11. FINANCIAL STATUS AND OPERATING RESULT

    1.  FINANCIAL STATEMENTS

Summary of Auditor’s report

  Mr. Ruth Chaowanagawi of Ernst & Young was appointed as the auditor of
  the Company, its subsidiary and the Company’s consolidated financial
  statements for the year ended December 31, 2000.

  Miss Wanraya Puttasatiean of AMC Co.,Ltd. was appointed as the auditor
  of the Company, its subsidiary and the Company’s consolidated
  financial statements for the year ended December 31, 2001

  Miss Somboon Supasiripinyo of KPMG Audit (Thailand) Limited was
  appointed as the auditor of the Company, its subsidiary and the
  Company’s consolidated financial statements for the year ended
  December 31,2002.

  The summary of auditor’s report for 2000, 2001 and 2002 are as below;

2000. The auditor expressed his opinion in the auditor’s report on an
      unqualified basis.

2001. The auditor expressed his opinion in the auditor’s report on a
      qualified basis.

  The company recorded the undelivered sales of Baht 520 million and
  cost of Baht 488 million to a foreign related company in the 2001
  consolidated and company financial statements. As of December 31,2001,
  the company still supervised inventory sold and goods was kept in the
  company’s warehouse. The company has not yet received such merchandise
  repayment. However, the management confirmed that the ownership of
  goods was transferred to the buyer according to the purchase and sale
  agreement dated December 31,2001. The company’s legal counselor gave
  an opinion that the ownership of goods was transferred to the buyer at
  the agreement date despite of undelivered goods.

2002. The auditor expressed his opinion in the auditor’s report on a
      qualified basis.

I did not audit the financial statements of the Company’s foreign
associated companies as at December 31,2001. Therefore I did not audit
the balance brought forward relating to the provision for diminution in
the value of investments in associated companies as disclosed in note
13. This was audited by another auditor.

Financial Statement and Ratio Analysis

  --------------- ------------------- ------------------ -------------- ---------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- --------- -------- -------
  CAPETRONIC                                                                                                                                                                                                    
  INTERNATIONAL                                                                                                                                                                                                 
  (THAILAND)                                                                                                                                                                                                    
  PUBLIC COMPANY                                                                                                                                                                                                
  LIMITED                                                                                                                                                                                                       

  AND ITS                                                                                                                                                                                                       
  SUBSIDIARY                                                                                                                                                                                                    
  COMPANY                                                                                                                                                                                                       

  BALANCE SHEETS                                                                                                                                                                                                

  AS AT 31                                                                                                                                                                                                      
  DECEMBER                                                                                                                                                                                                      

                                                                                                                                                                                             (Unit :            
                                                                                                                                                                                             Million            
                                                                                                                                                                                             Baht)              

                                                         Consolidated                                                                 The                                                                       
                                                                                                                                      Company                                                                   
                                                                                                                                      Only                                                                      

                                                         2000                      2001                  2002                         2000                  2001                  2002                          

                                                         Amount         %          Amount     %          Amount     %                 Amount     %          Amount     %          Amount               %        

                                      ASSETS                                                                                                                                                                    

  CURRENT ASSETS                                                                                                                                                                                                

                  Cash on hand and at                                   71.51      1.26       73.94      1.67       78.99    16.83               71.51      1.26       73.94      1.67       78.99              16.83
                  banks                                                                                                                                                                                         

                  Trade accounts                                        10.17      0.18       4.70       0.11       5.87     1.25                10.17      0.18       4.70       0.11       5.87               1.25
                  receivable - net                                                                                                                                                                              

                  Trade accounts                                        3,376.02   59.59      3,923.18   88.86               0.00                3,376.02   59.59      3,923.18   88.86      1.01               0.22
                  receivable(net) -                                                                                                                                                                             
                  related parties                                                                                                                                                                               

                  Short-term loan to                                    0.00       0.00                  0.00                0.00                3.02       0.05       2.10       0.05                          0.00
                  a local subsidiary                                                                                                                                                                            
                  company - net                                                                                                                                                                                 

                  Inventories - net                                     1,439.07   25.40      0.14       0.00       103.57   22.06               1,439.07   25.40      0.14       0.00       103.57             22.07

                  Other receivables                                     110.56     1.95       67.07      1.52       0.23     0.05                110.56     1.95       67.07      1.52       0.23               0.05

                  Other current                                         243.33     4.29       6.95       0.16       10.59    2.26                243.32     4.29       6.93       0.16       10.58              2.25
                  assets                                                                                                                                                                                        

                                      Total Current      5,250.66       92.68      4,075.98   92.32      199.25     42.45             5,253.67   92.73      4,078.06   92.36      200.25               42.67    
                                      Assets                                                                                                                                                                    

                                                                                                                                                                                                                

  NON-CURRENT                                                                                                                                                                                                   
  ASSETS                                                                                                                                                                                                        

                  Investment in other                                              0.00                  0.00                0.00                           0.00                  0.00                          0.00
                  company - net                                                                                                                                                                                 

                  Property, plant and                                   413.68     7.30       338.25     7.66       269.18   57.34               410.65     7.25       336.15     7.61       268.01             57.11
                  equipment -net                                                                                                                                                                                

                  Other assets                                          1.09       0.02       1.02       0.02       1.00     0.21                1.09       0.02       1.02       0.02       1.00               0.21

                                      Total Non -        414.77         7.32       339.27     7.68       270.18     57.55             411.74     7.27       337.17     7.64       269.01               57.33    
                                      Current Assets                                                                                                                                                            

  Total Assets                                                                     5,665.43   100.00     4,415.25   100.00   469.43   100.00                5,665.41   100.00     4,415.23   100.00    469.26   

                                                                                                                                                                                                                

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

  --------------- ------------- ----------------- -------------- ---------- -------- ------------ ----------- ---------- -------- ------------ ----------- ------------ ---------- -- ------------ ---------- --- --------- ------------ ----------- -- ---------- ------------ ------------ ----------
  CAPETRONIC                                                                                                                                                                                                                                                                                 
  INTERNATIONAL                                                                                                                                                                                                                                                                              
  (THAILAND)                                                                                                                                                                                                                                                                                 
  PUBLIC COMPANY                                                                                                                                                                                                                                                                             
  LIMITED                                                                                                                                                                                                                                                                                    

  AND ITS                                                                                                                                                                                                                                                                                    
  SUBSIDIARY                                                                                                                                                                                                                                                                                 
  COMPANY                                                                                                                                                                                                                                                                                    

  BALANCE SHEETS                                                                                                                                                                                                                                                                             

  AS AT 31                                                                                                                                                                                                                                                                                   
  DECEMBER                                                                                                                                                                                                                                                                                   

                                                                                                                                                                                                                                                        (Unit :                              
                                                                                                                                                                                                                                                        Million                              
                                                                                                                                                                                                                                                        Baht)                                

                                                  Consolidated                                                                                                                        The Company                                                                                            
                                                                                                                                                                                      Only                                                                                                   

                                                  2000                               2001                                         2002                                                2000                                  2001                                   2002                      

                                                  Amount         %                   Amount                   %                   Amount                   %                          Amount                      %         Amount                      %          Amount       %            

  LIABILITIES AND                                                                                                                                                                                                                                                                            
  SHAREHOLDERS                                                                                                                                                                                                                                                                               
  EQUITY                                                                                                                                                                                                                                                                                     

  CURRENT                                                                                                                                                                                                                                                                                    
  LIABILITIES                                                                                                                                                                                                                                                                                

                  Trust                                          0.23       0.00                  0.24                   0.01                                           0.00                       0.23                     0.00         0.24                      0.01                      0.00
                  receipts                                                                                                                                                                                                                                                                   

                  Trade                                          2,417.71   42.67                 155.77                 3.53                  20.75                    4.42                       2,417.71                 42.67        155.77                    3.53         20.75        4.42
                  accounts                                                                                                                                                                                                                                                                   
                  payable                                                                                                                                                                                                                                                                    

                  Trade                                          0.00       0.00                  0.00                   0.00                  2.18                     0.46                       0.00                     0.00         0.00                      0.00         2.18         0.46
                  accounts                                                                                                                                                                                                                                                                   
                  payable -                                                                                                                                                                                                                                                                  
                  related                                                                                                                                                                                                                                                                    
                  parties                                                                                                                                                                                                                                                                    

                  Loan from                                                 0.00                  949.74                 21.51                 22.34                    4.76                                                0.00         949.74                    21.51        22.34        4.76
                  related party                                                                                                                                                                                                                                                              

                  Warranty                                       293.38     5.18                  62.26                  1.41                  6.31                     1.34                       293.38                   5.18         62.26                     1.41         6.31         1.34
                  reserve                                                                                                                                                                                                                                                                    

                  Accrued                                        136.31     2.41                  98.89                  2.24                  14.79                    3.15                       136.30                   2.41         98.88                     2.24         14.62        3.12
                  expenses                                                                                                                                                                                                                                                                   

                  Provisions                                     0.00       0.00                  0.00                   0.00                  42.39                    9.03                       0.00                     0.00         0.00                      0.00         42.39        9.03

                  Other current                                  178.44     3.15                  11.03                  0.25                  10.78                    2.30                       178.43                   3.15         11.02                     0.25         10.78        2.30
                  liabilities                                                                                                                                                                                                                                                                

                                Total Current     3,026.07       53.41               1,277.93                 28.94               119.54                   25.46                      3,026.05                    53.41     1,277.91                    28.94      119.37       25.44        
                                Liabilities                                                                                                                                                                                                                                                  

                                                                                                                                                                                                                                                                                             

  NON – CURRENT                                                                                                                                                                                                                                                                              
  LIABILITIES                                                                                                                                                                                                                                                                                

                  Provision for                                                                                                                                                                                                                                                              
                  diminution in                                                                                                                                                                                                                                                              
                  value of                                                                                                                                                                                                                                                                   
                  investments                                                                                                                                                                                                                                                                
                  in                                                                                                                                                                                                                                                                         

                  Subsidiary                                     1,869.25   32.99                 2,055.66               46.56                 0.00                     0.00                       1,869.25                 32.99        2,055.66                  46.56        0.00         0.00
                  and                                                                                                                                                                                                                                                                        
                  associated                                                                                                                                                                                                                                                                 
                  companies                                                                                                                                                                                                                                                                  

                                Total Non –       1,869.25       32.99               2,055.66                 46.56               0.00                     0.00                       1,869.25                    32.99     2,055.66                    46.56      0.00         0.00         
                                Current                                                                                                                                                                                                                                                      
                                Liabilities                                                                                                                                                                                                                                                  

                                Total             4,895.32       86.41               3,333.59                 75.50               119.54                   25.46                      4,895.30                    86.41     3,333.57                    75.50      119.37       25.44        

                                                                                                                                                                                                                                                                                             

  SHAREHOLDERS'                                                                                                                                                                                                                                                                              
  EQUITY                                                                                                                                                                                                                                                                                     

                  Share capital                                  9,507.12   167.81                14,009.37              317.30                14,009.37                2,984.34                   9,507.12                 167.81       14,009.37                 317.30       14,009.37    2,985.42

                  Capital                                                                                                                                                                                                                                                                    
                  surplus                                                                                                                                                                                                                                                                    

                                Share premium     (5,046.73)     (89.08)             (9,098.76)               (206.08)            (9,098.76)               (1,938.26)                 (5,046.73)                  (89.08)   (9,098.76)                  (206.08)   (9,098.76)   (1,938.96)   
                                (discount)                                                                                                                                                                                                                                                   

                                Translation       (459.67)       (8.11)              (556.42)                 (12.60)             (104.65)                 (22.29)                    (459.67)                    (8.11)    (556.42)                    (12.60)    (104.65)     (22.30)      
                                Adjustment                                                                                                                                                                                                                                                   

                                Goodwill on       (987.79)       (17.44)             (987.79)                 (22.37)             0.00                     0.00                       (987.79)                    (17.44)   (987.79)                    (22.37)    0.00         0.00         
                                acquisition                                                                                                                                                                                                                                                  

                                Retained earnings                                                                                                                                                                                                                                            
                                (Deficit)                                                                                                                                                                                                                                                    

                                Appropriated –    3.84           0.07                3.84                     0.09                3.84                     0.82                       3.84                        0.07      3.84                        0.09       3.84         0.82         
                                statutory reserve                                                                                                                                                                                                                                            

                                Un appropriated   (2,246.66)     (39.66)             (2,288.58)               (51.83)             (4,459.91)               (950.07)                   (2,246.66)                  (39.66)   (2,288.58)                  (51.83)    (4,459.91)   (950.41)     
                                (Deficit)                                                                                                                                                                                                                                                    

                                Total             770.11         13.59               1,081.66                 24.50               349.89                   74.54                      770.11                      13.59     1,081.66                    24.50      349.89       74.56        
                                Shareholders'                                                                                                                                                                                                                                                
                                Equity                                                                                                                                                                                                                                                       

                                Total Liabilities 5,665.43       100.00              4,415.25                 100.00              469.43                   100.00                     5,665.41                    100.00    4,415.23                    100.00     469.26       100.00       
                                and Shareholders'                                                                                                                                                                                                                                            
                                Equity                                                                                                                                                                                                                                                       
  --------------- ------------- ----------------- -------------- ---------- -------- ------------ ----------- ---------- -------- ------------ ----------- ------------ ---------- -- ------------ ---------- --- --------- ------------ ----------- -- ---------- ------------ ------------ ----------

[TABLE]

  ---------------- -------------- -- ------------------------- -- --------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
  CAPETRONIC                                                                                                                                                                 
  INTERNATIONAL                                                                                                                                                              
  (THAILAND)                                                                                                                                                                 
  PUBLIC COMPANY                                                                                                                                                             
  LIMITED                                                                                                                                                                    

  AND ITS                                                                                                                                                                    
  SUBSIDIARY                                                                                                                                                                 
  COMPANY                                                                                                                                                                    

  STATEMENTS OF                                                                                                                                                              
  RETAINED                                                                                                                                                                   
  EARNINGS                                                                                                                                                                   

  FOR THE YEARS                                                                                                                                                              

                                                                                                                                      Unit :                                 
                                                                                                                                      Million Baht                           

                                                                  CONSOLIDATION                                                       COMPANY ONLY                           

                                                                  2543            2544         2545                      2543         2544         2545                      

  RETAINED                                                                                                                                                                   
  EARNINGS -                                                                                                                                                                 
  UNAPPROPRIATED                                                                                                                                                             

                   Balance -                                                                                (1,588.34)   (2,246.65)   (2,288.58)                (1,588.34)   (2,246.65)
                   Beginning of                                                                                                                                              
                   year                                                                                                                                                      
                   (deficit), as                                                                                                                                             
                   previously                                                                                                                                                
                   report                                                                                                                                                    

                   Adjusting                                                                                (987.79)                                            (987.79)     
                   entries in                                                                                                                                                
                   goodwill                                                                                                                                                  
                   translation                                                                                                                                               
                   adjustment                                                                                                                                                

                   Adjusting                                                                                (413.83)                                            (413.83)     
                   entries in                                                                                                                                                
                   accumulated                                                                                                                                               
                   translation                                                                                                                                               
                   adjustment                                                                                                                                                

                   Balance -                                                      (1,588.34)   (2,246.65)   (3,690.20)                (1,588.34)   (2,246.65)   (3,690.20)   
                   Beginning of                                                                                                                                              
                   year                                                                                                                                                      
                   (deficit), as                                                                                                                                             
                   restated                                                                                                                                                  

                   NET LOSS FOR                                                   (658.31)     (41.92)      (769.71)                  (658.31)     (41.92)      (769.71)     
                   THE YEAR                                                                                                                                                  

                   Balance - end                                                  (2,246.65)   (2,288.58)   (4,459.91)                (2,246.65)   (2,288.58)   (4,459.91)   
                   of year                                                                                                                                                   
                   (deficit)                                                                                                                                                 

  RETAINED                                                                                                                                                                   
  EARNINGS -                                                                                                                                                                 
  APPROPRIATED                                                                                                                                                               

                   Statutory                                                      3.84         3.84         3.84                      3.84         3.84         3.84         
                   reserve                                                                                                                                                   

                   Balance - end                                                  3.84         3.84         3.84                      3.84         3.84         3.84         
                   of year,                                                                                                                                                  
                   appropriated                                                                                                                                              

  TOTAL RETAINED                                                                               (2,242.81)   (2,284.74)   (4,456.07)                (2,242.81)   (2,284.74)   (4,456.07)
  EARNINGS                                                                                                                                                                   
  (DEFICIT)                                                                                                                                                                  

                                                                                                                                                                             

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

[TABLE]

  --------------- --------------- ------------------- ------- -------------- --------- -------- ------ ---------- -- --------- --------- -------- ----------
  CAPETRONIC                                                                                                                                      
  INTERNATIONAL                                                                                                                                   
  (THAILAND)                                                                                                                                      
  PUBLIC COMPANY                                                                                                                                  
  LIMITED                                                                                                                                         

  AND ITS                                                                                                                                         
  SUBSIDIARY                                                                                                                                      
  COMPANY                                                                                                                                         

  RATIO ANALYSIS                                                                                                                                  

  FOR THE YEARS                                                                                                                                   

                                                                                                                     Unit :                       
                                                                                                                     Million                      
                                                                                                                     Baht                         

                                                              CONSOLIDATED                                           COMPANY                      
                                                                                                                     ONLY                         

                                                              2000           2001               2002                 2000      2001      2002     

  LIQUIDITY RATIO                                                                                                                                 

                  Current Ratio                               (times)        1.74      3.19            1.67                    1.74      3.19     1.68

                  Quick Ratio                                 (times)        1.14      3.13            0.71                    1.14      3.13     0.72

                  Cash Flow                                   (times)        (0.25)    (0.64)          (0.80)                  (0.25)    (0.64)   (0.80)
                  Liquidity Ratio                                                                                                                 

                  A/R Turnover                                (times)        3.58      1.48            0.08                    3.58      1.48     0.08
                  (Avg)                                                                                                                           

                  Average                                     (days)         101       243             4,500                   101       243      4,500
                  Collection                                                                                                                      
                  Period (Avg)                                                                                                                    

                  Inventory                                   (times)        6.88      7.13            3.16                    6.88      7.13     3.16
                  Turnover (Avg)                                                                                                                  

                  Inventory                                   (days)         52        50              114                     52        50       114
                  Turnover Period                                                                                                                 
                  (Avg)                                                                                                                           

                  A/P Turnover                                (times)        4.02      3.99            1.86                    4.02      3.99     1.86
                  (Avg)                                                                                                                           

                  A/P Payment                                 (days)         90        90              194                     90        90       194
                  Period                                                                                                                          

                  Cash Cycle                                  (days)         63        204             4,420                   63        204      4,420

  PROFIT ABILITY                                                                                                                                  
  RATIO                                                                                                                                           

                  Gross Margin                                (%)            3.18      5.55            (3.28)                  3.18      5.55     (3.28)

                  Net Profit                                  (%)            (5.32)    (0.75)          (11.73)                 (5.32)    (0.75)   (11.73)

                  Return to                                   (%)            (88.03)   (4.53)          (107.54)                (88.03)   (4.53)   (107.54)
                  Shareholders'                                                                                                                   
                  Equity                                                                                                                          

  EFFICIENCY                                                                                                                                      
  RATIO                                                                                                                                           

                  Return on                                   (%)            (11.46)   (0.83)          (31.52)                 (11.46)   (0.83)   (31.52)
                  assets                                                                                                                          

                  Assets Turnover                             (times)        2.15      1.11            0.03                    2.15      1.11     0.03

  FINANCIAL                                                                                                                                       
  POLICY RATIO                                                                                                                                    

                  Debt to Equity                              (times)        6.36      3.08            0.34                    6.36      3.08     0.34

                  Interest                                    (times)        0.00      0.00            (3.73)                  0.00      0.00     (3.73)
                  Coverage                                                                                                                        

                  Dividend Pay                                (%)            0.00      0.00            0.00                    0.00      0.00     0.00
                  out                                                                                                                             

                                                                                                                                                  

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