WELLSEASTERN ASIA DISPLAYS (M) SDN. BHD. (Incorporatedin Malaysia) CompanyNo: 501396-U FinancialStatements and Supplementary Data forthe financial period ended October 5, 2007 Contents

 (Incorporated in Malaysia)

Company No: 501396-U

	Page
Report of Independent Registered Public Accounting Firm……………….…………………	1
Balance Sheets as of October 5, 2007 and December 31, 2006….…………..……………	2
Income Statements for the Period/Years Ended October 5, 2007, December 31, 2006 and 2005…………………………………………………………………………………………..	3
Statements of Changes in Equity for the Period/Years Ended October 5, 2007,  December 31, 2006 and 2005.………………………………………………………...............	4
Cash Flows Statements for the Period/Years Ended October 5, 2007, December 31, 2006 and 2005…………………………………....................................................................	5
Notes to Financial Statements………….………………………………………………………	6-15

(Incorporated in Malaysia)

We have audited the accompanying balance sheets of Wells Eastern Asia Displays (M) Sdn. Bhd. as of October 5, 2007 and December 31, 2006 and the related income statements, statements of changes in equity and cash flows statement for period/year ended October 5, 2007 and December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wells Eastern Asia Displays (M) Sdn. Bhd. as of October 5, 2007 and December 31, 2006 and the results of its operations and its cash flows for the period/year ended October 5, 2007 and December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

Without qualifying our opinion, we draw attention to Note 2.1 to the financial statements pertaining to the cessation of the Company’s business operations on July 31, 2007.

/s/ Horwath
Penang, Malaysia

Dated : 28 January 2008

							As of October 5,		As of December 31,
							2007		2006
							USD		USD
	ASSETS
	Current Assets
			Cash and cash equivalents				1,233,485		2,115,164
			Trade accounts receivable				0		0
			Trade accounts receivable, related party				0		2,258,493
			Inventories				0		727,742
			Prepaid and other current assets				0		18,465
			Income taxes receivable				39,812		37,859
	Total Current Assets						1,273,297		5,157,723
	Property and equipment, net						0		184,920
	Deferred tax assets						0		0
	Total Assets						1,273,297		5,342,643
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Current Liabilities
			Trade accounts payable				0		123,095
			Trade accounts payable, related party				0		314,984
			Other accounts payable, related party				0		427,316
			Accrued expenses and others				21,833		188,704
			Bank borrowings				0		1,377,602
			Income taxes payable				0		0
	Total Current Liabilities						21,833		2,431,701
	Stockholders' equity:
			Common stock, RM1.00 (equivalent to USD 0.2632) par value
							1,315,789		1,315,789
			(10,000,000 shares authorized, 5,000,000 shares issued and outstanding 2007 ,2006 and 2005, respectively)
			Exchange translation reserve				344,819		185,927
			(Accumulated losses)/Retained earnings				(409,144)		1,409,226
	Total Stockholders' Equity						1,251,464		2,910,942
	Total Liabilities and Stockholders' Equity						1,273,297		5,342,643

				For the
				Period Ended		For the Years Ended
				October 5,		December 31,
				2007		2006		2005
				USD		USD		USD
	REVENUE
		Net related party revenue		4,141,970		6,278,848		16,549,707
		Net third party revenue		306		4,210		38,697
		Net revenue		4,142,276		6,283,058		16,588,404
	COST OF REVENUE
		Related party cost of revenue		218,546		1,184,812		8,523,179
		Third party cost of revenue		3,840,542		4,555,820		6,698,545
		Cost of revenue		4,059,088		5,740,632		15,221,724
		Gross profit		83,188		542,426		1,366,680
	OPERATING EXPENSE
		Selling, general and administrative		226,229		295,556		566,814
		Research and development		0		0		165,401
		Total operating expense		226,229		295,556		732,215
		(Loss)/Profit from operations		(143,041)		246,870		634,465
		Interest income		46,529		7,699		6,481
		Interest expense		(26,386)		(105,338)		(183,644)
		Other income		22,627		49,427		77,774
		Loss on foreign exchange		(122,934)		(254,755)		0
		(Loss)/Profit before income taxes		(223,205)		(56,097)		535,076
		Tax expense		(268)		(15,881)		(71,978)
		Net (Loss)/Profit		(223,473)		(71,978)		463,098

		Common Stock				Exchange
						translation		Retained
		Shares		Amount		reserve		earnings		Total
				USD		USD		USD		USD
Balance at December 31, 2004		5,000,000		1,315,789		0		1,018,106		2,333,895
Net profit for the year		0		0		0		463,098		463,098
Balance at December 31, 2005		5,000,000		1,315,789		0		1,481,204		2,796,993
Exchange translation differences recognised directly in equity		0		0		185,927		0		185,927
Net loss for the year		0		0		0		(71,978)		(71,978)
Total recognised income and expenses		0		0		185,927		(71,978)		113,949
Balance at December 31, 2006		5,000,000		1,315,789		185,927		1,409,226		2,910,942
Dividend paid		0		0		0		(1,594,897)		(1,594,897)
Exchange translation differences recognised directly in equity		0		0		158,892		0		158,892
Net loss for the period		0		0		0		(223,473)		(223,473)
Total recognised income and expenses		0		0		158,892		(1,818,370)		(1,659,478)
Balance at October 5, 2007		5,000,000		1,315,789		344,819		(409,144)		1,251,464

			2007		2006		2005
			USD		USD		USD
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)/Profit			(223,473)		(71,978)		463,098
Adjustments for:-
Bad debt written off			417		0		0
Depreciation			31,342		63,628		78,793
Inventories written off			307,990		0		0
Loss on sale of property, plant and equipment			54,330		0		1,667
Property, plant and equipment written-off			56,268		1,274		0
Changes in net assets and liabilities
	Trade accounts receivable		0		22,801		91,791
	Trade accounts receivable - related party		2,258,493		1,940,093		3,005,322
	Inventories		419,752		922,324		361,038
	Prepaid and other current assets		18,048		24,547		(21,673)
	Income tax receivable		(1,953)		(37,859)		0
	Deferred tax assets		0		25,618		(25,618)
	Trade accounts payable		(123,095)		(82,396)		(1,000,515)
	Trade accounts payable - related party		(314,984)		(675,653)		(1,596,866)
	Accrued expenses and others		(594,187)		(467,432)		674,449
	Income taxes payable		0		(49,495)		37,899
Net cash from/(used in) operating activities			1,888,948		1,615,472		2,069,385
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment			46,425		30,835		5,789
Purchase of property, plant and equipment			0		(1,644)		(15,070)
Net cash from/(used in) investing activities			46,425		29,191		(9,281)
CASH FLOW S FROM FINANCING ACTIVITIES
Dividend paid			(1,594,897)		0		0
Increase/(Decrease) in bank borrowings			(1,377,602)		15,697		(2,042,864)
Net cash from/(used in) financing activities			(2,972,499)		15,697		(2,042,864)
Net (decrease)/increase in cash and cash equivalents			(1,037,126)		1,660,360		17,240
Effect of exchange rate changes			155,447		169,337		0
Cash and cash equivalents brought forward			2,115,164		285,467		268,227
Cash and cash equivalents carried forward			1,233,485		2,115,164		285,467
Supplemental cash flow information
Cash paid for interest			26,386		105,338		183,644
Cash paid for income tax			808		77,492		59,697

The Company was incorporated in year 2000, principally engaged in the manufacture of colour video monitors. There are two major stockholders, Wells-Gardner Electronics Corporation and Eastech Electronics (M) Sdn. Bhd., each holding 50% of the paid up capital of the Company.

The registered office of the Company is located at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia and the principal place of business of the Company is located at Lot 316 & 317, Jalan PKNK 3/2, Kawasan Perindustrian Sungai Petani, 08000 Sungai Petani, Kedah, Malaysia.

The financial statements of the Company are prepared under the historical cost convention, modified to include other bases of measurement as disclosed in other sections of the significant accounting policies, and in compliance with the accounting principles generally accepted in the United States of America.

Going Concern

The Company had ceased its business operations on July 31, 2007. Accordingly, the directors have decided to prepare the financial statements on a net realisable value basis, as opposed to the going concern basis. Where appropriate, adjustments have been made relating to the recoverability and classification of recorded asset amounts and to the amounts and classification of liabilities.

2.2

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

Property, plant and equipment are depreciated on a straight-line method over the estimated useful lives of the assets using the following annual rates:-

Plant and machinery	10-20%
Electrical installation and renovation	10%
Motor vehicles	20%
Office equipment	20%
Furniture and fittings	10%
Computer	10-20%
Factory tools and equipment	20%
Mould	10%

The carrying amounts of assets, other than deferred tax assets, inventories and financial assets, are reviewed at each balance sheet date to determine whether there is any indication that an item of asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Any excess of the carrying amount of the asset over its recoverable amount represents an impairment loss and is recognised as an expense in the income statement.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and it is reversed only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised. The reversal is recognised in the income statement.

There were no impairment loss recognized in the income statements for the period/years ended October 5, 2007, December 31, 2006 and 2005.

Inventories are valued at the lower of cost (determined on the first-in, first-out basis) and net realisable value after making due allowance for any obsolete or slow-moving items. Cost consists of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

Payables are recognised at cost which is the fair value of the consideration to be paid in the future for goods and services received.

All loans and borrowings are initially recognised at cost which is the fair value of the proceeds received. The loans and borrowings are subsequently stated at amortised cost using the effective yield method. The effective interest rate is the historical rate for a fixed rate instrument and the current market rate for a floating rate instrument.

All borrowing costs are recognised as an expense in the period in which they are incurred.

A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made of the amount.

Transactions in foreign currencies are converted into the functional currency at the rates of exchange ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency at the rates of exchange ruling at that date. Non-monetary assets and liabilities which are stated at cost denominated in foreign currencies are translated into the functional currency at the rates of exchange ruling at the transaction dates. Exchange gains and losses arising on foreign currency transactions and translation are recognised in the income statement.

The Company has only one class of share capital, i.e. ordinary shares of RM1.00 (equivalent to USD0.2632) each, which is classified as equity. External costs directly attributable to the issue of new shares are written-off to the share premium account or, where there is no such account, charged to the income statement.

Income from the sale of goods is recognised upon delivery of goods and customer’s acceptance. Interest income is recognised on an accrual basis.

Income taxes for the year comprise current tax and deferred tax.

Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is provided for under the balance sheet liability method in respect of all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base except for those temporary differences associated with goodwill, negative goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting nor taxable results at the time of the transaction.

A deferred tax liability is recognised for all taxable temporary differences whereas a deferred tax asset is recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted by the balance sheet date.

Short-term employee benefits such as wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated services are rendered by the employees.

As required by law, employers in Malaysia make contributions to the state pension scheme, Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the period in which the associated services are rendered by the employees.

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

The accounting policies for recognised financial instruments are disclosed in the individual policies associated with each item. The Company does not have any unrecognised financial instruments.

The carrying amounts of financial assets and liabilities with short maturity periods are assumed to approximate their fair values due to the short term nature of the instruments. The fair value of related party accounts receivable and payable are not practical to estimate based upon the related party nature of the underlying transactions.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The activities of the Company expose it to certain financial risks, including currency risk, interest rate risk, credit risk, liquidity risk and cash flow risk. The overall financial risk management objective of the Company is to maximise shareholders’ value by minimising the potential adverse impacts of these risks on its financial position, performance and cash flows.

The Board of Directors explicitly assumes the responsibilities of financial risk management which is carried out mainly through risk reviews and internal control systems.

The Company’s exposure to currency risk arises mainly from normal trading transactions denominated in foreign currencies.

The Company does not use any derivative financial instruments to manage its exposure to currency risk as the directors are of the opinion that the net exposure is not significant.

The Company’s exposure to interest rate risk arises mainly from borrowings.

The Company manages its exposure to interest rate risk by seeking to obtain the most favourable interest rates available without increasing its other financial risk exposures.

3.	Financial Risk Management (cont’d)

The Company’s exposure to credit risk arises mainly from receivables. The maximum credit risk exposure is best represented by the total carrying amount of these financial assets in the balance sheet.

The Company manages its exposure to credit risk by assessing counter parties’ financial standings on an ongoing basis, setting and monitoring counter parties’ limits and credit terms. The Company does not have any major concentration of credit risk other than the significant amount owing by a related party as disclosed in the financial statements.

The Company’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

The Company practises prudent liquidity risk management by maintaining sufficient cash and the availability of funding through certain committed credit facilities.

Property and equipment consist of the following as of October 5, 2007 and December 31, 2006  :-

	October 5, 2007		December 31, 2006
	USD		USD
Plant and machinery, factory tools and equipment	0		572,565
Electrical installation and renovation	0		15,013
Motor vehicles	0		14,974
Office equipment, furniture and fittings and computers	0		34,553
Total	0		637,105
Less : Accumulated depreciation	0		(452,185)
Property and equipment, net	0		184,920

Inventories consist of the following as of October 5, 2007 and December 31, 2006 :-

	October 5, 2007		December 31, 2006
	USD		USD
Raw materials	0		586,548
Work-in-progress	0		163,548
Finished goods	0		22,661
Goods-in-transit	0		1,133
Total	0		773,890
Inventory obsolescence reserve	0		(46,148)
	0		727,742

Prepaid and other current assets consists of the following as of October 5, 2007 and December 31, 2006 :-

	October 5, 2007		December 31, 2006
	USD		USD
Sundry deposits	0		953
Advance to suppliers	0		974
Prepaid expenses	0		15,481
Other	0		1,057
Total	0		18,465

7.	Accrued Expenses and Other

Accrued expenses and other consists of the following as of October 5, 2007 and December 31, 2006 :-

	October 5, 2007		December 31, 2006
	USD		USD
Accrued expenses	21,833		47,981
Other payables	0		52,346
Provisions	0		88,377
Total	21,833		188,704

	October 5, 2007		December 31, 2006
	USD		USD
Banker acceptance I	0		434,376
Banker acceptance IV	0		81,269
Export credit refinancing I	0		379,442
Export credit refinancing II	0		482,515
	0		1,377,602

The details of bank borrowings as of December 31, 2006 were as follows:-

Facility	Bank	Maturity	Interest
Banker acceptance I	Affin Bank Berhad	January - April 2007	3.75% - 3.80%
Banker acceptance IV	Malayan Banking Berhad	January 2007	3.47%
Export Credit Refinancing I	Malayan Banking Berhad	January - April 2007	4.25%
Export Credit Refinancing II	Southern Bank Berhad	February - March 2007	4.25%

Banker acceptance I was secured by one of the fixed deposits of the Company and guaranteed by Eastern Asia Technology Limited, which is the holding corporation of a substantial shareholder of the Company. All other bank borrowing were secured by the fixed deposits of the Company. The bank borrowings had been settled when payments are due.

 

The numerical reconciliation between the applicable tax rate, which is the statutory income tax rate, and the average effective tax rate is as follows :-

			For the Period Ended October 5,		For the Years Ended December 31,
			2007		2006		2005
			%		%		%
		Applicable tax rate	(27.00)		(28.00)		28.00
		Non-deductible expenses	11.91		8.77		1.75
		Tax exempt income from pioneer status	0.00		0.00		(15.88)
		Unrecognised in deferred tax assets	15.09		21.57		0.00
		Average effective tax rate	0.00		13.87		13.87

	October 5, 2007		December 31, 2006
	USD		USD
Balance at 1 January	0		25,618
Deferred tax - prior year	0		(25,618)
Balance at 5 October/31 December	0		0

The following represent related party transactions for each of the financial period/years ended October 5 and December 31 :-

	For the Period Ended October 5,		For the Years Ended December 31,
	2007 USD		2006 USD		2005 USD
Sale of goods to Wells-Gardner Electronics Corporation *	4,141,970		6,278,848		16,549,707
Purchase of goods from Wells-Gardner Electronics Corporation *	218,546		765,240		4,481,625
Management fee charged by Eastech Electronics (M) Sdn. Bhd. **	41,722		63,468		132,740
Purchase of goods from Eastech Electronics (M) Sdn. Bhd. **	0		419,572		4,041,554
Rental of premises charged by Eastech Electronics (M) Sdn. Bhd. **	32,826		53,337		51,340

*

A substantial shareholder which holds 50% of the equity interest in the Company.

**

A substantial shareholder which holds 50% of the equity interest in the Company.

12.	Reporting Periods And Comparative Figures

This set of financial statements has been presented for the period from January 1, 2007 to October 5, 2007. Accordingly, the comparative figures for the statements of income, changes in equity and cash flows and the related notes are not comparable as they were extracted from the annual audited financial statements of the Company for the financial years ended December 31, 2006 and 2005.

Subsequent to balance sheet date, the Company commences the process of liquidation on 1 November 2007.

On 26 December 2007, the Company made its first cash distribution to the shareholders amounting to approximately USD1,014,000.