Business Overview

4. INFORMATION ON OUR GROUP, 4. INFORMATION ON OUR GROUP,
4.1 HISTORY AND BUSiNESS 4.1.1 JFTech Our Company was incorporated in Malaysia as a public limited company under the Act on 18 September 2006 under its present name. It was established to become the investment holding company of J Foong and JF Micro in conjunction with lhe listing of our Company on the MESDAQ Market. We are presently an investmcnl holding company. The principal activities of our subsidiaries arc as follows: % Issued & effective paid-up Date / country equity capital Subsidiary of lncorporatioD interest (RM) Principal activities J Foong 29.04.1999/ 100.0 100,000 Manufacturing and trading of electronic Malaysia products and components JF Micro 14.12.2005/ 100.0 200,000 Design, development. custom manufacture Malaysia and sale of imegrated circuit test sockets, interconnect, test solutions and equipment for the semiconductor and electronic assembly markets Our Group’s corporate structure is depicted as follows: JF Tech I I
100% t 100% J Foong JF Micro
[ JI •Share capital Our present authorised share capital is RM25.000,OOO comprising 250,000,000 Shares. Our issued and paid-up share capttal is RM9,I20,SOO comprising 91.208,000 Shares as at the Latest Practicable Date. The changes in our issued and paid-up share capital since our incorporation arc as follows: Date or No. of Cumulative issued allotment ol”dioary Par \·atue Consideration nd paid-up capital shares RMRM 18.09.2006 2 1.00 Sub.scribers’ shares 2 18.01.2008 20 0.10 Share split (I: 10) 2 18.01.2008 91,207,980 0.10 Shares issued pursuant to !he 9,120.800 Acquisitions Our issued a”,d paid-up share capital would subsequently be increased to RM12.600,OOO comprising 126,000,000 Shares with the issuance of 34,792,000 Public Issue Shares at an issue price of RMO.40 per Public Issue Share.
4. INFORMATION ON OUR GROUP (Conl’d) 4.1.2 Our Group OUf management has identified a fast-growing niche sector in the semiconductor industry; the manufacture of test probe thai is critical to the testing phase of the semiconductor industry. The history of our Group can be traced back 10 the incorporation of J Foong on 29 April 1999 by Foong Wei Kuong, in response to an identified m’lrket need, witb a staff force of three (3) personnel and rented space of approximately 700 square feel. Having supplied made-to-order replacement test probes to several local Ie chip leSI handlers and semiconductor test houses. he was aware of where the semiconductor lest market was headed and what was needed 10 get there. He realised thaI local semiconductor houses and test handler makers were looking for more reliable and belief performance test probes as well as the localisation of their supply source as almost all semiconductor test probes wc:re impor1ed, and sel about 10 fuifillihe niche requirement. J Foong has come a long way from ils maiden producl, the single pin cantilever test probe; which is a high precision wire-cut metal plate in 2000. Over the years, J Foong has improved on the lest probe design, to accommodate the requirements of testing illCreasingiy complex but smaller Ie chips. The resultant design innovations have culminated in the production of 02 Kelvin tcst probes that can address the testing pitch as small as 0.35 mm. With innovative foresight, our Group is positioning ourselves in an optimum position to leverage on the next biggest emerging technology; mobile telecommunications, audio-visual and information delivery. The platform for application of this tedmology will be Ie devices that utilise radio frequencies, microwave and other forms of wireless mcdia of communication and delivery, such as por1able video-phones, peckel computers and mobile audio-visual enter1ainment devices. 1bcse devices will be powcred by smaller bUI morc complcx chips such as the MLF chips. Due to trus, it is envisaged that the growth in demand for Ie chips will be cxponential to fuel the expected demand in consumer electronics. In turn, this will result in an increase in demand for tcst solutions targeted at Ie chips, solutions that can process high volume testing with accuracy as well as with better tolerances. As a testament of our commitment to continuously improve the quality of our products, J Foong attained the ISO 9001:2000 certification on 20 August 2004 for design and assembly of tcst contactors for semiconductor application. On 14 December 2005, JF Micro was incorporated, to focus our Group’s innovative efforts to produce more advanced test solutions to address the future needs of the developing semiconductor market. A competent R&D team supported by in-house R&D facilities will ensure continuous improvement on products currently available in the market as well as produce cutting edge worldwide quality microelectronics devices. JF Micro will also showcase the innovative probe-socket technology approach, developed in-house, 10 provide integrated and customised tcst solutions for application to morc sophisticated Ie chips. The probe-socket technology will rcsult in quicker response but more accurate test solutions, as funner elaborated in the ensuing sec1ions below. Our Group has an office and fully functional production facilily at a 9,206-squarc feet area in locations as detailed in Section 4.3.16. The receipt of the Pioneer Status cer1ification for high technology company by IF Micro on 26 January 2007 is recognition of our management’s commitment 10 R&D in the field of advanced test probes. Further, in financial year ending 30 June 2008, our Group was awarded the Emerging SMEs under the Golden Bull Award 2007, Enterprise 50 Award Programme 2007 and SME Rising Stars Award 2007 respectively. 4. INFORMATION ON OUR GROUP (Cont’d)
4.2 USTING SCHEME As an integral pan of the Lisling, our Company undertook thc following listing scheme, which was approved by the relevant authorities as follows: (i) SC on 14 November 2007; and
(ii) MITI on 9 October 2007.

In addition. Bursa Securities had, vide its leller dated 13 February 2008, granted its approval in­principal for OUf Listing. Our Lisling Scheme entails thc following: 4.2.1 Sbace Split On 18 January 2008, our Company undenook a subdivision of every onc (1) existing ordinary share of RM1.00 each in JF Tech inlo tcn (10) ordinary shares of RMO.IO each in JF Tech. Consequently. the issued and paid-up capital of JF Tech is RM2 comprising twenty (20) ordinary shares of RMO.10 each in our Company. The twent)’ (20) JF Tech Shares rank pari passu in all rcspects amongst themselves.
4.2.2 Acquisitions (I) Acquisitwu of J Fooug On 9 July 2007. JF Tech entered into an SSA with the shareholders of J Foong for the acquisition of 100,000 J Foong Shares representing the entire equity interest in J Foong for a purchase consideration of RM3,017,998. full)’ satisfied by the issuance of 30,179,980 new JF Tech Shares at an issue price of RMO.lO per JFTcch Share. The purchase considcralion of RM3,017,998 for the Acquisition of J Foong was arrived at on a willing buyer-willing sellcr basis based on a PE Multiple of 2.J5times over the audited PAT of J Foong for the financial year cnded 30 June 2006 of RM1,406,174. The CQnsideration shares in JF Tecn issued pursuant to the Acquisilion of J Foong were allotted to the vendors of J Foong in the following manner: No. of No. of sbares beld consideration Vendors of J Foong inJ Foong % shares in JF Tech % Foong Wci Kuong 69.999 70.0 21,125,684 70.0 Wang Mci Ling 13,500 13.5 4,074,297 13.5 Foong Mei Leng 1 • 302 • Wan Wei Yee 16,500 16.5 4,979,697 16.5 Total 100,000 100.00 30.179,980 100.00 Nou: Negligible
The 30,179,980 new JF Tech Shares issued rank pari passu in all respeCts with the existing JF Tecn Shares in issue except thai they shall not rank for any dividends, rights, allotments and/or distributions declared or paid prior to the date of allotment thereof. The Acquisition of J Foong was compleled on 18 January 2008. 4, INFORMATION ON OUR GROUP (Conl’d) (li) Acquisition ofJF Micro 00 9 July 2007, JF Tech entered into an SSA with Ihe sharebolders of JF Micro for the acquisition of2oo,000 JF Micro Shares representing the enlire equity ioterest in JF Micro for a purchase consideration of RM5,482,800, fully satisfied by Ihc issuance of 54.828,000 new JF Tech Shares at an issue price of RMO.IO per JF Tech Share. The purchase consideration of RM5,482,800 for the Acquisition of JF Micro was arrived at on a willing buyer-willing seller basis based on a PE Multiple of 6.64 times over the audited PAT of JF Micro for thc financial year ended 30 June 2006 of RM826,038. The consideration shares in JF Tech issued pursuant to the Acquisition of JF Micro were allotted 10 thc vendors of JF Micro in the following manner: No. or No. of shares held coDsidenation Vendors of JF MIcro in JFMicro % sbares in JF Te<:h % Foong Wei Kuong 140,(X)O 70.0 38,379.600 70.0 Wang Mei Ling 22,000 11.0 6,031,080 11.0 Kok Kean Loon J9,000 9.5 5,208,660 9.5 Low Wan Choon J9,OOO 9.5 5.208,660 9.5 Total 200,000 100.0 54.828,000 100.00 The 54,828,000 new JF Tech Shares issued rank pari passu in all respects with the existing JF Tech Shares in issue eXL.’Cpl that Ihey shall not rank fOr any dividends, rights, aBotments and/or dislribulions declared or paid prior to the date of allotment lhereof. The Acquisition of JF Micro was completed on 18 January 2008. (iii) Acquisition of Properties On 9 July 2007, Jf Tech entered into the following SPAs: (a) SPA with Foong Wei Kuong and Wang Mei Ling for the acquisition of a freehold intermediate office 101, known as Parcel No. 84. Storey No.4, Building No. Ml·A. on Lot No. 42440, within Pekan Ccmpaka. District of Petaling, State of Selangor, held under Strata Title Gemn 46496/M1-N4184, and having a postal address of No. 5-4, Block El, Jaian PJU lf42A, Dataran Prima, 47301 Petaling Jaya, Sclallgor Darnl Ehsan for a purchase consideration of RM360.000, 10 be fully satisfied by the issuance of 3,600,000 new JF Tech Shares at an issue price of RM0.10 per JF Tech Share; and
(b) SPA with Foong Wei Kuong and Wang Mei Ling for the acquisition of a 3+1 ­bedroom condominium, known as Parcel No. PS-IOB-T, Type: Tiara, Storey No. Nine, Building No. Princess Wing, Tiara Kclana, erected on part of land held under Master Title H.S.(M) 6689. P.T. 131, Mukim of Damansara, District of Kclana Jaya (now within District of Pelaling), Stale of Selangor, together with Accessory Parcel No. AJ-ll of Building No. Block A. and having a postal address of No. 1002, Block

A. Tiara Kelana Condominium, No.1, Jalan SS7/19, Taman Sri Kdana, Kelana Jaya, 47301 Petaling Jaya, Selangor Darnl Ehsan for a purchase consideration of RM260,OOO, to be fully satisfied by the issuance of 2,600,000 new JF Tech Shares al an issue price ofRMO.IO per JF Tech Share. The total purchase consideration of RM620,OOCI was 10 be fully satisfied via the issuance of 6,200,000 ncw JF Tech Shares 10 Foong Wei Kuong and Wang Mei Ling at an issue price of 4. INFORMATION ON OUR GROUP (Conl’d) RMO.l0 per JF Tech Share, 1bc Acquisition of the Properties was completed on 18 January 2008. The 6,200,000 new JF Tech Shares issued rank. pari passu in all respects with the existing JF Tech Shares in issue except that they shall not rank for allY dividends, rights, allotments and/or distributions declared or paid prior to the date of allotment thereof. Upon completion of the Acquisitions, the issued and paid-up share capital of JF Tech increased from RM2 comprising 20 IF Tech Shares to RM9,120.s00 comprising 91,208,000 IF Tech Shares.
4.2.3 Public Issu~ In conjunction with our Listing, we will implement a public issue of 34,792,000 new JF Tech Shares at the issue price of RMO.40 per Public Issue Share. Upon completion of the Public Issue. the issued and paid-up share capital of JF Tech will increase from RM9,120,800 comprising 91,208,000 JF Tech Shares to RM12,600,OOO comprising 126,000,000 JF Tecb Shares. The 34,792,000 new JF Tech Shares to be issued pursuant to the Public Issue, which represents 27.61% of the enlarged share capital of JFTech, are to be issued to the following parties: (i) 5,000,000 JF Tech Shares representing 3.97% of the enlarged share capital of JF Tech will be reserved for application by Malaysian citizcRS, companies. co-opcratives, societies and institutions;
(ii) 4,000,000 JF Tech Shares representing 3.17% of the enlarged share capital of JF Tech will be reserved for eligible employees, Directors and business associates of the JF Tech Group; and

(iii) 25,792,000 JF Tech Shares representing approximately 20.47% of the enlarged share capital of JF Tech will be placed to investors by the placement agent(s) through a private placement exercise. The 34,792,000 new JF Tech Shares to be issued pursuant to the Public Issue will rank pari passu in all respects with the existing JF Tech Shares in issue except that they shall not rank for any dividends, rights, allotments and/or distributions declared or paid prior to the allotment thereof. 4.2.4 Listing Thereafter, we will seck admission to the Official Ust of Bursa Securities and the listing of and quotation for our entire enlarged issued and paid-up share capital of RM12.600.000 comprising 126,000,000 JFTech Shares on the MESDAQ Market. 4.3 BUSINESS OVERVIEW 4.3.1 Principal activities Our Group is principally involved in manufacturing and trading of electronics products and components. Currently. we arc engaged in the design, development, custom manufacture and sale ot· cantilever type tcst probes. 4.3.2 Principal products The principal product of our Group is semiconductor test probe. The culmination of the innovative efforts of our Group has conceptualised in the following product offerings: 4. INFORMATION ON OUR GROUP,{Cont’J)
A Kelvin test probe consists of double probes and is typically used for sensitive resistance measurements at analogllc/mixed applications. The advantage of a Kelvin lest probe over a non-Kelvin test probe is that the USt” of the double probes will provide a reference. thus delivering a more accurate test result. Currently Kelvin test probes are the most efficient test solution for the MLF package. The G2 Kelvin test probe represents a significant innovation over the G I Kelvin lest probe in terms of minialurisatioo. The G2 Kelvin lest probe has a microscopic gap of as small as 35 microns between the probes. As at thtl Latest Practicable Date, our Group produces 268 models of 02 Kelvin test probes, to cater for the testing of chips with different power requirements, size and contael leads per side. These chips require test solutions with differing. pitch. contact force and specific electrical requirements.
G 1 Kelvin test probes 02 Kelvin test probes Si:c comparison between/he Gl and 02 KeMn /es/ probe,\” (ii) Tungsten test probes Tungsten test probes have contact points that are usually made from materials, wit ich exhibit both electrical conductivily as well as high melting. point characteristics. such as tungsten allo)’s. The proliferation of new generations of densely-packaged, high Amp Ie devices, run at high levels of current and ternperalUre that are unattainable from copper-based test probes. The solution is to encase the lip of a test probe …..ith II harder material like tungsten, thus allowing the test probes to function at a higher current and temperature. Most of the new generation tungsten test probes can handle: test curren! in excess of 150 Amp or more.
TUllgsten Ie,,’ prohes As at the Latest Practicable D3te. we offer 196 models oftungslen test probes to the market. 4. INFORMATION ON OUR GROUP (Conf’d) (iii) Moulded test probes Moulded tesl probes are Kelvin pins used with c1anlping mechanism. housed in a pl11Sl:ic injection moulded body. The plastic housing allows for easy placement of the tesl probe for bener alignment and hit-rate in each test cycle. Moulded lest probes are also anoTher solution tor testing SOT discrete chips. specific to a cenain test handler manufacturer. and are hence rather large as compared to the G2 Kelvin lest probes. As at the Latest Practicable Date. we supply II rypes of moulded les! probes currently. (iv) MH lest probes MH tesl probes are Kelvin-type test probes Wilh the pins embedded in a flexible circuit. The contact pins in this model arc longer. measuring about 25 mm in length and are made 10 l1ex to fit into the test station. As at the Latest Praclicable Date. there are 8 rypes of MH lesl probe models under our Group’s product offering.
MH te.\”l probes (v) Single pins Single pins are individual wire-cut metal plates measuring approximately 10 mOl to35 rom in length. used as lest probes. The disadvantage of this type of test solution is the longer downtime required to replace each single worn ou! test probe individually.
SinR/e pins As altne Latest Practicable Date. there are 225 types of single pins being manufactured by our Group for the market. (vi) SC70/S0T probes SC70/S0T probes can be Kelvin or non-Kelvin probes. which arc manufactured with a plastic housing to allow better alig.nment of the probe to device under test and PCB. These probes are used as a test solution for SOT chips for certain specific leSI handlers. As at the Latest Practicable Date. there are II models or SC70/S0T lest probes being offered by our Group. 32 4_ INFORMATlON ON OUR GROUP (Cullt’d) (vii) TESEC (0 10) test probes TESEC (0I 0) test probes are another type of Kelvin Test probes. However this model is manufactured to lest the older SOP-type chips… which are substantially bigger than the MLF chips. Hence by size comparison. the TESEC (G \0) probe is even bigger than the 0 I Kelvin test probes for the MLF chip package. The TESEC (GIO) probes have a pitch of approximately 0.65 10 1.27 mm.
TESEC (G IOj fe.H probes As at the Latest Practicable Date, we have 5 models of TESEC (OlD) test probes in production for the markel. (viii) Lasak rM pins Lasak I’M ~~~s ~re.a proprietary as~t of our Group. O~r Gro.up has file.d. th7patent application for Lasak . pms In four (4) countries. namely Malaysia. Chma. the Phlhppmes and US. The LasakTMpill has a novel and innovative profile that allows it to be used to test even in instances of excessive moulding or flashes. Excessive moulding occurs when the moulding process produces les with one or more sunken leads: whereas flashes occur when there is protmsion on the chip housing that creates a raised edge alone or more sides ofa lead. These instances will render a “fail” result in conventional canlilever pins. The narrower pf<Jfile 3t the contact edge oflhe Lasak™ pin allows for better contact and expands lhe product offering [Q semiconductor manufacturers. As at the Latest Practicable Date. there are 10 types of LasakT:-t pins being manufactured by our Group for the market. 4.3.3 New products development In order to maintain market competitiveness, our Group is always at the forefront of the latest developmem in modern technologies associated with electrical test solutions, specitlcally test probe· socket technology. Heavy investment into R&D will ensure that the test probes produced will meet world-class standard and acceptance. As part of our product development plan to widen our product offerings and cater to more stringent customers’ requirements. our Group plans to introduce the following products over the next three (3) years. (i) Fin, pil<h “” pmb<s for I,ad-fre, d”im The European Union has enacted legislation to prohibit the use of lead in electronics mllnutacturing. In this region, China, Japan and South Korea are also phasing out the use of lead in manufacturing. and many global electronics manufacturers are requiring their suppliers to certify that their company’s products will support their lead-free initiativl’S. Lead is toxic 4. INFORMATION ON OUR GROUP (Con/’d) and is recognised as one of the most significant environmental health threats to humans. The global electronics industry has started to move towards reducing the use of hazardous substances. before local or global regulations came into force. With the announcement of lead-free initiatives across several countries, the implementation of lead-free electronic packaging is gaining momentum globally. A vast number of back-end service providers are trying to implement this, with each pnekaging technology being compatible with industry lead-free solders. This gives end users the flexibilily 10 utilise and meeltheir needs. The European Union has also enforced a new ruling on “green” guideline in the Waste from Electrical and Electronics Equipment Directive 2OO2I96/EC. Th.is guideline oullines the responsibilities of both producers and exportcrs for the treatment, recovery and disposal of electrical and electronics equipment. (Source: Independent Market Research Report by D&B) As an environmentally aware organisation. we are studying the usc of suitable materials for testing lead-free devices. in anticipation of the future adoption of such standards in the local region. (ii) Pogo pins A pogo pin is a test probe consisting of a barrel. which houses a micro spring; connecting a plunger and a contact point. The length of the pogo pin ranges from approximately 2 mm to 20 mm. Pogo pins are the only viable lest solution for testing malrix pad configurations such as BGA and CSP. The BOA pM:kage is widely used as memory modulcs for personal computers, eleclronic signboards, etc. The pogo pin is expected to further expand the market for our Group due to its applicability in a variety of fields in addition to testing of BGA packages. such as wafer level lest evaluation and substrate tests. Wafer level test evaluation and substrate tcsts are conducted during the wafer fabrication process to test for defects in the chip while it is still in wafer form. (iii) Test sockets A socket is a housing. made from advanced polymer, which holds test probes. Due to the various test applications available in the industry, the test sockets must be able to exhibit characteristics of accurate power measurement in high thermal conditions, deliver exceptional signal fidelity in high frequency applications and have the ability to withstand many insertions with minimal compromise to accuracy of measurement whilst being least obtrusive to the monitoring/test apparatus. Utilising CAD tools, including 3D mechanical modelling, JF Micro will develop high.quality lest sockets for BGA, D1MM. M1.F. QFP as well as RF packages. Currently. lhe test sockets 10 be produced will be low-profile. high frequency and high reliability sockets, designed to ensure cxcellent contact and first pass yields. The production of test sockets will allow our Group to realise the full potential of its market, by expanding its test solution offering to encompass lest probes, test sockets and probe-and­socket array. 4. INFORMATION ON OUR GROUP (CoN’d) (iv) Test probes fot RF chips RF chips ate the new generation chips that will power the current slew of portable telecommunications devices that ulilisc radio ftequencies as a media of delivery of infonnation. These chips run at a higher bandwidth as compared to the curtent models of chips thai utilise the existing test probes of our Group. up to 2 GHz as compated to a few hundred MHz. The probes required for testing these types of chips have to be shorter in length, to prevent parasitic interference. The R&D efforts of our Group will be focused to come up with innovative profiles for its test probes to cater for the testing of these RF chips. 4.3.4 Technology Our Group realises its unique position of being the leading Malaysian-owned test probe manufacturer in the country. Our Group employs specific in-house developed technology for our manufacturing methodology. Such manufacturing methodology is one of ils compelitive advantages. Our Group utilises several technologies such as unique manufacturing process and proprietary hardware. The success of our Group’s unique manufacturing methodology is evidenced by its acceptance as a preferred supplier of well-cstablished global market leaders in the semiconductor industry, sueh as SRM, a Malaysian~wned company and Ismcca Malaysia Sdn Dhd, a Swiss-owned company_ Through our years of experience in the field, our key management has devised a systematic bUI thorough approach to reduce the size of its test probes to II microscopic level of tolerance. This is established through a syslem of specially manufaclured jigs to shape the probes at a tolerance level of as small as 35 microns. Due to the high level of minialurisatioo, the final asscmbly of these probes is conducted manually, being too delicate for automated operations. The design and development of these high precision jigs arc computer-aided and are also developed in-house. A case in point is the G2 Kelvin test probes produced by our Group, which has achieved a microscopic gap between lhe two (2) probes that is finer than the human hair. A typical strand of human hair ranges from 50-80 microns and the typical gap of the G2 Kelvin test probe is 35 microns. The need for the gap is to prevent short-circuit of the probes as well as 10 achieve the required alignment between the probes and the contact point of lhe Ie. The unique methodology enables our Group to achieve micro-tolerance not visible to the naked human eye. The test probes produced by our Group has the ability to malch and in the case of the G2 Kelvin test probe, to better the existing products in the markct. This characteristic of the industry relics heavily on manual assembly, as automated processes cannot achieve the manufacturing process without damaging the manufacturing of ICSt probes. 4.3.5 Pateot!! and trademarks As at the latest Practicable Date, } Foong, our wholly-<lwned subsidiary company, has applied for the following patents and trademarks: Patent! Trademark  Filing Date  Filing Number  COUlltn- Status and Rell1lllrks  Lasa’  17.08.2006  06014679  Malaysia  Thc trademark application has been duly filed. In a letter dated 21 September 2007, tho Registrar of Trade Marks (“ROT”) had objected to lhe regiscration of the trade mark on the basis that the trade matk was
4. INFORMATION ON OUR GROUP. (Conl’d) 4. INFORMATION ON OUR GROUP (Cont’d) Patent! Trademark  Filine Date  FUine Number  Country  Sbtus and Remarks not in accordance with Sections lO(1Xc), (d) and (e) of Ihe Trade Marks Act 1976 (“‘TMA’j. In a leltcr dated 16 November 2007, J Foong had, via its trade mark. agenf responded to each of the ROT’s objcction and rcquested that thc application to register the trade mark be allowed to proceed on the grounds that the trade mark satisfy Ihe requirements 10′ registrability under Sedion 10{1) of the TMA. The reply from the ROT u; currently pending.  Tcslmore lM  17.08.2006  06014678  Malaysia  The lrademark application has been duly filed. In a letter dated 11 June 2007. Ihe ROT h’d objected to the registration of the trade mark on lhe basis that the trade mark was “”I ;n accordance with Sections 10(1)(e), (d)’nd (e)ollhc TMA. In a IeUer dated 8 August 2007. J Foong had, via its trade mark agent responded to each of the ROT’s objcction and requcs1ed thai the application to register the trade mark be allowed 10 proceed on the grounds that the trade “”,k satisfy Ihe requirements 1m registmbility under Section 10(1) of the TMA. The reply from Ihe ROT ” currently pending.  An improved contact for interconnecl system  05.09.2006  PI200664Q86  Malaysia  The patent application has been duly filed in Malaysia. Th, patent agent had on 14 February 2007 duly filed the request for substantive examination. Th’ palent application ;s currently pending substantive examination at lhe Malaysian Palent Registration Office.  An improved cofllact for interconnect system  08.11.2006  1·2006-000525  Th, Philippines  The patent application had been duly filed in the Philippines. A formality report was issued by lhe Philippines Intellectual Property Office (‘PIPO’) on 29 January 2007 ,nd Ihe patent agent h,d filed Ihe necessary resoooses to PIPO. The oaten!
Patent! Trademark  F”ilin2 Date  Flline: Number  Country  Sialus and Remarks agenl is in the midst of filing in the request for substantive examination.  An improved contact for interconnec1 system  17.02.2007  2007100841613  Olina  The patent application had been duly filed in China. The patent agent is in the midst of filing in tbe requcst for substantive examination.  An improved contact for interconnect system  26.04.2007  1In96.527  us  The patent application has been duly filed in the US and is currently pending examination at the US Patent Office.
J Foong, our wholly-owned subsidiary company, owns the domain name www.jfoong.oom.my. Save for the above. we currently do not hold any franclliscs from any third party nor any trademarks or patents registered wilh the Malaysian authorities. We constantly identify and assess Ihe risk of our intellectual property. 4.3.6 R&D R&D objectives The objcctives ofour R&D activities are to: (i) provide a means to sustain and grow the business through the proliferation of new products. The main focus of the R&D activities will be 10 create new and innovative test solutions to address the ClIrreot demand. 1bcsc activities will expand the product lines of our Group. enabling our Group 10 tap into new markets as well as increase its coverage of the existing markets. A case in point will be the planned development of pogo pins, which will enable our Group to tap into the test solutions for chip packages with matrix pad configuration;
(ii) create competitive advantage for our Group through significant value-adding to meel market demands. Efforts will be expended to improve existing manufacturing processes in tcrms of production units, production quality and cost efficiency. These will increase the internal value­add in our Group’s process, which can be passed on to end-users: and

(iii) increase profitability through proprictary and wche produclS. Our Group intends to embark on a brandinyrogramme as well as establish proprietary products to scllio the market. As a start the Lasak pins are a proprietary product that has significant performance advantage as well as cost advantage to our customers. The R&D policies of our Group are in-line with our product development strategy and optimise the development of strategic own·brand producls. R&D strategies In order to achieve our Group’s R&D objectives, the following strategies will be adopted: (i) strengthen the innovative capability of our Group, via the increase in headcount of technical personnel supported by higlliechnology facilifies and equipment;
4. INFORMATION ON OUR GROUP (Conl’d)
(ii) provide adequate resources to ensure R&D work is carried out continuously, ewn on existing product lines via the inlegration of R&D expenses inl0 the budget of our Group;

(iii) focus and develop on the prob.::·socket technology 10 allow more optimal and customisable test solutions to be developed that will address the test requiremenls in lint’ with the technology of the IC; and (iv) establish strong strategic technology partnersh.ips with major test handler manufacturers for cooperative technology developmem opportunities. OUT Group has targeled this segment of our users on the basis that the test handler makers art= al the forefront of the latest in IC development technology. as the testing phase is a critical phase in the manufacturing process. Hence. there is a win-win synergy to the relationship between test probe manufacturers and test handlers. due 10 the facI that the test probe is the hean of the testing phase. This strategy will expose our Group 10 the latest development in Ie technology. whilst allowing both partil,.’S to leverage on their core compete.ncies 10 provide an optimal test solution. R&D process Concept design +
Process design +
Product design and development +
Quality planning +
Cost planning and supplier sourcing +
Prototype verification (i) Concept design Concept design is initiated when: (a) sales enquiry is received for a new product; or
(b) an in-house innovation is initiated by Chief Te<:hnical Officer andJor Managing Direclor in response to market intelligence.

Product technical specifications and requirements form the major inpul for this phase of the R&D process. Where the clients originate the new product development request, the Operations Manager will conducl the necessary interviews to document in detail the relevant specifications. 38 4. INFORMATION ON OUR GROUP (ConJ’d) A technical report is prepared based on these specifications by the Chief Technical Officer or Operations Manager. The technical report will be used to generate a concept for the preliminary product design. The concept will reside in a CAD software form at this stage of the process. The engineering model will iocorporalc the proposed dimensions of the product to be manufactured. (ii) Process design Based on the concept design, a proposed process flow 10 actualisc the concept designs into a physical prototype will be prepared. The proposed manufacturing process 10 be adopted can be extracted or modified from the existing workflows from the company database. Relevant adjustments might be made 10 the workflo~ to customise it to the new products to be producoo. The main objective of this phase is 10 ensure a planned manufacturing procedure in order to minimise wastage in lhe manufacturing process, as well as to ensure that the end-product manufactured is practical and useable. The process now will also incorporate the jigs, manufacturing equipment as well as testing equipment that will be required to manufacture the product. (iii) Product design and development The proposed process flow along with the technical report will undergo a functional review; a walkthrough 10 determine its relevance. The walkthrough will ensure the types and sequence of jigs and equipment placed into lhe process. At this stage, raw malerial specificalions will be drawn up. This stage will also feature a review of the raw material requirements for the manufacturing process. At this stage, a technical and manufacturing risk profile will be drawn up based on the results of the functional review. The management relies on the risk profile to determine if the risks can be mitigated and the manufacturing process can be carried out in practice with reasonable =1. (IV) Quality planning As elaborated in the earlier stClions, the induslry is characterised by low tolerance to failed products. AdditionaUy, the ISO 9001:2000 certification requires a built~in quality-driven approach to our Group’s manufacturing process. Our Group places a quality planning focus into our R&D process to facilitate the qualilY assurance work subsequently 10 be performed in the manufacturing process. The focus of this phase will be on quality of raw materials to be used. reliability and consistency of the process in itself and a failure analysis study on the products manufactured; as well as the miligating steps to be tnken to address the issues in these areas. A control plan will be instituted for prodUCI validation, incoming materials quality control and finished goods quality control. (v) Cost planning and supplier sourcing This is the concept-to-prototype stage of tbe R&D phase. The output from this phase direclly impacts the feasibility of tn<: manufacturiflg process, and most likely determines the unit cost of manufacturing. The raw material, jig and process requirement will be quantified into cost. Raw material supplier SQurcing will be performed at this stage too. The cost of manufacturing data will be compiled into a repor1 for use in the manufacturing process. 39 4. INFORMATION ON OUR CROUP (CQ”t’d) If feasibility can be established, protOlyping will commence. (vi) Prototype verification Prior to commercial manufacturing of a test probe, our Group C’mploys protoryping to ensure that the manufactured test probes are physically viable to produce. The prototype represents the firsllangible model orlhe desired test probe and is produced in limited numbers to prevent possible wastage from producing a non-functioning probe. The prototype will be subject to physical and dimensional verification in accordance to the desired specification data generated from Ihe design and development stage. The prototype Ihen undergoes various reliability tests to ensure consistent perfonnance in relation to the following paramelers, electrical, precision and mechanicaL These tests also provide useful data in relation to the tolerance range of the prototype and the subsequent manufacturing model with regard to the parameters. Sensitive equipmenl is employed to provide the most accurate data collection and measurement. Electrical reliability tests the power range in which the test probe can still function. Precision reliability collates data on the consistency of the “pass” or “fair’ result over time. Mechanical reliability tests provide data on the mechanical integrity of the Pf”(){otype aller repeated use as well as the “stretching point” oflhe test probe. As data from these tests are micro-tolerant. the equipment employed are highly sensitive in nature. such as low impedance measurement meters, the micro hardness tester and the optical profile projector; which greatly assist in this process. R&D personnel involved The key members of our R&D team are highlighted in the organisation chart below:
Our Group maintains a dedicated R&D and lechnical team, which currently consists of five (5) personnel and led by the Executive Director of our Group, Goh Kok Sing. Goh Kok Sing is assisted by the Operations Manager, Mah Ying Hoe. and the CADfCAM Programmer. Tan ehee Keong. All of them possess vast experience in the field. with Goh Kok Sing having more Ihan twenty (20) years and the other two (2) key technical personnel having more than ten (10) years working experience in related industry respectively. Please refer to Sections 5.2.1 and 5.4.1 of this Prospectus for further details on their profiles. 4. INFORMATION ON OUR GROUP (Corll’d) R&D resources OUf Group’s R&D is currently housed in No. 29-1 and 29-2, Block F2, lalan PJU 1/42A, Delaran Prima. 47301 PClaLing Jaya, Selangor. with an approximate built-up area of 3,175 square feet. Our Group’s R&D department is equipped with sufficient R&D facilities thai arc used 10 asscs:>, analyse and test the properties of the test probes. A!;. althe Latest Practicable Date. some of the R&D equipment utilised by our Group arc set out below: R&D CQuipment  Usa2e  Dvnascope Proiector  For measurement of dimension.  Smartscooc Dimension Checkinl? Machine  For dimension chc.ekinl?.  “PRmC’ Deburrinl~ and Polishinll Machine  For dcburrinll and oolishinl!.  Tekronix Dillital Storal!c Oscilloscone  For RF testinu.  Carbolite Oven  For malerial hardenint>.  Heatin~ Machine  For material heating.  Accu Mac Precision Press Machine  For iilil.s formim!.  Accu Mac Bendinl1. and Shearinl1. Press Machine  For metal euttinll..  Quadra Check -200 Dimension Check.in~ Machinc  For dimension checkinp.  Autocad 2004 Full Packa~e  For dcsipn u ses.  SolidWorks Office Pro 2007 3D CAD  For 3D modelin£ pul”DOSeS.  EIectromallnetic Micro Testinll. Machine  For endurance tcstinll.  Shimadzu Hardness Testcr  For material hardness tcstin{!.  Precision LCR Meter E4980A 2Mhz  For electric properties checking.  Laser Welder  For welding purposes.  Semi Auto Grindinll Machine  For 2tindinll: of matcrials.  Eurotech Mctallography Specimen Grinding and  For micro $Cctioning purposes.  Polishini!: Machine  Milsubishi Wire Cut EDM  For 00110 ains orotatvoin!!.  “Fanuc” Brand RobodriLI Machinc  For test sockets nrototvoin,,-.  Nikon Q\lC Video Measurin~ System  For measurement u s.  Hi.i?h Temperature Oven  For curing of adhesive.
In addition, as detailed in the Section 3.1 of this Prospectus, our Group works closely with SRM, to develop suitable test probes and solution to address the requirements of newly developed 1Cs., which in turn need to be tested for functionality by the test handler manufactured by SRM. OUT Group has developed some of OUT cltisting range of products by collaborating the design and development efforts with SRM, including 02 Kelvin test probes, tungsten test probes, single pins and SC70/S0T probes and etc. With the R&D facililies owned and on-going collaboralive arrangement with SRM, coupled with our dedicated R&D team’s continuous effor1 10 carry out our R&D plan, our Board is of the opinion that the current and planned R&D resources for future product development are adequate. R&D milestones Summarised below are our R&D milestones since we CQmmenced busincs.s: Financial year ended 30 JuDe  Product name  Descriptionllmprnveweut  2001  Single pins  Maiden product, consisting of wire-eut metal plate test probes.
4. INFORMATION ON OUR GROUP (Cont’d) Financial year ended 30 June  Product name  J>es(;riplionJlmprovemeot  2002  Gl Kelvin pins  First generation of Gl Kelvin type pins, for testing SOT chip packages with a pitch of 0.95 mm 10 1.27 mm. Tn addition il is easier to usc comparatively.  2003  01 Kelvin pins  Reduction in scale of Gl Kelvin pins, allowing for lest probes thaI address finer pitch ofO.S mrn.  2006  02 Kelvin pins  An innovative spatial repositioning of the leads in the lest probes, to cater for the finer footprint of the devices 10 as fine as 0.35 mm; for smaHer MLP and QFN chips.  2007  Moulded pins  Test solutions catering for the SOP chip package.s. This product comes with a plastic housing thai assists in the accurate placement and alignment of the conlact pins to the lest probe arra)’.  2007  l.=k pins  A shan length lest probe developed for testing RF type chips that generaUy run at a higher bandwidth.  ‘-­ -~  .._. __.
R&D plan aDd pipeline/Present status of R&D Products  Process/technolol?v involved  Expec:ted commencement date of R&D  Anticipated commercialisation date  Financial year eDdim! 30 June  Financial yesr endiol:! 30 June  Test probes for lead-free devices  • Assembly process guided by ifl­house developed jigs • Use of suitable base materials for testing lead-free packages  2008  2008  Pogo pins  • Automated manufacluring of components • Assembly process guided by in­house developed jigs  2008  2009  Test sockets  • Automated manufacturing of components • Assembly process guided by in­house developed jigs  2008  2010  Test probes for RF ehips  • Automated manufacturing of components • Assembly process guided by in­house developed jigs  2009  2010
4. INFORMATION ON OUR GROUP (CQnf’dj R&D expendilure The umount spenl by OUf Group on R&D (including personnel cost and investment in R&D equipmenl) over the pasllhree (3) financial years are as follows: Four (4)­ month  •  financial  Financial  financial  Financial  period  year ended  year ended  year ended  ended 31  JO June  30 June  30 June  October  2005  2006  2001  2001  Amount SDem on R&D (RM”OOO)  199  762  539  692  Amount spent as a percentage of  7.47  15.38  6.CJ2  20.33  revenue (%)
4.3.7 Manufacturing process Sales order
Our Group’s process flow chart for test probe products is as follow: (i) Sales order The production flow is initiated by a sales order. (ii) Production Once a product has been identified for manufacturing, the product will be entered into a manufacturing planning schedule for planned manufacturing. Activities that occur in this flo””” process are material preparation. which includes CUlling of materials. jig preparation and the aC1l1a1 assembly process. Our Group employs a unique system ofjigs to aid in the manual assembly process inherent in the industry. The jigs reduce the margin of error for manufacturing within tolerances that is nOI visible to the naked eye. This unique melhodology is further elaborated in Section 4.3.4 of this Prospectus. Presemly we manufacture an average of 200 pieces of various types of lest probes with one shift per day, which is approximately 70% of our capacity per shift. Should the need arise. we are able to extend our capacity to another shift per day. We do nol foresee any constraints on our manufacturing capacity. 43 4. INFORMATION ON OUR GROUP (Con/’d) (iii) Quality control All products manufactured will be: (a) tested utilising the latest highly sophisticated instruments designed for testing of test probes and test sockets; and
(b) marked using a high technology designed laser-marking system. It utilises laser beam for engraving/printing wordings/logo on each of the manufactured test probe for identification purposes.

(iv) Delivery and feedback loop Products arc shipped to customers by courier, to ensure a secure and quick delivery. The Customer Service department, under direct monitoring by the Operations Manager and the Managing Director, provide a feedback line from the customers to the manufacturing process. This will ensure the fulfilment of the quality objective as well as the quality assurance commitment of our Group. 4.3.8 Source and availability of raw materials The main raw matcrials used in our manufacturing process is copper and special alloy. We obtain most of the raw materials through distributors in SingaIX’re. With long-tenn relationships and mutual trust with our suppliers, our Group has not in the past experienced any difficulty or disruptions in production due to difficulty in procuring materials. In the event that our Group is unable to source the raw materials from our main suppliers, we will have other readily available alternate suppliers to meet our raw materials requirements. The price of the raw material is based on prevailing market prices which arc affected by market forces from time to lime. However, the said fluctuation does not havc a material impact on the manufacturing costs. 4.3.9 Industry’s reliance on and vulnerability to imports The main raw materials used in the test probe industry are copper, stainless steel, palladium, gold, silver, rhodium and tungsten. Basical!y these metals are already commoditised in the market. Due to the generic nature of the raw materials which arc easily available in the market, a test probe manufacturer in the industry can easily switch its suppliers of raw materials. In other words, there arc very little switching costs involved. (Source: Independent Market Research Report by D&B) In view of the above, we are confident that the industry’s reliance on and vulnerability to these imports does not IX’se significant threat to our Group. 4.3.10 Quality assurance The industry is characterised by high sensitivity to failures. As such, quality control is critical to the production process, as our Group will be benchmarked against world-class quality test probes manufactured by foreign competitors. Realising this factor, we have sought to incorporate quality control into our production process, by formally adopting the methodology as ascribed by ISO, in line with the receipt of the ISO 9001:2000 certification by J Foong for its design and assembly of test contactors for semiconductor application process from SGS United Kingdom Ltd on 20 August 2004. We will also apply for a similar accreditation. for our manufacturing process in JF Micro. It is the policy of our Group to provide our customers with high quality products and on-time delivery. As such, all products manufactured will be tested utilising sophisticated instruments before delivering. 4. INF’ORMATION ON OUR GROUP (Cont’d) 4.3.11 Principal markets The products of our Group are offered 10 three (3) main categories of customer segments: (i) Test handler manufacturers These consist of some of the biggest manufacturers of lcst handlers in Ihe world, which arc located in Malaysia and wh.ose products aTC exported worldwide. To offer competitive packages, these manufacturers offer after sales service, which include the provision of supply of test probes and tcst sockets that are used by their machines. However, the test handler manufacturers tend 10 contract the manufacturing of lest solutions to specialists like our Group, to leverage on Ihe competitive advantage thaI comes from specialisation. Some of the customers of our Group distribute test handlers to chip manufacturers all over the world, indirectly providing the prodoos of our Group worldwide coverage. (ii) Semiconductor chip manufacturers This segment comprises some of the largest semiconductor chip manufacturers, who arc also rcsiding in Malaysia. Malaysia houses some of the world’s major semiconduelor manufacturing facilities. and the demand from this sector form a significanl market. Some of the customers of our Group are MNCs residing in Malaysia. Thcse companies have distribution networks that are worldwide in coverage and are credible names in the industry. (iii) Distributors Our Group also intends to proliferate our products regionally. To aclUeve the necessary product penetration effectively and cost efficiently, we leverage on the expertise of local dislribution network via the appointment of sales distributors within the countries targeted. The strategic rationale to utilise this mode of distribution will minimise the cost of product proliferation in foreign markets. The firs! direct overseas market secured for our Group is Singapore. For the financial year ended 30 June 2007, approximately 5.21% of the tolal revenue contributed by export sales to Singapore. 4.3.12 Mode of marketing/distribution Currently our Group’s marketing activities arc carried oul by certain of ils key management to local markcI, including tcst handler manufaclurers and semiconductor chip manufacturers and iodircctly through distributors to overseas market by ccrtain of its key management. Besides, the Group currently utilises two (2) distribulOrs. 4.3.13 lotefrnptions in operations We have nOl experience any disruplion in business which has a significant effect on our operations for lhe Iwelve (12)-monlh period prior to the date of this Prospectus.
4.3.14 InformatioD on employees As al the Latest Practicable Date. we have a total of fifty-two (52) employees, a Managing Director and fwo (2) Executive Directors, none of whom are foreign employees or contractuaVtcmporary employces. None of our employees belong to any union and they enjoy a good relationship with our managemcnt. There has not been any industrial dispute in Ihe past between our employees and management. The total number of employees wilh the breakdown into categories aod length of service as al the I…atest Practicable Date are as follows: 4. INFORMATION ON OURGROUPfCOnl’d) Categories of stafT  < 1 year  1 -2 vears  2-Snlll”S  > 5 vears  Total  Directors Managerial and professional Technical and supervisory Clerical and related occupations Factory Workers: -Skilled -Non-skilled  -2 4 1 3 17  1 2 -1 3 2  –6 2 4 1  2 J —- 3 5 10 4 to 20  27  •  13  3  52
We provide a series of oonlinoous training and development programmes for our employees, which include in-house workshops to update all employees on the new developments in the industry. OUf employees receive technical and operational training from our Group’s senior personneL The main objective of OUT training and development programme is to keep our staff informed about recenl developments in loclmology and manufacturing techniques hence, further encourage overall productivity and efficiency. In addition, our Group also engages extemaltraining ccntcr.;. and associations to conduct seminar.> and workshops 10 identify, evaluate and manage risks, to cnhance management quality and increase the competency Icvel of our employees. The types of external programmes that our staff have participated in the past include the following: TrainiDg programmes  Consultant  “ISO 9001:2000 Internal Quality Auditing'”  Novo Quality Services! SGS (Malaysia) Sdn Bhd  “Step by Step in 5S Implementation”  National Productivity Corporation  “AutoeAD 2004 Levell,2and3”  Autodesk Asia Private Limited  “‘Underslanding TechnicaJ Drawing”  FMM Institute of Manufacturing  “Ccrtificate in Human Resource and Industrial Relations”  FMM Institute of Manufacturing  “Corporate Training on AutoCAD 2006 -Levcll, 2 and 3”  SegiCollege  “Braze Welding and Brazing Coursc”  FMM Institute of Manufacluring  “Advanced Quality Assurance and Quality Control Inspector”  SMI Asia  “Lean Manufacturing Training”  SheffieldcoDSuhing  “Production and Operations Management”  FMM Institute of Manufacturing  “Master Class Human Resource Department, Operation & Administration Support”  SMl Asia  “Excellencc in Manufacturing”  FMM Institute of Manufacturing  “Solidworks Essentials course in Solidworks 2001”  IME CADCAM Training Centrc  “Basic NC Programming Course in Mastercam X2 Mill”  IME CADCAM Training Ccnuc
4.3.15 Key achievements or milestones Summarised below arc our key achievements/milestones:
Financial year end«Vendw230Juot  Events  2000  Commercialisation of single pins  2001  Commencement of sales 10 SRM
4. mFORMATIONONOURGROUP~om~ Financial year Events endedlendine 30 JIIDe Commercialisation of GI Kelvin pins 2002 Commencement of sales to overseas through distributor 2003 2004 • Received ISO 9001:2000 accreditation
• Expanded manufacturing floor space from approximately 700 square feet to approximately 1,700 square fect via reallocation of manufacturing plant
• Commercialisation of G2 Kelvin pins
• Commercialisation of tungsten pins
• Shifted the manufacturing process via the acquisition of new properties with a total manufacturing floor space of approximately 3,175 square feet
• Commercialisation of moulded pins
• Commercialisation of Lasak11\01 pins
• Convened previous manufacturing floor space of approximately 3,175 square feet for R&D facility
• Rental of factory with a total manufacturing floor space of approximately 4,000 square feet to cater for the expected increase in manufacturing capacity to meet with future demand
• Entered into a SPA dated 19 April 2007 with PKNS 10 acquire a 92,783-square feet land in Kota Damansara, Selangor for future expansion

2006 2007 2008 • Awarded the Emerging SMEs under the Golden Bull Award 2007 as organised by Nanyang Siang Pau
• Awarded the Enterprise 50 Award Programme 2007 by Small and Medium Induslrics Development Corporation (SMJOEq
• Awarded the SME Rising Stars Award 2007 by SMI Association of Malaysia

4.3.16 location ofoperations. princlp.:l1 asstts and production facilities The location of our Group’s operations, principal assets and production facilities arc as follows:
No.  Add[“ess  Function  Approximate built-up area (snUIIr’e reell  1.  No. 5-4, Block E2, Jalnn PJU l(42A, Dataran Prima, 47301 Pctaling Jaya, Sclangor Daru] Ehsan  Headquaners  I,m  2.  No. 29-1, Block n, Jalan PJU l(42A, Dataran Prima, 47301 Pelaling Jaya, Sclangor Darn] Ehsan  R&D facilities  1,453  3.  No. 29-2, Block F2, Jalan pm If42A, Datarao Prima, 47301 Pctaling Jaya, Selangor Darul Ehsan  R&D facilities  1,722
4. INFORMATION ON OUR GROUP (Cont’d) No.  Address  Function  Approximate  built-up area  (sauare feet)  4.  No. II-A, Jalan 5526/15. Taman Mayang Jaya, Light  Manufacturing  4,320  Industrial Park, Mukim Sungai Buloh, Daerah Pctaling  facilities
4.3.17 Competitive advantages Our Directors believe lhat our Group has the roUawing dislinc! advantages over our competilors:

The clientele base of our Group consists of MNCs. These companies practice strict adherence 10 stringent quality policies and only accept supplies from reliable supplicrs, which meet lhese world class standards. We understand that the continued acceptance of our test solutions is dependent on our ability to assure Ihe quality of our devices. Hence management has ensured thaI our production processes arc of the highest standard and bas stringent quality control procedures are observed. The commitment of our management to quality assurancc is exemplified by our obtaining Ihe ISO 9OO1:2£XX} certification for the design and assembly of test contactors for semiconductor application process in J Foong. (ii) Geograprucal and cost competitivc advantage Our Group will maximise on our cost dynamics by producing our test probes locally. 8y housing our manufacturing facilities in Malaysia, our Group can take advantage of lhe competitive operating cos1 infrastructure that Malaysia offers, including lower labour, transpor1ation and operating costs. Additionally. its geographical close proximity to some of the world’s major !iCmiconductor and test handler manufacturers in the world gives our Group lhe ability for fasler response time as well as a more timely after-sales service as compared to its competitors who arc all forcign·based. The close proximity to customers along with the COSI competitive manufacturing infrastructure of our Group allows for the provision of cost effective solutions to cuslomers as compared to competitors. (iii) Integrated rescarch, design, devclopmenl and manufacturing capabilily The oon:: oornpctency of our Group lies in the integrated approach wc adopt for our manufal.1uring process. Tes solutions can be designed from ground up. design, prototyping and oommercial production. This approach allows our Group to devise specific test solutions to address very specific and precise requirements of a very diverse and demanding industry. Being a manufacturing company specialising solely in the manufacturing of test probes in Malaysia. our Group is actively involved in thc R&D and innovation of new and bclter test probes for the markel. Unlike its other local competitors. our Group’s focus on the pl’Qduction of lest probes has led to the sel-up of our own R&D Department which specialises on test probes. giving our Group the ability to wm;tantly keep abreast of and improve upon the lalest test probe designs. The R&D department is essentially the reason why our Group’s products are able 10 compete with those which are imported from established overseas producers. In addition, our Group intends to merge two technological pathways in the industry, the test probe and tbe test socket technologies. This probe~sockct approach will allow our Group 10 48 4. INFORMATION ON OUR GROUP (Con/’d) customise test solutions whereby the probes and sockets will have a 100% alignment and thus increase hit rate incidence between the probes and the PCB. This in turn will result in a solution that delivers a high degree of accurate results. OUf Group intends to be a major innovator in this probe-socket technology approach. (iv) Capital-intensive nature For a new entrant aspiring to enter the test probe industry, an average capital of around RM8 million is needed for plant and machinery and working capital. The sophisticated machinery include CNC machines, cross-section equipment and tampering machines, as well as various laboratory equipment for quality assurance, like energy dispersive X-ray spectroscopy (“EDX”), network analyser, precision measuring equipment, and inductance, capacitance and resistance meters. Besides investing in a new plant, potential players who intend to venture into the test probe industry increasingly face costly transitions to new technology nodes. (Source: Independent Market Research Report by D&B) (v) Steep learning curve There is an observed tendency for unit costs to decline as a test probe manufacturer gains more cumulative experience in producing a product. The costs decline because the workers improve their methods to become more efficient, layout improves, better performance is coaxed from the equipment, specialised equipment and processes are developed, product design changes make manufacturing more user-friendly, techniques for control of operations improve, among others. The cost declines with experience arising from the individual operations or functions. New entrants will inherently absorb higher costs than established players and must bear heavy start-up losses from below or near cost-pricing in order to gain the experience to achieve cost parity. Many test probe manufacturers build successful strategies based on the learning curve through aggressive investments to build cumulative volume during the growth stagc of the industry, often by pricing in anticipation of future cost declines. (Source: Independent Market Research Report by D&B) (vi) High switching costs Often, there is a high switching cost involved in selecting test probe vendors. Adding or changing a test platform is a large investment, not only in capital outlay, but also in infrastructure costs, including engineering and manufacturing software environment and tools, training, hardware interfaces and maintenance. In other words, they are application specific. The support services comes direct from the vendor, rather than from a third party supplier. Hence, a new entrant into the industry may face high difficulties in persuading an existing user to switch to its produ,,1 range. (Source: Independent Market Research Report by D&B) (vii) Recognised quality and established brand name for products The clientele base of our Group consists of MNCs. These companies practice strict adherence to stringent quality policies and only accept supplies from reliable suppliers which meet these world class standards. The acceptance of our Group as one of their preferred suppliers by these well-established companies, such as SRM, lsmcca Malaysia Sdn Bhd (a Swiss-owned company), Carsem (M) 4. INFORMATION ON OUR GROUP (CoM’d) Sdn Bhd and National Semiconductor Sdn Bhd. is a testament to the qua(jty of our Group’s products. Going forward, our Group also recognises the importana: of having established brand names for its products, in order 10 ensure the visibility of its products and recognition for the innovative efforts of our Group. To-datc. our Group has submitted for registration two (2) brand names intended for our new generation of lest probe designs. namely “LasakT)l.. and -restmore1l4.., Whilst tbe design for the Testmore”N range of lese probes is still under R&D, the sales of Lasakl’M pins have commenced since December 2006. 4.4 SUBSIDlARlIlS 4.4,1 J Foong (482199-0) (I) History and business J Foong was incorporated as a private limited company in Malaysia under the Acl on 29 April 1999 and had commenced business since then. J Foong is principally involved in the manufacturing and trading of c!cclron;c products and components.. The history of J Foong is found in Section 4.2.1 of this Prospectus. (8) Share capital J Foong has an authorised share capital of RM100,(OO comprising 100.000 ordinary shares of RMl.OO each, of which all shares have betn issued and fully paid-up. The changes in the issued and paid-up share capital of J Foong since its incorporation are as follows: Date of No.ofshuu p” Total issued and paJd· ll1Iotmenl .lIottol value CoasiderulloD up share capilli RM RM 29.04.1999 2 1.00 Subscribers’ shares 2 08.12.1999 49,998 1.00 Cuh 50,000 28.06.2000 50,000 J.OO ea.h l00,OlXl (iii) Substantial sharebokler J Foong is a wholly~wned subsidiary of IF Tech. (iv) Subsidiarin aDd associated companies As al the utest Practicable Date. J Foong docs nol have any suhsidiaries or associated companies. 404.2 JF Micro (718184i.lJ) (I) History and business JF Micro was incorporated as a private limited company in Malaysia under the Ad On 14 December 2005 and had commenced business since then. JF Micro is principally involved in the design, development. custom manufacture and sale of integrated circuit test sockC”.s, Growth (%)  2001  2002  2003  2004  2005  2006  2007~  2008  WorldGDP  2.5  3.1  4.0  5.3  4.8  5.4  5.2  4.8  Advanced Economics  1.2  1.6  1.9  3.2  2.5  2.9  2.5  2.2  US  0.8  1.6  2.5  3.9  3.1  2.9  1.9  1.9  Japan  0.2  0.3  1.4  2.7  1.9  2.2  2.0  1.7  Euro area ..  1.9  0.9  0.8  2.0  1.5  2.8  2.5  2.1  China  8.3  9.1  10.0  10.1  10.4  11.1  11.5  10.0  ,—
4. INFORMATION ON OUR GROUP/Cont’d) interconnect, test solutions and equipment for the semiconductor and electronic assembly markets. The history of JF Micro is found in Section 4.2.1 of this Prospectus. (ii) Share capital JF Micro has an authorised share capital of RM500,OOO comprising 500,000 ordinary shares of RM1.00 each, of which 200,000 shares have been issued and fully paid-up. The changes in the issued and paid-up share capital of JF Micro since its incorporation are as follows: Date of No. of shares p” Total issued and paid. aUotment allotted value up share capitalConsideration RM RM 14.12.2005 2 1.00 Subscribers’ shares 2 20.03.2006 199,998 1.00 Cash 200,000 (iii) Substantial shareholder JF Micro is a wholly-owncd subsidiary of JF Tech. (iv) Subsidiaries and associated companies As at the Latest Practicable Date, JF Micro does not have any subsidiaries or associated companies. 4.5 INDUSTRY OVERVIEW 4.5.1 Tbe global ecoDomy Global growth in 2007 is forecasted to continue expanding, albeit at a more moderate pace, amidst high crude oil prices and uncertainties in the economy of the US. While growth is relatively lower than the 2006 performance, it is nonetheless expected to remain strong with further expansion in economic activities, especially in the fast-growing emerging economies such as China, India and Russia. Global inflation remains at manageable levels although it has edged upwards due to high crude oil prices. With spare capacity still limited, supply shocks or heightened geopolitical concerns could lead to further price spikes that could quickly translate into higher headline inflation. A global growth of 5.2% is anticipated in 2007. However, global growth is expected to slow down in 2008, although remaining at a buoyant pace. In the US, ongoing difficulties in the mortgage market are expected to extend the decline in residential investment, while higher energy prices, sluggish job growth and weaker house prices are likely to dampen consumption spending. The US economy is expected to maintain only moderate growth through the end of 2008. However, among the emerging markets, economic growth is expected to remain very strong. Strong domestic demand growth in these countries is anticipated to counterbalance continued moderate growth in the US. Global Real Gross Domestic p., vinet r”GDP”i Growth 2001.200Sr 4. INFORMATION ON OUR GROUP (Coni’d) Notes: Indicates member countries of tilL Eu.ro area (Austria, Bdgium, Finland, Frana, Gumany, Greece, Italy, Ireltmd, Luxembourg, Netherlands, Portuga~ Spain). e eSlirrwte f forecast (Source: Independent Market Research Report by D&B)
4.5.2 The Malaysian economy Growth prospects for the Malaysian economy remain favourable in 2007, despite uncertainties in the global economic environment. Strong domestic economic fundamentals will enable the economy to expand at 6.0% in 2007. On the supply side, output growth is supported by expansion in all sectors of the economy. Meanwhile, on the demand side, growth is projected to be driven by resilient domestic demand of both the private and public sectors, largely due to stronger consumer sentiment and business confidence as well as higher government spending. On the external front, Malaysia is expected to record a smaller trade surplus, as import growth picks up momentum in line with increasing domestic economic activities. The Malaysian economy is anticipated to strengthen further to between 6.0% and 6.5% in 2008, with positive contributions from all sectors of the economy. Domestic demand is projected to be the main driver of the economy, while external demand is expected to pick up in tandem with improved prospects in global trade. Both private investment and consumption spending are expected to remain robust, while public expenditure continues to expand. Finally, the Malaysian economy is expected to remain resilient on the back of a well-diversitied and broad-based structure, as well as strong macroeconomic fundamentals, which have strengthened over the years. Annual Chanue in Real GDP bv Sector 2001.200Sf 2000 nricesi Growth (%)  2001  2002  2003  2004  2005  2006  2007·  2008  GDP  0.5  5.4  5.8  6.8  5.0  5.9  6.0  6.0-6.5  Agriculture  -D.2  2.9  6.0  4.7  2.6  5.2  3.1  3.5  Manufacturing  -4.3  4.1  9.2  9.6  5.3  7.1  3.1  3.8  Mining and quarrying  -1.7  4.4  6.1  4.1  -1.3  -0.4  3.3  4.0  Construction  3.3  2.3  1.8  -0.9  -1.8  -0.5  5.2  6.3  Services  4.1  5.8  4.2  6.4  6.7  7.2  9.0  8.6
Not(;s:, (;slinwt(; f forecast (Source: Independent Market Research Report by D&B) 4.5.3 The manufacturing sector in Malaysia The manufacturing sector is projected to expand by 3.1% in 2007, supported by domestic-oriented industries, particularly chemicals and chemical-oriented industries, food and construction-related industries. In line with the expansion in global trade in manufactured products, the manufacturing sector is anticipated to increase by 3.8% in 2008. This is expected to benefit Malaysia’s export-oriented industries, including electrical and electronics products. The output of resource-based products is anticipated to expand due to strong demand for refined petroleum products, plastics, chemicals, rubber gloves and wooden furniture and fixtures. Further expansion is expected in the non-metallic mineral products and metals industries, supported by increased activities in the construction sector. The development of a strong and dynamic SME sector is an important economic agenda of the government. Industry deepening is especially applicable to the SMEs. Rapid technological advancements as well as tradc liberalisation and globalisation have placed a severe strain on the SMEs. In promoting the industry deepening process, a core element is the supporting industries, which are mostly SMEs. Having a strong supporting industry base enables less reliance on foreign imports. It can 4. INFORMATION ON OUR GROUP (Conl’d) also create additional employment as well as provide linkages between the large companies and SMEs. A strong supporting industry can also assist the growth of SMEs through subcontracting arrangements and lead to the further development of local entrepreneurs, resulting in a higher utilisation of domestic resources. Recognising the SMEs as an endogenous engine of growth, the government’s current development focus is on SMEs with the capability to manufacture products with higher intellectual property content using the requisite human capital. (Source: Independent Market Research Report by D&B) 4.5.4 Electronics industry Since the early seventies, the electronics industry in Malaysia has been dominated by the production of electronic components, which accounted for between 80% and 85% of output. However, there has been a shift in the composition of the industry since 1990, due to an increased emphasis placed on both consumer electronics and industrial electronics. Nonetheless, the electronic components segment still accounted for the largest portion of the electronics industry in the country. The years spent in the learning curve has made Malaysia one of the world’s leading location for semiconductor test, packaging and assembly. As the electronics industry is very wide, it can be further subdivided into three (3) segments, namely, electronic components, consumer electronics and industrial electronics. Basically, semiconductor products are microprocessors which fonn the basic circuitry elements for the functioning of other electronic and electrical products. The production of semiconductors comprises five (5) manufacturing steps of processes, which are design, mask, fabrication, assembly and testing of chips. Since the establishment of the first semiconductor plant in 1972, the semiconductor industry has developed rapidly to become one of the country’s major industries within the manufacturing sector. At that time, many foreign investors flocked into the country to take advantage of the abundant and cheap labour. Although the activities of chip manufacturing in the country are mainly dominated by lower-end assembly and testing of semiconductor devices, the industry is gradually moving into higher-end chip manufacturing technology, via backward integration into silicon ingot growing, cutting and polishing of silicon wafers, chip design and wafer fabrication. Malaysia is currently among the world’s leading sites for semiconductor assembly, testing and packaging. The electronics industry remained the leading contributor to export earnings, investments, industrial output and employment in the country. The continued presence of major MNCs has benefited the industry, in terms of technological progress and skills development. It has also encouraged the development of locally-owned supporting industries, in the supply of equipment, materials, component parts and dedicated services. There is a migration up the value chain to more complex and high-end products, as reflected by a higher percentagc of capital investment per employee ratio throughout time. Other activities along the value chain of the electronics industry include R&D, marketing, distribution, logistics and procurement. (Source: Independent Market Research Report by D&B) 4.5.5 Semiconductor industry Chip makers face constant booms and busts in demand for their products in the market. On average, each cycle is estimated to take around four (4) years. However, its application markets are so numerous -computers, communications infrastructure, automotive, consumer products etc; that it is unlikely that excess capacity in one segment will bring the whole industry down. In other words, different markets peak and bottom out at different times. Historically, the semiconductor industry has been highly cyclical with recurring periods of over supply, which often has had a severe negative effect on demand for tcst equipment, systems and services along the supply chain. 4. INFORMATION ON OUR GROUP (Cont’d) The semiconductor industry has become increasingly cyclical, driven over the years by economic conditions and transitory technological mutations. Market growth and fall cycles have shortened, while technological advancements, charalvicriscd by greater integration complexities, the transition to submicron manufacturing and wider usc of SaCs have had an evolutionary impact on testing requirements. Today, the chip makers arc seeking lower cost tests, shorter time-ta-market and added functionalities. These demands are driving out conventional testing methods and prompting the development of more versatile ATEs, along with the associated test probes. Meanwhile, the growing significance of mixed-signal design in devices has magnified the complexities that the test probe manufacturers must address. (Source: Independent Market Research Report by D&B) 4.5.6 Differing segments/sectors Generally, the test probes industry can be divided into two segments, the cantilever type (has a cantilever spring ann) and pogo pin type (has an internal spiral spring). In addition, pogo pins incorporate a plunger, a barrel and a spring. A Kelvin test probe, which is categorised under thc cantilever type, consists of double probes and is typically used for sensitive resistance measurements at analogue/mixed applications. The basic electrical principle behind it is that two (2) independent electrical connections to the device lead can compensate for the parasitic resistances between the device under tcst and the ATE. (Source: Independent Market Research Report by D&B) Currently, our Group is only involved in the production of cantilever type test probes. Moving forward, we will commence production of pogo pin type test probes as detailed in Section 4.3.3 above. 4.5.7 Market coverage The market coverage of our Group is depicted as follows: 2006  JF Tech  6.9%  Other local companies  1.1%  Othcrs (import) •  92.0%  Total  100.0%

The demand or market size for cantilever type test probes (used for testing electronic transistors and ICs) is estimated at around 3.7 million pieces in Malaysia in 2006. This includes both domestically produced and imported cantilever type test probes. Based on the number of electronic transistors and ICs manufactured in Malaysia in 2006, domestically-produced cantilever type test probes accounted for 8% of the market while imported cantilever type test probes took up the remaining 92%. Out of the 8% market share held by domestic companies, our Group is estimated to account for a market share of 6.9% while the balance of 1.1% is manufactured by the other local companies. (Source: Independent Market Research Report by D&B) 4.5.8 Industry players and competition Regionally, many of the bigger overseas suppliers of test probes have either a sales office or distributor to represent their products, located in Singapore. Eberts Electronics (S) Private Limited is the sales office in Singapore for Eberts Electronics Sales Inc. based in the US. The other US-based companies are represented by their distributors in Singapore; Johnstech International Corporation is represented by UST Technology Private Limited; Precision Contacts, Inc. by Sertec International (Singapore) Private Limited; and Synergetix by Petracarbon Private Limited. 4. INFORMATION ON OUR GROUP (Coni’d) There afe also three (3) indigenous companies in Singapore and they are AEM-Evertech Holdings Limited. Testmax Manufacturing Private Umitcd and Zen Voce Manufacturing Private Umiled. These companies based in Singapore also market their test probes 10 the end-users in Malaysia. due 10 the geograprucal proximity. . of Test Probes in Sin2aoor”e Name of Comnaov Eberts Electronics Sales Inc. lohnstech International Corporation  Country of OmiQ US US  Sales Office I Distributor I Manufacturer Eberts Electronics (S) Private Limited UST Technology Private Limited  Precision Contacts, Inc. Svner2etix  US US  Sertcc International (Singapore) Private Limited Petracarbon Private Limited  AEM-Evenech Holdin~ Limited Testmax Manufacturin2 Private Limited  Sin2.aoore Singaoore  · · · Zen Yo«-Manufacturitl£ Private limited  SinR’3oorc
A very high proportion of the lest probes used in Malaysia are imported from over.;cas. However, there is no trade classification for test probes as a category by itself, under the Harmoniscd System rHS”). Our Group is specialising solely in the manufacturing of cantilever type test probes in Malaysia, unlike the other manufacturing companies which arc also involved in other business activities. As a specialist in the iodustry, it is able 10 provide value added and customised solutions in the area of test probes, for the needs of its c1ienls in the semiconductor industry. There are anatner three (3) companies involved in the manufacturing of cantilever type test probes using electrical discharge machines. Thcy include Elemcc Engineering Sdn Bhd and TKE Technology Sdn Bhd. They are basically metal fabrication companies, engaged in manufacturing a wide variety of component parts for the electronics industry. Hence. the manufacturing of test probes is not the principal core activity of these companies. Similarly. there is BIM Technologies Sdn Bhd, whose principal core activity is in the repair of printed circuit boards, rather than the manufacturing of cantilever type test probes. The other suppliers of test probes in Malaysia include AEM Microtronics (M) Sdn Bhd, a subsidiary of AEM-Evcrtech Holdings Limited of Singapore; Eberts Penang office of Eberts Electronics Sales Inc; Rika Dcnshi Malaysia Sdn Bhd (a Japanese-based manufacturer); Petraearbon Sdn Bhd, the sales office of Pctracarbon Private Limited of Singapore; and Wellegion Industries (M) Sdn Bhd; the sales office of Tcstmax Manufacturing Private Limited of Singapore. ; of Ted Probes in Mala sia Name of Company  Country of Oril’in  Sales omce f Distributor I Manufaclurtr  JF Tech Groun  Malavsia  ·  BlM Tectmolol!ies Sdo Bhd  Malavsia  ·  Elemec Engineerinl! Sdn BM  Malavsia  ·  TKE Technolol.!V Sdn Bbd  ~ialaysia  ·  Eberts ElectrOnics Sales Inc.  US  Eberts Penang office  Rika Denshi Malaysia Sdn Bbd  Jana.  ·  AEM-Eyertecb Holdines Limited  Sineaoore  AEM Microtronics (M) Sdn Bhd  Pctracarbon Private Limited  Sio2aoorc  Pctracarbon Sdn Bhd  Tcstmu Manufacturing Private Limited  SinV”:8oore  Wellegion Industries (M) Sdn Bhd
(Source: lndepouhnt Market Researdl Report by D&JJ) 4. INFORMATION ON OUR GROUP(Cant’d) 4.5.9 Government legislalioo, incentives and policies Ltgi:slation JF Micro has a manufacturing license issued by MITl, under the Indusuial Coordination Act. 1975. It aims to secure the orderly development arK! growth of the country’s manufacturing sector. Under lilt Factories and Machinery Act, 1967, any employees in the factory c:w.:poscd to a wet or dusty process, 10 noise, heal or any lXlisonous, corrosive or other injurious substance which is likely liable 10 cause bodily injury to them, may be provided with suitable and adequate personal protective clothing and appliances. They include goggles, gloves, leggings, caps, fool wear and prOlcctivc ointment or lotion. Both the foundations and floors of the factory shall be of sufficient strength \0 sustain the loads for which they are designed; and no foundation or floor shall be overloaded. Test probe manufacturers are also subjected to the Occupational Safety and Health Act, 1994. This act is enforced by the Ministry of Human Resources under the Department of Occupational Safety and Health (“DOSH·’). Under this act, the employer has a duty to protect the safety, health and welfare of all his employees. The act requires the employer 10: • provide and maintain plant or equipment and systems of work that arc safe and without risks to health;
• make arrangements for ensuring safety and absence of risks to heallh in connection with the use or operation, handling, storage and transport of plant;
• provide infonnation, instruction, training and supervision as is neccssary to ensure the safety and health of the workers; and
• maintain his place of work to ensure il is safc and without risks 10 health.

The employer shall tslso ensure that no worker shall be employed at any machine or in any process, being a machine or finy process liable to cause bodily injury, unless he has been fully instruded as to the dangers likely to arise in connection therewith and the precautions to be observed. The workcr must receive sufficient instruction in work at thc machine or process; or is under adequate supervision by a person who has knowledge and experience of the machine or process. Laslly, both effective and suitable provision shall be made for securing and maintaining adequate venli1ation by the circulation of fresh air in every part of Ihe fnctory and for rendering harmless, so far as practicable, all gases, fumes, dust and other impurities thai may be injurious to health arising in the course of any process or work carried on in the factory. The European Union has enacted legislation to prohibit the usc of lead in electronics manufacturing. In this region, China, Japan and South Korea are also phasing out the usc of lead in manufacturing, and many global electroni<:s manufacturers arc requiring their suppliers to certify that their company’s products will support Iheir lead-frec initiatives. Lead is very poisonous and is recognised as one of the roosl significant environmental health lhreats to humans. The global electronics industry has Slartcd to move towards reducing the use of hazardous substances, before local or global regulations comc into force. With the announcement of lead-free initiatives across several countries, the implementalion of lead-free electronic packaging is gaining momentum globally. A vast number of back-end service providers arc trying to implement this, with each packaging technology being compaliblc with industry lead·free solders. This gives end users the flexibility to utilise and meet their needs. The European Union has also cnforced a ncw ruling on “green” guideline in the Waste from Elcclrical and Electronics Equipment Directiye 2002J96/EC. This guideline oullines the responsibilities of both producers and exporters for the treatment, recovery and disposal of elel.-1rical and electronics equipment. 4. lNFORMATION ON OUR GROUP (Cont’d) Ince”tilltls The manufacturing of lcst probes and Ie circuit test sockets is promoted by MIDA. A company engaged in the manufacturing of these products is considered a high technology company in Malaysia. In addition, a high technology company must ensure that rhe percentage of R&D expenditure to gross sales should be at least I%on an annual basis. A company has three (3) years from its dale of operation or commencement of business 10 comply with this requirement. Also, scientific and technical staff having degrees or diplomas with a minimum of five (5) years of experience should comprise al least 7% of the company’s work force. In this context, JF Micro is considered a high technology company and has obtained Pioneer Status certification on 26 January 2007. A high technology company qualifies for pioneer status with a tax exemption of 100% of statutory income for a period of five (5) years. Accumulated losses and unabsorbed capital allowances incurred during the pioneer period by companies whose pioneer status will expire on and after 1 October 2005 are allowed to be carried forward and deducted against post­pioneer income of a business rclating to the samc promoted activity or promoted product. Alternatively, a high tcchnology company also qualifies for an investmenllax allowance (“ITA”) of 60% (100% for promoted areas) on the qualifying capital expenditure within five (5) years from the date the first qualifying capital expenditure is incurred. The allowance can be utilised to offset itgainst 100% of the statutory income for each year of assessment. Any unutiliscd allowance can be carried forward to subsequent years until the whole amount has been fully utilised. Policies Under the 9MP, the government will continue to promote the dcvelopmcnt of the electronics industry, in view of its extensive linkages to the national economy. Besides auracting the MNCs, the domestic manufacturers will be encouraged to focus on improving the sophistication level of their products, in tcrms of quality, functionality and design. This is to facilitate the development of the relevant sltill sets and expertise, tcchnology know-how and R&D capabilities to move lhe electronics industry further up the value chain. As many of these supporting industries to the electronics industry falls under the SME category, the govemment plans to formulate strategies that will propel the SMEs up the value chain into strong knowledge-intensive and value creating entities in the manufacturing sector, so as to meet the challcnges of globalisation. There will be increased emphasis placed on technology development capabilities to establish technological leadership, achieve product aod services differentiation as well as to create a larger number of local tcchnology-based companies. This is through the provision of appropriate infrastructure, technology transfer and betler aect,55 1O finaocing. The R&D focus in the semiconductor industry is anticipated to cover fabrication, test and failure analysis, digital and analogue design of Ieand advanced microelecrronics. Under the Third Industrial Master Plan 2006-2020 (“IMP3″), the electroni~ industry is envisaged to continue to grow and contribute significantly to industrial progress and transformation. The MNCs will continue to assUfT)(l a significanl role in increasing the tcchnology level of the industry, in tandem with the global trend in miniaturisatillO and convergence oftcchnologics in multifunctional produl”.’l.. Testing activities will be part of the development of the entire semiconductor value chain. Towards realising the objectives and targets set for the electronics industry, seven (7) strategic thrusts have been established and they are as follows: • Strengthening and deepening the semiconductor industry The semiconductor industry will be further strengthened through the establishment of a fully developed semiconductor cluster covering the nOr1h-western corridor in the peninsula, including Penang, Perak, Kulim High Technology Park and the neighbouring industrial areas of Kedah; 57 4. INFORMATION ON OUR GROUP (Cont’d) • Deepening and widening the development of the ICf industry The industrial electronics segment will be further developed through the enhancement of the ICf value chain. The value chain, presently centred around the Multimedia Supc~ Corridor (“MSC’) in the Klang Valley, will be progressively expanded to designated areas around the counlry; • Intensifying R&D and design activities Measures will be introduced to promote the specialisation of R&D activities and the creation of cenlres of excellence among existing R&D centres in Ihe public universities and research institutes, so as 10 facilitate the development of new and emerging lechoologies; • Promoting the application of new and emerging tcchnologies
The application of new and emerging technologies like nanotechnology, MEMS, photonics, wireless technologies and advanced display technologies will be encouraged to improve the competitiveness of domestic companies;
• Integrating the industry into regional and global supply chain networks
Measures will be undertaken to nurture Ihe existing domestic companies with the growth potential to expand and integrate into the regional and global supply chain nctworks, as well as become major producers on their own;
• Making available a sufficient supply of highly skilled and innovative workforce
There will be undertakings in lhe development of the required human resources in the industry, so as to ensure that skilled personnel and a qualified workforce will be readily available: I’nd
• Strengthening the institutional support for the dcvclopmenl of the electronics industry

Institutional support include continuous improvements in tolal factor productivity, the formulation of a standardised quality control management system, management and disposal of scheduled wastes and strengthening the role of industry associations, so as to further develop the industry. (Source: lndlJpendenr Market Research Report by D&B) 4.5.l0 Demand Ilnd supply cOllditions Basically the demand for test probes (both the cantilever type and pogo pin type) is a function of the growth and cxpansion of the semiconductor industry in Malaysia. particularly in the back-end activities, as illustrated in Sections 4.5.4 and 4.5.5 of this Prospectus. A very nigh proportion of the lest probes used in Malaysia arc imported from overseas. Currently, our Group is specialising solely in the manufacturing of cantilever type test probes in Malaysia. unlike the othcr manufacturing companies which arc also involved in olher business aClivities. As a specialist in lhe industry, it is able to provide value added and c~omised solutions in the area of test probes, for the needs of ils clients in the scmicooduClor induslry. In addition, although the manufacturing processes of test probes aTe almost automated using advanced computerised machines in various stages, the final step of assembly is done manually, as it involves miniaturised component parts. Hence, this step cannot be automaled and is an inherent characteristic of the industry. Therefore, companies which are involved in the assembly of test probes in Malaysia possess a comparative advantage, due to the relatively lo…..er costs of labour. as opposed 10 the assembly process condul.1cd in the developed counuies. where it …..ould entail a higher labour cost. 4. INFORMATION ON OUR GROUP (Coord) (Source: Independent Morket Research Report by D&B) Hence, we arc confident Ihal there is still room to expand further the local supply of lest probes to meet the growing demand. 4.S.11 Substitutes As teChnological development in semiconductors gathers pace, new generations of cores emerge. A core refers 10 a broad category of materials thai arc recognised as proprietary 10 an organisation. In the electronics field, an IP core refers to the specific portions of a chip or “building blocks” Ihal arc proprietary and/or patented designs of a particular company. These IP “blocks” or cores can then he sold to customers as commodity parts for new designs. Test tools must support testing for both new and older generation cores. The existence of proprietary SoC cores is a problem in that SoC integrators cannot gain a deeper understanding of core archilccture. This means that there arc several testing methods available, nClne of which are suilable for every type of core. Ultimately, lhe quality of products is affected. The revolutionary change will come in the form of more on-chip self·leS! solutions to lighten the load on conventional exlernal ATEs. BIST funclionalily that is managed within the cores would be an ideal solUlion. With the widespread proliferation of SOC, OFT and/or BIST is likely 10 be the proposition. Traditionally, DFTfBlST has been considered a back-end process, but it is now accepted thai tests must be facilitated during the design process to ensure Ihe highest faull covcrage and shortest production lest lime. The consensus also seems 10 be that an optimal DFT/BIST strategy would better handle the challenges posed by SOC technology. The emergence of SOC has seen a lot of integration of analogue. mixed signal and RF blocks· with the average IP corcs on a single ehip rcaching between thirty (30) and sixty (60). So, in addition to established OFT approaches such as scan lechniques, there is a need for B1ST 10 provide an eXlremely efficient fault coverage mcchanism. The typical SOC contains a large number of BIST controllers associaled with a specific device under ICSI. The BIST lest circuitry implements the vector generation and analysis capabiJities on the chip. BIST then runs all Icsts at-speed, which is a great advantage. The BIST controller can initiate tests using the same access points as thai of the boundary scan. Additionally. DFf/BIST addresses numerous SOC testing problems that are current. However, implementing DFT and BIST test structures do have its drawbacks. For example, there could be interference with high-speed critical palhs lhat derails the chip’s performfmce. Numerous issues relating to wafer yield, die size and device packaging also have to be considered. Adding DFT/BIST structures creates a silicon overhead, which lowers Ihe number of devices per wafer. Bigger dies could mean lower yields. Hence, implementing BlST also requires early planning and considerable development lime. (Source: Independent Market Research Report by D&B) 4.5.12 Prospects and outlook of tbe induslry Rising /rend towards outsourcing In loday’s competitivc business environment, many chip makers arc looking at outsourcing as a way to streamline time-to-market and minimise cost-to-manufacture, given Ihc flexibilily it provides. Outsourcing has also been extended toward.<llhc vendors for testing. By outsourcing thc testing, both the chip makers and the packaging and test companies can experience a number of benefits like the avoidance of a large capital expenditure associated with the purchase and maintenance of assembly and lesl equipment, the elimination of lhe hiring costs of staffing testing operations as well as steering clear of the investments required for R&D at the back-end. Collectively, increasing global competition, additional complexity from more stringent environmental standards and rising price pressurcs from consumers have forced the original equipment manufacturers C’0EMs”) to reduce cOsts. 4. INFORMATION ON OUR GROUP (Conl’d) The new generation of ATE ranges in price between RM11 million and RM17 million. This expense is difficult to juslify. In addition, to remain competitive. a chip maker would need to invest in regular upgrades to this equipment. The packaging and lesl companies can invest in lop-of-lhe-linc ATE and spread these costs across multiple customers, thus enabling them 10 provide high quality services al a lower cost. The outsourcing process c~1cnds along the whole value chain, until it reaches Ihe tcst probe manufacturers. The chip Ill3kcrs arc also luming to vendors to a:;sist them 10 meet shorter lime-Io-market development cycles on lower volume dcvi~. The typical volume for a complex semicondudor ranges between 200,000 and 1 million units per year, and the product lifecycles are often measured in months. To fully tcst one of thesc dcvices r«juire customised «juipment and engineering support that is often outside the scope of expertise of many chip makers. Many of these chip makers would rather invest in developing IP for the next generation chip, instead of buying the associated test equipment. Upsurge in semiconductor industry The growth in the test equipment market, including test probes, is being spurred by the chip makers as lhcy invest in stale-of-the-art plants using 300 rom fabs and 65 nm tedmology. There i.s increasing capacity utilisation levels in the chip fabrication plants as semiconductors are in demand in the market again. In particular, nash memory chip market used for storage is growing faster than any other markets in the history of semiconductors. It offers fast access timc and low power consumption. As they can slore data when the batteries arc removed from a device, and in the process cutting orf the power supply, nash memory is a key element in cellular phones and digital cameras, as wen as the ubiquitous thumb drives. Other gizmos that utilise flash memory include the portable music players, video cameras and game consoles. The other factors triggering the mounting demand for all forms of semiconductors include the rising proportion of electronics in automobiles and the increasing levels of automation spanning various industries. Convergence beIWun computers aluI telecommunications The convetgence between the computers and telecommunications industries due to both technological advallCement and product innovation is expected to create new demand for mobile devices and applications. Both smart phones and PDAs arc projected to experience high growth, driven by both fashion trends and the wider availability of wireless fidelity connected hotspots. The explosion of the Internet is leading the way to a mobi.le. connected wOlld, where hand-held devices and smart appliances of all sorts make for one large, seamless network. In addition, tbe widespread introduction of 30 services is likely to impact the lest probe market po.sitive(y. This is mainly due to the growing popularity of camera phones, broadband connectivity and expanding mobile conlents., amongst others. In particular, the cellular phone market is also spurring the sales of semiconductors, as a 3G cellular phone has a semiconductor content of 25% more (lhan the previous generations) to support digital cameras, colour displays and wideband dala capacity. Growth in consumu electronics nuJrket Due to rising affluence and changing lifestyles, consumer electronics arc rapidly gaining prominence. Digitalisation, miniaturisation and mobility are the key elements for modem consumer electronics. The transition from analogue 10 digital technology has ushered in an era of improved functionality, which combined with greater penetration of home personal computers (“PCS”), allow consumers to easily and quickly upload/download brighter and clearer digital images. Consumer electronics have been the main driver behind surging sales of semiconductors globally. More than half of Ihe chips sold globally end up in consumcr products. They include digital televisions, digital cameras and digital versatile recorders. For example, digital televisions contain higher semiconductor content than the standard television. The full-scale shift from analogue 10 digital television broadcasting in the developed countries (2009 in Ihe US and 2011 in lapan) will also spark demand for more semiconductors. The semiconductor eonlen! of the latest generation of consumer 4. INFORMATION ON OURGROUP.(Con/’d) products such as cellular phones. MPEG·l Audio Layer 3 (“MP3″) players and digital camcrllS accounts for an average of 40% of the cost of such products. ll1c latest emerging technology developments in the field of consumer electronics arc focussed on digital home systems like home security and energy control, and tclemalics. or automotive electronics. These developments are expected 10 spur the demand for additional semiconductors. Conclusion The fast pace of t~hnological developments and the increasingly extensive applications of electronics in the world today will provide tremendous opportunities for the electronics industry to develop further. It was once predicted that the electronics industry would grow larger than the automobile. Sleel and aerospace industries combined. The industry itself is moving very fast, generating a constant stream of new and more complex devices. The global shift towards more expansive applications of electronics is anticipalcd 10 continue unabated across all indusuies and services, especially with new developments in information and communications technologies. As a result,the electronics industry will continue to be the main industry for industrial growth and innovation during the 9MP. The electronics industry is expected to account for 29.4% of the manufacturing sector in 2010, up [rom 28.0% in 2005. Concomitantly, the electronics industry as a whole is anticipated 10 expand a CAGR of 7.7% under the 9MP, while the semiconductor industry is projected to grow at a CAGR of 6.5%. Over the last decade, rapid strides have been made in c.lectronic systems design and integration. This trend is expected to continue wen into the next decade with the use of ultra high-performance, deep submicron devices operating at below onc (1) volt supply voltages. In parallel, research in nano technology and quantum electronics is anticipated 10 push digital circuit designs into new realms. Over lhe next 20 years, entire cle<:tronic systems consisting of digital, analogue (including radio frequency circuits), optical, chemical and MEMS parts are expected to be integrated inTO a single chip. The problems of design verification and jests of integrated SoC will assume hitheno unseen proportions. The continuing rapid advances in wafer fabrication and circuit technologies, as well as tbe changing nature of Ihe electronics market create big challenges for the tesl probe indusuy. As long as there arc new product designs, there will be a need for design validation testing. New processes and device structures also add new defeci mechanisms thai may require additional tests to detect. The test probe indusl:ry will need to evolve 10 accommodate the many trends affecting Ie manufacturing today. At the same time, the cost of test must continue to decline to ensure lhal the tcsts do not become the limiting economic factor in producing next-generation devices. It is imperative that the test probes adapt to the industry roadmap for reduced conlact sizes and pitches, while ensuring reliable contacts withoul threatening the structural integrity of the Ie contacts and undcrlying circuilry. Promising advanc~ in test probing technology and techniques provide the reassurance that the test probe industry is rising to meet the emerging challenges. Going forward. new advancements in superoonducling materials have given rise to a new breed of products. Using materials such as gallium arsenide, silicon carbide, and now even gallium nitride, researchers have developed chips lhat exceed silicon in both speed and voltage. This poses a new paradigm for the test probe manufacturers. (Source: Independent Market Research Reporr by D&B) THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. 4.6 4.7 4.8 I747681-H I INFORMATION ON OUR GROUP (Com’d) MAJOR CUSTOMERS Our Group’s major customers (i.e those individually contributing 10% or more of our Group’s revenue for each of the laslthtce (3) financial years ended 30 Jum: 2007 and four (4)-month financial period ended 31 October 2007) arc as follows: Contribution 10 Group’!> rtveuue Four (4)­
moo” financial  Finlnclal  Financial  FiBiudal  period  year ended  yureoded  year ended  euded 31  Lengt.ll of  30 June  30 J”‘”  30 JIlIM!  October  Name of customer  Contry  relationshipY..,  200′ %  2006  2007 %  2007 %  SRM  Malaysia  7  77.18  86.15  73.51  76.96  Carsem (M) Sdn Btu!  Malaysia  8  13.50  6.16  0.58  0.03  Ismeca Malaysia Sdn BM  Malaysia  8  U5  2~3  12.75  5.53
The details on the possible risk ofdependency on SRM is set out in Section 3.1 of this Prospectus. MAJOR SUPPLIERS Our Group’s major suppliers (i.e those individually contributing 10% or more of our Group’s raw materials and subcontracting CO!)1s for each of the last three (3) financial years ended 30 June 2007 and four (4)-month financial period ended 31 October 2007) are as follows: Contribution to Group’s purchases Four (4)-Fiunciat year ended  Financial year ended  FiDanclal year raded  month financial …­tDded 3J  Length or  JOJune  JO June  30 Ju.ne  OCtober  Name orsupplier  COUD:try  relaOotihip Y..,  200’ %  2006 %  2007 %  2007 %  Spectrum Pre<:isioD Sdn Bhd  Malaysia  6  19.69  11.61  13.82  8.89  Hakko Technologies Sdn Bhd  Malaysia  ,  17.52  24.80  16.18  26.72  Total Plating Techoology  Malaysia  7  12.14  1O.2J  10.29  10.40  Photo-Etch (S) Pte Lid  Singapore  8  19.19  9.27  12.86  8.25  Mesmal Engineering Sdn Bhd  Malaysia  7  11.03  16.70  25.66  26.97
The suppliers of our Group mainly supply tile main raw malerial, Le. copper and sub-contracting work including cutting, grinding, milling, plating and soldering services to our Group. Our Group is nol dependent on any single major supplier for raw material supplies or sub-oontracting work. FUrURE PLANS AND OUTWOK Our Group aims 10 be a recognised leader in the innovation of probe·socket technology as well as a market leader in the delivery of comprehensive probe-socket techoology for test solutions in the fast growing semiconductor industry. OUT Group intend,; to adopt a mission to design. develop and market new products in Ine ficld of probe-socket technology. Each product tcchnology will fill a current need in the semiconductor industry by improving upon an existing technology or test probe. or by designing a test probe to serve a need !hal is clearly defined and acknowledged by the industry. 62 4. INFORMATION ON OUR GROUP (emu’d) In order to achieve our vision and mission. we have outlined the followrng plans over the next three (3) years: (i) New product dt”~/()pmfnl As part of oor product development plan 10 capture wider market share., OUf Group plans to introduce the following products over the next three (J) years: (a) fine pitch test probes for lead·free devices;
(b) pogo p;ns;
(c) lest sockets; and
(d) pogo pin for RF application.

Derails of the above new products arc set out in Section 4.3.3 of this Prospectus. (il) R&D iniliatives Our Group intends 10 adopt an innovation-driven production process. Hence R&D activities and expenditure to fund these activities will feature prominently in the current and future business plans. The high technology environment facing Ihe {cst probe and tcst socket industry necessitates this approach as acceptance of QUr products arc perfonnance driven. Our Group has outlined a number of R&D plans based on the aforesaid product roadmap over the next three (3) years. which arc expected. among olhers. to achieve the following objectives: (a) provide a means to sustain and grow the business through the proliferation of new products. The main focus of the R&D activities will be to create new and innovative test solutions to address the current demand. These activities will expand the produci lines of our Group. enabling our Group to tap into new markets as well as increase its coverage of the existing markets. A case in point will be the planned development of pogo pins. which will enable our Group to tap inlO the test solutions for chip packages with matrix pad configuration;
(b) creatc competitive advantage for our Group through significam value-adding to meet market demands. Efforts will be expended to improve existing manufacturing processes in terms of production units. production quality and cost efficiency. These will increase the internal value-add in our Group’s process, which can be passed on to end-users; and
(c) increase profitability lhrough proprietary and niche producls. Our Group intends to embark on a branding programmes as well as establishing proprietary products to sell to the market. As a start the Lasak’TM pins are a proprietary product that has significant performance advantage as well as cost advantage to our customers.

(iii) Marbling initialiv” The challenge of the market is to create awareness and visibility for the product offering of our Group, in order to penc(l1lte into lhe preferred supplier lists of the various MNCs. Our marketing and sales strategies are broadly divided 10 address the distribution issues of the Malaysian market and export market. Our Group will channel adequate resources towards the following: 63 4. INFORMATION ON OUR GROUP (Con/’d) (a) expansion to overseas market:
(b) expanding sales and marketing workforce; and
(c) promoting brand visibility.

The test probe induslry will need 10 evolve to accommodate the many trcnds affecting IC manufacturing today. At the same lime. the cost of test must continue 10 decline to ensure that the tests do I10t become the limiting economic factor in producing next-generation devices. It is imperative that the test probes adapt 10 the industry roadmap for reduced contact sizes and pitches, while ensuring reliable contacts witbout threatening the structural integrity of the IC contacts and underlying circuitry. Promising advances in tesl probing technology and techniques provide the reassurance that the test probe industry is rising to meet the emerging challenges. Going forward, new advancements in supcrconducting materials have given rise to a new breed of products. Using materials such as gallium arsenide. silicon carbide. and now even gallium nitride. researchers have developed chips that exceed silicon in both speed and voltage. This poses a new paradigm for the test probe manufacturers. (Source: Independent Market Research Report by D&B) The various key strategies of our Group for the financial years ending 30 June 2008 to 30 June 2010 which are detailed in Section 10 of this Prospectus. have been formulated to enable our Group 10 become one of the market leaders and pioneers in the high growth industry. THE REST OF THIS PAGE [S [NTENTroNALLY LEFrBLANK

 

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