SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549


FORM
      20-F/A


Amendment
      No. 2


(Mark
      One)








[
      ]
      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE


SECURITIES
      EXCHANGE ACT OF 1934 [Fee Required]





[
      ]
      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE


ACT
      OF
      1934 [Fee Required]





For
      the
      Fiscal Year Ended December 31, 2005





[
      ]
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934 [No Fee Required]





For
      the
      transition period from ______________ to _______________.





Commission
      File No. 0-25108





IWI
                HOLDING LIMITED
              (Exact
                Name of Registrant as Specified in Its Charter)British
                Virgin Islands
              (Jurisdiction
                of Incorporation or Organization)P.O.
                Box 3340, Dawson Building, Road Town, Tortola, British Virgin
                Islands
              Address
                of Principal Executive OfficesSecurities
                Registered Pursuant to Section 12(b) of the Act:Title
                of Each Class
            Name
                of Each Exchange on Which RegisteredNone
            NoneSecurities
                Registered Pursuant to Section 12(g) of the Act:Common
                Stock, no par value
              (Title
                of Class)






Securities
      for which there is a reporting obligation pursuant to Section 15(d)


of
      the
      Act:







None


(Title
      of
      Class)





As
      of May
      10, 2006 the Registrant had outstanding 2,554,700 shares of Common Stock
      and
      3,644,880 shares of Preferred Stock.





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the past
      twelve


(12)
      months (or for such shorter period that the registrant was required to file such
      reports); and (2) has been subject to such filing requirements for the
      past


ninety
      (90) days. Yes R No (pound)





Indicate
      by check mark which financial statement item the registrant has elected to
      follow. Item 17 (pound) Item 18R





TABLE
      OF
      CONTENTS





Part
                I
            PageITEM
                1.
            IDENTITY
                OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
            3ITEM
                2.
            OFFER
                STATISTICS AND EXPECTED TIMETABLE
            3ITEM
                3.
            KEY
                INFORMATION
            3ITEM
                4.
            INFORMATION
                ON THE COMPANY
            4ITEM
                5.
            OPERATING
                AND FINANCIAL REVIEW AND PROSPECTS
            7ITEM
                6.
            DIRECTORS,
                SENIOR MANAGEMENT AND EMPLOYEES
            10ITEM
                7.
            MAJOR
                SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
            12ITEM
                8.
            SELECTED
                CONSOLIDATED FINANCIAL DATA
            13ITEM
                9.
            THE
                OFFER AND LISTING
            13ITEM
                10.
            ADDITIONAL
                INFORMATION
            14ITEM
                11.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT THE MARKET
            15ITEM
                12.
            DESCRIPTION
                OF SECURITIES OTHER THAN EQUITY SECURITIES
            15Part
                II
            16ITEM
                13.
            DEFAULTS
                DIVIDEND ARREARAGES AND DELINQUENCIES
            16ITEM
                14.
            MATERIAL
                MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                PROCEEDS
            16ITEM
                15.
            CONTROLS
                AND PROCEDURESITEM
                16A.
            AUDIT
                COMMITTEE FINANCIAL EXPERT
            16ITEM
                16B.
            CODE
                OF ETHICSITEM
                16C.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            17Part
                IIIITEM
                17.
            FINANCIAL
                STATEMENTS
            17ITEM
                18.
            FINANCIAL
                STATEMENTS
            17ITEM
                19.
            FINANCIAL
                STATEMENTS AND EXHIBITSSIGNATURES
            18CERTIFICATION
            19-20














PART
      I





ITEM
      1.
      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS





Not
      applicable.








ITEM
      2.
      OFFER STATISTICS AND EXPECTED TIMETABLE





Not
      applicable.








ITEM
      3.
      KEY INFORMATION








SELECTED
      CONSOLIDATED FINANCIAL DATA


(In
      thousands, except share data)





Year
                  Ended December 31,
              
              2001
              
              2002
              
              2003
              
              2004
              
              2005Statement
                  of Income Data:Net
                  sales
              
              $
              23,280
              
              $
              25,802
              
              $
              22,219
              
              $
              28,554
              
              $
              26,683Cost
                  of sales
              
              
              17,751
              
              
              20,322
              
              
              18,772
              
              
              22,309
              
              
              20,599Gross
                  profit
              
              
              5,529
              
              
              5,480
              
              
              3,447
              
              
              6,245
              
              
              6,084Operating
                  expenses
              
              
              5,011
              
              
              4,990
              
              
              5,052
              
              
              5,665
              
              
              5,815Income
                  (loss) from
                operations
                  before the
                Gain
                  on Trade Settlement
              
              
              518
              
              
              490
              
              
              (1,605
              )
              
              580
              
              
              269Gain
                  on Trade Settlement
              
              
              1,141
              
              
              -
              
              
              -
              
              
              -
              
              
              -Other
                  income (expense) - net
              
              
              (306
              )
              
              (248
              )
              
              (299
              )
              
              (349
              )
              
              (458
              )Income
                  (loss) before income
                taxes
              
              
              1,353
              
              
              242
              
              
              (1,904
              )
              
              231
              
              
              (189
              )Income
                  data:
                Income
                  (tax) benefit
              
              
              120
              
              
              36
              
              
              -
              
              
              -
              
              
              (3
              )Net
                  income (loss)
              
              $
              1,473
              
              $
              278
              
              $
              (1,904
              
              $
              231
              
              $
              (192
              )Net
                  income (loss) per
                common
                  share
              
              $
              .58
              
              $
              .11
              
              $
              (.75
              )
              $
              .09
              
              $
              (.08
              )Cash
                  distributions per
                common
                  share
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Weighted
                  average number
                of
                  common
                shares
                  outstanding
              
              
              2,554,700
              
              
              2,554,700
              
              
              2,554,700
              
              
              2,554,700
              
              
              2,554,700Year
                  Ended December 31,2001
              
              
              2002
              
              
              2003
              
              
              2004
              
              
              2005Balance
                  Sheet Data:Working
                  capital
              
              $
              2,569
              
              $
              3,010
              
              $
              1,233
              
              $
              1,528
              
              $
              1,342Total
                  assets
              
              
              11,625
              
              
              14,255
              
              
              15,327
              
              
              17,466
              
              
              18,540Long-term
                  debt
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Shareholders'
                  equity
              
              
              3,057
              
              
              3,335
              
              
              1,431
              
              
              1,662
              
              
              1,470




















Risk
      Factors





The
      nature of the business and industry that the Company operates is very seasonal.
      This seasonality combined with customer sales concentration and the


reliance
      of consumers using their discretionary disposable income on fashion related
      products within current economic conditions compounded by the
      increase


in
      cost
      of the gold componet of our product presents a potential risk that continued
      growth may be impacted.





The
      majority of the products that the Company sells are imported from the Peoples
      Republic of China ("PRC") and Hong Kong and as such reliance on non


restrictive
      trading agreements between the United States of America and these countries
      is critical.








ITEM
      4.
      INFORMATION ON THE COMPANY





General





IWI
      Holding Limited ("Company") was incorporated in the British Virgin Islands on
      February 22, 1993. The Company, through its wholly-owned subsidiary,
      Imperial


World,
      Inc. ("Imperial"), incorporated in the State of Illinois, is engaged in the
      design, assembly, merchandising and wholesale distribution of jewelry.
      The


Company
      provides a broad range of fashionable jewelry targeted at consumers who seek
      fine
      jewelry at moderate prices for every day wear. These customers are


likely
      to
      purchase jewelry at frequent intervals as fashions and styles change. The
      majority of the Company's U.S. sales are under the trade name of
      "World


Pacific
      Jewelry." Customers of the Company are principally large retail establishments
      with jewelry departments and mass media marketers.








Products
      and Pricing





The
      Company's principal products are fine jewelry of rings, earrings, pendants, bracelets
      and necklaces, made of 10, 14 and 18 karat gold, set with diamonds,


precious
      or semi-precious stones. In addition, the Company is also a major supplier
      of pearl products in the industry. The Company's products are
      currently


sold
      in
      over 7,000 retail outlets. For the majority of products, the average wholesale
      price is approximately $75 with the prices ranging from
      approximately


$20
      to
      $500.








Marketing





The
      primary marketing efforts are product design and customer support services. The
      Company markets its proprietary products and product designs through
      a


selling
      team that includes company management, internal account executives and independent
      sales representatives. Each major account has thorough involvement


of
      internal sales management, to insure that quality of sales meet or exceed the company
      requirement.





Customers





The
      Company's customers consist of jewelry retail stores, mass merchandisers, such
      as
      Wal-Mart Stores, Inc., department stores, such as J.C. Penney
      Company,


Inc.,
      national jewelry chains, catalog showrooms and various specialty markets to
      include television and internet outlets. The Company derived
      approximately


44%
      and
      12% of its net sales from two customers during 2005. The Company has no long-term
      contracts with any customers; however, the core of each of its
      large


volume
      purchasers had been customers for at least five years. The following table
      sets forth the approximate percentage of net sales for the major
      markets


for
      the
      periods indicated.














Year
      Ended December 31,





2003
            
            2004
            
            2005Jewelry
                retail stores
            
            
            0.6
            %
            
            0.3
            %
            
            0.3
            %Specialty
                markets
            
            
            28.5
            
            
            12.3
            
            
            20.8Mass
                merchandisers
            
            
            12.7
            
            
            16.9
            
            
            9.2Department
                stores
            
            
            39.5
            
            
            50.8
            
            
            46.5National
                jewelry chains
            
            
            16.3
            
            
            17.5
            
            
            22.4Catalog
                showrooms
            
            
            2.4
            
            
            2.2
            
            
            0.8Total
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %







Competition





The
      jewelry industry in the United States is highly fragmented, with little significant
      brand name recognition or consumer loyalty. Selection is generally
      a


function
      of design appeal, high perceived value and quality in relation to price.





Retail
      jewelry industry generates an estimated $44 billion in annual sales in the
      United States. Retail jewelry sales have historically increased at a rate
      in


excess
      of
      the inflation rate. This increase is principally attributable to the growth
      in
      the number of dual working households which in turn has increased
      the


amount
      of
      disposable income for women, the largest group of jewelry
      purchasers.





While
      many competitors may have a wider selection of products or greater financial
      resources, the Company believes its competitive position is
      enhanced


by
      its
      information system, performance and its close relationship with its customers
      and vendors. Therefore, although the competition is intense, the


Company
      believes it is well positioned in the jewelry industry.








Seasonality





The
      jewelry business is highly seasonal, with the fourth calendar quarter, which
      includes the Christmas shopping season, historically contributing the highest
      sales of any quarter during the year. Seasonality cannot be predicted or counted
      upon, and the results of any interim period are not necessarily indicative
      of
      the results that might be expected during a full fiscal year.











The
      following table sets forth the Company's unaudited net sales for the
      periods


indicated
      (dollar amounts are in thousands):





Year
                Ended December 31,2003
            
            
            
            2004
            
            
            
            2005Amount%
            
            
            
            Amount%
            
            
            
            Amount%First
                Quarter
            
            $
            4,524
            
            
            20.3
            
            $
            5,058
            
            
            17.7
            
            $
            5,707
            
            
            21.4Second
                Quarter
            
            
            5,079
            
            
            22.9
            
            
            5,494
            
            
            19.3
            
            
            4,972
            
            
            18.6Third
                Quarter
            
            
            5,801
            
            
            26.1
            
            
            6,628
            
            
            23.2
            
            
            5,137
            
            
            19.3Fourth
                Quarter
            
            
            6,815
            
            
            30.7
            
            
            11,374
            
            
            39.8
            
            
            10,867
            
            
            40.7Total
            
            $
            22,219
            
            
            100.0
            
            $
            28,554
            
            
            100.0
            
            $
            26,683
            
            
            100.0














Purchasing





The
      Company imports most of its jewelry from the People's Republic of China ("PRC")
      and Hong Kong. Approximately 20% of the Company's products are
      sourced


in
      the
      U.S. Fresh water and cultured pearls are imported from the PRC and Hong Kong.
      The
      imported pearls are assembled by and for the Company both overseas
      and


at
      the
      Company's location into various pearl jewelry products. The Company purchases
      jewelry from a number of suppliers based on quality, pricing and


available
      quantities.





Although
      purchases of material are made from a relatively small number of suppliers,
      the Company believes there are numerous alternative sources for all


materials,
      and that the failure of any principal supplier would not have a material
      adverse effect on operations or the Company's financial condition.
      The


Company
      believes it has good relations with its suppliers, most of whom have supplied
      the Company for many years. The Company has not experienced any


difficulty
      in securing product.








Manufacturing
      and Assembly





Since
      the
      Company imports most of its jewelry in an assembled state from suppliers
      in the PRC and Hong Kong, manufacturing and assembly operations


conducted
      by the Company are primarily limited to designing jewelry, assembly of pearl
      products and quality control. Upon completing a design, the Company


provides
      such design to its suppliers, who will purchase the raw materials, such as
      diamonds, other precious stones, gold and silver, and manufacture the
      product


or
      subcontract for its manufacture. The use of third party manufacturers enables the
      Company to shift the risk and capital cost of manufacturing.





The
      Company maintains a light assembly operation in the United States for the stringing
      of pearls. This enables the Company to assemble pearls specifically
      to


customer
      order and to provide shipment within two days of the order date.








Property,
      Plants and Equipment





The
      Company maintains its registered offices in the BVI; the Company leases approximately
      13,000 square feet of space for operations and pearl assembly in


Westmont,
      Illinois. The Company has been at its current location since November 1993.
      In
      December 2003 the Company extended its present lease through
      January


2007,
      future minimum annual lease payments are approximately $200,000. The facility,
      which provides state of the art security, was designed to maximize
      the


efficiency
      of the Company's current operations and to provide for the Company's anticipated
      growth.








Legal
      Proceedings





In
      September 1996, Robert J. Rosen filed a class action lawsuit in the Supreme Court
      in
      the state of New York alleging claims of fraudulent
      misrepresentations


by
      IWI
      Holding Limited and some Company officers, accountants and lawyers in connection
      with the Company's initial public offering on December 16, 1994,
      and


in
      connection with the dissemination of financial data thereafter. The Plaintiff claims
      damages on behalf of the class in excess of $11,000,000, which
      allegedly


resulted
      from a decline of the market value of the Company's common stock after the
      initial public offering.





The
      parties reached an agreement in principal to settle the claim for a significantly
      lesser amount, which was accrued as of December 31, 1999. The


settlement
      agreement is subject to court approval and the Company may decline to proceed
      with the agreement if a significant number of class members "opt out"
      of


the
      settlement. As of April 30, 2006 there has been no response from counsel for the
      class
      action lawsuit or from the lead counsel.

















ITEM
      5.
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS




This
      report contains forward-looking statements within the meaning of Section 27A
      of
      the Securities Act of 1933 and Section 21E of Securities Exchange Act of 1934.
      Actual results could differ materially from those projected in the
      forward-looking statements as a result of the risks which the Company cannot
      foresee. Such risks include, but are not limited to an economic turndown,
      changes in government policies, financial difficulty with or loss of a major
      customer or interruption in supplies.








Results
      of Operations





The
      following table sets forth, for the periods indicated, certain information
      derived from the Consolidated Statements of Income of the Company. All dollar
      and share amounts are set forth in thousands, except per share
      data.






2003
              
              2004
              
              2005%
                  Amount
              
              %
                  Sales
              
              Change
              
              %
                  Amount
              
              %
                  Sales
              
              Change
              
              %
                  Amount
              
              %
                  Sales
              
              ChangeNet
                  sales
              
              $
              22,219
              
              
              100.0
              
              
              (13.9
              )
              $
              28,554
              
              
              100.0
              
              
              28.5
              
              $
              26,683
              
              
              100.0
              
              
              (6.6
              )Gross
                  profit
              
              
              3,447
              
              
              15.5
              
              
              (37.1
              )
              
              6,245
              
              
              21.9
              
              
              81.2
              
              
              6,084
              
              
              22.8
              
              
              (2.6
              )Operating
                  expenses
              
              
              5,052
              
              
              22.7
              
              
              (1.2
              )
              
              5,665
              
              
              19.9
              
              
              12.1
              
              
              5,815
              
              
              21.8
              
              
              2.7Income
                  (Loss)
                from
                  oper.
              
              
              (1,605
              )
              
              (7.2
              )
              
              (427.5
              )
              
              580
              
              
              2.0
              
              
              n/a
              
              
              269
              
              
              1.0
              
              
              n/aOther
                  income (expense)
              
              
              (299
              )
              
              (1.4
              )
              
              n/a
              
              
              (349
              )
              
              (1.2
              )
              
              (16.7
              )
              
              (458
              )
              
              (1.7
              )
              
              (31.2
              )(Loss)
                  Income before
                income
                  taxes
              
              
              (1,904
              )
              
              (8.6
              )
              
              (886.8
              )
              
              231
              
              
              0.8
              
              
              n/a
              
              
              (189
              )
              
              0.7
              
              
              n/aIncome
                  tax benefit
              
              
              -
              
              
              -
              
              
              n/a
              
              
              -
              
              
              -
              
              
              n/a
              
              
              (3
              )
              
              -
              
              
              n/aNet
                  (Loss) income
              
              
              (1,904
              )
              
              (8.6
              )
              
              (784.9
              )
              
              231
              
              
              0.8
              
              
              n/a
              
              
              (192
              )
              
              0.7
              
              
              n/aNet
                  (Loss) income per
                common
                  share
              
              $
              (0.75
              )
              
              
              
              
              
              
              $
              0.09
              
              
              
              
              
              
              
              $
              (0.08
              )Weighted
                  average number of
                shares
                  outstanding
              
              
              2,555
              
              
              
              
              
              
              
              
              2,555
              
              
              
              
              
              
              
              
              2,555




The
      Company's sales are generated through the wholesaling of jewelry products to the
      following groups:





2001
            
            2002
            
            2003
            
            2004
            
            2005Jewelry
                retail stores
            
            
            3.2
            %
            
            1.1
            %
            
            0.6
            %
            
            0.3
            %
            
            0.3
            %Specialty
                markets
            
            
            22.1
            
            
            28.8
            
            
            28.5
            
            
            12.3
            
            
            20.8Mass
                merchandisers
            
            
            22.3
            
            
            27.9
            
            
            12.7
            
            
            16.9
            
            
            9.2Department
                stores
            
            
            41.7
            
            
            26.6
            
            
            39.5
            
            
            50.8
            
            
            46.5National
                jewelry chains
            
            
            9.9
            
            
            12.5
            
            
            16.3
            
            
            17.5
            
            
            22.4Catalog
                showrooms
            
            
            0.8
            
            
            3.1
            
            
            2.4
            
            
            2.2
            
            
            0.8Total
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %




The
      change in net sales is primarily attributable to changes in volumes of goods
      delivered to our customers. While most of the goods which we sell are produced
      in China until July 21, 2005, the Renminbi (RMB) (the Chinese currency) was
      pegged to the U.S. dollar at the exchange rate of 8.28 RMB to US$1. Therefore,
      we were not impacted by foreign currency fluctuations. Since July 21, 2005
      the
      value of the RMB is pegged to a basket of currencies. As a result, the RMB
      was
      immediately revalued to 8.11 RMB to US$1. Since July 21, 2005, the RMB has
      declined to approximately 8.00 RMB to US$1, or approximately 1.3% over the
      past
      year. Therefore, foreign currency fluctuation has had a minimal impact on the
      Company.





Year
      Ended December 31,2005 Compared to Year Ended December 31, 2004





Net
      Sales. Net sales decreased approximately $1.9 million or 6.6% to $26.7 million
      in 2005 from $28.6 million in 2004. This decrease in net sales
      reflects


a
      decrease in gross sales from the prior year of $3.4 million partially offset by
      a
      decrease in returns compared to 2004 of approximately $1.5 million.
      This


decrease
      in 2005 revenues reflect a combination of decreased sales from the Company's
      two largest customers of approximately $5.9 million offset
      partially


by
      the
      expansion of our customer base as well as increased sales to other existing
      customers. The change in net sales resulted from a decrease in unit


volume
      of
      approximately 8.1% which was partially offset by price increase of approximately
      1.5%.
















Gross
      Profit. Gross profit decreased $161,000 or 2.6% to $6.1 million in
      2005
      from $6.2 million in 2004. Gross margins improved slightly in 2005
      to


22.80%
      vs
      21.87%in 2004; an improvement of .93%. This improvement in overall gross
      margins was in part due to continued emphasis placed on the
      profitability


of
      each
      product sold and increased standard profit levels implemented.





Income
      from Operations. Income from operations was $269,000 in 2005 compared
      to $580,000 in 2004, representing a decrease from the prior year of


$311,000.
      Operating expenses increased $150,000 and primarily reflects increased salary
      and related costs as salaries that had been rolled back in 2004
      were


reinstated
      in 2005.





Other
      Income (Expense). Other expenses representing interest costs increased
      $109,000 to $458,000 from $349,000 in 2005 representing a
      combination


of
      increased borrowings and increased interest rates experianced in
      2005.





Net
      Loss.
      The net loss for 2005 totaled $192,000 a change of $423,000 compared
      to the net income reported in 2004 of $231,000.





Year
      Ended December 31, 2004 Compared to Year Ended December 31, 2003





Net
      Sales. Net Sales increased $6.3 million or 28.5% to $28.6 million in
      2004
      from $22.2 million in 2003. This increase in Net Sales reflects both
      an


increase
      in gross sales from the prior year of $5.4 million combined with a decrease
      in returns compared to 2003 of nearly $1.0 million. This increase
      in


2004
      revenues reflects a combination of increase in net sales to the Company's two
      largest customers of $7.9 million and modest increases in the balance of
      its


customer
      base. This increase in net sales overcame the loss of a major customer during
      2004, which had represented approximately 20% of the Company's net
      sales


in
      2003
      and represents a decrease in sales from this customer in 2004 of $3.8 million
      compared to 2003 levels.





Gross
      Profit. Gross profit increased $2.8 million or 81.0% to $6.2 million
      in 2004 from $3.4 million in 2003. Excluding the effect of
      consignment


and
      liquidation sales for 2004 and 2003, gross profit increased $2.5 million. Gross
      margin excluding the effect of consignment and liquidation sales
      increased


6.1%
      from
      18.5% in 2003 to 24.6% in 2004. This improvement in overall gross margin
      was, in part, due to renewed emphasis placed on the profitability of
      each


product
      sold and increased standard profit levels implemented. In addition, due to
      the
      relative consistency of overall gold pricing throughout 2004 the
      impact


of
      the
      change in gold prices throughout 2004 had minimal impact on profitability.





Income
      from Operations. Income from Operations were $508,000 in 2004 compared
      to a loss from operations in 2003 of $1.6 million, representing an


increase
      over the prior year of $2.2 million. This primarily reflects the increased
      sales and margins experianced in 2004. Operating expenses increased


$613,000
      or 12.1% and primarily reflect increased sales related costs such as advertising
      and commissions.





Other
      Income (Expense). Other Expenses representing interest costs increased
      $50,000 to $349,000 from $299,000 in 2003 representing a
      combination


of
      increased borrowings and increased interest rates experianced in
      2004.





Net
      Income. The net income for 2004 totaled $231,000 a change of $2,136,000
      compared to the net loss reported in 2003 of $1,904,000.





Trends





The
      Company has expended significant efforts and expenses to diversify its customer
      base. Although this resulted in the addition of a number of new


accounts,
      two customers still accounted for approximately 56% of our total sale in
      2005.
      For 2006, we believe that these two accounts will total less than
      50%


of
      our
      total sales.





Our
      sales
      are often driven by promotions or special events at our customers.
      The absence or inclusion of such events in any year can cause a


significant
      swing in the sales volume to such customers. Generally, promotions or
      special event sales to our customers are at lower profit margins than
      sales


in
      the
      ordinary course of business.












During
      2005, there was a significant spike in commodity prices, particularly
      gold and silver. While our customer agreements provide for a


modification
      to the price of our goods sold, there is always a short delay before
      these price changes can be implemented. Accordingly, in periods of
      rising


prices
      such as 2005, our margins were negatively impacted. However, in 2006, these
      commodity prices have declined considerably, which should
      positively


impact
      our margins.





Pricing
      in jewelry is substantially dependent on commodity prices such as gold,
      silver, diamonds, etc. When commodity prices rise, so do jewelry
      prices.


When
      commodity prices fall, so do jewelry prices, although generally not as quickly
      as prices can rise.





Because
      of the broadening of our customer base, sales are expected to increase
      in 2006. Our margins should remain relatively constant because of


competitive
      conditions with large customer companies. Our inventories too, should
      remain relatively constant. Our inventories are principally affected
      by


our
      sales, as well as returns and liquidation sales (generally sales of returned merchandise).
      While we expect an increase in sales which would increase our


inventories,
      we also anticipate an increase in liquidation sales which would decrease
      our inventories.








Analysis
      of Financial Position, Liquidity and Capital Resources





The
      Company's primary liquidity needs are to fund accounts receivable and inventories.
      The Company has historically financed its working capital


requirements
      through a combination of internally generated cash and short-term borrowings
      under bank lines of credit. The Company's working capital at
      December


31,
      2005
      was $1.3 million as compared to $1.5 million at December 31, 2004.





On
      June
      14, 2004 the Company entered into a credit agreement with a new financial
      institution, whereby the Company can borrow up to $7.5 million,
      plus


the
      seasonal over-line amount of $1.5 million, payable on demand. The total credit
      facility is governed by a formula, as defined in the agreement,
      based


principally
      on accounts receivable and inventory levels. This agreement provides,
      among other things, that the credit facilities are collateralized
      by


substantially
      all the assets of the Company.





Under
      this borrowing facility, interest is calculated at .25% over prime with respect
      to the revolving loan. In addition, an unused commitment fee is
      assessed


at
      a rate
      of .25% representing the difference between the maximum revolving loan and
      average daily outstanding balance. An officer of the Company has agreed
      to


personally
      guarantee up to $3,500,000 of the borrowing.





The
      agreement contains certain reporting and financial covenants, which the Company
      is required to maintain. The credit agreement matures on June 1,
      2007,


or
      may be
      accelerated by the lender upon certain events as specified in the loan agreement.
      For the year-ended December 31, 2005 the Company was in compliance


with
      all
      of the financial covenants except the debt service coverage ratio. This covenant
      was waived by the Bank for the year-ended December 31, 2005.








The
      following table summarizes cash provided by (used in) the Company's business activities
      for the past three years (dollar amounts are in thousands):











2003
            
            2004
            
            2005Operating
                activities
            
            $
            (2,286
            )
            $
            (601
            )
            $
            (2,385
            )Investing
                activities
            
            
            (32
            )
            
            (2
            )
            
            (12
            )Financing
                activities
            
            
            2,302
            
            
            604
            
            
            2,535Increase
                (decrease) in cash
            
            
            (16
            )
            
            1
            
            
            138








Operating
      Activities. The net cash used in 2005 was principally due to the increase
      in accounts receivable of $1.6 million and decreases in accounts


payables
      of $1.3 million offset partially by lower inventory levels of .6 million
      December 31, 2005.





Investing
      Activities. Cash uses in 2005 were minimal and reflect the upgrade of our
      computer and related systems.





Financing
      Activities. During 2005, the Company increased the amounts outstanding under
      its
      line of credit by $2.3 million to $7.9 million at December 31,
      2005.


Notes
      payable to employees and others increased by $205,000.





Off
      Balance Sheet Arrangements





The
      Company has no off balance sheet arrangements.





During
      the coming twelve months, the Company does not anticipate any significant capital
      expenditures. As a result, given the cash flow generated by current


operations
      and the existing bank line of credit, the Company has sufficient working
      capital to cover its operations for the next twelve months. The


following
      are its future contractual obligations:





Payment
                due by PeriodLess
                than
            1-3
            3-5
            More
                thanContractual
                Obligations
            Total
            1
                year
            Years
            Years
            5
                yearsOperating
                Lease Obligations
            200,000
            184,000
            16,000








Inflation





Inflation
      has historically not had a material effect on the Company's operations.
      When the price of gold or precious stones has increased, these
      costs


historically
      have been passed on to the customer, quarterly in arrears. Furthermore,
      because the Company does not have either long-term supply contracts


or
      long-term contracts with customers, prices are quoted based on the prevailing prices
      for semi-precious gemstones or metals. Accordingly, the Company does
      not


believe
      inflation will have a material effect on its future operations.








ITEM
      6.
      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES








Directors
      and Executive Officers





The
      following table sets forth certain information as of the date hereof
      with


respect
      to the directors and executive officers of the Company.





Name
            Age
            PositionJoseph
                K. Lau
            58
            Chairman
                of the Board of Directors: President
              of
                IWI Holding Limited, Principal Financial
              Officer
                and SecretaryRichard
                J. Mick
            65
            Sr.
                Vice President - Sales and DirectorConnie
                S. Yui
            55
            Inventory
                Manager and DirectorJoseph
                A. Benjamin
            63
            DirectorSamuel
                H. Lou
            52
            Director





Each
      director is serving a one-year term that expires after the next annual meeting
      of the Company's shareholders, or until their successors are elected
      and


qualified.
      Executive officers of the Company are elected by, and serve at the discretion
      of, the Board of Directors.












Joseph
      K.
      Lau and Connie Yui are brother and sister.





Joseph
      K.
      Lau joined the Company in November, 1982 and was elected Senior Vice President,
      Chief Operating Officer, Secretary and Director in February, 1986
      and


Chairman
      of the Board, President and Chief Executive Officer in August, 1998. For
      the
      11 years prior to joining the Company, he held a management position
      in


the
      restaurant industry and owned a trading company in Hong Kong.





Richard
      J. Mick joined the Company in February, 1996 as Vice President - Sales and
      Director, in January 2006 he was promoted to Senior Vice President -
      Sales


and
      Director. For 6 years prior to joining the Company he was President of a sales
      and
      marketing firm selling jewelry and related products. Prior thereto,


Mr.
      Mick
      was employed by J.C. Penney Company, Inc. for 26 years.





Connie
      S.
      Yui joined the Company in March, 1985 and has served as the Product Development
      Manager and is responsible for inventory control and pearl
      assembly.





Joseph
      A.
      Benjamin has served as a Director of the Company since December, 1997. Mr.
      Benjamin is a CPA and is the Managing Partner of Benjamin &
Birkenstein,


P.C.,
      a
      business and tax consulting firm in Chicago, Illinois.





Samuel
      H.
      Lou has served as a Director of the Company since December, 1997. Mr. Lou
      is a
      business consultant with his own firm in Chicago, Illinois.








Compensation
      of Directors and Officers





The
      aggregate cash compensation paid by the Company to all directors and officers
      as a group during 2005 was approximately $584,000. Due to an
      extensive


travel
      schedule, one of the officers of the Company resides in New York. Because of
      this,
      the Company also provides locally an apartment and related costs of


approximately
      $12,000 for this individual in lieu of motel accommodations and incurs
      an
      estimated $7,900 a year in airfare costs.





Certain
      officers of the Company will be entitled to bonuses from the Company based
      on
      performance criteria to be established by the Compensation Committee
      of


the
      Board
      of Directors of the Company. Additionally, in December, 1993, the Company
      adopted a Stock Option Plan (the "Option Plan") to assist the
      Company


and
      its
      subsidiaries in retaining the service of current employees, motivating selected
      key management personnel, and attracting new management by
      providing


the
      opportunity for such personnel to acquire a proprietary interest in the Company
      and thereby share in its growth and success. Participation in the
      Option


Plan
      and
      the granting of options under the Option Plan are made by the Compensation
      Committee of the Board of Directors, subject to ratification by the


Board.
      Pursuant to the Option Plan, a total of 150,000 shares of Common Stock are
      reserved for issuance. The Option Plan requires that the exercise price
      of


the
      option be the fair market value of the Company's stock on the date of the grant
      of
      the option but not less than $8.50 per share. The fair market value
      for


purposes
      of the Option Plan is for so long as Common Stock is quoted on the OTCBB,
      the final closing sales price per share on the date of the grant.
      The


exercise
      price with respect to any option must be paid in cash. As of the date hereof,
      there are no options to purchase shares of Common Stock outstanding


under
      the
      Option Plan.





The
      Company, during 1995, also adopted a Non-Qualified Stock Option Plan (the "Non-Qualified
      Plan.") A total of 600,000 shares are reserved for issuance under


the
      Non-Qualified Plan. The Non-Qualified Stock Option Plan provides for the granting
      of options and stock appreciation rights to non-employee directors,
      key


management
      employees and consultants and is administered by the Compensation Committee.
      The terms of any options and/or stock appreciation rights granted


under
      the
      Non-Qualified Plan shall be determined by the Compensation Committee provided
      that options may not be exercisable for a term longer than ten
      years


and
      may
      not be exercisable at a price less than the stated value of the Common Stock.
      No
      options or stock appreciation rights have been granted under the


Non-Qualified
      Stock Option Plan. This plan expired in 2005.





In
      addition, the Company maintains a defined contribution plan which has both
      a profit
      sharing feature and a 401(k) savings feature (the "Plan.") Under
      the


profit
      sharing portion of the Plan, contributions are an amount determined by the
      Company's Board of Directors. Subject to certain limitations required
      by


law,
      the
      Company's contribution is allocated to each participant who is employed by
      the
      Company at the end of the Plan year in the proportion that the
      total


compensation
      paid by the Company to each participant bears to the aggregate compensation
      paid by the Company to all participants during such Plan year.


Under
      the
      401(k) savings feature, eligible employees may elect, subject to certain
      limitations required by law, to defer payment of up to 15% of their


compensation.
      The Plan provides that if an employee defers payment, the Company will
      contribute 50% in 2003, effective January 1, 2004, 25% of the first 6%
      of


compensation
      deferred, by making a cash payment to the Plan on behalf of such participant.
      Contributions by the Company to the profit sharing feature of the


plan,
      and
      earnings thereon, vest based on the participant's years of service with
      the
      Company, vesting 20% per year after one year of service and being
      fully


vested
      after six years of service. Employee contributions are always 100% vested.
      Contributions by the Company to the 401(k) savings feature vest on
      the


employees
      first day of employment. All contributions vest, regardless of years of
      service, upon termination of employment by reason of death of
      disability,


attainment
      of age 62 or the termination of the Plan. After termination of employment,
      an employee is entitled to receive the distribution of his or her


entire
      vested interest in the Plan in a lump sum, in installments for a specific period
      of
      time, or an annuity for life. The amounts held under the Plan are


invested
      according to the instructions of the participant in investment funds designated
      by the plan administrator. The Company made contributions to the
      Plan


during
      2005, 2004 and 2003 of approximately $31,000, $30,000 and $61,000, respectively.













Employment
      Contracts





The
      Company has an employment contract with Joseph K. Lau who is employed by Imperial
      pursuant to a contract expiring July 2006. Mr. Lau has waived
      salary


increases
      as provided for in the contract since 2003 and has waived any bonus earned
      since that time. The contract provides for at a base salary of
      $163,000


in
      2006,
      and bonuses as determined by the Compensation Committee of the Board of Directors.





Committees
      and Attendance of the Board of Directors Meetings





During
      the year ended December 31, 2005, the Board of Directors held two formal meetings.
      The Audit Committee held four meetings and the Compensation
      Committee


held
      one
      meeting. Each director attended all of the meetings of the Board of Directors.
      The Audit and Compensation Committees were attended by all members.


The
      members of the Audit Committee are Messrs. Benjamin and Lou. The members of the
      Compensation Committee are Messrs. Lau, Benjamin and Lou.





Employees





As
      of
      December 31, 2005, the Company had 55 employees, including 2 executive officers,
      9 persons in sales and merchandising, 34 persons in operations, and
      10


persons
      in administrative and support functions. None of the employees is governed
      by a collective bargaining agreement and the Company considers its


relations
      with its employees to be satisfactory. As of May 1, 2006, the Company had
      52
      employees, including 2 executive officers, 9 persons in sales and


merchandising,
      31 persons in operations, and 10 persons in administrative and support
      functions.





Share
      Ownership





Share
      ownership of Directors and Officers is illustrated in Item 7.








ITEM
      7.
      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS





Share
      ownership of major shareholders, Directors and Officers





The
      following table is furnished as of May 10, 2006, to indicate beneficial ownership
      of shares of the Company's Common Stock and Preferred Stock by (1)


each
      shareholder of the Company who is known by the Company to be a beneficial owner
      of
      more than 10% of the Company's Common Stock or Preferred Stock and
      (2)


all
      officers and directors of the Company as a group. The information in the following
      table was provided by such persons.





Name
                and Address of Beneficial Owner
            
            Amount
                and Nature ofBeneficial
                Ownership (1)
            
            Title
                of Class
            
            Percent
                ofClass
            
            Percent
                ofVoting
                PowerBamberg
                Company Ltd.
            
            
            918,750
            
            
            Common
            
            
            35.96
            %
            
            20.99
            %Bamberg
                Company Ltd
            
            
            3,644,880
            
            
            Preferred
            
            
            100.00
            %
            
            41.64
            %Joseph
                K. Lau
            
            
            15,000
            
            
            Common
            
            
            0.59
            %
            
            0.34
            %Richard
                J. Mick
            
            
            117,500
            
            
            Common
            
            
            4.60
            %
            
            2.68
            %Joseph
                A. Benjamin
            
            
            10,000
            
            
            Common
            
            
            0.39
            %
            
            0.23
            %All
                executive officers
              and
                directors
              As
                a group (3 persons)
            
            
            142,500
            
            
            Common
            
            
            5.58
            %
            
            3.26
            %














Compliance
      with Section 16(a) of Exchange Act





Under
      the
      securities laws of the United States, the Company's Directors, its executive
      officers, and any persons holding more than ten percent of the


Company's
      common stock are required to report their initial ownership of the Company's
      common stock and any subsequent changes in ownership to the
      Securities


and
      Exchange Commission. Specific due dates for these reports have been established
      and the Company is required to disclose in this Form 20F any
      failure


to
      file
      by these dates during 2005. All of the filing requirements were satisfied
      on a timely basis in 2005. In making these disclosures, the Company


has
      relied solely on written statements of its directors, executive officers and shareholders
      and copies of the reports that were filed with the Commission.





Related
      Party Transactions





All
      transactions between the Company, its officers, directors, principal shareholder
      or affiliates, whether presently existing are, or in the future
      will


be,
      in
      the belief of management, on terms no less favorable to the Company than may
      be
      obtained from unaffiliated third parties.





Since
      1998, some of the Company's products were purchased from a manufacturer in Hong
      Kong, which is managed by a relative of an officer of the Company. For
      the


years
      ended December 31, 2005, 2004 and 2003, the Company's purchases from this manufacturer
      were approximately $3,284,000, $7,887,000, and $7,394,000


respectively.
      Beginning in October 2005 the Company began purchasing products from
      another manufacturer in Hong Kong, which is owned and managed by
      another


relative
      of an officer of the Company. Purchases from this company in 2005 were approximately
      $521,000.





The
      Company uses outside entities to pursue most of its sales, because it has proven
      to
      be both effective and economical. The stakeholders of a primary


outside
      sales entity are an officer of the Company and a family member of such officer.
      All negotiations of pricing, compensation, contracts or any other


matters
      involving this entity are conducted by persons other than the related party
      officer. Commission expense of the Company associated with this entity
      for


the
      years
      2005, 2004 and 2003 were $619,000, $688,000 and $569,000, respectively.
      Selling expenses such as salaries, travel, entertainment etc. are


borne
      directly by the sales entity.








ITEM
      8.
      FINANCIAL INFORMATION





Reference
      is made to the index to Consolidated Financial Statements of the Company,
      and notes thereto, appearing under Item 19 below, together with the


report
      of
      Blackman Kallick Bartelstein, LLP thereon.








ITEM
      9.
      THE OFFER AND LISTING





There
      is
      no non-U.S. trading market for the Common Stock of the Company. Within the
      United States, the Company's Common Stock is traded in the
      over-the-counter


market.
      The Company's Common Stock is quoted on the OTCBB under the symbol "JEWLF."





The
      following table sets forth the high and low bid price per share for the Company's
      Common Stock for each quarterly period for the past two years.





2005
            
            2004High
            
            Low
            
            High
            
            LowFirst
                Quarter
            
            $
            .080
            
            $
            .080
            
            $
            .200
            
            $
            .120Second
                Quarter
            
            
            .100
            
            
            .070
            
            
            .120
            
            
            .100Third
                Quarter
            
            
            .120
            
            
            .070
            
            
            .100
            
            
            .100Fourth
                Quarter
            
            
            .100
            
            
            .070
            
            
            .110
            
            
            .080












The
      following table sets forth the high and low bid price per share for the Company's
      Common Stock for each month for the past six months.





High
            Low2005
            November
            $.080
            $.080December
            .080
            .0702006
            January
            $.070
            $
                .070February
            .070
            .070March
            .100
            .070April
            .090
            .060




The
      quotations reflect inter-dealer prices without mark-up, mark-down or commission
      and may not represent actual transactions.





At
      May
      10, 2006, the bid price of the Common Stock was $.06.





As
      of May
      10, 2006, there were approximately 250 beneficial holders of the Common
      Stock of the Company, nearly all of which are believed to be in the


United
      States.








ITEM
      10.
      ADDITIONAL INFORMATION





Memorandum
      and Articles of Association.





The
      Company has two classes of stock, preferred and common.





Preferred
      stock has a par value of $1 per share, 5 million shares have been authorized
      3,644,880 shares are issued and outstanding. The preferred shares
      are


entitled
      to one-half vote per share and in the event of liquidation of the Company,
      the holders of the preferred shares will be entitled to $1 per
      share


before
      any payment to holders of common stock. The preferred shares are subject to
      redemption, at the option of the Company, in whole or in part, at any
      time


after
      March 21, 1997, at an amount not to exceed 50% of the net income in excess of
      $15,000,000 for the preceding year, together with the accrued dividends,
      if


any.
      The
      preferred shares are entitled to a 4% non-cumulative dividend, payable on
      all
      non-redeemed shares in cash, stock or property as the Board of
      Directors


shall,
      in
      its discretion, declare from time to time. There have been no dividends
      paid or authorized to preferred shareholders.





Common
      stock has no par value, 10 million shares have been authorized 2,554,700 shares
      are issued and outstanding. Each share of common stock is entitled to
      one


vote.
      Common stock is entitled to dividends payable in cash stock or property as the
      Board
      of Directors shall, in its discretion, declare from time to time.


There
      have been no dividends paid or authorized to common shareholders.





Exchange
      Controls





The
      Company is not subject to any governmental laws, decrees or regulations in the
      BVI
      which restrict the export or import of capital, including any
      foreign


exchange
      controls, or which affect the remittance of dividends, interest or other
      payments to non-resident holders of the Company's Common Stock.








Additionally,
      neither the laws of the BVI nor the Company's Charter impose any limitations
      on the right of non-resident foreign owners to hold or vote the


Common
      Stock of the Company.








Taxation





The
      BVI
      imposes no withholding taxes and holders of Common Stock who are not resident
      in the BVI will not be subject to BVI tax on any dividends received


from
      the
      Company or on gains realized from a sale or other disposition of the Common
      Stock. The United States does not have a tax treaty with the BVI.





Documents
      on Display





Documents
      concerning our Company which are referred to in this report may be inspected,
      upon reasonable notice, at our principal executive office at
      Oakmont


Centre,
      1010 Executive Court, Suite 300, Westmont, Illinois 60559.








ITEM
      11.
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





The
      economy and its impact on discretionary disposable consumer spending could be
      significant to future operating earnings.





The
      Company's sales are highly concentrated with several customers. A significant
      change in the relationship with one or more of these customers
      could


have
      a
      material effect on the operations of the Company.





The
      Company does have some exposure to the change in market price of precious metals,
      pearls and stones, particularly gold. Rapid or steady increase in
      the


price
      of
      gold could negatively impact the operating results in future periods. Although
      the company can pass these costs along to its customers, these gold


level
      adjustments occur on a quarterly lag basis. Due to the increase in cost of the
      gold
      component of our product the impact of which would require consumers
      to


devote
      more of their discretionary disposable income on fashion related products.
      The impact of this combined with the price increases associated
      with


gasoline
      could potentially have an adverse effect on future earnings of the Company
      and Industry as a whole.





The
      Company does not hold or issue financial instruments for trading or speculative
      purposes. The Company's financial instruments include accounts


receivable,
      accounts payable, and notes payable. The exposure to the Company for interest
      rate fluctuations is limited to the existing line of credit and is
      not


expected
      to be significant to its overall results of operation. The economy and its
      impact on discretionary disposable consumer spending could be significant
      to


future
      operating earnings.








ITEM
      12.
      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES





Not
      applicable.

















PART
      II








ITEM
      13.
      DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES





None
      reportable.





ITEM
      14.
      MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
      OF


PROCEEDS





None
      reportable.





ITEM
      15.
      CONTROLS AND PROCEDURES





Disclosure
      Controls and Procedures





We
      maintain disclosure controls and procedures, which are designed to ensure that
      information required to be disclosed in the reports we file or submit under
      the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within time periods specified in the Securities and Exchange
      Commission’s rules and forms, and that such information is accumulated and
      communicated to our management, including our chief executive officer, or CEO
      who is also our chief financial officer or CFO, as appropriate to allow timely
      decisions regarding required disclosure.





Under
      the
      supervision and with the participation of the Company’s management, including
      our CEO who is also our CFO, an evaluation was performed on the effectiveness
      of
      the design and operation of our disclosure controls and procedures as of the
      end
      of the period covered by this annual report. Based on that evaluation, our
      management, including our CEO who is also our CFO, concluded that our disclosure
      controls and procedures were effective as of December 31, 2005.





An
      evaluation was also performed under the supervision and with the participation
      of our management, including our CEO who is also our CFO, of any change in
      our
      internal controls over financial reporting that occurred during our last fiscal
      quarter and that has materially affected, or is reasonably likely to materially
      affect, our internal controls over financial reporting. The evaluation did
      not
      identify any change in our internal controls over financial reporting that
      occurred during our latest fiscal quarter and that has materially affected,
      or
      is reasonably likely to materially affect, our internal controls over financing
      reporting.





Management’s
      Report on Internal Control Over Financial Reporting





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as this term is defined in Exchange Act Rule
      13a-15(f). All internal control systems, no matter how well designed, have
      inherent limitations. Therefore, even those systems determined to be effective
      can provide only reasonable assurance with respect to financial statement
      preparation and presentation.





Under
      the
      supervision and with the participation of our management, including our CEO/CFO,
      we conducted an evalution of the effectiveness of our internal control over
      financial reporting based on the framework in Internal Control Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission. Based on our evaluation under the framework in Internal
      Control-Integrated Framework, our management concluded that our internal control
      over financial reporting was effective as of December 31, 2005.








ITEM
      16A.
      AUDIT COMMITTEE FINANCIAL EXPERT





The
      Company's Board of Directors has determined that it has at least
      one


financial
      expert serving on its Audit Committee. This individual is Joseph A.


Benjamin
      who has served as a Director of the Company since December, 1997.
      Mr.


Benjamin
      is a CPA and is the Managing Partner of Benjamin & Birkenstein, P.C.,
      a


business
      and tax consulting firm in Chicago, Illinois.














ITEM
      16B.
      CODE OF ETHICS





The
      Company has adopted a code of ethics for the Chief Executive Officer,
      Chief


Financial
      Officer and Principal Accounting Officer.





ITEM
      16C.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit
      Fee





The
      aggregate fees paid relating to the audit of the Company's annual
      financial


statements
      for the years ended December 31, 2005 and 2004 were $79,837 and


$64,404,
      respectively.





All
      Other
      Fees





The
      aggregate fees paid for other accounting services, primarily audit
      related,


for
      the
      years ended December 31, 2005 and 2004 were $0 and $6,349,
      respectively.








PART
      III








ITEM
      17.
      FINANCIAL STATEMENTS





Not
      applicable





ITEM
      18.
      FINANCIAL STATEMENTS





Reference
      is made to the index to Consolidated Financial Statements of the


Company,
      and notes thereto, appearing under Item 19 below, together with the


report
      of
      Blackman Kallick Bartelstein, LLP thereon.








ITEM
      19.
      FINANCIAL STATEMENTS AND EXHIBITS





(a)
                Financial Statements PageReport
                of Independent Auditors
            22Consolidated
                Balance Sheets as of December 31, 2005 and 2004
            23Consolidated
                Statements of Operations for Each of the Years
              in
                the Three-Year Period Ended December 31, 2005
            24Consolidated
                Statements of Shareholders' Equity for Each of the
              Years
                in the Three-Year Period Ended December 31, 2005
            25Consolidated
                Statements of Cash Flows for Each of the Years in
              the
                Three-Year Period Ended December 31, 2005
            26Notes
                to Consolidated Financial Statements
            27-36Financial
                Statement Schedules (1)I
                -
                Condensed Financial Information of Registrant
            37II
                - Valuation and Qualifying Accounts
            38








(1)
      All
      other schedules are omitted since the required information is not


present
      or is not present in amounts sufficient to require submission


of
      the
      schedule.





(b)
      Exhibits











Exhibit


Number
      Description





2.1*
      Bill
      of Sale dated February 4, 1995 re: acquisition of assets of


Ullenberg
      Corporation (1)


2.2*
      Stock Purchase Agreement relating to DACO Manufacturing Ltd. (3)


3.1*
      Amended and Restated Memorandum of Association and Articles of


Association
      of IWI Holding Limited (2)


4.1*
      Specimen Form of Common Stock certificate (2)


10.1*
      Lease Agreement between Imperial World, Inc. and American National
      Bank


and
      Trust
      Company of Chicago dated October 15, 1993 for the site in


Westmont,
      Illinois (2)


10.2*
      Stock Option Plan (2)


10.3*
      Amended and Restated Credit Agreement dated June, 1996 between Rhode


Island
      Hospital Trust National Bank and Imperial World, Inc. (2)


10.4*
      Indemnity Agreement (2)


10.5*
      Profit Sharing Plan (2)


10.6*
      Territorial Agreement (2)


10.8*
      IWI
      Holding Limited 1995 Non-Qualified Stock Option Plan (4)


10.11*
      Financing Agreement with Business Alliance Capital Corp.


10.12*
      Settlement Agreement with Richard W. Sigman


10.13*
      Settlement Agreement with Bruce W. Anderson


10.14*
      Amended Lease Agreement


10.15*
      DACO Sales Agreement


10.16*
      Employment Contract with Joseph K. Lau


10.17*
      Code of Ethics





*Previously
      Filed





(1)
      Incorporated by reference to the Company's Report on Form 6-K for
      the


month
      of
      February, 1995.


(2)
      Incorporated by reference to the Company's Registration Statement
      on


Form
      F-1
      (File No. 33-78904) declared effective December 13, 1994.


(3)
      Incorporated by reference to the Company's Report on Form 6-K for the


month
      of
      August, 1995.


(4)
      Incorporated by reference to the Company's Form 20-F for the
      year-ended


December
      31, 1995.





SIGNATURES





Pursuant
      to the requirements of Section 12 of the Securities Exchange Act of


1934,
      the
      registrant certifies that it meets all of the requirements for
      filing


on
      Form
      20-F and has duly caused this annual report to be signed on its
      behalf


by
      the
      undersigned, thereunto duly authorized.




IWI
                HOLDING
                LIMITEDDate: January
                7, 2008
              By:
              /s/ Joseph
                K.
                LauChairman,
                  President, Chief Financial Officer and DirectorTitle













Exhibit
      31





CERTIFICATIONS





I,
      Joseph
      K. Lau, certify that:





1.
      I have
      reviewed this annual report on Form 20-F of IWI Holding Limited for


the
      year
      ended December 31, 2005:





2.
      Based
      on my knowledge, this annual report does not contain any untrue


statement
      of a material fact or omit to state a material fact necessary to
      make


the
      statements made, in light of the circumstances under which such
      statements


were
      made, not misleading with respect to the period covered by this
      quarterly


report;





3.
      Based
      on my knowledge, the financial statements, and other financial


information
      included in this annual report, fairly present in all material


respects
      the financial condition, results of operations and cash flows of
      the


registrant
      as of, and for, the periods presented in this quarterly report;





4.
      I am
      responsible for establishing and maintaining disclosure controls
      and


procedures
      (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
      internal


control
      over financial reporting (as defined in Exchange Act Rules 13a-15(f)
      and


15d-15(f)
      for the registrant and have:





a)
      designed such disclosure controls and procedures or caused such
      disclosure


controls
      and procedures to be designed under my supervision, to ensure that


material
      information relating to the registrant, is made known to me by
      others


particularly
      during the period in which this annual report is being prepared;





b)
      evaluated the effectiveness of the registrant's disclosure controls


and
      procedures as of the end of the period converted by this report (the "Evaluation


Date");
      and





c)
      evaluated the effectiveness of the registrant’s disclosure controls and


procedures
      and presents in this report our conclusions about the effectiveness of the


disclosure
      controls and procedures, as of the end of the period covered by this
      report


based
      on
      such evaluation; and





d)
      disclosed in this report any change in the registrant’s internal
      control


over
      financial reporting that occurred during the registrant’s most recent
      fiscal


quarter
      (the registrant’s fourth fiscal quarter in the case of an annual report) that
      has


materially
      affected, or is reasonably likely to materially affect, the
      registrant’s


internal
      control over financial reporting; and





5.
      I have
      disclosed, based on my most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of registrant's
      board of directors (or persons performing the equivalent function):





a)
      all
      significant deficiencies and material weakness in the design or operation


of
      internal controls over financial reporting which are reasonably likely to
      adversely affect the registrant's ability to record, process, summarize and
      report financial data,





b)
      any
      fraud, whether or not material, that involves management or


other
      employees who have a significant role in the registrant's internal


control
      over financial reporting








Dated:
      January 7, 2008





By:
      /s/
      Joseph K. Lau


Joseph
      K.
      Lau


Chief
      Executive Officer and Chief Financial Officer






















CERTIFICATION
      OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT


TO
      18
      U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO


SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002





I,
      Joseph
      K. Lau, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Form
      20-F of IWI Holding Limited for the annual period ended December 31, 2005 fully
      complies with the requirements of Section 13(a) or 15(d) of the Securities
      Exchange Act of 1934 and that information contained in such Form 20-F fairly
      presents in all material respects the financial condition and results of
      operations of IWI Holding Limited.





By:
      /s/
      Joseph K. Lau


----------------------------


Name:
      Joseph K. Lau


Title:
      Chief Executive Officer


&
      Chief Financial Officer





January
      7, 2008













IWI
      HOLDING LIMITED





CONSOLIDATED
      FINANCIAL STATEMENTS AND


INDEPENDENT
      AUDITOR'S REPORT





Years
      Ended December 31, 2005, 2004 and 2003

















Report
      of
      Independent Registered Public Accounting Firm











The
      Board
      of Directors


IWI
      Holding Limited


Westmont,
      Illinois





We
      have
      audited the accompanying consolidated balance sheets of IWI Holding Limited
      as
      of December 31, 2005 and 2004, and the related consolidated statements of
      operations, stockholders' equity and cash flows for each of the three years
      in
      the period ended December 31, 2005. Our audits also included the financial
      statement schedules listed in the index at item 19(a). These financial
      statements and schedules are the responsibility of the Company's management.
      Our
      responsibility is to express an opinion on these consolidated financial
      statements and schedules based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The Company
      has determined that it is not required to have, nor were we engaged to perform,
      an audit of its internal control over financial reporting. Our audit included
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but not
      for the purpose of expressing an opinion on the effectiveness of the Company's
      internal control over financial reporting. Accordingly, we express no
      such


opinion.
      An audit also includes examining, on a test basis, evidence supporting the
      amounts and disclosures in the consolidated financial statements, assessing
      the
      accounting principles used and significant estimates made by management, as
      well
      as evaluating the overall financial statement presentation. We believe that
      our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of IWI Holding Limited as
      of
      December 31, 2005 and 2004, and the results of its operations and its cash
      flows
      for each of the three years in the period ended December 31, 2005, in conformity
      with accounting principles generally accepted in the United States of America.
      In addition, the information set forth in schedules listed in the index at
      item
      19(a) is fairly stated, in all material respects, in relation to the
      consolidated financial statements from which it has been derived.








As
      discussed in Note 3 to the consolidated financial statements, the 2005, 2004
      and
      2003 consolidated statements have been restated to correct a
      misstatement.





s/Blackman
      Kallick Bartelstein, LLP


Chicago,
      Illinois


April
      17,
      2006, except for Note 3, Correction of on Error, as to which the date is January
      7, 2008














Exhibit
      A





IWI
      Holding Limited


Consolidated
      Balance Sheets


(In
      Thousands, Except Share Data)









December
      31, 2005 and 2004








Assets
            
            2005
            
            2004Current
                AssetsCash
            
            $
            139
            
            $
            1Accounts
                receivable, less allowance for doubtful
              accounts
                of $710 in 2005 and $596 in 2004
            
            
            9,336
            
            
            7,714Inventories
            
            
            8,676
            
            
            9,298Deferred
                income taxes
            
            
            156
            
            
            156Prepaid
                expenses
            
            
            105
            
            
            163Total
                Current Assets
            
            
            18,412
            
            
            17,332Leasehold
                Improvements, Machinery and Equipment
            
            
            2,978
            
            
            2,966Less
                accumulated depreciation
            
            
            (2,850
            )
            
            (2,832
            )Property
                and Equipment, Net
            
            
            128
            
            
            134Total
                Assets
            
            $
            18,540
            
            $
            17,466Liabilities
                and Stockholders' Equity
            
            
            2005
            
            
            2004Current
                Liabilities
              Line
                of credit
            
            $
            7,913
            
            $
            5,583Notes
                payableEmployees,
                related parties
            
            
            294
            
            
            315Other
            
            
            653
            
            
            427Accounts
                payable - Trade
            
            
            5,272
            
            
            5,894Accounts
                payable to affiliated companies
            
            
            1,418
            
            
            2,085Accrued
                liabilities
            
            
            1,520
            
            
            1,500Total
                Current Liabilities
            
            
            17,070
            
            
            15,804Stockholders'
                Equity (Deficit)
              Preferred
                stock - $1 par value; authorized
              5,000,000
                shares; issued and outstanding
              3,644,880
                shares
            
            
            3,645
            
            
            3,645Common
                stock No par value; authorized
              10,000,000
                shares; issued and outstanding
              2,554,700
                shares
            
            
            -Additional
                paid-in capital
            
            
            12,446
            
            
            12,446Accumulated
                deficit
            
            
            (14,621
            )
            
            (14,429
            )Total
                Stockholders' Equity
            
            
            1,470
            
            
            1,662Total
                Liabilities & Stockholders' Equity
            
            $
            18,540
            
            $
            17,466

















Exhibit
      B





IWI
      Holding Limited


Consolidated
      Statements of Operations


(In
      Thousands, Except Share Data)





Years
      Ended December 31, 2005, 2004 and 2003









2005
              
              2004
              
              2003Net
                  Sales
              
              $
              26,683
              
              $
              28,554
              
              $
              2,219Cost
                  of Sales
              
              
              20,599
              
              
              22,309
              
              
              18,772Gross
                  Profit
              
              
              6,084
              
              
              6,245
              
              
              3,447Selling,
                  General and Administrative Expenses
              
              
              5,815
              
              
              5,665
              
              
              5,052Income
                  (Loss) from Operations
              
              
              269
              
              
              580
              
              
              (1,605
              )Interest
                  Expense
              
              
              (458
              )
              
              (349
              )
              
              (299
              )(Loss)
                  Income Before Income Taxes
              
              
              (189
              )
              
              231
              
              
              (1,904
              )Income
                  Tax Expense
              
              
              (3
              )
              
              -
              
              
              -Net
                  (Loss) Income
              
              $
              (192
              )
              $
              231
              
              $
              1,904
              )Net
                  (Loss) Income per Common Share
              
              $
              (0.08
              )
              $
              0.09
              
              $
              (0.75
              )Weighted-Average
                  Number of Common
                Shares
                  Outstanding
              
              
              2,554,700
              
              
              2,554,700
              
              
              2,554,700











Exhibit
      C





IWI
      Holding Limited


Consolidated
      Statements of Stockholders' Equity


(In
      Thousands, Except Share Data)





Years
      Ended December 31, 2005, 2004 and 2003









Preferred
                  Stock Accumulated
              Common
                  Stock Number of Shares
              Amount
              Number
                  of Shares
              Amount
              Additional
                  Paid in Capital
              Deficit
              TotalBalance,
                  January 1, 2003
              3,644,880
              $3,645
              2,554,700
              $
                  -
              $12,446
              $(12,756)
              $3,335Net
                  Income
              -
              -
              -
              -
              -
              (1,904)
              (1,904)Balance,
                  December 31, 2003
              3,644,88
              3,645
              2,554,700
              -
              12,446
              (14,660)
              1,431Net
                  Income
              -
              -
              -
              -
              -
              231
              231Balance,
                  December 31, 2004
              3,644,880
              3,645
              2,554,700
              -
              12,446
              (14,429)
              1,662Net
                  Income
              -
              -
              -
              -
              -
              (192)
              (192)Balance,
                  December 31, 2005
              3,644,880
              $3,645
              2,554,700
              $
                  -
              $12,446
              $(14,621)
              $1,470


















Exhibit
      D





IWI
      Holding Limited


Consolidated
      Statements of Cash Flows


(In
      Thousands)





Years
      Ended December 31, 2005, 2004 and 2003






2005
              
              2004
              
              2003Cash
                  Flows from Operating Activities
                Net
                  (loss) income
              
              $
              (192
              )
              $
              231
              
              $
              (1,904
              )Adjustments
                  to reconcile net (loss) to income
                net
                  cash used in operating activities
                Depreciation
                  and amortization
              
              
              18
              
              
              66
              
              
              159Provision
                  for doubtful accounts
              
              
              116
              
              
              351
              
              
              (32
              )(Increase)
                  decrease in
                Accounts
                  receivable
              
              
              (1,738
              )
              
              (2,508
              )
              
              (1,674
              )Inventories
              
              
              622
              
              
              (63
              )
              
              370Prepaid
                  expenses
              
              
              58
              
              
              18
              
              
              121Increase
                  (decrease) in
                Accounts
                  payable - Trade
              
              
              (622
              )
              
              1,491
              
              
              (171
              )Accounts
                  payable to
                affiliated
                  companies
              
              
              (667
              )
              
              (483
              )
              
              810Accrued
                  liabilities
              
              
              20
              
              
              296
              
              
              35Net
                  Cash Used in Operating Activities
              
              
              (2,385
              )
              
              (601
              )
              
              (2,286
              )Net
                  Cash Used in Investing Activities
                Purchases
                  of property and equipment
              
              
              (12
              )
              
              (2
              )
              
              (32
              )Cash
                  Flows from Financing ActivitiesChecks
                  issued in excess of Funds on deposit
              
              
              -
              
              
              (24
              )
              
              24(Payments
                  on) borrowings from notes payable
                Employees
              
              
              (21
              )
              
              (20
              )
              
              132Other
              
              
              226
              
              
              315
              
              
              -Borrowings
                  from line of credit, net
              
              
              2,330
              
              
              333
              
              
              2,146Net
                  Cash Provided by
                Financing
                  Activities
              
              
              2,535
              
              
              604
              
              
              2,302Net
                  Increase (Decrease) in Cash
              
              
              138
              
              
              1
              
              
              (16
              )Cash,
                  Beginning of Year
              
              
              1
              
              
              -
              
              
              16Cash,
                  End of Year
              
              $
              139
              
              $
              1
              
              $
              -

















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003








Note
      1 -
      Description of Business and Acquisitions





IWI
      Holding Limited ("Holding") was incorporated in the British Virgin
      Islands


on
      February 22, 1993. Holding and its wholly owned subsidiary (together,
      the


"Company")
      import, assemble, and distribute wholesale fine jewelry. The
      Company


also
      imports pearls for assembly and resale through its wholly owned
      subsidiary,


Imperial
      World, Inc. ("Imperial").








Note
      2 -
      Status of Operations





The
      Company continues in its effort to diversify its customer base
      thereby


reducing
      its reliance on two to three major customers. The diversification


effort
      was successful in 2005 but was offset by lower sales from two major


customers.
      These two customers' combined sales decreased in 2005 by


approximately
      $5.9 million. This decrease in sales was partially offset by the


expansion
      of our customer base as well as increased sales to other existing


customers.
      Overall net sales reported in 2005 decreased $1.9 million or 6.6%


compared
      to 2004. Moving forward in 2006, the Company expects to not only


increase
      its sales to core major customers but also to increase it sales to
      new


customers
      from 2005 levels, thus continuing the expansion of its customer
      base.





Gross
      margins for the Company continued to improve during 2005 from
      levels


experienced
      in 2004. Gross margins improved slightly in 2005 to 22.80% vs.


21.87%
      in
      2004 an increase of .93%. Gross profit as a result of lower sales


levels
      in
      2005 decreased by $161,000 as compared to 2004 levels. This


improvement
      in overall gross margins was in part due to continued emphasis


placed
      on
      the profitability of each product sold and increased standard
      profit


levels
      implemented.





Moving
      forward into 2006 the Company is confident that it will return to


profitability
      on an ongoing basis. The Company continues to explore alternatives


to
      reduce
      production costs such as moving certain production functions where


feasible
      overseas and maintain lean overhead support levels.





The
      Company's goal is to continue to diversify its customer base
      thereby


reducing
      its reliance on two to three major customers. This diversification


effort
      is
      expected to increase sales in 2006 from our non-major customers.


Within
      the first three months of 2006 the Company has either shipped or
      received


orders
      from two new customers. These new customers have significant volume


potential.
      Response to new styles and products presented to our customers has


been
      well
      received toward the end of 2005 and beginning of 2006. Where a


concerted
      effort to diverse our customer base continues, at the same time we
      are


attempting
      to expand opportunities with our major customers.




















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003








Note
      3 -
      Summary of Significant Accounting Policies





Basis
      of
      Presentation





The
      consolidated statements include the accounts of the Company and its


subsidiary.
      All intercompany accounts and transactions have been eliminated in


consolidation.





Receivables





Receivables
      are carried at the original invoice amount less estimates made for


doubtful
      receivables. Management determines the allowances for doubtful
      accounts


by
      reviewing and identifying troubled accounts on a periodic basis and by
      using


historical
      experience applied to an aging of accounts. A receivable is


considered
      to be past due if any portion of the receivable balance is


outstanding
      for more than thirty days beyond terms. Receivables are written off


when
      deemed uncollectible. Recoveries of receivables previously written off
      are


recorded
      into earnings when received.





Inventories





Inventories,
      consisting nearly entirely of finished goods (raw materials and


Work
      in
      process for the light assembly operation for the stringing of pearls in
      the


U.S.
      being the balance), are stated at the lower of first-in, first-out - (FIFO)


cost
      or
      market. No costs other than purchased costs, freight or duties are capitalized


in
      inventories.





As
      of
      December 31, 2005 and 2004, the inventory valuation reserve was
      $1,026,000


and
      $949,000 respectively. The Company recorded an expense of $131,000,
      $308,000


and
      $388,000 during 2005, 2004 and 2003, respectively, to adjust the
      inventory


value
      to
      lower of cost or market and to provide for future liquidations.





Revenue
      Recognition





Revenue
      is recognized in the consolidated financial statements when
      materials


are
      relieved from inventory and shipped directly FOB from from our facility
      in


Westmont,Illinois.
      Nearly all freight expense is paid by the customer. Net sales


are
      arrived at by deducting returns and discounts from gross sales. Returns
      are


deducted
      from sales when received. In addition, allowances for future
      returns


are
      provided based on historic experience and accepted customer
      returns.





Cost
      of
      sales





Cost
      of
      sales consists of the cost of goods relieved from our inventory.
      Inventory


write-downs,
      purchasing and receiving costs, inspection costs as well as
      warehousing


and
      distribution costs are included in cost of sales.





Depreciation





Machinery
      and equipment are stated at historical cost and depreciated
      primarily


on
      a
      straight-line basis over their estimated useful lives. Leasehold


improvements
      are amortized over the shorter of useful life or the life of the


lease.
      Useful lives range from three to ten years for machinery, equipment
      and


leasehold
      improvements.





Commissions





The
      Company accrues for commissions based on sales to customers based
      on


specific
      contractual agreements. These accruals are calculated based upon
      net


sales
      by
      customer, and the liability account is adjusted monthly to reflect


increases
      and decreases in each customer's sales and payments.





Income
      Taxes





Deferred
      tax assets and liabilities are determined based on the difference


between
      the financial reporting and tax bases of assets and liabilities
      using


the
      enacted tax rates in effect for the year in which the differences
      are


expected
      to reverse.





Selling,
      General and Administrative Expenses





Selling,
      general and administrative expenses consist of all operating
      expenses


other
      than costs of goods purchased, inbound freight and interest. Such
      expenses


would
      include salary and wages, commission, rent, travel, cooperative


advertising
      and all other general operating expenses.

















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003








Note
      3 -
      Summary of Significant Accounting Policies (Continued)





Fair
      Value of Financial Instruments





The
      Company's financial instruments include accounts receivable,
      accounts


payable,
      and notes payable. The fair values of all financial instruments
      were


not
      materially different than their carrying values.





Accounting
      Estimates





The
      preparation of financial statements in conformity with accounting
      principles


generally
      accepted in the United States of America requires Company
      management


to
      make
      estimates and assumptions that affect the amounts reported in the


financial
      statements and accompanying notes. Actual results could differ from


those
      estimates.





Stock-Based
      Compensation





The
      Company accounted for stock option grants in accordance with APB Opinion
      No.


25,
      "Accounting for Stock Issued to Employees" and, accordingly, recognized
      no


compensation
      expense for the stock option grants. As of December 31, 2005 and


2004,
      there were no stock options outstanding.





Advertising
      Costs





The
      Company expenses all advertising costs as incurred. Advertising costs
      were


approximately
      $1,149,000, $993,000 and $449,000 for 2005, 2004 and 2003,


respectively.





Foreign
      Currency





The
      functional currency of the Company is the U.S. dollar. Transactions
      arising


in
      foreign currencies have been translated at rates in effect at the dates
      of


the
      transactions. The gains or losses during the years presented are
      not


significant.





(Loss)
      Income Per Common Share





The
      Company has adopted the provisions of FASB No. 128, "Earnings Per
      Share."


Income
      per common share is computed by dividing net (loss) income by the


weighted-average
      number of common shares outstanding during the period.

















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003








Note
      3 -
      Summary of Significant Accounting Policies (Continued)





Segment
      Information





The
      Company has adopted Statement of Financial Accounting Standards No.
      131,


"Disclosures
      about Segments of an Enterprise and Related Information." The


internal
      reporting that is used by management for making operating decisions
      and


assessing
      performance is used as the source of determining the Company's


reportable
      segments. This statement requires disclosure of certain information


by
      reportable segment, geographic area and major customer.





The
      Company imports, assembles, distributes and wholesales fine
      jewelry.


Substantially
      all the Company's sales are within the United States. The Company


operates
      this product line as one operating segment, which is deemed to be
      one


reportable
      segment for purposes of this disclosure.





Comprehensive
      Income





Comprehensive
      income is a measure of all equity that results from recognized


transactions
      and other economic events other than owner transactions, such as


stock
      purchases and issuances and dividends. There were no significant


differences
      between the Company's net (loss) income and comprehensive income.





Correction
      of an Error





The
      Company has reduced net sales and selling, general and administrative expenses
      by


$1,149,000,
      $993,000 and $449,000 in 2005, 2004 and 2003, respectively to properly classify


cooperative
      advertising costs. The correction of the error had no impact on net (loss)
      income


or
      accumulated deficit for the years restated.





New
      Accounting Pronouncements





In
      November 2004, the FASB issued SFAS Statement No. 151 "Inventory Costs -
      An


amendment
      of ARB No. 43, Chapter 4." This new standard is the result of a


broader
      effort by the FASB to improve financial reporting by eliminating


differences
      between GAAP in the United States and GAAP developed by the


International
      Accounting Standards Board (IASB). As part of this effort, the


FASB
      and
      the IASB identified opportunities to improve financial reporting by


eliminating
      certain narrow differences between their existing accounting


standards.
      Statement No. 151 clarifies that abnormal amounts of idle facility


expense,
      freight, handling costs and spoilage should be expensed as incurred
      and


not
      included in overhead. Further, Statement No. 151 requires that allocation
      of


fixed
      production overheads to conversion costs should be based on normal


capacity
      of the production facilities. The provisions in Statement 151 are


effective
      for inventory costs incurred during fiscal years beginning after
      June


15,
      2005.
      The adoption of SFAS Statement No. 151 is not expected to have an


impact
      on
      the Company's consolidated financial position or results of


operations.





In
      December 2004, the FASB issued SFAS Statement No. 123 (Revised
      2004),


"Share-Based
      Payments". The new FASB rule requires that the compensation cost


relating
      to share-based payment transactions be recognized in the financial


statements.
      That cost will be measured based on the fair value of the equity or


liability
      instruments issued. Public entities (other than those filing as
      small


business
      issuers) will be required to apply Statement No. 123R beginning
      with


the
      first
      interim or annual reporting period of the company's first fiscal
      year


beginning
      after June 15, 2005. The adoption of SFAS Statement No. 123
      (Revised)


is
      not
      expected to have an impact on the Company's consolidated financial


position
      or results of operations.

















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003








Note
      3 -
      Summary of Significant Accounting Policies (Continued)





New
      Accounting Pronouncements (Continued)





In
      December 2004, the FASB issued SFAS No. 153 "Exchanges of Nonmonetary
      Assets


-
      An
      Amendment of APB Opinion No. 29". This new standard is the result of
      a


broader
      effort by the FASB to improve financial reporting by eliminating


differences
      between GAAP in the United States and GAAP developed by the


International
      Accounting Standards Board (IASB). As part of this effort, the


FASB
      and
      the IASB identified opportunities to improve financial reporting by


eliminating
      certain narrow differences between their existing accounting


standards.
      Statement 153 amends APB Opinion No. 29, "Accounting for
      Nonmonetary


Transactions",
      that was issued in 1973. The amendments made by Statement 153 are


based
      on
      the principle that exchanges of nonmonetary assets should be
      measured


based
      on
      the fair value of the assets exchanged. Further, the amendments


eliminate
      the narrow exception for nonmonetary exchanges of similar
      productive


assets
      and replace it with a broader exception for exchanges of
      nonmonetary


assets
      that do not have "commercial substance." Previously, Opinion 29
      required


that
      the
      accounting for an exchange of a productive asset for a similar


productive
      asset or an equivalent interest in the same or similar productive


asset
      should be based on the recorded amount of the asset relinquished.
      The


provisions
      in Statement 153 are effective for nonmonetary asset exchanges


occurring
      in the fiscal periods beginning after June 15, 2005. The adoption
      of


SAFS
      Statement No. 153 is not expected to have an impact on the
      Company's


consolidated
      financial position or results of operation.





In
      May
      2005, the FASB issued SFAS No. 154 "Accounting Changes and Error


Corrections
      - A Replacement of APB Opinion No. 20 and FASB Statement No. 3".


This
      Statement requires that a voluntary change in accounting principle
      be


applied
      retrospectively with all prior period financial statements presented
      on


the
      new
      accounting principle, unless it is impracticable to do so. Statement
      154


also
      provides that (1) a change in method of depreciating or amortizing
      a


long-lived
      nonfinancial asset be accounted for as a change in estimate


(prospectively)
      that was effected by a change in accounting principle, and (2)


correction
      of errors in previously issued financial statements should be
      termed


a
      "restatement." The new standard is effective for accounting changes
      and


correction
      of errors made in fiscal years beginning after December 15, 2005.
      The


adoption
      of SAFS Statement No. 154 is not expected to have an impact on the


Company's
      consolidated financial position or results of operations.





Note
      4 -
      Credit Arrangements





On
      June
      14, 2005, the Company entered into a credit agreement with a new


financial
      institution whereby the Company can borrow up to $7.5 million, plus


the
      seasonal over-line amount of $1.5 million, payable on demand. The
      total


credit
      facility is governed by a borrowing base formula, as defined in the


agreement,
      based principally on accounts receivable and inventory levels. This


agreement
      provides, among other things, that the credit agreements are


collateralized
      by substantially all the assets of the Company with an


approximate
      net book value of $18.4 million.





Under
      this borrowing facility, interest is calculated at .25% over the
      bank's


prime
      rate with respect to the revolving loan. In addition, an unused
      commitment


fee
      is
      assessed at a rate of .25% representing the difference between the


maximum
      revolving loan and the average daily outstanding balance. An officer
      of


the
      Company personally guarantees up to $3.5 million of the borrowings.





The
      agreement contains certain reporting and financial covenants, which
      the


Company
      is required to maintain. The credit agreement matures on June 1,
      2007,


or
      may be
      accelerated or called by the lender upon certain events as
      specified


in
      the
      loan agreement.











IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003





Note
      4 -
      Credit Arrangements (Continued)





As
      of
      December 31, 2005, borrowings under this credit agreement were


approximately
      $7.9 million. As of December 31,2005, maximum additional available


borrowings
      under the line of credit were approximately $1.1 million, subject
      to


certain
      borrowing base limitations. The Company was in compliance with all
      of


the
      financial covenants during the year-ended December 31, 2005 except the
      debt


service
      coverage ratio . This covenant was waived by the bank for the
      year-ended


December
      31, 2005.








Note
      5 -
      Preferred Stock





The
      3,644,880 issued preferred shares are redeemable at the Company's
      option


after
      March 21, 1997, at an amount not to exceed 50% of net income in excess
      of


$15
      million for the preceding year. If not redeemed, the preferred shares
      will


begin
      to
      accrue a 4% noncumulative dividend as of that date. The preferred


shares
      have voting rights equivalent to one-half vote per share. In the event
      of


a
      liquidation of the Company, the holders of preferred shares will be
      entitled


to
      $1 per
      share before any payment is made to common shareholders.








Note
      6 -
      Stock Option Plans





In
      January 1995, the Company adopted a nonqualified stock option plan
      under


which
      600,000 shares of common stock have been reserved for options, which
      may


be
      granted to key employees and third-party consultants at an option price to
      be


determined
      by the Compensation Committee of the Board of Directors. No options


have
      been
      granted under this plan. This plan expired in 2005.








Note
      7 -
      Related Party Transactions





Since
      1998, some of the Company's products were purchased from a manufacturer
      in


Hong
      Kong, which is managed by a relative of an officer of the Company.
      For


2005,
      2004 and 2003, the Company's purchases from this manufacturer were


approximately
      $3,284,000, $7,887,000 and $7,394,000, respectively. Beginning in


October
      2005 the Company began purchasing products from another manufacturer
      in


Hong
      Kong, which is owned and managed by a relative of an officer of the


Company.
      Purchases from this company in 2005 were approximately $521,000.





The
      Company uses outside entities to pursue most of its sales, because it
      has


proven
      to
      be both effective and economical. The stakeholders of a primary


outside
      sales entity are an officer of the Company and a family member of
      such


officer.





Commission
      expense of the Company associated with this entity for the years


2005,
      2004 and 2003 was approximately $619,000, $688,000 and $569,000,


respectively.
      Selling expenses such as salaries, travel, entertainment etc. are


borne
      directly by the sales entity.














IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003





Note
      7 -
      Related Party Transactions (Continue)








Notes
      Payable to Employees, Related Parties





Notes
      payable to employees and related parties reflect loans made to the
      Company


from
      employees and relatives of employees to enhance the cash flow of
      the


Company.
      These notes mature annually at December 31, but may be renewed if


concurred
      by both the Company and individual. These notes may be prepaid
      without


penalty.
      Interest was accrued and paid on these notes at a beginning rate in


2005
      of
      7.5% and increased periodically through the year reflecting increases
      in


the
      prime
      rate to 9.5% at year end. Interest was accrued and paid at a rate
      of


7.5%
      and
      10.0% in 2004 and 2003 respectively.








Note
      8 -
      Income Taxes





The
      following table summarizes income taxes (benefits):






Year
                  Ended December 31(In
                  Thousands)
              
              2005
              2004
              2003Current
              U.S.
                  federal
              $
                  (3)
              $
                  -
              $
                  -U.S.
                  state
              -
              -
              -Other
              -
              -
              -(3)
              -
              -Deferred
              U.S.
                  federal
              -
              -
              -U.S.
                  state
              -
              -
              -Other
              -
              -
              --
              -
              -Income
                  Tax Expense
              (3)
              -
              -
              -







The
      differences between the U.S. federal statutory tax rate and the Company's effective
      tax rate are as follows:





Year
                  Ended December 312005
              2004
              2003U.S.
                  federal statutory tax rate
              34%
              34%
              34%Change
                  in valuation allowance
              (35)
              (35)
              (35)Other
              1
              1
              1Consolidated
                  Effective Tax Rate
              -
                  %
              -
                  %
              -
                  %











IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003





Note
      8 -
      Income Taxes (Continued)





The
      components of deferred income taxes as of December 31, are as
      follows:





(In
                  Thousands)
              2005
              2004Deferred
                  Tax Assets
                Net
                  operating and capital loss
                carry
                  forward
              $
                  2,951
              $
                  2,682Accounts
                  receivable
              277
              232Inventories
              488
              464Property
                  and equipment
              203
              212Accrued
                  expenses
              75
              -Deferred
                  Tax Liability
              -Accrued
                  expenses
              -
              (155)3,994
              3,435Less:
                  Valuation allowance
              (3,838)
              (3,279)Net
                  Deferred Tax Asset
              $
                  156
              $
                  156





In
      accordance with the provisions of Internal Revenue Code Section
      382,


utilization
      of the company's net operating loss carry forward is estimated to
      be


limited
      to approximately $111,000 per year because of a change in corporate


ownership.
      However, because some of the net operating losses were incurred


during
      part of fiscal year 1998 and all of 1999 when the Section 382
      limitation


did
      not
      apply, the company has approximately $6,200,000 of net operating
      loss


carry
      forward available for immediate use as of December 31, 2005. Because
      of


the
      Section 382 limitation, the portion of the company's total net
      operating


loss
      carry forward that may be utilized through expiration is estimated to
      be


approximately
      $7,600,000. This net operating loss carryforward will expire


through
      2023.


.











Note
      9 -
      Supplemental Cash Flow Information





(In
      Thousands) Year Ended December 31




2005 2004 2003




Cash
      paid
      for interest $
      409  $
      334 $
      297
















IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003





Note
      10 -
      Employee Benefit Plan





The
      company sponsors a defined-contribution profit-sharing plan
      covering


substantially
      all full-time employees who have completed one year of service.


Company
      contributions to the plan are discretionary, determined by the Board
      of


Directors
      and fully vest to employees upon completion of six years of
      service.


The
      Company also has a voluntary 401(k) savings plan. Participants may


contribute
      up to 15% of their compensation to this plan. The Company matching
      to


this
      plan
      is discretionary and decided annually by the Board of Directors.


Participant
      and employer-matched contributions to the plan are 100% vested.


Company
      contributions to these plans were approximately $31,000, $30,000
      and


$61,000
      in 2005, 2004 and 2003, respectively.








Note
      11 -
      Significant Customers





The
      Company derived 44% and 12% of its net sales from two customers during
      2005.


The
      Company derived 44% and 18% of its net sales from two customers during
      2004


and
      36%,
      20% and 12% from three customers in 2003. The receivable balances
      for


significant
      customers were $5,817,000 and $7,439,000 as of December 31, 2005
      and


2004,
      respectively.








Note
      12 -
      Commitments and Contingencies





Litigation





The
      Company is a codefendant in a class action lawsuit brought by a
      stockholder


in
      1996
      who alleges the Company misrepresented its financial position in
      interim


financial
      statements. The original suit seeks damages in excess of $11
      million.


The
      Company has repeatedly disputed the stockholder's allegations and
      believes


that
      they
      will ultimately prevail in the litigation. The parties reached an


agreement
      in principal to settle the claim for a significantly lesser amount,


which
      was
      accrued for in 1999. The settlement agreement is subject to court


approval
      and the Company may decline to proceed with the agreement if a


significant
      number of class members "opt out" of the settlement. As of December


31,
      2005,
      there has been no response from counsel for the class action
      lawsuit


or
      from
      the lead plaintiff.











IWI
      Holding Limited


Notes
      to
      Consolidated Financial Statements





Years
      Ended December 31, 2005, 2004 and 2003





Note
      12 -
      Commitments and Contingencies (Continued)





Operating
      Leases





Imperial
      is obligated under a lease on its operating facility, located in


Westmont,
      Illinois for minimum rentals as well as real estate taxes and other


operating
      expenses through January 2007.





The
      future minimum lease payments required under this lease as of December
      31,


2005
      are
      as follows:








Year
      Ending December 31:




2006  $
      184,000


2007     
      16,000


-----------


$ 200,000





Rent
      expense included in the accompanying statements of operations amounted
      to


$238,000,
      $221,000 and $187,000 for 2005, 2004 and 2003, respectively.





Employment
      Agreements





The
      Company has an employment agreement with an officer expiring on July
      31,


2006.
      The
      agreement includes provisions for severance payments for the longer
      of


one
      year
      or any period for which the employee is required not to compete.








The
      future minimum annual compensation payments as required under the
      agreement


as
      of
      December 31, 2005 approximates $163,000.




















Schedule
      l





IWI
      Holding Limited


Condensed
      Financial Information of Registrant


Balance
      Sheets


December
      31, 2005 and 2004








2005
              
              2004AssetsCash
              
              $
              1,000
              
              $
              1,000Due
                  from affiliate
              
              
              500,000
              
              
              500,000Investments
                  in wholly owned subsidiaries
              
              
              969,000
              
              
              1,161,000Total
                  Assets
              
              $
              1,470,000
              
              $
              1,662,000Stockholders'
                  EquityPreferred
                  stock - $1 par value;
                authorized
                  - 5,000,000 shares; issued and
                outstanding
                  - 3,644,880 shares
              
              $
              3,644,880
              
              $
              3,644,880Common
                  stock - No par value; authorized - 10,000,000
                shares;
                  issued and outstanding - 2,544,700 shares
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              12,446,120
              
              
              12,446,120Accumulated
                  deficit
              
              
              (14,621,000
              )
              
              (14,429,000
              )$
              1,470,000
              
              $
              1,662,000Statements
                  of Income and Accumulated Deficit
              
              
              2005
              
              
              2004Equity
                  in net (loss) income of subsidiaries
              
              $
              (192,000
              )
              $
              231,000Accumulated
                  deficit, beginning of year
              
              
              (14,429,000
              )
              
              (14,660,000
              )Accumulated
                  deficit, end of year
              
              $
              (14,621,000
              )
              $
              (14,429,000
              )










Schedule
      ll





IWI
      Holding Limited


Valuation
      and Qualifying Accounts


Years
      Ended December 31, 2005, 2004 and 2003


Description
              Additions
                  Balance at Beginning of Period
              Charged
                  to Cost and Expenses
              Charged
                  to Other Accounts
              Deduction
              Additions
                  Balance at End of PeriodYear
                  Ended December 31, 2003Allowance
                  for
                Doubtful
                  Accounts
              $
                  568,000
              (32,000)
              -
              4,000(1)
              $
                  532,000Inventory
                  Valuation
                Allowance
              $1,073,000
              388,000
              -
              633,000
                  (2)
              $828,000Deferred
                  Income Tax
                Valuation
                  Allowance
              $3,612,000
              -
              -
              15,000
                  (3)
              $
                  3,597,000Year
                  Ended December 31, 2004Allowance
                  for
                Doubtful
                  Accounts
              $532,000
              351,000
              -
              287,000
                  (1)
              $
                  596,000Inventory
                  Valuation
                Allowance
              $828,000
              308,000
              -
              187,000
                  (2)
              $
                  949,000Deferred
                  Income Tax
                Valuation
                  Allowance
              $3,597,000
              -
              -
              318,000
                  (3)
              $
                  3,279,000Year
                  Ended December 31, 2005Allowance
                  for
                Doubtful
                  Accounts
              $596,000
              116,000
              -
              2,000
                  (1)
              $
                  710,000Inventory
                  Valuation
                Allowance
              $949,000
              111,000
              -
              34,000(2)
              $
                  1,026,000Deferred
                  Income Tax
                Valuation
                  Allowance
              $3,279,000
              559,000
              -
              -
              $
                  3,838,000





(1)
      Write-off of uncollectible accounts (2) Inventory losses realized
      (3)


Decreases
      in deferred tax assets