UNITEDTable STATESof Contents

~~SECURITIES~~UNITED ~~AND~~STATES ~~EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-K~~D.C. 20549

~~(MARK~~FORM ~~ONE)~~10-K

~~x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15~~(dMARK ONE) OF

~~THE~~x ANNUAL ~~SECURITIES~~REPORT ~~EXCHANGE~~PURSUANT ~~ACT~~TO OFSECTION ~~1934~~13 OR 15(d) OF

~~For~~THE ~~the~~SECURITIES ~~fiscal~~EXCHANGE ~~year~~ACT ~~ended~~OF ~~March 31,~~1934 ~~2006~~

ORFor the fiscal year ended March 31, 2007

~~¨ TRANSITION REPORT PURSUANT TO SECTION 13~~ OR ~~15(d)~~

OF¨ TRANSITION ~~THE~~REPORT ~~SECURITIES~~PURSUANT ~~EXCHANGE~~TO ~~ACT~~SECTION OF13 ~~1934~~OR 15(d)

~~For~~OF ~~the~~THE ~~transition~~SECURITIES ~~period~~EXCHANGE ~~from to~~ ACT OF 1934

~~Commission~~For ~~file~~the ~~number~~transition ~~0-29332~~period from to

~~PEAK~~Commission ~~INTERNATIONAL~~file ~~LIMITED~~number 0-29332

~~(Exact~~PEAK ~~name~~INTERNATIONAL ofLIMITED ~~registrant as specified in its charter)~~

Bermuda		Not applicable
(Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
Flat E & F, 19/F., CDW Building, 388 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
(Address of principal executive office)		(Zip Code)

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (852) 3193-6000


Bermuda		Not applicable
(Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Flat E & F, 19/F., CDW Building, 388 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
(Address of principal executive office)		(Zip Code)

~~Securities~~Registrant’s ~~registered~~telephone ~~pursuant~~number, toincluding ~~Section 12(b)~~area ~~of the Act~~code: ~~None~~(852) 3193-6000

Securities registered pursuant to Section 12(gb) of the Act: None

Title of each class		Name of each exchange on which registered
Common Stock, par value US $0.01 per share		NASDAQ National Market

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Title of each class		Name of each exchange on which registered
Common Stock, par value US $0.01 per share		NASDAQ Global Market

~~Yes~~Indicate ~~¨ No~~by xcheck mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

~~Indicate~~Yes by¨ No ~~check~~x ~~mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.~~

~~Yes~~Indicate ~~¨ No~~by xcheck mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

~~Indicate~~Yes by¨ No ~~check~~x mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Yes~~Indicate ~~x No~~by check mark whether the registrant ¨(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Indicate~~Yes by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ No x

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of isdelinquent afilers ~~large~~pursuant ~~accelerated~~to ~~filer,~~Item 405 anof ~~accelerated~~Regulation ~~filer~~S-K is not contained herein, orand awill ~~non-accelerated~~not ~~filer.~~be ~~See~~contained, ~~definition~~to the best of ~~“accelerated~~registrant’s ~~filer~~knowledge, ~~and~~in ~~large~~definitive ~~accelerated~~proxy ~~filer”~~or ininformation ~~Rule~~statements ~~12b-2~~incorporated by reference in Part III of ~~the~~this ~~Exchange~~Form ~~Act.~~10-K ~~(Check~~or ~~one):~~any amendment to this Form 10-K. ¨

~~Large~~Indicate ~~Accelerated~~by ~~Filer~~check ~~¨ Accelerated~~mark ~~Filer~~whether ~~¨ Non~~the registrant is a large accelerated filer, an accelerated filer, or a non-~~Accelerated~~accelerated ~~Filer~~filer. xSee definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~Large byAccelerated ~~check~~Filer ¨ Accelerated ~~mark~~Filer ~~whether the registrant is a shell company (as defined in Rule 12b~~¨ Non-2Accelerated ofFiler ~~the~~x ~~Exchange Act).~~

~~Yes~~Indicate ~~¨ No~~by xcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

~~The~~Yes ~~aggregate~~¨ No ~~market~~x value of the registrant’s Common Stock held by non-affiliates, based upon the closing price of the Common Stock on September 30, 2005, as reported by the Nasdaq National Market, was approximately $23,779,407. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding Common Stock, based on the filings with the Securities and Exchange Commission, have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

AsThe aggregate market value of the registrant’s Common Stock held by non-affiliates, based upon the ~~June~~closing price of the Common Stock on September 530, 2006, as reported by the ~~number~~NASDAQ ofGlobal ~~shares~~Market, was approximately $18,342,876. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding ~~was~~Common ~~approximately~~Stock, 12based on the filings with the Securities and Exchange Commission,~~420,389~~ have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

~~Documents~~As ~~Incorporated~~of byJune 5, ~~Reference~~ 2007, the number of shares of Common Stock outstanding was approximately 12,423,306.

~~Items~~Documents ~~10,~~Incorporated ~~11, 12, 13 and 14 of Part III are incorporated~~ by ~~reference~~Reference ~~from the Registrant’s proxy statement, which is expected to be filed with the Securities and Exchange Commission no later than 120 days following the end of the fiscal year covered by this report.~~

~~PEAK~~Items ~~INTERNATIONAL~~10, ~~LIMITED~~11, 12, 13 and 14 of Part III are incorporated by reference from the Registrant’s proxy statement, which is expected to be filed with the Securities and Exchange Commission no later than 120 days following the end of the fiscal year covered by this report.

2006Table FORMof 10-K Contents

~~TABLE~~ PEAK OFINTERNATIONAL ~~CONTENTS~~LIMITED

		Page
PART I		2
Item 1.	Business	2
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	18
Item 4.	Submission of Matters to a Vote of Security Holders	19
PART II		20
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Selected Consolidated Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 8.	Financial Statements and Supplementary Data	34
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	35
Item 9A.	Controls and Procedures	35
Item 9B.	Other Information	35
PART III		36
Item 10.	Directors and Executive Officers of the Registrant	36
Item 11.	Executive Compensation	36
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships and Related Transactions	36
Item 14.	Principal Accountant Fees and Services	36
PART IV		37
Item 15.	Exhibits and Financial Statement Schedules	37

2007 FORM 10-K

~~All~~TABLE ~~references~~OF toCONTENTS the “Company,” “Peak,” “we,” “us” or “our” in this Annual Report on Form 10-K (“Annual Report”) are references to Peak International Limited, a company incorporated under Bermuda law on January 3, 1997, and, unless the context otherwise requires, its subsidiaries and predecessors. All references to “Peak (HK)” in this Annual Report are to Peak Plastic & Metal Products (International) Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company and, unless the context otherwise requires, its subsidiaries and predecessors. References in this Annual Report to our historical business and operations assume that the corporate reorganization in 1997 (the “Restructuring”) by which, among other things, Peak (HK) became a wholly-owned subsidiary of the Company and the Company acquired its other subsidiaries, had already occurred as of the times to which the references relate. Any discrepancies in the tables included in this Annual Report between the amounts indicated and the totals thereof are due to rounding. All references to “US Dollars,” “US$” or “$” in this Annual Report are to United States dollars, references to “HK Dollars” or “HK$” are to Hong Kong dollars.

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The forward-looking statements reflect our view at the time of this Annual Report with respect to future events and financial performance. We intend for the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. These statements, which include statements regarding our beliefs regarding the benefits of our recycling business, our beliefs regarding our distribution capabilities, our beliefs regarding the benefits of our products, our beliefs regarding the benefits of our in-house tooling facilities, our expectation that we will meet our cash requirements for 2007 from cash flows from operations, our plans to expand capacity and replace fixed assets, the Company’s belief that it is not contractually obligated to pay taxes and other amounts owed by the factory at which the Company’s products are manufactured and its expectations regarding the assessment of any penalties on such amounts, the Company’s expected financial position, business and financing plans, our beliefs that our existing cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs in the ordinary course of business for at least the next 12 months, our expectation that we will be able to renegotiate the terms and conditions of our processing agreement, our beliefs that our operations in the PRC are now in compliance with the applicable PRC legal and regulatory requirements relating to environmental matters and custom duties, statements regarding intellectual property rights of third parties, statements regarding our critical accounting policies, and statements regarding the validity of lawsuits against the Company are forward-looking statements. Such forward-looking statements are identified by use of forward-looking words such as “anticipates,” “believes,” “plans,” “estimates,” “expects,” and “intends” or words or phrases of similar expression. These forward-looking statements are subject to various assumptions, risks and uncertainties, including but not limited to, economic conditions in the semiconductor and disk drive industries, any future economic downturn, demand for the Company’s products, the Company’s dependence on significant customers, technology developments affecting the Company’s products, the Company’s ability to raise additional capital if necessary, the price and availability of raw materials, fluctuations in currency markets, the outcome of lawsuits by and against the Company, difficulties related to working in the PRC, including regional government and processing partner relations and contracts, foreign currency exchange laws, taxation and health issues, and amounts the Company may have to pay for back taxes and social insurance contributions to the PRC tax authorities. Actual results could differ materially from those contemplated by the forward-looking statements as a result of these factors and those set forth under “Factors Which May Affect Operating Results” below. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard hereto or any change in events, conditions or circumstances on which any such statement is based. Investors are cautioned not to place undue reliance on these forward-looking statements.


		Page
PART I		2

Item 1.	Business	2

Item 1A.	Risk Factors	11

Item 1B.	Unresolved Staff Comments	19

Item 2.	Properties	19

Item 3.	Legal Proceedings	20

Item 4.	Submission of Matters to a Vote of Security Holders	20

PART II		21

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21

Item 6.	Selected Consolidated Financial Data	23

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	24

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 8.	Financial Statements and Supplementary Data	35

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	35

Item 9A.	Controls and Procedures	35

Item 9B.	Other Information	36

PART III		37

Item 10.	Directors, Executive Officers and Corporate Governance	37

Item 11.	Executive Compensation	37

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37

Item 13.	Certain Relationships and Related Transactions, and Director Independence	37

Item 14.	Principal Accountant Fees and Services	37

PART IV		38

Item 15.	Exhibits and Financial Statement Schedules	38

1Table of Contents

All references to the “Company,” “Peak,” “we,” “us” or ~~PART~~“our” Iin this Annual Report on Form 10-K (“Annual Report”) are references to Peak International Limited, a company incorporated under Bermuda law on January 3, 1997, and, unless the context otherwise requires, its subsidiaries and predecessors. All references to “Peak (HK)” in this Annual Report are to Peak Plastic & Metal Products (International) Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of Peak and, unless the context otherwise requires, its subsidiaries and predecessors. References in this Annual Report to our historical business and operations assume that the corporate reorganization in 1997, which we refer to as the restructuring, by which, among other things, Peak (HK) became a wholly-owned subsidiary of ours and we acquired our other subsidiaries, had already occurred as of the times to which the references relate. Any discrepancies in the tables included in this Annual Report between the amounts indicated and the totals thereof are due to rounding. All references to “US Dollars,” “US$” or “$” in this Annual Report are to United States dollars and references to “HK Dollars” or “HK$” are to Hong Kong dollars.

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities ~~ITEM~~Act of 1933, as amended, and Section 121E of the Securities and Exchange Act of 1934, as amended. ~~BUSINESS~~ The forward-looking statements reflect our view at the time of this Annual Report with respect to future events and financial performance. We intend for the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. Examples of forward-looking statements include statements regarding our beliefs and expectations regarding:

~~General~~• the benefits of our recycling business,

~~Peak~~• ~~International~~our ~~Limited~~distribution ~~is a leading supplier of precision engineered packaging products for the storage~~capabilities, transportation and automated handling of semiconductor devices and other electronic components. Our products are designed to interface with automated handling equipment used in the production and testing of semiconductor and electronic products. Our customers include semiconductor companies such as Texas Instruments, ST Microelectronics, Philips and Freescale (a spin off of the semiconductor assets of Motorola), disk drive manufacturers such as Seagate as well as subcontract assembly and test companies such as ASAT, STATS ChipPAC, Siliconware Precision Industries Co. Ltd (‘SPIL”), Amkor and ASE. Our products are designed to ensure that semiconductor devices and electronic components, which are often delicate and may have significant value, are protected from mechanical and electrical damage during storage, transportation and automated handling.

We• ~~principally produce matrix and disk drive trays, carrier tapes and reels. We also produce leadframe boxes and interleaves used in~~ the ~~storage~~benefits ~~and transportation~~ of ~~leadframes. In addition, we collect and sell recycled matrix trays. We believe that~~ our ~~recycling programs, whereby we collect and recycle~~ products ~~we manufacture and products manufactured by others~~, ~~enable us to expand our customer base by supplying both newly-manufactured and recycled products to customers.~~

~~Our~~• ~~main production facilities, located in Shenzhen in~~ the ~~People’s~~benefits ~~Republic~~ of China, or the PRC, and operated pursuant to a processing agreement with an unaffiliated PRC company, are equipped with injection molding machines, extruders, carrier tape machines, mixing machines, ultrasonic welding machines and other machinery and equipment. We maintain in-house tooling facilities capable of producing the molds used for production, dies and tooling for sale and spare parts for machines used in our ~~production processes. We also have~~ in-house compounding capabilities for the mixing, blending and pelletizing of raw materials used in our production processes. In addition, we maintain computer aided design, or CAD, stations, which are linked electronically to our sales offices to enable the sharing of design information. Finalized designs are transmitted electronically to our in-house tooling facilities ~~for the production of molds and dies.~~ ,

We• ~~maintain recycling programs through which we,~~ our ~~agents~~ability ~~and independent contractors collect used trays in Asia. We also purchase products~~ to recycle from independent dealers. We recycle trays manufactured by us or by others, collected from end users, such as surface mount technology, or SMT, companies and other types of assemblers of circuit boards and manufacturers of electronic products and systems. Most of the trays collected or purchased are then transported to our production facilities in Shenzhen, the PRC, where we process them through inspection, cleaning and anti-static coating, if appropriate. We then place the trays into inventory in our warehousing facilities pending sale to our customers. Recycled trays that do not meet our ~~quality~~cash requirements, or for ~~which~~fiscal ~~there~~2008 ~~is insufficient~~from ~~demand,~~our ~~are~~existing ~~ground~~cash and ~~reused~~cash inequivalents ~~the~~and ~~manufacturing~~cash ~~processes~~flows ~~for~~from ~~new products. Currently, we collect approximately one million trays each month for recycling. By using recycled trays in our~~ operations, ~~we are able to decrease our cost of goods sold, and increase our operating margin without increasing prices.~~

We• ~~maintain~~our ~~eight~~plans ~~sales offices, located in Hong Kong, the PRC, Taiwan, Singapore, Malaysia, and the United States, whereby direct sales are made~~ to ~~customers,~~expand ~~and~~capacity ~~representative offices in the PRC, the Philippines,~~ and ~~Italy,~~replace ~~that~~fixed ~~provide customers with technical information. We also sell our products through a sales agent located in South Korea. We maintain~~assets, either directly or through our local sales representatives, a network of 19 Just-in-Time, or JIT, warehouses located in Asia, North America and Europe, near our customers’ production facilities which allow us to rapidly meet our customers’ needs.

We• ~~changed~~the ~~our~~lack ~~principal~~of ~~executive~~a ~~office~~contractual obligation on our part to ~~Flat~~pay Etaxes &and F,other ~~19/F., CDW~~amounts ~~Building,~~owed ~~388~~by ~~Castle~~the ~~Peak~~main ~~Road,~~production ~~Tsuen~~facilities ~~Wan,~~located ~~New~~in ~~Territories,~~Shenzhen ~~Hong~~in ~~Kong,~~the ~~and~~People’s Republic of China at which our ~~main~~products ~~telephone~~are ~~number~~manufactured isand ~~(852) 3193-6000.~~the assessment of any penalties on such amounts,

2• our expected financial position, business and financing plans for the next 12 months,

~~Strategy~~• the sufficiency of our existing cash and cash equivalents and anticipated cash flow from operations to meet our anticipated cash needs in the ordinary course of business for at least the next 12 months,

~~Our~~• ~~objective~~the iscompliance toof ~~increase~~ our ~~market~~operations ~~presence~~ in ~~serving~~ the ~~semiconductor~~PRC ~~and~~with ~~electronics~~the ~~industries~~applicable byPRC ~~providing~~legal ~~top quality service, precision engineered packaging solutions~~ and ~~recycling~~regulatory ~~alternatives~~requirements relating to ~~manufacturers~~environmental ofmatters ~~semiconductor devices, disk drives~~ and ~~electronic~~custom ~~components through our integrated manufacturing capability and our recycling programs. The key elements of our business strategy are as follows:~~ duties,

~~Maintain~~• ~~Close~~intellectual ~~Customer~~property ~~Relationships. We~~rights ~~plan to maintain close relationships with our customers through a network~~ of ~~strategically~~ ~~located~~third ~~sales~~parties, customer service and product distribution sites and by working closely with our customers in developing precision engineered packaging solutions for the storage, transportation and automated handling of their products. We believe that our ability to distribute our products to customers located in Asia, North America and Europe allows us to compete effectively with other suppliers of packaging products to the semiconductor, disk drive and electronics industries. Customer reliance on quick delivery drives our product strategy with respect to both new and recycled products. We believe that our recycling programs enable us to expand our customer base by providing us with opportunities to supply both newly manufactured and recycled products to customers.

~~Shorten~~• ~~Delivery Time. We plan to attract and retain customers based on~~ our ~~ability~~critical toaccounting ~~deliver large quantities of products on short notice to meet customer demand. We believe that short delivery time is of particular importance to our customers because~~policies, ~~in the semiconductor~~ and electronics industries, requirements for packaging products are sometimes difficult to forecast accurately. We believe that stocking certain key products in our network of JIT warehouses, maintained either by us or by our local sales representatives reduces the amount of time required for the delivery of our products to our customers, thereby improving our responsiveness to customer requirements for flexibility in delivery and generally facilitating the improvement of inventory management by our customers. In addition, we believe our in-house tooling facilities and raw material mixing and compounding capabilities reduces the need to work with sub-contractors and enables us to achieve shorter production cycles.

~~Offer~~• a Broad Range of Products. Our current product offerings, which include matrix and disk drive trays, carrier tape and reels, allow us to service a broad range of customers, who often have needs across multiple product categories. We are also currently engaged in the ~~research~~validity ~~and development~~ of ~~new~~lawsuits ~~products,~~against with an emphasis on packaging products designed to carry high-value semiconductor and electronic components. Our production facilities have been formally approved, or “qualified,” by a number of our customers across our product categories. We believe that our customers value the range of our product offerings allowing us ~~to compete effectively~~. Our in-house design and tooling capabilities help reduce the time needed for the development of new products and product features and facilitate our development of custom products which typically requires different prototype stages during product development. Our in-house design and tooling capabilities also facilitate our development of new product features such as the “enhanced pocket strength,” “anti-reflective wall” and “high strength ring pedestal” features for our carrier tape products. In addition, our in-house raw material mixing and compounding capabilities help us create products to meet customer specifications as to certain characteristics such as color, transparency and hardness. Our recycling programs also enable us to supply a broad range of recycled trays to our customers.

~~Maintain~~Such ~~Volume~~forward-looking ~~Supply~~statements ~~Capabilities. We~~are identified by use of forward-looking words such as “anticipate,” “believe,” “plan,” to“estimate,” ~~continue~~“expect,” and “intend” or words or phrases of similar expression. These forward-looking statements are subject to ~~maintain~~various ~~our~~assumptions, ~~production~~risks and ~~tooling~~uncertainties, ~~capacities~~including but not limited to, economic conditions in the semiconductor and ~~our~~disk ~~recycling~~drive ~~programs~~industries, toany ~~maintain~~future economic downturn, demand for our ~~high~~products, ~~volume~~our ~~supply~~dependence ~~capabilities.~~on ~~Between~~significant ~~fiscal~~customers, ~~1993~~technology ~~and 2001~~developments affecting our products, weour ~~were~~ability ~~expanding~~to raise additional capital if necessary, the ~~production~~price ~~capacity~~and availability of ~~our~~raw ~~facilities~~materials, fluctuations in ~~Shenzhen~~currency markets, the outcome ~~PRC~~of inlawsuits ~~order~~by and against us, difficulties related to ~~meet~~working ~~growing~~in ~~demand~~the PRC, including regional government and processing partner relations and contracts, foreign currency exchange laws, taxation and health issues, and amounts we may have to pay for ~~our~~back ~~products~~taxes and social insurance contributions to the PRC tax authorities. ~~Our~~Actual ~~expansion~~results ~~plan~~could ~~was~~differ ~~put~~materially onfrom ~~hold~~those ~~during~~contemplated by the ~~slow~~forward-~~down~~looking ofstatements ~~the~~as ~~semiconductor~~a ~~industry~~result ~~between~~of ~~fiscal~~these ~~2002~~factors and those set forth under “Factors ~~2003.~~Which WeMay ~~paid~~Affect ~~approximately~~Operating $4Results” below.3 ~~million~~These ~~and~~forward-looking $5statements speak only as of the date hereof.6 ~~million~~We inexpressly ~~cash~~disclaim ~~for~~any ~~additional~~obligation ~~capital~~or ~~equipment~~undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in ~~fiscal~~our ~~2006~~expectations ~~and~~with ~~2005~~regard ~~respectively~~hereto or any change in events, ~~primarily~~conditions toor ~~increase~~circumstances ~~capacity~~on ~~and~~which any such statement is based. Investors are cautioned not to ~~handle~~place ~~new~~undue ~~products~~reliance on these forward-looking statements.

~~Emphasize~~1 Quality Assurance and Process Control. We plan to continue to maintain our standard of high quality products. We have a quality assurance and process control department which, as of March 31, 2006,

3Table of Contents

~~consisted~~PART ofI approximately 98 technicians and on-line process controllers. Quality assurance and process control procedures are performed at each major stage of production. These include the inspection of incoming raw materials, statistical process control at the injection molding for trays and reels and the inspection and testing of finished products. Our production facilities in Shenzhen, the PRC, obtained International Standard Organization, or ISO, 9002 and 14001 certification in October 1994 and August 2000 respectively and are subject to follow-up surveillance audits conducted semi-annually thereafter in accordance with normal ISO procedures. In addition, before making high volume purchases from us, customers generally require us to undergo a one to two month qualification process. These qualification processes often include on-site certification of our production facilities by members of the customer’s engineering and quality control staff. Our production facilities in Shenzhen, the PRC, have been qualified by many of our customers including ST Microelectronics, ASE, Seagate, Amkor, Freescale, Philips, Texas Instruments, SPIL, STATS ChipPAC and ASAT. We believe that in addition to our quality assurance and process control department, our in-house design and tooling facilities and raw material compounding capabilities have enabled us to control the quality of our products.

~~History~~ ITEM 1. BUSINESS

~~We were~~General organized in 1992 and were incorporated as an exempted company with limited liability in 1997 under the laws of Bermuda. In the same year, we combined with a manufacturer of integrated circuit shipping tubes with production facilities in Shenzhen, the PRC. We augmented our in-house tooling capability and commenced the production and sale of matrix trays. At the same time, we commenced the establishment of a distribution network of JIT warehousing facilities located near areas of semiconductor manufacturing activity. Additionally, we commenced the operation of our recycling programs through subsidiaries doing business under the trade name “SemiCycle.” In 1994, we commenced the sale of the reels used in tape-and-reel IC carriers. In 1996, we commenced the sale of the tapes used in such carriers and in 2001, we commenced the sale of matrix trays used by disk drive manufacturers. Since 1992, we have expanded the production capacity of our facilities in Shenzhen, the PRC in order to meet growing demand.

~~Markets~~Peak ~~That~~International WeLimited ~~Serve~~is a leading supplier of precision engineered packaging products for the storage, transportation and automated handling of semiconductor devices and other electronic components. Our products are designed to interface with automated handling equipment used in the production and testing of semiconductor and electronic products. Our customers include semiconductor companies such as Freescale (a spin-off of the semiconductor assets of Motorola), NXP Semiconductors (a semiconductor company founded by Philips), ST Microelectronics, and Texas Instruments, disk drive manufacturers such as Seagate as well as subcontract assembly and test companies such as Amkor, ASAT, ASE, Siliconware Precision Industries Co. Ltd (“SPIL”) and STATS ChipPAC. Our products are designed to ensure that semiconductor devices and electronic components, which are often delicate and may have significant value, are protected from mechanical and electrical damage during storage, transportation and automated handling.

~~Our~~We ~~products~~principally ~~are~~produce ~~used~~matrix ~~for~~and ~~the~~disk ~~storage~~drive trays, carrier tapes and ~~transportation~~reels. ofWe ~~semiconductor~~also ~~devices~~collect and ~~other~~sell ~~electronic~~recycled ~~components~~matrix ~~such~~trays. asWe ~~read-write~~believe ~~heads~~that ~~for~~our ~~disk drives,~~recycling ~~connectors~~programs, ~~resistors~~whereby we collect and ~~capacitors.~~recycle Weproducts ~~design~~we manufacture ~~our~~and products tomanufactured ~~interface~~by ~~with~~others, ~~automated~~enable ~~handling~~us ~~equipment~~to ~~used~~expand inour ~~the~~customer ~~manufacture~~base ~~and~~by ~~testing~~supplying ofboth ~~semiconductor~~newly-manufactured and ~~electronic~~recycled products to customers.

~~Semiconductors~~Our main production facilities, located in Shenzhen in the People’s Republic of China, or the PRC, and operated pursuant to a processing agreement with an unaffiliated PRC company, which we refer to as the Factory, are equipped with injection molding machines, extruders, carrier tape machines, mixing machines, ultrasonic welding machines and other machinery and equipment. We maintain in-house tooling facilities capable of producing the molds used for production, dies and tooling for sale and spare parts for machines used in our production processes. We also have in-house compounding capabilities for the mixing, blending and pelletizing of raw materials used in our production processes. In addition, we maintain computer aided design, or CAD, stations, which are linked electronically to our sales offices to enable the sharing of design information. Finalized designs are transmitted electronically to our in-house tooling facilities for the production of molds and dies.

~~Semiconductors~~We ~~are the~~maintain ~~basic~~recycling ~~building~~programs ~~blocks~~through which we, our agents and independent contractors collect used trays in Asia. We also purchase products to ~~create~~recycle afrom ~~variety~~independent dealers. We recycle trays manufactured by us or by others, collected from end users, such as surface mount technology, or SMT, companies and other types of assemblers of circuit boards and manufacturers of electronic products and systems. ~~Continual~~Most ~~improvements~~of inthe ~~semiconductor~~trays ~~process~~collected ~~and~~or ~~design~~purchased ~~technologies~~are ~~have~~then ~~enabled~~transported ~~the~~to our production offacilities ~~complex~~in Shenzhen, ~~highly~~the ~~integrated~~PRC, ~~circuits~~where ~~which~~we ~~provide~~process ~~faster execution,~~them ~~increased~~through ~~functionality~~inspection, cleaning and ~~greater~~anti-static ~~reliability~~coating, if appropriate. AsWe athen ~~result~~place the trays into inventory in our warehousing facilities pending sale to our customers. Recycled trays that do not meet our quality requirements, ~~semiconductor~~or for which there is insufficient demand, ~~has~~are ~~experienced~~ground ~~growth~~and reused in ~~markets~~the manufacturing processes for new products. ~~such~~Currently, aswe ~~computers,~~collect ~~communications,~~approximately ~~consumer~~one ~~electronic~~million ~~devices~~trays each month for recycling. By using recycled trays in our operations, ~~automotive~~we ~~products~~are ~~and~~able ~~industrial automation~~to decrease our cost of goods sold, and ~~control~~increase ~~systems~~our operating margin without increasing prices.

~~Semiconductors~~We ~~are~~maintain ~~often~~six ~~classified~~sales asoffices ~~discrete~~located ~~devices~~in ~~such~~Hong asKong, ~~individual~~the ~~diodes~~PRC, ~~transistors~~Taiwan, orSingapore, ~~ICs.~~Malaysia, Inand the United ~~ICs~~States, ~~thousands~~whereby ofdirect ~~functions~~sales are ~~combined~~made onto acustomers, ~~single~~and ~~chip~~representative ofoffices ~~silicon~~in tothe ~~form~~PRC, athe ~~more~~Philippines, ~~complex~~South ~~circuit~~Korea, ~~which~~and isItaly, ~~then~~that ~~encapsulated~~provide incustomers ~~plastic~~with technical information. We maintain, ~~ceramic~~either directly or ~~other~~through ~~materials~~our ~~(forming~~local sales representatives, a ~~module)~~network ~~for~~of ~~connection~~25 Just-in-Time, or JIT, warehouses located in Asia, North America, Europe and North Africa, near our customers’ production facilities which allow us to arapidly ~~circuit~~meet ~~board~~our customers’ needs.

InOur ~~pin-through-hole,~~principal orexecutive ~~PTH,~~office ~~technology,~~is ~~modules~~Flat ~~are~~E ~~attached~~& ~~to circuit board by pins~~F, ~~also called input~~19/~~output~~F., orCDW ~~I/O~~Building, ~~leads,~~388 ~~inserted~~Castle ~~through~~Peak ~~or soldered to plated holes in the printed circuit board. PTH is one of the earliest technologies in the assembly of printed circuit boards. PTH semiconductor devices~~Road, ~~such~~Tsuen ~~as PDIP (Plastic Dual In-Line Package) modules~~Wan, ~~are~~New ~~typically sorted and transported in IC shipping tubes. We produced shipping tubes until March 2005~~Territories, atHong ~~which point we ceased to manufacture~~Kong, ~~market~~ and ~~sell~~our ~~these~~main telephone ~~products~~number ~~due~~is ~~to their less favorable gross margins~~(852) 3193-6000.

InTable the more technologically advanced surface mount technology, or SMT, the leads on ICs and other electronic components are soldered to the surface of the printed circuit board rather than inserted into holes. SMT can accommodate a substantially higher number of leads than PTH, thereby permitting the board to interconnect a greater number of integrated circuits. This, in turn, allows tighter component spacing which permits a reduction in the dimensions of the printed circuit board. Because of their high lead counts, most of the very large scale integrated circuits are configured for surface mounting. Additionally, SMT allows components to be placed on both sides of the circuit board, thereby permitting even greater density. The substantially higher number of leads and finer lead-to-lead spacing or “pitch” in SMT products require packaging solutions which are more exact than for PTH products. In addition, certain SMT products are sensitive to moisture absorption and typically undergo a baking process before surface mounting, and consequently require robust packaging solutions which are resistant to high temperature. SMT semiconductor devices are typically stored and transported in matrix trays or tape-and-reel carriers, like the ones we produce. Contents

~~Electronic~~Strategy ~~Components~~

Our ~~products are~~objective ~~used~~is to ~~package~~increase ~~other~~our ~~electronic~~market ~~components,~~presence ~~including~~in ~~connectors,~~serving ~~resistors,~~the ~~capacitors~~semiconductor and ~~disk~~electronic ~~drive~~industries ~~read-write~~by ~~heads.~~providing ~~Connectors~~top ~~are~~quality ~~electro-mechanical~~service, ~~devices~~precision ~~that~~engineered ~~allow~~packaging ansolutions ~~electronic~~and ~~signal~~recycling toalternatives ~~pass from one device~~ to ~~another.~~manufacturers ~~They~~of ~~are used~~semiconductor ~~to connect wires~~devices, ~~cables,~~disk ~~printed~~drives ~~circuit boards, flat cable~~ and ~~other~~ electronic components ~~with~~through ~~each~~our ~~other~~integrated manufacturing capability and toour ~~related~~recycling ~~equipment~~programs. ~~Connectors~~In ~~are~~addition, ~~found~~we inintend ~~virtually~~to ~~all~~develop ~~electronic~~ products ~~including~~for ~~computers,~~entry ~~printers,~~into ~~disk~~new ~~drives,~~industry ~~modems~~segments, ~~VCRs,~~ ~~radios,~~including ~~medical~~our ~~instruments,~~recently ~~airplanes,~~announced ~~appliances,~~entry ~~cellular~~into the ~~telephones,~~medical ~~pagers~~disposables ~~and automobiles~~market. ~~Original~~The ~~equipment~~key ~~manufacturers~~elements inof ~~the~~our ~~electronics~~business ~~industry~~strategy ~~generally~~are ~~use~~as ~~connectors~~follows: ~~to complete the design and manufacture of their products.~~

~~Resistors~~Maintain ~~are~~Close ~~basic~~Customer Relationships. We ~~components~~plan ~~used~~to inmaintain ~~all~~close ~~forms~~relationships with our customers through a network of ~~electronic~~strategically ~~circuitry~~located tosales, ~~adjust~~customer service and ~~regulate~~product ~~levels~~distribution ofsites ~~voltage~~ and ~~current.~~by ~~They~~working ~~vary widely~~closely with our customers in developing precision ~~and~~engineered ~~cost~~packaging solutions for the storage, transportation and ~~are~~automated ~~manufactured~~handling of their products. We believe that our ability to distribute our products to customers located in ~~numerous~~Asia, ~~materials~~North America and ~~forms.~~Europe ~~Resistive~~allows ~~components~~us ~~may~~to compete beeffectively ~~either~~with ~~fixed~~other orsuppliers ~~variable,~~of ~~depending~~packaging onproducts ~~whether~~to the ~~resistance~~semiconductor, isdisk ~~adjustable~~drive ~~(variable)~~and orelectronic ~~not (fixed)~~industries. ~~Resistors~~Customer ~~can~~reliance ~~also~~on bequick ~~used~~delivery ~~as measuring~~drives ~~devices,~~our ~~such~~product asstrategy ~~resistive~~with ~~sensors.~~respect ~~Resistive~~to ~~sensors~~both ornew ~~strain~~and ~~gauges~~recycled ~~are~~products. ~~used~~We inbelieve that ~~experimental~~our ~~stress~~recycling ~~analysis~~programs ~~systems~~enable asus ~~well~~to asexpand inour ~~transducers~~customer ~~for~~base ~~electronic~~by ~~measurement~~providing ofus ~~loads~~with ~~(scales),~~opportunities ~~acceleration~~to supply both newly manufactured and ~~fluid~~recycled ~~pressure~~products to customers.

~~Capacitors~~Maintain ~~perform~~Short ~~energy~~Delivery ~~storage,~~Time. We ~~frequency~~plan ~~control,~~to ~~timing~~attract and ~~filtering~~retain ~~functions~~customers inbased ~~most~~on ~~types~~our ability to deliver large quantities of ~~electronic~~products ~~equipment~~on short notice to meet customer demand. ~~The~~We ~~more~~believe ~~important~~that ~~applications~~short ~~for~~delivery ~~capacitors~~time ~~are~~is of particular importance to our customers because in the semiconductor and electronic ~~filtering~~industries, requirements for ~~linear~~packaging ~~and~~products ~~switching~~are ~~power~~sometimes ~~supplies~~difficult to forecast accurately. We believe that stocking certain key products in our network of JIT warehouses, ~~decoupling~~maintained ~~and~~either ~~bypassing~~by us or by our local sales representatives, reduces the amount of ~~electronic~~time ~~signals~~required for ~~ICs~~the ~~and~~delivery ~~circuit~~of ~~boards~~our products to our customers, thereby improving our responsiveness to customer requirements for flexibility in delivery and ~~frequency~~generally ~~control~~facilitating the improvement of inventory management by our customers. In addition, ~~timing~~we believe our in-house tooling facilities and ~~conditioning~~raw ofmaterial ~~electronic~~mixing ~~signals~~and ~~for~~compounding acapabilities ~~broad~~reduce the ~~range~~need ofto ~~applications~~work with sub-contractors and enable us to achieve shorter production cycles.

~~Disk~~Offer a Broad Range of Products. Our current product offerings, which include matrix and disk drive ~~read-write~~trays, ~~heads~~carrier tape and reels, allow us to service a broad range of customers that often have needs across multiple product categories. We are also ~~electro-mechanical~~currently ~~devices~~engaged ~~employed~~in the research and development of new products, with an emphasis on packaging products designed to ~~access~~carry ~~data~~high-value ~~stored~~semiconductor and electronic components. In May 2007, we announced the general availability of our UltraLite™ packaging designs, which reduce the weight and cost of plastic products and their effect on ~~magnetic~~logistic ~~surfaces~~and supply chain costs versus traditional packaging designs in the market. We have filed patents and trademarks on the ~~enclosed~~UltraLite™ ~~within~~design, process and brand. Our production facilities have been formally approved, or “qualified,” by a number of our customers across our product categories. We believe that our customers value the ~~disk~~range ~~drives~~of our product offerings, allowing us to compete effectively. Our in-house design and tooling capabilities are intended to help to reduce the time needed for the development of new products and product features and facilitate our development of custom products which typically requires different prototype stages during product development. Our in-house design and tooling capabilities also facilitate our development of new product features such as the “enhanced pocket strength,” “anti-reflective wall” and “high strength ring pedestal” features for our carrier tape products. In addition, our in-house raw material mixing and compounding capabilities are intended to help us to create products to meet customer specifications as to certain characteristics such as color, transparency and hardness. Our recycling programs also enable us to supply a broad range of recycled trays to our customers.

Introduce New Products. We ~~and~~intend ~~Production~~to ~~Processes~~develop products for entry into new industry segments. We recently announced the availability for sale of three types of disposable medical cuvettes.

WeMaintain ~~produce~~Volume ~~matrix~~Supply ~~and~~Capabilities. We plan ~~disk~~to ~~drive~~continue ~~trays,~~to ~~carrier~~maintain ~~tapes~~our production and ~~reels~~tooling capacities and ~~sell~~our ~~recycled~~recycling ~~matrix~~programs ~~trays.~~to Inmaintain ~~addition,~~our wehigh ~~produce~~volume asupply ~~limited~~capabilities. ~~number~~We ofpaid ~~leadframe~~approximately ~~boxes~~$4.6 million and ~~leadframe~~$4.3 ~~interleaves~~million ~~used~~in cash for additional capital equipment in ~~the~~fiscal 2007 ~~storage~~and 2006 respectively, primarily to maintain capacity and ~~transportation~~ ofto ~~leadframes~~handle new products.

~~Our~~3 products are typically categorized by their dimensions and configurations, the type and size of semiconductor devices they carry, and their physical characteristics, in particular their resistance to deformation, or warpage, at various temperatures. Our products are also categorized by their electrostatic properties as conductive, dissipative or anti-static. Conductive and dissipative products are manufactured by adding carbon fiber or carbon powder to the plastic compound. Anti-static characteristics are achieved by applying a coating to the surface of the product to prevent the accumulation of surface electrostatic charges.

5Table of Contents

~~Tray~~Emphasize ~~Products~~Quality Assurance and Process Control. We plan to maintain our standard of high quality products. We have a quality assurance and process control department which, as of March 31, 2007, consisted of approximately 87 technicians and on-line process controllers. We perform quality assurance and process control procedures at each major stage of production. These include the inspection of incoming raw materials, statistical process control at the injection molding for trays and reels and the inspection and testing of finished products. Our production facilities in Shenzhen, the PRC, obtained International Standard Organization, or ISO, 9002 and 14001 certification in October 1994 and August 2000, respectively, and are subject to follow-up surveillance audits conducted semi-annually thereafter in accordance with normal ISO procedures. In addition, before making high volume purchases from us, customers generally require us to undergo a one to two month qualification process. These qualification processes often include on-site certification of our production facilities by members of the customer’s engineering and quality control staff. Our production facilities in Shenzhen, the PRC, have been qualified by many of our customers including Amkor, ASAT, ASE, Freescale, NXP Semiconductors, Seagate, SPIL, STATS ChipPAC, ST Microelectronics and Texas Instruments. We believe that in addition to our quality assurance and process control department, our in-house design and tooling facilities and raw material compounding capabilities have enabled us to control the quality of our products.

~~Our~~History IC tray products may be used to store and transport SMT semiconductor devices. The outer dimensions of IC matrix trays are generally fixed by industry standards prescribed by electronic industry associations such as the Joint Electron Device Engineering Council, or JEDEC, in the United States and the Electronic Industries Association of Japan, or EIAJ, in Japan. We sell high temperature trays (which may be baked to temperatures up to 180 degrees Celsius), low temperature trays and non-bakeable trays.

~~Our~~We ~~three-dimensional~~were ~~tray~~organized ~~products~~in ~~are~~1992 ~~used~~and were incorporated as an exempted company with limited liability in 1997 under the ~~transportation~~laws of ~~disk~~Bermuda. ~~drive~~In ~~components~~the same year, we ~~such~~combined aswith ~~read-write~~a ~~heads~~manufacturer of integrated circuit shipping tubes with production facilities in Shenzhen, the PRC. ~~Such~~We augmented our in-house tooling capability and commenced the production and sale of matrix trays. ~~are~~At ~~designed~~the tosame ~~interface~~time, ~~with~~we ~~automated~~commenced ~~equipment~~the establishment toof ~~allow~~a ~~high~~distribution network of JIT warehousing facilities located near areas of semiconductor manufacturing activity. Additionally, we commenced the operation of our recycling programs through subsidiaries doing business under the trade name “SemiCycle.” In 1994, we commenced the sale of the reels used in tape-~~speed~~and-reel ~~assembly~~IC carriers. In 1996, we commenced the sale of the tapes used in such carriers and in 2001, we commenced the sale of matrix trays used by disk ~~drives~~drive manufacturers. Since 1992, we have expanded the production capacity of our facilities in Shenzhen, the PRC in order to meet growing demand.

AtMarkets ~~the~~That ~~beginning~~We ofServe the tray production process, samples of incoming raw materials are inspected and tested for key material properties. Virgin raw materials are mixed and blended with other materials in accordance with our proprietary processes and production techniques and formed by injection molding machines into trays. The formed trays are then cleaned of surface contaminants. Trays that require anti-static coating are subsequently dipped in anti-static solution and dried. Trays made to be heat resistant undergo a baking process. Thereafter, we inspect samples of these new trays from each manufactured lot for visible defects and warpage, test for electrostatic discharge characteristics and check their dimensions prior to shipment.

~~Tape-~~Our products are used for the storage and transportation of semiconductor devices and other electronic components such as read-~~Reel~~write ~~Products~~heads for disk drives, connectors, resistors and capacitors. We design our products to interface with automated handling equipment used in the manufacture and testing of semiconductor and electronic products.

~~Our~~Semiconductors tape-and-reel products may be used to store and transport SMT semiconductor devices and other modules, as well as other products used in the electronic industry, such as connectors. Tape-and-reel carriers comprise three parts: reels, carrier tapes and cover tapes. The semiconductor devices or other products to be carried are placed in pockets formed in the carrier tape, which is sealed with cover tape and wound around a reel for storage and transportation. We commenced sales of reels in 1994 and sales of carrier tapes in 1996.

~~The~~Semiconductors ~~production~~are the ~~process~~basic ~~for~~building ~~reels~~blocks isused ~~similar~~ to ~~that~~create ~~for~~a ~~trays~~variety ~~except~~of ~~that~~electronic weproducts ~~use different raw materials~~ and ~~that~~systems. anContinual ~~additional~~improvements ~~process~~in ofsemiconductor ~~ultrasonic welding is required following the injection molding~~ process toand ~~weld~~design ~~two~~technologies ~~parts~~have ofenabled the ~~reel together. In the~~ production of ~~carrier tapes~~complex, wehighly ~~either~~integrated ~~purchase~~circuits ~~polystyrene~~which ~~pellets~~provide tofaster ~~extrude~~execution, ~~our~~increased ~~own~~functionality ~~sheets~~and orgreater wereliability. ~~purchase~~As ~~polystyrene~~a ~~or polycarbonate tapes from suppliers in large rolls~~result, ~~then~~semiconductor wedemand ~~slit~~has ~~the~~experienced ~~tapes~~growth toin ~~desired~~markets ~~widths.~~for Weproducts ~~form~~such ~~the~~as ~~carrier~~computers, ~~tapes~~communications, byconsumer aelectronic ~~combination of thermal~~devices, ~~air~~automotive ~~pressure~~products and ~~hole~~industrial automation ~~punching processes,~~ and ~~thereafter~~ ~~inspect~~control ~~the new carrier tapes for visible defects prior to shipment~~systems. ~~We resell cover tapes purchased from outside sources.~~

~~Other~~Semiconductors ~~Products~~are often classified as discrete devices such as individual diodes, transistors or ICs. In ICs, thousands of functions are combined on a single chip of silicon to form a more complex circuit, which is then encapsulated in plastic, ceramic or other materials (forming a module) for connection to a circuit board.

In ~~addition~~pin-through-hole, or PTH, technology, modules are attached to ~~the~~circuit ~~standard~~board ~~products~~by inpins, ~~our~~also ~~principal~~called ~~product~~input/output, ~~lines~~or I/O, weleads, ~~also~~inserted ~~produce~~through anor soldered ~~array~~to plated holes in the printed circuit board. PTH is one of ~~custom products~~the ~~which~~earliest ~~include~~technologies ~~customer-specific~~in ~~designs~~the assembly of ~~trays,~~printed ~~reels~~circuit ~~and~~boards. ~~carrier~~PTH ~~tapes~~semiconductor devices, such as ~~well~~PDIP as(Plastic ~~disc~~Dual ~~caddies~~In-Line Package) modules, are typically sorted and transported in IC shipping tubes. We ~~also~~produced ~~produce~~shipping ~~leadframe~~tubes ~~boxes~~until March 2005, at which point we ceased to manufacture, market and ~~leadframe~~sell ~~interleaves~~these products due to their less favorable gross margins.

~~Product~~4 ~~Development~~

WeTable are continually engaged in the study and development of new products, and product features and enhancements, with an emphasis on packaging products designed for the carriage of high-value components related to the semiconductor, disk drive and electronics industries. We undertake on-going research and development efforts which emphasize the development of features that require precision engineering in order to better serve our customer base. Research and development expenditures were $145,000, $157,000 and $236,000 for fiscal 2006, fiscal 2005 and fiscal 2004 respectively. Contents

6In the more technologically advanced surface mount technology, or SMT, the leads on ICs and other electronic components are soldered to the surface of the printed circuit board rather than inserted into holes. SMT can accommodate a substantially higher number of leads than PTH, thereby permitting the board to interconnect a greater number of integrated circuits. This, in turn, allows tighter component spacing which permits a reduction in the dimensions of the printed circuit board. Because of their high lead counts, most of the very large scale integrated circuits are configured for surface mounting. Additionally, SMT allows components to be placed on both sides of the circuit board, thereby permitting even greater density. The substantially higher number of leads and finer lead-to-lead spacing or “pitch” in SMT products require packaging solutions which are more exact than for PTH products. In addition, certain SMT products are sensitive to moisture absorption and typically undergo a baking process before surface mounting, and consequently require robust packaging solutions which are resistant to high temperature. SMT semiconductor devices are typically stored and transported in matrix trays or tape-and-reel carriers, like the ones we produce.

~~Recycling~~Electronic ~~Programs~~Components

WeOur ~~conduct~~products are ~~our~~used ~~collection~~to ~~operations~~package ~~through~~other ~~our~~electronic ~~subsidiaries~~components, including connectors, resistors, capacitors and ~~independent~~disk ~~contractors~~drive read-write heads. WeConnectors ~~recycle~~are ~~trays~~electro-mechanical ~~and~~devices ~~reels~~that ~~collected~~allow an electronic signal to pass from ~~end~~one ~~users~~device into ~~Asia~~another. They are used to connect wires, cables, printed circuit boards, flat cable and ~~Europe.~~other Weelectronic ~~also~~components ~~purchase~~with ~~products~~each toother ~~recycle~~and ~~from~~to ~~independent dealers~~related equipment. ~~Carrier~~Connectors ~~tape~~are found in virtually all electronic products ~~are~~including ~~generally~~computers, ~~not~~printers, ~~recycled.~~disk ~~Currently~~drives, wemodems, VCRs, ~~collect~~radios, ~~approximately~~medical ~~one~~instruments, ~~million~~airplanes, ~~trays~~appliances, ~~each~~cellular ~~month~~telephones, ~~for~~pagers ~~recycling~~and automobiles. Original equipment manufacturers in the electronic industry generally use connectors to complete the design and manufacture of their products.

~~The~~Resistors ~~trays~~are ~~collected~~basic ~~through~~components ~~our~~used ~~recycling~~in ~~programs~~all ~~are~~forms ~~primarily~~of ~~transported~~electronic circuitry to ~~our~~adjust ~~production~~and ~~facilities~~regulate inlevels ~~Shenzhen,~~of ~~the~~voltage ~~PRC~~and ~~where~~current. weThey ~~process~~vary widely ~~them,~~in ~~including~~precision ~~sorting,~~and ~~inspection~~cost, ~~cleaning~~ and ~~anti-static~~are ~~coating,~~manufactured ifin ~~appropriate.~~numerous Wematerials ~~then put~~and ~~these~~forms. ~~recycled~~Resistive ~~products~~components ~~into~~may ~~inventory~~be ineither ~~our~~fixed ~~warehousing~~or ~~facilities~~variable, ~~pending~~depending ~~sale~~on towhether ~~customers.~~the ~~Typical~~resistance ~~end~~is ~~users~~adjustable ~~include~~(variable) ~~SMT,~~or ~~and~~not ~~other~~(fixed). ~~types~~Resistors ofcan ~~assemblers~~also ofbe ~~circuit~~used ~~boards~~as measuring ~~and~~devices, ~~manufacturers~~such ofas ~~computers~~resistive ~~and other end products~~sensors. ~~Recycled~~Resistive ~~trays that~~sensors door ~~not~~strain ~~meet~~gauges ~~industry~~are ~~quality~~used ~~requirements,~~in orexperimental ~~for~~stress ~~which~~analysis ~~there~~systems isas ~~insufficient~~well ~~demand,~~as ~~are~~in ~~ground~~transducers ~~and recycled~~ for ~~use~~electronic inmeasurement ~~the~~of ~~manufacturing~~loads ~~processes~~(scales), ~~for~~acceleration ~~new~~and ~~products~~fluid pressure.

~~Some~~Capacitors ~~jurisdictions~~perform inenergy ~~which our packaging products are sold or used have adopted or proposed laws and regulations with a view to promote~~storage, ~~among~~frequency ~~other things~~control, ~~the~~timing ~~recycling~~and offiltering ~~packaging~~functions ~~materials. In addition, the ISO has incorporated environmental considerations~~ in ~~formulating~~most ~~its~~types ~~ISO~~of ~~14000~~electronic ~~quality standards~~equipment. WeThe ~~believe~~more ~~that our recycling programs provide our customers with opportunities to~~important ~~select~~applications ~~the~~for ~~packaging~~capacitors ~~products~~are ~~that~~electronic ~~best~~filtering ~~meet~~for ~~their~~linear ~~requirements in terms of cost~~ and ~~environmental~~switching ~~preferences.~~power ~~We believe that our recycling programs help our customers comply with environmental regulations and meet ISO standards with respect to environmental issues in several ways. First~~supplies, wedecoupling ~~provide a recycling alternative to the traditional disposal methods of landfill~~ and ~~incineration.~~bypassing ~~Second, our offerings~~ of ~~recycled~~electronic ~~products~~signals ~~assist~~for ~~our~~ICs ~~customers in complying with or meeting “recycle- content”~~ and ~~“green~~circuit ~~product” regulations~~boards, ~~standards~~and orfrequency ~~goals. In addition~~control, ~~our~~timing ~~homogeneous~~and ~~carrier~~conditioning ~~tapes~~of ~~may~~electronic besignals ~~more~~for ~~easily~~a ~~recycled~~broad range ~~than~~of ~~the laminated carrier tapes~~applications.

~~Customers~~Disk drive read-write heads are electro-mechanical devices employed to access data stored on magnetic surfaces enclosed within the disk drives.

~~Our~~Products ~~customers include semiconductor~~ and ~~component~~ ~~companies~~Production asProcesses well as subcontract assembly and test companies. We also sell products to manufacturers of disk drives, connectors, sockets, resistors, capacitors and other types of electronic components. In fiscal 2006, our top ten customers were STATS ChipPAC, Amkor, SPIL, ASE, ST Microelectronics, Philips, Seagate, Freescale, Texas Instruments and ASAT Limited who collectively accounted for 69.7% of our net sales in fiscal 2006. In fiscal 2005, these same customers accounted for 67.8% of our net sales. STATS ChipPAC accounted for 10.4% of our net sales in fiscal 2006 and ASE accounted for 11.4% of our net sales in fiscal 2005. No other customer accounted for 10% or more of our net sales in fiscal 2006 and 2005.

~~Pricing~~We produce matrix and disk drive trays, carrier tapes and reels and sell recycled matrix trays.

~~The~~Our products ~~price~~are ~~quotations~~typically wecategorized ~~provide~~by ~~generally contemplate~~their dimensions and configurations, the ~~delivery~~type and size of ~~products~~semiconductor ~~within~~devices ~~two~~they ~~weeks~~carry, ofand ~~the~~their ~~receipt~~physical ofcharacteristics, ~~purchase~~in ~~orders~~particular their resistance to deformation, or warpage, at various temperatures. Our Weproducts ~~charge~~are ~~higher~~also ~~prices~~categorized ~~when~~by ~~the~~their ~~customer~~electrostatic ~~desires~~properties ~~shorter~~as ~~delivery~~conductive, ~~time~~dissipative or ~~additional~~anti-static. ~~services,~~Conductive ~~such~~and asdissipative ~~local~~products ~~warehousing,~~are ~~special~~manufactured ~~packaging~~by ~~provisions~~adding carbon fiber or ~~special~~ ~~markings~~carbon onpowder to the ~~product~~plastic compound. AsAnti-static characteristics aare ~~general~~achieved ~~policy,~~by weapplying ~~price~~a ~~our~~coating ~~recycled~~to ~~products~~the atsurface aof ~~discount~~the product to prevent the ~~price~~accumulation of ~~corresponding~~surface ~~new~~electrostatic ~~products~~charges.

~~Sales and~~5 ~~Marketing~~

WeTable maintainof eight sales offices, located in Hong Kong, the PRC, Taiwan, Singapore, Malaysia, and the United States, whereby direct sales are made to customers, and representative offices in the PRC, the Philippines, and Italy, that provide customers with technical information. We also sell our products through a sales agent located in South Korea. Contents

WeTray ~~generally~~Products make our sales pursuant to purchase orders from our customers. Therefore, for the most part we do not have long-term agreements with or commitments from our customers for the purchase of products. While customers typically provide us with one-to two-month forecasts of their requirements, forecasts do not constitute binding orders.

7Our IC tray products may be used to store and transport SMT semiconductor devices. The outer dimensions of IC matrix trays are generally fixed by industry standards prescribed by electronic industry associations such as the Joint Electron Device Engineering Council, or JEDEC, in the United States and the Electronic Industries Association of Japan, or EIAJ, in Japan. We sell high temperature trays (which may be baked to temperatures in excess of 180 degrees Celsius), low temperature trays and non-bakeable trays.

~~The~~Our ~~following~~three-dimensional ~~table~~tray ~~sets~~products ~~forth~~are ~~the~~used ~~geographic~~in ~~regions~~the transportation of ~~our~~disk ~~net~~drive components ~~sales~~such ~~for~~as ~~the~~read-write ~~periods indicated~~heads. ~~For more~~Such ~~details,~~trays ~~see~~are ~~Note~~designed ~~21 of Notes~~ to ~~our~~interface ~~Consolidated~~with ~~Financial~~automated ~~Statements~~equipment ~~included~~to ~~elsewhere~~allow inhigh-speed ~~this~~assembly ~~Annual~~of ~~Report~~disk ~~on Form 10-K~~drives.

	Year Ended March 31,
	2006		2005		2004
North Asia	61.8	%	61.6	%	59.7	%
South Asia	26.9		27.2		29.6
North America	7.8		5.6		6.1
Europe	3.5		5.6		4.6
	100.0	%	100.0	%	100.0	%

At the beginning of the tray production process, samples of incoming raw materials are inspected and tested for key material properties. Virgin raw materials are mixed and blended with other materials in accordance with our proprietary processes and production techniques and formed by injection molding machines into trays. The formed trays are then cleaned of surface contaminants. Trays that require anti-static coating are subsequently dipped in anti-static solution and dried. Trays made to be heat resistant undergo a baking process. Thereafter, we inspect samples of these new trays from each manufactured lot for visible defects and warpage, test for electrostatic discharge characteristics and check their dimensions prior to shipment.

~~North Asia consists of the PRC, Hong Kong, the Philippines, Taiwan, Japan~~ Tape-and-Reel ~~Korea~~Products ~~while South Asia consists of Singapore, Malaysia and Thailand.~~

~~Distribution~~Our tape-and-reel products may be used to store and transport SMT semiconductor devices and other modules, as well as other products used in the electronic industry, such as connectors. Tape-and-reel carriers comprise three parts: reels, carrier tapes and cover tapes. The semiconductor devices or other products to be carried are placed in pockets formed in the carrier tape, which is sealed with cover tape and wound around a reel for storage and transportation. We commenced sales of reels in 1994 and sales of carrier tapes in 1996.

WeThe ~~maintain,~~production ~~either~~process ~~directly~~for orreels ~~through~~is ~~our~~similar ~~sales~~to ~~representatives~~that for trays, aexcept that ~~network~~we ofuse ~~warehouses~~different ~~located~~raw ~~near~~materials ~~the~~and ~~production~~an ~~facilities~~additional process of ~~our~~ultrasonic ~~customers.~~welding ~~The~~is required following ~~table~~the ~~sets~~injection ~~forth~~molding ~~the~~process ~~locations~~to weld two parts of the ~~warehouses~~reel ~~that~~together. In the production of carrier tapes, we either purchase polystyrene pellets to extrude our own sheets or we purchase polystyrene or ~~our~~polycarbonate ~~local~~tapes ~~sales~~from ~~representatives~~suppliers ~~maintain~~in large rolls, then we slit the tapes to desired widths. We form the carrier tapes by a combination of thermal, air pressure and hole punching processes, and thereafter inspect the new carrier tapes for visible defects prior to shipment. We resell cover tapes purchased from outside sources.

~~Asia~~Other ~~North~~Products ~~America~~and ~~Europe~~New ~~Africa~~Product ~~Malaysia~~Introduction ~~(two) Newark, California, U.S.A. Malta Morocco The PRC (five) Taiwan (one) Thailand (two) The Philippines (three) Singapore (two) South Korea (one)~~

WeIn ~~also~~addition ~~offer~~to ~~drop~~the ~~shipment~~standard ~~services~~products ~~for~~in our ~~products~~principal product lines, ~~which~~we ~~provide~~also ~~for~~produce ~~the~~an ~~shipment~~array of ~~our~~ custom products ~~directly~~which toinclude ~~end~~customer-~~users~~specific ~~designated~~designs byof ~~our~~trays, ~~customers.~~reels ~~Because~~and ~~drop~~carrier ~~shipment~~tapes, ~~prohibits~~as ~~our~~well ~~customers~~as ~~from~~disc ~~inspecting~~caddies. ~~our~~We intend to develop products ~~before~~for ~~their~~entry ~~receipt~~into bynew ~~the~~industry ~~end~~segments. ~~user,~~We recently announced the ~~quality~~availability offor ~~our~~sale ~~products~~of isthree antypes ~~important~~of ~~consideration~~disposable ~~for~~medical ~~our customers~~cuvettes.

~~Customers~~Product ~~generally~~Development place purchase orders with our sales office or sales agents near their locations. The orders are then entered into our computerized tracking system for processing by our sales and customer service staff. Employees at our production facilities in Shenzhen, the PRC generally respond to the local sales office upon receipt of the order with a committed shipping date.

~~Our~~We ~~office~~are continually engaged in ~~Hong~~the ~~Kong~~study isand ~~responsible~~development ~~for~~of ~~invoicing~~new ~~local~~products, ~~sales~~product ~~offices~~features and ~~sales~~enhancements, ~~agents~~with an emphasis on packaging products designed for the carriage of high-value components related to the semiconductor, ~~who~~disk drive and electronic industries. We undertake on-going research and development efforts which emphasize the development of features that require precision engineering in ~~turn~~order ~~issue~~to better serve our customer ~~invoices~~base. Research and ~~handle collections~~development expenditures were $172,000, $145,000 and $157,000 for fiscal 2007, fiscal 2006 and fiscal 2005, respectively.

~~Raw~~6 ~~Materials~~

WeTable can generally purchase the raw materials we use in the production of trays and reels from a variety of sources worldwide that charge similar prices. We purchase raw materials for trays principally from eight suppliers located in the Singapore, Malaysia, Australia, Japan, Korea and the PRC, while raw materials for reels are generally sourced from Korea and Malaysia. We purchase the polystyrene material and polycarbonate sheet used in our carrier tapes production process, as well as cover tapes, from suppliers located in Japan, Korea, Thailand, Australia, the United States and Europe. Contents

8Recycling Programs

We ~~generally~~conduct ~~order~~our ~~the~~collection ~~various~~operations ~~raw~~through ~~materials used in~~ our ~~production~~subsidiaries ~~processes one~~ and aindependent ~~half months before the materials are delivered to us~~contractors. We ~~try~~recycle totrays ~~maintain~~and anreels ~~inventory~~collected offrom ~~raw~~end ~~materials~~users ~~for~~in ~~approximately~~Asia ~~two~~and toEurope. ~~three~~We ~~months~~also ofpurchase ~~estimated~~products ~~production~~to ~~requirements~~recycle atfrom ~~our facilities in Shenzhen, the PRC~~independent dealers. ~~Recycled~~Carrier ~~trays~~tape ~~that~~products ~~we or our agents collect~~ are ~~initially~~generally ~~accounted~~not ~~for as part of our inventory of raw materials~~recycled. ~~After~~Currently, ~~being~~we ~~sorted~~collect ~~and~~approximately ~~processed,~~one ~~recycled~~million trays ~~that~~each ~~are~~month ~~to be reused are subsequently accounted~~ for ~~as part of our inventory of finished goods~~recycling.

~~Quality~~The ~~Assurance~~trays collected through our recycling programs are primarily transported to our production facilities in Shenzhen, the PRC where we process them, including sorting, inspection, cleaning and ~~Process~~anti-static ~~Control~~coating, if appropriate. We then put these recycled products into inventory in our warehousing facilities pending sale to customers. Typical end users include SMT, other types of assemblers of circuit boards and manufacturers of computers and other end products. Recycled trays that do not meet our quality requirements, or for which there is insufficient demand, are ground and recycled for use in the manufacturing processes for new products.

WeSome ~~maintain~~jurisdictions ~~a quality~~in ~~assurance~~which ~~and~~our ~~process~~packaging ~~control~~products ~~department.~~are Wesold ~~perform~~or ~~quality~~used ~~assurance~~have ~~and~~adopted ~~statistical~~or ~~process~~proposed ~~control~~laws ~~procedures~~and atregulations ~~each~~with ~~major~~a ~~stage~~view ofto ~~production~~promote, ~~including~~among other things, the ~~inspection~~recycling of ~~raw~~packaging materials. In addition, ~~statistical~~the ~~process~~ISO has ~~control~~incorporated atenvironmental ~~the~~considerations ~~injection molding~~in ~~(for~~formulating ~~trays~~its ~~and~~ISO ~~reels)~~14000 ~~and~~quality ~~extrusion~~standards. ~~(for~~We ~~carrier~~believe ~~tapes)~~that ~~stages~~our ~~and~~recycling ~~the~~programs ~~inspection~~provide ~~and~~our ~~testing~~customers ofwith ~~finished~~opportunities to select the packaging products. Wethat ~~also~~best ~~conduct~~meet ~~“qualification”~~their ~~procedures~~requirements ~~for~~in ~~our~~terms of ~~raw~~cost ~~material~~and ~~suppliers~~environmental preferences. We believe that, inour ~~addition~~recycling toprograms help our ~~quality~~ ~~assurance~~customers comply with environmental regulations and ~~process~~meet ~~control~~ISO ~~department,~~standards ~~our~~with ~~in-house~~respect ~~design~~to ~~and~~environmental ~~tooling~~issues ~~facilities~~in ~~and~~several ~~compounding~~ways. ~~capabilities~~First, ~~have~~we ~~enabled~~provide usa recycling alternative to ~~control~~ the ~~quality~~traditional disposal methods of landfill and incineration. Second, our ~~products~~offerings ~~and~~of ~~that~~recycled ~~such~~products ~~integrated~~assist ~~quality~~our ~~assurance~~customers ~~system~~in ~~enables~~complying uswith toor ~~ensure end~~meeting “recycle-content” and “green product” ~~integrity~~regulations, standards ~~and~~or togoals. ~~maximize~~In ~~customer~~addition, ~~value~~our homogeneous carrier tapes may be more easily recycled than the laminated carrier tapes.

~~Our~~Customers production facilities in Shenzhen, the PRC were certified as meeting the ISO 9002 and 14001 quality standards by the ISO in October 1994 and in August 2000 respectively, and are subject to follow-up surveillance audits conducted semi-annually thereafter in accordance with normal ISO procedures. The ISO is an organization formed by delegates from member countries to establish international quality assurance standards for products and manufacturing processes. The certification process involves subjecting our production processes and our quality management systems to review and surveillance for periods as long as nine months. The ISO certification is required by certain European countries in connection with sales of industrial products in such countries. In addition, such certification provides independent verification to our customers as to the quality control in our manufacturing processes and many of our customers require ISO certification as a prerequisite for purchasing from us.

~~Before~~Our ~~making~~customers ~~high~~include ~~volume~~semiconductor ~~purchases~~and ~~from~~component ~~us,~~companies ~~prospective~~as ~~customers~~well ~~generally~~as ~~require~~subcontract ~~our~~assembly ~~production~~and ~~facilities~~test tocompanies. ~~undergo~~We aalso ~~one~~sell products to ~~two month~~manufacturers ~~“qualification”~~of ~~process.~~disk ~~These~~drives, ~~qualification~~connectors, ~~processes~~sockets, ~~often~~resistors, ~~include~~capacitors ~~on-site~~and ~~certification~~other types of electronic components. In fiscal 2007, our ~~production~~top ~~facilities~~ten bycustomers ~~members~~were ofAmkor, aASAT, ~~customer’s~~ASE, ~~engineering~~Freescale, NXP Semiconductors, Seagate, SPIL, STATS ChipPAC, ST Microelectronics and Texas ~~quality~~Instruments, ~~control~~which ~~staff~~collectively accounted for 67.4% ~~Our~~of ~~production~~our ~~facilities~~net sales in ~~Shenzhen,~~fiscal ~~the~~2007. ~~PRC have~~In ~~been~~fiscal ~~qualified~~2006, bythese same customers ~~like~~accounted STfor ~~Microelectronics,~~69.7% ~~ASE,~~of ~~Seagate,~~our ~~Amkor,~~net ~~Freescale,~~sales. ~~Philips,~~In ~~Texas~~fiscal ~~Instruments~~2007, ~~Siliconware~~no ~~Precision~~customer ~~Industries~~accounted ~~Co.,~~for ~~Ltd~~10% or more of our net sales. ~~(“SPIL”)~~In fiscal 2006, only STATS ChipPAC ~~and~~accounted ~~ASAT~~for 10.4% of our net sales.

~~Competition~~Pricing

The ~~markets~~price ~~for~~quotations ~~our~~we provide generally contemplate the delivery of products ~~and services~~within ~~are~~two ~~highly~~weeks ~~competitive~~after the receipt of purchase orders. ~~Our~~We ~~products~~charge ~~compete~~higher prices ~~with~~when ~~similar~~the ~~products~~customer ~~manufactured~~desires byshorter ~~other~~delivery ~~companies~~time or additional services, ~~some~~such ofas ~~which~~local ~~have~~warehousing, ~~substantially~~special ~~greater~~packaging ~~financial~~provisions ~~resources~~or ~~than~~special markings on the product. As a general policy, we doprice our recycled products at a discount to the price of corresponding new products.

WeSales ~~classify our competitors as large diversified manufacturers, large single-product manufacturers~~ and ~~small~~Marketing local job-shop style manufacturers. Large diversified manufacturers are typically divisions of large multinational companies which compete with us in markets for more than one product. Large single-product manufacturers typically have international operations similar to ours. Small local job-shop style manufacturers typically operate only within certain geographic regions, such as Taiwan and Singapore. We are not aware that any of our major competitors offer the range of products and services that we offer. We believe that we compete with large diversified manufacturers through our focus on serving the semiconductor, disk drive and electronic industries, with large single-product manufacturers through our broad range of product offerings and with smaller local job-shop style manufacturers through our international organization which enables us to meet the requirements of multinational customers with several production facilities at various locations.

9We maintain six sales offices located in Hong Kong, the PRC, Taiwan, Singapore, Malaysia, and the United States, whereby direct sales are made to customers, and representative offices in the PRC, the Philippines, South Korea, and Italy, that provide customers with technical information.

We ~~believe~~generally ~~that~~make ~~the~~our ~~principal~~sales ~~competitive~~pursuant ~~factors~~to inpurchase ~~the~~orders ~~markets~~from our customers. Therefore, for ~~our~~the ~~products~~most ~~and~~part ~~services~~we ~~are responsiveness~~do ~~and~~not ~~flexibility~~have ~~(including~~long-term ~~short~~agreements ~~delivery~~with ~~cycles~~or ~~and~~commitments from our customers for the ~~ability~~purchase toof ~~supply~~products. ~~large~~While ~~quantities~~customers ontypically ~~short~~provide ~~notice),~~us ~~price,~~with ~~product~~one ~~quality~~to ~~and~~two ~~range~~month forecasts of ~~products~~their ~~and~~requirements, forecasts ~~services~~do ~~available~~not constitute binding orders.

~~Environmental~~7 ~~Matters~~

WeTable are subject to various laws, rules and regulations in the PRC regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. We believe that we are in substantial compliance with applicable laws, rules and regulations relating to the protection of the environment and that our compliance will have no material effect on our capital expenditures, earnings or competitive position. Contents

~~Employees~~The following table sets forth the geographic regions of our net sales for the periods indicated. For more details, see Note 22 of “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report on Form 10-K.

As of March 31, 2006, we had 136 employees at our offices located in Asia, North America and Europe. Our employees are not covered by any collective bargaining agreements.


	Year Ended March 31,
	2007		2006		2005
North Asia	59.8	%	61.8	%	61.6	%
South Asia	27.9		26.9		27.2
North America	7.8		7.8		5.6
Europe	4.5		3.5		5.6

	100.0	%	100.0	%	100.0	%

~~Our~~North ~~main~~Asia ~~production~~consists ~~facilities~~of ~~in Shenzhen,~~ the ~~PRC~~ ~~are operated pursuant to a processing agreement with an unaffiliated~~ PRC, ~~company~~Hong ~~initially~~Kong, ~~entered into in May 1987 and subsequently amended and renewed in May 1994 and December 1996. We entered into~~ the ~~processing agreement with the unaffiliated PRC company (“processing partner”)~~Philippines, ~~which was formed by the Shenzhen Municipal Longgang District Foreign Economic Service Company~~Taiwan, aJapan ~~company~~and ~~controlled~~Korea bywhile ~~the~~South Asia ~~local~~consists ~~government~~ of ~~the~~Singapore, ~~Longgang~~Malaysia ~~District~~and ~~of Shenzhen~~Thailand. ~~The current term of the processing agreement expires on May 28, 2016.~~

InDistribution accordance with the processing agreement, we provide our processing partner with machinery, equipment and fittings, raw materials, assessorial and packaging materials required for manufacturing our products. These assets are the property of the Company.

~~Under~~We ~~the processing agreement~~maintain, weeither ~~pay~~directly aor ~~processing~~through ~~fee monthly to the processing partner for production of~~ our ~~products~~sales ~~at the factory~~representatives, ~~which~~a ~~covers salaries~~network of ~~the~~warehouses ~~factory~~located ~~workers,~~near ~~expenses~~the ~~incurred~~production byfacilities ~~our processing partner for providing labor safety products to factory workers, fees~~ of our ~~processing partner and the factory’s workers and amounts for various social insurance~~customers. The ~~processing~~ ~~partner~~following istable ~~responsible~~sets ~~for~~forth ~~dealing with all matters relating to~~ the ~~import~~locations ~~and export~~ of ~~raw materials and our products, as well as providing adequate personnel for~~ the ~~operation~~warehouses ~~of the factory. In practice,~~ that we ~~have~~or ~~broadly interpreted~~ our ~~right~~local tosales ~~supervise~~representatives ~~the factory and have participated broadly in the recruiting, supervision and compensation of factory workers and in the operation of the factory~~maintain. ~~As of March 31, 2006, the personnel employed at the production facilities in Shenzhen, the PRC by the processing partner, numbered approximately 1,541.~~

~~Insurance~~Asia North America Europe North Africa Malaysia (three) U.S.A. (two) Malta Morocco The PRC (four) Italy Taiwan (three) Thailand (three) The Philippines Singapore (two) South Korea (four)

We ~~maintain~~also ~~insurance~~offer ~~policies~~drop ~~covering~~shipment ~~risks~~services offor ~~losses~~our ~~due to fire~~products, ~~flood~~which ~~and~~provide ~~other~~for ~~natural~~the ~~disasters.~~shipment ~~Our insurance policies cover certain~~ of our ~~buildings,~~products ~~machinery~~directly ~~and~~to ~~equipment,~~end-users ~~raw~~designated ~~materials~~by ~~and~~our ~~inventory~~customers. WeBecause ~~also~~drop ~~maintain~~shipment ~~business~~prohibits ~~interruption~~our ~~insurance.~~customers ~~Significant~~from ~~damage~~inspecting ~~to any of~~ our ~~production~~products ~~facilities,~~before ~~whether~~their asreceipt aby ~~result~~the ofend ~~fire or other causes~~user, ~~would have a material adverse effect on our results of operations and financial condition. Additionally,~~ we ~~maintain~~believe ~~directors~~that ~~and officers insurance covering~~ the ~~payment~~quality ~~and defense~~ of ~~certain claims asserted against~~ our ~~directors~~products ~~and~~is ~~officers.~~an Weimportant ~~are not insured against the~~consideration ~~loss~~for of our ~~key personnel~~customers.

~~Patents~~Customers generally place purchase orders with our sales or representative offices near their locations. The orders are then entered into our computerized tracking system for processing by our sales and ~~Trademarks~~customer service staff. Employees at our production facilities in Shenzhen, the PRC generally respond to the local sales office upon receipt of the order with a committed shipping date.

WeOur ~~have~~office ~~obtained several patents~~ in ~~the~~Hong ~~United~~Kong ~~States~~is ~~and~~responsible ~~have~~for ~~additional~~invoicing ~~patent~~local ~~applications~~sales ~~pending~~offices, inwhich ~~the United States and~~ in ~~several~~turn ~~Asian~~issue ~~countries~~customer ~~in which we operate. We do not believe that these patents~~invoices ~~provide~~and ahandle ~~competitive advantage to us~~collections.

10Raw Materials

~~Available~~We ~~Information~~can generally purchase the raw materials we use in the production of trays and reels from a variety of sources worldwide that charge similar prices. We purchase raw materials for trays principally from seven suppliers located in Singapore, Malaysia, Taiwan, Japan, Korea, the PRC, the United States and Europe while raw materials for reels are generally sourced from Hong Kong and Korea. We purchase the polystyrene material and polycarbonate sheet used in our carrier tape production process, as well as cover tapes, from suppliers located in Japan, Korea, Singapore, Hong Kong, the United States and Europe.

~~We file with the Securities and Exchange Commission (the “SEC”) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form~~ 8-K and amendments to reports to be filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the Public Reference Room by calling 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

OurTable internet address is www.peakf.com. We make available, free of charge, through our internet website copies of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Information contained on our website is not incorporated by reference unless specifically referenced herein. Contents

We generally order the various raw materials used in our production processes one and a half months ~~ITEM 1A~~before the materials are delivered to us. ~~RISK~~ ~~FACTORS~~We try to maintain an inventory of raw materials for approximately one to two months of estimated production requirements at our facilities in Shenzhen, the PRC. Recycled trays that we or our agents collect are initially accounted for as part of our inventory of raw materials. After being sorted and processed, recycled trays that are to be reused are subsequently accounted for as part of our inventory of finished goods.

~~The~~Quality ~~risks~~Assurance and ~~uncertainties~~Process ~~described below~~Control are not the only ones we face. If an adverse outcome of any of the following risks actually occurs, our business, financial condition or results of operations could be materially and adversely affected. In evaluating our business, shareholders should consider carefully the following factors in addition to the other information presented herein.

~~Our~~We ~~operating~~maintain ~~results~~a quality ~~are~~assurance ~~difficult~~and toprocess ~~predict~~control department. We perform quality assurance and statistical process control procedures at each major stage of production, including the inspection of raw materials, statistical process control at the injection molding (for trays and ~~are~~reels) ~~likely~~and extrusion (for carrier tapes) stages and the inspection and testing of finished products. We also conduct “qualification” procedures for our raw material suppliers. We believe that, in addition to ~~fluctuate~~our quality ~~significantly~~assurance ~~based~~and onprocess ~~several~~control ~~factors~~department, ~~which~~our ~~can~~in-house ~~cause~~design and tooling facilities and compounding capabilities have enabled us to control the quality of our ~~stock~~products ~~price~~and that such integrated quality assurance system enables us to ~~decline~~ensure end-product integrity and maximize customer value.

Our ~~operating~~production ~~results~~facilities in Shenzhen, the PRC were certified as meeting the ISO 9002 and 14001 quality standards by the ISO in October 1994 and in August 2000 respectively, and are ~~affected~~subject to follow-up surveillance audits conducted semi-annually thereafter in accordance with normal ISO procedures. The ISO is an organization formed by adelegates ~~wide~~from ~~variety~~member ofcountries ~~factors~~to ~~that~~establish ~~could~~international ~~materially~~quality ~~affect~~assurance ~~net~~standards ~~sales~~for products and ~~profitability~~manufacturing orprocesses. ~~lead~~The tocertification ~~significant~~process ~~fluctuations~~involves insubjecting our ~~quarterly~~production orprocesses ~~annual~~and ~~operating~~our ~~results~~quality management systems to review and surveillance for periods as long as nine months. ~~These~~The ~~factors~~ISO ~~include~~certification is required by certain European countries in connection with sales of industrial products in such countries. In addition, ~~among~~such ~~others:~~certification provides independent verification to our customers as to the quality control in our manufacturing processes and many of our customers require ISO certification as a prerequisite for purchasing from us.

•Before ~~the~~making ~~price~~high ofvolume ~~raw~~purchases ~~materials~~from us, ~~the~~prospective ~~majority~~customers ofgenerally ~~which~~require ~~are~~our ~~petroleum~~production ~~derivatives~~facilities to undergo a one to two month “qualification” process. ~~Prices~~These ofqualification ~~these~~processes ~~raw~~often include ~~materials~~on-site ~~are~~certification ~~significantly~~of ~~affected~~our production facilities by ~~oil~~members ~~prices~~of ~~which~~a ~~recently~~customer’s engineering and quality control staff. Our production facilities in Shenzhen, the PRC have ~~become~~been ~~volatile;~~qualified by customers like Amkor, ASAT, ASE, Freescale, NXP Semiconductors, Seagate, SPIL, STATS ChipPAC, ST Microelectronics and Texas Instruments.

•Competition ~~factors relating to conditions in the semiconductor, disk drive and electronic industries including:~~

—The ~~lower~~markets ~~demand~~ for our products; and services are highly competitive. Our products compete with similar products manufactured by other companies, some of which have substantially greater financial resources than we do.

—We ~~increased~~classify ~~price~~our ~~competition;~~competitors as large diversified manufacturers, large single-product manufacturers and small local job-shop style manufacturers. Large diversified manufacturers are typically divisions of large multinational companies which compete with us in markets for more than one product. Large single-product manufacturers typically have international operations similar to ours. Small local job-shop style manufacturers typically operate only within certain geographic regions, such as Taiwan and Singapore. We are not aware that any of our major competitors offer the range of products and services that we offer. We believe that we compete with large diversified manufacturers through our focus on serving the semiconductor, disk drive and electronic industries, with large single-product manufacturers through our broad range of product offerings and with smaller local job-shop style manufacturers through our international organization which enables us to meet the requirements of multinational customers with several production facilities at various locations.

—9 ~~downturns and deterioration of business conditions;~~

—Table technological changes and the introduction of new products; andContents

—We ~~changes~~believe inthat ~~production~~the ~~processes~~principal competitive factors in the ~~semiconductor~~markets for our products and ~~electronic~~services ~~industries~~are responsiveness ~~which~~and ~~could~~flexibility ~~require~~(including ~~changes~~short indelivery ~~packaging~~cycles and the ability to supply large quantities on short notice), price, product quality and range of products; and services available.

•Environmental ~~although~~Matters we do not believe that it is our liability, the need for us to pay and the amounts that we might pay on a voluntary basis for certain tax, social insurance contributions and potential penalties on behalf of the Factory at which our products are manufactured in order to avoid the seizure of the Factory’s assets and keep it operational, as well as claims resulting from employee lawsuits against the Factory;

•We ~~capital~~are ~~requirements~~subject to various laws, rules and regulations in the ~~availability~~PRC regulating the discharge of ~~funding;~~materials into the environment or otherwise relating to the protection of the environment. We believe that we are in substantial compliance with applicable laws, rules and regulations relating to the protection of the environment and that our compliance will have no material effect on our capital expenditures, earnings or competitive position.

•Employees ~~our expansion plan and possible disruptions caused by the installation of new equipment or the construction of new facilities;~~

•As ~~difficulties~~of inMarch 31, ~~recycling~~2007, ~~trays~~we ~~manufactured~~had ~~using~~102 employees at our ~~proprietary~~offices ~~plastic~~located ~~compounds;~~in Asia, North America and Europe. Our employees are not covered by any collective bargaining agreements.

•Our main production facilities in Shenzhen, the PRC ~~lack~~are operated pursuant to a processing agreement with an unaffiliated PRC company initially entered into in May 1987, subsequently amended and renewed in May 1994 and December 1996, and further amended in January 2007 to reflect workforce changes at the Factory. We entered into the processing agreement with the unaffiliated PRC company (“processing partner”), which was formed by the Shenzhen Municipal Longgang District Foreign Economic Service Company, a company controlled by the local government of ~~long-~~the Longgang District of Shenzhen. The current term ~~purchase~~of orthe ~~supply~~processing ~~agreements~~agreement ~~with~~expires ~~customers;~~on May 28, 2016.

11In accordance with the processing agreement, we provide our processing partner with machinery, equipment and fittings, raw materials, assessorial and packaging materials required for manufacturing our products. These assets are the property of the Company.

•Under the ~~loss~~processing agreement, we pay a processing fee monthly to the processing partner for production of ~~key~~our products at the Factory, which covers salaries of the Factory workers, expenses incurred by our processing partner for providing labor safety products to Factory workers, fees of our processing partner and the Factory’s workers and amounts for various social insurance. The processing partner is responsible for dealing with all matters relating to the import and export of raw materials and our products, as well as providing adequate personnel orfor the ~~shortage~~operation of ~~available~~the ~~skilled~~Factory. ~~employees;~~In practice, we have broadly interpreted our right to supervise the Factory and have participated broadly in the recruiting, supervision and compensation of Factory workers and in the operation of the Factory. As of March 31, 2007, the personnel employed at the production facilities in Shenzhen, the PRC by the processing partner numbered approximately 1,400.

•Insurance ~~international political or economic events or developments, including those relating to Hong Kong and the PRC;~~

•We ~~our~~maintain ~~relationship~~insurance ~~with~~policies covering risks of losses due to fire, flood and other natural disasters. Our insurance policies cover certain of our buildings, ~~processing~~machinery ~~partner~~and inequipment, ~~the~~raw ~~PRC~~materials and ~~the~~inventory. ~~ability~~We also maintain business interruption insurance. Significant damage to any of ~~the~~our ~~government~~production facilities, whether as a result of ~~the~~fire ~~PRC~~or toother ~~seize~~causes, would have a material adverse effect on our results of operations and financial condition. Additionally, we maintain directors and officers insurance covering the ~~assets~~payment and ~~shut~~defense ~~down~~of certain claims asserted against our ~~factory~~directors ~~operated~~and inofficers. We are not insured against the loss ~~PRC;~~of our key personnel.

•Patents ~~production volume fluctuations~~ and ~~the~~Trademarks ~~management of our inventories;~~

•We ~~currency~~have ~~fluctuations~~obtained ~~and~~several ~~foreign~~patents ~~exchange~~in ~~rules~~the United States and ~~regulations~~have additional patent applications pending in the ~~PRC;~~United States and in several Asian countries in which we operate. We have yet to determine if these patents do or will provide a substantial competitive advantage to us. We will continue to maintain current patents and file new patent applications to protect our intellectual property.

•10 ~~the recurrence of SARS or other major health issues in Asia;~~

•Table the outcome of patent litigation in Taiwan; andContents

•Available ~~the~~Information imposition of fines, penalties and bonds arising from violations of rules and regulations in the PRC relating to customs regulations, foreign currency exchange rules, taxation, the withholding of taxes for employees and other laws and regulation.

~~Unfavorable~~We ~~changes~~file inwith the ~~above~~Securities orand ~~other~~Exchange ~~factors could~~Commission ~~substantially~~(the ~~harm~~“SEC”) our ~~results~~Annual ofReport ~~operations~~on orForm ~~financial~~10-K, ~~condition.~~Quarterly WeReports ~~believe~~on ~~that~~Form ~~period~~10-Q, toCurrent ~~period~~Reports ~~comparisons~~on ofForm ~~our~~8-K ~~results~~and ofamendments ~~operations~~to ~~will~~reports ~~not~~to ~~necessarily~~ be ~~meaningful.~~filed ~~You~~pursuant ~~should~~to Sections ~~not~~13(a) ~~rely~~and on15(d) ~~these~~of ~~comparisons~~the asSecurities anExchange ~~indication~~Act of ~~our future~~1934, ~~performance~~as amended. IfThe ~~our~~public ~~results~~may ofread ~~operations~~and incopy ~~one~~any ormaterials ~~more~~we ~~periods~~file ~~fail~~with tothe ~~meet~~SEC orat ~~exceed~~ the ~~expectations~~SEC’s ofPublic ~~securities~~Reference ~~analysts~~Room orat ~~investors,~~450 ~~the~~Fifth ~~trading~~Street, ~~price~~NW, ofWashington, ~~our~~DC ~~common~~20549. ~~stock~~The public may ~~decline,~~obtain information ~~possibly~~on the Public Reference Room by calling 1-800-SEC-0330. The SEC maintains a ~~significant~~website ~~amount~~at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our internet address is www.peakf.com. We ~~depend~~make onavailable, ~~the~~free ~~health~~of charge, through our internet website copies of ~~the~~our ~~semiconductor~~Annual Report on Form 10-K, ~~disk~~quarterly ~~drive~~reports ~~and~~on ~~electronics~~Form ~~industries~~10-Q, ~~which~~current ~~are~~reports ~~highly~~on ~~cyclical~~Form 8-K and amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or 15(d) of the ~~decline~~Exchange inAct, ~~demand~~as ~~for~~soon ~~products~~as inreasonably ~~these~~practicable after filing ~~industries~~such ~~could~~material ~~severely~~electronically ~~affect~~or otherwise furnishing it to the SEC. Information contained on our ~~net~~website ~~sales~~is ~~and~~not ~~financial~~incorporated ~~results~~by reference unless specifically referenced herein.

~~Our net sales depend on increased demand for our products from~~ ~~manufacturers of semiconductor, disk drive and electronic components~~ITEM 1A. RISK ~~Any~~FACTORS deterioration of business conditions in the semiconductor industry, including lower demand for semiconductor products, decreased unit volume of semiconductor products shipped, other factors resulting in decreased demand for packaging products, or increased price competition in the semiconductor industry could result in increased price pressure on suppliers to the semiconductor industry, and could have a material adverse effect on our results of operations and financial condition. The industries we serve are characterized by rapid technological change leading to more complex products, evolving industry standards, intense competition and fluctuations in demand. From time to time, demand for electronic systems, which generally include both semiconductors and electronic components, has suffered significant downturns, which in some cases have been prolonged. For example, during 2002 and 2003, demand for our products decreased as the overall economy and the electronics industry experienced a general downturn in business. These downturns have been characterized by diminished product demand, product over-capacity and accelerated erosion of average selling prices. Any future downturn in the semiconductor or disk drive or electronics industries may substantially harm our results of operations or financial condition.

~~Our~~The ~~customer~~risks ~~base~~and isuncertainties ~~concentrated~~described below ~~and~~are not the ~~loss~~only ones we face. If an adverse outcome of ~~one~~any of the following risks actually occurs, our business, financial condition or ~~more~~results of ~~our~~operations ~~key~~could ~~customers~~be ~~would~~materially ~~harm~~and adversely affected. In evaluating our business, shareholders should consider carefully the following factors in addition to the other information presented herein.

Our ~~top~~operating ~~10 customers~~results ~~together accounted for 69.7%, 67.8% and 64.4% of our net sales in fiscal 2006, fiscal 2005 and fiscal 2004, respectively. We~~ are ~~dependent~~difficult upon a single customer, Seagate Technology, for substantially all sales of our disk drive trays, with whom we have no long-term contract. In addition, in fiscal 2006, STATS ChipPAC accounted for 10.4% of our net sales. Like Seagate Technology, we do not have a long-term contract with STATS ChipPAC. Our ability to ~~maintain close, mutually~~predict ~~beneficial~~and ~~relationships~~are ~~with~~likely ~~our leading customers is important~~ to ~~the~~fluctuate ~~ongoing~~significantly ~~growth~~based ~~and~~on ~~profitability~~several offactors, ~~our~~which ~~business.~~can ~~Although~~cause our ~~sales~~stock toprice ~~specific customers have varied from year~~ to ~~year, our results of operations have been dependent on a number of significant customers and the conditions of their respective industries~~decline. ~~All of our customers operate in the global~~

12Our operating results are affected by a wide variety of factors that could materially affect net sales and profitability or lead to significant fluctuations in our quarterly or annual operating results. These factors include, among others:

~~semiconductor,~~• ~~disk drive and electronic industries which historically have been highly cyclical. As a result of~~ the ~~concentration~~price of ~~our~~raw ~~customer base~~materials, the ~~loss~~ ormajority ~~cancellation~~ of ~~business~~which ~~from,~~are orpetroleum ~~significant~~derivatives. ~~changes~~Prices ~~in scheduled deliveries or decreases in the prices~~ of ~~products or services provided to, any of~~ these ~~customers~~raw ~~could~~materials ~~materially and adversely affect our results of operations and financial condition. Our sales~~ are ~~made~~significantly ~~pursuant~~affected toby ~~purchase~~oil ~~orders,~~prices ~~and~~which therefore, we generally have no agreements with or commitments from our customers for the purchase of products. Although customers typically provide us with forecasts of their requirements, these forecasts are ~~not binding. Our customers may not maintain or increase their sales volumes or orders for our products and we may be unable to maintain or add to our existing customer base.~~ volatile;

~~Our~~• ~~operations~~factors ~~are~~relating ~~concentrated~~to conditions in the ~~People’s~~semiconductor, ~~Republic~~disk ofdrive ~~China~~ and weelectronic ~~are~~industries ~~subject to the risks associated with international operations, which may negatively affect our business.~~ including:

As— oflower ~~March 31,~~demand 2006, substantially all of our fixed assets and inventories were located in Shenzhen, the PRC. Our main production facilities are located in Shenzhen, the PRC and are operated pursuant to a processing agreement with an unaffiliated PRC company (the “Factory”) that obligates it to provide all of the personnel for ~~the operation of our facilities and to render assistance in dealing with matters relating to the import of raw materials and the export of our~~ products. We are dependent on continued good relations with our processing partner in order to supervise the operation of the Factory and its employees. The Factory is located on land leased from the PRC government by one of our wholly-owned subsidiaries under land use certificates and agreements with a remaining term of approximately 36 years. Our assets and facilities located in the PRC and the PRC company’s operation of the Factory are subject to the laws and regulations of the PRC and our results of operations in the PRC are subject to the economic and political situation in the PRC. In January 2005, we entered into negotiations with our processing partner to revise and update our agreement regarding the operation of the Factory. While these negotiations have been suspended, we expect to be able to renegotiate some of the terms and conditions of the processing agreement. There are no assurances that we will be able to do so, which could lead to increased costs and harm our business. In addition, during the third fiscal quarter of 2005, we discovered discrepancies, which were at the Factory and not at Peak, in the computation and withholding of both taxes and social insurance contributions for workers at the Factory. Upon discovery of these discrepancies, we conducted an internal review of the Factory’s practices and we concluded that the Factory had a duty to correct certain of these discrepancies. While we believe we were not contractually obligated under the terms of our agreement with our processing partner to pay these amounts, we elected to voluntarily make such payment in order to avoid the seizure of the Factory’s assets and keep it operational. Voluntary payments by us on behalf of the Factory to the PRC tax authorities could diminish a significant portion of our current cash reserves and materially harm our operating results and business. ;

~~The~~— ~~operations~~increased ofprice our production facilities in Shenzhen, the PRC may be harmed by changes in the laws and regulations of the PRC or the interpretation thereof, such as those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, foreign currency exchange regulations and other matters. Prior to September 2002, we exported all the products manufactured at our production facilities in Shenzhen, the PRC. Accordingly, we were not subject to certain PRC taxes and are exempt from customs duties on imported raw materials and exported products. During the fourth quarter of fiscal 2003, we finished the procedure of setting up a wholly owned subsidiary in the PRC and hence a small portion of our products was sold locally in the PRC. This PRC subsidiary is subject to PRC taxes and customs duties on materials imported for such PRC sales. This PRC subsidiary has ceased manufacturing operations. competition;

~~According~~— ~~to customs~~downturns rules in the PRC, we may be subject to classification by the Chinese customs authorities in a manner that would require us to supply a substantial bond against customs duties that we would have to pay if we were importing material for ultimate sale in the PRC. We may also be subject to significantly higher administrative importation costs generally. These measures could harm our ability to manufacture products at a competitive price and ~~our~~deterioration ~~results~~ of ~~operations~~business could suffer. In addition, if we are required to post a bond in connection with our exemption status from PRC duties on imported raw materials for export sales and exported products, we will experience a substantial drain of our liquid resources. We may not be able to provide the required bond at a commercially feasible cost, or at all. conditions;

13— technological changes and the introduction of new products; and

We— ~~may~~changes ~~become subject to PRC taxes and may be required to pay customs duties~~ in ~~the~~production ~~future~~processes ~~even under the contract processing agreement. If we are required to pay PRC taxes or customs duties, our results of operations could suffer. We believe that our operations~~ in ~~Shenzhen,~~ the ~~PRC~~semiconductor ~~are now in compliance with the applicable PRC legal~~ and ~~regulatory requirements~~electronic ~~for~~industries ~~custom duties. However, the central or local governments of the PRC may impose new regulations or interpretations of existing laws, rules and regulations~~ which could require ~~additional~~changes ~~expenditures or preclude the production of products~~ in ~~the~~packaging ~~PRC by Peak or our processing partner.~~ products;

~~The~~• ~~economy~~although ofwe ~~the~~do ~~PRC~~not ~~differs~~believe ~~from~~that ~~the~~it ~~economies~~is ofour ~~many countries in many respects such as structure~~liability, ~~government~~the ~~involvement,~~need ~~level~~for ofus ~~development,~~to ~~growth rate~~pay, ~~capital~~and ~~reinvestment,~~the ~~allocation~~amounts ofthat ~~resources,~~we ~~self-sufficiency,~~have ~~rate~~previously ofpaid ~~inflation~~ and ~~balance~~might ofin ~~payments position, among others. In~~ the ~~past,~~future ~~the~~again ~~economy~~pay ofon ~~the PRC~~a ~~has~~voluntary ~~been~~basis ~~primarily~~for acertain ~~planned~~tax, ~~economy~~social ~~subject~~insurance tocontributions ~~state~~and ~~plans.~~potential ~~Since~~penalties ~~the~~on ~~entry~~behalf of the ~~PRC~~Factory ~~into~~at ~~the~~which ~~World~~our ~~Trade~~products ~~Organization~~are inmanufactured ~~2002, the PRC government has been reforming its economic and political systems. These reforms have resulted~~ in ~~significant~~ ~~economic~~order ~~growth~~to ~~and~~avoid ~~social~~the ~~change.~~seizure Weof ~~cannot assure, however, that~~ the ~~PRC government~~Factory’s ~~policies~~assets ~~for~~and ~~economic~~keep ~~reforms~~it ~~will~~operational, beas ~~consistent~~well oras ~~effective.~~claims ~~Our~~resulting ~~results~~from ofemployee ~~operations~~lawsuits ~~and~~against ~~financial position may be harmed by changes in~~ the ~~PRC’s~~ ~~political, economic or social conditions.~~ Factory;

~~We,~~• ~~and the Factory at which~~ our ~~products~~capital ~~are~~requirements ~~manufactured, have in the past~~ and ~~may in~~ the ~~future be~~availability ~~the subject~~ of ~~investigations by PRC government authorities, which can divert management’s attention, lead to fines and penalties, increase our costs and harm our operating results.~~ funding;

~~We,~~• and the Factory, have in the past and may in the future be the subject of investigations by PRC government authorities. Such investigations are expensive and time-consuming and could divert management’s attention away from running our ~~business.~~expansion Inplan ~~addition, as a result of such investigations we, or the Factory, may be subject to taxes, fines or penalties, which would increase our costs~~ and ~~harm~~possible ~~our~~disruptions ~~operating~~caused ~~results. In the event the Factory is unable to pay any fines or penalties assessed against it~~ by ~~PRC authorities, we may voluntarily pay such amounts to avoid~~ the ~~seizure~~installation of ~~our~~new ~~assets~~equipment and the closure of the Factory. For example, in April 2005, the PRC tax authorities began an investigation into the withholding and payment of income taxes by the Factory in Shenzhen for certain current and former employees of Peak, its affiliates or ~~other companies who performed services at~~ the ~~Factory~~construction but had not paid income taxes in the PRC and for whom the Factory did not withhold and pay income taxes. The PRC tax authorities sought to collect unpaid income taxes on salaries and expense allowances of ~~certain~~new current and former employees of Peak, affiliates of Peak or other companies who performed services in the PRC based on such worker’s relationship with the Factory, and interest and penalties on such amounts. Since some of these claims were based on income earned over several years, the amount of such taxes, accrued interest and penalties was substantial. We do not believe that we were liable for such claims, but in the event the PRC tax authorities determine payments for back taxes, interest and penalties are owed, the potential consequences could have included substantial monetary claims against the Factory or the seizure of the Factory and our assets at the Factory and the termination of substantially all of our production operations. As the PRC authorities did assert claims for such taxes against the Factory, we did make payments on a voluntary basis in order to avoid the seizure of the Factory or our assets at the Factory and keep it operational. Voluntary payments by us on behalf of the Factory to the PRC tax authorities could diminish a significant portion of our current cash reserves and materially harm our operating results and business. Upon final settlement of this PRC tax investigation there were no interest or penalty assessments on the above unpaid income taxes associated with the Factory. However, the Factory and the Company may in the future be subject to further investigations by the PRC authorities, including tax authorities, for similar or other claims, including claims for other unpaid taxes, which we may be required to pay in order to avoid seizure of the Factory or some or all of its or our assets. facilities;

We• ~~have~~difficulties in ~~the~~recycling ~~past~~trays ~~and~~manufactured ~~may~~using inour ~~the~~proprietary ~~future,~~plastic ~~be party to legal proceedings that could have a negative financial impact on us.~~ compounds;

We11 have in the past been involved in litigation relating to securities and employment law, and are currently involved in litigation in Taiwan related to intellectual property, tax and labor disputes in the PRC. While these

14Table of Contents

~~lawsuits~~• ~~and disputes vary greatly in~~ the ~~materiality~~lack of ~~potential~~long-term ~~liability~~purchase ~~associated with them, the uncertainty associated with substantial unresolved litigation could seriously harm our business, financial condition and reputation, whether material individually~~ or insupply ~~the~~agreements ~~aggregate. In particular, this uncertainty could harm our relationships~~ with ~~existing~~ customers~~, our ability to obtain new customers and our ability to operate our business.~~ ;

~~Litigation~~• ~~and~~ the ~~resolution~~loss of ~~disputes~~key ~~also~~personnel ~~could~~or ~~result in~~ the ~~diversion~~shortage of ~~our management’s~~available ~~time~~skilled and attention away from business operations, which could harm our business. Negative developments with respect to the litigation could cause the price of our common stock to decline significantly. In addition, we are unable to determine the amount, if any, that we may be required to pay if litigation is not resolved in a favorable manner. For more information about the litigation, please see Item 3 entitled “Legal Proceedings.” employees;

A• ~~significant~~international ~~portion~~political ofor ~~our~~economic ~~business~~events isor ~~conducted~~developments, inincluding ~~the~~those ~~Asia~~relating ~~Pacific region. This concentration could expose us~~ to ~~risks~~Hong ~~inherent~~Kong toand ~~doing business in~~ the ~~Asia Pacific region that could harm our business.~~ PRC;

A• ~~significant~~our ~~portion~~relationship ofwith our ~~net~~processing ~~sales~~partner ~~are~~in ~~derived~~the ~~from~~PRC ~~sales~~and tothe ~~customers~~ability inof ~~Hong~~the ~~Kong, Singapore,~~government ~~Taiwan,~~of the ~~Philippines~~PRC ~~and~~to ~~other~~seize ~~countries~~the inassets ~~East~~ and ~~Southeast~~shut ~~Asia,~~down orour ~~the~~main ~~Asia~~production ~~Pacific~~facilities ~~region.~~located ~~Accordingly~~in Shenzhen, ~~our~~the ~~financial~~PRC ~~condition~~(operated ~~and~~pursuant ~~results~~to ofa ~~operations~~processing ~~and~~agreement ~~the~~with ~~market~~an ~~price~~unaffiliated ofPRC ~~shares~~company) ofwhich ~~our~~we ~~common~~refer ~~stock~~to ~~may~~as bethe ~~affected by:~~ Factory;

• ~~economic~~production volume fluctuations and ~~political~~the ~~instability~~management of our inventories;

• ~~changes~~currency influctuations ~~regulatory~~and ~~requirements,~~foreign ~~tariffs,~~exchange ~~customs,~~rules ~~duties~~ and ~~other~~regulations ~~trade~~in ~~barriers~~the PRC;

• ~~transportation~~the ~~delays~~recurrence of SARS or other major health issues in Asia;

• ~~fluctuations~~the inoutcome ~~currency~~of ~~exchange~~our ~~rates~~patent litigation in Taiwan; and

• the imposition of fines, penalties and bonds arising from violations of rules and regulations in the PRC relating to customs regulations, foreign currency ~~convertibility~~exchange rules, taxation, the withholding of taxes for employees and ~~repatriation;~~other laws and regulations.

•Unfavorable ~~taxation~~changes in the above or other factors could substantially harm our results of operations or financial condition. We believe that period to period comparisons of our ~~earnings~~results ~~and~~of operations will not necessarily be meaningful. You should not rely on these comparisons as an indication of our future performance. If our results of operations in one or more periods fail to meet or exceed the ~~earnings~~expectations of securities analysts or investors, the trading price of our ~~personnel;~~common stock may decline, possibly by a significant amount.

•We depend on the ~~recurrence~~health of ~~SARS~~the semiconductor, disk drive and ~~other~~electronic ~~major~~industries ~~health~~which ~~issues;~~are highly cyclical and the decline in demand for products in these industries could severely affect our net sales and financial results.

•Our ~~amounts~~net wesales ~~may~~depend ~~have~~on toincreased ~~pay~~demand for our products from manufacturers of semiconductor, disk drive and electronic components. Any deterioration of business conditions in the ~~PRC~~semiconductor onindustry, ~~behalf~~including lower demand for semiconductor products, decreased unit volume of ~~the~~semiconductor products ~~Factory~~shipped, other factors resulting in ~~Shenzhen~~decreased demand for ~~personal~~packaging ~~income~~products, ~~taxes~~or increased price competition in the semiconductor industry could result in increased price pressure on suppliers to the semiconductor industry, ~~interest~~and could have a material adverse effect on our results of operations and ~~penalties~~financial ~~that~~condition. ~~may~~The beindustries ~~imposed~~we serve are characterized by ~~PRC~~rapid ~~tax~~technological ~~authorities~~change onleading to more complex products, evolving industry standards, intense competition and fluctuations in demand. From time to time, demand for electronic systems, which generally include both semiconductors and electronic components, has suffered significant downturns, which in some cases have been prolonged. For example, during 2002 and 2003, demand for our products decreased as the ~~income~~overall economy and the electronic industry experienced a general downturn in business. These downturns have been characterized by diminished product demand, product over-capacity and accelerated erosion of average ~~foreign~~selling ~~workers~~prices. ~~who~~Any ~~performed~~future ~~services~~downturn in the ~~Shenzhen~~semiconductor, ~~Factory;~~disk drive or electronic industries may substantially harm our results of operations or financial condition.

•Our ~~amounts~~customer webase ~~may~~is ~~have~~concentrated toand ~~pay~~the onloss ~~behalf~~ of ~~the~~one ~~Factory~~or inmore ~~the PRC as a result~~ of ~~employees’~~our ~~litigation~~key ~~against~~customers ~~the~~would ~~factory~~harm inour ~~Shenzhen;~~business. ~~and~~

•Our ~~other~~top ~~risks~~10 ~~relating~~customers totogether ~~changes,~~accounted ~~administration~~for or67.4%, ~~new~~69.7% ~~interpretations~~and 67.8% of ~~laws~~our net sales in fiscal 2007, ~~regulations~~fiscal 2006 and ~~policies~~fiscal in2005, ~~the~~respectively. ~~jurisdictions~~We inare ~~which~~dependent upon a single customer, Seagate Technology, for substantially all sales of our disk drive trays, with whom we ~~conduct~~have no long-term contract. We also do not have long-term contracts with our ~~business~~other top 10 customers. Our ability to maintain close, mutually beneficial

~~None~~12 of these factors are within our control. In fiscal 1999, many countries in the Asia Pacific region experienced considerable currency volatility and depreciation, high interest rates, stock market volatility and declining asset values which contributed to net foreign capital outflows, an increase in the number of insolvencies, a decline in business and consumer spending and a decrease in economic growth as compared with prior years.

ConsumerTable demand for products that use semiconductors, disk drives and electronic components generally rises as the overall level of economic activity increases and falls as such activity decreases. In addition, currency devaluations in the Asia Pacific region could result in accelerated price erosion of semiconductor and electronic products as products manufactured in countries whose currencies have devalued significantly against the US dollar become less expensive in US dollar terms. Any adverse effect on the global semiconductor, disk drive and electronic industries as a result of lower demand for products in the Asia Pacific region or accelerated product price erosion arising from currency devaluations in the Asia Pacific region could harm our financial condition or results of operations. Contents

15 relationships with our leading customers is important to the ongoing growth and profitability of our business. Although our sales to specific customers have varied from year to year, our results of operations have been dependent on a number of significant customers and the conditions of their respective industries. Substantially all of our customers operate in the global semiconductor, disk drive and electronic industries which historically have been highly cyclical. Other events such as consolidation within the semiconductor industry could also materially impact our sales. For example the merger of Seagate and Maxtor, two of our historically larger customers, and the subsequent rationalization of inventory had a substantial impact on our results of operation. As a result of the concentration of our customer base, the loss or cancellation of business from, or significant changes in scheduled deliveries or decreases in the prices of products or services provided to, any of these customers could materially and adversely affect our results of operations and financial condition. Our sales are made pursuant to purchase orders, and therefore, we generally have no agreements with or commitments from our customers for the purchase of products. Although customers typically provide us with one or two month forecasts of their requirements, these forecasts are not binding. Our customers may not maintain or increase their sales volumes or orders for our products and we may be unable to maintain or add to our existing customer base.

WeAs a result of the resignation of one of our directors in May 2007, we are ~~incorporated~~not ~~under~~in compliance with NASDAQ rules regarding the ~~laws~~composition of ~~Bermuda~~our board of directors and audit committee, and there ~~may~~is bea ~~potential~~risk ~~difficulties~~of indelisting ~~protecting~~if ~~our~~the ~~shareholders’~~non-compliance ~~rights~~is not cured within the time period allowed by NASDAQ.

WeOn ~~are~~May 14, ~~incorporated~~2007, ~~under~~Mr. Thomas Gimple resigned from his position as a director and as a member of our Audit Committee of our Board of Directors. The resignation of Mr. Gimple was not the ~~laws~~result of ~~Bermuda~~any ~~and~~disagreement with us. As a result of Mr. Gimple’s resignation, our ~~corporate~~Audit ~~affairs~~Committee does not meet the requirement of NASDAQ Rule 4350(d)(2)(A) for three independent members, and we are ~~governed~~out of compliance with NASDAQ Rule 4350(c)(1), which requires a majority of independent directors. Consequently, we are in the process of searching for a new candidate to serve on our board of directors to satisfy the NASDAQ Rules. We have notified NASDAQ of such circumstances as required by the applicable NASDAQ rules, and on May 29, 2007, NASDAQ formally gave written notice to us regarding our noncompliance ~~Memorandum~~with the NASDAQ rules. In the letter, NASDAQ confirmed that we have a cure period to regain compliance, which shall be until the earlier of our next annual shareholders’ meeting or May 14, 2008; or if our next annual ~~Association~~shareholders’ ~~and~~meeting ~~Bye~~is held before November 12, 2007, then no later than November 12, 2007. While we have every intent to fill the position in the timeframe permitted, if we cannot cure such non-~~laws~~compliance, ~~and~~we byface the ~~laws~~risk ~~governing~~of ~~corporations~~being delisted ~~incorporated~~from inthe ~~Bermuda~~NASDAQ Global Market.

~~The~~Our ~~rights~~operations ofare ~~our~~concentrated ~~shareholders~~in ~~and~~ the ~~responsibilities~~ ofPeople’s ~~members~~Republic of ~~our~~China ~~Board~~and ofwe ~~Directors under Bermuda law~~ are ~~different~~subject ~~from those applicable~~ to ~~a corporation incorporated in~~ the ~~United States and, therefore, our shareholders may have more difficulty protecting their interests in~~risks ~~connection~~associated with ~~actions~~international ~~by our management~~operations, ~~members~~which ofmay ~~our~~negatively ~~Board~~affect ~~of Directors or~~ our ~~principal shareholder than they would as shareholders of a corporation incorporated in the United States~~business.

As of March 31, 2007, substantially all of our fixed assets and inventories were located in Shenzhen, the PRC. Our ~~stock~~main ~~price~~production ~~has~~facilities ~~been~~are located in Shenzhen, the PRC and ~~will~~are ~~likely~~operated ~~continue~~pursuant to bea ~~volatile~~processing agreement with an unaffiliated PRC company, which we refer to as the Factory, that obligates it to provide all of the personnel for the operation of our facilities and to render assistance in dealing with matters relating to the import of raw materials and the export of our products. AWe ~~decline~~are dependent on continued good relations with our processing partner in order to supervise the operation of the Factory and its employees. The Factory is located on land leased from the PRC government by one of our ~~stock~~wholly-owned ~~price~~subsidiaries ~~could~~under ~~result~~land use certificates and agreements with a remaining term of approximately 35 years. Our assets and facilities located in ~~securities~~the ~~class~~PRC ~~action~~and ~~litigation~~the ~~against~~PRC uscompany’s operation of the Factory are subject to the laws and regulations of the PRC and our results of operations in the PRC are subject to the economic and political situation in the PRC. In addition, during the third fiscal quarter of 2005, we discovered discrepancies, which were at the Factory and not at Peak, in the computation and withholding of both taxes and social ~~could~~insurance ~~divert~~contributions ~~management~~for workers at the Factory. Upon discovery of these discrepancies, we conducted an internal review of the Factory’s ~~attention~~practices and we concluded that the Factory had a duty to correct certain of these discrepancies. While we believe we were not contractually obligated under the terms of our agreement with our processing partner to pay these amounts, we elected to voluntarily make such payment in order to avoid the seizure of the Factory’s assets and keep it operational. Additional voluntary payments made by us on behalf of the Factory to the PRC tax authorities could diminish a significant portion of our current cash reserves and materially harm our operating results and business.

~~Our~~13 ~~stock price has been and is likely to continue to be highly volatile. Our stock price could fluctuate significantly due to a number of factors, including:~~

•Table variationsof in our actual or anticipated operating results;Contents

•The ~~sales~~operations of ~~substantial~~our ~~amounts~~production facilities in Shenzhen, the PRC may be harmed by changes in the laws and regulations of the PRC or the interpretation thereof, such as those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, foreign currency exchange regulations and other matters. Prior to September 2002, we exported all the products manufactured at our ~~stock;~~production facilities in Shenzhen, the PRC. Accordingly, we were not subject to certain PRC taxes and are exempt from customs duties on imported raw materials and exported products. During the fourth quarter of fiscal 2003, we finished the procedure of setting up a wholly-owned subsidiary in the PRC and hence a small portion of our products was sold locally in the PRC. This PRC subsidiary is subject to PRC taxes and customs duties on materials imported for such PRC sales. This PRC subsidiary ceased manufacturing operations in fiscal 2005.

•According ~~announcements~~to ~~about~~customs rules in the PRC, we may be subject to classification by the PRC customs authorities in a manner that would require us orto ~~about~~supply a substantial bond against customs duties that we would have to pay if we were importing material for ultimate sale in the PRC. We may also be subject to significantly higher administrative importation costs generally. These measures could harm our ~~competitors~~ability to manufacture products at a competitive price and our results of operations could suffer. In addition, ~~including~~if ~~technological~~we ~~innovation~~are required orto ~~new~~post a bond in connection with our exemption status from PRC duties on imported raw materials for export sales and exported products, we will experience a substantial drain of our current cash reserves. We may not be able to provide the required bond at a commercially feasible cost, or ~~services;~~at all.

•We ~~litigation~~may become subject to PRC taxes and ~~other~~may ~~developments~~be ~~relating~~required to ~~patents~~pay customs duties in the future even under the contract processing agreement. If we are required to pay PRC taxes or ~~other~~customs ~~proprietary~~duties, ~~rights~~our results of operations could suffer. We believe that our operations in Shenzhen, the PRC are now in compliance with the applicable PRC legal and regulatory requirements for custom duties. However, the central or ~~those~~local governments of the PRC may impose new regulations or interpretations of existing laws, rules and regulations which could require additional expenditures or preclude the production of products in the PRC by Peak or our ~~competitors;~~processing partner.

•The ~~conditions~~economy of the PRC differs from the economies of many countries in many respects such as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, self-sufficiency, rate of inflation and balance of payments position, among others. In the ~~semiconductor~~past, the ~~disk~~economy ~~drive~~of the PRC has been primarily a planned economy subject to state plans. Since the entry of the PRC into the World Trade Organization in 2002, the PRC government has been reforming its economic and ~~electronics~~political ~~industries;~~systems. These reforms have resulted in significant economic growth and social change. We cannot assure, however, that the PRC government’s policies for economic reforms will be consistent or effective. Our results of operations and financial position may be harmed by changes in the PRC’s political, economic or social conditions.

•We, ~~governmental~~and ~~regulation~~the Factory at which our products are manufactured, have in the past and may ~~legislation;~~in the future be the subject of investigations by PRC government authorities, which can divert management’s attention, lead to fines and penalties, increase our costs and harm our operating results.

•We ~~international~~and ~~political~~the Factory have in the past and may in the future be the subject of investigations by PRC government authorities. Such investigations are expensive and time-consuming and could divert management’s attention away from running our business. In addition, as a result of such investigations we, or ~~economic~~the ~~events~~Factory, may be subject to taxes, fines or ~~developments~~penalties, ~~including~~which ~~those~~would ~~relating~~increase our costs and harm our operating results. In the event the Factory is unable to ~~Hong~~pay ~~Kong~~any fines or penalties assessed against it by PRC authorities, we may voluntarily pay such amounts to avoid the seizure of our assets and the closure of the Factory. For example, in April 2005, the PRC; tax authorities began an investigation into the withholding and payment of income taxes by the Factory in Shenzhen for certain current and former employees of Peak, our affiliates or other companies who performed services at the Factory but had not paid income taxes in the PRC and for whom the Factory did not withhold and pay income taxes. The PRC tax authorities sought to collect unpaid income taxes on salaries and expense allowances of certain current and former employees of Peak, our affiliates or other companies who performed services in the PRC based on such worker’s relationship with the Factory, and interest and penalties on such

•14 ~~the recurrence of SARS and other major health issues;~~

•Table amounts we may have to pay in the PRC for personal income taxes, interest and penalties that may be imposed by PRC tax authorities on the income of foreign workers who performed services in the Shenzhen Factory;Contents

• amounts. Since some of these claims were based on income earned over several years, the amount of such taxes, accrued interest and penalties was substantial. We do not believe that we ~~may~~were liable for such claims, but in the event the PRC tax authorities determine payments for back taxes, interest and penalties are owed, the potential consequences could have included substantial monetary claims against the Factory or the seizure of the Factory and our assets at the Factory and the termination of substantially all of our production operations. As the PRC authorities did assert claims for such taxes against the Factory, we did make payments in fiscal 2006 on a voluntary basis in order to ~~pay~~avoid the seizure of the Factory or our assets at the Factory and keep it operational. Additional voluntary payments by us on behalf of the ~~factory~~Factory into the PRC astax authorities could diminish a ~~result~~significant portion of ~~employees’~~our ~~litigation~~current ~~against~~cash reserves and materially harm our operating results and business. Upon final settlement of this PRC tax investigation there were no interest or penalty assessments on the above unpaid income taxes associated with the Factory;. However, we and the Factory may in the future be subject to further investigations by the PRC authorities, including tax authorities, for similar or other claims, including claims for other unpaid taxes, which we may pay whether or not we are contractually required to do so in order to avoid seizure of the Factory or some or all of its or our assets.

•Failure ~~changes~~to insuccessfully ~~securities~~defend against ~~analysts’~~intellectual ~~estimates~~property oflawsuits ~~our~~brought ~~performance,~~against orus ~~our~~may ~~failure~~adversely toaffect ~~meet~~our ~~analysts’ expectations~~business.

~~Many~~As oftechnology ~~these~~is ~~factors~~an ~~are~~integral ~~beyond~~part of our design ~~control.~~and ~~In addition~~products, ~~the~~we ~~stock~~have, ~~markets~~ in ~~general, and~~ the ~~NASDAQ National Market in particular~~past, ~~have~~received ~~experienced extreme~~communications ~~price~~alleging ~~and~~that ~~volume~~our ~~fluctuations~~products ~~recently.~~infringe ~~These fluctuations often have been unrelated~~ or ~~disproportionate~~misappropriate tocertain ~~the~~intellectual ~~operating~~property ~~performance~~rights ofheld ~~these~~by ~~companies.~~others, ~~These broad market~~ and ~~industry factors~~ may ~~decrease~~continue ~~the~~to ~~market~~receive ~~price~~such ofcommunications ~~our~~in ~~common stock,~~the ~~regardless of our actual operating performance~~future. InWe ~~the~~are currently ~~past,~~involved ~~companies~~in ~~that~~an ~~have~~intellectual ~~experienced~~property ~~volatility~~dispute in ~~the~~Taiwan ~~market~~with ~~prices~~R.H. ofMurphy ~~their~~Co., ~~stock have been the object of securities class action litigation~~Inc. If weany ~~were~~third ~~the~~party ~~object~~were ofto ~~other~~make ~~securities class~~valid ~~action~~intellectual ~~litigation,~~property itinfringement ~~could~~or ~~result~~misappropriation inclaims ~~substantial~~against ~~costs and a diversion of management’s attention and resources~~us, ~~which~~we ~~could~~may ~~harm~~be ~~our~~required ~~business.~~to:

16• discontinue using disputed manufacturing process technologies;

If• westop ~~fail~~selling toproducts ~~maintain~~that ancontain ~~effective~~allegedly ~~system~~infringing of internal controls, we may not be able to accurately or timely report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. technology;

~~Effective~~• ~~internal~~pay ~~controls~~substantial ~~are~~monetary necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement and we have devoted, and will in the future devote, resources to remediate and improve our internal controls. Although we believe that these efforts have strengthened our internal controls, we are continuing to work to improve our internal controls. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. damages;

~~Changes~~• seek to ~~financial~~develop ~~accounting~~non-infringing ~~standards~~technologies, which may ~~affect~~not ~~our~~be ~~results~~feasible; ~~of operations and cause us to change our business practices.~~ or

We• ~~prepare~~seek ~~our financial statements~~ to ~~conform~~acquire ~~with~~licenses ~~generally accepted accounting principles, or GAAP, in the United States. These accounting principles are subject~~ to ~~interpretation by~~ the ~~American~~allegedly ~~Institute~~infringed ~~of Certified Public Accountants~~technology, ~~the~~which ~~Securities~~may ~~and~~not ~~Exchange~~be ~~Commission~~available ~~and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect~~ on ~~our~~commercially ~~reported~~reasonable results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For exampleterms, ~~accounting~~if ~~policies~~at ~~affecting many aspects of our business, including rules relating to employee stock option grants, have recently been revised or are under review~~all. The Financial Accounting Standards Board and other agencies have finalized changes to U.S. generally accepted accounting principles that will require us, starting in our fiscal year 2007, to record a charge to earnings for employee stock option grants and other equity incentives. We may have significant and ongoing accounting charges resulting from option grant and other equity incentive expensing that could reduce our overall net income. In addition, since we historically have used equity-related compensation as a component of our total employee compensation program, the accounting change could make the use of equity-related compensation less attractive to us and therefore make it more difficult to attract and retain employees.

If our products are found to infringe or misappropriate third-party intellectual property rights, we may be subject to ~~ITEM 1B~~significant liabilities and be required to change our manufacturing processes or products. ~~UNRESOLVED~~ ~~STAFF~~This ~~COMMENTS~~could restrict us from making, using, selling or exporting some of our products, which could in turn materially and adversely affect our business and financial condition. Our failure to develop non-infringing technologies or license intellectual property rights in a timely and cost-effective manner could materially and adversely affect our business and financial condition. In addition, any litigation, whether to enforce our patents or other intellectual property rights or to defend ourselves against claims that we have infringed the intellectual property rights of others, could, regardless of the ultimate outcome, materially and adversely affect our operating results by requiring us to incur significant legal expenses and diverting the resources of the company and the attention of management.

~~Not~~The ~~applicable~~loss of any of our key personnel or the failure to attract or retain specialized technical and management personnel could impair our ability to grow our business.

We rely heavily on the services of our key employees such as (i) Dean Personne, our President and Chief Executive Officer, (ii) John Supan, our ~~ITEM~~Chief Financial Officer, (iii) 2Splendid Zuo, our Vice President and General Manager of Operations, (iv) Mary Chow, our Vice President of Supply Chain Management, and (v) Chris Buckley, our Vice President of Sales. ~~PROPERTIES~~ We believe our future success will depend upon our ability to retain these and other key employees and our ability to attract and retain other skilled managerial, engineering, technical and sales and marketing personnel. The competition for such personnel, particularly management and

~~Our~~15 ~~principal executive office is located at Flat E & F, 19/F., CDW Building, 388 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong.~~

OurTable main production facilities are located in Shenzhen, the PRC in a plant with a total floor space of approximately 273,000 square feet. Contents

We technical ~~maintain~~personnel, ais ~~tooling~~intense ~~shop~~in onour industry. Despite the ~~premises~~ ofincentives we provide, our ~~production~~current ~~facilities~~employees inmay ~~Shenzhen~~not continue to work for us, ~~the~~and ~~PRC~~if ~~that~~additional personnel were required for our operations, we ~~use~~may not be able to ~~make~~obtain the ~~molds~~services weof ~~need~~additional ~~for~~personnel ~~production,~~necessary ~~dies~~for ~~and~~our ~~tooling~~growth. ~~for~~For ~~sale~~instance, ~~and~~the ~~spare~~departure ~~parts~~of ~~for~~two ~~equipment~~of ~~used~~our sales executives in ~~our~~fiscal ~~production~~2007 ~~process~~had adversely affected our sales performance. AsThe loss of ~~March 31~~any of our key employees or our inability to attract or retain qualified personnel, ~~2006~~including engineers, could delay the ~~tooling~~development ~~shop, with~~and aintroduction ~~total~~of ~~floor~~and ~~space~~have ofan ~~approximately~~adverse ~~25,000~~effect ~~square~~on ~~feet,~~our ~~employed~~ability ~~118~~to ~~tool~~sell ~~makers~~our products as well as our overall growth.

17We may engage in future acquisitions and we may be unable to successfully integrate these companies into our operations, which would adversely affect our business.

~~Our~~As ~~existing~~part ~~facilities~~of ~~in Shenzhen, the PRC are operated pursuant to processing agreements with an unaffiliated PRC company. These facilities are located on land which was leased from the PRC government by~~ our ~~wholly-owned~~growth ~~subsidiary~~strategy, ~~Warden~~we ~~Development~~may ~~Ltd~~make ~~(“Warden”)~~acquisitions ~~under~~in ~~land~~companies ~~use certificates~~ and/or ~~agreements~~businesses. ~~with terms of fifty years~~Our ~~from~~industry ~~May 1,~~is ~~1992.~~very ~~On November 30~~competitive, ~~2004,~~and ~~the~~we ~~land~~believe ~~lease~~that ~~and~~acquiring ~~buildings~~suitable ~~(“Lease~~companies and ~~Buildings”)~~businesses ~~comprising~~will ~~the~~allow ~~production~~us ~~facilities described above were transferred from Warden~~ to ~~another~~compete ~~wholly-owned~~more ~~subsidiary, Peak China Property Ltd (“Peak China”)~~effectively. ~~After~~The ~~this~~success ~~transfer,~~of ~~Warden owned certain land use rights and~~ an ~~incomplete~~acquisition ~~industrial~~would ~~building,~~depend ~~and~~on ~~Peak~~a ~~China~~number ~~owned Lease and Buildings. The land rights and incomplete industrial building were originally purchased with the intention~~ of ~~completing~~factors, ~~the~~including: ~~facility for expansion of our existing production facilities but this plan was subsequently aborted.~~

~~The~~• ~~Lease~~our ~~and~~ability ~~Buildings were in turn leased by Peak (HK) from Peak China under a two-year lease, which commenced in April 2005 and which is expected~~ to beidentify ~~renewed~~suitable opportunities for ~~another two years in April 2007. Peak (HK) owns the machinery and equipment in the Shenzhen facilities. Under current PRC law, all land belongs to the government~~acquisition; ~~individuals and enterprises may only lease land from the government.~~

We• ~~entered~~our ~~into~~ability ato ~~contract~~reach ~~with~~ an ~~independent~~acquisition ~~third~~agreement party for the sale of Warden, which owned certain land use rights and an incomplete industrial building. This incomplete industrial building is located approximately three miles from our existing production facilities. The sale was completed on ~~April 13,~~terms ~~2005~~that ~~for~~are ~~approximately~~satisfactory ~~$7.7~~to ~~million~~us inor ~~cash.~~at all;

~~ITEM 3. LEGAL~~• ~~PROCEEDINGS~~our ability to successfully integrate the acquired company or business; and

~~R.H.~~• ~~Murphy Co., Inc. (“Murphy”) is~~ the ~~owner of U.S. Re-examined Patent 5~~economic,~~400,904~~ C1business ~~and~~or ~~certain~~other ~~corresponding~~strategic ~~foreign~~objectives ~~patents, which are directed to specific features in trays used to carry integrated circuits. Murphy has notified us~~ and ~~certain~~goals of ~~our customers~~the ~~that~~acquired itcompany ~~believes~~compared ~~these patents are infringed by certain integrated circuit trays that we provided~~ to ~~our~~those ~~customers, and indicated that licenses to these patents are available. We do not believe that any valid claim~~ of ~~these~~our ~~patents is infringed, and are proceeding consistent with that belief~~own.

WeIf ~~applied for a preliminary injunction order so that~~ we ~~can~~are ~~continue~~unsuccessful ~~to sell trays~~ in ~~Taiwan~~our ~~without being interrupted by Murphy and its three distributors in Taiwan and the Taiwan Taichung District Court granted the preliminary injunction order in June 2002. On July 8~~acquisitions, ~~2002,~~ we ~~placed~~may anot security bond of approximately $301,000 at the Taiwan Taichung District Court for a compulsory execution of the preliminary injunction order. Murphy and its three local distributors filed an appeal with the Taiwan High Court, Taichung Branch against the grant of the order by the district court, and in December 2002, the High Court revoked the order issued by the district court. In January 2003, we filed a re-appeal with the Taiwanese Supreme Court, and the Supreme Court revoked the High Court’s ruling and dismissed Murphy and its local distributors’ appeal filed with the High Court. The grant of the preliminary injunction order has now become final and, accordingly, it is unlikely that Murphy or its local distributors will be able to ~~obtain~~implement ~~preliminary injunctive~~fully ~~relief against us or~~ our ~~Taiwan~~business ~~customers~~strategy during the pendency of the underlying litigation. In addition, in October 2002, we filed a civil suit against Murphy with the Taiwan Taichung District Court seeking permanent relief in connection with the preliminary injunction order, which is pending before the Taiwan High Court, Taichung Branch. An additional security bond of approximately $13,200 was placed with the Taiwan Taichung District Court in connection with the underlying civil suit, which was later increased by approximately $23,820. If our effort to ~~receive~~maintain ~~permanent~~or ~~relief~~grow is not successful, we may be required to forfeit the bonds and Murphy and its distributors in Taiwan may assert patent infringement claims against us, which, if successful, could prevent us from selling certain of our ~~products in Taiwan and could result in monetary damages~~business. In December 2001 and July 2003, we also filed two cancellation actions with the Taiwanese Intellectual Property Office (“IPO”) to invalidate Murphy’s patent. The IPO rejected the cancellation actions, and we filed an administrative appeal and further filed an administrative suit for each of the cases, which are pending before the Taiwan High Administrative Court. In February 2002, we also filed a complaint for unfair competition with the Fair Trade Commission (“FTC”) against Murphy. The FTC dismissed the action and we have filed an administrative appeal. That appeal was dismissed and we filed an

18We have in the past and may in the future, be party to legal proceedings that could have a negative financial impact on us.

~~administrative~~We ~~suit.~~have ~~The~~in ~~Taipei~~the ~~High~~past ~~Administrative~~been ~~Court~~involved ~~rendered~~in alitigation ~~judgment~~relating ~~favorable~~ to ~~Peak~~securities and employment law, ~~ruling~~and ~~that~~are ~~Murphy~~currently ~~violated~~involved ~~the~~in ~~Fair~~litigation ~~Trade~~in ~~Act.~~Taiwan ~~Murphy~~related ~~then~~to ~~filed~~intellectual ~~an appeal~~property, ~~which~~and isin ~~still~~tax ~~pending~~and ~~before~~labor ~~the~~disputes ~~Supreme~~in ~~Administrative~~the ~~Court~~PRC. AtWhile ~~present,~~these lawsuits and disputes vary greatly in the ~~outcome~~materiality of ~~this~~potential ~~patent~~liability ~~dispute~~associated ~~cannot~~with bethem, ~~predicted~~the uncertainty associated with ~~reasonable~~substantial ~~particularity~~unresolved ~~and~~litigation nocould seriously ~~impact~~harm toour ~~the~~business, financial ~~statements~~condition ~~has~~and ~~been~~reputation, ~~reflected~~whether material individually or in the aggregate. In particular, this uncertainty could harm our relationships with existing customers, our ability to obtain new customers and our ~~respect~~ability to operate our business.

Litigation and the resolution of disputes also could result in the diversion of our management’s ~~ITEM 4~~time and attention away from business operations, which could harm our business. ~~SUBMISSION~~ OFNegative ~~MATTERS~~developments TOwith Arespect ~~VOTE~~to OFthe ~~SECURITY~~litigation ~~HOLDERS~~ could cause the price of our common stock to decline significantly. In addition, we are unable to determine the amount, if any, that we may be required to pay if such litigation is not resolved in a favorable manner. For more information about the litigation, please see Item 3 entitled “Legal Proceedings.”

~~None~~A significant portion of our business is conducted in the Asia Pacific region. This concentration could expose us to risks inherent to doing business in the Asia Pacific region that could harm our business.

19A significant portion of our net sales are derived from sales to customers in the PRC, Hong Kong, Singapore, Taiwan, the Philippines and other countries in East and Southeast Asia, or the Asia Pacific region. Accordingly, our financial condition and results of operations and the market price of shares of our common stock may be affected by:

~~PART~~• IIeconomic and political instability;

~~ITEM~~• 5.changes ~~MARKET~~in ~~FOR~~regulatory ~~REGISTRANT’S~~requirements, ~~COMMON~~tariffs, ~~EQUITY~~customs, ~~RELATED~~duties ~~STOCKHOLDER~~and ~~MATTERS~~other ~~AND~~trade ~~ISSUER PURCHASES OF EQUITY SECURITIES~~barriers;

~~Market~~• oftransportation ~~Common Stock~~ delays;

~~Since~~16 November 1, 2000, shares of our common stock have traded on the NASDAQ National Market under the symbol “PEAK”. Prior to this time, and on and after October 31, 1997, shares of our common stock traded on the NASDAQ National Market under the symbol “PEAKF”. Prior to October 31, 1997, the shares traded on the NASDAQ National Market under the symbol “PITLF”. Public trading of the shares commenced on June 20, 1997. Prior to that time, there was no public market for the shares. The following table sets forth the high and low sale prices for the shares as reported by the NASDAQ National Market for the periods indicated:

	Price Range ofCommon Stock
	High		Low
Year Ended March 31, 2005:
1st Quarter	$	8.00	$	4.75
2nd Quarter		5.28		4.12
3rd Quarter		5.30		3.85
4th Quarter		4.27		3.10
Year Ended March 31, 2006:
1st Quarter	$	3.89	$	3.06
2nd Quarter		3.88		2.42
3rd Quarter		3.11		2.45
4th Quarter		3.45		2.40

~~Holders~~• offluctuations ~~Record~~in currency exchange rates;

As• ofcurrency ~~June 5,~~convertibility ~~2006, we had approximately 10 holders of record of our common stock. Because many of our shares are held by brokers~~ and ~~other distributions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.~~ repatriation;

~~Dividend~~• ~~Policy~~taxation of our earnings and the earnings of our personnel;

We• ~~have not paid any dividends on our common stock over~~ the ~~past~~recurrence ~~three years and we do not anticipate paying any dividends in the foreseeable future. We intend to retain all earnings, if any, for general corporate purposes. The declaration and payment~~ of ~~dividends,~~SARS ~~if any, will be dependent on our results of operations, financial condition, cash requirements~~ and other ~~relevant~~major ~~factors,~~health ~~subject to the discretion of our board of directors.~~ issues;

~~Equity~~• ~~Compensation~~amounts ~~Plan~~we ~~Information~~may pay, whether or not we are contractually required to do so, in the PRC on behalf of the Factory in Shenzhen for personal income taxes, interest and penalties that may be imposed by PRC tax authorities on the income of foreign workers who performed services in the Shenzhen Factory;

~~The~~• ~~information~~amounts ~~required~~we tomay bepay, ~~disclosed~~whether byor ~~Item 201(d)~~not ofwe ~~Regulation~~are ~~S-K~~contractually ~~“Securities~~required ~~Authorized~~to ~~for~~do ~~Issuance~~so, ~~Under~~on ~~Equity~~behalf ~~Compensation Plans”~~of isthe ~~included~~Factory ~~under~~in ~~Item 12~~the ofPRC ~~Part~~as ~~III~~a result of ~~this~~employees’ ~~Annual~~litigation ~~Report.~~against the Factory in Shenzhen; and

~~Bermuda~~• ~~Taxation~~other risks relating to changes, administration or new interpretations of laws, regulations and policies in the jurisdictions in which we conduct our business.

WeNone of these factors are ~~incorporated~~within inour ~~Bermuda~~control. ~~Under~~In ~~current~~fiscal ~~Bermudan law~~1999, wemany ~~are~~countries ~~not~~in ~~subject~~the toAsia ~~tax~~Pacific onregion ~~income~~experienced considerable orcurrency ~~capital~~volatility ~~gains,~~ and nodepreciation, ~~Bermuda~~high ~~withholding~~interest ~~tax~~rates, ~~will~~stock ~~be imposed~~market ~~upon~~volatility ~~payment~~and ofdeclining ~~dividends~~asset byvalues uswhich contributed to ~~our~~net ~~shareholders.~~foreign ~~Furthermore~~capital outflows, wean ~~have~~increase ~~received~~in ~~from~~ the ~~Minister~~number of ~~Finance~~insolvencies, ofa ~~Bermuda~~decline ~~under~~in ~~the~~business ~~Exempted~~and consumer ~~Undertakings~~spending ~~Tax~~and ~~Protection~~a ~~Act~~decrease ~~of 1966 an assurance that,~~ in ~~the~~economic ~~event~~growth ~~that~~as ~~Bermuda~~compared ~~enacts~~with ~~any legislation~~prior years.

20Consumer demand for products that use semiconductors, disk drives and electronic components generally rises as the overall level of economic activity increases and falls as such activity decreases. In addition, currency devaluations in the Asia Pacific region could result in accelerated price erosion of semiconductor and electronic products as products manufactured in countries whose currencies have devalued significantly against the US dollar become less expensive in US dollar terms. Any adverse effect on the global semiconductor, disk drive and electronic industries as a result of lower demand for products in the Asia Pacific region or accelerated product price erosion arising from currency devaluations in the Asia Pacific region could harm our financial condition or results of operations.

~~imposing~~We ~~any~~are ~~tax~~incorporated ~~computed~~under ~~on profits or income or on any capital asset, gain or appreciation, or any tax in~~ the ~~nature~~laws of ~~estate~~Bermuda ~~duty~~and orthere ~~inheritance~~may ~~tax, the imposition of such tax shall not~~ be ~~applicable~~potential todifficulties usin orprotecting ~~any of~~ our ~~operations,~~shareholders’ ~~nor to the shares, debentures or other obligations of Peak until March 28, 2016~~rights. ~~This assurance does not, however, prevent the imposition of any Bermuda tax payable~~ ~~in relation to any land in Bermuda leased to us or to persons ordinarily resident in Bermuda.~~

AsWe ~~an exempted company, we~~ are ~~liable~~incorporated tounder ~~pay to~~ the ~~Bermudan~~laws ~~government~~of anBermuda ~~annual~~and ~~registration~~our ~~fee~~corporate ~~not~~affairs ~~exceeding~~are ~~27,825~~governed ~~Bermuda~~by ~~dollars~~our ~~(US$27,825)~~Memorandum ~~per~~of ~~annum~~Association ~~calculated~~and onBy-laws ~~a sliding scale basis~~ and by ~~reference~~the tolaws ~~its~~governing ~~authorized~~corporations ~~share~~incorporated ~~capital~~in ~~plus any share premium~~Bermuda.

~~Exchange~~The ~~Controls~~rights of our shareholders and ~~Other~~the ~~Limitations~~responsibilities ~~Affecting~~of ~~Security~~members ~~Holders~~of our Board of Directors under Bermuda law are different from those applicable to a corporation incorporated in the United States and, therefore, our shareholders may have more difficulty protecting their interests in connection with actions by our management, members of our Board of Directors or our principal shareholder than they would as shareholders of a corporation incorporated in the United States.

WeOur ~~have~~stock price has been ~~designated~~and aswill alikely ~~non-resident~~continue ofto ~~Bermuda~~be ~~for~~volatile. ~~exchange~~A ~~control~~decline ~~purposes~~in byour ~~the~~stock ~~Bermuda~~price ~~Monetary~~could ~~Authority,~~result ~~whose~~in ~~permission~~securities ~~for~~class ~~the~~action ~~free~~litigation ~~transferability~~against ofus, ~~shares~~which ofcould ~~our~~divert ~~common~~management’s ~~stock~~attention ~~has~~and ~~been~~harm ~~obtained~~our business.

ITOur ~~MUST~~stock BEprice ~~DISTINCTLY~~has ~~UNDERSTOOD~~been ~~THAT,~~and INis ~~GRANTING~~likely ~~SUCH~~to ~~PERMISSION,~~continue ~~THE~~to ~~BERMUDA~~be ~~MONETARY~~highly ~~AUTHORITY~~volatile. ~~WILL~~Our ~~ACCEPT~~stock NOprice ~~RESPONSIBILITY~~could ~~FOR~~fluctuate ~~THE FINANCIAL~~significantly ~~SOUNDNESS~~due OFto ~~ANY~~a ~~SCHEMES~~number of ORfactors, ~~FOR~~including: ~~THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED HEREIN.~~

~~The~~• ~~transfer~~variations ~~of shares~~in ~~between persons regarded as resident outside Bermuda for exchange control purposes and the issue of shares within~~ our ~~current~~actual ~~authorized share capital to~~ or byanticipated ~~such~~operating persons may be effected without specific consent under the Exchange Control Act 1972 and regulations thereunder. Issues and transfers of shares involving any person regarded as resident in Bermuda for exchange control purposes require specific prior approval under the Exchange Control Act 1972. results;

~~There~~• ~~are~~sales ~~no limitations on the rights~~ of ~~holders~~substantial ofamounts ~~shares~~ of our ~~common~~ stock who are non-resident in Bermuda for exchange control purposes to hold or vote their shares. Because we have been designated as a non-resident for Bermuda exchange control purposes, there are no restrictions on our ability to transfer funds in and out of Bermuda or to pay dividends to United States residents who are holders of the shares, other than in respect of local Bermuda currency. We do not anticipate that we will transact business or make payments of dividends or other distributions in the local Bermuda currency. ;

In• ~~accordance~~announcements ~~with~~about ~~Bermudan~~us ~~law, share certificates are only issued in the names of corporations, partnerships~~ or ~~individuals.~~about Inour ~~the case of an applicant acting in a special capacity (for example~~competitors, asincluding ~~trustee),~~technological ~~certificates~~innovation ~~may,~~or atnew ~~the~~products ~~request~~or of the applicant, record the capacity in which the applicant is acting. Notwithstanding the recording of any such special capacity, we are not bound to take notice of any person other than the person entered in the Register of Members of Peak. services;

As17 an exempted company, we are exempted from Bermudan laws which restrict the percentage of share capital that may be held by non-Bermudians, but as an exempted company we may not participate in certain business transactions including: (1) the acquisition or holding of land in Bermuda (except that required for our business and held by way of lease or tenancy for terms of not more than 50 years or, with the consent of the Minister of Finance of Bermuda land held by lease or tenancy agreements for terms of not more than 21 years to provide accommodation or recreational facilities for officers or employees), (2) the taking of mortgages on land in Bermuda to secure an amount in excess of 50,000 Bermuda dollars (US$50,000) without the consent of the Minister of Finance of Bermuda, (3) the acquisition of any bonds or debentures secured on any land in Bermuda except bonds or debentures issued by the Bermuda government or a public authority or (4) the carrying on of business of any kind in Bermuda, except in furtherance of our business carried on outside Bermuda or under a license granted by the Minister of Finance of Bermuda.

21Table of Contents

~~ITEM 6. SELECTED~~• ~~FINANCIAL~~litigation ~~DATA~~and other developments relating to patents or other proprietary rights or those of our competitors;

~~The~~• ~~selected~~conditions consolidated income statement data for the years ended March 31, 2006, 2005 and 2004 and the selected consolidated balance sheet data as of March 31, 2006 and 2005 set forth below are derived from our audited consolidated financial statements included elsewhere herein and should be read with, and are qualified in ~~their entirety by reference to, these financial statements, including~~ the ~~notes thereto. The selected consolidated income statement data for the fiscal years ended March 31~~semiconductor, ~~2003 and~~disk ~~2002~~drive and ~~the~~electronic selected consolidated balance sheet data as of March 31, 2004, 2003 and 2002 set forth below are derived from our audited consolidated financial statements not included herein. The consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the United States of America. industries;

~~The~~• ~~consolidated financial~~governmental ~~data~~regulation ~~set forth below should be read with Item 7, “Management’s Discussion~~ and ~~Analysis of Financial Condition and Results of Operation,” and the consolidated financial statements and related notes thereto, included elsewhere herein.~~ legislation;

	Year Ended March 31,
	2006			2005			2004			2003			2002
	(In thousands, except share data)
Income Statement Data:
Net sales	$	66,119		$	67,909		$	63,756		$	56,142		$	45,333
Cost of goods sold		(54,632	)		(59,650	)		(45,215	)		(41,394	)		(36,864	)
Gross profit		11,487			8,259			18,541			14,748			8,469
Operating expenses:
Selling and marketing		(10,184	)		(12,118	)		(12,106	)		(10,071	)		(7,845	)
General and administrative		(8,663	)		(6,641	)		(6,588	)		(7,768	)		(8,815	)
Research and development		(145	)		(157	)		(236	)		(136	)		(155	)
Gain on disposal of a subsidiary		2,189			—			—			—			—
Asset impairment(1)		—			—			—			(13,378	)		—
Loss from operations		(5,316	)		(10,657	)		(389	)		(16,605	)		(8,346	)
Other (expense) income, net		(82	)		93			269			(106	)		(266	)
Interest income, net		350			229			166			285			713
(Loss) income before income taxes		(5,048	)		(10,335	)		46			(16,426	)		(7,899	)
Income tax benefit (expense)		473			1,126			(278	)		(104	)		(21	)
Net loss	$	(4,575	)	$	(9,209	)	$	(232	)	$	(16,530	)	$	(7,920	)
Losses per share:
Basic	$	(0.37	)	$	(0.74	)	$	(0.02	)	$	(1.30	)	$	(0.61	)
Diluted	$	(0.37	)	$	(0.74	)	$	(0.02	)	$	(1.30	)	$	(0.61	)
Weighted average number of shares outstanding:
Basic		12,420,388			12,396,344			12,228,781			12,688,651			12,914,700
Diluted		12,420,388			12,396,344			12,228,781			12,688,651			12,914,700
Balance Sheet Data:
Cash and cash equivalents	$	17,441		$	22,301		$	20,303		$	25,928		$	29,217
Total assets		68,811			80,659			87,885			88,023			103,816
Shareholders’ Equity		59,249			63,811			72,645			74,256			90,782
Cash Flow Data:
Net cash (used in) provided by operating activities		(2,745	)		6,291			3,113			(793	)		3,814
Net cash used in investing activities		(2,128	)		(4,668	)		(7,359	)		(2,496	)		(2,339	)
Net cash provided by (used in) financing activities		—			434			(1,290	)		20			(6,265	)

•

international political or economic events or developments, including those relating to Hong Kong and the PRC;

~~(1)~~• ~~Asset impairment charges were recorded during~~ the ~~year~~recurrence ~~ended March 31, 2003, based on independent appraisal, due initially to the Company’s decision to delay in the construction~~ of aSARS ~~new plant in the PRC in fiscal 1999, then the drop in property value in the PRC in fiscal 2001,~~ and ~~the~~other ~~decline~~major inhealth ~~the fair value of an unoccupied factory building as it was reclassified to an “asset to be disposed of by sale” in fiscal 2003.~~issues;

On• ~~April 13,~~amounts ~~2005,~~we ~~this~~may ~~incomplete factory building~~pay, ~~together~~whether ~~with~~or ~~the~~not ~~associated~~we ~~land~~are ~~use rights,~~contractually ~~was~~required ~~sold~~to ~~for~~do ~~approximately~~so, ~~$7.7 million~~ in ~~cash~~the ~~with~~PRC afor ~~net~~personal ~~gain~~income ontaxes, ~~disposal~~interest ofand ~~approximately~~penalties ~~$2.2~~that ~~million~~may ~~through~~be aimposed ~~sale~~by ofPRC ~~the~~tax ~~subsidiary~~authorities ofon the ~~Company~~income ~~that~~of ~~held~~foreign ~~title~~workers towho ~~this~~performed ~~incomplete~~services ~~factory~~in ~~building and~~ the ~~associated~~Shenzhen ~~land use rights.~~ Factory;

22• amounts we may pay, whether or not we are contractually required to do so, on behalf of the Factory in the PRC as a result of employees’ litigation against the Factory; and

~~ITEM~~• 7.changes ~~MANAGEMENT~~in securities analysts’S ~~DISCUSSION~~estimates ~~AND~~of ~~ANALYSIS~~our OFperformance, ~~FINANCIAL~~or ~~CONDITION~~our ~~AND~~failure ~~RESULTS~~to OFmeet ~~OPERATION~~analysts’ expectations.

~~Overview~~Many of these factors are beyond our control. In addition, the stock markets in general, and the NASDAQ Global Market in particular, have experienced extreme price and volume fluctuations recently. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors may decrease the market price of our common stock, regardless of our actual operating performance. In the past, companies that have experienced volatility in the market prices of their stock have been the object of securities class action litigation. If we were the object of securities class action litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

~~We are a leading supplier of precision~~If ~~engineered~~we ~~packaging~~fail ~~products~~to ~~for~~maintain ~~the~~an ~~storage,~~effective ~~transportation~~system ~~and automated handling~~ of ~~semiconductor~~internal ~~devices~~controls, ~~and~~we ~~other~~may ~~electronic~~not ~~components.~~be ~~Our~~able ~~products are designed~~ to ~~interface~~accurately ~~with~~or ~~automated~~timely ~~handling~~report ~~equipment~~our ~~used~~financial inresults ~~the~~or ~~production~~prevent ~~and testing of semiconductor and electronic products~~fraud. WeAs ~~produce~~a ~~principally matrix and disk drive trays~~result, ~~carrier~~current ~~tapes~~ and ~~reels.~~potential Weshareholders ~~also~~could ~~produce~~lose ~~leadframe~~confidence ~~boxes and interleaves used~~ in ~~the~~our ~~storage~~financial ~~and transportation of leadframes. In addition~~reporting, we ~~collect~~which ~~and~~would ~~sell~~harm ~~recycled matrix trays. We primarily derive~~ our ~~revenue~~business ~~from~~and the ~~sale~~trading price of ~~these~~our ~~products~~stock.

~~The~~Effective ~~following~~internal ~~information~~controls isare necessary for us to provide reliable ~~based~~financial ~~on,~~reports and ~~should~~effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be ~~read~~harmed. ~~with~~Pursuant to the Sarbanes-Oxley Act of 2002, we will be required to furnish a report by management on our ~~consolidated~~internal control over financial ~~statements~~reporting, ~~and~~including management's assessment of the ~~related~~effectiveness ~~notes~~of ~~thereto~~such ~~included~~control, ~~elsewhere~~for infiscal ~~this~~2008. ~~Annual~~Internal ~~Report~~control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. ~~Our~~Therefore, ~~consolidated~~even ~~net~~effective ~~sales~~internal ~~increased~~controls ~~from~~can ~~$63~~provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.8 ~~million~~In inaddition, ~~fiscal~~projections ~~2004~~of any evaluation of effectiveness of internal control over financial reporting to ~~$67~~future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.9 ~~million~~We have in ~~fiscal~~the ~~2005~~past discovered, and ~~decreased~~may ~~slightly~~in the future discover, areas of our internal controls that need improvement and we have devoted, and will in the future devote, resources to ~~$66~~remediate and improve our internal controls.1 ~~million~~Although inwe ~~fiscal~~believe ~~2006~~that these efforts have strengthened our internal controls, ~~reflecting~~we are continuing to work to improve our internal controls. We cannot be certain ~~improvements~~that onthese measures ~~the~~will ~~demand~~ensure inthat ~~the~~we ~~semiconductor~~implement ~~industry~~and ~~from~~maintain ~~fiscal~~adequate ~~2004~~controls toover ~~fiscal~~our ~~2005~~financial processes and reporting in the ~~cessation~~future. ofAny ~~manufacturing,~~failure ~~marketing~~to ~~and~~implement ~~selling~~required ~~tube~~new ~~products~~or ~~resulting~~improved controls, or difficulties encountered in their implementation, could ~~decline~~harm ofour ~~consolidated~~operating ~~sales~~results ~~from~~or ~~fiscal~~cause ~~2005~~us to ~~fiscal~~fail ~~2006~~to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

~~Our~~18 consolidated net loss increased from $0.2 million in fiscal 2004 to $9.2 million in fiscal 2005, primarily due to increased raw material costs caused by higher petroleum prices in fiscal 2005, an impairment charge of $0.7 million associated with a write down of plant, machinery and equipment used in our tape and reel businesses, a loss of $1.2 million related to the disposal and write-off of fixed assets, an inventory reserve of $2.0 million for recycled material that could not be economically utilized, $0.4 million of inventory reserve mainly for tubes, tapes and reels due to pricing trends and $1.3 million of expenses related to discrepancies in the computation and payment of taxes and social insurance contributions for workers at the Factory that manufactures our products, which is located in Shenzhen, the PRC and operated pursuant to a processing agreement with an unaffiliated PRC company. Also included in the net loss for the fiscal 2005 was a $0.3 million expense related to labor litigation in the Factory in the PRC.

OurTable consolidated net loss decreased to $4.6 million in fiscal 2006. In fiscal 2006, we successfully utilized approximately $1.5 million of materials, the cost of which had been recognized in a prior period primarily due to a lower of cost or market adjustment and had a favorable disposition through the sales of inventory that was previously reserved by approximately $0.6 million as a result of improved pricing trends of reel and tape. The favorable impact of these factors was offset by scrap materials write off of about $2.0 million. We also paid $1.6 million of income taxes for certain former employees of Peak, its affiliates or other companies who performed services at the Factory, related tax advisory fees and other taxes, as well as customs duty. In addition, higher materials usage and labor costs as a result of changes in product mix, raw material prices and labor overtime resulted in an adverse impact for fiscal 2006. The gross profit was also adversely impacted by $0.5 million of severance payments to a group of terminated workers at the Factory as a result of outsourcing of the canteen and security services. A cost saving of selling and marketing expenses of $1.9 million resulted mainly from reorganizing the sales offices and logistics management. Severance payments of $1.6 million to the former Chief Executive Officer and the former Vice President, General Counsel, were recorded in general administrative expenses for year ended March 31, 2006. A net gain on disposal of a subsidiary (that held title to our Asset Held for Disposal), of $2.2 million was recorded in fiscal 2006. Contents

~~Critical~~Changes ~~Accounting~~to ~~Policies~~financial accounting standards may affect our results of operations and cause us to change our business practices.

InWe ~~preparing~~prepare our ~~consolidated~~ financial statements into ~~conformity~~conform with generally accepted accounting principles, ~~generally~~or ~~accepted~~GAAP, in the United States. These ofaccounting ~~America,~~principles weare ~~must~~subject ~~make~~to ainterpretation ~~variety~~by the American Institute of ~~estimates~~Certified ~~that~~Public ~~affect~~Accountants, the ~~reported~~Securities ~~amounts~~and Exchange Commission and ~~related~~various ~~disclosures.~~bodies ~~The~~formed ~~following~~to interpret and create appropriate accounting policies. A change in those policies ~~are~~can ~~currently~~have ~~considered~~a ~~most~~significant ~~critical~~effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the ~~preparation~~questioning of current practices may adversely affect our reported financial ~~statements~~results or the way we conduct our business. IfFor ~~actual~~example, ~~results~~accounting ~~differ~~policies ~~significantly~~affecting ~~from~~many ~~management’s~~aspects ~~estimates~~of our business, including rules relating to employee stock option grants, have recently been revised or are under review. The Financial Accounting Standards Board and ~~projections~~other agencies have finalized changes to U.S. generally accepted accounting principles that require us, ~~there~~starting ~~could~~in beour fiscal year 2007, to record a ~~material~~charge ~~effect~~to onearnings for employee stock option grants and other equity incentives. We have significant and ongoing accounting charges resulting from option grant and other equity incentive expensing that reduce our ~~financial~~overall ~~statements~~net income. For more information, please see Note 4 entitled “Non-cash Share-based Compensation”. In addition, since we historically have used equity-related compensation as a component of our total employee compensation program, the accounting change makes the use of equity-related compensation less attractive to us, and therefore could make it more difficult to attract and retain employees.

23 ITEM 1B. UNRESOLVED STAFF COMMENTS

~~Revenue~~Not ~~Recognition~~applicable.

Our revenue is recognized when product has been shipped and title to the product has transferred to the customer. Title of the product may transfer to the end customer or distributor when shipped to or received by the ~~customer based on the specific purchase terms of the agreement~~ITEM 2. PROPERTIES We evaluate the provision for estimated returns monthly, based on historical sales and returns. To date we have not experienced significant returns. Any increase in the level of returns could have a material and adverse effect on our financial statements.

~~Allowance~~Our ~~for~~principal ~~Doubtful~~executive ~~Accounts~~office is located at Flat E & F, 19/F., CDW Building, 388 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong.

~~Allowance~~Our ~~for~~main ~~doubtful~~production ~~accounts~~facilities ~~is made against accounts receivable to the extent they~~ are ~~considered~~located ~~to be doubtful. Accounts receivable~~ in ~~the balance~~ ~~sheet~~Shenzhen, ~~are stated net of such provision. We evaluate~~ the ~~collectability~~PRC, ofwhich ~~our accounts receivable based on a combination of factors. In circumstances where~~ we ~~are~~refer ~~aware of a specific customer’s inability~~ to ~~meet~~as ~~its~~the ~~financial obligation to us~~Facility, we ~~record~~in a ~~specific~~plant ~~reserve~~with ~~for~~a ~~bad~~total ~~debts~~floor ~~against~~space ~~amounts due. A provision is also made based on the aging~~ of ~~the~~approximately ~~receivables. If circumstances change~~273,000 ~~such~~square as the incurrence of higher than expected defaults or an unexpected material adverse change occurs regarding a major customer’s ability to meet its financial obligations to us, our estimates of the recoverability of amounts due to us could be reduced by a material amountfeet.

~~Inventory~~We maintain ~~Valuation~~a tooling shop on the premises of the Facility that we use to make the molds we need for production, dies and tooling for sale, and spare parts for equipment used in our production process. As of March 31, 2007, the tooling shop, with a total floor space of approximately 25,000 square feet, employed 107 tool makers.

WeOur ~~write~~existing ~~down~~facilities in Shenzhen, the PRC are ~~our~~operated ~~inventory~~pursuant ~~for~~to ~~estimated~~processing ~~obsolescence~~agreements orwith ~~unmarketable~~an ~~inventory~~unaffiliated ~~equal~~PRC tocompany. ~~the~~These ~~difference~~facilities ~~between~~are ~~the~~located ~~cost~~on ofland ~~inventory~~which ~~and~~was leased from the ~~estimated~~PRC ~~market~~government ~~value~~by ~~based~~our ~~upon~~former ~~assumptions~~wholly-owned ~~about~~subsidiary, ~~future~~Warden ~~demand~~Development Ltd. On November 30, 2004, the land lease and ~~market~~buildings, ~~conditions.~~which Atwe ~~each~~refer ~~balance~~to ~~sheet~~as ~~date~~Lease and Buildings, ~~inventory~~ oncomprising ~~hand~~the inproduction ~~excess~~facilities described above were transferred from Warden to another wholly-owned subsidiary of ~~one~~ours, ~~year’s~~Peak ~~demand~~China orProperty ~~usage~~Ltd. orAfter ~~those~~this ~~that~~transfer, ~~were~~Warden owned ~~produced~~certain ~~more~~land ~~than~~use ~~twelve~~rights ~~months~~and ~~ago~~an incomplete industrial building, ~~are~~and ~~fully~~Peak ~~reserved~~China ~~for~~owned aLease ~~net~~and ~~carrying~~Buildings ~~value~~under land use certificates and agreements with terms of ~~zero~~50 years commencing from December 30, 1992. IfThe ~~actual~~land ~~future~~rights ~~demand~~and orincomplete industrial ~~market~~building ~~conditions~~were ~~are~~originally ~~less~~purchased ~~favorable~~with ~~than~~the ~~those projected~~intention byof ~~management,~~completing ~~additional~~the ~~write-downs~~facility ~~may~~for beexpansion ~~required~~of our existing production facilities but this plan was subsequently abandoned.

~~Valuation~~The ofLease ~~Long~~and Buildings were in turn leased by Peak (HK) from Peak China under a two-~~lived~~year ~~Assets~~lease, which commenced in April 2005 and which was renewed for another two years in April 2007. Peak (HK) owns the machinery and equipment in the Shenzhen facilities. Under current PRC law, all land belongs to the government; individuals and enterprises may only lease land from the government.

We19 assess the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

•Table significantof under-performance relative to expected historical or projected future operating results;Contents

•We ~~significant~~entered ~~changes~~into ina contract with an independent third party for the ~~manner~~sale of ~~our~~Warden, which owned certain land use ofrights ~~the~~and ~~asset;~~an incomplete industrial building located approximately three miles from our existing production facilities. The sale was completed on April 13, 2005 for approximately $7.7 million in cash.

• ITEM 3. LEGAL ~~significant~~PROCEEDINGS ~~negative industry or economic trends; and~~

•R.H. Murphy Co., Inc. (“Murphy”) is the owner of U.S. Re-examined Patent 5,400,904 C1 and certain corresponding foreign patents, which are directed to specific features in trays used to carry integrated circuits. Murphy has notified us and certain of our ~~market~~customers ~~capitalization~~that ~~relative~~it believes these patents are infringed by certain integrated circuit trays that we provided to ~~net~~our ~~book~~customers, ~~value~~and indicated that licenses to these patents are available. We do not believe that any valid claim of these patents is infringed, and are proceeding consistent with that belief. Below is a summary of our actions taken against Murphy.

~~Upon~~We ~~the~~applied ~~existence~~for ofa ~~one~~preliminary orinjunction ~~more~~order ofso that we can continue to sell trays in Taiwan without being interrupted by Murphy and its three distributors in Taiwan. The Taiwan Taichung District Court granted the ~~above~~preliminary ~~indicators~~injunction oforder ~~impairment~~in June 2002. On July 8, 2002, we ~~test~~placed ~~such~~a ~~assets~~security bond of approximately $301,000 at the Taiwan Taichung District Court for a ~~potential~~compulsory ~~impairment~~execution of the preliminary injunction order. ~~The~~Murphy ~~carrying~~and ~~value~~its three local distributors filed an appeal with the Taiwan High Court, Taichung Branch against the grant of the order by the district court, and in December 2002, the High Court revoked the order issued by the district court. In January 2003, we filed a ~~long~~re-~~lived~~appeal ~~asset~~with isthe ~~considered~~Taiwanese ~~impaired~~Supreme ~~when~~Court, and the ~~estimated~~Supreme ~~future~~Court ~~cash~~revoked ~~flows~~the High Court’s ruling and dismissed Murphy and its local distributors’ appeal filed with the High Court. The grant of the preliminary injunction order has now become final and, ~~undiscounted~~accordingly, ~~are~~it is unlikely that Murphy or its local distributors ~~less~~will ~~than~~be able to obtain preliminary injunctive relief against us or our Taiwan customers while the ~~asset’s~~underlying ~~carrying~~litigation ~~value~~is pending. In ~~that~~October ~~event~~2002, we filed a ~~loss~~civil issuit ~~recognized~~against ~~based~~Murphy with the Taiwan Taichung District Court seeking permanent relief in connection with the preliminary injunction order. The Taiwan High Court, Taichung Branch dismissed our claims on January 2, 2007. We filed an appeal on January 26, 2007 with the ~~amount~~Supreme Court to contest the decision issued by the Taiwan High Court, which is still pending with the ~~carrying~~Supreme ~~value~~Court. ~~exceeds~~A security bond for the ~~fair~~court ~~market~~cost ~~value~~of approximately $13,200 was placed with the Taiwan Taichung District Court in connection with the underlying civil suit. If our effort to receive permanent relief is not successful, we may be required to forfeit the bonds and Murphy and its distributors in Taiwan may assert patent infringement claims against us, which, if successful, could prevent us from selling certain of our products in Taiwan and could result in monetary damages. In December 2001 and July 2003, we also filed two cancellation actions with the ~~long-lived~~Taiwanese ~~asset~~Intellectual Property Office (“IPO”) to invalidate Murphy’s patent. ~~Fair~~The ~~market~~IPO ~~value~~rejected the cancellation actions, and we filed an administrative appeal and further filed an administrative suit for each of the cases, one of which is ~~determined~~pending ~~primarily~~before ~~using~~the Taipei High Administrative Court and the ~~anticipated~~other was dismissed by the Taipei High ~~cash~~Administrative ~~flows~~Court ~~discounted~~on atJanuary 12, 2007. We have filed an appeal with the Supreme Administrative Court to contest the judgment rendered by the Taipei High Administrative Court. In February 2002, we also filed a ~~rate~~complaint ~~commensurate~~for unfair competition with the ~~risk~~Fair ~~involved~~Trade Commission (“FTC”) against Murphy. The FTC dismissed the action and we have filed an administrative appeal. That appeal was dismissed and we filed an administrative suit. The Taipei High Administrative Court rendered a judgment favorable to Peak, ruling that Murphy violated the Fair Trade Act. The FTC then filed an appeal, which was dismissed by the Supreme Administrative Court. On March 16, 2007, the FTC filed a petition for “retrial” with the Supreme Administrative Court. At present, the outcome of this patent dispute cannot be predicted with reasonable particularity and no impact to the financial statements has been reflected in this respect.

~~Asset~~ ITEM 4. SUBMISSION toOF beMATTERS ~~Disposed~~TO ofA byVOTE ~~Sale~~OF SECURITY HOLDERS

Asset to be disposed of by sale represents the incomplete industrial building in Shenzhen, the PRC, together with the land use rights on which the building is built and is stated at the lower of its carrying amount or fair value less cost to sell as of the balance sheet date in accordance with Statement of Financial Accounting Standards (“SFAS”) NoNone. ~~144~~ ~~“Accounting for the Impairment of Disposal of Long-Lived Assets.” Fair value was~~

2420

calculatedTable on the basis of a professional valuation report on the property provided by an independent appraiser. A subsidiary that held title to the asset to be disposed of by sale, was sold for $7,692 in cash with a net gain of $2,189 during fiscal year 2006. See Note 5. Contents

~~Deferred~~ PART ~~Taxes~~II

AsITEM part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes and tax bases of assets and liabilities in each of the jurisdictions in which we operate5. ~~This~~MARKET ~~process~~FOR ~~involves~~REGISTRANT’S usCOMMON estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilitiesEQUITY, ~~which~~RELATED ~~are~~STOCKHOLDER ~~included~~MATTERS inAND ~~our~~ISSUER ~~consolidated~~PURCHASES ~~balance~~OF ~~sheet.~~EQUITY We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and, to the extent we believe that recovery is more unlikely than likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the statement of operations. Any change in the future recoverability of the deferred tax assets could significantly affect the results of our operations or cash flows. SECURITIES

~~Property,~~Market ~~Plant~~Information ~~and Equipment~~

~~Property~~Since November 1, ~~plant~~2000, shares of our common stock have traded on the NASDAQ Global Market (called the NASDAQ National Market prior to July 2006) under the symbol “PEAK”. Prior to this time, and ~~equipment~~on isand ~~stated~~after atOctober 31, ~~cost~~1997, ~~less~~shares ~~accumulated~~of our common stock ~~depreciation~~traded on the NASDAQ National Market under the symbol “PEAKF”. ~~Gains~~Prior orto ~~losses~~October 31, 1997, the shares traded on ~~disposals~~the ~~are~~NASDAQ ~~reflected~~National inMarket ~~current~~under ~~operations~~the symbol “PITLF”. ~~Major~~Public ~~expenditures~~trading ~~for~~of ~~betterments~~the ~~and~~shares ~~renewals~~commenced ~~are~~on ~~capitalized~~June 20, 1997. ~~All~~Prior ~~ordinary~~to ~~repairs~~that ~~and~~time, ~~maintenance~~there ~~costs~~was ~~are~~no ~~expensed~~public asmarket ~~incurred~~for the shares. ~~Depreciation~~The isfollowing ~~provided~~table ~~using~~sets forth the ~~straight-line~~ ~~method~~high ~~over~~and low sale prices for the ~~estimated~~shares ~~useful~~as ~~lives.~~reported by the NASDAQ Global Market (or the NASDAQ National Market prior to July 2006) for the periods indicated:

The useful lives of property, plant and equipment adopted for depreciation purposes are as follows:


	Price Range of Common Stock
	High		Low
Year Ended March 31, 2006:
1^st Quarter	$	3.89	$	3.06
2^nd Quarter		3.88		2.42
3^rd Quarter		3.11		2.45
4^th Quarter		3.45		2.40

Year Ended March 31, 2007:
1^st Quarter	$	3.26	$	2.65
2^nd Quarter		3.27		2.60
3^rd Quarter		3.10		2.62
4^th Quarter		3.13		2.60

Buildings		10 years
Plant, machinery and equipment		5-10 years
Molds		3-5 years
Leasehold improvements, furniture, fixtures and motor vehicles		5-10 years

Holders of Record

~~Results~~As of ~~Operations~~June 5, 2007, we had approximately 8 holders of record of our common stock. Because many of our shares are held by brokers and other distributions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

~~Cost~~Dividends ~~of Goods Sold. Cost of goods sold primarily consists of costs of raw materials, labor, and manufacturing overhead.~~

~~Operating~~We ~~Expenses. Selling~~have ~~and~~not ~~marketing~~paid ~~expenses~~any ~~primarily~~dividends ~~consists~~on ofour ~~freight~~common ~~and~~stock ~~delivery~~over ~~costs,~~the ~~salaries~~past ~~and allowances.~~three ~~General~~years and ~~administrative~~we ~~expenses~~do ~~primarily~~not ~~consist~~anticipate ofpaying ~~salaries~~any ~~and~~dividends ~~allowances~~in ~~and~~the ~~legal~~foreseeable future. We intend to retain all earnings, ~~professional~~if ~~and~~any, ~~consulting~~for ~~fees~~general corporate purposes. ~~Research~~The declaration and ~~development~~payment ~~expenses~~of ~~primarily~~dividends, ~~consist~~if any, will be dependent on our results of ~~wages~~operations, ~~raw~~financial ~~material~~condition, ~~costs~~cash requirements and ~~fixed~~other ~~assets~~relevant ~~depreciation.~~factors, subject to the discretion of our board of directors.

25Equity Compensation Plan Information

The ~~following~~information ~~table~~required ~~sets~~to ~~forth,~~be ~~for~~disclosed ~~the~~by ~~years~~Item 201(d) ~~indicated,~~of ~~certain~~Regulation ofS-K ~~our~~“Securities ~~income~~Authorized ~~statement~~for ~~items~~Issuance asUnder aEquity Compensation ~~percentage~~Plans” is included under Item 12 of ~~net~~Part ~~sales~~III of this Annual Report.

	Year Ended March 31,
	2006		2005		2004
Net sales	100.0	%	100.0	%	100.0	%
Cost of goods sold	(82.6	)	(87.8	)	(70.9	)
Operating expenses:
Selling and marketing	(15.4	)	(17.8	)	(19.0	)
General and administrative	(13.1	)	(9.8	)	(10.3	)
Research and development	(0.2	)	(0.2	)	(0.4	)
Gain on disposal of a subsidiary	3.3		—		—
Loss from operations	(8.0	)	(15.6	)	(0.6	)
Other (expense) income, net	(0.1	)	0.1		0.4
Interest income, net	0.5		0.3		0.3
(Loss) income before income taxes	(7.6	)	(15.2	)	0.1
Income tax benefit (expense)	0.7		1.7		(0.4	)
Net loss	(6.9	)%	(13.5	)%	(0.3	)%

Bermuda Taxation

~~Fiscal~~We ~~2006~~are ~~Compared~~incorporated in Bermuda. Under current Bermudan law, we are not subject to ~~Fiscal~~tax ~~2005~~on income or capital gains, and no Bermuda withholding tax will be imposed upon payment of dividends by us to our shareholders. Furthermore, we have received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 an assurance that, in the event Bermuda enacts any legislation

~~Net~~21 Sales. Revenues decreased by $1.8 million or 2.6% to $66.1 million in fiscal 2006 from $67.9 million in fiscal 2005. Revenue from sales of our IC trays increased by 0.7%. Volume for IC trays decreased by 1.4% while average selling price increased by 2.1%. Revenue from sales of our disk drive trays increased by 5.8% driven mainly by an increase in average selling price by 23.7% while volume decreased by 14.5%. Revenue from sales of our carrier tape products increased by 2.0% compared to last year primarily due to an increase in average selling price of 3.3% while a volume decreased by 1.3% compared to the prior year. Revenue from sales of our reel products increased by 12.4% compared to last year primarily due to a volume increase of 10.1% while average selling price increased by 2.1% compared to the prior year. Revenue from sales of our cover tape products increased by 4.6% reflecting both a 1.2% increase in volume and a 3.4% increase in the average selling price. Revenue from sales of our tube products decreased by 99.6% comparing to the fiscal 2005 as we had ceased to manufacture, market and sell tube products since March 2005 due to unfavorable margins. Revenue from sale of our disc caddies increased to $1.5 million for fiscal 2006 from only $98,000 for fiscal 2005 when this new product was first introduced.

OurTable disk drive tray sales and new product sales have generally been to a few major customers or to subcontractors supporting those customers. These sales are largely dependent on the introduction of new products by those customers. New product introductions are difficult to forecast both with respect to timing as well as demand. We have been producing new custom molds for those customers in anticipation of several new products, but these activities have not yet led to significant production orders. Mature products, while requiring some replacement trays, do not generally generate a sustainable high level of revenue. As a result, revenue from sales of our disk drive trays and new products has, and will in the future, fluctuate dramatically with the corresponding fluctuations in the introduction of new products. Contents

~~Gross~~ imposing ~~Profit. Gross~~any ~~profit~~tax ~~for~~computed ~~fiscal~~on ~~2006~~profits ~~increased~~or toincome ~~$11.5~~or ~~million~~on ~~from~~any ~~$8.3~~capital ~~million~~asset, ingain ~~fiscal~~or ~~2005~~appreciation, anor ~~increase~~any ~~by 39.1%.~~tax ~~Gross~~in ~~margin~~the ~~increased~~nature ~~as a percentage~~ of ~~sales~~estate toduty ~~17.4%~~or ininheritance ~~fiscal~~tax, ~~2006~~the imposition ~~from~~of ~~12.2%~~such intax ~~fiscal~~shall ~~2005.~~not ~~Improvements~~be inapplicable ~~gross~~to ~~profit~~us ~~and~~or ~~gross~~any ~~margin~~of ~~percentage~~our ~~were~~operations, ~~attributable~~nor to ~~several~~our ~~factors. First~~shares, wedebentures ~~exited~~or ~~the~~other ~~unprofitable~~obligations ~~manufacture~~until March 28, ~~marketing~~ ~~and~~2016. ~~sales~~This ofassurance ~~tube~~does ~~products~~not, athowever, prevent the ~~end~~imposition of ~~fiscal~~any ~~2005.~~Bermuda ~~Second,~~tax ~~improved~~payable ~~market~~in relation ~~pricing trends have allowed us~~ to ~~increase~~any ~~the~~land ~~average~~in ~~selling~~Bermuda ~~prices~~leased ofto ~~our~~us ~~products,~~or ~~and~~to ~~there~~persons ~~was~~ordinarily aresident ~~favorable~~in ~~impact of about $0~~Bermuda.6 ~~million arising from the sales of inventory that had previously been~~

26As an exempted company, we are liable to pay to the Bermudan government an annual registration fee not exceeding 27,825 Bermuda dollars (US$27,825) (29,220 Bermuda dollars (US$29,220) with effect from April 1, 2007) per annum calculated on a sliding scale basis by reference to our authorized share capital plus any share premium.

~~reserved.~~Exchange ~~Third,~~Controls weand ~~had~~Other ~~improved~~Limitations ~~our~~Affecting ~~material~~Security ~~utilization.~~Holders We have successfully utilized approximately $1.5 million of materials, the cost of which had been recognized in a prior period. The above favorable impact was partially offset by scrap materials written off that amounted to $2.0 million in fiscal 2006. Also, there was higher material cost as a result of changes in sales mix and material prices.

AnWe ~~amount~~have ofbeen ~~$0.5~~designated ~~million was incurred~~ as ~~severance payments to~~ a ~~group~~non-resident of ~~terminated~~Bermuda ~~workers~~for atexchange ~~the~~control ~~factory~~purposes inby ~~Shenzhen (~~the ~~“Factory”)~~ ~~for~~Bermuda ~~fiscal~~Monetary ~~2006~~Authority. asThe apermission ~~result~~ of ~~outsourcing~~ the ~~canteen~~Bermuda Monetary ~~and~~Authority ~~security~~is ~~functions~~required atfor the ~~Factory~~issue ~~that is operated pursuant to a processing agreement with an unaffiliated party. An amount~~ of ~~$0.3~~shares ~~million~~and ~~was~~securities ~~incurred~~by asPeak ~~severance payments~~and ~~for~~the ~~fiscal~~subsequent ~~2005.~~transfer ~~Higher labor costs as a result~~ of ~~changes~~such inshares ~~product mix,~~ and ~~labor overtime also resulted in an adverse impact for fiscal 2006~~securities.

~~Our~~IT ~~gross~~MUST ~~profit~~BE ~~for~~DISTINCTLY ~~fiscal~~UNDERSTOOD ~~2006 was also impacted by accruals and payments in connection with the underpayment of taxes in the PRC incurred by the Factory. In April 2005~~THAT, ~~the~~IN ~~PRC~~GRANTING ~~tax~~SUCH ~~authorities began an investigation into the withholding and payment of income taxes by the Factory for certain current and former employees of the Company~~PERMISSION, ~~its~~THE ~~affiliates~~BERMUDA orMONETARY ~~other~~AUTHORITY ~~companies~~WILL ~~who~~ACCEPT ~~performed~~NO ~~services~~RESPONSIBILITY atFOR ~~the~~THE ~~Factory~~FINANCIAL ~~but~~SOUNDNESS ~~had~~OF ~~not~~ANY ~~paid~~PROPOSALS ~~income~~OR ~~taxes~~FOR inTHE ~~the~~CORRECTNESS ~~PRC and~~OF ~~for~~ANY ~~whom~~OF ~~the~~THE ~~Factory~~STATEMENTS ~~did~~MADE ~~not~~OR withhold and pay income taxes. The PRC tax authorities sought to collect unpaid income taxes on salaries and expense allowances of certain current and former employees of the Company, its affiliates or otherOPINIONS ~~companies~~EXPRESSED ~~who~~IN ~~performed~~ANY ~~services~~DOCUMENT inWITH ~~the~~REGARD ~~PRC~~TO ~~based~~SUCH ~~on the worker’s relationship with the Factory and interest and penalties on such amounts~~ISSUE. Since some of these claims were based on income earned over several years, the amount of such taxes, accrued interest and penalties was substantial. The Company does not believe that it was liable for such claims, but in the event the PRC tax authorities determine payments for back taxes, interest and penalties are owed, the potential consequences could have included substantial monetary claims against the Factory or the seizure of the Factory and the Company’s assets at the Factory and the termination of substantially all of the Company’s production operations. The PRC authorities did assert claims for such taxes against the Factory, and accordingly the Company did make payments on a voluntary basis in order to avoid the seizure of the Factory or the Company’s assets at the Factory and to keep it operational. The Company engaged tax advisors to assist the Company in assessing the Factory’s and the Company’s obligations with respect to the withholding and payment of income and other taxes by the Factory. The investigation concluded in the fourth quarter of fiscal 2006. A total of approximately $1.4 million was paid in fiscal 2006 for the income taxes of certain former employees stationed at or employed by the Factory, and for other taxes. The Company did not believe that the Factory had sufficient assets to pay such amounts. Upon final settlement of this PRC tax investigation there were no interest or penalty assessments on the above unpaid income taxes. An additional $0.2 million has been paid as fees to the China tax advisor.

~~Loss~~The ~~from~~transfer ~~Operations. An~~of ~~operating~~shares ~~loss~~between ofpersons ~~$5.3~~regarded ~~million~~as ~~was~~resident ~~recorded~~outside Bermuda for exchange ~~fiscal~~control ~~2006~~purposes ~~compared~~and the issue of shares within our current authorized share capital to aor ~~loss~~by such persons may be effected without specific consent from the Bermuda Monetary Authority under the Exchange Control Act 1972 and regulations thereunder for so long as any equity securities, including shares, are listed on an appointed stock exchange as defined in the Companies Act 1981 of ~~$10~~Bermuda.7 ~~million recorded~~Issues and transfers of shares involving any person regarded as resident in Bermuda for exchange ~~fiscal~~control ~~2005~~purposes require specific prior approval under the Exchange Control Act 1972.

~~Selling~~There ~~and~~are ~~Marketing~~no ~~Expenses. Selling~~limitations ~~and~~on ~~marketing~~the ~~expenses~~rights ~~decreased~~of holders byof ~~16.0% to~~shares ~~$10.2~~of ~~million~~our common stock who are non-resident in ~~fiscal~~Bermuda ~~2006~~for ~~from~~exchange ~~$12~~control purposes to hold or vote their shares.1 ~~million~~Because inwe ~~fiscal~~have ~~2005,~~been ~~primarily~~designated as a ~~result~~non-resident offor ~~cost~~Bermuda ~~savings~~exchange ~~from~~control ~~reorganizing~~purposes, there are no restrictions on our ~~logistics~~ability ~~management~~to transfer funds in and ~~sales~~out ~~offices~~of .Bermuda ~~During~~or ~~fiscal~~to ~~2006,~~pay wedividends ~~consolidated~~to ~~certain~~United States residents who are holders of ~~our~~the ~~sales~~shares, ~~and~~other ~~distribution facilities~~than in ~~Singapore,~~respect ~~Malaysia~~of ~~and~~local ~~China~~Bermuda currency. ~~This~~We ~~consolidation~~do ~~contributed~~not toanticipate ~~the~~that ~~decrease~~we will transact business or make payments of dividends or other distributions in ~~selling~~the ~~and~~local ~~marketing~~Bermuda ~~expenses~~currency.

~~General and~~In ~~Administrative~~accordance ~~Expenses. General~~with ~~and~~Bermudan ~~administrative~~law, ~~expenses~~share ~~increased~~certificates toare ~~$8.7~~only ~~million~~issued in the ~~fiscal~~names ~~2006~~of ~~from~~corporations, $6partnerships or individuals.6 ~~million~~In the case of an applicant acting in ~~fiscal~~a ~~2005~~special ~~mainly~~capacity (for example, as atrustee), ~~result~~certificates ofmay, ~~severance~~at ~~payments~~the request of ~~$1.6~~the ~~million~~applicant, torecord the ~~former~~capacity ~~Chief Executive~~in ~~Officer~~which ~~and~~ the ~~former~~applicant ~~Vice~~is ~~President,~~acting. Notwithstanding ~~General~~the ~~Counsel,~~recording asof ~~well~~any assuch anspecial ~~increase~~capacity, inwe ~~costs~~are ~~associated~~not ~~with~~bound ~~the~~to ~~use~~take notice of ~~consultants~~any toperson ~~review~~other ~~and~~than ~~improve~~the ~~various~~person ~~operational~~entered ~~efficiencies~~in at the ~~Factory~~Register of Members of Peak.

~~Gain~~As onan ~~disposal~~exempted ofcompany, awe ~~subsidiary. We~~are ~~realized~~exempted afrom ~~net~~Bermudan ~~gain~~laws onwhich restrict the ~~sale~~percentage of ashare ~~subsidiary~~capital that may be held by non-Bermudians, ~~Warden~~but ~~Development~~as ~~Ltd.~~an exempted company we may not participate in certain business transactions including: (~~“Warden”~~1) the acquisition or holding of land in Bermuda (except that required for our business and held by way of lease or tenancy agreements for terms of not more than 50 years or, ~~which~~with the consent of the Minister of Finance of Bermuda, land held ~~title~~by lease or tenancy agreements for terms of not more than 21 years to anprovide ~~incomplete~~accommodation ~~industrial~~or ~~building~~recreational ~~and~~facilities for officers or employees), (2) the taking ~~associated~~of mortgages on land ~~use~~in ~~rights~~Bermuda to secure an amount in excess of 50,000 ~~located~~Bermuda ~~approximately~~dollars ~~three~~(US$50,000) ~~miles~~without ~~from~~the ~~our~~consent ~~existing~~of ~~PRC~~the ~~production~~Minister ~~facilities~~of Finance of Bermuda, (3) the acquisition of ~~approximately~~any ~~$2.2~~bonds ~~million~~or indebentures ~~fiscal~~secured ~~2006.~~on ~~The~~any land in Bermuda ~~incomplete~~except ~~industrial~~bonds ~~building~~or ~~was~~debentures ~~originally~~issued ~~purchased~~by ~~with~~the Bermuda government or a public authority or (4) the ~~intention~~carrying on of ~~completing~~business ~~the~~of ~~facility~~any kind in Bermuda, except, among others, with an exempted undertaking in furtherance only of our business carried on outside Bermuda.

2722

forTable expansion of our existing production facilities but this plan was subsequently aborted. The sale was completed on April 13, 2005, with full ownership of Warden and its associated risk transferred to the purchaser, for sales proceeds of approximately $7.7 million in cash. Contents

Other (Expense) Income), Net. Other (expense) income , net is comprised of foreign currency transaction gains and losses. Fluctuations are due primarily to the relative strength or weaken of the US dollar at ~~various times compared with the other currencies we use to conduct our business~~ITEM 6. SELECTED ~~Interest~~FINANCIAL ~~Income,~~DATA ~~Net. Interest income, net increased by 52.8%, from $229,000 in fiscal 2005 to $350,000 in fiscal 2006, primarily due to an increase in interest rates for such deposits.~~

~~Net~~The ~~Loss. Net~~selected ~~loss~~consolidated income ~~decreased~~statement data for the years ended March 31, 2007, 2006 and 2005 and the selected consolidated balance sheet data as of March 31, 2007 and 2006 set forth below are derived from ~~$9.2~~our ~~million~~audited consolidated financial statements included elsewhere in ~~fiscal~~this ~~2005~~Annual Report on Form 10-K and should be read with, and are qualified in their entirety by reference to, $4these financial statements, including the notes thereto.6 ~~million~~The in selected consolidated income statement data for the fiscal ~~2006~~years ended March 31, ~~reflecting~~2004 ~~all~~and 2003 and the ~~above~~selected ~~factors~~consolidated balance sheet data as of March 31, 2005, 2004 and 2003 set forth below are derived from our audited consolidated financial statements not included herein. The consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the United States of America.

~~Fiscal~~The ~~2005~~consolidated ~~Compared~~financial todata ~~Fiscal~~set ~~2004~~forth below should be read with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and the consolidated financial statements and related notes thereto, included elsewhere herein.

Net Sales. Revenues increased by $4.2 million or 6.5% to $67.9 million in fiscal 2005 from $63.8 million in fiscal 2004. The increase resulted from greater demand across all products, except for disk drive trays.


	Year Ended March 31,
	2007			2006			2005			2004			2003
	(In thousands, except share data)
Income Statement Data:
Net sales	$	60,159		$	66,119		$	67,909		$	63,756		$	56,142
Cost of goods sold		(49,424	)		(54,632	)		(59,650	)		(45,215	)		(41,394	)

Gross profit		10,735			11,487			8,259			18,541			14,748
Operating expenses:
Selling and marketing		(8,647	)		(10,184	)		(12,118	)		(12,106	)		(10,071	)
General and administrative		(6,611	)		(8,663	)		(6,641	)		(6,588	)		(7,768	)
Research and development		(172	)		(145	)		(157	)		(236	)		(136	)
Gain on disposal of a subsidiary⁽¹⁾		—			2,189			—			—			—
Asset impairment⁽¹⁾		—			—			—			—			(13,378	)

Loss from operations		(4,695	)		(5,316	)		(10,657	)		(389	)		(16,605	)
Other (expense) income, net		(117	)		(82	)		93			269			(106	)

Interest income, net		622			350			229			166			285

(Loss) income before income taxes		(4,190	)		(5,048	)		(10,335	)		46			(16,426	)
Income tax benefit (expense)		283			473			1,126			(278	)		(104	)

Net loss	$	(3,907	)	$	(4,575	)	$	(9,209	)	$	(232	)	$	(16,530	)

Loss per share:
Basic	$	(0.31	)	$	(0.37	)	$	(0.74	)	$	(0.02	)	$	(1.30	)

Diluted	$	(0.31	)	$	(0.37	)	$	(0.74	)	$	(0.02	)	$	(1.30	)

Weighted average number of shares outstanding:
Basic		12,420,988			12,420,388			12,396,344			12,228,781			12,688,651
Diluted		12,420,988			12,420,388			12,396,344			12,228,781			12,688,651

Balance Sheet Data:
Cash and cash equivalents	$	20,366		$	17,441		$	22,301		$	20,303		$	25,928
Total assets		62,926			68,811			80,659			87,885			88,023
Shareholders’ Equity		55,909			59,249			63,811			72,645			74,256

Cash Flow Data:
Net cash provided by (used in) operating activities		7,453			(2,745	)		6,291			3,113			(793	)
Net cash used in investing activities		(4,530	)		(2,128	)		(4,668	)		(7,359	)		(2,496	)
Net cash provided by (used in) financing activities		7			—			434			(1,290	)		20

~~Revenue from sales of our IC trays increased by 9.7%. Volume for IC trays increased by 13.~~(1%) ~~while~~Asset ~~average~~impairment ~~selling~~charges ~~price~~were ~~dropped~~recorded byduring ~~3.0%.~~the ~~The~~year ~~increase~~ended inMarch ~~volume~~31, ~~for~~2003, ICbased ~~trays~~on ~~was~~independent ~~primarily~~appraisal, due initially to ~~increased~~our ~~demand~~decision ~~for~~to ~~such~~delay ~~trays.~~the ~~Revenue~~construction ~~from~~of ~~sales~~a ofnew ~~our~~plant ~~disk~~in ~~drive~~the ~~trays~~PRC ~~decreased~~in byfiscal ~~15.4%~~1999, ~~driven mainly~~and bythen ato the drop in ~~average~~property ~~selling~~value ~~price~~in bythe ~~16.0%~~PRC ~~while~~in ~~volume~~fiscal ~~increased~~2001, byand ~~0.6%.~~the ~~Revenue~~decline ~~from~~in ~~sales~~the fair value of ~~our~~an ~~carrier~~unoccupied ~~tape~~factory ~~products~~building ~~increased~~as byit ~~6.1%~~was ~~compared~~reclassified to ~~last~~an ~~year~~“asset ~~primarily due~~ to abe ~~volume~~disposed ~~increase~~ of ~~22.2% while average selling price dropped~~ by ~~13.2%~~sale” ~~compared~~in tofiscal ~~the prior year~~2003. ~~Revenue~~On ~~from~~April ~~sales~~13, of2005, ~~our~~this ~~reel~~incomplete ~~products~~factory ~~increased~~building, bytogether ~~7.3%~~with ~~compared~~the toassociated ~~last~~land ~~year~~use ~~primarily~~rights, ~~due~~was tosold afor ~~volume~~approximately ~~increase of 10~~$7.5%7 ~~while~~million ~~average~~in ~~selling~~cash ~~price~~with ~~dropped~~a bynet ~~2.9%~~gain ~~compared~~on todisposal ~~the prior year. Revenue from sales~~ of ~~our~~approximately ~~cover tape products increased by 36~~$2.3%2 ~~reflecting~~million ~~both~~through a ~~35.8%~~sale ~~increase~~of ~~in volume and~~ a ~~0.4%~~wholly-owned ~~increase~~subsidiary inof the ~~average~~Company ~~selling~~(Warden ~~price~~Development Ltd.) ~~Revenue~~that ~~from~~held ~~sales~~title ofto ~~our~~this ~~tube~~incomplete ~~products~~factory ~~increased~~building ~~by 29.7% reflecting both 26.9% increase in volume~~ and ~~2.2%~~the ~~increase~~associated inland anuse ~~average selling price~~rights.

~~Our~~23 disk drive tray sales have generally been to one major customer or to subcontractors supporting that customer. These sales are largely dependent on the introduction of new products by that customer. New product introductions are difficult to forecast both with respect to timing as well as demand. We have been producing new custom molds for that customer in anticipation of several new products, but this activity has not yet led to significant production orders. Mature products, while requiring some replacement trays, do not generally generate a sustainable high level of revenue. As a result, revenue from sales of our disk drive trays has, and will in the future, fluctuate dramatically with the corresponding fluctuations in the introduction of new products.

DuringTable the quarter ended December 31, 2004, we announced to our customers our intention to discontinue the production and sale of tubes and in March 2005 we ceased the manufacture, marketing and sale of tube products. We gave our customers until the end of March to place orders for “last time buys.” We accelerated depreciation on the dedicated equipment used in the manufacturing of tubes and as a result all such assets had a zero book value at the time of disposal. Contents

~~Gross~~ITEM Profit. Gross profit for fiscal 2005 decreased to $8.3 million from $18.5 million in fiscal 2004, a decrease 55.5%. Gross margin deteriorated to 12.2% in fiscal 2005 from 29.1% in fiscal 2004, reflecting a reduction in the average selling price of our products and an increase in the cost of raw material due to higher petroleum prices. The gross profit for fiscal 2005 also included an impairment charge of $0.7 ~~million associated with a write down of plant, machinery and equipment used in our tape and reel businesses, a $1~~.2 ~~million~~MANAGEMENT’S ~~loss~~DISCUSSION ~~related~~AND toANALYSIS ~~the~~OF ~~disposal~~FINANCIAL ~~and~~CONDITION ~~write-off~~AND ofRESULTS ~~fixed~~OF assets, an inventory reserve of $2.0 million for recycled material that could not be economically utilized, $0.4 million of inventory reserve mainly for tubes, tapes and reels due to pricing trends and $1.3 million of expenses related to discrepancies in the computation and payment of taxes and OPERATION

28Overview

~~social~~We ~~insurance~~are ~~contributions for workers at the Factory. The discrepancy, which was at the Factory and not at Peak, was discovered as~~ a ~~result~~leading supplier of ~~a claim~~precision byengineered anpackaging ~~employee~~products ~~regarding~~for the ~~computation~~storage, oftransportation ~~wages~~ and ~~withholding.~~automated ~~Upon~~handling ~~discovery~~ of ~~these~~semiconductor ~~discrepancies,~~devices weand ~~conducted~~other anelectronic ~~internal~~components. ~~review~~Our ofproducts ~~the~~are ~~Factory’s~~designed ~~practices and engaged third party advisors~~ to ~~assist~~interface ~~us in assessing the Factory’s and our obligations~~ with ~~respect~~automated tohandling ~~these~~equipment ~~discrepancies.~~used ~~Upon completion of this review~~ in the ~~third~~production ~~quarter~~and testing of ~~fiscal~~semiconductor ~~2005,~~and ~~management~~electronic ~~concluded that the Factory had a duty to correct certain of these discrepancies that amounted to a total of $1~~products.~~3 million.~~ ~~While~~We weproduce ~~believe~~principally wematrix ~~were not contractually obligated under the terms of our agreement with our processing partner to pay these amounts~~ and ~~while~~disk nodrive ~~claim had yet been made by any government agency~~trays, wecarrier ~~voluntarily~~tapes ~~made~~and ~~payments of approximately $1~~reels.3 ~~million~~We toalso ~~the~~collect ~~PRC tax authorities in the fourth quarter of fiscal 2005 in order to avoid the seizure of the Factory’s assets~~ and ~~keep~~sell itrecycled ~~operational.~~matrix ~~Also included in the gross profit for the year was a $0~~trays.3 ~~million~~We ~~expense related~~primarily toderive ~~labor~~our ~~litigation~~revenue infrom the ~~Factory~~sale inof ~~the~~these ~~PRC~~products.

~~Loss~~The ~~from~~following ~~Operations~~information is based on, and should be read with, our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. An ~~operating~~Our ~~loss~~consolidated ofnet sales decreased from $1067.7 9 million ~~was~~in ~~recorded~~fiscal ~~for~~2005 to $66.1 million in fiscal ~~2005~~2006, ~~compared~~and decreased further to a$60.2 ~~loss~~million in fiscal 2007. The cessation of $0manufacturing, marketing and selling of tube products resulted in the decline of consolidated sales from fiscal 2005 to fiscal 2006.4 ~~million~~Comparing ~~recorded~~fiscal ~~for~~2007 with fiscal ~~2004~~2006, the sales of all product categories decreased with the exception of a marginal increase in the sales of reel products.

~~Selling~~Our ~~and~~consolidated ~~Marketing~~net loss decreased to $3.9 million in fiscal 2007. In fiscal 2007, we recorded a charge of ~~Expenses~~approximately $1. ~~Selling~~2 ~~and~~million ~~marketing~~for ~~expenses~~materials ~~remained~~that ~~steady~~were atwritten down to scrap value as they were no longer usable in the production process, a charge of approximately $120.4 million for finished goods that were either obsolete or slow-moving, and a loss of approximately $0.1 million from the conclusion of contract litigation with a scrap dealer. In addition, the reduction in ~~both~~sales from fiscal ~~2005~~2006 to fiscal 2007 resulted in a greater proportion of fixed manufacturing overheads that was absorbed into the cost of goods sold. The unfavorable impact of these factors was partially offset by reductions in selling and ~~2004~~marketing expenses and general and administrative expenses, despite the expensing of non-cash share-based compensation in fiscal 2007 in accordance with SFAS 123R (see Note 4). Selling and marketing expenses decreased primarily due to cost savings from the streamlining of logistics and warehousing, as well as the reorganization of our sales and marketing department. General and administrative expenses decreased primarily due to the streamlining of operations and improvement in operating efficiencies.

~~General~~Our consolidated ~~and~~net ~~Administrative~~loss ~~Expenses~~decreased to $4. ~~General~~6 million in fiscal 2006. In fiscal 2006, we successfully utilized approximately $1.5 million of materials, the cost of which had been recognized in a prior period primarily due to a lower cost or market adjustment, and ~~administrative~~had ~~expenses~~a ~~remained~~favorable ~~steady~~disposition atthrough the sales of inventory that was previously reserved by approximately $0.6 million as a result of improved pricing trends of reel and tape. The favorable impact of these factors was offset by scrap material write-offs of about $2.0 million. We also paid $1.6 million of income taxes for certain former employees of Peak, its affiliates or other companies who performed services at the Factory, related tax advisory fees and other taxes, as well as customs duty. In addition, higher materials usage and labor costs as a result of changes in ~~both~~product mix, raw material prices and labor overtime resulted in an adverse impact for fiscal ~~2005~~2006. The gross profit was also adversely impacted by $0.5 million of severance payments to a group of terminated workers at the Factory as a result of outsourcing of the canteen and ~~2004~~security services. A cost saving of selling and marketing expenses of $1.9 million resulted mainly from reorganizing the sales offices and logistics management. Severance payments of $1.6 million to the former Chief Executive Officer and the former Vice President and General Counsel, were recorded in general administrative expenses for year ended March 31, 2006. A net gain on disposal of a subsidiary (which held title to our Asset Held for Disposal) of $2.2 million was recorded in fiscal 2006.

~~Other (Expense) Income, Net. Other (expense) income, net is generally comprised of foreign currency gains and losses as a~~Critical ~~result~~Accounting ofPolicies a fluctuation of the US dollar at certain times during the year. Other income, net decreased by 65.4%, or $176,000, from $269,000 in fiscal 2004 to $93,000 in fiscal 2005. In fiscal 2004, $367,000 was collected in partial payment of a judgment against a former officer of the Company which was included in other income (expense), net.

~~Interest~~In ~~Income, Net. Interest~~preparing ~~income,~~our ~~net~~consolidated ~~increased~~financial bystatements ~~38.0%,~~in ~~from~~conformity ~~$166,000~~with accounting principles generally accepted in the ~~fiscal~~United ~~2004~~States toof ~~$229~~America,~~000~~ inwe ~~fiscal~~must ~~2005,~~make ~~primarily~~a ~~due~~variety of estimates that affect the reported amounts and related disclosures. The following accounting policies are currently considered most critical to the ~~increase~~preparation inof ~~bank~~our ~~deposit~~financial ~~balances~~statements. If actual results differ significantly from management’s estimates and ~~increase~~projections, inthere ~~interest~~could ~~rates~~be ~~for~~a ~~such~~material ~~deposits~~effect on our financial statements.

~~Net~~24 ~~Loss. Net loss increased from $0.2 million in fiscal 2004 to $9.2 million in fiscal 2005, reflecting all the above factors.~~

LiquidityTable andof Capital Resources Contents

WeShare-Based ~~historically~~Compensation met a significant portion of our cash requirements from cash flow from operations and we expect this to continue in fiscal 2007. In fiscal 2006, we did not have any cash generated from nor used in financing activities. Our primary uses of cash have been to fund capital expenditures related to the expansion of our facilities and operations and working capital requirements. We intend to continue to retain our earnings to finance the development and expansion of our business operations and do not intend to pay dividends for the foreseeable future. As of March 31, 2006, cash and cash equivalents were $17.4 million, a decrease of $4.9 million as compared to cash and cash equivalents of $22.3 million as of March 31, 2005.

~~Our~~In ~~net~~December 2004, ~~cash~~the ~~used~~Financial inAccounting ~~operating~~Standards ~~activities~~Board ~~was~~(“FASB”) $2issued SFAS 123R, which requires companies to measure and recognize compensation expense for all share-based payments at fair value.7 ~~million~~Share-based inpayments ~~fiscal~~include ~~2006,~~stock ~~compared~~options and non-vested share grants. We grant options to apurchase ~~net~~common ~~cash~~stock ~~provided~~to bysome of our employees and directors under various plans at prices ~~operating~~equal ~~activities~~to the market value of $6the stock on the dates the options were granted.3 ~~million~~We historically have accounted for stock options using the method prescribed in ~~fiscal~~the ~~2005~~Accounting Principles Board (“APB”) 25 whereby stock options are granted at market price and ano compensation cost is recognized, and disclosed the pro forma effect on net ~~cash~~earnings ~~provision~~assuming ofcompensation ~~$3.1~~cost ~~million~~had been recognized in ~~fiscal~~accordance ~~2004.~~with ~~The~~SFAS ~~increase~~123. inSFAS ~~cash~~123R, ~~used~~which inwas ~~operating~~effective ~~activities~~for ~~during~~us ~~fiscal~~since April 1, 2006, eliminates asthe ~~compared~~ability to ~~fiscal~~account ~~2005~~for ~~was~~share-based ~~primarily~~compensation ~~due~~transactions tousing aAPB ~~deposit~~25, ~~of approximately~~and $2generally requires that such transactions be accounted for using prescribed fair-value-based methods.5 ~~million~~SFAS ~~into~~123R anpermits ~~escrow~~public companies to ~~fund~~adopt ~~certain~~its requirements ~~contingent~~using ~~obligations~~one ~~under~~of ~~existing~~two ~~contracts~~methods: (a) a “modified prospective” method in which compensation costs are recognized beginning with ~~senior~~the ~~management.~~effective ~~During~~date ~~fiscal~~based ~~2006,~~on wethe ~~paid~~requirements ~~severance~~of SFAS 123R for all share-based payments granted or modified after the effective date, and based on the requirements of ~~$1.6~~SFAS 123 ~~million~~for all awards granted to employees prior to the ~~former~~effective ~~Chief~~date ~~Executive~~of ~~Officer~~SFAS ~~and~~123R that remain unvested on the ~~former Vice~~effective ~~President,~~date ~~General~~or ~~Counsel,~~(b) a ~~out~~“modified retrospective” ofmethod ~~this~~which ~~escrow~~includes ~~fund.~~the ~~The~~requirements ~~increase~~of inthe ~~cash~~modified ~~used~~prospective inmethod ~~operating~~described ~~activities~~above, ~~was~~but also ~~due~~permits companies to ~~$2.7~~restate ~~million~~based ~~cash~~on ~~used~~the inamounts ~~accounts~~previously ~~payable-trade.~~recognized Inunder ~~fiscal~~SFAS ~~year~~123 ~~2005,~~for wepurposes ~~received~~of ~~$4.1~~pro ~~million~~forma asdisclosures either anfor ~~advance~~all ~~deposit~~periods ~~in connection~~presented ~~with~~or ~~the~~prior ~~sale~~interim periods of ~~Warden,~~ the ~~subsidiary~~year ~~that~~of ~~held~~adoption. ~~title~~We tohave ~~the~~decided ~~incomplete~~to ~~industrial~~adopt ~~building~~SFAS ~~and~~123R ~~related~~using ~~land~~the ~~use~~modified ~~rights~~prospective method.

29As part of our adoption of Statement of Financial Accounting Standards (“SFAS”) 123R as of April 1, 2006, we are required to recognize the fair value of share-based compensation awards as an expense. We apply the Black-Scholes option-pricing model in order to determine the fair value of stock options on the date of grant, and we apply judgment in estimating key assumptions that are important elements in the model such as the expected stock-price volatility, expected stock option life and expected forfeiture ratios. Our estimates of these important assumptions are based on historical data and judgment regarding market trends and factors. If actual results are not consistent with our assumptions and judgments used in estimating these factors, we may be required to record additional share-based compensation expense, which could be material to our results of operations.

~~Our~~Revenue ~~net~~Recognition cash used in investing activities was $2.1 million in fiscal 2006, compared to $4.7 million in fiscal 2005 and $7.4 million in fiscal 2004. Net cash used in investing activities primarily consisted of capital expenditures of $4.3 million, $5.6 million and $6.4 million for the acquisition of new equipment in our current production facilities during fiscal 2006, fiscal 2005 and fiscal 2004, respectively. The continuous investment in capital expenditure during fiscal 2006 and 2005 reflected capacity expansion due to the increase in economic activity in the semiconductor industry and replacement of obsolete fixed assets. In fiscal year 2006, we have also received $2.3 million as cash proceeds from the disposal of Warden. The remaining $1.3 million of the sales consideration was kept in escrow that will be released to us in two equal payments during the first quarters of fiscal 2007 and 2008. For details of the escrow, see Note 5.

AsOur ofrevenue ~~March 31, 2006, we had~~is ~~commitments~~recognized ~~for~~when ~~capital~~product ~~expenditures~~has ofbeen ~~$0.3~~shipped ~~million.~~and ~~The~~title ~~actual~~to ~~amounts~~the ofproduct ~~capital~~has ~~expenditures~~transferred ~~may~~to ~~vary~~the ~~substantially~~customer. ~~from~~Title ~~those~~of ~~budgeted~~the orproduct ~~estimated~~may ~~for~~transfer ato ~~variety~~the ofcustomer ~~reasons,~~when ~~including~~shipped ~~changes~~to inor ~~market~~received ~~conditions,~~by ~~unavailability~~the orcustomer ~~changes~~based ~~in scheduled~~on ~~delivery~~the of specific ~~equipment,~~purchase ~~changes~~terms inof ~~interest~~the ~~rates and other factors~~agreement. We Inevaluate ~~addition,~~the weprovision ~~plan~~for toestimated ~~continue~~returns tomonthly, ~~expand~~based ~~capacity~~on ~~and~~historical ~~replace~~sales ~~our obsolete fixed assets in future periods~~ and ~~plan~~returns. toTo ~~fund~~date ~~such~~we ~~expansion~~have ~~through~~not ~~our~~experienced ~~current cash~~significant ~~reserves,~~returns. ~~future~~Any ~~cash~~increase ~~flow~~in ~~from~~the ~~operations~~level ~~and~~of ~~new~~returns ~~bank~~could ~~borrowings~~have asa ~~required.~~material ~~We lease office~~ and ~~warehouse~~adverse ~~facilities~~effect ~~under~~on ~~various~~our ~~leases that expire through 2010. Total future minimum commitments under these leases amount to approximately~~financial $1statements.0 ~~million.~~

AsAllowance offor ~~March 31,~~Doubtful ~~2006,~~Accounts we had no outstanding indebtedness. At March 31, 2006, the Company has unsecured letter of credit facilities available of $3.0 million of which all have been utilized. Interest rates in connection with the credit facilities are generally based on the weighted average lending rates of 3.73 % and the line of credit is normally subject of annual review.

~~According~~Allowance tofor ~~customs~~doubtful ~~rules~~accounts inis ~~the~~made ~~PRC,~~against itaccounts isreceivable ~~possible~~to ~~that~~the weextent ~~may~~they beare ~~subject~~considered to ~~classification~~be bydoubtful. Accounts receivable in the ~~Chinese~~balance ~~customs authorities~~sheet inare astated ~~manner~~net ~~that~~of ~~would~~such ~~require~~provision. usWe toevaluate ~~supply~~the collectability of our accounts receivable based on a ~~substantial~~combination ~~bond~~of ~~against~~factors. ~~customs~~In ~~duties~~circumstances ~~that~~where we ~~would~~are ~~have~~aware of a specific customer’s inability to ~~pay~~meet ifits financial obligation to us, we ~~were~~record ~~importing~~a ~~material~~specific reserve for ~~ultimate~~bad ~~sale~~debts inagainst amounts due. A provision is also made based on the ~~PRC~~aging of the receivables. If ~~the~~circumstances ~~customs~~change, ~~authorities~~such ofas the ~~PRC~~incurrence ~~require~~of ushigher tothan ~~post~~expected adefaults ~~bond in~~or ~~connection~~an ~~with~~unexpected ~~our~~material ~~exemption~~adverse ~~status~~change ~~from~~occurs ~~PRC~~regarding ~~duties~~a onmajor ~~imported~~customer’s ~~raw~~ability to ~~materials~~meet ~~for~~its ~~export~~financial ~~sales~~obligations to us, ~~and~~our ~~exported~~estimates ~~products,~~of wethe ~~will~~recoverability ~~experience~~of aamounts ~~substantial~~due ~~additional~~to ~~use~~us ~~our~~could ~~cash~~be ~~resources~~reduced by a material amount.

~~There~~Inventory ~~was~~Valuation no cash provided by financing activities in fiscal 2006, compared to a cash provided of $0.4 million in fiscal 2005 and a net cash usage of $1.3 million in fiscal 2004. Net cash provided by financing activities in fiscal 2005 was due to proceeds from issuance of common stock. Net cash used in financing activities in fiscal 2004 was primarily used to repurchase shares of our common stock. In September 2000, our board of directors authorized the repurchase, at management’s discretion, of up to $10.0 million worth of our common stock at prices not to exceed 150% of our net asset value per share. Common stock repurchased was cancelled immediately. During the year ended March 31, 2004, we repurchased 660,186 shares of common stock at an average cost of $3.66 per share. There were no repurchases of shares for years ended March 31, 2006 and 2005.

~~As of March 31, 2006, our principal source of liquidity consisted of $17.4 million in cash and cash equivalents.~~ We ~~believe~~write ~~that~~down our ~~existing~~inventory ~~cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs in the ordinary course of business~~ for atestimated ~~least~~obsolescence ~~the next 12 months. If our existing cash and cash equivalents and cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional public~~ or ~~private~~unmarketable ~~equity~~inventory ~~securities~~equal ~~or obtain debt financing. There can be no assurance that we will be able~~ to ~~sell additional equity securities,~~the ~~publicly~~difference orbetween ~~privately in~~ the ~~amounts~~cost ~~that~~of ~~may~~inventory beand ~~needed or at all. There can be no assurance that additional financing will be available in~~ the ~~amounts~~estimated ~~that~~market ~~may~~value bebased ~~needed,~~upon orassumptions ifabout ~~available,~~future ~~will~~demand beand ~~obtained on terms favorable to us. Additional equity~~ ~~or debt financing may also be dilutive to our existing shareholders.~~

~~The~~25 Company does not use off-balance-sheet arrangements with unconsolidated entities or related parties, nor does it use other forms of off-balance-sheet arrangements such as research and development arrangements. Accordingly, the Company’s liquidity and capital resources are not subject to off-balance-sheet risks from unconsolidated entities.

30Table of Contents

~~From~~ market ~~time~~conditions. toAt ~~time~~each balance sheet date, weinventory ~~may~~on ~~evaluate~~hand ~~possible~~in ~~investments~~excess of one year’s demand or ~~acquisitions~~usage ~~and~~or ~~may,~~those ifthat awere ~~suitable~~produced more than twelve ~~opportunity~~months ~~arises~~ago, ~~make~~are ~~such~~fully anreserved ~~investment~~for ora ~~acquisition~~net carrying value of zero. WeIf ~~currently~~actual ~~have~~future nodemand ~~commitments~~or tomarket ~~make~~conditions ~~any~~are ~~material~~less ~~investments~~favorable orthan ~~acquisitions~~those projected by management, additional write-downs may be required.

~~Contractual~~Valuation ~~Obligations~~of ~~and~~Long-lived ~~Commercial~~Assets ~~Commitments~~

AsWe assess ofthe ~~March 31,~~carrying ~~2006,~~value ~~our~~of ~~future~~long-lived ~~fixed~~assets ~~commitments~~whenever ~~are~~events asor ~~follows (~~changes in ~~thousands):~~circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

	Payments due by period
Contractual Obligations	Total		Less than1 year		1-3 years		3-5 years	More than5 years
Operating Leases	$	981	$	744	$	237	—	—
Purchase Orders		4,251-		4,251-		—	—	—

•

significant under-performance relative to expected historical or projected future operating results;

~~PVC~~• ~~Compound~~significant ~~Price~~changes in the manner of our use of the asset;

~~PVC~~• ~~compound,~~significant ~~the~~negative ~~principal~~industry ~~material~~or ~~used~~economic intrends; ~~the manufacture of our tubes, accounted for 10.1%~~ and ~~7.4% of our total raw materials costs in fiscal 2005 and 2004 respectively. In fiscal 2006, we ceased the manufacture, marketing and sale of tube products and hence minimal PVC compound was used.~~

~~Hong~~• ~~Kong~~our ~~Profits~~market ~~Tax~~capitalization relative to net book value.

~~The~~Upon ~~factory at which our products are produced, which is located in Shenzhen,~~ the ~~PRC,~~existence isof ~~operated~~one ~~pursuant~~or tomore aof ~~processing agreement with an unaffiliated PRC company. According to~~ the ~~tax~~above ~~guidelines~~indicators ~~issued~~of byimpairment, ~~the~~we ~~tax~~test ~~authority~~such inassets afor ~~situation where~~ a ~~Hong~~potential Kong company manufactures goods partly in Hong Kong and partly outside Hong Kong, the Hong Kong Inland Revenue Department (“IRD”) may accept profits that relate to the manufacture of the goods outside Hong Kong to be offshore in nature and therefore not subject to Hong Kong profits taximpairment. The ~~offshore~~carrying ~~claim~~value ~~would only be allowed by the IRD by way~~ of concession and provided that certain criteria are met to their satisfaction. We believed that most of its manufacturing activities were conducted outside Hong Kong and therefore since fiscal 1996 it apportioned a ~~substantial~~long-lived ~~amount~~asset ofis ~~its~~considered ~~profits~~impaired ~~(80%~~when tothe ~~90%)~~estimated tofuture ~~activities~~cash ~~outside Hong Kong for tax filing purposes. However~~flows, ~~since fiscal 1996~~undiscounted, ~~there~~are ~~was~~less athan ~~dispute with~~ the ~~IRD~~asset’s incarrying ~~relation to the apportionment basis of the profit derived from manufacturing activities outside Hong Kong~~value. WeIn ~~raised a number of objections to the tax assessments and examined factors~~ that ~~the~~event, ~~IRD~~a ~~used~~loss tois ~~ascertain~~recognized ~~the geographic nature of our activities and sources of the profits. We made provisions for taxes payable according to the apportionment basis~~ based on ~~practices~~the ~~normally acceptable~~amount by ~~the~~which ~~IRD in general cases. Interest associated with~~ the ~~tax~~carrying ~~payable~~value ~~for~~exceeds ~~fiscal years 1996 to 2004 had also been accrued. We believed that~~ the ~~aggregate~~fair ~~maximum~~market ~~amount~~value of ~~its~~the ~~potential~~long-lived ~~exposure~~asset. ~~was~~Fair ~~approximately~~market ~~$4.3~~value ~~million~~is ~~plus~~determined primarily ~~interest~~using in the ~~amount~~anticipated ofcash ~~$1.4~~flows ~~million.~~discounted Asat a ~~result,~~rate ~~the~~commensurate ~~Company~~with ~~accrued $5.6 million as of March 31, 2004 and $5.6 million as of March 31, 2003 as part of~~ the ~~income~~risk ~~taxes payable~~involved.

InAsset ~~connection~~to ~~with~~be ~~the~~Disposed ~~above, the IRD requested that we place tax reserve certificates~~ of ~~$5.1~~by ~~million~~Sale ~~with IRD as of March 31, 2004 and $3.7 million and letters of credit of $0.6 million with the IRD as of March 31, 2003, which could be recovered if we prevails.~~

InAsset to be disposed of by sale represented certain land use rights and an incomplete industrial building in Shenzhen, the ~~year~~PRC and was stated at the lower ~~ended~~of its carrying amount or fair value less cost to sell in accordance with SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets.” Fair value as of March 31, 2005, wewas ~~reached~~calculated on the basis of a professional ~~settlement~~valuation ~~with~~report on the ~~IRD~~property ~~and~~provided ~~these~~by ~~tax~~an ~~reserve~~independent ~~certificates~~appraiser. ~~were~~A ~~utilized~~subsidiary, towhich ~~pay~~held ~~for~~title to the ~~prior~~asset ~~year~~to ~~taxes.~~be Adisposed ~~net~~of ~~gain~~by ofsale, was sold for $07.37 million ~~was~~in ~~recognized~~cash aswith a ~~result~~net gain of ~~the~~$2.2 ~~settlement~~million ~~with~~during ~~the~~fiscal ~~IRD~~year 2006. See Note 6.

~~New~~Deferred ~~Accounting~~Taxes ~~Standards~~

InAs ~~June,~~part ~~2005~~of the process of preparing our consolidated financial statements, we are required to estimate our income taxes and tax bases of assets and liabilities in each of the jurisdictions in which we operate. This process involves us estimating our current tax ~~Financial~~exposure ~~Accounting~~together ~~Standards~~with ~~Board~~assessing ~~(FASB)~~temporary ~~issued~~differences ~~FASB~~resulting ~~Statement~~from Nodiffering treatment of items for tax and accounting purposes. ~~154,~~ ~~“Accounting~~These ~~changes~~differences result in deferred tax assets and ~~error~~liabilities, ~~corrections—a~~which ~~replacement~~are ofincluded ~~APB~~in ~~Opinion~~our Noconsolidated balance sheet. 20 We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and, ~~FASB~~to ~~Statement~~the Noextent we believe that recovery is more unlikely than likely, we must establish a valuation allowance. 3” To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the statement of operations. Any change in the future recoverability of the deferred tax assets could significantly affect the results of our operations or cash flows.

31Property, Plant and Equipment

~~(“FAS No. 154”). FAS No. 154 replaces APB Opinion No. 20~~Property, ~~“Accounting~~plant ~~changes”~~ and ~~changes~~equipment ~~the~~is ~~requirements~~stated ~~for~~at ~~the accounting~~cost ~~for~~less ~~and~~accumulated ~~reporting of a change in accounting principles~~depreciation. ~~This~~Gains ~~Statement~~or ~~applies~~losses toon ~~all~~disposals ~~voluntary~~are ~~changes~~reflected in ~~accounting~~current ~~principles~~operations. ~~It also applies to changes required by an accounting pronouncement in the unusual instance that the~~Major ~~pronouncement~~expenditures ~~does~~for ~~not~~betterments ~~include~~and ~~specific~~renewals ~~transition~~are ~~provisions~~capitalized. ~~This~~All ~~Statement~~ordinary ~~requires~~repairs ~~retrospective~~and ~~application~~maintenance tocosts ~~prior~~are ~~periods’~~expensed financial statements of changes in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This Statement defines retrospective application as the application of a different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entityincurred. ~~This~~Depreciation ~~Statement~~is ~~also~~provided ~~redefines~~using ~~restatement as~~ the revising of previously issued financial statements to reflect the correction of an error. This Statement requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change in nondiscretionary profitstraight-~~sharing~~line ~~payments resulting~~method ~~from~~over ~~an accounting change, should be recognized in~~ the ~~period~~estimated ofuseful ~~the accounting change~~lives. This Statement also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. The Company believes this has no material impact on its consolidated financial statements.

In26 December, 2004, the FASB issued FASB Statement No. 123 (revised 2004), Share-Based Payment, or Statement 123(R), which is a revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation”. Statement 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” or Opinion 25. Generally, the approach in Statement 123(R) is similar to the approach described in the unrevised Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. In April 2005, the SEC deferred the effective date of Statement 123(R) so that companies may now adopt its provisions at the beginning of their first annual period beginning after June 15, 2005 which would be fiscal 2007, beginning April 1, 2006 for us. As permitted by the unrevised Statement 123, we currently account for share-based payments to employees using Opinion 25’s intrinsic value method, under which we generally do not record compensation cost for employee stock options. Accordingly, the adoption of Statement 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of Statement 123(R) cannot be predicted at this time because it will depend, in part, on levels of share-based payments granted in the future. However, had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note 23 to our Consolidated Financial Statements.

InTable December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. SFAS No. 153 addresses the measurement of exchanges of nonmonetary assets and redefines the scope of transactions that should be measured based on the fair value of the assets exchanged. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, which would be our second quarter of fiscal 2006. The adoption of SFAS No. 153 is not expected to have a material effect on our consolidated financial position or results of operations. Contents

InThe ~~November~~useful ~~2004,~~lives ~~the FASB issued SFAS No. 151, Inventory Costs—An Amendment~~ of ~~ARB No. 43~~property, ~~Chapter~~plant ~~4, which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs~~ and ~~wasted~~equipment ~~material~~adopted ~~(spoilage). SFAS No. 151 is effective~~ for ~~inventory~~depreciation ~~costs~~purposes ~~incurred~~are ~~during~~as ~~fiscal years beginning after June 15, 2005, which would be our first quarter of fiscal 2007 and its adoption is not expected to have a~~follows: ~~significant impact on our results of operations or financial position.~~


Buildings		10 years
Plant, machinery and equipment		5-10 years
Molds		3-5 years
Leasehold improvements, furniture, fixtures and motor vehicles		5-10 years

~~ITEM 7A. QUANTITATIVE~~Results ~~AND~~of ~~QUALITATIVE~~Operations ~~DISCLOSURES ABOUT MARKET RISK~~

~~Currency~~Cost ~~Exchange~~of ~~Rate~~Goods ~~Fluctuations~~Sold. Cost of goods sold primarily consists of costs of raw materials, labor and manufacturing overhead.

~~Our~~Operating ~~sales~~Expenses. Selling ~~are~~and ~~denominated~~marketing expenses primarily inconsist ~~US dollars while our cost~~ of ~~goods~~freight ~~sold~~and ~~are generally~~delivery ~~incurred in US dollars~~costs, ~~Hong~~salaries ~~Kong dollars~~ and allowances. ~~Renminbi,~~General and ~~our~~administrative ~~operating~~ expenses ~~are generally denominated in Renminbi, Hong Kong dollars, Singapore dollars, New Taiwanese dollars and US dollars. In addition, a substantial portion of our capital expenditures,~~ primarily ~~for~~consist ~~the purchase~~ of ~~equipment,~~salaries ~~has~~and ~~been~~allowances and ~~is expected to continue to be denominated in US dollars~~legal, ~~Renminbi,~~professional ~~Japanese Yen~~ and ~~the~~consulting ~~Euro~~fees. ~~Consequently,~~Research ~~a portion of our costs~~ and ~~operating~~development ~~margins~~expenses ~~may be affected by fluctuations in exchange rates,~~ primarily ~~between~~consist ~~the US dollar and other currencies. Our results~~ of ~~operations~~consultancy and financial condition could be adversely affected by fluctuations in currency exchange rates or the imposition of new or additional currency controls in the jurisdictions in which we operate. At March 31fees, ~~2006 and 2005~~wages, weraw ~~had~~material nocosts ~~outstanding~~and ~~foreign~~fixed assets ~~exchange contracts~~depreciation.

~~Many~~The offollowing ~~our~~table ~~competitors~~sets ~~are~~forth, ~~located~~for ~~in countries whose currencies devalued significantly against~~ the USyears ~~dollar~~indicated, ~~beginning~~certain ~~in the second half~~ of ~~1997. As a result of such devaluation, these competitors’ products have become less expensive in US dollar terms. This reduction could result in~~ our ~~customers~~income ~~purchasing~~statement ~~products~~items ~~from~~as ~~these competitors rather than from us, which would have~~ a ~~material~~percentage ~~and~~of ~~adverse effect on our~~ net sales ~~and results of operations~~.

As the Hong Kong dollar is officially pegged to the US dollar and the Renminbi is controlled by the PRC government such that it only trades within a limited range against the US dollar, unless there are significant changes in the policies of the Hong Kong and the PRC government, fluctuations in the exchange rates of the Hong Kong dollar and the Renminbi are not expected to have a significant impact on our results of operations. However, should the PRC government allow the Renminbi to have a wider trading range, resulting in a significant appreciation of the Renminbi against the US dollar, our production costs will increase and our operating margins will erode.


	Year Ended March 31,
	2007		2006		2005
Net sales	100.0	%	100.0	%	100.0	%
Cost of goods sold	(82.1	)	(82.6	)	(87.8	)
Operating expenses:
Selling and marketing	(14.4	)	(15.4	)	(17.8	)
General and administrative	(11.0	)	(13.1	)	(9.8	)
Research and development	(0.3	)	(0.2	)	(0.2	)
Gain on disposal of a subsidiary	—		3.3		—

Loss from operations	(7.8	)	(8.0	)	(15.6	)
Other (expense) income, net	(0.2	)	(0.1	)	0.1
Interest income, net	1.0		0.5		0.3

Loss before income taxes	(7.0	)	(7.6	)	(15.2	)
Income tax benefit	0.5		0.7		1.7

Net loss	(6.5	)%	(6.9	)%	(13.5	)%

33Fiscal 2007 Compared to Fiscal 2006

Net Sales. Revenues decreased by $6.0 million or 9.0% to $60.2 million in fiscal 2007 from $66.1 million in fiscal 2006. ~~ITEM~~ Revenue from sales of our IC trays decreased by 7.7%. Volume for IC trays decreased by 7.4% while average selling price decreased by 0.3%. Revenue from sales of our disk drive trays decreased by 44.3% driven mainly by a volume decrease of 52.4% while average selling price increased by 16.9%. Revenue from sales of our carrier tape products decreased by 6.8% compared to last year primarily due to a volume decrease of 8. ~~FINANCIAL~~5% ~~STATEMENTS~~while ~~AND~~average ~~SUPPLEMENTARY~~selling ~~DATA~~price increased by 1.9% compared to the prior year. Revenue from sales of our reel products increased by 3.0% compared to last year primarily due to an increase in average selling price by 8.2% while volume decreased by 4.8% compared to the prior year. Revenue from sales of our cover tape products decreased by 3.3% reflecting a 4.4% decrease in average selling price and a 1.2% increase in volume. Revenue from sales of our disc caddies decreased slightly by 2.5% compared to the prior year. However, all of the fiscal 2007 sales for disc caddies, a relatively new product that was first introduced in fiscal 2005, were recorded in the first quarter with nil sales in the subsequent three quarters due to the merger of Seagate and Maxtor, two of our historically larger customers, and the subsequent rationalization of inventory.

~~See~~27 ~~the index included on page F-1, Index to Consolidated Financial Statements and Schedule. Our unaudited quarterly results of operations for the years ended March 31, 2006 and 2005 are as follows:~~

	Quarter Ended
	3/31/2006			12/31/2005			9/30/2005			6/30/2005			3/31/2005			12/31/2004			9/30/2004			6/30/2004
	(unaudited)
	(In thousands, except share data)
Income Statement Data:
Net sales	$	16,893		$	17,185		$	16,598		$	15,443		$	16,543		$	16,785		$	16,787		$	17,794
Cost of goods sold		(12,253	)		(12,690	)		(13,610	)		(16,079	)		(16,329	)		(16,858	)		(13,989	)		(12,474	)
Gross Profit		4,640			4,495			2,988			(636	)		214			(73	)		2,798			5,320
Operating Expenses:
Selling and marketing		(2,283	)		(2,605	)		(2,521	)		(2,775	)		(2,906	)		(3,028	)		(3,036	)		(3,148	)
General and administrative		(3,450	)		(1,816	)		(1,638	)		(1,759	)		(1,577	)		(1,690	)		(1,671	)		(1,703	)
Research and development		(37	)		(33	)		(31	)		(44	)		(35	)		(37	)		(39	)		(46	)
Gain on disposal of a subsidiary		—			—			—			2,189			—			—			—			—
(Loss) income from operations		(1,130	)		41			(1,202	)		(3,025	)		(4,304	)		(4,828	)		(1,948	)		423
Other income (expense), net		102			107			(157	)		(134	)		45			212			(84	)		(80	)
Interest income, net		65			68			112			105			84			68			44			33
(Loss) income before income taxes		(963	)		216			(1,247	)		(3,054	)		(4,175	)		(4,548	)		(1,988	)		376
Income tax benefit (expense)		(56	)		(4	)		91			442			309			378			491			(52	)
Net (loss) income	$	(1,019	)	$	212		$	(1,156	)	$	(2,612	)	$	(3,866	)	$	(4,170	)	$	(1,497	)	$	324
(Losses) earnings per share:
Basic		(0.08	)		0.02			(0.09	)		(0.21	)		(0.31	)		(0.34	)		(0.12	)		0.03
Diluted		(0.08	)		0.02			(0.09	)		(0.21	)		(0.31	)		(0.34	)		(0.12	)		0.03
Weighted average number of shares outstanding:
Basic		12,420,389			12,420,388			12,420,388			12,420,388			12,420,388			12,408,176			12,396,265			12,360,683
Diluted		12,420,389			12,420,681			12,420,388			12,420,388			12,420,388			12,408,176			12,396,265			12,771,588
Balance Sheet Data:
Cash and cash equivalents	$	17,441		$	18,855		$	19,403		$	20,470		$	22,301		$	24,110		$	20,433		$	20,156
Total assets		68,811			73,701			70,600			73,123			80,659			84,062			82,308			89,024
Shareholders’ equity		59,249			60,236			60,046			61,117			63,811			67,696			71,860			73,284

34Our disk drive tray sales and new product sales have generally been to a few major customers or to subcontractors supporting those customers. These sales are largely dependent on the introduction of new products by those customers. New product introductions are difficult to forecast both with respect to timing as well as demand. We have been producing new custom molds for those customers in anticipation of several new products, but these activities have not yet led to significant production orders. Mature products, while requiring some replacement trays, do not generally generate a sustainable high level of revenue. As a result, revenue from sales of our disk drive trays and new products has, and will in the future, fluctuate dramatically with the corresponding fluctuations in the introduction of new products.

~~ITEM~~Gross 9Profit. Gross ~~CHANGES~~profit INdecreased ~~AND~~by ~~DISAGREEMENTS~~$0.8 ~~WITH~~million ~~ACCOUNTANTS~~or ON6.5% ~~ACCOUNTING~~to ~~AND~~$10.7 ~~FINANCIAL~~million ~~DISCLOSURE~~in fiscal 2007 from $11.5 million in fiscal 2006. Gross margin as a percentage of sales increased slightly to 17.8% in fiscal 2007 from 17.4% in fiscal 2006. In fiscal 2007, we recorded a charge of approximately $1.2 million for materials that were written down to scrap value as they were no longer usable in the production process, a charge of approximately $0.4 million for finished goods that were either obsolete or slow-moving, and a loss of approximately $0.1 million from the conclusion of contract litigation with a scrap dealer. In addition, the reduction in sales from fiscal 2006 to fiscal 2007 resulted in a greater proportion of fixed manufacturing overheads that was absorbed into the cost of goods sold.

~~None~~Loss from Operations. An operating loss of $4.7 million was recorded for fiscal 2007 compared to a loss of $5.3 million recorded for fiscal 2006.

~~ITEM 9A~~Selling and Marketing Expenses. ~~CONTROLS~~Selling ~~AND~~and ~~PROCEDURES~~marketing expenses decreased by 15.1% to $8.6 million in fiscal 2007 from $10.2 million in fiscal 2006, despite the expensing of non-cash share-based compensation in fiscal 2007 in accordance with SFAS 123R (see Note 4). The decrease was primarily a result of cost savings from the streamlining of logistics and warehousing, including the consolidation of our sales and distribution facilities in Singapore, Malaysia and the PRC, as well as the reorganization of our sales and marketing department.

~~(a)~~General ~~Evaluation of disclosure controls~~ and ~~procedures~~Administrative Expenses. WeGeneral ~~maintain “disclosure controls~~ and ~~procedures,”~~administrative asexpenses ~~such~~decreased ~~term~~by is23.7% ~~defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed~~ to ~~ensure~~$6.6 ~~that~~million ~~information required to be disclosed by us~~ in ~~reports~~fiscal ~~that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission~~2007 ~~rules~~from and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure$8.7 Inmillion ~~designing~~in ~~and~~fiscal ~~evaluating our disclosure controls and procedures~~2006, ~~management~~despite ~~recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that~~ the ~~objectives~~expensing of ~~the~~non-cash ~~disclosure~~share-based ~~controls~~compensation ~~and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally,~~ in ~~designing~~fiscal ~~disclosure~~2007 ~~controls and procedures, our management necessarily was required to apply its judgment~~ in ~~evaluating~~accordance ~~the~~with ~~cost-benefit~~SFAS ~~relationship~~123R of(see ~~possible~~Note ~~disclosure controls and procedures~~4). The ~~design~~decrease ofwas ~~any~~primarily ~~disclosure~~a ~~controls~~result ~~and~~of ~~procedures also is based in part upon certain assumptions about~~ the ~~likelihood~~ streamlining of ~~future~~operations ~~events,~~ and ~~there~~improvement ~~can be no assurance that any design will succeed~~ in ~~achieving its stated goals under all potential future conditions~~operating efficiencies.

~~Based~~Other on(Expense) ~~their~~Income, ~~evaluation~~Net. Other as(expense) ofincome, ~~the~~net ~~end~~is comprised of ~~the~~foreign ~~period~~currency transaction ~~covered~~gains byand ~~this~~losses. ~~Annual~~Fluctuations ~~Report~~are ondue ~~Form~~primarily ~~10-K,~~to ~~our~~the ~~Chief~~relative ~~Executive~~strength ~~Officer,~~or ~~Chief~~weakness ~~Financial~~of ~~Officer~~the ~~and~~US ~~Principal~~dollar ~~Accounting~~at ~~Officer~~various ~~have~~times ~~concluded~~compared ~~that,~~with asthe ofother ~~such date,~~currencies ~~our~~that ~~disclosure~~we ~~controls~~use ~~and~~to ~~procedures~~conduct ~~were~~our ~~effective at the reasonable assurance level~~business.

~~(b)~~Interest ~~Changes~~Income, ~~in internal control over financial reporting~~Net. ~~There~~Interest ~~was~~income, nonet ~~significant~~increased ~~change~~by in77.7%, ~~our~~from ~~internal~~$350,000 ~~control over financial reporting (as defined~~ in ~~Rule~~fiscal ~~13a-15(f)~~2006 ~~under~~to ~~the~~$622,000 ~~Exchange Act) identified~~ in ~~connection~~fiscal ~~with~~2007 ~~management’s evaluation~~due ~~during~~to ~~the~~increases ~~last~~both ~~fiscal~~in ~~quarter~~deposits ~~that~~placed ~~has~~with ~~materially~~banks ~~affected,~~and orin isinterest ~~reasonably~~rates ~~likely~~for tosuch ~~materially affect, our internal control over financial reporting~~deposits.

~~ITEM 9B~~Net Loss. ~~OTHER~~Net ~~INFORMATION~~loss decreased from $4.6 million in fiscal 2006 to $3.9 million in fiscal 2007, reflecting all of the above factors.

~~Not~~Fiscal ~~applicable.~~2006 Compared to Fiscal 2005

35Net Sales. Revenues decreased by $1.8 million or 2.6% to $66.1 million in fiscal 2006 from $67.9 million in fiscal 2005. Revenue from sales of our IC trays increased by 0.7%. Volume for IC trays decreased by 1.4% while average selling price increased by 2.1%. Revenue from sales of our disk drive trays increased by 5.8% driven mainly by an increase in average selling price by 23.7% while volume decreased by 14.5%. Revenue from sales of our carrier tape products in fiscal 2006 increased by 2.0% compared to fiscal 2005 primarily due to an increase in average selling price of 3.3% while volume decreased by 1.3% compared to fiscal 2005. Revenue from sales of our reel products in fiscal 2006 increased by 12.4% compared to fiscal 2005 primarily due to a volume increase of 10.1% while average selling price increased by 2.1% compared to fiscal 2005. Revenue from

~~PART~~28 ~~III~~

ITEM 10. DIRECTORSTable ANDof EXECUTIVE OFFICERS OF THE REGISTRANT Contents

~~The~~ sales ~~information~~of ~~required~~our bycover ~~Item 10~~tape ofproducts ~~Form~~in ~~10-K~~fiscal is2006 ~~incorporated~~increased by ~~reference~~4.6% ~~from~~reflecting ~~the~~both ~~information~~a ~~contained~~1.2% increase in volume and a 3.4% increase in the ~~sections~~average ~~captioned~~selling ~~“Election~~price. Revenue from sales of ~~Director”,~~our ~~“Directors~~tube ~~and~~products ~~Executive~~in ~~Officers”~~fiscal ~~and~~2006 ~~“Security Ownership~~decreased ofby ~~Certain~~99.6% ~~Beneficial~~compared ~~Owners~~to ~~and~~fiscal ~~Management~~2005 as we ceased to manufacture, market and ~~Related~~sell ~~Stockholder~~tube ~~Matters”~~products insince ~~the~~March ~~Proxy~~2005 ~~Statement,~~due ato ~~copy~~unfavorable margins. Revenue from sales of ~~which~~our ~~will~~disc becaddies increased ~~filed~~to ~~with~~$1.5 ~~the~~million ~~Securities~~for ~~and~~fiscal ~~Exchange~~2006 ~~Commission~~from ~~before~~only ~~the~~$98,000 ~~meeting~~for ~~date~~fiscal 2005 when this new product was first introduced.

Gross ~~ITEM 11~~Profit. ~~EXECUTIVE~~Gross ~~COMPENSATION~~profit for fiscal 2006 increased to $11.5 million from $8.3 million in fiscal 2005, an increase of 39.1%. Gross margin increased as a percentage of sales to 17.4% in fiscal 2006 from 12.2% in fiscal 2005. Improvements in gross profit and gross margin percentage were attributable to several factors. First, we exited the unprofitable manufacture, marketing and sales of tube products at the end of fiscal 2005. Second, improved market pricing trends in fiscal 2006 allowed us to increase the average selling prices of our products, and there was a favorable impact of about $0.6 million arising from the sales of inventory that had previously been reserved. Third, we had improved our material utilization in fiscal 2006. We successfully utilized in fiscal 2006 approximately $1.5 million of materials, the cost of which had been recognized in a prior period. The above favorable impact was partially offset by scrap materials written off that amounted to $2.0 million in fiscal 2006. Also, there was higher material cost as a result of changes in sales mix and material prices.

~~The~~An amount ~~information~~of ~~required~~$0.5 ~~by Item 11~~million ofwas ~~Form~~incurred ~~10-K~~in isfiscal ~~incorporated~~2006 ~~herein~~as byseverance ~~reference~~payments ~~from~~to ~~the~~a ~~information~~group ~~contained~~of terminated workers at the Factory in Shenzhen, the ~~sections~~PRC ~~entitled~~as ~~“Executive~~a ~~Compensation~~result ~~and~~of ~~Related~~outsourcing ~~Information”~~the canteen and ~~“Information~~security ~~About~~functions at the ~~Board~~Factory. An amount of ~~Directors~~$0.3 ~~and~~million ~~Committees~~was incurred as severance payments for fiscal 2005. Higher labor costs as a result of ~~the Board—Compensation~~changes ~~Committee~~in ~~Interlocks~~product mix and ~~Insider~~labor ~~Participation”~~overtime also resulted in ~~the~~an ~~Proxy~~adverse ~~Statement~~impact for fiscal 2006.

~~ITEM~~Our 12gross profit for fiscal 2006 was also impacted by accruals and payments in connection with the underpayment of taxes in the PRC incurred by the Factory. ~~SECURITY~~In ~~OWNERSHIP~~April OF2005, ~~CERTAIN~~the ~~BENEFICIAL~~PRC ~~OWNERS~~tax ~~AND~~authorities ~~MANAGEMENT~~began ~~AND~~an ~~RELATED~~investigation ~~STOCKHOLDER~~into ~~MATTERS~~the withholding and payment of income taxes by the Factory for certain current and former employees of Peak, our affiliates or other companies who performed services at the Factory but had not paid income taxes in the PRC and for whom the Factory did not withhold and pay income taxes. The PRC tax authorities sought to collect unpaid income taxes on salaries and expense allowances of certain current and former employees of Peak, our affiliates or other companies who performed services in the PRC based on the worker’s relationship with the Factory and interest and penalties on such amounts. Since some of these claims were based on income earned over several years, the amount of such taxes, accrued interest and penalties was substantial. We do not believe that we were liable for such claims, but in the event the PRC tax authorities determined payments for back taxes, interest and penalties were owed, the potential consequences could have included substantial monetary claims against the Factory or the seizure of the Factory and our assets at the Factory and the termination of substantially all of our production operations. The PRC authorities did assert claims for such taxes against the Factory, and accordingly we did make payments on a voluntary basis in order to avoid the seizure of the Factory or our assets at the Factory and to keep it operational. We engaged tax advisors to assist us in assessing the Factory’s and our obligations with respect to the withholding and payment of income and other taxes by the Factory. The investigation concluded in the fourth quarter of fiscal 2006. A total of approximately $1.4 million was paid in fiscal 2006 for the income taxes of certain former employees stationed at or employed by the Factory, and for other taxes. We did not believe that the Factory had sufficient assets to pay such amounts. Upon final settlement of this PRC tax investigation, there were no interest or penalty assessments on the above unpaid income taxes. An additional $0.2 million has been paid as fees to our PRC tax advisor.

~~The~~Loss ~~information~~from ~~required~~Operations. An byoperating ~~Item 12~~loss of ~~Form~~$5.3 ~~10-K~~million iswas ~~incorporated~~recorded ~~by reference from the information contained in the sections captioned “Securities Authorized~~ for ~~Issuance~~fiscal ~~under~~2006 ~~Equity~~compared ~~Compensation~~to ~~Plans”~~a ~~and~~loss ~~“Security Ownership~~ of ~~Certain~~$10.7 ~~Beneficial~~million ~~Owners~~recorded ~~and~~for ~~Management”~~fiscal ~~in the Proxy Statement~~2005.

~~ITEM 13~~Selling and Marketing Expenses. ~~CERTAIN~~Selling ~~RELATIONSHIPS~~and ~~AND~~marketing ~~RELATED~~expenses ~~TRANSACTIONS~~decreased by 16.0% to $10.2 million in fiscal 2006 from $12.1 million in fiscal 2005, primarily as a result of cost savings from reorganizing our logistics management and sales offices. During fiscal 2006, we consolidated certain of our sales and distribution facilities in Singapore, Malaysia and the PRC. This consolidation contributed to the decrease in selling and marketing expenses.

~~The information~~29 required by Item 13 of Form 10-K is incorporated herein by reference from the information contained in the section entitled “Certain Relationships and Related Transactions” in the Proxy Statement.

ITEM 14. PRINCIPALTable ACCOUNTANTof FEES AND SERVICES Contents

~~The information~~General ~~required~~and byAdministrative ~~Item 14~~Expenses. General ofand ~~Form~~administrative ~~10-K~~expenses increased isto ~~incorporated~~$8.7 ~~herein~~million byin ~~reference~~fiscal to2006 ~~the~~from ~~information~~$6.6 ~~contained~~million in ~~the~~fiscal ~~section~~2005 ~~entitled~~mainly ~~“Appointment~~as a result of ~~Independent~~severance ~~Registered~~payments ~~Public~~of ~~Accounting~~$1.6 ~~Firm—Audit~~million ~~Firm~~to ~~Fee~~our ~~Summary”~~former Chief Executive Officer and ~~“Appointment~~ ofour ~~Independent~~former ~~Registered~~Vice ~~Public~~President ~~Accounting~~and ~~Firm—Pre-Approval~~General ~~Policies”~~Counsel, as well as an increase in costs associated with the ~~Proxy~~use ~~Statement~~of consultants to review and improve various operational efficiencies at the Factory.

36Gain on disposal of a subsidiary. We realized a net gain in fiscal 2006 of approximately $2.2 million on the sale of a subsidiary, Warden Development Ltd. (“Warden”), which held title to an incomplete industrial building and the associated land use rights, located approximately three miles from our existing PRC production facilities. The incomplete industrial building was originally purchased with the intention of completing the facility for expansion of our existing production facilities but this plan was subsequently abandoned. The sale was completed on April 13, 2005, with full ownership of Warden and its associated risk transferred to the purchaser, for sales proceeds of approximately $7.7 million in cash.

Other (Expense) Income, Net. Other (expense) income, net is comprised of foreign currency transaction ~~PART~~gains IVand losses. Fluctuations are due primarily to the relative strength or weakness of the US dollar at various times compared with the other currencies that we use to conduct our business.

~~ITEM 15~~Interest Income, Net. ~~EXHIBITS~~Interest ~~AND~~income, ~~FINANCIAL~~net ~~STATEMENT~~increased ~~SCHEDULES~~by 52.8%, from $229,000 in fiscal 2005 to $350,000 in fiscal 2006, primarily due to an increase in interest rates for bank deposits.

~~(a)~~Net ~~The~~Loss. Net ~~following~~loss ~~documents~~decreased ~~are~~from ~~filed~~$9.2 million asin ~~part~~fiscal of2005 ~~this~~to ~~report~~$4.6 onmillion ~~Form~~in ~~10-K:~~fiscal 2006, reflecting all of the above factors.

1.Liquidity ~~Financial~~and ~~Statements~~Capital Resources

~~Consolidated~~We ~~Balance~~historically ~~Sheets~~met asa significant portion of our cash requirements from cash flow from operations and we expect this to continue in fiscal 2008. In fiscal 2007, our cash generated from financing activities was insignificant, while in fiscal 2006, we did not have any cash provided by or used in financing activities. Our primary uses of cash have been to fund capital expenditures related to the expansion of our facilities and operations and working capital requirements. We intend to continue to retain our earnings to finance the development and expansion of our business operations and do not currently intend to pay dividends in the foreseeable future. As of March 31, ~~2006~~2007, cash and ~~2005~~cash equivalents were $20.4 million, an increase of $3.0 million as compared to cash and cash equivalents of $17.4 million as of March 31, 2006.

~~Consolidated~~Our ~~Statements~~net cash provided by operating activities was $7.5 million in fiscal 2007, compared to net cash used in operating activities of ~~Operations~~$2.7 ~~for~~million ~~the~~in fiscal ~~years~~2006 ~~ended~~and ~~March 31~~net cash provided of $6.3 million in fiscal 2005. The increase in cash provided by operating activities during fiscal 2007 as compared to fiscal 2006 was largely due to four reasons. First, $1.1 million of cash was released from escrow in fiscal 2007, in comparison to $2.5 million of cash that was deposited into escrow in fiscal 2006, ~~2005~~out of which $1.6 million was paid as severance to our former Chief Executive Officer and ~~2004~~our former Vice President and General Counsel. For details of the escrow, see Notes 6 and 7. Second, accounts receivable reduced by $2.7 million in fiscal 2007, compared to a reduction of $0.3 million in fiscal 2006. Third, inventories decreased by $1.8 million in fiscal 2007, compared to a decrease of $1.0 million in fiscal 2006. Fourth, accounts payable decreased by $1.9 million for fiscal 2007, in comparison to a decrease of $2.7 million for fiscal 2006. The decreases in accounts receivable, inventories and accounts payable reflected the decrease in sales.

~~Consolidated~~Our ~~Statements~~net ofcash ~~Changes~~used in ~~Shareholders’~~investing ~~Equity~~activities aswas of$4.5 ~~March 31~~million in fiscal 2007, compared to $2.1 million in fiscal 2006 and $4.7 million in fiscal 2005. Net cash used in investing activities primarily consisted of capital expenditures of $4.6 million, $4.3 million and $5.6 million for the acquisition of new equipment in our current production facilities during fiscal 2007, fiscal 2006 and fiscal 2005, respectively. The continuous investment in capital expenditure during fiscal 2007 and ~~2004~~2006 reflected capacity maintenance and replacement of obsolete fixed assets. In fiscal 2006, we received $2.3 million as cash proceeds from the disposal of Warden. The remaining $1.3 million of the sales consideration was kept in escrow before being released to us in two equal payments during the first quarter of each of fiscal 2007 and fiscal 2008. For details of the escrow, see Note 6.

~~Consolidated~~30 ~~Statements of Cash Flows for the years ended March 31, 2006, 2005 and 2004.~~

NotesTable toof Consolidated Financial Statements. Contents

2As of March 31, 2007, we had commitments for capital expenditures of $0.1 ~~Financial~~million. ~~Statement~~The ~~Schedules~~actual amounts of capital expenditures may vary substantially from those budgeted or estimated for a variety of reasons, including changes in market conditions, unavailability or changes in scheduled delivery of specific equipment, changes in interest rates and other factors. In addition, we plan to continue to maintain capacity and replace our obsolete fixed assets in future periods and plan to fund such capacity maintenance through our current cash reserves, future cash flow from operations and new bank borrowings as required. We lease office and warehouse facilities under various leases that expire through January 2010. Total future minimum commitments under these leases amount to approximately $0.9 million.

As of March ~~Schedule~~31, 2007, we had no outstanding indebtedness. At March 31, 2007, we had unsecured letter of credit facilities available of $2.0 ~~II—Valuation~~million of which $0.5 million was utilized. Interest rates in connection with the credit facilities are generally based on the weighted average lending rates of 4.27% and ~~qualifying~~the ~~accounts~~line of credit is normally subject to annual review.

3.According ~~Exhibits—The~~to ~~following~~customs ~~exhibits~~rules ~~are~~in ~~filed~~the asPRC, ~~part~~it ~~of,~~is orpossible ~~incorporated~~that we may be subject to classification by ~~reference~~the ~~into~~PRC ~~this~~customs ~~report~~authorities in a manner that would require us to supply a substantial bond against customs duties that we would have to pay if we were importing material for ultimate sale in the PRC. If the customs authorities of the PRC require us to post a bond in connection with our exemption status from PRC duties on ~~Form~~imported ~~10-K:~~raw materials for export sales and exported products, we will experience a substantial additional use of our cash resources.

ExhibitNo.		Description
3.1(a)		Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-1, Registration No. 333-6652, filed on March 19, 1997 and declared effective by the Securities and Exchange Commission on June 20, 1997 (the “Form F-1”))
3.1(b)		Bye-laws of the Registrant (incorporated by reference to Exhibit 3.1(b) to the Company’s Report on Form 10-K for the year ending March 31, 2001 filed on June 19, 2001)
4.1		Specimen of Share Certificate for the Shares of the Registrant (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Form F-1)
10.1		Processing Agreement dated May 28, 1987 and renewed and amended on May 24, 1994 and December 12, 1996 (incorporated by reference to Exhibit 10.1 to the Form F-1)
10.2		Land Use Certificate relating to the Company’s existing production facilities (incorporated by reference to Exhibit 10.3 to the Form F-1)
10.3		Land Use Right Granting Contract relating to the Company’s existing production facilities (incorporated by reference to Exhibit 10.5 to the Form F-1)
10.4		Lease between Warden and Peak (HK) relating to the Company’s existing production facilities (incorporated by reference to Exhibit 10.7 to the Form F-1)
10.5		Lease between Warden and Peak (HK) relating to the Company’s existing production facilities (incorporated by reference to Exhibit 10.8 to the Company’s Report on Form 10-K for the year ending March 31, 2001 filed on June 19, 2001)
10.6*		1998 Share Option Plan (incorporated by reference to Exhibit 4.3 to the Company’s Form S-8 filed on July 30, 1998)
10.7*		2000 Peak International Limited Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.4 to the Company’s Form S-8 filed on December 18, 2000)
10.8		Deed of Undertaking by Mr. T. L. Li dated May 29, 1997 relating to non-competition and referral (incorporated by reference to Exhibit 10.9 to the Form F-1)
10.9		Option Agreement dated February 17, 1997 relating to the non-voting deferred shares of Peak (HK) (incorporated by reference to Exhibit 10.10 to the Form F-1)
10.10		Restructuring Agreement dated February 28, 1997 for the acquisition of the entire issued share capital of Peakgold and Success Gold (incorporated by reference to Exhibit 10.11 to the Form F-1)

There was approximately $7,000 cash provided by financing activities in fiscal 2007, compared to no cash provided in fiscal 2006 and cash provided of $0.4 million in fiscal 2005. Net cash provided by financing activities in fiscal 2007 and fiscal 2005 were due to proceeds from the issuance of common stock. In September 2000, our board of directors authorized the repurchase, at management’s discretion, of up to $10.0 million worth of our common stock at prices not to exceed 150% of our net asset value per share. Common stock repurchased was cancelled immediately. During the year ended March 31, 2004, we repurchased 660,186 shares of our common stock at an average cost of $3.66 per share. There were no repurchases of shares for years ended March 31, 2007, 2006 and 2005.

37As of March 31, 2007, our principal source of liquidity consisted of $20.4 million in cash and cash equivalents. We believe that our existing cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs in the ordinary course of business for at least the next 12 months. If our existing cash and cash equivalents and cash generated from operations are insufficient to satisfy our liquidity requirements, we may seek to sell additional public or private equity securities or obtain debt financing. There can be no assurance that we will be able to sell additional equity securities, publicly or privately in the amounts that may be needed or at all. There can be no assurance that additional financing will be available in the amounts that may be needed, or if available, will be obtained on terms favorable to us. Additional equity or debt financing may also be dilutive to our existing shareholders.

ExhibitNo.		Description
10.11*		Employment Agreement, dated July 1, 2004, by and between the Company and Frank Lazo (incorporated by reference to Exhibit 10.4 to the Company’s Report on Form 10-Q for the quarter ended September 30, 2004 filed on November 15, 2004)
10.12*		Employment Agreement, dated April 12, 2005, by and between the Company and Katie Fung (incorporated by reference to Exhibit 10.15 to the Company’s Report on Form 10-K for the fiscal year ended March 31, 2005 filed on June 29, 2005)
10.13		Lease dated April 1, 2004 for the principal offices of Peak Plastic and Metal Products (International) Limited (incorporated by reference to Exhibit 10.21 to the Company’s Report on Form 10-K for the year ended March 31, 2004 filed on June 18, 2004)
10.14		Lease Agreement, dated December 29, 2004 between Peak International, Inc. and Cabot Industrial Venture B, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the quarter ended December 31, 2004 filed on March 24, 2005)
10.15*		Employment Agreement, dated February 15, 2005, amended July 7, 2005, by and between the Company and Dean Personne and Addendum to Employment Agreement, dated March 23, 2006, by and between the Company and Dean Personne (incorporated by reference to Exhibits 99.1 and 99.2 to the Company’s Report on Form 8-K, dated April 1, 2006 and filed on April 6, 2006)
21.1		Subsidiaries of the Company
23.1		Consent of BDO McCabe Lo Limited
23.2		Consent of PricewaterhouseCoopers
24.1		Power of Attorney (included in the signature page)
31.1		Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

We do not use off-balance-sheet arrangements with unconsolidated entities or related parties, nor does it use other forms of off-balance-sheet arrangements such as research and development arrangements. Accordingly, our liquidity and capital resources are not subject to off-balance-sheet risks from unconsolidated entities.

*From ~~Indicates~~time ~~management~~to ~~contract~~time, we may evaluate possible investments or ~~compensatory~~acquisitions ~~plan~~and may, if a suitable opportunity arises, make such an investment or acquisition. ~~arrangement~~We currently have no commitments to make any material investments or acquisitions.

+31 In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 are deemed to accompany this Form 10-K and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

(b)Table See List of Exhibits at page 37 of this Form 10-K.Contents

~~(c)~~Contractual ~~See~~Obligations ~~the~~and ~~Consolidated~~Commercial ~~Financial~~Commitments ~~Statements beginning on page F-1 of this report on Form 10-K.~~

38As of March 31, 2007, our future fixed commitments are as follows (in thousands):

SIGNATURES


	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years	More than 5 years
Operating Leases	$	902	$	519	$	383	—	—
Purchase Orders		2,800		2,800		—	—	—

~~Pursuant~~Hong toKong ~~the~~Profits ~~requirements~~Tax ~~of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on June 29, 2006.~~

~~PEAK~~The ~~INTERNATIONAL~~factory ~~LIMITED~~at Bywhich ~~/s/~~our ~~Dean~~products ~~Personne~~are ~~Dean~~produced, ~~Personne~~which ~~Chief~~is ~~Executive~~located ~~Officer~~in Shenzhen, the PRC, is operated pursuant to a processing agreement with an unaffiliated PRC company. According to the tax guidelines issued by the tax authority in a situation where a Hong Kong company manufactures goods partly in Hong Kong and partly outside Hong Kong, the Hong Kong Inland Revenue Department (IRD) may accept profits that relate to the manufacture of the goods outside Hong Kong to be offshore in nature and therefore not subject to Hong Kong profits tax. The offshore claim would only be allowed by the IRD by way of concession and provided that certain criteria are met to their satisfaction. We believed that most of its manufacturing activities were conducted outside Hong Kong and therefore since fiscal 1996 it apportioned a substantial amount of its profits (80% to 90%) to activities outside Hong Kong for tax filing purposes. However, since fiscal 1996, there was a dispute with the IRD in relation to the apportionment basis of the profit derived from manufacturing activities outside Hong Kong. We raised a number of objections to the tax assessments and examined factors that the IRD used to ascertain the geographic nature of our activities and sources of the profits. We made provisions for taxes payable according to the apportionment basis based on practices normally acceptable by the IRD in general cases. Interest associated with the tax payable for fiscal years 1996 to 2004 had also been accrued. We believe that the aggregate maximum amount of our potential exposure was approximately $4.3 million plus interest in the amount of $1.4 million. As a result, we accrued $5.6 million as of March 31, 2004 and $5.6 million as of March 31, 2003 as part of the income taxes payable.

~~POWER~~In OFconnection ~~ATTORNEY~~with the above, the IRD requested that we place tax reserve certificates of $5.1 million with IRD as of March 31, 2004, and $3.7 million and letters of credit of $0.6 million with the IRD as of March 31, 2003, which could be recovered if we prevailed.

~~KNOW~~In ~~ALL~~the ~~PERSONS~~year BYended ~~THESE PRESENTS~~March 31, ~~that each person whose signature appears below~~2005, ~~except~~we ~~for~~reached ~~Katie~~a ~~Fung,~~settlement ~~hereby constitutes and appoints Dean Personne and John Supan, and each of them, as his or her true and lawful attorneys-in-fact and agents,~~ with ~~power to act with or without~~ the ~~others~~IRD and ~~with~~these ~~full~~tax ~~power~~reserve ofcertificates ~~substitution~~were ~~and~~utilized ~~resubstitution,~~ to dopay any and all acts and things and to execute any and all instruments which said attorneys and agents and each of them may deem necessary or desirable to enable the registrant to comply with the U.S. Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the U.S. Securities and Exchange Commission thereunder in connection with the registrant’s Annual Report on Form 10-K for the ~~fiscal~~prior year ~~ended March 31, 2006 (the “Annual Report”), including specifically, but without limiting the~~ ~~generality~~taxes. ofA ~~the~~net ~~foregoing,~~gain ~~power and authority to sign the name~~ of ~~the~~$0.3 ~~registrant~~million ~~and~~was ~~the~~recognized ~~name of the undersigned, individually and in his or her capacity~~ as a ~~director~~result ~~or officer~~ of the ~~registrant,~~settlement ~~to the Annual Report as filed~~ with the UIRD.~~S. Securities~~ and Exchange Commission, to any and all amendments thereto, and to any and all instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents and each of them shall do or cause to be done by virtue hereof.

~~Pursuant~~We tocurrently ~~the~~do ~~requirements~~not ofhave ~~the~~any ~~Securities~~dispute ~~Exchange~~with ~~Act of~~the ~~1934,~~IRD. ~~this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated:~~

Signatures	Title	Date
/s/ Dean Personne Dean Personne	Chief Executive Officer, Chairman of the Board (Principal Executive Officer) and Director	June 29, 2006
/s/ John Supan John Supan	Interim, Chief Financial Officer	June 29, 2006
/s/ Katie Fung Katie Fung	Principal Accounting Officer	June 29, 2006
/s/ Douglas Broyles Douglas Broyles	Director	June 29, 2006
/s/ Christine Russell Christine Russell	Director	June 29, 2006
/s/ Thomas Gimple Thomas Gimple	Director	June 29, 2006
/s/ Russ Silvestri Russ Silvestri	Director	June 29, 2006

New Accounting Standards

~~PEAK~~In September 2006, ~~INTERNATIONAL~~the ~~LIMITED~~SEC issued Staff Accounting Bulletin No. 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108), to address diversity in practice in quantifying financial statement misstatements and the potential for the build up of improper amounts on the balance sheet. SAB 108 identifies the approach that registrants should take when evaluating the effects of unadjusted misstatements on each financial statement, the circumstances under which corrections of misstatements should result in a revision to financial statements and disclosures related to the correction of misstatements. SAB 108 is effective for financial statements for an interim period of the first fiscal year ending after November 16, 2006. The adoption of SAB 108 in fiscal 2007 did not have an effect on our consolidated financial statements.

~~INDEX~~In TOSeptember ~~CONSOLIDATED~~2006, ~~FINANCIAL~~the ~~STATEMENTS~~FASB issued SFAS No. 157, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands

1. Index to Consolidated Financial Statements:
Report of BDO McCabe Lo Limited , Independent Registered Public Accounting Firm		F-2
Report of PricewaterhouseCoopers, Independent Registered Public Accounting Firm		F-3
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations		F-5
Consolidated Statements of Shareholders’ Equity		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8
2. Index to Financial Statement Schedules:
Schedule II—Valuation and qualifying accounts		F-28

F-1Table of Contents

~~REPORT~~ disclosures OFabout ~~INDEPENDENT~~fair ~~REGISTERED~~value ~~PUBLIC~~measurements. ~~ACCOUNTING~~SFAS ~~FIRM~~No. 157 applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on our consolidated financial statements.

~~Board~~In June 2006, the FASB ratified the provisions of ~~Directors~~Emerging Issues Task Force (“EITF”) Issue No. 06-3, “How Taxes Collected from Customers and ~~Shareholders~~Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” EITF Issue No. 06-3 requires that the presentation of taxes within revenue-producing transactions between a seller and a customer, including but not limited to sales, use, value added, and some excise taxes, should be on either a gross (included in revenue and cost) or a net (excluded from revenue) basis. In addition, for any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant. The disclosure of those taxes can be done on an aggregate basis. EITF Issue No. 06-3 is effective for fiscal years beginning after December 15, 2006, which will be our fiscal 2008. The adoption of EITF Issue No. 06-3 is not expected to have a material impact on our consolidated results of operations or financial position.

~~Peak~~In June ~~International~~2006, ~~Limited~~the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”) which prescribes a recognition threshold and measurement attribute, as well as criteria for subsequently recognizing, derecognizing and measuring uncertain tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty in income tax assets and liabilities. FIN 48 is effective for fiscal years beginning after December 15, 2006, which will be our fiscal 2008, and is required to be recognized as a change in accounting principle through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The adoption of FIN 48 is not expected to have a material impact on our consolidated results of operations or financial position.

We33 have audited the accompanying consolidated balance sheets of Peak International Limited as of March 31, 2006 and 2005 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the two years in the period ended March 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.

WeTable 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion. Contents

InITEM ~~our~~7A. ~~opinion,~~QUANTITATIVE ~~the~~AND ~~consolidated~~QUALITATIVE ~~financial~~DISCLOSURES ~~statements~~ABOUT ~~referred~~MARKET to above present fairly, in all material respects, the financial position of Peak International Limited at March 31, 2006 and 2005, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2006, in conformity with accounting principles generally accepted in the United States of America. RISK

~~/s/ BDO~~Currency ~~McCabe~~Exchange LoRate ~~Limited~~Fluctuations

Our sales are denominated primarily in US dollars while our cost of goods sold are generally incurred in US dollars, Hong Kong dollars and Renminbi, and our operating expenses are generally denominated in Renminbi, Hong Kong dollars, Singapore dollars, New Taiwanese dollars and US dollars. In addition, a substantial portion of our capital expenditures, primarily for the purchase of equipment, has been and is expected to continue to be denominated in US dollars, Renminbi, Japanese Yen and the Euro. Consequently, a portion of our costs and operating margins may be affected by fluctuations in exchange rates, primarily between the US dollar and other currencies. Our results of operations and financial condition could be adversely affected by fluctuations in currency exchange rates or the imposition of new or additional currency controls in the jurisdictions in which we operate. At March 31, 2007 and 2006, we had no outstanding foreign exchange contracts.

~~May 15~~As the Hong Kong dollar is officially pegged to the US dollar and the Renminbi is controlled by the PRC government such that it only trades within a limited range against the US dollar, ~~2006~~unless there are significant changes in the policies of the Hong Kong and the PRC government, fluctuations in the exchange rates of the Hong Kong dollar and the Renminbi are not expected to have a significant impact on our results of operations. However, should the PRC government allow the Renminbi to have a wider trading range, resulting in a significant appreciation of the Renminbi against the US dollar, our production costs will increase and our operating margins will erode.

~~F-2~~Currently, as of the fiscal year ended March 31, 2007, we have annual expenses in Renminbi of approximately $16 million. If the exchange rate of US dollars were to increase by 5% against Renminbi, we would see an increase in expenses of approximately $0.8 million. In addition, we have approximately $20.4 million of cash and cash equivalents as of March 31, 2007, of which approximately $1.8 million is denominated in Renminbi. If the exchange rate of US dollars were to increase by 5% against Renminbi, we would potentially suffer loss by approximately $0.09 million in the account reflection.

~~REPORT~~We OFdo ~~INDEPENDENT~~not ~~REGISTERED~~anticipate ~~PUBLIC~~significant ~~ACCOUNTING~~material ~~FIRM~~risk from the exchange rate of the US dollar with regards to Japanese Yen, Hong Kong dollars, Euro, Singapore dollars and New Taiwanese dollars.

To34 ~~the Board of Directors and Shareholders of~~

PeakTable Internationalof Limited: Contents

InITEM our opinion, the consolidated statements of operations, consolidated statements of shareholders’ equity and consolidated statements of cash flows for the year ended March 31, 2004 present fairly, in all material respects, the results of operations and cash flows of Peak International Limited and its subsidiaries for the year ended March 31, 2004, in conformity with accounting principles generally accepted in the United States of America8. ~~These~~FINANCIAL ~~financial~~STATEMENTS ~~statements~~AND ~~are~~SUPPLEMENTARY 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 of these statements in accordance with the standards of the Public Company Accountancy 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. DATA

~~/s/~~See ~~PricewaterhouseCoopers~~the index included on page F-1, Index to Consolidated Financial Statements and Schedule. Our unaudited quarterly results of operations for the years ended March 31, 2007 and 2006 are as follows:

PricewaterhouseCoopers


	Quarter Ended
	3/31/2007			12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005			9/30/2005			6/30/2005
	(unaudited)
	(In thousands, except share data)
Income Statement Data:
Net sales	$	12,068		$	13,621		$	15,817		$	18,653		$	16,893		$	17,185		$	16,598		$	15,443
Cost of goods sold		(10,628	)		(11,785	)		(13,193	)		(13,818	)		(12,253	)		(12,690	)		(13,610	)		(16,079	)

Gross Profit		1,440			1,836			2,624			4,835			4,640			4,495			2,988			(636	)

Operating Expenses:
Selling and marketing		(2,165	)		(2,040	)		(2,181	)		(2,261	)		(2,283	)		(2,605	)		(2,521	)		(2,775	)
General and administrative		(1,642	)		(1,674	)		(1,715	)		(1,580	)		(3,450	)		(1,816	)		(1,638	)		(1,759	)
Research and development		(86	)		(22	)		(28	)		(36	)		(37	)		(33	)		(31	)		(44	)
Gain on disposal of a subsidiary		—			—			—			—			—			—			—			2,189

(Loss) income from operations		(2,453	)		(1,900	)		(1,300	)		958			(1,130	)		41			(1,202	)		(3,025	)
Other income (expense), net		54			(5	)		(111	)		(55	)		102			107			(157	)		(134	)
Interest income, net		157			183			165			117			65			68			112			105

(Loss) income before income taxes		(2,242	)		(1,722	)		(1,246	)		1,020			(963	)		216			(1,247	)		(3,054	)
Income tax benefit (expense)		66			196			103			(82	)		(56	)		(4	)		91			442

Net (loss) income	$	(2,176	)	$	(1,526	)	$	(1,143	)	$	938		$	(1,019	)	$	212		$	(1,156	)	$	(2,612	)

(Loss) earnings per share:
Basic		(0.18	)		(0.12	)		(0.09	)		0.08			(0.08	)		0.02			(0.09	)		(0.21	)
Diluted		(0.18	)		(0.12	)		(0.09	)		0.08			(0.08	)		0.02			(0.09	)		(0.21	)
Weighted average number of shares outstanding:
Basic		12,422,820			12,420,389			12,420,389			12,420,389			12,420,389			12,420,388			12,420,388			12,420,388
Diluted		12,422,820			12,420,389			12,420,389			12,425,074			12,420,389			12,420,681			12,420,388			12,420,388

Balance Sheet Data:
Cash and cash equivalents	$	20,366		$	18,855		$	19,548		$	18,648		$	17,441		$	18,855		$	19,403		$	20,470
Total assets		62,926			65,200			70,031			70,522			68,811			73,701			70,600			73,123
Shareholders’ equity		55,909			58,005			59,526			60,445			59,249			60,236			60,046			61,117

~~Hong~~ITEM ~~Kong~~9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~April~~None. ~~22, 2004~~

~~F-3~~ ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure ~~PEAK~~controls ~~INTERNATIONAL~~and ~~LIMITED~~procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards.

~~CONSOLIDATED~~35 ~~BALANCE SHEETS~~

ASTable OFof MARCH 31, 2006 AND 2005 Contents

~~(United~~ Additionally, ~~States~~in ~~dollars~~designing indisclosure ~~thousands~~controls and procedures, ~~except~~our ~~number~~management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of ~~shares~~possible disclosure controls and ~~per~~procedures. ~~share~~The ~~data)~~design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

		March 31,
	Note	2006			2005
ASSETS
Current assets:
Cash and cash equivalents		$	17,441		$	22,301
Restricted cash	6		2,182			—
Accounts receivable, net of allowance for doubtful accounts of $128 at March 31, 2006 and $257 at March 31, 2005			12,277			12,578
Inventories	4		12,782			13,739
Other receivables, deposits and prepayments			615			1,121
Income taxes receivable			—			3
Total current assets			45,297			49,742
Asset to be disposed of by sale	5		—			5,230
Property, plant and equipment, net	8		22,358			24,611
Land use right	7		722			742
Deposits for acquisition of property, plant and equipment			133			33
Other deposit	9		301			301
Total assets		$	68,811		$	80,659
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable:
—trade		$	5,601		$	8,288
—property, plant and equipment			536			210
Accrued payroll and employee benefits			1,007			1,562
Accrued other expenses			2,019			5,786
Income taxes payable			111			127
Total current liabilities			9,274			15,973
Deferred income taxes	14		288			875
Commitments and contingencies	18
Shareholders’ equity:
Common stock, $0.01 par value; authorized 100,000,000 shares; issued and outstanding 12,420,389 shares at March 31, 2006, and 12,420,388 shares at March 31, 2005	19		124			124
Additional paid-in capital			27,135			27,135
Retained earnings			33,238			37,813
Accumulated other comprehensive loss			(1,248	)		(1,261	)
Total shareholders’ equity			59,249			63,811
Total liabilities and shareholders’ equity		$	68,811		$	80,659

Based on their evaluation as of March, 31, 2007, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

~~The~~(b) ~~accompanying~~Changes ~~notes~~in ~~are~~internal ancontrol ~~integral~~over ~~part~~financial ofreporting. There ~~these~~was ~~consolidated~~no significant change in our internal control over financial ~~statements~~reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with management’s evaluation during the quarter ended March 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~F-4~~ ITEM 9B. OTHER INFORMATION

~~PEAK~~Not ~~INTERNATIONAL~~applicable. ~~LIMITED~~

~~CONSOLIDATED~~36 ~~STATEMENTS OF OPERATIONS~~

FORTable THEof YEARS ENDED MARCH 31, 2006, 2005 AND 2004 Contents

~~(United~~ PART ~~States~~III ~~dollars in thousands, except number of shares and per share data)~~

		Year ended March 31,
	Notes	2006			2005			2004
Net sales		$	66,119			67,909			63,756
Cost of goods sold	10		54,632			59,650			45,215
Gross profit			11,487			8,259			18,541
Operating expenses:
Selling and marketing	11		10,184			12,118			12,106
General and administrative			8,663			6,641			6,588
Research and development			145			157			236
Gain on disposal of a subsidiary	5		(2,189	)		—			—
Loss from operations			(5,316	)		(10,657	)		(389	)
Other (expense) income, net	12		(82	)		93			269
Interest income	13		350			229			166
(Loss) income before income taxes			(5,048	)		(10,335	)		46
Income tax benefit (expense)	14		473			1,126			(278	)
Net loss		$	(4,575	)	$	(9,209	)	$	(232	)
Losses per share:
Basic		$	(0.37	)	$	(0.74	)	$	(0.02	)
Diluted		$	(0.37	)	$	(0.74	)	$	(0.02	)
Weighted average number of shares outstanding:
Basic			12,420,388			12,396,344			12,228,781
Diluted			12,420,388			12,396,344			12,228,781

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information ~~accompanying~~required ~~notes~~by ~~are~~Item 10 anof ~~integral~~Form ~~part~~10-K is incorporated by reference from the information contained in the sections captioned “Election of ~~these~~Director”, ~~consolidated~~“Directors ~~financial~~and ~~statements~~Executive Officers”, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Corporate Governance” in the Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission before the meeting date.

~~F-5~~ ITEM 11. EXECUTIVE COMPENSATION

The information required by ~~PEAK~~Item 11 ~~INTERNATIONAL~~of ~~LIMITED~~Form 10-K is incorporated herein by reference from the information contained in the sections entitled “Executive Compensation and Related Information” and “Information About the Board of Directors and Committees of the Board—Compensation Committee Interlocks and Insider Participation” in the Proxy Statement.

~~CONSOLIDATED~~ITEM ~~STATEMENTS~~12. SECURITY OWNERSHIP OF ~~SHAREHOLDERS’~~CERTAIN ~~EQUITY~~BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

~~FOR~~The ~~THE~~information ~~YEARS~~required ~~ENDED~~by ~~MARCH~~Item 12 ~~31,~~of ~~2006,~~Form ~~2005~~10-K ~~AND~~is ~~2004~~incorporated by reference from the information contained in the sections captioned “Securities Authorized for Issuance under Equity Compensation Plans” and “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

~~(United~~ITEM ~~States~~13. ~~dollars~~CERTAIN inRELATIONSHIPS ~~thousands,~~AND ~~except~~RELATED ~~number~~TRANSACTIONS, ofAND ~~shares~~DIRECTOR ~~and per share data)~~ INDEPENDENCE

		Common stock					Additionalpaid-in capital			Retained earnings			Accumulatedothercomprehensive (loss) income			Total
	Note	Shares		Amount
Balance as of March 31, 2003		12,664,912			127			27,988			47,254			(1,113	)		74,256
Net loss for the year		—			—			—			(232	)		—			(232	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		307,965			3			1,123			—			—			1,126
Common stock repurchased for cancellation	19	(660,186	)		(7	)		(2,409	)		—			—			(2,416	)
Foreign currency translation		—			—			—			—			(89	)		(89	)
Balance as of March 31, 2004		12,312,691		$	123		$	26,702		$	47,022		$	(1,202	)	$	72,645
Net loss for the year		—			—			—			(9,209	)		—			(9,209	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		107,697			1			433			—			—			434
Common stock repurchased for cancellation	19	—			—			—			—			—			—
Foreign currency translation		—			—			—			—			(59	)		(59	)
Balance as of March 31, 2005		12,420,388		$	124		$	27,135		$	37,813		$	(1,261	)	$	63,811
Net loss for the year		—			—			—			(4,575	)		—			(4,575	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		1			—			—			—			—			—
Common stock repurchased for cancellation	19	—			—			—			—			—			—
Foreign currency translation		—			—			—			—			13			13
Balance as of March 31, 2006		12,420,389		$	124		$	27,135		$	33,238		$	(1,248	)	$	59,249

The information required by Item 13 of Form 10-K is incorporated herein by reference from the information contained in the section entitled “Certain Relationships and Related Transactions” and “Corporate Governance—Director Independence” in the Proxy Statement.

~~The~~ ITEM 14. PRINCIPAL ~~accompanying~~ACCOUNTANT ~~notes~~FEES ~~are~~AND anSERVICES ~~integral part of these consolidated financial statements.~~

FThe information required by Item 14 of Form 10-6K is incorporated herein by reference to the information contained in the section entitled “Appointment of Independent Registered Public Accounting Firm—Audit Firm Fee Summary” and “Appointment of Independent Registered Public Accounting Firm—Pre-Approval Policies” in the Proxy Statement.

~~PEAK~~37 ~~INTERNATIONAL LIMITED~~

CONSOLIDATEDTable STATEMENTSof OF CASH FLOWS Contents

~~FOR~~ PART ~~THE~~IV ~~YEARS ENDED MARCH 31, 2006, 2005 AND 2004~~

~~(United~~ITEM ~~States~~15. ~~dollars~~EXHIBITS inAND ~~thousands)~~FINANCIAL STATEMENT SCHEDULES

	Year ended March 31,
	2006			2005			2004
Operating activities:
Net loss	$	(4,575	)	$	(9,209	)	$	(232	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		6,444			7,021			6,267
Deferred income taxes		(587	)		(795	)		123
Loss on disposal/write-off of property, plant and equipment		437			1,156			584
Allowance for doubtful accounts		8			20			(48	)
Gain on disposal of a subsidiary		(2,189	)		—			—
Asset impairment		—			663			—
Changes in operating assets and liabilities:
Accounts receivable		293			(205	)		(1,497	)
Inventories		957			(192	)		(1,357	)
Other receivables, deposits and prepayments		233			(71	)		(127	)
Income taxes receivable		3			5,082			(1,353	)
Accounts payable—trade		(2,687	)		3,852			526
Accrued payroll and employee benefits		(555	)		82			341
Accrued other expenses		390			4,618			(251	)
Income taxes payable		(16	)		(5,731	)		137
Cash held in escrow for funding of certain contingent obligations under existing contracts with senior management		(901	)		—			—
Net cash (used in) provided by operating activities		(2,745	)		6,291			3,113
Investing activities:
Acquisition of property, plant and equipment		(4,297	)		(5,604	)		(6,419	)
Net proceeds on disposal of property, plant and equipment		15			—			12
Net proceeds on disposal of a subsidiary		2,254			—			—
(Increase) decrease in deposits for acquisition of property, plant and equipment		(100	)		936			(952	)
Net cash used in investing activities		(2,128	)		(4,668	)		(7,359	)
Financing activities:
Proceeds from issuance of common stock		—			434			1,126
Payment for repurchase of common stock		—			—			(2,416	)
Net cash provided by (used in) financing activities		—			434			(1,290	)
Net (decrease) increase in cash and cash equivalents		(4,873	)		2,057			(5,536	)
Cash and cash equivalents at beginning of year		22,301			20,303			25,928
Effects of exchange rate changes on cash and cash equivalents		13			(59	)		(89	)
Cash and cash equivalents at end of year	$	17,441		$	22,301		$	20,303
Supplemental cash flow information:
Cash paid during the year for:
Interest	$	—		$	—		$	—
Income taxes		127			318			1,371

(a)	The following documents are filed as part of this report on Form 10-K:

~~The accompanying notes are an integral part of these consolidated financial statements~~1. Financial Statements

~~F-7~~ Consolidated Balance Sheets as of March 31, 2007 and 2006.

~~PEAK~~ Consolidated ~~INTERNATIONAL~~Statements ~~LIMITED~~of Operations for the years ended March 31, 2007, 2006 and 2005.

~~NOTES~~ Consolidated TOStatements ~~CONSOLIDATED~~of ~~FINANCIAL~~Changes ~~STATEMENTS~~in Shareholders’ Equity as of March 31, 2007, 2006 and 2005.

~~(United~~ Consolidated ~~States~~Statements ~~dollars~~of inCash ~~thousands,~~Flows ~~except~~for ~~number~~the ofyears ~~shares~~ended ~~and~~March 31, ~~per~~2007, ~~share~~2006 ~~data)~~and 2005.

~~1. ORGANIZATION~~ Notes ~~AND~~to ~~BASIS~~Consolidated OFFinancial ~~PRESENTATION~~Statements.

~~Peak~~2. ~~International~~Financial ~~Limited~~Statement ~~(the “Company”) was incorporated as an exempted company with limited liability in Bermuda under the Companies Act 1981 of Bermuda (as amended) on January 3, 1997.~~ Schedules

~~The subsidiaries of the Company are principally engaged in the manufacture and sale of precision engineered packaging products, such as matrix and disk~~ Schedule ~~drive~~II—Valuation ~~trays, reels~~ and ~~carrier~~qualifying ~~tapes,~~accounts lead frame boxes and interleaves used in the storage and transportation of semiconductor devices and other electronic components. The Company’s principal production facilities are located in the People’s Republic of China (the “PRC”) and the Company maintains sales offices in Hong Kong, the United States of America (“U.S.A.”), Singapore, Taiwan and Malaysia (See Note 3 for details of the Company’s subsidiaries).

3. Exhibits—The ~~accompanying~~following ~~consolidated~~exhibits ~~financial~~are ~~statements~~filed ~~have~~as ~~been~~part ~~prepared~~of, inor ~~accordance~~incorporated ~~with~~by ~~accounting~~reference ~~principles~~into ~~generally accepted~~this inreport ~~the~~on ~~U.S.A.~~Form 10-K:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Exhibit No.		Description
3.1		Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-1, Registration No. 333-6652, filed on March 19, 1997 and declared effective by the Securities and Exchange Commission on June 20, 1997 (the “Form F-1”))

3.2		By-laws of the Registrant (incorporated by reference to Exhibit 3.1(b) to the Company’s Report on Form 10-K for the year ending March 31, 2001 filed on June 19, 2001)

4.1		Specimen of Share Certificate for the Shares of the Registrant (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Form F-1)

10.1		Processing Agreement dated May 28, 1987 and renewed and amended on May 24, 1994 and December 12, 1996 (incorporated by reference to Exhibit 10.1 to the Form F-1)

10.2*		Land Use Certificate relating to the Company’s existing production facilities

10.6		1998 Share Option Plan (incorporated by reference to Exhibit 4.3 to the Company’s Form S-8 filed on July 30, 1998)

10.7		2000 Peak International Limited Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.4 to the Company’s Form S-8 filed on December 18, 2000)

10.8		Deed of Undertaking by Mr. T. L. Li dated May 29, 1997 relating to non-competition and referral (incorporated by reference to Exhibit 10.9 to the Form F-1)

10.9		Option Agreement dated February 17, 1997 relating to the non-voting deferred shares of Peak (HK) (incorporated by reference to Exhibit 10.10 to the Form F-1)

10.10		Restructuring Agreement dated February 28, 1997 for the acquisition of the entire issued share capital of Peakgold and Success Gold (incorporated by reference to Exhibit 10.11 to the Form F-1)

10.14		Lease Agreement, dated December 29, 2004 between Peak International, Inc. and Cabot Industrial Venture B, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the quarter ended December 31, 2004 filed on March 24, 2005)

10.15		Employment Agreement dated February 15, 2005, as amended as of July 7, 2005, March 23, 2006, August 25, 2006 and May 30, 2007, between Peak International Limited (the “Company”) and Dean Personne (incorporated by reference to Exhibits 99.1 and 99.2 of the Company’s Form 8-K filed April 6, 2006, Exhibit 10.4 of the Company’s Form 8-K filed July 13, 2005, Exhibit 99.1 of the Company’s Form 8-K filed August 29, 2006 and Exhibit 10.2 of the Company’s Form 8-K filed June 1, 2007)

~~(a) Basis~~38 ~~of consolidation~~

The consolidatedTable financial statements include the accounts of the Company and its subsidiaries. All significant intra-group balances and transactions have been eliminated on consolidation. Contents

(b) Cash and cash equivalents


Exhibit No.		Description
10.16		Employment Agreement dated August 1, 2006, as amended on May 30, 2007, between the Company and John Supan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed August 3, 2006 and Exhibit 10.3 of the Company’s Form 8-K filed June 1, 2007)

10.17*		Agreement effective as of January 1, 2007, amending the Processing Agreement, dated May 28, 1987 and renewed and amended on May 24, 1994 and December 12, 1996 {English version}

10.18*		Tenancy Agreement dated September 11, 2006 for the principal offices of Peak Plastic and Metal Products (International) Limited

21.1*		Subsidiaries of the Company

23.1*		Consent of BDO McCabe Lo Limited

24.1		Power of Attorney (included in the signature page)

31.1		Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2+		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Cash~~* ~~and~~Filed cash equivalents include cash on hand, cash accounts, interest bearing savings accounts placed with banks or other financial institutions and all highly liquid debt instruments with original maturity of three months or lessherewith.

+ In accordance with Item 601(cb) ~~Allowance~~(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 are deemed to accompany this Form 10-K and will not be deemed “filed” for ~~doubtful~~purpose ~~accounts~~of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

~~Allowance~~(b) ~~for~~See ~~doubtful~~List ~~accounts is made against accounts receivable to the extent they are considered to be doubtful. Accounts receivable in the balance sheet are stated net~~ of ~~such~~Exhibits ~~provision.~~at ~~The~~page ~~collectability~~37 of ~~the~~this ~~Company’s accounts~~Form ~~receivable is evaluated based on a combination of factors~~10-K. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligation to the Company, a specific reserve for bad debts is recorded against amounts due. A provision is also made based on the aging of receivables and the history of uncollectible accounts receivable.

(dc) ~~Inventories~~ See the Consolidated Financial Statements beginning on page F-1 of this report on Form 10-K.

~~Inventories~~39 are stated at the lower of cost or market value, with cost determined using a cost method that approximate to the first-in, first-out basis. Cost of finished goods includes costs of direct materials, direct labor and an appropriate proportion of production overheads. Production overheads are absorbed in finished goods based on units of production.

(e) LandTable useof right Contents

~~Land~~SIGNATURES ~~use right is stated at cost less accumulated amortization. Amortization is provided using the straight-line method over the lease term of 50 years.~~

~~F-8~~Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on June 29, 2007.

PEAK INTERNATIONAL LIMITED By /s/ Dean Personne Dean Personne President & Chief Executive Officer

~~NOTES~~POWER TOOF ~~CONSOLIDATED~~ATTORNEY ~~FINANCIAL STATEMENTS—(Continued)~~

~~(United~~KNOW ~~States~~ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below, hereby constitutes and appoints Dean Personne and John Supan, and ~~dollars~~each of them, as his or her true and lawful attorneys-in-fact ~~thousands~~and agents, ~~except~~with ~~number~~power to act with or without the others and with full power of ~~shares~~substitution and ~~per~~resubstitution, ~~share~~to ~~data~~do any and all acts and things and to execute any and all instruments which said attorneys and agents and each of them may deem necessary or desirable to enable the registrant to comply with the U.S. Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the U.S. Securities and Exchange Commission thereunder in connection with the registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007 (the “Annual Report”), including specifically, but without limiting the generality of the foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually and in his or her capacity as a director or officer of the registrant, to the Annual Report as filed with the U.S. Securities and Exchange Commission, to any and all amendments thereto, and to any and all instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents and each of them shall do or cause to be done by virtue hereof.

~~2. SUMMARY~~Pursuant OFto ~~SIGNIFICANT~~the ~~ACCOUNTING~~requirements ~~POLICIES~~of ~~(Continued)~~the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated:

(f) Property, plant and equipment, net


Signatures	Title	Date

/s/ Dean Personne Dean Personne	President & Chief Executive Officer (Principal Executive Officer) and Director	June 29, 2007


/s/ John Supan John Supan	Chief Financial Officer	June 29, 2007


/s/ Douglas Broyles Douglas Broyles	Director	June 29, 2007


/s/ Christine Russell Christine Russell	Director	June 29, 2007


/s/ Russ Silvestri Russ Silvestri	Director	June 29, 2007

Property,Table plantof and equipment is stated at cost less accumulated depreciation. Gains or losses on disposals are reflected in current operations. Major expenditures for betterments and renewals are capitalized. All ordinary repairs and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives. Contents

~~The~~ PEAK ~~useful~~INTERNATIONAL ~~lives~~LIMITED ~~of property, plant and equipment adopted for depreciation purposes are as follows:~~

Buildings		10 years
Plant, machinery and equipment		5-10 years
Molds		3-5 years
Leasehold improvements, furniture, fixtures and motor vehicles		5-10 years

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(g) Asset to be disposed of by sale


1. Index to Consolidated Financial Statements:
Report of BDO McCabe Lo Limited , Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Shareholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

2. Index to Financial Statement Schedules:
Schedule II—Valuation and qualifying accounts		F-28

Asset to be disposed of by sale represents certain land use rights and an incomplete industrial building in Shenzhen, the PRC and is stated at the lower of its carrying amount or fair value less cost to sell in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment of Disposal of LongF-~~Lived~~1 Assets.” Fair value as of March 31, 2005 was calculated on the basis of a professional valuation report on the property provided by an independent appraiser. A subsidiary that held title to the asset to be disposed of by sale, was sold for $7,692 in cash with a net gain of $2,189 during fiscal year 2006. See Note 5.

(h) ValuationTable of long-lived assets Contents

~~The Company accounts for long-lived assets in accordance with SFAS No. 144, which requires impairment losses to be recorded on long-lived assets used~~ inREPORT ~~operations~~OF ~~when~~INDEPENDENT ~~indicators~~REGISTERED ofPUBLIC ~~impairment~~ACCOUNTING ~~are~~FIRM present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Company determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the net asset carrying value. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows.

~~(i) Income~~Board ~~taxes~~of Directors and Shareholders

~~The~~Peak ~~Company~~International ~~accounts~~Limited for income tax in accordance with SFAS No. 109 “Accounting for Income Taxes,” which requires the asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred taxes are provided for the estimated future tax effects attributable to temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefit from items including tax loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected in the years of recovery or reversal and the effect from a change in tax rates is recognized in income for the period of enactment. A valuation allowance is provided for a portion of deferred tax assets that will more likely than not be unrealized.

~~(j) Foreign~~We ~~currency~~have ~~translation~~ audited the accompanying consolidated balance sheets of Peak International Limited as of March 31, 2007 and 2006 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended March 31, 2007. 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.

~~The~~We ~~Company~~conducted ~~uses~~our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). ~~dollar~~Those standards require that aswe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its ~~functional~~internal ~~and~~control ~~reporting~~over financial ~~currencies~~reporting. ~~Monetary~~Our ~~assets~~audits ~~and~~included ~~liabilities~~consideration ~~denominated~~of internal control over financial reporting as a basis for designing audit procedures that are appropriate in ~~currencies~~the ~~other~~circumstances, ~~than~~but not for the ~~United~~purpose ~~States~~of ~~dollar~~expressing ~~are~~an ~~remeasured~~opinion ~~into~~on the effectiveness ~~United~~of ~~States~~the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~F-9~~In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Peak International Limited at March 31, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

~~PEAK~~/s/ BDO ~~INTERNATIONAL~~McCabe ~~LIMITED~~Lo Limited

~~NOTES~~Hong TOKong ~~CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(United States dollars in thousands~~June 29, ~~except~~2007 ~~number of shares and per share data)~~

F-2~~. SUMMARY~~ ~~OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

dollarTable at the rates of exchange at the balance sheet date. Transactions in currencies other than the United States dollar during the year are converted into the United States dollar at the rates of exchange at the transaction dates. Exchange differences are recognized in the statement of operations. Contents

On consolidation, balance sheets of subsidiaries denominated in currencies other than the United States dollar are translated into the United States dollar at the rates of exchange at the balance sheet date. Statements of operations of ~~subsidiaries~~PEAK ~~denominated~~INTERNATIONAL inLIMITED currencies other than the United States dollar are translated into the United States dollar at average exchange rates during the year. Exchange differences resulting from the translation of financial statements denominated in currencies other than the United States dollar and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of shareholders’ equity and are reported as other comprehensive income (loss).

~~The~~CONSOLIDATED ~~Company~~BALANCE ~~may~~SHEETS ~~enter into foreign exchange contracts to reduce its exposure to changes in exchange rates. Market value gains and losses are recognized in the statement of operations.~~

~~(k) Research~~AS ~~and~~OF ~~development~~MARCH ~~expenditures~~31, 2007 AND 2006

~~Research~~(United ~~and~~States ~~development~~dollars ~~expenditures~~in ~~are~~thousands, ~~expensed~~except innumber ~~the period~~of ~~incurred.~~shares and per share data)

(l) Revenue recognition


		March 31,
	Note	2007			2006
ASSETS
Current assets:
Cash and cash equivalents		$	20,366		$	17,441
Restricted cash	7		1,128			2,182
Accounts receivable, net of allowance for doubtful accounts of $427 at March 31, 2007 and $128 at March 31, 2006			9,279			12,277
Inventories	5		10,959			12,782
Other receivables, deposits and prepayments			852			615

Total current assets			42,584			45,297

Property, plant and equipment, net	9		19,278			22,358
Land use right	8		703			722
Deposits for acquisition of property, plant and equipment			60			133
Other deposit	10		301			301

Total assets		$	62,926		$	68,811


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable:
—trade		$	3,689		$	5,601
—property, plant and equipment			78			536
Accrued payroll and employee benefits			1,165			1,007
Accrued other expenses			1,990			2,019
Income taxes payable			95			111

Total current liabilities			7,017			9,274

Deferred income taxes	15		—			288

Commitments and contingencies	19

Shareholders’ equity:
Common stock, $0.01 par value; authorized 100,000,000 shares; issued and outstanding 12,423,306 shares at March 31, 2007, and 12,420,389 shares at March 31, 2006	20		124			124
Additional paid-in capital			27,707			27,135
Retained earnings			29,331			33,238
Accumulated other comprehensive loss			(1,253	)		(1,248	)

Total shareholders’ equity			55,909			59,249

Total liabilities and shareholders’ equity		$	62,926		$	68,811

The ~~Company~~accompanying ~~primarily~~notes derives its revenue from the sale of precision engineering packaging products such as matrix and disk drive trays, shipping tubes, reels and carrier tapes, lead frame boxes and interleaves. Revenues arising from sale of goods are ~~recognized~~an atintegral ~~the~~part time when the goods are shipped and titles to the goods passed to customers. Title to the product may transfer to the customer when shipped to or when received by the customer based on the specific terms of ~~the purchase agreement. The Company permits the return of damaged or defective products and accounts for~~ these ~~returns~~consolidated asfinancial ~~deduction from sales~~statements. ~~The Company evaluates its provisions for estimated returns monthly, based on historical returns. To date, the Company has not experienced any significant returns.~~

~~(m) Stock~~F-~~based~~3 ~~compensation~~

SFASTable No. 123 “Accounting for Stock-Based Compensation” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation awarded to employees using the intrinsic value method prescribed in Accounting Principles Board Opinions (“APB”) No. 25 “Accounting for Stock Issued to Employees” and related interpretations. Accordingly, compensation cost for stock options awarded to employees, officers and directors is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the amount an employee must pay to acquire the stock. Contents

~~The Company discloses pro~~ ~~forma~~PEAK ~~earnings~~INTERNATIONAL ~~per~~LIMITED ~~share information in accordance with SFAS No. 123. See Note 23.~~

~~(n) Earnings~~CONSOLIDATED ~~per~~STATEMENTS ~~share~~ OF OPERATIONS

~~Earnings~~FOR ~~per~~THE ~~share~~YEARS isENDED ~~computed~~MARCH in31, ~~accordance~~2007, ~~with~~2006 ~~SFAS~~AND ~~No. 128~~2005 ~~“Earnings per Share” by dividing net income for each year by the weighted average number of shares outstanding during the year.~~

~~F-10~~(United States dollars in thousands, except number of shares and per share data)

PEAK INTERNATIONAL LIMITED


		Year ended March 31,
	Notes	2007			2006			2005
Net sales		$	60,159			66,119			67,909
Cost of goods sold	11		49,424			54,632			59,650

Gross profit			10,735			11,487			8,259

Operating expenses:
Selling and marketing	12		8,647			10,184			12,118
General and administrative			6,611			8,663			6,641
Research and development			172			145			157
Gain on disposal of a subsidiary	6		—			(2,189	)		—

Loss from operations			(4,695	)		(5,316	)		(10,657	)
Other (expense) income, net	13		(117	)		(82	)		93
Interest income	14		622			350			229

Loss before income taxes			(4,190	)		(5,048	)		(10,335	)
Income tax benefit	15		283			473			1,126

Net loss		$	(3,907	)	$	(4,575	)	$	(9,209	)

Loss per share:
Basic		$	(0.31	)	$	(0.37	)	$	(0.74	)

Diluted		$	(0.31	)	$	(0.37	)	$	(0.74	)

Weighted average number of shares outstanding:
Basic			12,420,988			12,420,388			12,396,344
Diluted			12,420,988			12,420,388			12,396,344

~~NOTES~~The TOaccompanying ~~CONSOLIDATED~~notes ~~FINANCIAL~~are ~~STATEMENTS—(Continued)~~an integral part of these consolidated financial statements.

~~(United~~F-4 ~~States dollars in thousands, except number of shares and per share data)~~

2. SUMMARYTable OFof SIGNIFICANT ACCOUNTING POLICIES (Continued) Contents

~~Diluted earnings per share is computed by dividing net income by the weighted average number of~~ ~~ordinary~~PEAK ~~shares~~INTERNATIONAL ~~and~~LIMITED ordinary share equivalents outstanding during the year. The weighted average shares used to compute diluted earnings per share include the incremental potential ordinary shares relating to outstanding options to the extent such incremental shares would be dilutive.

~~The~~CONSOLIDATED ~~following~~STATEMENTS ~~table~~OF ~~sets~~SHAREHOLDERS’ ~~forth~~EQUITY ~~the computation of losses per share for the years indicated:~~

	March 31,
	2006			2005			2004
Numerator:
Net loss	$	(4,575	)	$	(9,209	)	$	(232	)
Denominator:
Weighted average number of shares
Basic		12,420,388			12,396,344			12,228,781
Options		—			—			—
Diluted		12,420,388			12,396,344			12,228,781

FOR THE YEARS ENDED MARCH 31, 2007, 2006 AND 2005

~~For~~(United ~~the~~States ~~years~~dollars ~~ended~~in ~~March 31~~thousands, ~~2006,~~except ~~2005~~number ~~and 2004 in which the Company had a net loss, inclusion~~ of ~~stock~~shares ~~options outstanding would have been anti-dilutive~~ and ~~therefore not included in the computation of diluted losses~~ per share. ~~See~~data) ~~Note 23 for details of stock options outstanding.~~

(o) Financial instruments


		Common stock			Additional paid-in Capital		Retained earnings			Accumulated other comprehensive (loss) income			Total
	Note	Shares	Amount		Additional paid-in Capital		Retained earnings			Accumulated other comprehensive (loss) income			Total
Balance as of March 31, 2004		12,312,691	$	123	$	26,702	$	47,022		$	(1,202	)	$	72,645
Net loss for the year		—		—		—		(9,209	)		—			(9,209	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		107,697		1		433		—			—			434
Common stock repurchased for cancellation	20	—		—		—		—			—			—
Foreign currency translation		—		—		—		—			(59	)		(59	)

Balance as of March 31, 2005		12,420,388	$	124	$	27,135	$	37,813		$	(1,261	)	$	63,811
Net loss for the year		—		—		—		(4,575	)		—			(4,575	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		1		—		—		—			—			—
Common stock repurchased for cancellation	20	—		—		—		—			—			—
Foreign currency translation		—		—		—		—			13			13

Balance as of March 31, 2006		12,420,389	$	124	$	27,135	$	33,238		$	(1,248	)	$	59,249
Net loss for the year		—		—		—		(3,907	)		—			(3,907	)
Issuance of shares on exercise of stock options and under employee stock purchase plan		2,917		—		572		—			—			572
Common stock repurchased for cancellation	20	—		—		—		—			—			—
Foreign currency translation		—		—		—		—			(5	)		(5	)

Balance as of March 31, 2007		12,423,306	$	124	$	27,707	$	29,331		$	(1,253	)	$	55,909

The ~~carrying~~ ~~values~~accompanying ofnotes ~~financial~~are ~~instruments,~~an ~~which~~integral ~~mainly~~part ~~consist~~ of ~~cash~~these ~~and~~consolidated ~~cash~~financial ~~equivalents, accounts receivable, other receivables, deposits, prepayments, accounts payable and accruals, approximate their fair values due to the short-term nature of these instruments~~statements.

~~(p) Comprehensive~~F-5 ~~(loss) income~~

TheTable Company follows SFAS No. 130 “Reporting Comprehensive Income” for the reporting and display of its comprehensive (loss) income and related components in the financial statements and thereby reports a measure of all changes in equity of an enterprise that results from transactions and economic events other than transactions with the shareholders. Items of comprehensive (loss) income are reported in the “Consolidated Statements of Shareholders’ Equity.” Contents

~~(q) Use~~ PEAK ofINTERNATIONAL ~~estimates~~ LIMITED

~~The~~CONSOLIDATED ~~preparation~~STATEMENTS ofOF ~~financial~~CASH ~~statements~~FLOWS in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect reported amounts of certain assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities as of and for the reporting periods. Actual results could differ from those estimates. Differences from those estimates are reported in the period they become known and are disclosed to the extent they are material to the financial statements taken as a whole.

~~(r) Segment~~FOR ~~information~~THE YEARS ENDED MARCH 31, 2007, 2006 AND 2005

~~The~~(United ~~Company~~States ~~has~~dollars ~~adopted~~in ~~SFAS~~thousands) ~~No. 131 “Disclosure about Segments of an Enterprise and Related Information” which established standards for reporting information about operating segments on a basis~~

F-11


	Year ended March 31,
	2007			2006			2005
Operating activities:
Net loss	$	(3,907	)	$	(4,575	)	$	(9,209	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		6,805			6,444			7,021
Deferred income taxes		(288	)		(587	)		(795	)
Loss on disposal/write-off of property, plant and equipment		439			437			1,156
Allowance for doubtful accounts		299			8			20
Non-cash share-based compensation		565			—			—
Gain on disposal of a subsidiary		—			(2,189	)		—
Asset impairment		—			—			663
Changes in operating assets and liabilities:
Accounts receivable		2,699			293			(205	)
Inventories		1,823			957			(192	)
Other receivables, deposits and prepayments		(237	)		233			(71	)
Income taxes receivable		—			3			5,082
Accounts payable—trade		(1,912	)		(2,687	)		3,852
Accrued payroll and employee benefits		159			(555	)		82
Accrued other expenses		(30	)		390			4,618
Income taxes payable		(16	)		(16	)		(5,731	)
Cash held in escrow for terms of sale agreement for disposal of a subsidiary		641			—			—
Cash held in escrow for funding of certain contingent obligations under existing contracts with senior management		413			(901	)		—

Net cash provided by (used in) operating activities		7,453			(2,745	)		6,291

Investing activities:
Acquisition of property, plant and equipment		(4,603	)		(4,297	)		(5,604	)
Net proceeds on disposal of property, plant and equipment		—			15			—
Net proceeds on disposal of a subsidiary		—			2,254			—
Decrease (Increase) in deposits for acquisition of property, plant and equipment		73			(100	)		936

Net cash used in investing activities		(4,530	)		(2,128	)		(4,668	)

Financing activities:
Proceeds from issuance of common stock		7			—			434

Net cash provided by financing activities		7			—			434

Net increase (decrease) in cash and cash equivalents		2,930			(4,873	)		2,057
Cash and cash equivalents at beginning of year		17,441			22,301			20,303

Effects of exchange rate changes on cash and cash equivalents		(5	)		13			(59	)

Cash and cash equivalents at end of year	$	20,366		$	17,441		$	22,301

Supplemental cash flow information:
Cash paid during the year for:
Interest	$	—		$	—		$	—
Income taxes		21			127			318

~~PEAK~~The ~~INTERNATIONAL~~accompanying ~~LIMITED~~notes are an integral part of these consolidated financial statements.

~~NOTES~~F-6 ~~TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

(UnitedTable States dollars in thousands, except number of shares and per share data) Contents

~~2. SUMMARY~~ PEAK OFINTERNATIONAL ~~SIGNIFICANT~~LIMITED ~~ACCOUNTING POLICIES (Continued)~~

~~consistent~~NOTES ~~with~~TO ~~the~~CONSOLIDATED ~~Company’s~~FINANCIAL ~~internal~~STATEMENTS organizational structure as well as information about geographical areas and business segments. It is management’s view that the products of the Company are of a similar nature and therefore only one business segment is identified. See Note 21.

(~~s) Related~~United ~~parties~~States dollars in thousands, except number of shares and per share data)

~~Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company~~1. ORGANIZATION ~~Related~~AND ~~parties~~BASIS ~~also~~OF ~~include~~PRESENTATION principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Peak International Limited (tthe “Company”) ~~Operating~~ ~~leases~~was incorporated as an exempted company with limited liability in Bermuda under the Companies Act 1981 of Bermuda (as amended) on January 3, 1997.

~~Rental~~The ~~payments~~subsidiaries ~~under~~of ~~operating~~the ~~leases~~Company are ~~expensed~~principally onengaged ain the manufacture and sale of precision engineered packaging products, such as matrix and disk ~~straight-line~~drive ~~basis~~trays, ~~over~~reels and carrier tapes used in the ~~periods~~storage and transportation of semiconductor devices and other electronic components. The Company’s principal production facilities are located in the ~~respective~~People’s ~~leases~~Republic of China (the “PRC”) and the Company maintains sales offices in Hong Kong, the PRC, the United States of America (“U.S.A.”), Singapore, Taiwan and Malaysia (See Note 3 for details of the Company’s subsidiaries).

~~(u) New~~The ~~Accounting~~accompanying ~~Standards~~consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.A.

~~In June, 2005, the Financial Accounting Standards Board (FASB) issued FASB Statement No~~2. ~~154,~~ SUMMARY ~~“Accounting~~OF ~~changes~~SIGNIFICANT ~~and~~ACCOUNTING ~~error~~POLICIES corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“FAS No. 154”). FAS No. 154 replaces APB Opinion No. 20, “Accounting changes” and changes the requirements for the accounting for and reporting of a change in accounting principles. This Statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This Statement requires retrospective application to prior periods’ financial statements of changes in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This Statement defines retrospective application as the application of a different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entity. This Statement also redefines restatement as the revising of previously issued financial statements to reflect the correction of an error. This Statement requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change in nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. This Statement also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. The Company believes this has no material impact on its consolidated financial statements.

~~In December, 2004, the~~ (~~FASB~~a) Basis ~~issued FASB Statement No. 123 (revised 2004), Share-Based Payment, or Statement 123(R), which is a revision~~ of FASB Statement No. 123, “Accounting for Stock-Based Compensation”. Statement 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” or Opinion 25. Generally, the approach in Statement 123(R) is similar to the approach described in consolidation

FThe consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intra-12group balances and transactions have been eliminated on consolidation.

~~PEAK~~(b) Cash ~~INTERNATIONAL~~and ~~LIMITED~~cash equivalents

~~NOTES~~Cash TOand ~~CONSOLIDATED~~cash ~~FINANCIAL~~equivalents ~~STATEMENTS—(Continued)~~include cash on hand, cash accounts, interest bearing savings accounts placed with banks or other financial institutions and all highly liquid debt instruments with original maturity of three months or less.

(~~United~~c) Allowance ~~States dollars~~for indoubtful ~~thousands, except number of shares and per share data)~~ accounts

2Allowance for doubtful accounts is made against accounts receivable to the extent they are considered to be doubtful. ~~SUMMARY~~ OFAccounts ~~SIGNIFICANT~~receivable ~~ACCOUNTING~~in ~~POLICIES~~the ~~(Continued)~~balance sheet are stated net of such provision. The collectability of the Company’s accounts receivable is evaluated based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligation to the Company, a specific reserve for bad debts is recorded against amounts due. A provision is also made based on the aging of receivables and the history of uncollectible accounts receivable.

~~the unrevised Statement 123. However, Statement 123~~(Rd) Inventories ~~requires all share-based payments to employees, including grants of employee stock options, to be~~ recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. In April 2005, the SEC deferred the effective date of Statement 123(R) so that companies may now adopt its provisions at the beginning of their first annual period beginning after June 15, 2005 which would be fiscal 2007, beginning April 1, 2006 for the Company. As permitted by the unrevised Statement 123, we currently account for share-based payments to employees using Opinion 25’s intrinsic value method, under which we generally do not record compensation cost for employee stock options. Accordingly, the adoption of Statement 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of Statement 123(R) cannot be predicted at this time because it will depend, in part, on levels of share-based payments granted in the future. However, had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note 23 to our Consolidated Financial Statements.

InInventories ~~December~~are ~~2004,~~stated ~~the~~at ~~FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. SFAS No. 153 addresses~~ the ~~measurement~~lower of ~~exchanges~~cost ofor ~~nonmonetary~~market ~~assets~~value, ~~and~~with ~~redefines~~cost ~~the~~determined ~~scope~~using ofa ~~transactions~~cost method that ~~should~~approximate beto ~~measured based on~~ the ~~fair~~first-in, first-out ~~value of the assets exchanged~~basis. ~~SFAS~~Cost ~~No. 153~~of isfinished ~~effective~~goods ~~for nonmonetary~~includes ~~asset~~costs ~~exchanges~~of ~~occurring~~direct ~~in fiscal periods beginning after June 15~~materials, ~~2005,~~direct ~~which~~labor ~~would~~and bean ~~our~~appropriate ~~second~~proportion ~~quarter~~ of ~~fiscal~~production ~~2006~~overheads. ~~The~~Production ~~adoption~~overheads ofare ~~SFAS~~absorbed ~~No. 153~~in isfinished ~~not~~goods ~~expected~~based ~~to have a material effect~~ on ~~our~~units ~~consolidated financial position or results~~ of ~~operations~~production.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—An Amendment of ARB No. 43, Chapter 4, which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (~~spoilage~~e). Land ~~SFAS~~use No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, which would be our first quarter of fiscal 2007 and its adoption is not expected to have a significant impact on our results of operations or financial position. right

FLand use right is stated at cost less accumulated amortization. Amortization is provided using the straight-13line method over the lease term of 50 years.

~~PEAK~~F-7 ~~INTERNATIONAL LIMITED~~

NOTESTable TOof CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Contents

~~(United~~PEAK ~~States dollars~~INTERNATIONAL inLIMITED ~~thousands, except number of shares and per share data)~~

~~3. SUBSIDIARIES~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Details~~(United ofStates dollars ~~the~~in ~~Company’s~~thousands, ~~consolidated~~except ~~subsidiaries~~number as of ~~March 31,~~shares ~~2006~~and ~~were~~per asshare ~~follows:~~data)

Company name	Place ofincorporation	Ownershipinterestattributable tothe Company		Principal activities
Peak Gold 3 Ltd.	The British Virgin Islands (“BVI”)	100	%	Investment holding
Success Gold 8 Ltd.	BVI	100	%	Investment holding
Diamond Crest Holdings Ltd.	BVI	100	%	Investment holding
PIL (Mauritius) Ltd.	Mauritius	100	%	Investment holding
Semicycle Resources (S) Pte. Ltd.	Singapore	100	%	Trading
Semicycle Resources SDN BHD	Malaysia	100	%	Trading
Peak Plastic & Metal Products (International) Ltd.	Hong Kong	100	%	Manufacturing and trading
Semicycle Hong Kong Ltd.	Hong Kong	100	%	Investment holding
Peak International Inc.	USA	100	%	Trading
Peak Plastics, Inc.	USA	100	%	Inactive
Luckygold 168J Ltd.	BVI	100	%	Investment holding
Best Luck 9 Ltd.	BVI	100	%	Investment holding
Peak Resources Singapore Pte. Ltd.	Singapore	100	%	Trading
Peak Semiconductor Packaging SDN BHD	Malaysia	100	%	Trading
Peak International (Asia) Ltd.	Hong Kong	100	%	Trading
Peak China Property Ltd.	BVI	100	%	Property holding
Peak Semiconductor Packaging Products (Shenzhen) Co. Ltd.	The PRC	100	%	Manufacturing and trading

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

4.(f) ~~INVENTORIES~~Property, plant and equipment, net

~~The~~Property, ~~components~~plant ofand ~~inventories~~equipment ~~were~~is stated at cost less accumulated depreciation. Gains or losses on disposals are reflected in current operations. Major expenditures for betterments and renewals are capitalized. All ordinary repairs and maintenance costs are expensed as ~~follows:~~incurred. Depreciation is provided using the straight-line method over the estimated useful lives.

	March 31,
	2006		2005
Raw materials	$	5,152	$	8,394
Finished products		7,630		5,345
	$	12,782	$	13,739

The useful lives of property, plant and equipment adopted for depreciation purposes are as follows:

5. ASSET TO BE DISPOSED OF BY SALE/GAIN ON DISPOSAL OF A SUBSIDIARY


Buildings		10 years
Plant, machinery and equipment		5-10 years
Molds		3-5 years
Leasehold improvements, furniture, fixtures and motor vehicles		5-10 years

~~A former subsidiary of the Company~~ (~~“Warden”~~g) Asset owned certain land use rights and an incomplete industrial building in Shenzhen, the PRC. The incomplete industrial building was originally purchased with the intention of completing the facility for expansion of our existing production facilities but this plan was subsequently aborted. During the fourth quarter of the year ended March 31, 2001, management reassessed the fair value of the building given the downturn in the industrial property market in which the building was located and a provision of $759 was recorded to ~~reduce~~be ~~the~~disposed ~~carrying value~~ of ~~the~~by ~~building.~~ sale

FAsset to be disposed of by sale represented certain land use rights and an incomplete industrial building in Shenzhen, the PRC and was stated at the lower of its carrying amount or fair value less cost to sell in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment of Disposal of Long-14Lived Assets.” Fair value as of March 31, 2005 was calculated on the basis of a professional valuation report on the property provided by an independent appraiser. A subsidiary, which held title to the asset to be disposed of by sale, was sold for $7,692 in cash with a net gain of $2,189 during fiscal year 2006. See Note 6.

~~PEAK~~(h) Valuation ~~INTERNATIONAL~~of ~~LIMITED~~long-lived assets

~~NOTES~~The TOCompany ~~CONSOLIDATED~~accounts ~~FINANCIAL~~for ~~STATEMENTS—~~long-lived assets in accordance with SFAS No. 144, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present. Reviews are regularly performed to determine whether the carrying value of assets is impaired. The Company determines the existence of such impairment by measuring the expected future cash flows (~~Continued~~undiscounted and without interest charges) and comparing such amount to the net asset carrying value. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows.

(~~United States dollars in thousands, except number of shares and per share data~~i) Income taxes

5The Company accounts for income tax in accordance with SFAS No. ~~ASSET~~ 109 TO“Accounting BEfor ~~DISPOSED~~Income OFTaxes,” BYwhich ~~SALE/GAIN~~requires ONthe ~~DISPOSAL~~asset OFand Aliability approach for financial accounting and reporting for income ~~SUBSIDIARY~~taxes. ~~(Continued)~~Under this approach, deferred taxes are provided for the estimated future tax effects attributable to temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefit from items including tax loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected in the years of recovery or reversal and the effect from a change in tax rates is recognized in income for the period of enactment. A valuation allowance is provided for a portion of deferred tax assets that will more likely than not be unrealized.

~~During~~(j) Foreign ~~the~~currency quarter ended June 30, 2002, the incomplete industrial building and the related land use rights in the PRC, which has an assigned period for 50 years commencing May 1993, were reclassified as “asset to be disposed of by sale” following management’s decision to dispose of the property as a general purpose industrial building. As a result, the property has been written down to its fair market value less costs to sell pursuant to SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets”, resulting in an asset impairment charge of $13,378 during the year ended March 31, 2003. The net book value of the property and the land use rights were $4,071 and $1,159 respectively as of March 31, 2005 and 2004. translation

The Company ~~entered~~uses ~~into a contract with an independent third party (~~the ~~“Purchaser”)~~United ~~for~~States ~~the sale of Warden. The sale was completed on~~dollar ~~April 13,~~as ~~2005~~its ~~for~~functional ~~approximately~~and ~~$7,692~~reporting ~~in cash~~currencies. ~~Approximately~~Monetary ~~$1,282~~assets ofand ~~the~~liabilities ~~sale~~denominated ~~proceeds is held~~ in ~~escrow~~currencies asother ~~restricted~~than ~~cash~~the ~~(see~~United ~~Note~~States 6,dollar ~~Restricted~~are ~~Cash).~~remeasured Ainto ~~net gain on disposal of approximately $2,189 was recognized in~~ the ~~first~~United ~~quarter~~States of ~~fiscal 2006.~~

~~The~~F-8 ~~escrow fund extends over two consecutive years, commencing with the completion of the sale on April 13, 2005, as follows:~~

•Table Theof year ended April 13, 2006; andContents

•PEAK ~~The~~INTERNATIONAL ~~year~~LIMITED ~~ending April 13, 2007.~~

InNOTES ~~accordance~~TO ~~with the~~CONSOLIDATED ~~terms~~FINANCIAL ofSTATEMENTS—(Continued) the sale agreement, immediately following the year ended April 13, 2006, approximately $641, which represented one half of the full amount established and held in escrow and classified as restricted cash, was released to the Company without any reduction or offsets.

~~During~~(United ~~the~~States dollars ~~year~~in ~~ending April 13~~thousands, ~~2007,~~except ~~the~~number ~~remaining~~of ~~escrow~~shares ~~fund~~and ~~shall~~per beshare ~~distributed~~data) ~~in the following order:~~

•2. SUMMARY ~~First,~~OF ~~towards~~SIGNIFICANT ~~payment~~ACCOUNTING ofPOLICIES any tax or duty payable in respect of the remaining escrow fund for which the Company or the escrow agent is or are or may be properly become liable and towards payment of any bank or other charges during the year; and(Continued)

• dollar ~~Secondly,~~at ~~by payment to~~ the ~~Purchaser~~rates of ~~any~~exchange ~~amount~~at of the ~~remaining~~balance ~~escrow~~sheet ~~fund~~date. Transactions in orcurrencies ~~towards~~other ~~satisfaction~~than ~~of such amount payable by~~ the ~~Company~~United asStates ~~stated~~dollar ~~in any final judgment or award made or ordered~~ during the year inare ~~respect~~converted ~~of any litigation, arbitration or other legal proceedings~~ into the ~~subject~~United ~~matter~~States ofdollar aat ~~claim, and if applicable, by payment to~~ the ~~Purchaser~~rates of anexchange ~~amount~~at ~~equivalent to~~ the ~~interest~~transaction ~~that~~dates. ~~would~~Exchange ~~have~~differences ~~been~~are ~~earned~~recognized onin ~~such~~the ~~amount~~statement ~~during~~of ~~the year~~operations.

On orconsolidation, ~~immediately~~balance ~~after~~sheets ~~April 13,~~of ~~2007,~~subsidiaries denominated in currencies other than the ~~remaining~~United ~~escrow~~States ~~fund~~dollar ~~shall~~are betranslated into the United States dollar at the rates of exchange at the balance sheet date. Statements of operations of ~~closed~~subsidiaries denominated in currencies other than the United States dollar are translated into the United States dollar at average exchange rates during the year. Exchange differences resulting from the translation of financial statements denominated in currencies other than the United States dollar and bethe ~~distributed:~~effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of shareholders’ equity and are reported as other comprehensive income (loss).

•The ~~First,~~Company bymay ~~payment~~enter tointo ~~the~~foreign ~~Purchaser~~exchange ofcontracts ~~such~~to reduce ~~amount,~~its ifexposure ~~any, which has been agreed~~ to bychanges ~~the Company~~ in ~~compensation~~exchange ~~for~~rates. ~~any~~Market ~~claim,~~value gains and anlosses ~~amount~~are ~~equivalent~~recognized toin the ~~interest~~statement ~~that would have been earned on such amount since the completion~~ of ~~the~~operations. ~~sale on April 13, 2005; and~~

•(k) Research ~~Secondly,~~and bydevelopment ~~payment of the balance to the Company.~~expenditures

~~The Company~~Research ~~is liable to compensate the Purchaser for any breach of warranties that include the Company being the legal~~ and ~~beneficial~~development ~~owner~~expenditures ofare ~~the~~expensed ~~shares~~in ~~of Warden, free and clear of encumbrances or third party right, before they were sold to~~ the ~~Purchaser,~~period ~~and~~incurred. ~~that no legal proceedings have been initiated or are outstanding~~

~~F-15~~(l) Revenue recognition

~~PEAK~~The ~~INTERNATIONAL~~Company ~~LIMITED~~primarily derives its revenue from the sale of precision engineering packaging products such as matrix and disk drive trays, shipping tubes, reels and carrier tapes. Revenues arising from sale of goods are recognized at the time when the goods are shipped and titles to the goods passed to customers. Title to the product may transfer to the customer when shipped to or when received by the customer based on the specific terms of the purchase agreement. The Company permits the return of damaged or defective products and accounts for these returns as deduction from sales. The Company evaluates its provisions for estimated returns monthly, based on historical returns. To date, the Company has not experienced any significant returns.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—~~(~~Continued~~m) Share-based compensation

~~(United~~As ~~States~~part of the Company’s adoption of SFAS 123R as of April 1, 2006, it was required to recognize the fair value of share-based compensation ~~dollars~~awards as an expense. The Company applies the Black-Scholes option-pricing model in ~~thousands~~order to determine the fair value of stock options on the date of grant, ~~except~~and ~~number~~it applies judgment in estimating key assumptions that are important elements in the model such as the expected stock-price volatility, expected stock option life and expected forfeiture ratios. The Company’s estimates of ~~shares~~these important assumptions are based on historical data and ~~per~~judgment regarding market trends and factors. If actual results are not consistent with the Company’s assumptions and judgments used in estimating these factors, it may be required to record additional share-based ~~data)~~compensation expense, which could be material to its results of operations. In December 2004, the FASB issued SFAS 123R, which requires companies to measure and recognize compensation expense for all share-based payments at fair value. Share-based payments include stock options and non-vested share grants. The Company grants options to purchase common stock to some of its employees and directors under various plans at prices equal to the market value of the stock on the dates the options were granted. The Company historically has accounted for stock options using the method prescribed in APB 25 whereby stock options are granted at market price and no compensation cost is recognized, and disclosed

~~5. ASSET~~F-9 ~~TO BE DISPOSED OF BY SALE/GAIN ON DISPOSAL OF A SUBSIDIARY (Continued)~~

againstTable Warden and there are no unfulfilled or unsatisfied judgment or court orders against Warden. If the Purchaser and the Company shall not have reached agreement as to the amount to which the Purchaser is entitled by way of compensation in respect of any of the aforesaid claims, the matter in dispute will be determined by an independent solicitor of appropriate experience and standing. The sale agreement is governed by and construed in accordance with the laws of Hong Kong and the parties agree to submit to the exclusive jurisdiction of the courts of Hong Kong. The Company is not aware of any potential claim or encumbrance in connection with the sale agreement and no such claim or encumbrance has been alleged by the Purchaser or any other party. Contents

~~6. RESTRICTED CASH~~PEAK INTERNATIONAL LIMITED

~~$1,282~~NOTES ofTO ~~the~~CONSOLIDATED ~~sale~~FINANCIAL ~~proceeds~~STATEMENTS—(Continued) ~~were held in escrow as restricted cash described in Note 5 above, Asset to be disposed of by sale/Gain on disposal of a subsidiary.~~

~~In addition to this, on October 14, 2005, the Company entered into escrow arrangements appointing an independent third party as an escrow agent~~ (~~“Escrow~~United ~~Agent”) for a total of $2,501 deposited as restricted cash by the Company. In September 2005, a shareholder of the Company stated its intention to replace the Company’s senior~~States ~~management~~dollars ~~and effect a merger of the Company with another corporation. The escrows were set up to ensure that obligations of the Company to the officers under their employment contracts would be honored~~ in ~~the future. The Company has deposited an amount equal to estimated severance payments and anticipated administrative costs in the escrows. During fiscal 2006~~thousands, ~~severance~~except ~~payments~~number of ~~$1.6~~shares ~~million were paid to the former Chief Executive Officer~~ and ~~the~~per ~~former~~share ~~Vice~~data) ~~President, General Counsel. Funds in these escrows will not be available for use by the Company until March 15, 2007 or earlier in accordance with the provisions of the escrow agreements.~~

72. ~~LAND~~SUMMARY ~~USE~~OF ~~RIGHT~~SIGNIFICANT ACCOUNTING POLICIES (Continued)

~~Land~~ the ~~use~~pro ~~right~~forma ~~consisted~~effect ofon net earnings assuming compensation cost had been recognized in accordance with SFAS 123. SFAS 123R, which was effective for the Company ~~following~~since April 1, 2006, eliminates the ability to account for share-based compensation transactions using APB 25, and generally requires that such transactions be accounted for using prescribed fair-value-based methods. SFAS 123R permits public companies to adopt its requirements using one of two methods: (a) a “modified prospective” method in which compensation costs are recognized beginning with the effective date based on the requirements of SFAS 123R for all share-based payments granted or modified after the effective date, and based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date or (b) a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits companies to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either for all periods presented or prior interim periods of the year of adoption. The Company has decided to adopt SFAS 123R using the modified prospective method.

	March 31,
	2006			2005
Land use right	$	981		$	981
Less: Accumulated amortization		(259	)		(239	)
	$	722		$	742

(n) Earnings per share

AEarnings ~~subsidiary~~per ofshare ~~the~~is ~~Company~~computed ~~operating~~ in ~~Shenzhen,~~accordance ~~the~~with ~~PRC~~SFAS ~~owns~~No. 128 ~~factory~~“Earnings ~~buildings~~per onShare” ~~certain state-owned~~by ~~land~~dividing innet ~~the~~income ~~PRC~~for ~~and~~each ~~has~~year ~~been~~by ~~assigned~~ the ~~land~~weighted average ~~use~~number ~~rights for a period~~ of 50shares ~~years~~outstanding ~~since~~during ~~May 1,~~the ~~1992~~year.

~~During~~Diluted earnings per share is computed by dividing net income by the ~~years~~weighted ~~ended~~average ~~March 31,~~number ~~2006,~~of ~~2005~~ordinary shares and ~~2004,~~ordinary ~~amortization~~share ~~expense~~equivalents ~~related~~outstanding during the year. The weighted average shares used to compute diluted earnings per share include the ~~land~~incremental ~~use~~potential ~~right~~ordinary ~~amounted~~shares relating to ~~$20,~~outstanding ~~$19~~options ~~and~~to the ~~$20,~~extent ~~respectively~~such incremental shares would be dilutive.

~~F-16~~The following table sets forth the computation of loss per share for the years indicated:

PEAK INTERNATIONAL LIMITED


	March 31,
	2007			2006			2005
Numerator:
Net loss	$	(3,907	)	$	(4,575	)	$	(9,209	)

Denominator:
Weighted average number of shares
Basic		12,420,988			12,420,388			12,396,344
Options		—			—			—

Diluted		12,420,988			12,420,388			12,396,344

~~NOTES~~For TOthe ~~CONSOLIDATED~~years ~~FINANCIAL~~ended ~~STATEMENTS—(Continued)~~March 31, 2007, 2006 and 2005 in which the Company had a net loss, inclusion of stock options outstanding would have been anti-dilutive and therefore not included in the computation of diluted loss per share. See Note 24 for details of stock options outstanding.

(~~United States dollars in thousands, except number of shares and per share data~~o) Financial instruments

~~8. PROPERTY~~The carrying values of financial instruments, ~~PLANT~~which ~~AND~~mainly ~~EQUIPMENT~~consist of cash and cash equivalents, ~~NET~~accounts receivable, other receivables, deposits, prepayments, accounts payable and accruals, approximate their fair values due to the short-term nature of these instruments.

~~Property,~~F-10 ~~plant and equipment, net consisted of the following:~~

	March 31,
	2006			2005
Buildings	$	2,524		$	2,524
Plant, machinery, molds and equipment		32,266			31,792
Leasehold improvements, furniture, fixtures and motor vehicles		25,757			23,875
		60,547			58,191
Less: Accumulated depreciation		(38,189	)		(33,580	)
	$	22,358		$	24,611

~~During~~PEAK ~~the~~INTERNATIONAL ~~years~~LIMITED ~~ended March 31, 2006, 2005 and 2004, depreciation expense amounted to $6,424, $7,002 and $6,247, respectively.~~

~~9. OTHER~~NOTES ~~DEPOSIT~~TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Other~~(United ~~deposit~~States dollars ~~represents the security bond placed at a Taiwanese court~~ in ~~order~~thousands, toexcept ~~obtain~~number ~~an anti-injunction order in respect~~ of ashares ~~potential~~and ~~patent dispute~~per inshare ~~Taiwan. See Note 18(c~~data) ~~“Litigation” for details. Management does not expect the case to be settled within 12 months and therefore the amount was classified as a non-current asset as at March 31, 2006.~~

102. ~~COST~~SUMMARY OF ~~GOODS~~SIGNIFICANT ~~SOLD~~ACCOUNTING POLICIES (Continued)

~~The cost~~(p) Comprehensive of(loss) ~~goods sold included an impairment charge of $nil, $663, $ nil associated with a write down of plant, machinery and equipment used in Peak’s tape and reel businesses for fiscal 2006, 2005 and 2004.~~ income

~~Amounts~~The ofCompany ~~approximately~~follows ~~$398,~~SFAS ~~$1,121,~~No. 130 ~~and~~“Reporting ~~$579~~Comprehensive ~~related~~Income” tofor the ~~write-off~~reporting and display of ~~machinery~~its ~~and~~comprehensive ~~molds~~(loss) ~~were~~income ~~included~~and related components in ~~cost~~the financial statements and thereby reports a measure of ~~goods~~all ~~sold~~changes ~~due~~in toequity ~~asset~~of ~~loss, technological~~an ~~obsolescence~~enterprise that results from transactions and ~~capacity~~economic ~~under-utilization~~events ~~for~~other than transactions with the ~~years~~shareholders. ~~ended~~Items ~~March 31,~~of ~~2006,~~comprehensive ~~2005~~(loss) income ~~and~~are ~~2004~~reported in the “Consolidated Statements of Shareholders’ Equity.”

~~11.~~(q) ~~DELIVERY AND~~Use ~~FREIGHT~~of ~~EXPENSES~~estimates

~~For~~The ~~the~~preparation ~~years~~of ~~ended~~financial ~~March 31,~~statements ~~2006,~~in ~~2005~~conformity ~~and~~with ~~2004,~~generally accepted accounting principles requires the ~~Company~~use ~~incurred~~of ~~delivery~~estimates and assumptions ~~freight~~that ~~expenses~~affect reported amounts of ~~approximately~~ $3certain assets,~~010~~ liabilities, 3revenues,~~422,~~ expenses and ~~$3,103~~disclosure ~~respectively,~~of ~~which~~contingent ~~have~~assets ~~been~~and ~~included~~liabilities as ~~part~~ of ~~selling~~and for the reporting periods. Actual results could differ from those estimates. Differences from those estimates are reported in the period they become known and ~~marketing~~are ~~expenses~~disclosed to the extent they are material to the financial statements taken as a whole.

~~12. OTHER INCOME~~ (~~EXPENSE~~r), Segment ~~NET~~ information

~~Other~~The ~~income~~Company ~~(expense),~~has ~~net~~adopted ~~consisted~~SFAS No. 131 “Disclosure about Segments of an Enterprise and Related Information” which established standards for reporting information about operating segments on a basis consistent with the ~~following:~~Company’s internal organizational structure as well as information about geographical areas and business segments. It is management’s view that the products of the Company are of a similar nature and therefore only one business segment is identified. See Note 22.

	Year ended March 31,
	2006			2005		2004
Foreign currency exchange gain/(loss), net	$	(82	)	$	93	$	(98	)
Judgement claims from litigation		—			—		367
	$	(82	)	$	93	$	269

(s) Related parties

~~The~~Parties are considered to be related to the Company ~~had~~if nothe ~~exchange~~parties, ~~losses~~directly onor ~~foreign~~indirectly, ~~currency~~through ~~forward~~one ~~contracts~~or ~~during~~more intermediaries, control, are controlled by, or are under common control with the ~~years~~Company. ~~ended~~Related parties ~~March 31~~also include principal owners of the Company, ~~2006~~its management, ~~2005~~members of the immediate families of principal owners of the Company and ~~2004~~its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

~~F-17~~(t) Operating leases

~~PEAK~~Rental ~~INTERNATIONAL~~payments ~~LIMITED~~under operating leases are expensed on a straight-line basis over the periods of the respective leases.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—~~(~~Continued~~u) New Accounting Standards

~~(United~~In ~~States~~September 2006, the SEC issued Staff Accounting Bulletin No. 108 “Considering the Effects of Prior Year Misstatements when Quantifying ~~dollars~~Misstatements in ~~thousands~~Current Year Financial Statements” (SAB 108), ~~except~~to ~~number~~address ofdiversity ~~shares~~in practice in quantifying financial statement misstatements and ~~per~~the ~~share~~potential ~~data)~~for the build up of improper amounts on the balance sheet. SAB 108 identifies the approach that registrants should take when evaluating the effects of unadjusted misstatements on each financial statement, the circumstances under which

~~13. INTEREST~~F-11 ~~INCOME~~

InterestTable income was derived from bank deposits of the Company during the years ended March 31, 2006, 2005 and 2004. Contents

~~14. INCOME~~PEAK ~~TAX~~INTERNATIONAL ~~BENEFIT~~LIMITED ~~(EXPENSE)~~

~~Income~~NOTES isTO ~~subject~~CONSOLIDATED toFINANCIAL ~~taxation in the various countries in which the Company and its subsidiaries operate. The income~~ STATEMENTS—(~~loss~~Continued) ~~before income taxes by geographical location was as follows for the periods indicated:~~

	Year ended March 31,
	2006			2005			2004
Hong Kong	$	(4,846	)	$	(9,851	)	$	63
Other countries		(202	)		(484	)		(17	)
	$	(5,048	)	$	(10,335	)	$	46

(United States dollars in thousands, except number of shares and per share data)

~~The~~2. SUMMARY ~~current~~OF ~~and~~SIGNIFICANT ~~deferred~~ACCOUNTING ~~elements~~POLICIES ~~of income tax benefit~~ (~~expense~~Continued) ~~by geographical locations were~~ ~~as follows:~~

	Year ended March 31,
	2006			2005			2004
Current income tax:
Hong Kong	$	—		$	339		$	(48	)
United States		(110	)		—			(104	)
Malaysia		(2	)		(8	)		—
Singapore		(2	)		—			(3	)
Deferred income tax:
Hong Kong		587			795			(123	)
	$	473		$	1,126		$	(278	)

corrections of misstatements should result in a revision to financial statements and disclosures related to the correction of misstatements. SAB 108 is effective for financial statements for an interim period of the first fiscal year ending after November 16, 2006. The adoption of SAB 108 in fiscal 2007 did not have an effect on the Company’s consolidated financial statements.

~~The~~In ~~components~~September of2006, the ~~net~~Financial ~~deferred~~Accounting ~~income~~Standards ~~tax~~Board ~~liabilities~~(“FASB”) asissued ofSFAS ~~March~~No. 31157, ~~2006~~“Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and ~~2005~~expands ~~were~~disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or aspermit ~~follows:~~fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on its consolidated financial statements.

	March 31,
	2006			2005
Temporary differences arising from depreciation and amortization	$	(1,789	)	$	(1,957	)
Total deferred tax liabilities		(1,789	)		(1,957	)
Reserves and accruals not currently deductible		95			153
Net operating losses carried forward		1,818			1,348
Total deferred tax assets		1,913			1,501
Less: valuation allowance		(412	)		(419	)
Net deferred tax liabilities	$	(288	)	$	(875	)

In June 2006, the FASB ratified the provisions of Emerging Issues Task Force (“EITF”) Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” EITF Issue No. 06-3 requires that the presentation of taxes within revenue-producing transactions between a seller and a customer, including but not limited to sales, use, value added, and some excise taxes, should be on either a gross (included in revenue and cost) or a net (excluded from revenue) basis. In addition, for any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant. The disclosure of those taxes can be done on an aggregate basis. EITF Issue No. 06-3 is effective for fiscal years beginning after December 15, 2006, which will be the Company’s fiscal 2008. The adoption of EITF Issue No. 06-3 is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

AsIn ofJune ~~March~~2006, the FASB issued Interpretation No. 3148, ~~2006~~“Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”) which prescribes a recognition threshold and ~~2005~~measurement attribute, ~~the~~as ~~Company~~well ~~provided~~as criteria for asubsequently ~~full~~recognizing, ~~valuation~~derecognizing ~~allowance~~and ~~against~~measuring uncertain tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the ~~deferred~~uncertainty in income tax assets ofand ~~subsidiaries~~liabilities. inFIN ~~Malaysia~~48 is effective for fiscal years beginning after December 15, ~~Singapore~~2006, which will be the ~~U.S.A.~~Company’s ~~due~~fiscal 2008, and is required to be recognized as a change in accounting principle through a cumulative-effect adjustment to retained earnings as of the ~~uncertainty~~beginning ~~surrounding~~of the ~~realizability~~year of ~~these~~adoption. ~~benefits~~The inadoption ~~future~~of ~~tax~~FIN ~~returns~~48 is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

F-1812

UNITEDTable STATESof Contents

2006Table FORMof 10-K Contents

1Table of Contents

3Table of Contents

5Table of Contents

—Table technological changes and the introduction of new products; andContents

•Table the outcome of patent litigation in Taiwan; andContents

14Table of Contents

•Table variationsof in our actual or anticipated operating results;Contents

•Table amounts we may have to pay in the PRC for personal income taxes, interest and penalties that may be imposed by PRC tax authorities on the income of foreign workers who performed services in the Shenzhen Factory;Contents

OurTable main production facilities are located in Shenzhen, the PRC in a plant with a total floor space of approximately 273,000 square feet. Contents

Table of Contents

21Table of Contents

•Table significantof under-performance relative to expected historical or projected future operating results;Contents

calculatedTable on the basis of a professional valuation report on the property provided by an independent appraiser. A subsidiary that held title to the asset to be disposed of by sale, was sold for $7,692 in cash with a net gain of $2,189 during fiscal year 2006. See Note 5. Contents

forTable expansion of our existing production facilities but this plan was subsequently aborted. The sale was completed on April 13, 2005, with full ownership of Warden and its associated risk transferred to the purchaser, for sales proceeds of approximately $7.7 million in cash. Contents

LiquidityTable andof Capital Resources Contents

30Table of Contents

Table of Contents

ITEM 10. DIRECTORSTable ANDof EXECUTIVE OFFICERS OF THE REGISTRANT Contents

ITEM 14. PRINCIPALTable ACCOUNTANTof FEES AND SERVICES Contents

NotesTable toof Consolidated Financial Statements. Contents

(b)Table See List of Exhibits at page 37 of this Form 10-K.Contents

F-1Table of Contents

PeakTable Internationalof Limited: Contents

ASTable OFof MARCH 31, 2006 AND 2005 Contents

FORTable THEof YEARS ENDED MARCH 31, 2006, 2005 AND 2004 Contents

CONSOLIDATEDTable STATEMENTSof OF CASH FLOWS Contents

The consolidatedTable financial statements include the accounts of the Company and its subsidiaries. All significant intra-group balances and transactions have been eliminated on consolidation. Contents

(e) LandTable useof right Contents

(h) ValuationTable of long-lived assets Contents

2. SUMMARYTable OFof SIGNIFICANT ACCOUNTING POLICIES (Continued) Contents

(UnitedTable States dollars in thousands, except number of shares and per share data) Contents

NOTESTable TOof CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Contents

•Table Theof year ended April 13, 2006; andContents

Table of Contents

InterestTable income was derived from bank deposits of the Company during the years ended March 31, 2006, 2005 and 2004. Contents

PEAKTable INTERNATIONALof LIMITED

Filing Compare · PEAK INTERNATIONAL LTD