China Factory audit report

1. Watch Your Quality All The Time China Factory Audit Report In general, we will check the following aspects for a factory audit: Content Section 1: Company Overview 1.1 Legal Validity 1.2 Company Building Information 1.3 Communication Infrastructures 1.4 Products Markets Section 2: Management 2.1 Company Chart 2.2 Employee Headcount 2.3 Management 2.4 Working force training 2.5 Working Condition (Safety) Section 3: Production Capacity 3.1 Annual Production Capacity (Previous Year) 3.2 Production Capacity 3.3 Production Machinery 3.4Testing Machinery 3.5 Subcontractors 3.6 Daily output check Section 4: Quality Assurance 4.1 Quality Management System Certification 4.2 Product Certification 4.3 Quality Control Management 4.4 Supplier Management 4.5 After Sales Service Section 5: Production Process Management Section 6: R & D Capacity Section 7: Company Development / Expansion Plans Section 8: Certification & Photos Section 9: Others Page 1 of 19

2. Watch Your Quality All The Time Section 1: Company Overview Company Overview 1.1 Legal Validity Does the company have a valid Business license? Business License Number Yes No xxxxxxxxxxxx Year Established: 2003-01-03 Validity Period: 2020-12-31 xxxxxx ,Gushu Village, Xixiang Town, Bao’an District, Shenzhen Registered Address: xxxxxx ,Gushu Village, Xixiang Town, Bao’an District, Shenzhen Company Address: Shenzhen Industrial & Commercial Bureau Annual review conducted by the Industrial & Commercial Bureau? Yes No Reviewed By: Registered Capital: RMB: 50,000,000 Zhang Xiaoping Corporate Representative: Manufacture and sale of PCBA Industry: Business Type: Manufacturer Trading Company Combined Private Owner Joint Venture limited Company Other Type of Ownership: Products Manufactured: PCBA Business License (Original) Page 2 of 19

3. Watch Your Quality All The Time 1.2 Company Building Information Certification Type: Land Certification Real Estate Certification Lease Agreement Factory Officer Claimed 20000m2 Total Building Size: Number of Building(s): 2 Number of Sample room(s) N/A Number of Warehouse 1 Factory building #1（3 floor） Factory building #2（4 floor） Company's Certificate Company's Certificate Page 3 of 19

4. Watch Your Quality All The Time 1.3 Communication Infrastructures Telephone sets 50 Fax machines 1 Computers 182 Internet Access Type: _China Telecom_ Digital Camera 10 1.4 Products Markets Product Type Main customer Name Market location Monthly Order Qty Factory not willing to reply. Their market are mainly in China. Section 2: Management Management 2.1 Company Chart Page 4 of 19

5. Watch Your Quality All The Time 2.2 Employee Headcount Department Name Full Time Employee(s) Part-time Employee(s) Total G.M 7 0 7 Purchasing Dept. 11 0 11 AV R&D Dept. 17 0 17 Finance Dept. 8 0 8 PMC Dept. 8 0 8 Warehouse Dept. 27 0 27 Comprehensive Dept. 9 0 9 MID R&D Dept. 44 0 44 Production technology Dept. 43 0 43 Marketing Dept. 49 0 49 Car electronic Dept. 7 0 7 MID testing Dept. 6 0 6 SMT Production Dept. 223 0 223 Testing Dept. 87 0 87 DIP Production Dept. 230 0 230 MID Production Dept. 215 0 215 Quality Dept. 125 0 125 Account Dept. 20 0 20 Total Number: 1146 0 1146 2.3 Management Department Name Title Year(s) in Current Company Zhang Xiaoping - 12 G.M Page 5 of 19

6. Watch Your Quality All The Time Huang Sheng - 12 Production Dept. Cai Xiaotian - 11 Purchasing Dept. Tan Yunliang - 10 Quality Dept. 2.4 Working force training Content Observations / Comments Yes, all employees have skill training Yes, some employees have skill training No 2.4.1 Are employees having skill training process? Yes, all skill training valid Yes, some skill training valid No 2.4.2 Is the skill training valid? Yes, all skill training having record Yes, some skill training having record No 2.4.3 Is the skill training having record? 2.5 Working Condition(Safety) Content Observations/Comments Yes No 2.5.1 Are workplace sufficiently well ventilated? Are illuminated, accessible, and kept clear of obstructions? aisles and emergency exit doors clearly marked, Yes No 2.5.2 Yes No 2.5.3 Does the factory have Fire extinguisher? Secure Channel Page 6 of 19

7. Watch Your Quality All The Time Page 7 of 19

8. Watch Your Quality All The Time Section 3: Production Capacity Production Capacity 3.1 Annual Production Capacity Product Name: MID PCBA Phone PCBA DVD PCBA 150K pcs/Week 600K pcs/Week 600K pcs/Week 3.2 Production Capacity Product Name Production Line Capacity Actual Units Produced (Previous Year) - - - 3.3 Production Machinery Machine Name Brand& Model No. Quantity Number of Year(s) Used Condition Fully automatic printing machine High-speed chip mounter Multi-functional smt machine Unknown 16 Unknown Good SIEMENS 16 Unknown Good SIEMENS 8 Unknown Good Reflow oven Unknown 16 Unknown Good Fully automatic printing machine High-speed chip mounter High-speed chip mounter High-speed chip mounter Page 8 of 19

9. Watch Your Quality All The Time Reflow oven AOI machine Machine Page 9 of 19

10. Watch Your Quality All The Time 3.4 Testing Machinery Machine Name Brand & Model No. Quantity Number of Year(s) Used Condition Salt spraying tester Unknown 1 Unknown Good X-Ray Unknown 1 Unknown Good AOI Unknown 10 Unknown Good KAYOTIM Unknown 1 Unknown Good Salt spraying tester Salt spraying tester 3.5 Subcontractors Cooperation Period(Years) Subcontractor Name Product Subcontracted Volume Supplied Factory not willing to reply. Section 4: Quality Assurance Quality Management System and Product Certification 4.1 Quality Management System Certification Certification Certified By Certificate No. Validity Period Factory not provide 4.2 Product Certification Certification Certified By Certificate No. Product Name Validity Nil Nil Nil Nil Page 10 of 19

11. Watch Your Quality All The Time 4.3 Quality Control Management Content Observations/Comments Yes, all production lines have quality control Yes, some production lines have quality control No Yes No QC department Yunliang 83 workers on production line do 100% inspection. 30 independent QC do sample inspection. 4.3.1 Is there quality control in all lines? Do the QA/QC inspectors work independently from the production line? 4.3.2 manager: Tan 4.3.3 Who does the QA/QC Manager/Supervisor report to? 4.3.4 How many QA/QC inspectors in total? QC report QC report QC report QC report No. of Employees in Each Production Line Page 11 of 19

12. Watch Your Quality All The Time Production Line Supervisor No. of Operators No. of In-line QC/QA -- SMT workshop 223 20 -- DIP workshop 230 33 -- MID workshop 215 18 SMT workshop SMT workshop SMT workshop SMT workshop SMT workshop Page 12 of 19

13. Watch Your Quality All The Time SMT workshop SMT workshop SMT workshop SMT workshop SMT workshop SMT workshop Page 13 of 19

14. Watch Your Quality All The Time SMT workshop SMT workshop SMT workshop SMT workshop Page 14 of 19

15. Watch Your Quality All The Time 4.4 Supplier Management Content Observations/Comments Does the company have a supplier assessment procedure? Yes No 4.4.1 Yes, Because of commercial confidentiality, the factory did not allow to take photo. No Yes, Because of commercial confidentiality, the factory did not allow to take photo. No Yes,Because of commercial confidentiality, the factory did not allow to take photo. No Does the company have an updated list of approved supplier? 4.4.2 Does the company establish and implement a standard procedure for purchasing contract review and approval? 4.4.3 Does the company keep it’s supplier assessment reports? 4.4.4 Yes No 4.4.5 Are there company’s purchasing documents Is there a procedure to conduct random product inspections after final packaging? Yes No 4.4.6 Does the factory perform regular quality control at major production steps? Yes No 4.4.7 4.5 After Sales Service Content Observations/Comments Is clearly record and maintained? Are there any clear procedures for handling customer complaints? Is there a closed-loop corrective action system in place? Can finished/packaged products be traced by lot identification to the appropriate raw material test reports? customer feedback, including complaints, Yes No Yes No Yes No 4.5.1 4.5.2 4.5.3 Yes No 4.5.4 Yes No 4.5.5 Is there a product alert and recall procedure? Page 15 of 19

16. Watch Your Quality All The Time Section 5: Production Process Management Production Process Management Content Observations/Comments Yes No 5.1 Is the factory tidy and clean enough for production? Are the following items/documents provided at the appropriate location? Yes No 5.2 Are written instructions available for onsite material inspection/testing? Are the relevant records maintained? Are written inspection/testing instructions available for finished products? Are maintained? Yes No 5.3 Yes No 5.4 the relevant records 5.5 How are finished products inspected? 100% Full check Are units that failed inspection clearly marked and separated to prevent accidental dispatch? Yes No 5.6 How are finished products that failed inspection handled? Yes, Repaired and re-inspected. 5.7 Job guidance document for inspection Job guidance document for inspection Job guidance document for inspection Job guidance document for inspection Page 16 of 19

17. Watch Your Quality All The Time Job guidance document for inspection Job guidance document for inspection Job guidance document for production Job guidance document for production Page 17 of 19

18. Watch Your Quality All The Time Section 6: R&D Capacity R&D Capacity Content Observations/Comments 6.1 There are _61_ R&D engineer(s) in the company. Does the company have it’s own brand? If yes, please specify Yes No Yes No 6.2 6.3 Does the company provide ODM service for others? Are there relevant design Input / Output, review, and verification documents available for the assessment company? Based on inspection, are R&D employees equipped with adequate specialized equipment? If yes, please list all key equipment used:________ Do R&D employees use any specific software for designing new products? If yes, please list the main software used:_ Yes No 6.4 6.5 N/A 6.6 N/A Please list all certifications and/or qualifications of the R&D department. 6.7 N/A Designs Certificate Designs Certificate N/A N/A Section 7: Company Development/ Expansion Plans Company Development/ Expansion Plans Company Development Action Timeframe N/A N/A Section 8: Certification & Photos Certification & Photos Page 18 of 19

19. Watch Your Quality All The Time N/A N/A Section 9: Others Remarks 1. SHENGZHEN XXX ELECTRONIC CO., LTD is legally registered as manufacturing factory. It is a large size of PCBA factory in Shenzhen. 2. Part of the documents. Because involving trade secrets, factory did not let us take pictures. 3. On-site audit, the factory is producing products, auditor did not find child labor. 4. Factory looks very specialized in the PCB client is intending to purchase; factory has a good production capacity and quality control system. 5. The auditor found that factory employees were not wearing employee's card, need to improve. 6. And no PCB board production machines, the factory purchases PCB and other materials, then mounts PCBs. 7. Factory does not have sample room; factory can provide solution to MID operation system as well. End of Report Page 19 of 19