Part 2

Company Information

Capetronic International (Thailand) Public Company Limited (“the
Company”) was originally engaged in the manufacture of computer monitors
and printed circuit board assemblies for computer monitors. Due to the
declining demands and stiff competition in the computer monitors and
printed circuit boards, The Company introduced in 2002/2003 a new
product line of the LCD multimedia / LCD TV into its production line.
Its headquarter is located at 105 Moo 3, Bangna-Trad Road, KM. 52,
Thakham, Bangpakong, Chachoengsao 24130, Telephone No. (038) 573-161 Fax
No. (038) 573-174. The Company registration number is Bor Mor Jor 113.

2.  RISK FACTOR

    1.  Business conduction

The company is exposed to a certain degree of risk in securing
sufficient orders to meet its operating overheads. The company shall
address this by continuous cost reduction measures to reduce its fixed
overheads and make its prices more competitive.

2.  Reliance on single product

  The Company manufactures and distributes only computer monitors. In
  order to minimize the risk from reliance on a single product, the
  management has extended/added new product line of LCD
  multi-media/LCD-TV in addition to monitor display.

3.  Foreign exchange risk

    In 2003, the Company registered a gain from exchange rate of
    approximately Baht 10 million,. The exchange gain could be
    attributed to the book translation of its receivables in US dollars
    to Thai Baht as a result of the strengthening of the Thai Baht
    against the US dollars. The exchange gain was included under
    operational results.

    The Company does not have any measures in place to protect against
    exposure from the fluctuation of the foreign exchange because the
    Company sells solely in US$ currency and the Company buys most of
    its components in US$ currency as well. Thus, gains or losses that
    may arise from these transactions will be netted off and have
    limited exposure.

    However, the Company may have a gain or loss resulting from the
    translation of balance sheet items in foreign currencies as at the
    balance sheet date. This translation is made in accordance with the
    general accounting standards.

4.  Materials Procurement risk

    The company has introduced a new product line of LCD
    multimedia/LCD-TV in 2002. This new product line uses different
    tuner system for differed regions. There is a potential risk of
    procuring tuner related materials when any shortage arises.

    Management has provided a direction to engineering team for a
    two-step plan to address this:-

    .

    Step 1 is to work out two versions of tuner-systems (PAL and NTSC)
    to meet the global requirements.

    Step 2 is to design a one worldwide multi-tuner system that covers
    all regions.

5.  Reliance on major customer

  From the past to 2001, Sony Corporation, was its major customer. For
  the year 2001, total sales to this customer were Baht 4.76 billion or
  87.65% of total sales. Sony Corporation terminated the engagement with
  the Company in producing the computer monitors since October 1, 2001
  as a consequence of their decision to discontinue with small-middle
  size monitors.

  To reduce the risk from reliance on major customers in future, the
  Company has a strategy for expanding its customer base to spread over
  all major territories.

6.  Risk of having a major shareholder (holding more than 75 percent)

  The major shareholder of the Company, The Grande Holdings Limited,
  holding in aggregate of 1,155 million shares or 82.46 percent of the
  total issued shares in the Company. The shareholding of more than 75
  percent effectively allows this major shareholder to have control over
  the Company in relation to matters requiring the approval of the
  shareholders. As a result, there is a risk to minority shareholders
  that they are unable to vote against the matters proposed by this
  major shareholder. However, this does not apply to situations where
  this major shareholder is an interested shareholder and must abstain
  from voting or where the regulations of the SEC or the SET provides
  for the veto right of the minority shareholders.

7.  Risk of going concern

The financial statements have been prepared on going concern basis. The
consolidated financial statements and separate financial statements of
the company for year 2003 reflected a loss before and after
extraordinary items of approximately Baht 187 million and Baht 161
million respectively. In year 2003, due to insufficient market demand,
the Company wound down its operations. It made significant staff
reductions and changed the status of all remaining staff to that of
contract workers. The Company, itself, paid total severance pay of Baht
40.67 million.

In November 2003 the Stock Exchange of Thailand placed the Company into
rehabilitation. The Company needs to present its detailed rehabilitation
plan for review and this rehabilitation plan is currently under
preparation by the Company.

The financial statements of the Company for 2003 and 2002 show that net
cash used in operations during those yeas was Baht 126 million and Baht
557 million, respectively, and that as the end of the year 2003, current
liabilities exceeded current assets by Baht 16 million. The company’s
ability to continue as a going concern is dependent on the receipt of
continuing financial support from the parent company group. The
assumption is premised on future events, the outcome of which is
inherently uncertain. The financial statements do not therefore include
adjustments that might result should the Company not be able to continue
as a going concern.