 (with respect
to 100,000 shares);
$3.30 (with respect
to 25,000 shares)
    
    July 2017 (with respect to 100,000
shares); September
2017 (with respect
to 25,000 shares)Trevor Hayes
    
    
    16,667
    
    
    
    $6.87Denis Horton
    
    
    112,500
    
    
    $5.35 (with respect
to 87,500 shares);
$3.30 (with respect
to 25,000 shares)
    
    March 2017 (with respect to 87,500
shares); September
2017 (with respect
to 25,000 shares)Bob Esterbrook
    
    
    35,000
    
    
    $5.35 (with respect
to 25,000 shares);
$3.30 (with respect
to 10,000 shares)
    
    March 2017 (with respect to 25,000
shares); September
2017 (with respect
to 10,000 shares)
 
 (1)
    
    All options described above have a term of ten years and an exercise price equal to the
closing price of the ADSs on the trading date immediately prior to the date of grant.(2)
    
    These stock options generally vest 25% on the one year anniversary with the remaining options
vesting monthly over the following three year period on a pro rata basis. 39




---



##### 



ADS/Share OwnershipName
    
    Number
    
    % of outstanding(5)Carrick John Clough
    
    
    64,455
    (1)
    
    
    *Michael Cookson
    
    
    711,629
    (1,2)
    
    
    5.63Darren Epstein
    
    
    1,075,055
    (4)
    
    
    9.73Leo Paul Koulos
    
    
    24,000
    (2)
    
    
    *Charles C. McGettigan
    
    
    147,108
    (3)
    
    
    *Daniel Widdicombe
    
    
    4,000
    (2)
    
    
    *Timothy Steel
    
    
    4,000
    (2)
    
    
    *Denis Horton
    
    
    50,475
    (1)
    
    
    *Bob Esterbrook
    
    
    30,285
    (1)
    
    
    *
 
 *
    
    less than 1%(1)
    
    On November 9, 2007 certain directors participated in bridge financing transaction that
converted our warrants to ADSs at $2.03 per share price.(2)
    
    Michael Cookson purchased 20,000 ADSs in October 2007 at a purchase price of $5.00 per
share. In addition, he participated in the November 2007 bridge financing. Mr. Cookson converted $100,000 of his loan into ADSs at $2.03 per ADS, and is still owed $200,000. He also received warrants to purchase 30,000 ADSs at HK $3.00 per share.(3)
    
    In August 2007, Mr. McGettigan converted 2,396 warrants to ADSs at $5.00 per share. In
December 2007, he participated in the equity purchase of 100,000 ADS at $1.00 per share.(4)
    
    In April 2008, the Board approved the release of these shares that had been held in escrow to
Mr. Epstein upon the sale of the Cards business to Esdevium.(5)
    
    Based on 13,385,553 shares outstanding as of March 31, 2008. 40




---



##### 



Item 7. Major Shareholders and Related Party Transactions
 
 A. Major Shareholders
  Number of Shares
    
    Percentage of SharesName of Beneficial Owner
    
    Beneficially Owned
    
    Outstanding (%)Knott Partners Offshore Fund, L.P.
    
    
    1,305,297
    
    
    
    7.8485 Underhill Boulevard, Suite 205
Syosset, NY 11791(1)Consor Capital LLC
    
    
    1,602,557
    
    
    
    9.6475 Gate Five Road, Suite 320
Sausalito, CA 94965(2)Special Situations Private Equity Fund, L.P., et al
    
    
    1,292,552
    
    
    
    7.7527 Madison Avenue, Suite 2600
New York, NY 10022(3)Royal Capital Management LLC
    
    
    2,632,055
    
    
    
    15.8623 Fifth Avenue, 24th floor
New York, NY 10022(4)Gruber & McBaine Capital Management LLC
    
    
    1,022,648
    
    
    
    6.150 Osgood Place-Penthouse
San Francisco, CA 94133(5)SRB Greenway Capital / Walker Smith Capital
    
    
    1,009,196
    
    
    
    6.0300 Crescent Court, Suite 1111
Dallas, TX 75219 (6)
 41




---



##### 



(1)
    
    Based on our records as of March 31, 2008, the group comprising Knott Partners Offshore Fund
(including Knott Partners Offshore Master Fund, Findeme LLC, Shoshone Partners, L.P., Common
Fund Hedged Equity Co., Good Steward Trading Co., Matterhorn Offshore Fund and Mulsanne
Partners, L.P.) owns 1,034,847 ADSs and 270,450 warrants.(2)
    
    Based on our records as of March 31, 2008, the group comprising Consor Capital (including
Consor
Capital L.P., Consor Capital II, L.P., Consor Capital Savion, Joshua Huffard and Jay Huffard)
owns
1,568,923 ADSs and 33,634 warrants.(3)
    
    Based on our records as of March 31, 2008, the group comprising Special Situations Fund
(including
Special Situations Fund III QP, L.P., LJHS Company, SYM Partners, Special Situations Private
Equity
Fund L.P.) owns 1,048,186 ADSs and 244,366 warrants.(4)
    
    Based on our records as of March 31, 2008, the group comprising Royal Capital Fund
(including
Royal Capital Value Fund L.P., Royalty Capital Value Fund, (QP) L.P., Royal Capital Value
Fund, Ltd., Royal Capital Value Fund Ltd., II, Royal Capital LH Managed Account, LMASPC
Segregated Portfolio for and on behalf of Nap Q) owns 2,576,931 ADSs and 55,124 warrants.(5)
    
    Based on our records as of March 31, 2008, the group comprising Gruber & McBain International
(including Gruber & McBaine Capital Management, LLC, Jon D. Gruber, J. Patterson McBaine,
Eric B. Swergold, Gruber & McBaine International, Jon D. Gruber and Linda W. Gruber Trustees FBO
Jon D. and Linda W. Gruber trust dated July 4, 2004 beneficially owned by Eric Swergold and Dawn
Dobras, Trustees, Swergold Dobras Trust Dated August 1, 2000 beneficially owned by J. Patterson
McBaine; Jon D. Gruber and J. Patterson McBaine are the managers, controlling persons and
portfolio managers of Gruber & McBaine Capital Management, LLC) owns 984,174 ADSs and 38,474
warrants.(6)
    
    Based on our records as of March 31, 2008, the group comprising SRB Greenway Capital (including
SRB Greenway Capital L.P., SRB Greenway Capital (QP) L.P., SRB Greenway Offshore Operating Fund,
L.P., HHMI Investments, L.P., Walker Smith Capital L.P., Walker Smith Capital (QP), L.P.,
Walker Smith International Fund Ltd.) owns 822,465 ADSs and 186,731 warrants.  
 B. Related Party Transactions
  42




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##### 



43




---



##### 



Item 8. Financial Information
 
 A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
  Legal Proceedings
   44




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##### 



Dividend Policy
  
 B. SIGNIFICANT CHANGES
  
    
    In May 2007, Mr. Denis Horton joined us as Managing Director, Europe, and in June
2007, Bob Esterbrook joined us as Finance Director, Europe.Effective July 1, 2007,
Jack Lawrence became our new Chief Financial Officer, Chief Operating Officer and
General Manager, U.S.
    
    Effective August 22, 2007, we and the warrant holders amended the terms of the
1,070,654 warrants issued in December 2006 pursuant to an Amendment to Warrants,
Commitment to Issue Replacement Warrants, Amendment to Registration Rights Agreement
and Waiver, to reduce temporarily their exercise price from $7.80 per share to $5.00
per share if exercised by September 5, 2007. Any warrant holder exercising their
warrants would be entitled to receive a new warrant on substantially the same terms
as the existing warrants but with an exercise price of $6.00 per share. The terms
of any warrant not exercised by September 5, 2007 will remain unchanged. Holders of
368,863 warrants took advantage of the amendment and exercised such warrants for
approximately $1.844 million by September 5, 2007, and we issued 184,427 new
warrants to such holders.
    
    On
November 9, 2007, we secured $976,560 of bridge financing (including
$776,560 from officers, employees and directors) with an interest
rate of 15% per annum and with an aggregate of 97,656 warrants with an
exercise price of par value or $3.00 Hong Kong dollars (or
approximately $0.38 per ADS). We converted approximately $473,763 of
the bridge financing into ADSs at $2.03 per ADS and $200,000 at $1.00
per ADS. The remaining balance as of March 31, 2008 was $344,734,
including accrued interest. Approximately one third of the principal
amount of Michael Cooksons note is still outstanding.
    
    On January 7, 2008, we finalized arrangements for a three-year asset based credit
facility with Burdale Financial Limited (Burdale), a member of Bank of Ireland
Group for a maximum credit availability of approximately $30 million. Alongside the
Burdale financing, our existing lenders, Barclays Bank PLC, Ropart Asset Management
Fund LLC (RAM) and Gateway Trade Finance LLC each agreed to extend the maturity of
their existing credit facilities with us and Gateway agreed to provide up to $3.3
million of inventory financing for at least one year. In connection with the RAM
extension, we granted RAM a warrant to purchase 200,000 American Depositary Shares
(ADS) with an exercise price at par value or $3.00 Hong Kong dollars (or
approximately $0.38 per ADS).
    
    On Monday, January 7, 2008, we closed a $2.2 million equity financing in a
private placement of our ADSs to existing investors for $1.00 per ADS for a total of
2.2 million ADSs of which $200,000 was in exchange of existing indebtedness. We
agreed to register the ADSs for resale with the SEC within 90 days. In addition,
pursuant to an exchange agreement dated December 21, 2007, in a private placement,
we converted approximately $473,763 of existing indebtedness into approximately
233,381 ADSs at $2.03 per ADS (the closing NASDAQ per share price for our ADS on
December 20, 2007).
 45




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##### 




    
    On March 15, 2008, Charles McGettigan became the new Chairman of the Board
effective March 15, 2008. Our previous Chairman, John Clough remained on the Board
until he resigned on October 6, 2008. In addition, we restructured the Board
reducing the number of Directors from seven to five Directors. In order to effect
this change, Leo Koulos and Darren Epstein made the decision to resign from the
Board. Darren Epstein will continue as Executive Vice President. Mr. Tim Steel
joined the Companys audit committee and Mr. Daniel Widdicombe joined the Companys
compensation committee.
    
    On March 13, 2008, the Board authorized us to offer the right to our existing
directors and officers to convert into ADSs up to $500,000 of our indebtedness
(principally in the form of accrued and unpaid board fees and expenses and
short-term loans to the company), at the higher of the closing market price on March
13, 2004 or the closing of the conversion expected on or before March 21, 2008. In
addition, the Board has reduced Board fees for Fiscal Year 2009, ending in March
2009, by 50%.
    
    On April 8, 2008, we sold our Cards Inc. trading card distribution business to
Esdevium for approximately US$2.25 million and approximately USD$0.7 million of
inventory. As a result of this sale and pursuant to the terms of our purchase
agreement with the shareholders of Cards Inc. Limited, the Company released to the
former Cards Inc. shareholders 612,213 ADSs which had been held in escrow to cover
certain representations and warranties under the purchase agreement.
    
    On April 15, 2008, we terminated our agreement with Burdale Financial Limited and
was able to refinance the Burdale credit facility with a $16 million
accounts receivable financing facility with CoFace Receivables Finance Limited. The
Company also resumed the production finance facility with Gateway Finance Inc. which
allows additional capital for bringing products to market.
    
    On May 2, 2008 we sold our Corgi collectibles die-cast business to Hornby Hobbies
Limited , including the Corgi brand name and tooling, for consideration of
approximately £7.5 million (or approximately US$15 million). In addition, the
related existing inventory was sold for consideration of approximately £0.8 million
or approximately US$1.6 million. The Corgi collectibles die-cast business was not
profitable.
    
    On May 2, 2008, we used the proceeds from the sale of the Corgi collectibles
die-cast business to Hornby to repay our other lenders, Barclays Bank PLC and Ropart
Asset Management Fund LLC, $3.8 million in the aggregate and to repay in part
various other trade creditors.
    
    On May 2, 2008, following information and consultation with our employees, we
announced a global workforce reduction of approximately 82 employees or about 58% of
our staff, a number of whom joined Hornby. This force reduction was completed in
June of 2008, with a remaining employee base of 58 people.
    
    On May 20, 2008, we ceased our relationship with Eisner LLP, our independent
registered accounting firm. We have continued our relationship with our statutory
auditors, Baker Tilly LLP, in Hong Kong and the United Kingdom.
    
    On June 16, 2008, we received notice from the staff of The Nasdaq Stock Market,
Inc. indicating that we were not in compliance with The Nasdaq Stock Markets
requirements for continued listing because, for the previous 30 consecutive business
days, the bid price of our ADSs has closed below the
minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace
Rule 4450(a)(5) (the Minimum Bid Price Rule). We have until December 15, 2008
(180 days from June 16, 2008) to regain compliance with the Minimum Bid Price Rule.
We can regain compliance with the Minimum Bid Price Rule if the bid price of our
ADSs closes at $1.00 per share or more for a minimum of 10 consecutive business days
before December 15, 2008. If compliance is not achieved by December 15, 2008,
Nasdaq staff will provide written notification to us that our securities will be
delisted. In the event that we receive notice that our ADSs are delisted, Nasdaq
rules permit us to appeal any delisting determination by Nasdaq staff to a Nasdaq
Listings Qualifications
 46




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##### 



Panel. In addition, the Nasdaq Marketplace Rules may permit the Company to transfer
our ADSs to the Nasdaq Capital Market if our ADSs satisfy all criteria for initial
inclusion on such market other than compliance with the Minimum Bid Price Rule. In
the event such transfer were approved, the Nasdaq Marketplace Rules provide that we
would be provided an additional 180 calendar days to comply with the Minimum Bid Price
Rule while on the Nasdaq Capital Market.
    
    On July 14, 2008 our audit committee engaged Burr, Pilger & Mayer LLP (BPM) as
our independent registered public accounting firm. BPM is a regional accounting
firm located in California and operating in the San Francisco Bay Area, with four
offices located in San Francisco, San Jose, Palo Alto and Walnut Creek, California.
    
    On
August 14, 2008, the Warner Brothers Corporation announced the
postponement of the Harry Potter and the Half-Blood Prince movie from
November 2008 to July 2009. This change in the movie release date
materially impacted the Companys projected revenue and its
ability to obtain financing. The late date of Warner Brothers
decision to postpone the movie also impacted our immediate cash flow
due to investments in design, tooling, manufacturing, sales and
marketing already taken place.
    
    On September 30, 2008, we received notice from the NASDAQ Stock Market that we are not in compliance
with the NASDAQ rule requiring that we maintain a minimum market value of publicly held securities
of $50,000,000, if we do not regain compliance with this rule by
December 24, 2008, our securities may be delisted.
    
    On October 13, we received a letter from the Nasdaq Stock Market indicating that, as a
result of Mr. Cloughs
resignation from the Board on October 6, 2008, we no longer comply
with Nasdaqs independent director and audit committe
requirements. We have until April 6, 2009 to regain compliance, or our securities will be delisted.
 Item 6 
Directors, Senior Management and Employees  Compensation
  
 Item 9. The Offer and Listing
 
 A4. Historical Share Price Information
   In U.S. DollarsHigh
    
    LowYear ending March 31, 2008
    
    $
    6.29
    
    
    $
    1.58First quarter
    
    $
    6.29
    
    
    $
    4.60Second quarter
    
    $
    5.50
    
    
    $
    3.23Third quarter
    
    $
    4.50
    
    
    $
    1.70Fourth quarter
    
    $
    2.74
    
    
    $
    1.58Apr-08
    
    $
    1.45
    
    
    $
    0.92May-08
    
    $
    1.02
    
    
    $
    0.59Jun-08
    
    $
    0.93
    
    
    $
    0.65Jul-08
    
    $
    0.79
    
    
    $
    0.60Aug-08
    
    $
    0.62
    
    
    $
    0.32Sep-08
    
    $
    0.50
    
    
    $
    0.19October 2008 (through October 10)
    
    $
    0.29
    
    
    $
    0.15
 47




---



##### 



In U.S. DollarsHigh
    
    LowYear ending March 31, 2007
    
    $
    7.40
    
    
    $
    0.80First quarter
    
    $
    2.76
    
    
    $
    1.90Second quarter
    
    $
    2.19
    
    
    $
    1.05Third quarter
    
    $
    7.40
    
    
    $
    0.80Fourth quarter
    
    $
    6.87
    
    
    $
    4.80Year ended March 31, 2006
    
    $
    4.86
    
    
    $
    2.60First Quarter
    
    $
    4.54
    
    
    $
    3.52Second Quarter
    
    $
    4.86
    
    
    $
    3.13Third Quarter
    
    $
    3.40
    
    
    $
    2.65Fourth Quarter
    
    $
    3.50
    
    
    $
    2.60Year ended March 31, 2005 (full year)
    
    $
    6.48
    
    
    $
    4.10Year ended March 31, 2004 (full year)
    
    $
    9.34
    
    
    $
    3.50Year ended March 31, 2003 (full year)
    
    $
    4.00
    
    
    $
    1.10
 
 B. Plan of Distribution
  
 C. Markets
  48




---



##### 



Item 10. Additional Information
 
 A. SHARE CAPITAL
  
 B. MEMORANDUM and ARTICLES OF ASSOCIATION
   Voting requirements
  
 C. MATERIAL CONTRACTS
  Agreement and Plan of Merger
 Share Purchase Agreement
 49




---



##### 



Purchase Agreement
 Registration Rights Agreement Amendment to Warrants, Commitment to Issue
Replacement Warrants, Amendment to Registration Rights Agreement and Waiver Item 7  Related Party Transactions
 Amendment and Waiver Agreement
 Amendment and Waiver Agreement
 Second Amendment and Waiver Agreement
 Third Amendment and Waiver Agreement
 50




---



##### 



Sale and Purchase Agreement
 Employment Agreement Item 7  Related Party Transactions
 Stock Option Agreement Issued Pursuant to the Corgi International Limited Amended and Restated
1997 Equity Incentive Plan
 Service Agreement Item 7  Related Party Transactions
 Employment Offer Letter Item 7  Related Party Transactions
 Receivables
Finance Standard Terms and Conditions
 Gateway
Financing Agreement
 Ropart Asset Management Fund LLC Agreement
 Amendment to Warrants,
Commitment to Issue Replacement Warrants, Amendment to Registration Rights Agreement and
Waiver
 51




---



##### 



Bridge
Note Purchase Agreement
 Equity
Financing.
 Facility
Agreement
 2008
Coface Agreements.
 Asset Purchase Agreement
 General Security
Agreement
 Asset Purchase Agreement
 Term Facility
Agreement
 
 D. EXCHANGE CONTROLS
  52




---



##### 



E. TAXATION
  Hong Kong Taxation
  Profits Tax
   Capital Gains/Taxation of Dividends
  53




---



##### 



Estate Duty
  Stamp Duty
  United States Federal Income Tax Considerations
  General
  
    
    an individual who is a citizen or resident of the United States;
    
    a corporation or partnership created in or organized under the law of the United States or
any State or political subdivision thereof;
    
    an estate the income of which is includible in gross income for United States federal
income tax purposes regardless of its source;
    
    a trust the administration of which is subject to the primary supervision of a United
States court and which has one or more United States persons who have the authority to control
all substantial decisions of the trust; or
    
    a trust that was in existence on August 20, 1996, was treated as a United States person,
for United States federal income tax purposes, on the previous day, and elected to continue to be
so treated.
 54




---



##### 



Dividends
    Sale or Other Disposition of Shares or ADSs
  55




---



##### 



PFIC Considerations
  Controlled Foreign Corporation Considerations
  Information Reporting and Backup Withholding
  
 F. DOCUMENTS ON DISPLAY
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Raw Materials Price Risk
  56




---



##### 



Foreign Currency Exchange Rate Risk
   
 Item 12. Not applicable .
 
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Not applicable.
 
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures
  57




---



##### 



Changes in Internal Controls
      
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  58




---



##### 



Item 16C. Principal Accountant Fees and Services
 Year ended March 31,(in thousands)2007
    
    2008Audit fees billed (1)
    
    $
    1,577,535
    
    
    $
    863,441Tax preparation fees (2)
    
    $
    179,429
    
    
    $
    20,570Other (3)
    
    
    
    
    
    $
    878,428Total
    
    $
    1,756,964
    
    
    $
    1,762,439
 
 (1)
    
    For the years ended March 31, 2007 and March 31, 2008, these are fees for professional
services performed by Burr, Pilger & Mayer, Eisner LLP, and Baker Tilly for the audit of our
annual financial statements, preparation of our registration statement on Form F-3 and
preparation of our annual report on Form 20-F.(2)
    
    For the years ended March 31, 2007 and March 31, 2008, these are fees for tax preparation for
required state and federal filings for Burr, Pilger & Mayer and Baker Tilly.(3)
    
    Other includes Baker Tilly Corporate Finance billings, SOX
planning and managements report on internal control over financial
reporting.  
 Item 16D. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Exhibits
 ExhibitNo.
    
    Exhibit Title1.1
    
    Memorandum of Association of the Company.(1)1.2
    
    Articles of Association of the Company.(2)2.1
    
    Form of Deposit Agreement by and among Corgi International
Limited, The Bank of New York and Owners and Holders of American
Depositary Receipts, dated March 5, 1997.(9)2.2
    
    Amended and Restated 1997 Equity Incentive Plan.(7)2.3
    
    Master Replicas Stock Option Plan.(13)4.1
    
    Securities Exchange Agreement, by and among Corgi International
Limited and     the other parties signatories thereto, dated April 30, 2008.*4.2
    
    Asset Purchase Agreement, by and among Cards Inc. Limited,  Corgi     International
Limited, Darren Epstein, and Esdevium Games Limited, dated      April 8, 2008.*4.3
    
    Asset Purchase Agreement, by and among Corgi Classics Limited,
Corgi USA,      Inc., Corgi International LTD., and Hornby Hobbies Limited, dated
        April 30, 2008.*4.4
    
    Bridge Note Purchase Agreement, by and among Corgi International Limited
and     the other parties signatories thereto, dated November 9, 2007.*4.5
    
    Form of Registration Rights Agreement dated as of December 20,
2006, by and among Corgi International Limited and the other
parties signatories thereto.(10)
 59




---



##### 



ExhibitNo.
    
    Exhibit Title4.6
    
    Note and Warrant Purchase Agreement dated April 28, 2006, by and
between Corgi International Limited and certain investors listed
on the Schedule of Purchasers attached thereto.(8)4.7
    
    Form of Promissory Note issued by Corgi International Limited to
the other parties to the Note and Warrant Purchase Agreement
dated April 28, 2006.(8)4.8
    
    Form of Warrant issued by Corgi International Limited to the
other parties to the Note and Warrant Purchase Agreement dated
April 28, 2006.(8)4.9
    
    Share Purchase Agreement, dated November 2, 2006, between the
Company and the shareholders of Cards Inc. Limited. (10)4.10
    
    Sale and Purchase Agreement, dated November 3, 2006, between the
Company, Poundwell Limited, Zindart Manufacturing Limited,
Dongguan Xinda Giftware Co., Ltd., Luen Tat Model Design Company
Limited, Luen Tat Mould Manufacturing Limited and Onchart
Industrial (BVI) Limited. (10)4.11
    
    Amendment and Waiver Agreement, dated November 15, 2006, among
the Company, Master Replicas Inc. and LightSaber Acquisition
Corp.(10)4.12
    
    Amendment and Waiver Agreement, between the Company and the
investors party to the Note and Warrant Purchase Agreement, dated
April 28, 2006.(10)4.13
    
    Second Amendment and Waiver Agreement, dated August 2006, between
the Company and the investors party to the Note and Warrant
Purchase Agreement.(10)4.14
    
    Third Amendment and Waiver Agreement, dated November 16, 2006,
between the Company and the investors party to the Note and
Warrant Purchase Agreement.(10)4.15
    
    Purchase Agreement, dated November 16, 2006, between the Company
and the investors named therein. (10)4.16
    
    Agreement and Plan of Merger dated as of October 4, 2006, by and
among Master Replicas, Inc., Corgi International Limited and
LightSaber Acquisition Corp.(11)4.17
    
    Amendment to Warrants, Commitment to Issue Replacement Warrants,
Amendment to Registration Rights Agreement and Waiver between the
Company and various warrant holders effective as of August 22,
2007.(13)4.18
    
    Form of Warrant issued by Corgi International Limited to the
other parties to the Amendment to Warrants, Commitment to Issue
Replacement Warrants, Amendment to Registration Rights Agreement
and Waiver between the Company and various warrant holders
effective as of August 22, 2007.(13)4.19
    
    Receivables Finance Agreement, by and between Corgi Classics Ltd.
and Coface Receivables Finance Limited, dated 
June 26, 2006.(13)4.20
    
    Receivables Finance Standard Terms and Conditions, dated June 6,
2006, by and between Corgi International Limited and Coface
Receivables Finance Limited.(13)4.21
    
    All Assets Debenture by and between Corgi International Limited
and Coface Receivables Limited.(13)4.22
    
    Purchasing Arrangement Agreement, by and between Corgi
International Limited and Gateway Trade Finance, LLC, dated July
25, 2007.(13)4.23
    
    Employment Agreement by and between Corgi International Limited
and Michael Cookson, dated December 26, 2006.(11)4.24
    
    Stock Option Agreement Issued Pursuant to the Corgi International
Limited Amended and Restated 1997 Equity Incentive Plan, by and
among Corgi International Limited and Michael Cookson, dated as
of January 2007.(11)4.25
    
    Service Agreement by and between Cards Inc. Limited and Darren
Epstein, dated as of December 20, 2006.(11)4.26
    
    Letter Agreement by and between Corgi International Limited and
Jack Lawrence, dated May 22, 2007.(13)4.27
    
    Receivables Finance Standard Terms and Conditions, by and between Corgi       Classics Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.28
    
    Receivables Finance Agreement, by and between Cards Inc Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.29
    
    Receivables Finance Standard Terms and Conditions, by and between Cards Inc   Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.30
    
    Receivables Finance Agreement, by and between Corgi Classics Ltd and Coface   Receivables Finance Limited, dated April 16, 2008.*4.31
    
    General Security Agreement, by and between Corgi USA, Inc. and Gateway        Trade Finance, LLC, dated September 12, 2007.*4.32
    
    Gateway Financing Agreement, by and between Master Replicas, Inc and         Gateway Trade Finance, LLC, dated July 25, 2007.*4.33
    
    Term Facility Agreement, by and
between Popco Entertainment Limited and Synergy Global Finance Master
Fund Limited, dated June 2008.*
 60




---



##### 



ExhibitNo.
    
    Exhibit Title8.1
    
    List of subsidiaries*12.1
    
    Section 302 Certification of Michael Cookson*12.2
    
    Section 302 Certification of Jack Lawrence*13.1
    
    Section 906 Certification of Michael Cookson and Jack Lawrence*23.1
    
    Consent of Burr, Pilger and Mayer
LLP for 2008*23.2
    
    Consent of Burr, Pilger and Mayer
LLP for 2005*
 
 *
    
    Filed herewith(1)
    
    Incorporated by reference in our Registration Statement on Form F-1, as amended (File No.
333-17973).(2)
    
    Incorporated by reference in our Registration Statement on Form F-1, as amended (File No.
333-08134).(3)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed June 29, 2000 (File No.
000-22161).(4)
    
    Incorporated by reference in our Quarterly Report on Form 10-Q, filed February 14, 2001 (File
No. 000- 22161).(5)
    
    Incorporated by reference in our Quarterly Report on Form 10-Q, filed February 12, 2002.(6)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed June 28, 2001.(7)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed July 1, 2002.(8)
    
    Incorporated by reference in our Form 6-K, filed May 26, 2006.(9)
    
    Incorporated by reference in our Registration Statement on Form F-6 (File No. 333-08226),
filed January 20, 1998.(10)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
November 20, 2006.(11)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
April 19, 2007.(12)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
October 26, 2006.(13)
    
    Incorporated by reference in our Form 20-F (File No. 000-22161) filed with the Commission on October 15, 2007. 61




---



##### 



SIGNATURES
  CORGI INTERNATIONAL
LIMITED/s/ Jack LawrenceJack LawrenceChief Financial Officer, Chief
Operating Officer and General
Manager, U.S.
(Principal Financial Officer)  62




---



##### 



EXHIBIT INDEX
 ExhibitNo.
    
    Exhibit Title1.1
    
    Memorandum of Association of the Company.(1)1.2
    
    Articles of Association of the Company.(2)2.1
    
    Form of Deposit Agreement by and among Corgi International
Limited, The Bank of New York and Owners and Holders of American
Depositary Receipts, dated March 5, 1997.(9)2.2
    
    Amended and Restated 1997 Equity Incentive Plan.(7)2.3
    
    Master Replicas Stock Option Plan.(13)4.1
    
    Securities Exchange Agreement, by and among Corgi International
Limited and     the other parties signatories thereto, dated April 30, 2008.*4.2
    
    Asset Purchase Agreement, by and among Cards Inc. Limited,  Corgi     International
Limited, Darren Epstein, and Esdevium Games Limited, dated      April 8, 2008.*4.3
    
    Asset Purchase Agreement, by and among Corgi Classics Limited,
Corgi USA,      Inc., Corgi International LTD., and Hornby Hobbies Limited, dated
        April 30, 2008.*4.4
    
    Bridge Note Purchase Agreement, by and among Corgi International Limited
and     the other parties signatories thereto, dated November 9, 2007.*4.5
    
    Form of Registration Rights Agreement dated as of December 20,
2006, by and among Corgi International Limited and the other
parties signatories thereto.(10)4.6
    
    Note and Warrant Purchase Agreement dated April 28, 2006, by and
between Corgi International Limited and certain investors listed
on the Schedule of Purchasers attached thereto.(8)4.7
    
    Form of Promissory Note issued by Corgi International Limited to
the other parties to the Note and Warrant Purchase Agreement dated
April 28, 2006.(8)4.8
    
    Form of Warrant issued by Corgi International Limited to the other
parties to the Note and Warrant Purchase Agreement dated April 28,
2006.(8)4.9
    
    Share Purchase Agreement, dated November 2, 2006, between the
Company and the shareholders of Cards Inc. Limited. (10)4.10
    
    Sale and Purchase Agreement, dated November 3, 2006, between the
Company, Poundwell Limited, Zindart Manufacturing Limited,
Dongguan Xinda Giftware Co., Ltd., Luen Tat Model Design Company
Limited, Luen Tat Mould Manufacturing Limited and Onchart
Industrial (BVI) Limited. (10)4.11
    
    Amendment and Waiver Agreement, dated November 15, 2006, among the
Company, Master Replicas Inc. and LightSaber Acquisition Corp.(10)4.12
    
    Amendment and Waiver Agreement, between the Company and the
investors party to the Note and Warrant Purchase Agreement, dated
April 28, 2006.(10)4.13
    
    Second Amendment and Waiver Agreement, dated August 2006, between
the Company and the investors party to the Note and Warrant
Purchase Agreement.(10)4.14
    
    Third Amendment and Waiver Agreement, dated November 16, 2006,
between the Company and the investors party to the Note and
Warrant Purchase Agreement.(10)4.15
    
    Purchase Agreement, dated November 16, 2006, between the Company
and the investors named therein. (10)4.16
    
    Agreement and Plan of Merger dated as of October 4, 2006, by and
among Master Replicas, Inc., Corgi International Limited and
LightSaber Acquisition Corp.(11)4.17
    
    Amendment to Warrants, Commitment to Issue Replacement Warrants,
Amendment to Registration Rights Agreement and Waiver between the
Company and various warrant holders effective as of August 22,
2007.(13)4.18
    
    Form of Warrant issued by Corgi International Limited to the other
parties to the Amendment to Warrants, Commitment to Issue
Replacement Warrants, Amendment to Registration Rights Agreement
and Waiver between the Company and various warrant holders
effective as of August 22, 2007.(13)
 63




---



##### 



ExhibitNo.
    
    Exhibit Title4.19
    
    Receivables Finance Agreement, by and between Corgi Classics Ltd.
and Coface Receivables Finance Limited, dated 
June 26, 2006.(13)4.20
    
    Receivables Finance Standard Terms and Conditions, dated
June 6,
2006, by and between Corgi International Limited and Coface
Receivables Finance Limited.(13)4.21
    
    All Assets Debenture by and between Corgi International Limited
and Coface Receivables Limited.(13)4.22
    
    Purchasing Arrangement Agreement, by and between Corgi
International Limited and Gateway Trade Finance, LLC, dated 
July  25, 2007.(13)4.23
    
    Employment Agreement by and between Corgi International Limited
and Michael Cookson, dated December 26, 2006.(11)4.24
    
    Stock Option Agreement Issued Pursuant to the Corgi International
Limited Amended and Restated 1997 Equity Incentive Plan, by and
among Corgi International Limited and Michael Cookson, dated as of
January 2007.(11)4.25
    
    Service Agreement by and between Cards Inc. Limited and Darren
Epstein, dated as of December 20, 2006.(11)4.26
    
    Letter Agreement by and between
Corgi International Limited and Jack Lawrence, dated May 22,
2007.(13)4.27
    
    Receivables Finance Standard Terms and Conditions, by and between Corgi       Classics Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.28
    
    Receivables Finance Agreement, by and between Cards Inc Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.29
    
    Receivables Finance Standard Terms and Conditions, by and between Cards Inc   Ltd and Coface Receivables Finance Limited, dated April 16, 2008.*4.30
    
    Receivables Finance Agreement, by and between Corgi Classics Ltd and Coface   Receivables Finance Limited, dated April 16, 2008.*4.31
    
    General Security Agreement, by and between Corgi USA, Inc. and Gateway        Trade Finance, LLC, dated September 12, 2007.*4.32
    
    Gateway Financing Agreement, by and between Master Replicas, Inc and         Gateway Trade Finance, LLC, dated July 25, 2007.*4.33
    
    Term Facility Agreement, by and
between Popco Entertainment Limited and Synergy Global Finance Master
Fund Limited, dated June 2008.*8.1
    
    List of subsidiaries*12.1
    
    Section 302 Certification of Michael Cookson*12.2
    
    Section 302 Certification of Jack Lawrence*13.1
    
    Section 906 Certification of Michael Cookson and Jack Lawrence*23.1
    
    Consent of Burr, Pilger and Mayer
LLP for 2008*23.2
    
    Consent of Burr, Pilger and Mayer
LLP for 2005*
 
 *
    
    Filed herewith(1)
    
    Incorporated by reference in our Registration Statement on Form F-1, as amended (File No.
333-17973).(2)
    
    Incorporated by reference in our Registration Statement on Form F-1, as amended (File No.
333-08134).(3)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed June 29, 2000 (File No.
000-22161).(4)
    
    Incorporated by reference in our Quarterly Report on Form 10-Q, filed February 14, 2001 (File
No. 000- 22161).(5)
    
    Incorporated by reference in our Quarterly Report on Form 10-Q, filed February 12, 2002.(6)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed June 28, 2001.(7)
    
    Incorporated by reference in our Annual Report on Form 10-K, filed July 1, 2002.(8)
    
    Incorporated by reference in our Form 6-K, filed May 26, 2006. 64




---



##### 



(9)
    
    Incorporated by reference in our Registration Statement on Form F-6 (File No. 333-08226),
filed January 20, 1998.(10)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
November 20, 2006.(11)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
April 19, 2007.(12)
    
    Incorporated by reference in our Form 6-K (File No. 000-22161) filed with the Commission on
October 26, 2006.(13)
    
    Incorporated by reference in our Form 20-F (File No.
000-22161) filed with the Commission on October 15, 2007.  Index to Financial Statements
 F-2
    
    Report of Independent Registered Public Accounting FirmF-3
    
    Report of Independent Registered Public Accounting FirmF-5
    
    Consolidated Balance Sheets as of March 31, 2007 and 2008F-6
    
    Consolidated statements of Operations for the years ended December 31,
2004, December 31, 2005, the three month period ended March 31, 2006,
the year ended March 31, 2007 and the year ended March 31, 2008F-7
    
    Consolidated statements of stockholders equity for the years ended
December 31, 2004, December 31, 2005, the three month period ended
March 31, 2006, the year ended March 31, 2007 and the year ended March
31, 2008F-8
    
    Consolidated statements of Cash Flows for the years ended December 31,
2004, December 31, 2005, the three month period ended March 31, 2006,
the year ended March 31, 2007 and the year ended March 31, 2008F-10
    
    Notes to the consolidated financial statements
 65




---



##### 



Corgi
International Ltd.




---



##### 



Report of Independent Registered Public Accounting Firm
 
     
 F-2




---



##### 



Report of Independent Registered Public accounting firm
 
    
  F-3




---



##### 



Corgi International Ltd.
 
   CORGI INTERNATIONAL LIMITED
CONSOLIDATED BALANCE SHEET
 March 31, 2007
    
    
    March 31, 2008ASSETS (NOTE 9)Current assets:Cash
    
    $
    2,149,180
    
    
    $
    718,245Accounts receivable, net of allowance of $1,694,000 and
$998,000 as of 3/31/2007 and 3/31/2008, respectively
    
    
    11,462,229
    
    
    
    8,634,140Income tax receivable
    
    
    354,850
    
    
    
    1,340,958Inventory, net
    
    
    14,791,241
    
    
    
    2,438,766Prepaid expenses and other assets
    
    
    5,301,552
    
    
    
    1,904,993Deferred tax assets
    
    
    728,000
    
    
    
    Assets held for sale
    
    
    
    
    
    
    2,365,762Total current assets
    
    
    34,787,052
    
    
    
    17,402,864Property and equipment, net
    
    
    620,151
    
    
    
    199,222Notes receivable
    
    
    102,415
    
    
    
    Tooling costs, net
    
    
    4,466,970
    
    
    
    385,388Assets held for sale
    
    
    
    
    
    
    7,351,543Goodwill
    
    
    14,639,284
    
    
    
    9,612,172Intangible assets, net
    
    
    13,214,286
    
    
    
    1,109,210Restricted investments
    
    
    
    
    
    
    322,634Total assets
    
    $
    67,830,158
    
    
    $
    36,383,033LIABILITIES
AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Short term debt
    
    $
    9,544,643
    
    
    $
    12,459,060Accrued expenses
    
    
    10,685,502
    
    
    
    10,148,126Trade accounts payable
    
    
    16,516,588
    
    
    
    22,065,636Income taxes payable
    
    
    205,017
    
    
    
    Current portion long term debt
    
    
    329,992
    
    
    
    Total current liabilities
    
    
    37,281,742
    
    
    
    44,672,822Long term debt, net of current portion
    
    
    659,984
    
    
    
    37,941,726
    
    
    
    44,672,822Stockholders equityOrdinary Stock, authorized 20,000,000 shares, par value
$0.384 (Hong Kong Equivalent HK $3), issued and
outstanding 9,873,142 and 12,793,341, (including 612,213
shares held in escrow)
    
    
    3,791,282
    
    
    
    4,908,799Additional paid-in capital
    
    
    37,073,942
    
    
    
    42,749,103Accumulated deficit
    
    
    (10,826,847
    )
    
    
    (56,093,684
    )Accumulated other comprehensive income (loss), net of tax
    
    
    (149,945
    )
    
    
    145,993Total
stockholders equity (deficit)
    
    
    29,888,432
    
    
    
    (8,289,789
    )Total
liabilities and stockholders equity (deficit)
    
    $
    67,830,158
    
    
    $
    36,383,033
  F-4




---



##### 



Corgi International Ltd.
 
   CORGI INTERNATIONAL LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
 Three monthYear ended
    
    
    period ended
    
    
    Year ended
    
    
    Year endedDecember 31, 2005
    
    
    March 31, 2006
    
    
    March 31, 2007
    
    
    March 31, 2008Net sales
    
    $
    47,194,243
    
    
    $
    6,747,665
    
    
    $
    35,497,317
    
    
    $
    85,089,482Cost of goods sold
    
    
    31,109,570
    
    
    
    4,095,489
    
    
    
    28,140,004
    
    
    
    71,632,147Gross profit
    
    
    16,084,673
    
    
    
    2,652,176
    
    
    
    7,357,313
    
    
    
    13,457,335Operating expensesAdministration, sales and marketing
expenses
    
    
    9,841,742
    
    
    
    1,719,596
    
    
    
    20,667,062
    
    
    
    48,864,645Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,275,921(Loss) Income from operations
    
    $
    6,242,931
    
    
    $
    932,580
    
    
    $
    (13,309,749
    )
    
    $
    (43,683,231
    )Other expense :Interest expense
    
    
    252,078
    
    
    
    23,321
    
    
    
    538,273
    
    
    
    2,190,373Change in fair value of
derivative liability
    
    
    
    
    
    
    
    
    
    
    380,000
    
    
    
    (Loss) Income before (benefit) provision for
income taxes
    
    
    5,990,853
    
    
    
    909,259
    
    
    
    (14,228,022
    )
    
    
    (45,873,604
    )(Benefit) Provision for income tax
    
    
    1,664,000
    
    
    
    566,000
    
    
    
    (965,178
    )
    
    
    (606,767
    )Net (loss) income
    
    $
    4,326,853
    
    
    $
    343,259
    
    
    $
    (13,262,844
    )
    
    $
    (45,266,837
    )Other comprehensive income (loss), net of tax:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    (149,945
    )
    
    
    295,938Comprehensive (loss) income
    
    $
    4,326,853
    
    
    $
    343,259
    
    
    $
    (13,412,789
    )
    
    $
    (44,970,899
    )(Loss) income per ordinary shareBasic
    
    $
    115.57
    
    
    $
    9.17
    
    
    $
    (5.28
    )
    
    $
    (4.22
    )Diluted
    
    $
    0.93
    
    
    $
    0.07
    
    
    $
    (5.28
    )
    
    $
    (4.22
    )Weighted average ordinary sharesBasic
    
    
    37,440
    
    
    
    37,440
    
    
    
    2,511,103
    
    
    
    10,718,436Diluted
    
    
    4,645,000
    
    
    
    4,631,584
    
    
    
    2,511,103
    
    
    
    10,718,436
  F-5




---



##### 



Corgi International Ltd.
 
   Corgi International Ltd.
   AccumulatedSeries A Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    otherPreferred Stock
    
    
    Ordinary Stock
    
    
    Additional
    
    
    Accumulated
    
    
    comprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Paid-in Capital
    
    
    Deficit
    
    
    income (loss)
    
    
    TotalBalance of Members equity at January
1, 2005
    
    
    319,528
    
    
    
    528
    
    
    
    32,503
    
    
    $
    12,481
    
    
    
    756,324
    
    
    
    (2,234,106
    )
    
    
    
    
    
    $
    (1,464,773
    )Issuance of ordinary stock
    
    
    
    
    
    
    
    
    
    
    4,937
    
    
    
    1,896
    
    
    
    (1,663
    )
    
    
    
    
    
    
    
    
    
    
    233Deferred stock-based compensation
arising from options issued to
employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,748
    
    
    
    
    
    
    
    
    
    
    
    89,748Net Income for year ended December 31,
2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,326,844
    
    
    
    
    
    
    
    4,326,844Balance at December 31, 2005
    
    
    319,528
    
    
    $
    528
    
    
    
    37,440
    
    
    $
    14,377
    
    
    $
    844,409
    
    
    $
    2,092,738
    
    
    
    
    
    
    $
    2,952,052Deferred Stock-based compensation
arising from options issued to
employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,222
    
    
    
    
    
    
    
    
    
    
    
    183,222Net Income three month ended March 31,
2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343,259
    
    
    
    
    
    
    
    343,259Balance at March 31, 2006
    
    
    319,528
    
    
    $
    528
    
    
    
    37,440
    
    
    $
    14,377
    
    
    $
    1,027,631
    
    
    $
    2,435,997
    
    
    
    
    
    
    $
    3,478,533Stock-based compensation arising from
options issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010,834
    
    
    
    
    
    
    
    
    
    
    
    1,010,834Issuance of ordinary stock for services
    
    
    
    
    
    
    
    
    
    
    131,220
    
    
    
    50,384
    
    
    
    675,640
    
    
    
    
    
    
    
    
    
    
    
    726,024Preferred shares repurchased
    
    
    (10,840
    )
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    (71,272
    )
    
    
    
    
    
    
    
    
    
    
    (71,304
    )Conversion preferred Series A and
Series B
    
    
    (308,688
    )
    
    
    (496
    )
    
    
    3,720,862
    
    
    
    1,428,811
    
    
    
    1,374,634
    
    
    
    
    
    
    
    
    
    
    
    2,802,949Exercise of stock warrants
    
    
    
    
    
    
    
    
    
    
    139,617
    
    
    
    53,613
    
    
    
    12,735
    
    
    
    
    
    
    
    
    
    
    
    66,348Acquisition of Cards Inc. Limited
    
    
    
    
    
    
    
    
    
    
    578,897
    
    
    
    222,296
    
    
    
    3,019,527
    
    
    
    
    
    
    
    
    
    
    
    3,241,823Deemed acquisition of Corgi
International Limited
    
    
    
    
    
    
    
    
    
    
    5,265,106
    
    
    
    2,021,801
    
    
    
    29,644,213
    
    
    
    
    
    
    
    
    
    
    
    31,666,014Conversion of Series B warrant
liability to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    380,000
    
    
    
    
    
    
    
    
    
    
    
    380,000Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149,945
    )
    
    
    (149,945
    )Net loss for year ended March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,262,844
    )
    
    
    
    
    
    
    (13,262,844
    )Balance at March 31, 2007
    
    
    
    
    
    $
    
    
    
    
    9,873,142
    
    
    $
    3,791,282
    
    
    $
    37,073,942
    
    
    $
    (10,826,847
    )
    
    $
    (149,945
    )
    
    $
    29,888,432Stock-based compensation arising from
options issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,568,603
    
    
    
    
    
    
    
    
    
    
    
    1,568,603Stock options exercised
    
    
    
    
    
    
    
    
    
    
    80,403
    
    
    
    30,875
    
    
    
    9,326
    
    
    
    
    
    
    
    
    
    
    
    40,201Fair value
of warrants issued in connection with debt financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    500,000Issuance of ordinary stock for services
    
    
    
    
    
    
    
    
    
    
    14,166
    
    
    
    5,440
    
    
    
    70,348
    
    
    
    
    
    
    
    
    
    
    
    75,788Exercise of stock warrants
    
    
    
    
    
    
    
    
    
    
    372,249
    
    
    
    142,944
    
    
    
    1,701,377
    
    
    
    
    
    
    
    
    
    
    
    1,844,321Equity
financing (January 2008)
    
    
    
    
    
    
    
    
    
    
    2,200,000
    
    
    
    841,893
    
    
    
    1,358,107
    
    
    
    
    
    
    
    
    
    
    
    2,200,000Equity financing (October 2007)
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    7,680
    
    
    
    92,320
    
    
    
    
    
    
    
    
    
    
    
    100,000Conversion
of bridge loans to stock
    
    
    
    
    
    
    
    
    
    
    233,381
    
    
    
    88,685
    
    
    
    375,080
    
    
    
    
    
    
    
    
    
    
    
    463,765Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295,938
    
    
    
    295,938Net loss for year ended March 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,266,837
    )
    
    
    
    
    
    
    (45,266,837
    )Balance at March 31, 2008
    
    
    
    
    
    $
    
    
    
    
    12,793,341
    
    
    $
    4,908,799
    
    
    $
    42,749,103
    
    
    $
    (56,093,684
    )
    
    $
    145,993
    
    
    $
    (8,289,789
    )
  F-6




---



##### 



Corgi International Ltd.
 
   CORGI INTERNATIONAL LIMITED
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Fiscal PeriodsYear ended
    
    
    Three month period ended
    
    
    Year ended
    
    
    Year endedDecember 31, 2005
    
    
    March 31, 2006
    
    
    March 31, 2007
    
    
    March 31, 2008Cash flows from operating
activities:Net (loss) income
    
    $
    4,326,853
    
    
    $
    343,259
    
    
    $
    (13,262,844
    )
    
    $
    (45,266,837
    )Adjustments to reconcile net
(loss) income to net cash used
in operating activities:Gain on disposal of
fixed assets
    
    
    3,971
    
    
    
    
    
    
    
    
    
    
    
    (203,741
    )Loss from impairment
of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,275,921Depreciation and
amortization
    
    
    965,997
    
    
    
    150,157
    
    
    
    3,281,426
    
    
    
    8,118,127Deferred tax asset
    
    
    (935,975
    )
    
    
    393,666
    
    
    
    (194,691
    )
    
    
    Stock compensation
expense
    
    
    89,748
    
    
    
    183,222
    
    
    
    1,010,834
    
    
    
    1,568,603Fair value
of warrants issued in connection with debt financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000Ordinary stock issued
for services
    
    
    
    
    
    
    
    
    
    
    726,074
    
    
    
    75,788Derivative liability
    
    
    
    
    
    
    
    
    
    
    380,000
    
    
    
    Changes in operating accounts:Accounts receivable
    
    
    (6,082,287
    )
    
    
    3,400,032
    
    
    
    5,221,476
    
    
    
    2,828,089Income tax receivable
    
    
    
    
    
    
    
    
    
    
    (354,850
    )
    
    
    (986,108
    )Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728,000Inventory 
Including Assets Held
for Sale
    
    
    (5,465,862
    )
    
    
    700,050
    
    
    
    2,370,057
    
    
    
    9,986,714Prepaid expenses and
other current assets
    
    
    (440,466
    )
    
    
    (104,984
    )
    
    
    5,517,020
    
    
    
    3,396,559Other
    
    
    (6,959
    )
    
    
    
    
    
    
    
    
    
    
    Notes receivable long
term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,415Restricted investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (322,633
    )Accrued other expenses
    
    
    4,640,198
    
    
    
    (3,226,172
    )
    
    
    (5,579,712
    )
    
    
    462,625Trade accounts payable
    
    
    4,577,879
    
    
    
    (4,684,632
    )
    
    
    1,221,941
    
    
    
    5,549,047Income tax payable
    
    
    1,624,975
    
    
    
    (750,321
    )
    
    
    (874,564
    )
    
    
    (21,403
    )Net cash flows (used in) /
provided by operating activities
    
    
    3,298,072
    
    
    
    (3,595,723
    )
    
    
    (537,833
    )
    
    
    (5,208,835
    )Cash flows from investing
activities:Cash received in
acquisition of Cards
    
    
    
    
    
    
    
    
    
    
    42,823
    
    
    
    Cash received in
acquisition of Corgi
    
    
    
    
    
    
    
    
    
    
    7,401,448
    
    
    
    Purchase of property
and equipment
    
    
    
    
    
    
    (51,841
    )
    
    
    (390,831
    )
    
    
    (207,734
    )Purchase of web site
development costs
    
    
    (321,674
    )
    
    
    
    
    
    
    
    
    
    
    Costs incurred in
acquisition
    
    
    
    
    
    
    
    
    
    
    (2,074,899
    )
    
    
    Tooling costs 
Including Assets Held
for Sale
    
    
    (472,810
    )
    
    
    (117,743
    )
    
    
    (1,436,956
    )
    
    
    (2,883,031
    )
  F-7




---



##### 



Corgi International Ltd.
 Fiscal PeriodsYear ended
    
    
    Three month period ended
    
    
    Year ended
    
    
    Year endedDecember 31, 2005
    
    
    March 31, 2006
    
    
    March 31, 2007
    
    
    March 31, 2008Net cash (used in) provided by
investing activities
    
    
    (794,484
    )
    
    
    (169,584
    )
    
    
    3,541,585
    
    
    
    (3,090,765
    )Cash flows from financing
activities:Net proceeds /
(payments) from line
of credit
    
    
    (150,000
    )
    
    
    
    
    
    
    2,142,063
    
    
    
    2,388,205Repayment of debt
assumed in
acquisitions
    
    
    
    
    
    
    
    
    
    
    (3,458,178
    )
    
    
    Exercise of warrants
for ordinary shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,844,321Proceeds from
issuance of standby
notes
    
    
    (150,000
    )
    
    
    
    
    
    
    66,348
    
    
    
    Proceeds from
exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,201Proceeds from sale of
ordinary shares to
CEO
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Proceeds from
issuance of equity
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,200,000Payments on capital
lease obligations
    
    
    (8,642
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from
inventory financing
    
    
    (120,371
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from sale of
assets
    
    
    754
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of
preferred shares
    
    
    
    
    
    
    
    
    
    
    (71,304
    )
    
    
    Payments for purchase
of stock
    
    
    1,615,682
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by / (used in)
financing activities
    
    $
    1,187,423
    
    
    $
    
    
    
    $
    (1,321,071
    )
    
    $
    6,572,727Effect for foreign
currency translation
    
    
    0
    
    
    
    0
    
    
    
    (149,945
    )
    
    
    295,938Net (decrease) / increase in
cash and cash equivalents
    
    
    3,691,011
    
    
    
    (3,765,307
    )
    
    
    1,532,736
    
    
    
    (1,430,935
    )Cash at beginning of period
    
    
    690,740
    
    
    
    4,381,751
    
    
    
    616,444
    
    
    
    2,149,180Cash at end of period
    
    $
    4,381,751
    
    
    $
    616,444
    
    
    $
    2,149,180
    
    
    $
    718,245Supplemental disclosure of cash
flow information:Cash paid for interest
    
    $
    125,494
    
    
    $
    36,341
    
    
    $
    298,359
    
    
    $
    896,572Cash paid for taxes
    
    $
    975,686
    
    
    $
    906,700
    
    
    $
    1,013,203
    
    
    
    Supplemental disclosure of
non-cash Investing and financing
activitiesIssuance of common stock
in connection with Cards
acquisition
    
    
    
    
    
    
    
    
    
    $
    3,241,823Issuance of common stock
and warrants in connection
with Corgi acquisition
    
    
    
    
    
    
    
    
    
    $
    31,666,014Conversion of Series A and
B Preferred shares to
common shares
    
    
    
    
    
    
    
    
    
    $
    2,802,949Reduction in Goodwill and
Accrued Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,000,000Conversion of Bridge
Finance and Interest to
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463,765Fair value of warrants accounted
for as interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    500,000
   F-8




---



##### 



Corgi International Ltd.
  1. Organization and Basis of Presentation
         F-9




---



##### 



Corgi International Ltd.
  Background to the Merger
          Basis of Presentation
   F-10




---



##### 



Corgi International Ltd.
      2. Summary of Significant Accounting Policies
 Principles of Consolidation and Reverse Purchase Accounting
   Reclassifications
 
 Financial Instruments
  Use of Estimates
   F-11




---



##### 



Corgi International Ltd.
  Cash and Cash Equivalents
  Restricted Investment
  Allowance for Doubtful Accounts
    Property and Equipment
   Web Site Development
 Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use
 Inventory
    F-12




---



##### 



Corgi International Ltd.
   Tooling Costs
  Revenue Recognition
     Income Taxes
 Accounting for Income Taxes
 Accounting
for Uncertainty in Income Taxes.
  F-13




---



##### 



Corgi International Ltd.
   Advertising Costs
  Freight and Shipping Costs
   Earnings per Ordinary Share
 Earnings
Per Share
 Foreign Currency Translation
  Impairment of Long-Lived Assets
   Goodwill and Intangible Assets
 , Goodwill and Other Intangible Assets
  F-14




---



##### 



Corgi International Ltd.
     Provision for Returns
  Concentrations of Credit Risk and Seasonality
       F-15




---



##### 



Corgi International Ltd.
    Stock-Based Compensation
 Accounting for Stock-Based Compensation Accounting for Equity Instruments that are Issued to Other than Employees for
Acquiring, or in Conjunction with Selling, Goods and Services
 Share-Based Payments,
 Recent Accounting Pronouncements
 Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109 Accounting
for Income Taxes
 Business
Combinations.
  F-16




---



##### 



Corgi International Ltd.
  , Noncontrolling Interests in
Consolidated Financial Statements  An Amendment of ARB No. 51.
 3. Acquisitions
   Cash
    
    $
    7,400,000Accounts receivable
    
    
    7,904,000Inventory
    
    
    5,780,000Fixed assets and tooling
    
    
    4,955,000Intangibles
    
    
    8,400,000Other assets
    
    
    9,750,000Liabilities
    
    
    (23,717,000
    )Goodwill
    
    
    12,750,000Purchase Price
    
    $
    33,222,000
  Value of shares at fair value(5,265,106 shares at $5.60 per share)
    
    $
    29,484,000Fair value of options and warrants
    
    
    2,182,000Costs incurred*
    
    
    1,556,000Purchase Price
    
    $
    33,222,000
 
 *
    
    Costs incurred were allocated 75% to the acquisition of Corgi International Limited and 25%
to the acquisition of Cards Inc. Limited.   F-17




---



##### 



Corgi International Ltd.
  EstimatedValue
    
    
    Useful LifeTrade Name
    
    $
    4,800,000
    
    
    8 YearsCustomer Relationships
    
    
    2,700,000
    
    
    4 - 8 YearsOther
    
    
    900,000
    
    
    1 - 3 YearsTotal
    
    $
    8,400,000
  Cash
    
    $
    43,000Accounts receivable
    
    
    4,750,000Inventory
    
    
    5,593,000Fixed assets and tooling
    
    
    250,000Intangibles
    
    
    5,700,000Other assets
    
    
    790,000Liabilities
    
    
    (15,254,000
    )Goodwill
    
    
    1,889,000Purchase Price
    
    $
    3,761,000
  Value of shares at fair value
(578,897 shares at $5.60 per share)
    
    $
    3,242,000Costs incurred*
    
    
    519,000Purchase Price
    
    $
    3,761,000
 
 *
    
    Costs incurred were allocated 75% to the acquisition of Corgi International Limited and 25%
to the acquisition of Cards Inc. Limited.   Estimated UsefulValue
    
    
    LifeSupplier Relationships
    
    $
    1,700,000
    
    
    7 YearsOther
    
    
    1,400,000
    
    
    1 - 5 YearsLicensing Relationships
    
    
    2,600,000
    
    
    3 YearsTotal
    
    $
    5,700,000
   F-18




---



##### 



Corgi International Ltd.
  Unaudited Pro Forma Summary
  For year ended
    
    
    For year endedMarch 31, 2006
    
    
    March 31, 2007Net Sales
    
    $
    105,588,000
    
    
    $
    81,549,000Operating loss
    
    
    (9,311,000
    )
    
    
    (39,342,000
    )Net loss
    
    
    (13,412,000
    )
    
    
    (39,788,000
    )Loss per ordinary share
    
    $
    (1.40
    )
    
    $
    (4.11
    )
 4. Tooling Costs
 Tooling Costs
 March 31, 2007
    
    
    March 31, 2008Tooling Costs
    
    $
    8,320,482
    
    
    $
    9,262,192Accumulated Amortization
    
    
    (3,853,512
    )
    
    
    (6,038,671
    )Total Tooling Costs
    
    $
    4,466,970
    
    
    $
    3,223,521Less Assets Held For Sale  Tooling
    
    
    
    
    
    
    (2,838,133
    )Net Tooling Costs
    
    $
    4,466,970
    
    
    $
    385,388
   F-19




---



##### 



Corgi International Ltd.
  5. Property and Equipment
 March 31, 2007
    
    
    March 31, 2008Computer Equipment
    
    $
    345,750
    
    
    $
    503,838Furniture and Fixtures
    
    
    303,261
    
    
    
    550,661Capital Lease Equipment
    
    
    
    
    
    
    17,053Tradeshow Booth
    
    
    
    
    
    
    61,117Software
    
    
    
    
    
    
    156,778Website Development
    
    
    524,765
    
    
    
    629,982Automobiles
    
    
    33,532
    
    
    
    50,926Total Property and Equipment
    
    $
    1,207,308
    
    
    $
    1,970,355Accumulated Depreciation and amortization
    
    
    (587,157
    )
    
    
    (1,771,133
    )Property and Equipment
    
    $
    620,151
    
    
    $
    199,222
  6. Assets Held For Sale
 Assets held for sales are summarized as follows:
 As
of March 31, 2008Corgi Classics
    
    
    Cards
    
    
    TotalInventory-total
current assets held for sale
    
    $
    1,619,490
    
    
    $
    746,272
    
    
    $
    2,365,762Tooling
    
    $
    2,838,133
    
    
    $
    
    
    
    $
    2,838,133Identifiable
intangibles assets
    
    
    4,062,100
    
    
    
    451,310
    
    
    
    4,513,410Total long
term assets held for sale
    
    $
    6,900,233
    
    
    $
    451,310
    
    
    $
    7,351,543
   F-20




---



##### 



Corgi International Ltd.
  7. Intangible Assets and Goodwill
 Amortizable intangible assets and goodwill are summarized as follows:
 2008 Year
    
    
    2008 YearMarch 31, 2007
    
    
    Ended
    
    
    Ended
    
    
    March 31, 2008
    
    
    EstimatedNet Carrying
    
    
    Amortization
    
    
    Impairment
    
    
    Net Carrying
    
    
    UsefulValue
    
    
    Expense
    
    
    Charge
    
    
    Value
    
    
    LifeTrade Names
    
    
    4,931,250
    
    
    
    675,000
    
    
    
    120,000
    
    
    
    4,136,250
    
    
    
    5 to 8Customer Relationships
    
    
    4,933,036
    
    
    
    1,467,857
    
    
    
    3,032,143
    
    
    
    433,036
    
    
    
    2 to 8Licensing Relationships
    
    
    2,383,333
    
    
    
    866,667
    
    
    
    910,000
    
    
    
    606,666
    
    
    
    3Other
    
    
    966,667
    
    
    
    333,333
    
    
    
    186,666
    
    
    
    446,668
    
    
    
    1 to 3Sub-Total
    
    $
    13,214,286
    
    
    $
    3,342,857
    
    
    $
    4,248,809
    
    
    $
    5,622,620Less Assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,513,410
    )Total
    
    $
    13,214,286
    
    
    $
    3,342,857
    
    
    $
    4,248,809
    
    
    $
    1,109,210
 Purchase Price
    
    2008 ImpairmentMarch 31, 2007
    
    Adjustment
    
    Charge
    
    March 31, 2008Goodwill
    
    
    14,639,284
    
    
    
    (1,000,000
    )
    
    
    (4,027,112
    )
    
    
    9,612,172
  March 31, 2008Impairment Charge Intangibles
    
    
    4,248,809Impairment Charge Goodwill
    
    
    4,027,112Total Impairment Charge
    
    
    8,275,921
    F-21




---



##### 



Corgi International Ltd.
  8. Accrued Expenses and Prepaid Expenses
  Accrued Expenses
 March 31, 2007
    
    
    March 31, 2008Accrued Royalties
    
    $
    2,638,974
    
    
    $
    3,435,759Accrued Professional Fees
    
    
    1,886,211
    
    
    
    1,823,554Accrued Freight and Production Costs
    
    
    1,813,050
    
    
    
    1,556,480Accrued Other
    
    
    1,981,976
    
    
    
    656,744Accrued Property Tax
    
    
    1,000,000
    
    
    
    1,000,000Accrued Finance Charges
    
    
    521,566
    
    
    
    96,306Accrued Salaries and Related
    
    
    474,858
    
    
    
    1,344,271Accrued Selling Expenses
    
    
    368,867
    
    
    
    235,012$
    10,685,502
    
    
    $
    10,148,126
  Prepaid
Expenses
 March 31, 2007
    
    
    March 31, 2008Prepaid Other
    
    $
    1,606,110
    
    
    $
    184,488Prepaid Marketing
    
    
    1,203,337
    
    
    
    Prepaid Production
    
    
    1,072,150
    
    
    
    553,013Prepaid Royalties
    
    
    747,332
    
    
    
    415,258Prepaid Inventory
    
    
    396,624
    
    
    
    61,048Prepaid Rent
    
    
    275,999
    
    
    
    341,695Prepaid Property Taxes
    
    
    
    
    
    
    349,491Total
    
    $
    5,301,552
    
    
    $
    1,904,993
 9. Long and Short Term Debt
 March 31, 2007
    
    
    March 31, 2008Burdale Financial Limited
    
    
    
    
    
    
    6,556,307Ropart Asset Management
    
    
    2,142,063
    
    
    
    2,942,243Barclays Bank
    
    
    3,155,411
    
    
    
    2,602,818Coface
    
    
    4,209,000
    
    
    
    Promissory Notes
    
    
    
    
    
    
    344,734Other
    
    
    38,170
    
    
    
    12,958Total
    
    $
    9,544,644
    
    
    $
    12,459,060
   F-22




---



##### 



Corgi International Ltd.
        10. License Agreements
   F-23




---



##### 



Corgi International Ltd.
        For the year ended March 31:2009
    
    $
    2,829,0002010
    
    
    2,705,1252011
    
    
    327,5002012
    
    
    60,0002013
    
    
    Total
    
    $
    5,921,625
 11. Contingencies
   F-24




---



##### 



Corgi International Ltd.
  12. Lease Commitments
  For the year ended March 31:2009
    
    $
    1,361,9552010
    
    
    929,5352011
    
    
    558,5782012
    
    
    311,0172013
    
    
    250,327Total
    
    $
    3,411,412
  13. Income Taxes
   Income
Taxes
 Year Ended
    
    
    Three MonthsDecember 31,
    
    
    Ended
    
    
    Year Ended
    
    
    Year Ended2005
    
    
    March 31, 2006
    
    
    March 31, 2007
    
    
    March 31, 2008Current:Federal
    
    $
    2,050,000
    
    
    $
    250,000
    
    
    $
    (820,070
    )
    
    $
    (1,340,958
    )State
    
    
    550,000
    
    
    
    110,000
    
    
    
    49,583
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current
    
    $
    2,600,000
    
    
    $
    360,000
    
    
    $
    (770,487
    )
    
    $
    (1,340,958
    )Deferred:Federal
    
    
    (721,000
    )
    
    
    93,000
    
    
    
    (194,691
    )
    
    
    734,191State
    
    
    (215,000
    )
    
    
    113,000
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Deferred
    
    
    (936,000
    )
    
    
    206,000
    
    
    
    (194,691
    )
    
    
    734,191Total Tax (benefit)
    
    $
    1,664,000
    
    
    $
    566,000
    
    
    $
    (965,178
    )
    
    $
    (606,767
    )
  F-25




---



##### 



Corgi International Ltd.
    Year Ended
    
    
    Three MonthsDecember 31,
    
    
    Ended
    
    
    Year Ended
    
    
    Year Ended2005
    
    
    March 31, 2006
    
    
    March 31, 2007
    
    
    March 31, 2008Federal expense (benefit) computed at statutory rate
    
    $
    2,037,000
    
    
    $
    309,000
    
    
    $
    (2,315,400
    )
    
    
    (7,800,000
    )State expense (benefit) at statutory rate
    
    
    359,000
    
    
    
    55,000
    
    
    
    (612,900
    )
    
    
    (2,050,000
    )Foreign expense (benefit) at statutory rate
    
    
    
    
    
    
    
    
    
    
    (2,299,580
    )
    
    
    (6,600,000
    )Increase (Decrease) resulting from:Deferred tax valuation allowance
    
    
    (732,000
    )
    
    
    125,000
    
    
    
    4,262,702
    
    
    
    15,843,243Adjustment to prior year
    
    
    
    
    
    
    77,000
    
    
    
    Provision (benefit) for income taxes
    
    $
    1,664,000
    
    
    $
    566,000
    
    
    $
    (965,178
    )
    
    $
    (606,767
    )
  Deferred Tax Assets and Liabilities
 March 31, 2007
    
    
    March 31, 2008Deferred tax assets:Accruals and allowance
    
    $
    863,000
    
    
    
    2,400,000Depreciation
    
    
    1,169,000
    
    
    
    500,000Net Operating losses
    
    
    13,072,000
    
    
    
    21,100,000Gross deferred tax assets
    
    $
    15,104,000
    
    
    $
    24,000,000Less valuation allowance
    
    
    (10,416,000
    )
    
    
    (21,100,000
    )Deferred Tax Liability: Intangible Assets
    
    
    (3,960,000
    )
    
    
    (2,900,000
    )Total net deferred tax assets
    
    $
    728,000
    
    
    $
    
   F-26




---



##### 



Corgi International Ltd.
    14. Stock Option Plan
    Three months ended
    
    Twelve months ended
    
    Twelve months endedAssumptions

    March 31, 2006
    
    March 31, 2007
    
    March 31, 2008Dividend Yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk Free Interest Rate
    
    
    4.70
    %
    
    
    4.50
    %
    
    
    4.50
    %Expected life (in years)
    
    
    5
    
    
    
    5
    
    
    
    4Expected Volatility
    
    
    100
    %
    
    
    75
    %
    
    
    75
    %
    F-27




---



##### 



Corgi International Ltd.
   Non-vestedAvailable for
    
    Options
    
    Vested
    
    OptionsGrant
    
    Outstanding
    
    Exercisable
    
    OutstandingBalance
    
    January 1, 2006
    
    
    195,093
    
    
    
    742,147
    
    
    
    365,767
    
    
    
    376,380Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,747
    
    
    
    (80,747
    )Cancelled
    
    
    
    
    
    
    4,669
    
    
    
    (4,669
    )
    
    
    
    
    
    
    (4,669
    )Balance
    
    March 31, 2006
    
    
    199,762
    
    
    
    737,478
    
    
    
    446,514
    
    
    
    290,964Granted
    
    
    
    
    
    
    (1,342,757
    )
    
    
    1,342,757
    
    
    
    
    
    
    
    1,342,757Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206,067
    
    
    
    (206,067
    )Cancelled
    
    
    
    
    
    
    32,846
    
    
    
    (32,846
    )
    
    
    (30,501
    )
    
    
    (2,345
    )Merger- increase in
authorized
    
    
    
    
    
    
    1,385,447
    
    
    
    170,402
    
    
    
    101,663
    
    
    
    68,739Balance
    
    March 31, 2007
    
    
    275,298
    
    
    
    2,217,791
    
    
    
    723,743
    
    
    
    1,494,048Granted
    
    
    
    
    
    
    (420,000
    )
    
    
    420,000
    
    
    
    
    
    
    
    420,000Exercised
    
    
    
    
    
    
    80,403
    
    
    
    (80,403
    )
    
    
    (80,403
    )
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    555,785
    
    
    
    (555,785
    )Cancelled
    
    
    
    
    
    
    491,865
    
    
    
    (491,865
    )
    
    
    (175,564
    )
    
    
    (316,301
    )Balance
    
    March 31, 2008
    
    
    427,566
    
    
    
    2,065,523
    
    
    
    1,023,561
    
    
    
    1,041,962
   WeightedWeighted
    
    
    
    
    
    
    Average
    
    
    IntrinsicAverage
    
    
    
    
    
    
    Exercise
    
    
    Values ofVesting
    
    Exercise
    
    
    Number
    
    
    Remaining Life
    
    
    Number
    
    
    Price of
    
    
    ExercisableSchedule
    
    Price
    
    
    Outstanding
    
    
    in Years
    
    
    Exercisable
    
    
    Exercisable
    
    
    Options
    
    
    Term$
    0.165
    
    
    
    1,209
    
    
    
    8.25
    
    
    
    739
    
    
    $
    0.165
    
    
    $
    1,222
    
    
    
    100.50
    
    
    
    221,463
    
    
    
    9.25
    
    
    
    80,678
    
    
    
    0.50
    
    
    
    106,740
    
    
    
    100.55
    
    
    
    486,795
    
    
    
    9.25
    
    
    
    365,096
    
    
    
    0.55
    
    
    
    464,921
    
    
    
    101.82
    
    
    
    28,011
    
    
    
    9.66
    
    
    
    
    
    
    
    1.82
    
    
    
    
    
    
    
    10March 31, 2006
    
    
    
    
    
    
    737,478
    
    
    
    9.25
    
    
    
    446,513
    
    
    
    
    
    
    $
    572,883
  F-28




---



##### 



Corgi International Ltd.
  WeightedWeighted
    
    
    
    
    
    
    Average
    
    
    IntrinsicAverage
    
    
    
    
    
    
    Exercise
    
    
    Values ofVesting
    
    Exercise
    
    
    Number
    
    
    Remaining Life
    
    
    Number
    
    
    Price of
    
    
    ExercisableSchedule
    
    Price
    
    
    Outstanding
    
    
    in Years
    
    
    Exercisable
    
    
    Exercisable
    
    
    Options
    
    
    TermMarket Value
- $.11 per
share$
    0.17
    
    
    
    1,209
    
    
    
    7.2
    
    
    
    1,142
    
    
    $
    0.17
    
    
    $
    5,287
    
    
    
    100.50
    
    
    
    212,120
    
    
    
    8.3
    
    
    
    123,737
    
    
    
    0.50
    
    
    
    532,069
    
    
    
    100.55
    
    
    
    486,795
    
    
    
    8.3
    
    
    
    486,795
    
    
    
    0.55
    
    
    
    2,068,879
    
    
    
    101.82
    
    
    
    28,008
    
    
    
    8.7
    
    
    
    12,448
    
    
    
    1.82
    
    
    
    37,095
    
    
    
    105.05
    
    
    
    252,826
    
    
    
    10
    
    
    
    
    
    
    
    5.05
    
    
    
    
    
    
    
    105.50
    
    
    
    185,160
    
    
    
    8.9
    
    
    
    70,191
    
    
    
    5.50
    
    
    
    
    
    
    
    105.85
    
    
    
    550,000
    
    
    
    9.8
    
    
    
    
    
    
    
    5.85
    
    
    
    
    
    
    
    106.45
    
    
    
    182,919
    
    
    
    9.4
    
    
    
    
    
    
    
    6.45
    
    
    
    
    
    
    
    106.87
    
    
    
    268,678
    
    
    
    9.8
    
    
    
    
    
    
    
    6.87
    
    
    
    
    
    
    
    109.24
    
    
    
    3,246
    
    
    
    5.4
    
    
    
    3,246
    
    
    
    9.24
    
    
    
    
    
    
    
    1015.90
    
    
    
    24,000
    
    
    
    8.8
    
    
    
    7,000
    
    
    
    15.90
    
    
    
    
    
    
    
    1018.18
    
    
    
    5,000
    
    
    
    5.8
    
    
    
    5,000
    
    
    
    18.18
    
    
    
    
    
    
    
    1030.12
    
    
    
    4,166
    
    
    
    7.6
    
    
    
    4,166
    
    
    
    30.12
    
    
    
    
    
    
    
    1030.60
    
    
    
    8,333
    
    
    
    7.8
    
    
    
    4,687
    
    
    
    30.60
    
    
    
    
    
    
    
    1035.88
    
    
    
    333
    
    
    
    7.2
    
    
    
    333
    
    
    
    35.88
    
    
    
    
    
    
    
    1040.50
    
    
    
    3,332
    
    
    
    1.8
    
    
    
    3,332
    
    
    
    40.50
    
    
    
    
    
    
    
    1041.25
    
    
    
    1,666
    
    
    
    2.8
    
    
    
    1,666
    
    
    
    41.25
    
    
    
    
    
    
    
    10March 31,
2007
    
    
    
    
    
    
    2,217,791
    
    
    
    8.9
    
    
    
    723,743
    
    
    
    
    
    
    $
    2,643,330Market Value
- $4.80
per share$
    0.17
    
    
    
    1,209
    
    
    
    6.1
    
    
    
    1,209
    
    
    $
    0.17
    
    
    $
    1,705
    
    
    
    100.50
    
    
    
    66,477
    
    
    
    7.2
    
    
    
    61,876
    
    
    
    0.50
    
    
    
    69,347
    
    
    
    100.55
    
    
    
    486,795
    
    
    
    7.2
    
    
    
    486,795
    
    
    
    0.55
    
    
    
    501,399
    
    
    
    101.82
    
    
    
    14,004
    
    
    
    7.6
    
    
    
    11,272
    
    
    
    1.82
    
    
    
    
    
    
    
    103.30
    
    
    
    199,000
    
    
    
    9.5
    
    
    
    
    
    
    
    3.30
    
    
    
    
    
    
    
    105.05
    
    
    
    153,021
    
    
    
    8.9
    
    
    
    39,792
    
    
    
    5.05
    
    
    
    
    
    
    
    105.35
    
    
    
    212,500
    
    
    
    9.2
    
    
    
    
    
    
    
    5.05
    
    
    
    
    
    
    
    105.50
    
    
    
    97,976
    
    
    
    8.5
    
    
    
    35,390
    
    
    
    5.50
    
    
    
    
    
    
    
    105.85
    
    
    
    550,000
    
    
    
    8.8
    
    
    
    160,417
    
    
    
    5.85
    
    
    
    
    
    
    
    106.45
    
    
    
    182,919
    
    
    
    8.3
    
    
    
    182,919
    
    
    
    6.45
    
    
    
    
    
    
    
    106.87
    
    
    
    84,212
    
    
    
    8.8
    
    
    
    26,480
    
    
    
    6.87
    
    
    
    
    
    
    
    109.24
    
    
    
    3,246
    
    
    
    4.4
    
    
    
    3,246
    
    
    
    9.24
    
    
    
    
    
    
    
    1018.18
    
    
    
    5,000
    
    
    
    4.8
    
    
    
    5,000
    
    
    
    18.18
    
    
    
    
    
    
    
    1030.12
    
    
    
    4,166
    
    
    
    6.5
    
    
    
    4,166
    
    
    
    30.12
    
    
    
    
    
    
    
    1040.50
    
    
    
    3,332
    
    
    
    0.3
    
    
    
    3,333
    
    
    
    40.50
    
    
    
    
    
    
    
    1041.25
    
    
    
    1,666
    
    
    
    1.8
    
    
    
    1,666
    
    
    
    41.25
    
    
    
    
    
    
    
    10March 31,
2008
    
    
    
    
    
    
    2,065,523
    
    
    
    8.4
    
    
    
    1,023,561
    
    
    
    
    
    
    $
    572,451Market Value
- $1.58
per share
 15. Outstanding Stock Warrants
   F-29




---



##### 



Corgi International Ltd.
         F-30




---



##### 



Corgi International Ltd.
    16. Stockholder Equity and Redeemable Preferred Series B Stock
     17. Employee Benefit Plans and Employment Contracts
     F-31




---



##### 



Corgi International Ltd.
   
    
    On December 26, 2006, the Company entered into a three year employment agreement
with Michael J. Cookson, pursuant to which Mr. Cookson will be employed as our Chief
Executive Officer.
    
    On December 20, 2006, Cards Inc. Limited and Darren Epstein entered into a service
agreement, pursuant to which Mr. Epstein will be employed as our Executive Vice
President.
    
    On April 28, 2006, the Company entered into a Letter agreement with Denis Horton as
Corgi Group Managing Director, Europe.
    
    On May 22, 2007, the Company entered into a Letter Agreement with Jack Lawrence in
connection with Mr. Lawrences appointment as Chief Financial Officer, Chief Operating
Officer and General Manager North America.
   18. Earnings per Share
  Earnings
per Share
 2005
    
    2006
    
    2007
    
    2008In thousands except per share amounts
    
    
    (000)
    
    
    
    (000)
    
    
    
    (000)
    
    
    
    (000)Numerator for basic and diluted loss
per ordinary share:Net Income (loss)
    
    
    4,327
    
    
    
    343
    
    
    
    (13,263
    )
    
    
    (45,266
    )Denominator:Basic weighted average number of
ordinary shares outstanding
    
    
    37
    
    
    
    37
    
    
    
    2,511
    
    
    
    10,718Convertible Stock
    
    
    3,720
    
    
    
    3,720
    
    
    
    Options and Warrants
    
    
    888
    
    
    
    875
    
    
    
    Diluted weighted average number of shares
    
    
    4,645
    
    
    
    4,632
    
    
    
    2,511
    
    
    
    10,718Basic and Diluted Income per common share:Basic Earnings (loss)
    
    
    116.00
    
    
    
    9.17
    
    
    
    (5.28
    )
    
    
    (4.22
    )Fully Diluted Earnings (loss)
    
    
    0.93
    
    
    
    0.07
    
    
    
    (5.28
    )
    
    
    (4.22
    )
  F-32




---



##### 



Corgi International Ltd.
   19. Segment Information
   Net Sales
 2007
    
    
    20082008 net sales consist of the following:Master Replicas
    
    $
    22,951
    
    
    $
    23,579Cards
    
    
    4,080
    
    
    
    28,671Corgi
    
    
    8,466
    
    
    
    32,839Total 2008 net sales
    
    $
    35,497
    
    
    $
    85,089
 Net Loss
 2007
    
    
    2008Master Replicas
    
    $
    (3,831
    )
    
    $
    (21,001
    )Cards
    
    
    (1,844
    )
    
    
    (9,634
    )Corgi
    
    
    (7,588
    )
    
    
    (13,048
    )Total (loss) from operations
    
    $
    (13,263
    )
    
    $
    (43,683
    )
 Geographic analysis of net sales
 2007
    
    
    2008United States of America
    
    $
    23,366
    
    
    $
    25,270France
    
    
    
    
    
    
    5,044UK
    
    
    11,050
    
    
    
    42,080Other countries
    
    
    1081
    
    
    
    12,695$
    35,497
    
    
    $
    85,089
  F-33




---



##### 



Corgi International Ltd.
  Reportable Segment Asset and Liabilities
  Reportable Segment Assets and Liabilities
 2007 GeographicalLocationUnited
    
    
    UnitedStates
    
    
    Kingdom
    
    
    Hong Kong
    
    
    TotalTotal assets:Master Replicas
    
    
    9,774
    
    
    
    
    
    
    
    
    
    
    
    9,774Cards
    
    
    
    
    
    
    17,429
    
    
    
    
    
    
    
    17,429Corgi
    
    
    2,559
    
    
    
    36,046
    
    
    
    2,022
    
    
    
    40,627Total assets
    
    $
    12,333
    
    
    $
    53,475
    
    
    $
    2,022
    
    
    $
    67,830Total liabilities:Master Replicas
    
    
    6,401
    
    
    
    
    
    
    
    
    
    
    
    6,401Cards
    
    
    
    
    
    
    16,044
    
    
    
    
    
    
    
    16,044Corgi
    
    
    0
    
    
    
    15,496
    
    
    
    
    
    
    
    15,496Total liabilities
    
    $
    6,401
    
    
    $
    31,540
    
    
    $
    
    
    
    $
    37,941
 Reportable Segment Assets and Liabilities
 2008 GeographicalLocationUnited
    
    
    UnitedStates
    
    
    Kingdom
    
    
    Hong Kong
    
    
    TotalTotal assets:Master Replicas
    
    
    19,679
    
    
    
    
    
    
    
    
    
    
    
    19,679Cards
    
    
    
    
    
    
    5,889
    
    
    
    
    
    
    
    5,889Corgi
    
    
    1,316
    
    
    
    9,146
    
    
    
    353
    
    
    
    10,815Total assets
    
    $
    20,995
    
    
    $
    15,035
    
    
    $
    353
    
    
    $
    36,383Total liabilities:Master Replicas
    
    
    16550
    
    
    
    
    
    
    
    
    
    
    
    16,550Cards
    
    
    
    
    
    
    10,032
    
    
    
    
    
    
    
    10,032Corgi
    
    
    782
    
    
    
    9,301
    
    
    
    8,008
    
    
    
    18,091Total liabilities
    
    $
    17,332
    
    
    $
    19,333
    
    
    $
    8,008
    
    
    $
    44,673
  F-34




---



##### 



Corgi International Ltd.
  Long-Lived Assets   2007 Geographical Location:
 United
    
    
    UnitedStates
    
    
    Kingdom
    
    
    Hong Kong
    
    
    TotalLong-Lived assets:Master Replicas Inc.
    
    
    27,393
    
    
    
    
    
    
    
    
    
    
    
    27,393Cards Inc. Limited
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    180Corgi International Limited
    
    
    
    
    
    
    4,365
    
    
    
    3
    
    
    
    4,368Total long-lived assets
    
    $
    27,393
    
    
    $
    4,545
    
    
    $
    3
    
    
    $
    31,941
 Long-Lived Assets   2008 Geographical Location:
 United
    
    
    UnitedStates
    
    
    Kingdom
    
    
    Hong Kong
    
    
    TotalLong-Lived assets:Master Replicas Inc.
    
    
    15,484
    
    
    
    
    
    
    
    
    
    
    
    15,484Cards Inc. Limited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corgi International Limited
    
    
    33
    
    
    
    301
    
    
    
    2
    
    
    
    335Total long-lived assets
    
    $
    15,517
    
    
    $
    301
    
    
    $
    2
    
    
    $
    15,819
  20. Subsequent Events
  
    
    On April 8, 2008, the Company sold its Cards Inc. Limited trading card distribution business to
Esdevium for approximately US$2.25 million and approximately US$.7 million of inventory.
As a result of this sale and pursuant to the terms of the Companys purchase agreement with
the shareholders of Cards Inc. Limited, the Company released to the former Cards Inc. Limited
shareholders 612,213 ADSs which had been held in escrow to cover certain representations
and warranties under the purchase agreement.
    
    On April 15, 2008, the Company terminated its agreement with Burdale Financial Limited
and refinanced the Burdale credit facility with a $16 million accounts
receivable financing facility with CoFace Receivables Finance Limited with a 75%
availability, a funding period of 123 days, interest rate of 1.75% per annum and annual
fees of approximately $80,000.
    
    On April 30, 2008, the existing
directors and officers of the Company converted $602,018 of indebtedness
of the Company (principally in the form of accrued and unpaid board fees and expenses and
bridge loans to the company) into 316,844 ADSs.
  F-35




---



##### 



Corgi International Ltd.
  
    
    On May 2, 2008 the Company sold its Corgi collectibles die-cast business to Hornby
Hobbies Limited (Hornby), including the Corgi brand name and tooling, for consideration
of approximately £7.5 million (or approximately US$15 million). In addition, the related
existing inventory was sold for consideration of approximately £800,000 or approximately
US$1.6 million.
    
    On May 2, 2008, the Company used the proceeds from the sale of the Corgi collectibles
die-cast business to Hornby to repay its other lenders, Barclays Bank PLC and Ropart Asset
Management Fund LLC, $3.8 million in the aggregate and to repay in part various other trade
creditors.
    
    On May 2, 2008, the Company announced a global workforce reduction of approximately 65
employees or about 50% of its staff. This force reduction was completed in June of 2008,
with a remaining employee base of 58.
    
    In June 2008, the Company executed a $5.0 million term loan agreement with Synergy
Global Finance Master Fund Limited (Synergy). $3.0 million of this term loan facility was
drawn in June 2008 and the remaining $2.0 million was drawn in July 2008. Both loans mature
in twenty four months and are payable in equal monthly installments beginning thirteen
months after the date of initial advance. In conjunction with the term loan agreement, the
Company agreed to issue to Synergy five year warrants to purchase 500,000 shares at an
exercise price of $3.0 Hong Kong dollars. Monthly interest payments are due at the rate of
18% per annum. The loan is currently in default due to deficient asset levels and variance
to the FY 2009 plan.
    
    On June 16, 2008, Corgi received notice from the staff of The Nasdaq Stock Market, Inc.
indicating that Corgi is not in compliance with The Nasdaq Stock Markets requirements for
continued listing because, for the previous 30 consecutive business days, the bid price of
Corgis American Depository Shares (ADSs) has closed below the minimum $1.00 per share
requirement for continued inclusion under Nasdaq Marketplace Rule 4450(a)(5) (the Minimum
Bid Price Rule). Corgi has until December 15, 2008 (180 days from June 16, 2008) to
regain compliance with the Minimum Bid Price Rule. Corgi can regain compliance with the
Minimum Bid Price Rule if the bid price of Corgis ADSs closes at $1.00 per share or more
for a minimum of 10 consecutive business days before December 15, 2008. If compliance is
not achieved by December 15, 2008, Nasdaq staff will provide written notification to Corgi
that its securities will be delisted. In the event that Corgi receives notice that its ADSs
are delisted, Nasdaq rules permit Corgi to appeal any delisting determination by Nasdaq
staff to a Nasdaq Listings Qualifications Panel. In addition, the Nasdaq Marketplace Rules
may permit the Company to transfer its ADSs to the Nasdaq Capital Market if the Companys
ADSs satisfy all criteria for initial inclusion on such market other than compliance with
the Minimum Bid Price Rule. In the event such transfer were approved, the Nasdaq
Marketplace Rules provide that the Company would be provided an additional 180 calendar
days to comply with the Minimum Bid Price Rule while on the Nasdaq Capital Market.
    
    In August 2008, the Company committed to Letters of Credit with production vendors
financed with customer orders in exchange for a lien on the Companys accounts receivable
as an instrument in the production finance facility with Gateway Finance Inc. which allows
additional capital for bringing products to market. The fees and interest in this
arrangement range for 21% - 30% per annum.
    
    On September 30, 2008, the company received notice from NASDAQ Stock Market that for the
last 30 consecutive trading days, the Companys American Depositary Shares (ADS) have not
maintained a minimum market value of publicly held shares (MVPHS) of $5,000,000 as
required for continued inclusion by Marketplace Rule 4450(a)(2) (the Rule). Therefore,
in accordance with Marketplace Rule 4450(e)(1), the Company will be provided 90 calendar
days, or until December 29, 2008, to regain compliance. If, at anytime before December 29,
2008, the MVPHS of the Companys ADS is $5,000,000 or greater for a minimum of 10
consecutive trading days, Staff will provide written notification that the Company complies
with the Rule. If the Company fails to comply with the Rule by December 29, 2008,
  F-36




---



##### 



Corgi International Ltd.
  Staff will provide written notification that the Companys securities will be delisted. At
that time, the Company may appeal Staffs determination to a Listing Qualifications Panel.
The Company may want to apply to transfer its securities to The Nasdaq Capital Market. To
transfer, the Company must satisfy the continued inclusion requirements for that market. If
the Company submits a transfer application and pays the applicable listing fees by December
29, 2008, the initiation of the delisting proceedings will be stayed pending Staffs review
of the application. If Staff does not approve the Companys transfer application, Staff
will provide written notification that its securities will be delisted.
    
    In September 2008, PopCo Classics Limited (formerly
Corgi Classics Limited) was unable to pay certain
vendors and was served with winding up petitions that may
force PopCo Classics Limited into administration (bankruptcy) if settlement with these vendors is not
met.
    
    On October 6, 2008, John Clough resigned from the Board.
On October 13, 2008, Nasdaq notified the Company that, as a result
of Mr. Cloughs resignation, the Company no longer complies with
Nasdaqs director independence and audit committee requirement.
If the Company does not regain compliance within 180 days of Mr.
Cloughs resignation, its securities will be subject to
delisting.
    
    Subsequent to March 31, 2008, the Company granted 1,154,585 stock options while
simultaneously cancelling stock options to purchase 1,154,585 number of shares.
 21. Related Party Transactions
     F-37