The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Report. The Company prepares its financial statements in accordance with U.S. GAAP.

Year ended March 31, 2000 Compared to Year Ended March 31, 1999

The Company's net sales for the year ended March 31, 2000 were $60,958,000, an increase of $7,519,000 or 14.1% as compared to year ended March 31, 1999. Sales to Inter-Tel Incorporated ("Inter-Tel"), Kyocera Mita Industrial Co. (H.K.) Ltd. ("Mita") and VTech Communications Ltd. ("VTech"), the Company's three largest customers during the year ended March 31, 2000, represented approximately 71.4% of net sales for the year.

The increase in sales was mainly related to an increase in sales of injection-molded plastic products of $8,250,000, offset by a decrease in sales of electronic and metallic products of $731,000. This represented an increase of 27.4% and a decrease of 3.1% respectively, as compared with the net sales of such products in the year ended March 31, 1999. The increase in net sales from plastic operations was attributed to the increase in orders from its existing customer base together with the new orders from new customers. The decrease in net sales of electronic and metallic products was mainly attributed to the decrease in demand from its customers, especially customers which subcontracted for PCB product assembly, coupled with the reduction in selling prices in both OEM and subcontracted sales as compared to the year ended March 31, 1999.

Net sales to customers by geographic area are determined by reference to shipping destinations as directed by the Company's customers. During the year ended March 31, 2000, sales to China, North America, Hong Kong and Japan increased by $8,667,000, $3,415,000, $848,000 and $65,000, respectively, and sales to Europe decreased by $5,476,000, over fiscal 1999 levels.

The overall gross profit for the year ended March 31, 2000 was $22,696,000, representing a gross profit margin of 37.2%. This compares with the overall gross profit and gross profit margin of $21,260,000 or 39.8% for the year ended March 31, 1999. The decrease in gross margin of 2.6% was mainly attributable to the reduction in selling prices on both OEM and subcontracted sales as a result of intense competition in the Company's markets.

Selling, general and administrative expenses for the year ended March 31, 2000 were $11,970,000, amounting to 19.6% of total net sales, as compared to $10,364,000 or 19.4% of total net sales for the year ended March 31, 1999. The increase in selling, general and administrative expenses of $1,606,000 over fiscal 1999 was the increase in general and administrative expenses resulting from the improved business in fiscal 2000 over fiscal 1999.

As a result, operating income was $10,726,000 for the year ended March 31, 2000, a decrease of $170,000 or 1.6% as compared with the prior year.

During the year ended March 31, 2000, the Company acquired an additional 17.9% equity interest in its metal manufacturing subsidiary. As a result, minority interests represent the Company's 49% minority interest in both the electronics and metallic subsidiaries. The decrease in minority interest to $433,000 for the year ended March 31, 3000 from $1,575,000 for the year ended March 31, 1999 reflects the fact that the electronic and metallic business generated less profit in fiscal 2000 as compared to fiscal 1999.

As a result of the above factors, net income was $10,298,000 for the year ended March 31, 2000, an increase of $806,000 or 8.5%, as compared to the year ended March 31, 1999 and net income as a percentage of net sales decreased to 16.9% from 17.8%.

Year ended March 31, 1999 Compared to Year Ended March 31, 1998

The Company's net sales for the year ended March 31, 1999 were $53,439,000, a decrease of $12,730,000 or 19.2% as compared to the year ended March 31, 1998. Sales to Mita Inter-Tel , Behringer Holdings (Pte) Ltd. ("Behringer"), VTech and Namtai Electronic (Shenzhen) Co. Limited ("Namtai Shenzhen"), the Company's five largest customers during the year ended March 31, 1999, represented approximately 88.0% of net sales for the year.

The decrease in sales was due mainly to decreased sales in all product lines, consisting of decreases in sales of injection-molded plastic, electronic and metallic products of $2,669,000, $7,846,000 and $2,215,000, respectively, or decreases of 7.8%, 26.5% and 54.9% respectively as compared with the net sales in the prior year. The decrease in sales in the electronic division was mainly attributed to the substantial reduction in orders from subcontracted PCB assembly customers and the reduction in selling prices in both OEM and subcontracted sales as compared to the prior year. As regards to the plastics division, the reduction in orders from Mita and other customers were offset by the increase in demand from different customers.

Net sales to customers by geographic area are determined by reference to shipping destinations as directed by the Company's customers. During the year ended March 31, 1999, sales to China, Hong Kong, the United States and Europe decreased by $2,747,000, $2,001,000, $772,000 and $7,367,000, respectively, and sales to Japan increased by $157,000, over 1998 levels.

The overall gross profit for the year ended March 31, 1999 was $21,260,000, representing a gross profit margin of 39.8%. This compares with the overall gross profit and gross profit margin of $29,923,000 or 45.2% for the year ended March 31, 1998. The decrease in gross margin of 5.4% was mainly attributable to the reduction in selling prices on both OEM and subcontracted sales and the substantial reduction in orders of relatively higher margin subcontracted products from the Company's contract manufacturing operations in the year ended March 31, 1999.

Selling, general and administrative expenses for the year ended March 31, 1999 were $10,364,000, amounting to 19.4% of total net sales, as compared to $14,067,000 or 21.2% of total net sales for the year ended March 31, 1998. The decrease in selling, general and administrative expenses of $3,703,000 over the prior year was largely due to the stricter control in these expenses and the internal takeover of quality control and research and development support work during the year ended March 31, 1999.

As a result of the decrease in net sales, operating income was $10,896,000 for the year ended March 31, 1999, a decrease of $4,960,000 or 31.3% as compared with the prior year. The operating margin for the year ended March 31, 1999 was 20.4%, as compared to 24.0% in the previous year.

Minority interests represent the 49% and 66.9% minority interests in the Company's electronic and metallic manufacturing subsidiaries respectively. The decrease in minority interest to $1,575,000 for the year ended March 31, 1999 from $3,289,000 for the year ended March 31, 1998 reflects the reduction in profits generated by the contract electronic manufacturing business during the year ended March 31, 1999 as compared to the prior year. This offset the effect of a reduced loss generated by the Company's metallic manufacturing operations during the year ended March 31, 1999 as compared to the prior year.

As a result of the above factors, net income was $9,492,000 for the year ended March 31, 1999, a decrease of $3,479,000 or 26.8%, as compared to the year ended March 31, 1998 and net income as a percentage of net sales decreased slightly to 17.8% from 19.6%.