Creative Master was incorporated under the laws of Bermuda on 6 December 2002 to act as the investment holding company of our Group. Our headquarters are in Hong Kong and our manufacturing facilities are located in Dongguan, the PRC.

Our Group has been engaged in the contract manufacturing of die-cast collectibles for about 17 years. We are headquartered in Hong Kong and our manufacturing facilities are located in Dongguan, the PRC.

Our wholly-owed subsidiary, CML, was co-founded in 1986 by our Chief Executive Officer and Chief Operating Officer, Carl Tong and Leo Kwok respectively, to produce high quality die-cast replicas of cars and other vehicles. The original factory was located in Hong Kong with approximately 1,800 m² of factory space. Due to increasing production and labour costs in Hong Kong and our need for more production space as our business expanded, we moved our manufacturing facilities to Guangzhou, the PRC in 1990. This move saw our factory space almost tripled to approximately 5,000 m².

In June 1994, we acquired the manufacturing capabilities for the moulds that we use in producing the die-cast replicas by purchasing a 70% equity interest in CEL. This allowed us to have a better control over the quality and timing in the mould making process.

In 1996, ASHL became our major shareholder. The ultimate major shareholder of ASHL is Acma Ltd. ASHL¡¯s cash investment and the provision of its corporate guarantee to banks and financial institutions provided us with financial resources and support that enabled us to obtain additional credit facilities. This allowed us to grow our business more aggressively by seeking new customers and expanding our manufacturing facilities. In addition to growing our business with MBI, which had been our major customer since 1986, we added Tyco Toys (which was subsequently acquired by Mattel) and Brookfield Collectors Guild (which was subsequently acquired by Action Performance) to our customer base. To cope with the new orders, we moved to larger premises in Dongguan, Guangdong Province in the PRC.

From 1995 to mid-1999, we established four more factories for our die-cast business in Dongguan, the PRC, all located within one-mile radius of each other. We set up our second and third factories in May and September 1996 respectively. In December 1998, we set up a fourth factory to house our pattern making unit and our second mould making unit when we acquired MEL. This fourth factory contains approximately 4,400 m² of production space. In April 1999, we established our fifth factory, which had approximately 10,000 m² of manufacturing space. At the same time, we expanded our corporate services offices and moved them to a separate building in the compound of the fifth factory. This building also houses certain executive offices, training facilities and our information technology department.

In 1997, we were awarded the Hong Kong Productivity Centre¡¯s ¡°Certificate of Merit in Productivity¡±. This award was established by the Hong Kong Government and was presented by the Chief Executive of Hong Kong.

To raise additional funds for our growth, CML undertook a corporate restructuring exercise in 1997 in a bid to access the capital markets in the US by acquiring a listing on the National Association of Securities Dealers Automated Quotation (¡°NASDAQ¡±). In December 1997, CML initiated a reverse takeover of Davin Enterprises Inc, (¡°Davin¡±) a public company incorporated in Delaware, United States. Davin had no significant assets, liabilities, business or operations prior to the takeover. It was subsequently renamed CMII. CMII then acquired all the outstanding capital stock of CML from Carl Tong, Leo Kwok and ASHL in exchange for new shares in CMII allotted to Carl Tong, Leo Kwok, ASHL and AIPL. In December 1998, CMII completed a public offering in the US, raised gross proceeds of US$6.25 million and obtained a listing on NASDAQ National Market System.

In 1999, we diversified into the Electronics Business. We started our sixth factory to manufacture the products under our Electronics Business.

In 2000, we were approached by an Internet company, PacificNet.com LLC (¡°PNC¡±), for a reverse takeover as PNC desired to obtain a NASDAQ National Market listing. On 27 July 2000, CMII completed a share swap with the owners of PNC whereby CMII acquired the entire equity interest in PNC by issuing new shares in CMII to the owners of PNC. CMII was then owned substantially by the former owners of PNC, who assumed control of management and the board, and was renamed PacificNet.com, Inc. (¡°PACT¡±). With this acquisition, PACT switched its focus to business-to-business electronic commerce services and solutions.

On 17 October 2000, PACT sold the entire die-cast collectibles business operated under CML to ASHL, AIPL, Superego (a company beneficially owned by Leo Kwok), and Cititrend (a company beneficially owned by Carl Tong) (collectively, the ¡°Purchasers¡±). At the Purchasers¡¯direction, all the capital stock of CML was issued to USIL, an investment holding company held by the Original Shareholders in the same proportion as they had in CML, before the sale of CML to CMII. Thereafter, CML had no relationship with PACT.

In May 2002, DBS Nominees acquired a 5% interest in our Group. Also, in 2002, we discontinued our Electronics Business so as to focus on our core die-cast collectibles business.

In December 2002, we entered into a new business to manufacture mould for third-parties to be used in the production of electronic and consumer products. We set up a new company with L&WHK, whose shareholders have been involved in the manufacture of plastic injection moulds for more than 30 years. We own 70% of the company, CLW, while the balance of 30% is held by L&WHK. This arrangement allows us to leverage on our expertise in mould making and L&WHK¡¯s contacts and experience in the plastic moulding business. L&WHK has undertaken to channel any new business from its existing clients or new clients for moulds to be manufactured in the PRC to CLW.

On 4 August 2003, CML formed a 50:50 joint venture with one of our customers, Tamiya, to establish TCME to provide assistance to Japanese corporations to find suitable original equipment manufacturers in the PRC for mould making and injected moulding parts, or moulds and finished goods.