19 | P a g e Form51-102F  For the period ended June 30, 2010  MANAGEMENT’S DISCUSSION & ANALYSIS  Internal Control over Financial Reporting  Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial  reporting and the preparation of financial statements in accordance with Canadian GAAP. Management is responsible for  establishing and maintaining adequate internal controls over financial reporting for the Company.  The Company’s management, including the CEO and CFO, has evaluated the effectiveness of the internal controls over financial  reporting. Based on this evaluation, management has concluded that internal controls over financial reporting were designed  effectively as of June 30, 2010.  As a result of this review it was determined that there were no changes in internal control over financial reporting that have  materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting, except the  internal control has been extended to include the subsidiaries located in Malaysia. During the second quarter of fiscal 2010, the  assessment indentified the following material weakness:  • The Company’s policies and procedures relating to the inventory control process at one of the Company’s operating  subsidiaries were not followed. This did not have a material impact on the financial reporting.  During the current period, the Company has re-designed the inventory control process and extensive training and monitoring  have been performed to ensure adequate control procedures over timely inventory recording and counting are followed by  operating subsidiaries.  While the Company’s CEO and CFO believe that the Company’s internal controls over financial reporting provide a reasonable  level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures or internal  control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated,  can only provide reasonable, not absolute, assurance that the objectives of the control system are met. 