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Corporate history

1. What is the relationship between ZTEST and Permatech Electronics?

Permatech Electronics is a wholly owned subsidiary of ZTEST Electronics Inc. and is an ISO 9002 certified Electronic Manufacturing Services (EMS) provider founded in 1982. Permatech offering includes Materials Management, Printed Circuit Board (PCB) Assembly, Testing and Design services. Permatech operates from a 20,000 square foot facility in North York, Ontario, Canada. The company serves customers in the Medical, Power, Computer, Telecommunication, Wireless, Industrial and Consumer Electronics markets requiring high quality, quick-turn, small and medium size production runs.

ZTEST purchased a 60% investment in Permatech in August 2000. After evaluating Permatech's business for a year, ZTEST announced in September 2001 its intention to purchase the remaining 40% equity subject to regulatory and shareholder approval. All parties agreed to the transaction and the acquisition was completed on January 15, 2002.

2. What are the natural synergies between ZTEST and Permatech?

As a developer and manufacturer of electronic test equipment, ZTEST had outsourced assembly projects to a number of vendors, one of them being Permatech, whose performance had been impressive. After completing due diligence and purchasing a 60% stake in the company, the synergies became more clear, as both companies developed complementary expertise vital to turnkey offerings to Permatech customers. Permatech's ISO9002-certified facility was also a valuable asset to ZTEST, as it helps to differentiate EMS providers particularly in the small to mid-sized run category. For Permatech, the next level of growth as an EMS provider necessitated a transition to more turnkey business, a transition that required additional expertise and access to capital. ZTEST's public company status and test services background fulfilled addressed both needs.

Industry Terms

3. What is a PCB?

A printed circuit board (PCB) is an insulating surface with conductive material deposited in continuous paths from terminal-to-terminal. Electronic components are then mounted on the board in the assembly process.

4. What is the difference between Printed Circuit Board (PCB) Assembly and PCB Fabrication and where does Permatech fit?

Permatech falls into the PCB assembly provider category, which is often confused with the manufacturers who fabricate printed circuit boards, for example, Circuit World.

The fabricators produce the boards themselves, which are in turn purchased by OEMs or EMS assembly providers performing procurement services on behalf of their OEM customers. The assembly providers or OEM customers then purchase the electronic or RF components such as chips, resistors etc. to be mounted on the printed circuit board. Once the assembly has been completed, the board with all attached components can be delivered back to the customer to be placed into its enclosure, or housing.

5. What is meant by "Turnkey" versus "Consignment" manufacturing and what effect will Permatech's transition to "Turnkey" have on revenues?

"Turnkey" manufacturing refers to Permatech's ability to add both Design and Materials management services to their standard "Consignment" based assembly services. These additional services can increase revenue substantially as the Materials Management, purchasing and warehousing of parts, can account for as much a 90% of the total cost of the entire manufacturing costs. Permatech recently secured a material "Turnkey" order for materials management and assembly services. The order, announced September 23rd 2002, is for the manufacturing of point-of-sale terminals and is estimated to be in the $800,000 range for the first year of the agreement, with an expected increase thereafter.

Permatech's Position within the Industry

6. What is Permatech's assembly capability?

Permatech currently offers full surface-mount and through-hole capability. Through-hole (sometimes called "pin-through-hole") was the prevailing manufacturing method for PCB assembly until roughly 5 - 7 years ago, and is basically the practice of mounting components on the board by inserting the component's leads through holes. The limitation of Through-hole manufacturing is that the maximum density of components is constrained by the amount of board space allocated to the holes and secondly, the speed of placement is restricted by the component size and mounting process. Surface mount allows for a much higher density of components along with decreased costs and increased speed. Despite the advantages of surface mount technology, through-hole is still the method of choice in some applications. The company recently purchased additional assembly equipment from Siemens and DEK Printing Machines Ltd, adding full Ball Grid Array and Micro-Ball Grid Array placement capability.