10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-50812

MULTI-FINELINE ELECTRONIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-3947402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3140 East Coronado Street

Anaheim, CA 92806

(Address of principal executive offices, Zip Code)

(714) 238-1488

(Registrant’s telephone number, including area code)

Indicate 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 of 1934 during the preceding 12 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨
(Do not check if a smaller reporting company)

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

The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of January 31, 2011 was 23,971,454.

Multi-Fineline Electronix, Inc.

Index

PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	17
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
	Signatures	30

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

	December 31, 2010		September 30, 2010
	(unaudited)
ASSETS
Cash and cash equivalents	$	99,161	$	99,875
Short-term investments		—		14,991
Accounts receivable, net of allowances of $2,736 and $2,354 at December 31, 2010 and September 30, 2010, respectively		161,650		149,469
Inventories		72,090		76,933
Deferred taxes		3,445		3,445
Income taxes receivable		4,548		4,548
Assets held for sale		2,958		2,958
Other current assets		3,359		2,761
Total current assets		347,211		354,980
Property, plant and equipment, net		193,955		185,282
Land use rights		3,464		3,461
Deferred taxes		5,602		5,505
Goodwill		7,537		7,537
Other assets		7,139		5,556
Total assets	$	564,908	$	562,321
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	139,906	$	156,910
Accrued liabilities		25,826		27,077
Income taxes payable		6,722		4,972
Total current liabilities		172,454		188,959
Other liabilities		13,133		11,830
Total liabilities		185,587		200,789
Commitments and contingencies (Note 2)
Stockholders’ equity
Preferred stock, $0.0001 par value, 5,000,000 and 5,000,000 shares authorized at December 31, 2010 and September 30, 2010, respectively; 0 and 0 shares issued and outstanding at December 31, 2010 and September 30, 2010, respectively		—		—
Common stock, $0.0001 par value; 100,000,000 and 100,000,000 shares authorized at December 31, 2010 and September 30, 2010, respectively; 23,965,454 and 23,916,665 shares issued and outstanding at December 31, 2010 and September 30, 2010, respectively		2		2
Additional paid-in capital		84,967		85,150
Retained earnings		265,930		250,829
Accumulated other comprehensive income		28,422		25,551
Total stockholders’ equity		379,321		361,532
Total liabilities and stockholders’ equity	$	564,908	$	562,321

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and Per Share Data)

(unaudited)

	Three Months Ended December 31,
	2010			2009
Net sales	$	241,154		$	229,498
Cost of sales		206,680			193,025
Gross profit		34,474			36,473
Operating expenses:
Research and development		2,751			2,835
Sales and marketing		7,433			6,685
General and administrative		5,050			5,883
Total operating expenses		15,234			15,403
Operating income		19,240			21,070
Other (expense) income, net
Interest expense		(116	)		(277	)
Interest income		223			86
Other (expense) income, net		(165	)		190
Income before income taxes		19,182			21,069
Provision for income taxes		(4,081	)		(4,756	)
Net income	$	15,101		$	16,313
Net income per share:
Basic	$	0.63		$	0.65
Diluted	$	0.62		$	0.63
Shares used in computing net income per share:
Basic		23,960,323			25,269,783
Diluted		24,298,495			25,755,033

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(unaudited)

	Three Months Ended December 31,
	2010			2009
Cash flows from operating activities
Net income	$	15,101		$	16,313
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,169			12,043
Provision for doubtful accounts and returns		2,064			2,079
Deferred taxes		(34	)		(88	)
Stock-based compensation expense		1,643			1,376
Loss (gain) on disposal of equipment		5			(145	)
Changes in operating assets and liabilities:
Accounts receivable		(14,237	)		(4,572	)
Inventories		5,468			14,649
Due to (from) affiliates, net		1,208			(1,008	)
Other current assets		(379	)		(715	)
Other assets		(1,548	)		432
Accounts payable		(17,878	)		(28,074	)
Accrued liabilities		(2,042	)		(2,416	)
Income taxes payable		1,676			1,282
Other current liabilities		—			149
Other liabilities		1,305			1,151
Net cash provided by operating activities		3,521			12,456
Cash flows from investing activities
Sales of investments		14,991			150
Purchases of property and equipment		(18,327	)		(11,709	)
Proceeds from sale of equipment		277			234
Net cash used in investing activities		(3,059	)		(11,325	)
Cash flows from financing activities
Proceeds from exercise of stock options		52			945
Tax withholdings for net share settlement of equity awards		(959	)		(905	)
Repurchase of common stock		(924	)		—
Net cash (used in) provided by financing activities		(1,831	)		40
Effect of exchange rate changes on cash		655			83
Net (decrease) increase in cash		(714	)		1,254
Cash and cash equivalents at the beginning of the period		99,875			139,721
Cash and cash equivalents at the end of the period	$	99,161		$	140,975
Non-cash investing activities
Purchases of property and equipment	$	13,842		$	11,015

The accompanying notes are an integral part of these condensed consolidated financial statement

3

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

1. Description of Business

Multi-Fineline Electronix, Inc. (“MFLEX” or the “Company”) was incorporated in 1984 in the State of California and reincorporated in the State of Delaware in June 2004. The Company is primarily engaged in the engineering, design and manufacture of flexible printed circuit boards along with related component assemblies.

Affiliates and subsidiaries of WBL Corporation Limited (collectively “WBL”), a Singapore company, beneficially owned approximately 62% of the Company’s outstanding common stock as of December 31, 2010 and September 30, 2010, which provides WBL with control over the outcome of stockholder votes, except with respect to certain related-party transactions.

2. Basis of Presentation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has two wholly owned subsidiaries located in China: MFLEX Suzhou Co., Ltd., (“MFC”) formerly known as Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. (“MFC2”) and into which Multi-Fineline Electronix (Suzhou) Co., Ltd (“MFC1”) was recently merged, and MFLEX Chengdu Co., Ltd. (“MFLEX Chengdu”); one located in the Cayman Islands: M-Flex Cayman Islands, Inc. (“MFCI”); one located in Singapore: Multi-Fineline Electronix Singapore Pte. Ltd. (“MFLEX Singapore”); one located in Malaysia: Multi-Fineline Electronix Malaysia Sdn. Bhd. (“MFM”); one located in Arizona: Aurora Optical, Inc. (“Aurora Optical”); and one located in Cambridge, England: MFLEX UK Limited, formerly known as Pelikon Limited (“MFE”). All significant intercompany transactions and balances have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S.”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s 2010 Annual Report on Form 10-K. The financial information presented in the accompanying statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the periods indicated. All such adjustments are of a normal recurring nature. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities.

Inventories

Inventories, net of related allowances, are comprised of the following:

	December 31, 2010		September 30, 2010
Raw materials and supplies	$	26,497	$	32,134
Work-in-progress		17,339		19,855
Finished goods		28,254		24,944
	$	72,090	$	76,933

Property, Plant and Equipment

Property, plant and equipment, net, are comprised of the following:

	December 31, 2010		September 30, 2010
Land	$	3,730	$	3,730
Building		57,682		55,688
Machinery and equipment		232,025		223,518

4

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

	December 31, 2010			September 30, 2010
Computers and capitalized software		12,234			12,106
Leasehold improvements		15,731			16,550
Construction-in-progress		32,681			23,886
	$	354,083		$	335,478
Accumulated depreciation and amortization		(160,128	)		(150,196	)
	$	193,955		$	185,282

Depreciation expense for the three months ended December 31, 2010 and 2009 was $10,980 and $11,349, respectively.

Included in other current assets as of December 31, 2010 and September 30, 2010 are prepaid software licenses that are short-term in nature. Amortization of software licenses for the three months ended December 31, 2010 and 2009 was $171 and $338, respectively.

Product Warranty Accrual

The Company warrants its products for up to 36 months. The standard warranty requires the Company to replace defective products returned to the Company at no cost to the customer. The Company records an estimate for warranty related costs at the time revenue is recognized based on historical amounts incurred for warranty expense and historical return rates. The warranty accrual is included in accrued liabilities in the accompanying condensed consolidated balance sheets.

Changes in the product warranty accrual for the three months ended December 31, 2010 and 2009 were as follows:

	Balance at October 1		Warranty Expenditures			Provision for Estimated Warranty Cost		Balance at December 31
Fiscal 2011	$	463	$	(316	)	$	82	$	229
Fiscal 2010	$	541	$	(1,151	)	$	1,576	$	966

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during the period from transactions and other events and circumstances from non-owner sources. The difference between net income and comprehensive income (loss) for the three months ended December 31, 2010 and 2009 was comprised entirely of the Company’s foreign currency translation adjustment and is summarized in the following table:

	Three Months Ended December 31,
	2010		2009
Net income	$	15,101	$	16,313
Other comprehensive income – translation adjustment		2,871		22
Total comprehensive income	$	17,972	$	16,335

5

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

Net Income Per Share—Basic and Diluted

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities. The impact of potentially dilutive securities is determined using the treasury stock method.

The following table presents a reconciliation of basic and diluted shares:

	Three Months Ended December 31,
	2010		2009
Basic weighted-average number of common shares outstanding		23,960,323		25,269,783
Dilutive effect of potential common shares		338,172		485,250
Diluted weighted-average number of common and potential common shares outstanding		24,298,495		25,755,033
Potential common shares excluded from the per share computations as the effect of their inclusion would be anti-dilutive		372,639		240,186

Commitments and Contingencies

Litigation

The Company is involved in litigation from time to time in the ordinary course of business. Management does not believe the outcome of any currently pending matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Other Commitments

As of December 31, 2010 and September 30, 2010, the Company had outstanding purchase and other commitments, primarily related to capital projects at its various facilities, which totaled $21,949 and $38,054, respectively.

Pursuant to the laws applicable to the Peoples’ Republic of China’s Foreign Investment Enterprises, the Company’s two wholly owned subsidiaries in China, MFC and MFLEX Chengdu, are restricted from paying cash dividends on 10% of after-tax profit, subject to certain cumulative limits. These restrictions on net income for the three months ended December 31, 2010 and 2009 were $13,544 and $11,632, respectively.

Recent Accounting Pronouncements

In July 2010, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that enhances disclosures about the credit quality of financing receivables and the allowance for credit losses. The guidance is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. The disclosures are required for interim and annual periods ending after December 15, 2010 (which is December 31, 2010 for the Company), although the disclosures of reporting period activity are required for interim and annual periods beginning after December 15, 2010 (which is January 1, 2011 for the Company). The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, as its requirements are disclosure-related in nature.

Significant Concentrations

Net sales to the Company’s largest Original Equipment Manufacturer (“OEM”) customers, inclusive of net sales made to their designated sub-contractors, as a percentage of total sales, are presented below:

	Three Months Ended December 31,
	2010			2009
OEM C		28	%		48	%
OEM D		54	%		40	%

6

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

	Three Months Ended December 31,
	2010			2009
OEM E		10	%		1	%

Consistent with prior practice of identifying customers by name when they reach 10% of sales, OEM E refers to HTC Corporation.

In the three months ended December 31, 2010, 93%, 2% and 4% of net sales, respectively, were derived from sales for products or services into the smartphone, feature phone and consumer electronics sectors. In the three months ended December 31, 2009, 63%, 4% and 32% of net sales, respectively, were derived from sales for products or services into the smartphone, feature phone and consumer electronics sectors. All of these sectors are subject to economic cycles and have experienced periods of slowdown in the past.

3. Lines of Credit

In July 2010, MFC entered into a credit line agreement with Agricultural Bank of China, Suzhou Wuzhong Sub-branch (“ABC”), which provides for a borrowing facility for 200,000 Chinese Renminbi (“RMB”) ($30,199 at December 31, 2010). The line of credit will mature in July 2013 and interest on the credit line agreement for U.S. dollar lending will be calculated as LIBOR plus a mutually determined number of basis points. The basis points will be determined according to the U.S. dollar lending cost in the Chinese domestic market. For RMB lending, the interest rate is 90% of the basic rate issued by the People’s Bank of China (“PBOC”) on the loan start date, and the basic interest rate may be adjusted once per year if the PBOC adjusts the basic rate.

In March 2010, MFC1 and MFC2 entered into credit line agreements with China Construction Bank, Suzhou Industry Park Sub-Branch (“CCB”), which provide for two borrowing facilities, for 150,000 RMB each ($22,649 each at December 31, 2010). The lines of credit will mature in March 2013. Interest on the credit line agreements for U.S. dollar lending will be calculated as LIBOR plus a mutually determined number of basis points, and may be adjusted once per quarter for changes in LIBOR. The basis points will be determined according to the U.S. dollar lending cost in the China interbank borrowing market. For RMB lending, the interest rate is 90% of the basic rate issued by the PBOC on the loan start date, and the basic rate may be adjusted once per year if the PBOC adjusts the basic rate.

In February 2009, the Company and MFLEX Singapore (each, a “Borrower,” and collectively, the “Borrowers”) entered into a Loan and Security Agreement (the “Agreement”) with Bank of America, N.A., as a lender and agent (“BOA”), for a senior revolving credit facility (the “Facility”) in an amount up to $30,000, which may be increased to $60,000 at the Company’s discretion upon satisfaction of certain additional requirements (the “Revolver Commitment”). The line of credit will mature in February 2012. The parties have entered into four amendments to the Agreement, including an amendment on August 27, 2009, to make certain adjustments to the amount available for borrowing under the Facility and the definition of Eligible Account (as defined in such amendment). The second amendment was effective on February 15, 2010 and amended the definition of “Permitted Debt” to allow the Borrowers additional aggregate debt during the Borrowers’ transitioning of their credit lines from certain financial institutions in China to different financial institutions in China. The third amendment was effective March 17, 2010 and made changes to the definition of “Restricted Investment” to amend the amount that may be invested in MFM and Pelikon to fund operating expenses. Covenants related to availability, collateral and other events are also imposed on the Company and its foreign subsidiaries in the Agreement.

A summary of the lines of credit is as follows:

	Amounts Available at				Amounts Outstanding at
	December 31, 2010		September 30, 2010		December 31, 2010		September 30, 2010
Line of credit (ABC)	$	30,199	$	29,846	$	—	$	—
Line of credit (CCB)		45,298		44,768		—		—
Line of credit (BOA)		30,000		30,000		—		—
	$	105,497	$	104,614	$	—	$	—

7

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

As of December 31, 2010, the Company was in compliance with all covenants under the lines of credit.

4. Segment information

Based on the evaluation of the Company’s internal financial information, management believes that the Company operates in one reportable segment which is primarily engaged in the engineering, design and manufacture of flexible circuit boards along with related component assemblies. The Company operates in four geographical areas: United States, China, Singapore and Other (which includes Malaysia and the United Kingdom). Net sales are presented based on the country in which the sales originate, which is where the legal entity is domiciled. The financial results of the Company’s geographic segments are presented on a basis consistent with the consolidated financial statements. For the three months ended December 31, 2009, net sales reflect certain sales related to customer purchase orders that were transferred from the U.S. geographic segment to the Singapore geographic segment. Segment net sales and assets amounts include intra-company product sales transactions and subsidiary investment amounts, respectively, which are offset in the elimination line.

Financial information by geographic segment is as follows:

	Three Months Ended December 31,
	2010			2009
Net sales
United States	$	6,155		$	27,115
China		213,404			154,703
Singapore		234,196			200,695
Other		136			164
Eliminations		(212,737	)		(153,179	)
Total	$	241,154		$	229,498
Operating income (loss)
United States	$	(3,124	)	$	(4,109	)
China		5,578			12,145
Singapore		18,035			16,984
Other		(956	)		(3,006	)
Eliminations		(293	)		(944	)
Total	$	19,240		$	21,070
Depreciation and amortization
United States	$	895		$	1,445
China		10,184			9,929
Singapore		24			10
Other		66			659
Total	$	11,169		$	12,043
	December 31, 2010			September 30, 2010
Total assets
United States	$	166,520		$	192,559
China		299,713			285,945
Singapore		292,302			268,186
Other		5,005			5,873
Eliminations		(198,632	)		(190,242	)
Total	$	564,908		$	562,321

8

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

5. Equity Incentive Plans

Stock Options

Stock option activity for the three months ended December 31, 2010 under the Company’s 2004 Stock Incentive Plan (the “2004 Plan”) is summarized as follows:

	Number of Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life
Options outstanding at September 30, 2010		328,599		$	11.57
Granted		—			—
Exercised		(3,242	)		14.28
Forfeited		(200	)		10.00
Options outstanding and exercisable at December 31, 2010		325,157		$	11.54	$	4,860		3.4
Vested and expected to vest at December 31, 2010		325,157		$	11.54	$	4,860		3.4

No compensation costs were recognized during the three months ended December 31, 2010 and 2009 related to stock options. The aggregate intrinsic value of stock options exercised was $31 and $1,524 during the three months ended December 31, 2010 and 2009, respectively. No unearned compensation existed as of December 31, 2010 related to non-vested stock options.

Service and Performance-Based Restricted Stock Units

During the three months ended December 31, 2010 and 2009, the Company granted service-based restricted stock units (“RSU” or “RSUs”) equal to 164,414 and 133,213 shares, respectively, of the Company’s common stock. These grants were made under the 2004 Plan to certain employees (including executive officers) and directors at no cost to such individual. Each RSU represents one hypothetical share of the Company’s common stock, without voting or dividend rights. The RSUs granted to employees vest over a period of three years with one-third vesting on each of the anniversary dates of the grant date. Unearned compensation related to the RSUs is determined based on the fair value of the Company’s common stock on the date of grant and is amortized to expense over the vesting period using the straight-line method.

On November 15, 2010, the Company’s board of directors (the “Board”) or a committee thereof (in either event, the “Administrator”) approved the grant of 94,879 performance-based RSUs (the “November 2010 Awards”). The November 2010 Awards vest upon the achievement of defined performance and market objectives pertaining to each grant, with vesting to occur on or about November 30, 2013. Two-thirds of the November 2010 Awards contained performance conditions whereby the Company recorded share-based compensation cost based on the grant-date fair value and the probability that the performance metrics will be achieved. At the end of each reporting period, the Company evaluates the probability that the performance-based RSUs will vest. If the Company determines that the vesting of any of the outstanding performance-based RSUs is not probable, the compensation expense related to those performance-based RSUs is reversed in the period in which this determination is made.

One-third of the November 2010 Awards contained both market and performance conditions, whereby the market condition was measured by determining the Company’s total shareholder return (“TSR”) for the three year period beginning fiscal 2011 through fiscal 2013 versus the TSR of the Russell 2000 Index for the same period. An award with a market condition is accounted for and measured differently than an award that has a performance or service condition. The effect of a market condition is reflected in the award’s fair value on the grant date (e.g., a discount may be taken when estimating the fair value of an RSU to reflect the market condition). The fair value may be lower than the fair value of an identical award that has only a service or performance condition because those awards will not include a discount on the fair value. All compensation costs for an award that has a market condition will be recognized if the requisite service period is fulfilled, even if the market condition is never satisfied. The estimated per share fair value of the portion of the November 2010 Awards containing both market and performance conditions was $16.47 utilizing the following weighted-average assumptions:

9

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

	November 2010 Awards			Russell 2000 Index Benchmark Inputs
Expected stock return/discount rate1		0.64	%		0.64	%
Dividend yield		0.00	%		0.00	%
Volatility2		65.00	%		25.00	%
Test start date3		9/30/2010			9/30/2010
Common share price3	$	21.99		$	676.14
Expected vesting period (in years)		3.00			N/A

¹ The expected stock return/discount rate was based on the yield to maturity of short-term government bonds over the expected term as of the grant dates.

² Volatilities are selected as of fiscal year end dates for the Company given the vesting provisions are based on the TSR over a fiscal period.

³ The common stock price input at the Grant Date was based on the closing price for the Company’s common stock and the Russell 2000 Index as of September 30, 2010, which was $21.99 and $676.14, respectively. The Company selected the September 30, 2010 prices given that the measurement period for the vesting objective started on September 30, 2010.

As of December 31, 2010, the Company considers the vesting of the November 2010 Awards to be probable.

On November 16, 2009, the Administrator approved the grant of 117,826 performance-based RSUs (the “November 2009 Awards”). The November 2009 Awards vest upon the achievement of defined performance objectives pertaining to each grant, with vesting to occur on or about November 30, 2012. As of December 31, 2010, the Company considers the vesting of the November 2009 Awards to be probable.

RSU activity for the three months ended December 31, 2010 under the 2004 Plan is summarized as follows:

	Number of Shares			Weighted- Average Grant- Date Fair Value
Non-vested shares outstanding at September 30, 2010		479,019		$	21.68
Granted		259,293			21.48
Vested		(128,506	)		18.66
Forfeited		(9,001	)		22.16
Non-vested shares outstanding at December 31, 2010		600,805		$	22.23

The Company recognized compensation costs related to RSUs of $1,353 and $1,214 during the three months ended December 31, 2010 and 2009, respectively. The weighted-average grant-date fair value of nonvested RSUs granted during the three months ended December 31, 2010 and 2009 was $21.48 and $26.02, respectively. The weighted-average fair value of RSUs vested during the three months ended December 31, 2010 and 2009 was $18.66 and $17.79, respectively. Unearned compensation of $9,976 existed as of December 31, 2010 related to nonvested RSUs, which will be recognized into expense over the weighted-average remaining contractual life of the nonvested RSUs of 1.7 years.

Stock Appreciation Rights

During the three months ended December 31, 2010 and 2009, the Administrator approved the grant of stock appreciation rights (“SSAR” or “SSARs”) to be settled in Company common stock. These grants were made under the 2004 Plan to certain employees (including executive officers) at no cost to such individual. Each SSAR has a base appreciation amount that is equal to the closing price of a share of the Company’s common stock on each applicable grant date as reported on the NASDAQ Global Select Market. The Company’s SSARs are treated as equity awards and are measured using the initial compensation element of the award at the time of grant and the expense is recognized over the requisite service period (the vesting period).

On November 15, 2010, the Administrator approved the grant of 125,780 SSARs (the “November 2010 SSARs”). The November 2010 SSARs vest over a period of three years with one-third vesting on each November 15, 2011, 2012 and 2013,

10

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

and will expire on November 14, 2020. The grant date fair value of the SSAR awards was estimated at $10.22 using the Black-Scholes valuation pricing model assuming a risk-free interest rate of 0.78%, zero expected dividends, expected volatility of 66.81% and an expected term of 3.3 years.

SSARs activity for the three months ended December 31, 2010 under the 2004 Plan is summarized as follows:

	Number of Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life
SSARs outstanding at September 30, 2010		295,282	$	21.16
Granted		125,780		22.17
Exercised		—		—
Forfeited		—		—
SSARs outstanding at December 31, 2010		421,062	$	21.46	$	2,159		9.0
SSARs expected to vest after December 31, 2010		395,195	$	21.39	$	2,056		8.9

During the three months ended December 31, 2010 and 2009, the Company recognized compensation costs of $296 and $162 related to the SSARs grants. No SSARs were exercised or were exercisable during the three months ended December 31, 2010 and 2009. Unearned compensation as of December 31, 2010 was $2,563 related to non-vested SSARs, which will be recognized into expense over a weighted-average period of 1.9 years.

6. Share Repurchase Program

On December 5, 2008, the Board approved the establishment of a share repurchase program for up to 2,250,000 shares in the aggregate of the Company’s common stock on the open market. This amount represented approximately nine percent of the Company’s common stock outstanding as of December 31, 2010. Stock repurchases could be made from time to time, based on market conditions and other factors, including price, regulatory requirements and capital availability.

As of September 30, 2010, the Company had repurchased a total of 2,207,177 shares for a total value of $47,469 pursuant to 10b5-1 plans, all of which were retired during fiscal 2010 and 2009. During the three months ended December 31, 2010, the remaining 42,823 shares were repurchased for a total value of $924 and were subsequently retired in October 2010. The excess of the repurchase price over par value was booked as an adjustment to additional paid-in capital.

7. Income Taxes

As of December 31, 2010, the liability for income taxes associated with uncertain tax positions increased to $12,675 from $11,372 as of September 30, 2010. On a net basis, as of December 31, 2010 and September 30, 2010, these liabilities are reduced by $4,792 and $4,723, respectively, from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments. The net amount of $7,883 at December 31, 2010 and $6,649 at September 30, 2010, if recognized, would favorably affect the Company’s effective tax rate. The Company anticipates that there will be changes to the unrecognized tax benefit associated with uncertain tax positions due to the expiration of statutes of limitation, payment of tax on amended returns, audit settlements and other changes in reserves. However, due to the uncertainty regarding the timing of these events, a current estimate of the range of changes that may occur within the next twelve months cannot be made.

The Company currently enjoys tax incentives for certain of its Asian operations. One of the tax holidays was eliminated by taxing authorities due to a change in law. Certain Asian operations are subject to taxes at a rate of 10% of their profits and for the three months ended December 31, 2010, the Company realized tax savings for these operations. However, the tax incentive may be challenged, modified or eliminated by taxing authorities or changes in law.

11

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

8. Impairment and Restructuring

Restructuring Reserve Activity

The following table reflects the movement activity of the restructuring reserve for the three months ended December 31, 2010:

	One-Time Termination Benefits			Other			Total
Accrual balance as of September 30, 2010	$	547		$	502		$	1,049
Restructuring charges		—			—			—
Utilization		(391	)		(278	)		(669	)
Adjustments		(25	)		—			(25	)
Accrual balance as of December 31, 2010	$	131		$	224		$	355

9. Subsequent events

Between January 6 and January 19, 2011, Wearnes Global (Suzhou) Co., Ltd., a subsidiary of our majority stockholder WBL Corporation (“WGS”), and MFC entered into certain agreements whereby MFC shall purchase property located in Suzhou, China, from WGS for a purchase price of 32,314 RMB ($4,866 at January 6, 2011). MFC currently leases such property from WGS, and the lease will terminate contemporaneously with the finalization of the purchase.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include, but are not limited to, statements and predictions as to our expectations regarding our revenues, net sales, sales, full year net sales growth, net income, operating expenses, research and development expenses, earnings, operations, gross margins, including without limitation, our targeted gross margin range, achievement of margins within or outside of such range and factors that could affect gross margins, yields, anticipated cash needs and uses of cash, capital requirements and capital expenditures, payment terms, expected tax rates, results of audits of us in China and the U.S., needs for additional financing, use of working capital, the benefits and risks of our China operations, anticipated growth strategies, ability to attract customers and diversify our customer base, including without limitation the relative size of each customer to us, sources of net sales, anticipated trends and challenges in our business and the markets in which we operate, trends regarding the use of flex in smartphones, feature phones and other consumer electronic devices, the adequacy and expansion of our facilities, capability, capacity and equipment, the impact of economic and industry conditions on our customers and our business, current and upcoming programs and product mix and the learning curves associated with our programs, market opportunities and the utilizations of flex and flex assemblies, customer demand, our competitive position, critical accounting policies and the impact of recent accounting pronouncements. Additional forward-looking statements include, but are not limited to, statements pertaining to other financial items, plans, strategies or objectives of management for future operations, our financial condition or prospects, and any other statement that is not historical fact, including any statement which is preceded by the word “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “predict,” “aim,” “potential,” “plan,” or similar words. For all of the foregoing forward-looking statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to, the impact of changes in demand for our products, our success with new and current customers, our ability to develop and deliver new technologies, our ability to diversify our customer base, our effectiveness in managing manufacturing processes and costs and expansion of our operations, the degree to which we are able to utilize available manufacturing capacity, achieve expected yields and obtain expected gross margins, the impact of competition, the economy and technological advances, and the risks set forth below under “Item 1A. – Risk Factors.” These forward-looking statements represent our judgment as of the date hereof. We disclaim any intent or obligation to update these forward-looking statements.

Overview

We are a global provider of high-quality, technologically advanced flexible printed circuits and value-added component assembly solutions to the electronics industry. We believe that we are one of a limited number of manufacturers that provide a seamless, integrated flexible printed circuit and assembly solution from design and application engineering and prototyping through high-volume fabrication, component assembly and testing. We target our solutions within the electronics market and, in particular, we focus on applications where flexible printed circuits facilitate human interaction with an electronic device and are the enabling technology in achieving a desired size, shape, weight or functionality of the device. Current applications for our products include mobile phones, smart mobile devices, consumer products, portable bar code scanners, personal digital assistants, computer/storage devices and medical devices. We provide our solutions to original equipment manufacturers (“OEMs”) such as Apple, Inc. and Research In Motion Limited and to electronic manufacturing services (“EMS”) providers such as Foxconn Electronics, Inc., Jabil Circuit, Inc., and Flextronics International Ltd. Our business model, and the way we approach the markets which we serve, is based on value added engineering and providing technology solutions to our customers facilitating the miniaturization of portable electronics. Through early supplier involvement with customers, we look to assist in the development of new designs and processes for the manufacturing of their products and, through value added component assembly of components on flex, seek to provide a higher level of product within their supply chain structure. This approach is relatively unique and may or may not always fit with the operating practices of all OEMs. Our ability to add to our customer base may have a direct impact on the relative percentage of each customer’s revenue to total revenues during any reporting period.

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We typically have numerous programs in production at any particular time. The programs’ prices are subject to intense negotiation and are determined on a program by program basis, dependent on a wide variety of factors, including without limitation, expected volumes, assumed yields, material costs, actual yields, and the amount of third party components within the program. Our profitability is dependent upon how we perform against our targets and the assumptions on which we base our prices for each particular program. Our volumes, margins and yields also vary from program to program and, given various factors and assumptions on which we base our prices, are not necessarily indicative of our profitability. In fact, some lower-priced programs have higher margins while other higher-priced programs have lower margins. Given that the programs in production vary from period to period and the pricing and margins between programs vary widely, volumes are not necessarily indicative of our performance. For example, we could experience an increase in volumes for a particular program during a particular period, but depending on that program’s margins and yields and the other programs in production during that period, those higher volumes may or may not result in an increase in overall profitability.

Critical Accounting Policies

Information with respect to our critical accounting policies which we believe have the most significant effect on our reported results and require subjective or complex judgments of management are contained on pages 30-33 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended September 30, 2010.

Comparison of the Three Months Ended December 31, 2010 and 2009

The following table sets forth our Statement of Operations data expressed as a percentage of net sales for the periods indicated:

	Three Months Ended December 31,
	2010			2009
Net sales		100.0	%		100.0	%
Cost of sales		85.7			84.1
Gross profit		14.3			15.9
Operating expenses:
Research and development		1.1			1.2
Sales and marketing		3.1			2.9
General and administrative		2.1			2.6
Total operating expenses		6.3			6.7
Operating income		8.0			9.2
Interest income		0.1			0.0
Interest expense		(0.0	)		(0.1	)
Other (expense) income, net		(0.1	)		0.1
Income before income taxes		8.0			9.2
Provision for income taxes		(1.7	)		(2.1	)
Net income		6.3	%		7.1	%

Net Sales. Net sales increased to $241.2 million for the three months ended December 31, 2010, from $229.5 million for the three months ended December 31, 2009. The increase of $11.7 million, or 5.1%, was driven by new program wins.

Net sales into the smartphones sector increased to $223.7 million for the three months ended December 31, 2010, from $144.1 million for the three months ended December 31, 2009. The increase of $79.6 million, or 55.2%, was primarily due to a higher consumer demand for smartphones. For the three months ended December 31, 2010 and 2009, the smartphones sector accounted for approximately 93% and 63% of total sales, respectively.

Net sales into the feature phones sector decreased to $5.1 million for the three months ended December 31, 2010, from $9.3 million for the three months ended December 31, 2009. The decrease of $4.2 million, or 45.2%, was primarily due to the decision to utilize our resources for higher value-added assemblies in the smartphone sector. For the three months ended December 31, 2010 and 2009, the feature phones sector accounted for approximately 2% and 4% of total sales, respectively.

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Net sales into the consumer electronics sector were $9.1 million for the three months ended December 31, 2010, versus $72.1 million for the three months ended December 31, 2009. The decrease in sales into the consumer electronics sector was mainly due to a major program reaching the end of its life cycle, followed by the initiation of a new program with less flex content. Shipments into the consumer electronics sector accounted for approximately 4% and 32% of total net sales for the three months ended December 31, 2010 and 2009, respectively.

For the second quarter of fiscal 2011, we expect net sales to be in the range of $210 to $240 million due to healthy customer demand. This compares with actual net sales of $154.1 million in the second quarter of fiscal 2010.

Cost of Sales and Gross Profit. Cost of sales as a percentage of net sales increased to 85.7% for the three months ended December 31, 2010 compared to 84.1% for the three months ended December 31, 2009. The increase in cost of sales as a percentage of net sales of 1.6% was primarily attributable to higher labor costs in China, the appreciation of the Chinese Yuan and increased pricing pressures from customers. As a result, gross profit decreased to $34.5 million for the three months ended December 31, 2010 versus $36.5 million for the three months ended December 31, 2009, or 5.5%. As a percentage of net sales, gross profit decreased to 14.3% for the three months ended December 31, 2010 from 15.9% for the three months ended December 31, 2009. For the second fiscal quarter of 2011, we expect gross margins to range between 13 and 15 percent based on our projected product mix and sales volume.

Research and Development. Research and development expense remained flat at $2.8 million for the three months ended December 31, 2010 compared to the three months ended December 31, 2009. As a percentage of net sales, research and development expense decreased to 1.1% versus 1.2% in the comparable period of the prior year.

Sales and Marketing. Sales and marketing expense increased by $0.7 million to $7.4 million for the three months ended December 31, 2010, from $6.7 million in the comparable period in the prior year, an increase of 10.4%. The increase is primarily attributable to increased commissions as a result of volume and program mix changes. As a percentage of net sales, sales and marketing expense increased to 3.1% versus 2.9% in the comparable period of the prior year.

General and Administrative. General and administrative expense decreased by $0.8 million to $5.1 million for the three months ended December 31, 2010, from $5.9 million for the three months ended December 31, 2009, a decrease of 13.6%. The decrease was due to efforts in the prior fiscal year to realign functions and reduce external general and administrative costs on a global basis. As a percentage of net sales, general and administrative expense decreased to 2.1% of net sales for the three months ended December 31, 2010 from 2.6% in for the comparable period of the prior year. We expect general and administrative expense, as a percentage of net sales, to remain relatively flat throughout the fiscal year.

Interest Income (Expense), Net. Interest income, net increased to $0.1 million for the three months ended December 31, 2010 from interest expense, net of $0.2 million for the three months ended December 31, 2009. Interest income, net increased as a result of higher interest rates on our cash held in China and interest expense decreased due to the repayment of our notes payable during fiscal 2010.

Other Expense (Income), Net. Other expense, net was $0.2 million for the three months ended December 31, 2010 versus other income, net of 0.2 million for the three months ended December 31, 2009. The change to other expense from other income was primarily the result of net losses from foreign exchange due to the movement of the U.S. dollar versus the RMB and other foreign currencies.

Income Taxes. The effective tax rate for the three months ended December 31, 2010 and 2009 was 21.3% and 22.6%, respectively. Future tax rates could vary if current tax regulations are changed.

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Liquidity and Capital Resources

Our principal sources of liquidity have been cash provided by operations and our ability to borrow under our various credit facilities. Our principal uses of cash have been to finance working capital, facility expansions, stock repurchases and other capital expenditures. We anticipate these uses, as well as the possible use of cash for a strategic acquisition, will continue to be our principal uses of cash in the future. Global financial and credit markets recently have been volatile, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, if needed.

It is our policy to carefully monitor the state of our business, cash requirements and capital structure. We believe that funds generated from our operations and available from our borrowing facilities will be sufficient to fund current business operations as well as anticipated growth over at least the next fiscal year.

Changes in the principal components of operating cash flows during our three months ended December 31, 2010 were as follows:

• Our net accounts receivable increased to $161.7 million as of December 31, 2010 from $149.5 million as of September 30, 2010, or 8.2%, due to increased sales during the period. Our net inventory balances decreased to $72.1 million as of December 31, 2010 from $76.9 million as of September 30, 2010, a decrease of 6.2%. Inventory decreased as a result of decreased production at the end of December which will continue into the first week of February due to the Chinese New Year. Our accounts payable decreased to $139.9 million as of December 31, 2010 from $156.9 million as of September 30, 2010, a decrease of 10.8%, as a result of the decreased production in December previously mentioned, coupled with final payments on accrued capital expenditures related to our expansion activities at our third manufacturing facility in Suzhou, China.

• Depreciation and amortization expense was $11.2 million for the three months ended December 31, 2010 versus $12.0 million for the comparable period of the prior year due to dispositions of equipment associated with our restructuring activities in the United Kingdom, Malaysia and Anaheim, partially offset by an increased fixed asset base in manufacturing operations in China. We expect capital expenditures to continue to increase during the second quarter of fiscal 2011 due to continued expansion activities in China.

Our principal investing and financing activities during our three months ended December 31, 2010 were as follows:

• Net cash used in investing activities was $3.1 million for the three months ended December 31, 2010. Capital expenditures included cash purchases of $18.3 million of capital equipment and other assets, which were primarily related to our manufacturing capacity expansion in China. In addition, United States treasury bills amounting to $15.0 million were redeemed during the first fiscal quarter of 2011. As of December 31, 2010, we had outstanding purchase commitments totaling $21.9 million primarily related to capital projects at our various facilities.

• Net cash used in financing activities was $1.8 million for the three months ended December 31, 2010 and consisted primarily of repurchases of common stock of $0.9 million. Our loans payable and borrowings outstanding against credit facilities were zero at December 31, 2010 and September 30, 2010.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Market risk represents the risk of loss arising from adverse changes in liquidity, market rates and foreign exchange rates. At December 31, 2010, no amounts were outstanding under our loan agreements with Bank of America, N.A., Agricultural Bank of China or China Construction Bank. The amounts outstanding under these loan agreements at any time may fluctuate and we may from time to time be subject to refinancing risk. We do not believe that a change of 100 basis points in interest would have a material effect on our results of operations or financial condition based on our current borrowing level.

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Foreign Currency Risk

We derive a substantial portion of our sales outside of the U.S. Approximately $235.0 million, or 97%, of total shipments to these foreign manufacturers during the three months ended December 31, 2010 were made in U.S. dollars with the remaining balance of our net sales denominated in RMB. The exchange rate for the RMB to the U.S. dollar has been an average of 6.66 RMB per U.S. dollar for the three months ended December 31, 2010. To date, we attempt to manage our working capital in a manner to minimize foreign currency exposure. However, we continue to be vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. We currently have a significant portion of our expenses, more specifically cost of sales, denominated in RMB, whereby a significant appreciation or depreciation in the RMB could materially affect our reported expenses in U.S. dollars.

Liquidity Risk

We believe our anticipated cash flows from operations are sufficient to fund our operations, including capital expenditure requirements, through at least the remainder of the current fiscal year. If there was a need for additional cash to fund our operations, we would access our global credit lines.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation carried out as of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

FACTORS THAT MAY AFFECT OUR OPERATING RESULTS

Our business, financial condition, operating results and cash flows can be impacted by a number of factors, including but not limited to those set forth below, any of which could cause our results to be adversely impacted and could result in a decline in the value or loss of an investment in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

Risks Related to Our Business

We are heavily dependent upon the smartphone, feature phone and consumer electronics industries, and any downturn in these sectors may reduce our net sales.

For the three months ended December 31, 2010, 2009 and 2008, approximately 93%, 63% and 41%, respectively, of our net sales were derived from sales to companies that provide products or services into the smartphone industry; approximately 2%, 4% and 28%, respectively, of our net sales derived from sales were to companies that provide products or services into the feature phone industry; and approximately 4%, 32% and 26%, respectively, of our net sales were derived from sales to companies that provide products or services into the consumer electronics industry. In general, these industries are subject to economic cycles and periods of slowdown. Intense competition, relatively short product life cycles and significant fluctuations in product demand characterize these industries, and the industries are also generally subject to rapid technological change and product obsolescence. Fluctuations in demand for our products as a result of periods of slowdown in these markets (including the current economic downturn) or discontinuation of products or modifications developed in connection with next generation products could reduce our net sales.

We depend on a limited number of key customers, and a limited number of programs from those customers, for significant portions of our net sales and if we lose business with any of these customers, our net sales could decline substantially.

For the past several years, a substantial portion of our net sales has been derived from products that are incorporated into products manufactured by or on behalf of a limited number of key customers and their subcontractors, including Apple Inc., Motorola, Inc. and Research in Motion Limited. In addition, a substantial portion of our sales to each customer is often tied to only one, or a small number, of programs. In the fiscal years ended September 30, 2010, 2009 and 2008 approximately 98%, 96% and 95% respectively, of our net sales were to only four customers in the aggregate. Approximately 43%, 43% and 45% of our net sales in each of the fiscal years ended September 30, 2010, 2009 and 2008, respectively, were to one customer (not the same customer in each of the three years) and approximately 85%, 80% and 65% of our net sales were to two of our customers in each of the three years, respectively. In addition, two customers constituted approximately 85% of our net sales in the fiscal year ended September 30, 2010 and 82% of our net sales in the three months ended December 31, 2010. The loss of a major customer or a significant reduction in sales to a major customer, including due to the lack of commercial success, a product failure of a customer’s program upon which we were relying or limited flex content in a program on which we were relying, would seriously harm our business. Although we are continuing our efforts to reduce dependence on a limited number of customers, net sales attributable to a limited number of customers and their subcontractors are expected to continue to represent a substantial portion of our business for the foreseeable future.

We will have difficulty selling our products if customers do not design flexible printed circuit products into their product offerings or our customers’ product offerings are not commercially successful.

We sell our flexible printed circuit products directly or indirectly to OEMs, who include our products and component assemblies in their product offerings. We must continue to design our products into our customers’ product offerings in order to remain competitive. However, our OEM customers may decide not to design flexible printed circuits into their product offerings (or may reduce the amount of flex in a product offering), or may procure flexible printed circuits from one of our competitors. If an OEM selects one of our competitors to provide a product instead of us or switches to alternative technologies developed or manufactured by one or more of our competitors, it becomes significantly more difficult for us to sell our products to that OEM because changing component providers after the initial production runs begin involves significant cost, time, effort and risk for the OEM. Even if an OEM designs one of our products into its product offering, the product may not be commercially successful or may experience product failures, we may not receive any orders from that manufacturer, the OEM may qualify additional vendors for the product or we could be undercut by a competitor’s pricing. Additionally, if an OEM selects one or more of our competitors, they may rely upon such competitors for the life of specific offering and subsequent generations of similar offerings. Any of these events would result in fewer sales and reduced profits for us, and could adversely affect the accuracy of any forward-looking guidance we may give.

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Our customers have in the past and likely will continue to cancel their orders, change production quantities, delay production or qualify additional vendors, any of which could reduce our net sales and/or increase our expenses.

Substantially all of our sales are made on a purchase order basis, and we are not always able to predict with certainty the number of orders we will receive or the timing or magnitude of the orders. Our customers may cancel, change or delay product purchase orders with little or no advance notice to us, and we believe customers are doing so with increased frequency. These changes may be for a variety of reasons, including changes in their prospects, the success of their products in the market, reliance on a new vendor and the overall economic forecast. In general, we do not have long-term contractual relationships with our customers that require them to order minimum quantities of our products, and our customers may decide to use another manufacturer or discontinue ordering from us in their discretion. In addition, many of our products are shipped to hubs, and we often have limited visibility and no control as to when our customers pull the inventory from the hub. We have recently seen an increase in the use of hubs by our customers, and our hub balances have been growing. We also have increased risks with respect to inventory control and potential inventory loss, and must rely on third parties for recordkeeping when our products are shipped to a hub. As a result of these factors, we are not always able to forecast accurately the net sales that we will make in a given period. Changes in orders can also result in layoffs and associated severance costs, which in any given financial period could materially adversely affect our financial results.

In addition, we are increasingly being required to purchase materials, components and equipment before a customer becomes contractually committed to an order so that we may timely deliver the expected order to the customer. We may increase our production capacity, working capital and overhead in expectation of orders that may never be placed, or, if placed, may be delayed, reduced or canceled. As a result, we may be unable to recover costs that we incur in anticipation of orders that are never placed, such as costs associated with purchased raw materials, components or equipment. Delayed, reduced or canceled orders could also result in write-offs of obsolete inventory and the underutilization of our manufacturing capacity if we decline other potential orders because we expect to use our capacity to produce orders that are later delayed, reduced or canceled.

Our industry is extremely competitive, and if we are unable to respond to competitive pressures we may lose sales and our market share could decline.

We compete primarily with large flexible printed circuit board manufacturers located throughout Asia, including Taiwan, China, Korea, Japan and Singapore. We believe that the number of companies producing flexible printed circuit boards has increased materially in recent years and may continue to increase. Certain EMS providers have developed or acquired their own flexible printed circuit manufacturing capabilities or have extensive experience in electronics assembly, and in the future may cease ordering products from us or even compete with us on OEM programs. In addition, the number of customers in the market has been decreasing through consolidation and otherwise. Furthermore, many companies in our target customer base may move the design and manufacturing of their products to original design manufacturers in Asia. These factors, among others, make our industry extremely competitive. If we are not successful in addressing these competitive aspects of our business, including maintaining or establishing close relationships with customers in markets in which we compete, we may not be able to grow or maintain our market share or net sales.

Our products and their terms of sale are subject to various pressures from our customers, competitors and market forces, any of which could harm our gross profits.

Our selling prices are affected by changes in overall demand for our products, changes in the specific products our customers buy, pricing of competitors’ products, our products’ life cycles and general economic conditions. In addition, from time to time we may elect to reduce the price of certain products we produce in order to gain additional orders on a particular program. A typical life cycle for one of our products has our selling price decrease as the program matures. To offset price decreases during a product’s life cycle, we rely primarily on higher sales volume and improving our manufacturing yield and productivity to reduce a product’s cost. If we cannot reduce our manufacturing costs as prices decline during a product’s life cycle, or if we are required to pay damages to a customer due to a breach of contract or other claim, including due to quality or delivery issues, our cost of sales may increase, which would harm our profitability.

In addition, our key customers and their subcontractors are able to exert significant pricing pressure on us and often require us to renegotiate the terms of our arrangements with them, including liability and indemnification thresholds and payment terms, among other terms. Increases in our labor costs, especially in China where we may have little or no advance notice of such increases, changes in contract terms, the extension of payment terms and regular price reductions may result in lower gross margins for us. Furthermore, our competitive position is dependent upon the yields and quality we are able to achieve on our products, and our level of automation as compared to our competitors. These trends and factors make it more difficult to compete effectively.

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Significant product failures or safety concerns about our or our customers’ products could harm our reputation and our business.

Continued improvement in manufacturing capabilities, quality control, material costs and successful product testing capabilities are critical to our growth. Our efforts to monitor, develop, modify and implement stringent testing and manufacturing processes for our products may not be sufficient. If any flaw in the design, production, assembly or testing of our or our customers’ products were to occur or if our, or our customers’, products were believed to be unsafe, it could result in significant delays in product shipments by, or cancellation of orders or, substantial penalties from, our customers and their customers, substantial repair or replacement costs, an increased return rate for our products, potential damage to our reputation, or potential lawsuits which could prove to be time consuming and costly.

Problems with manufacturing yields and/or our inability to ramp up production could impair our ability to meet customer demand for our products.

We could experience low manufacturing yields due to, among other things, design errors, manufacturing failures in new or existing products, the inexperience of new employees, component defects, or the learning curve experienced during the initial and ramp up stages of new product introduction. If we cannot achieve expected yields in the manufacture of our products, this could result in higher operating costs, which could result in higher per unit costs, reduced product availability and may be subject to substantial penalties by our customers. Reduced yields or an inability to successfully ramp up products can significantly harm our gross margins, resulting in lower profitability or even losses. In addition, if we were unable to ramp up our production in order to meet customer demand, whether due to yield or other issues, it would impair our ability to meet customer demand for our products, and our net sales and profitability would be negatively affected.

We must develop and adopt new technology and manufacture new products and product features in order to remain competitive, and we may not be able to do so successfully.

Our long-term strategy relies in part on timely adopting, developing and manufacturing technological advances and new products and product features to meet our customers’ needs, including advanced technologies such as high density interconnect. However, any new technology and products adopted or developed by us may not be selected by existing or potential customers. Our customers could decide to switch to alternative technologies or materials, adopt new or competing industry standards with which our products are incompatible or fail to adopt standards with which our products are compatible. If we choose to focus on new technology or a standard that is ultimately not accepted by the industry and/or does not become the industry standard, we may be unable to sell those products. If we are unable to obtain customer qualifications for new products or product features, cannot qualify our products for high-volume production quantities or do not execute our operational and strategic plans for new products or advanced technologies in a timely manner, our net sales may decrease. In addition, we may incur higher manufacturing costs in connection with new technology, materials, products or product features, as we may be required to replace, modify, design, build and install equipment, all of which would require additional capital expenditures.

We must continue to be able to procure raw materials and components on commercially reasonable terms to manufacture our products profitably.

Generally we do not maintain a large surplus stock of raw materials or components for our products because the specific assemblies are uniquely applicable to the products we produce for our customers; therefore, we rely on third-party suppliers to provide these raw materials and components in a timely fashion and on commercially reasonable terms. In addition, we are often required by our customers to seek components from a limited number of suppliers that have been pre-qualified by the customer and, from time to time we have experienced shortages of the components and raw materials used in the fabrication of our products. For example, in recent quarters we have experienced shortages in flexible printed circuit materials and have experienced component shortages, which resulted in delayed shipments to customers. We expect that these delays are likely to occur in the current or future periods. Furthermore, the supply of certain precious metals required for our products is limited, and our suppliers could lose their export or import licenses on materials we require, any of which could limit or halt our ability to manufacture our products. We may not be successful in managing any shortage of raw materials or components that we may experience in the future, which could adversely affect our relationships with our customers and result in a decrease in our net sales. Component shortages could also increase our cost of goods sold because we may be required to pay higher prices for components in short supply. In addition, suppliers could go out of business, discontinue the supply of key materials, or consider us too small of a customer to sell to directly, and could require us to buy through distributors, increasing the cost of such components to us.

Our manufacturing and shipping costs may also be impacted by fluctuations in the cost of oil and gas. Any fluctuations in the supply or prices of these commodities could have an adverse effect on our profit margins and financial condition.

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If we are unable to attract or retain personnel necessary to operate our business, our ability to develop and market our products successfully could be harmed.

We believe that our success is highly dependent on our current executive officers and management team. We do not have an employment contract with Reza Meshgin, our president and chief executive officer, or any of our other key personnel, and their knowledge of our business and industry would be extremely difficult to replace. The loss of any key employee or the inability to attract or retain qualified personnel, including engineers, sales and marketing personnel, management or finance personnel could delay the development and introduction of our products, harm our reputation or otherwise damage our business.

Furthermore, we have experienced very high employee turnover in our facilities in China, and are experiencing increased difficulty in recruiting employees for these facilities. In addition, we are noting the signs of wage inflation, labor unrest and increased unionization in China and expect these to be ongoing trends for the foreseeable future, which could cause employee issues, including work stoppages, excessive wage increases and the formation of labor unions, at our China facilities. A large number of our employees work in our facilities in China, and our costs associated with hiring and retaining these employees have increased over the past several years. The high turnover rate, increasing wages, our difficulty in recruiting and retaining qualified employees and the other labor trends we are noting in China have resulted in an increase in our employee expenses and a continuation of any of these trends could result in even higher costs or production disruptions or delays, resulting in order cancellation, imposition of customer penalties if we were unable to timely deliver product or a negative impact on net sales and profits for us.

Our manufacturing capacity may be interrupted, limited or delayed if we cannot maintain sufficient sources of electricity in China.

The flexible printed circuit fabrication process requires a stable source of electricity. As our production capabilities increase in China and our business grows, our requirements for a stable source of electricity in China will grow substantially. We have recently experienced a lack of sufficient electricity supply in China and expect that during the current quarter we will continue to experience insufficient power supplies from time to time. Although we have purchased several generators, such generators do not produce sufficient electricity supply to run our manufacturing facilities. In addition, China has recently instituted energy conservation regulations which ration the amount of electricity that may be used by enterprises such as ours. Power interruptions, electricity shortages, the cost of diesel fuel to run our back-up generators or government intervention, particularly in the form of rationing, are factors that could restrict our access to electricity at our Chinese manufacturing facilities, and affect our ability to manufacture and related costs. Any such shortages could result in delays in our shipments to our customers and, potentially, the loss of customer orders and penalties from such customers for the delay.

Our global operations expose us to additional risk and uncertainties.

We have operations in a number of countries, including the United States, China, the United Kingdom, Malaysia and Singapore. Our global operations may be subject to risks that may limit our ability to operate our business. We manufacture the bulk of our products in China and sell our products globally, which exposes us to a number of risks that can arise from international trade transactions, local business practices and cultural considerations, including:

• political unrest, terrorism and economic or financial instability;

• restrictions on our ability to repatriate earnings;

• unexpected changes in regulatory requirements and uncertainty related to developing legal and regulatory systems related to economic and business activities, real property ownership and application of contract rights;

• nationalization programs that may be implemented by foreign governments;

• import-export regulations;

• difficulties in enforcing agreements and collecting receivables;

• difficulties in ensuring compliance with the laws and regulations of multiple jurisdictions;

• difficulties in ensuring that health, safety, environmental and other working conditions are properly implemented and/or maintained by the local office;

• changes in labor practices, including wage inflation, extremely high increases in the minimum wage, labor unrest and unionization policies;

• limited intellectual property protection;

• longer payment cycles by international customers;

• currency exchange fluctuations;

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• inadequate local infrastructure and disruptions of service from utilities or telecommunications providers, including electricity shortages;

• transportation delays and difficulties in managing international distribution channels;

• difficulties in staffing foreign subsidiaries and in managing an expatriate workforce;

• potentially adverse tax consequences;

• differing employment practices and labor issues;

• the occurrence of natural disasters or other acts of force majeure; and

• public health emergencies such as SARS, avian flu and Swine flu.

We also face risks associated with currency exchange and convertibility, inflation and repatriation of earnings as a result of our foreign operations. In some countries, economic, monetary and regulatory factors could affect our ability to convert funds to U.S. dollars or move funds from accounts in these countries. We are also vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. Although we have significant operations in Asia, a substantial portion of transactions are denominated in U.S. dollars, including approximately 98% of the total shipments made to foreign manufacturers during the fiscal year 2010. The balance of our net sales is denominated in Chinese Renminbi (“RMB”). As a result, as appreciation against the U.S. dollar increases, it will result in an increase in the cost of our business expenses in China. Further, downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products less price competitive than local solutions. We do not currently engage in currency hedging activities to limit the risks of currency fluctuations.

In addition, our activities in China are subject to administrative review and approval by various national and local agencies of China’s government. Given the changes occurring in China’s legal and regulatory structure, we may not be able to secure required governmental approval for our activities or facilities or the government may not apply real property or contract rights in the same manner as one may expect in other jurisdictions. For example, in 2007 we were informed that one of our facilities in China no longer meets the current fire department regulations. If we were required to take corrective action, it could adversely affect our ability to maintain or expand our operations at that facility and/or increase our costs. In addition, certain of our insurance policies may be deemed to be ineffective without a current fire certificate.

We are in the process of increasing our manufacturing capacity, and we may have difficulty managing these changes.

We are engaged in a number of manufacturing expansion projects, including new manufacturing facilities in both Suzhou and Chengdu, China. In addition, we have been engaged in an international restructuring effort to transition various business functions to our offices in Singapore, in order to better align these activities with our international operations and to transition certain production and process research and development to China in continuation of our cost reduction efforts. These efforts require significant investment by us, and have in the past and could continue to result in increased expenses and inefficiencies and reduced gross margins.

Our management team may have difficulty managing our manufacturing expansion and transition projects or otherwise managing any growth in our business that we may experience. Risks associated with managing expansion and growth may include those related to:

• managing multiple, concurrent major manufacturing expansion projects;

• hiring and retaining employees, particularly in China;

• accurately predicting any increases or decreases in demand for our products and managing our manufacturing capacity appropriately;

• under-utilized capacity, particularly during the start-up phase of a new manufacturing facility and the effects on our gross margin of under-utilization;

• managing increased employment costs and scrap rates often associated with periods of growth;

• implementing, integrating and improving operational and financial systems, procedures and controls, including our computer systems;

• construction delays, equipment delays or shortages, labor shortages and disputes and production start-up problems;

• cost overruns and charges related to our expansion activities; and

• managing expanding operations in multiple locations and multiple time zones.

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Our management team may not be effective in expanding our manufacturing facilities and operations, and our systems, procedures and controls may not be adequate to support such expansion. Any inability to manage our growth may harm our profitability and growth.

If we encounter problems during the expansion of our operation management and information systems, we could experience a disruption of our operations and unanticipated increases in our costs.

We are in the process of expanding our information systems for certain of our China facilities. Any problems encountered in the expansion of these systems could result in material adverse consequences, including disruption of operations, loss of information and unanticipated increases in costs.

WBL Corporation Limited beneficially owns approximately 62% of our outstanding common stock and is able to exert influence over us and our major corporate decisions.

WBL Corporation Limited, together with its affiliates and subsidiaries (“WBL”) beneficially owns approximately 62% of our outstanding common stock, and we expect to be a principal subsidiary of WBL for the foreseeable future. As a result of this ownership interest and the resulting influence over the composition of our board of directors, WBL has influence over our management, operations and potential significant corporate actions. For example, so long as WBL continues to control more than a majority of our outstanding common stock, it will have the ability to control who is elected to our board of directors each year. In addition, for so long as WBL effectively owns at least one-third of our voting stock, it has the ability, through a stockholders’ agreement with us, to approve the appointment of any new chief executive officer or the issuance of securities that would reduce WBL’s effective ownership of us to a level that is below a majority of our outstanding shares of common stock, as determined on a fully diluted basis. As a result, WBL could preclude us from engaging in an acquisition or other strategic opportunity that we may want to pursue if such acquisition or opportunity required the issuance of our common stock. This concentration of ownership may also discourage, delay or prevent a change of control of our company, which could deprive our other stockholders of an opportunity to receive a premium for their stock as part of a sale of our company, could harm the market price of our common stock and could impede the growth of our company. WBL could also sell a controlling interest in us to a third party, including a participant in our industry, or buy additional shares of our stock.

WBL and its designees on our board of directors may have interests that conflict with, or are different from, the interests of our other stockholders. These conflicts of interest could include potential competitive business activities, corporate opportunities, indemnity arrangements, sales or distributions by WBL of our common stock and the exercise by WBL of its ability to influence our management and affairs. In general, our certificate of incorporation does not contain any provision that is designed to facilitate resolution of actual or potential conflicts of interest. If any conflict of interest is not resolved in a manner favorable to our stockholders, our stockholders’ interests may be substantially harmed.

WBL is currently unable to vote its shares on specified matters that require stockholder approval without obtaining its own stockholders’ and regulatory approval and it is possible that WBL’s stockholders or the relevant regulators may not approve the proposed corporate action.

WBL’s ordinary shares are listed on the Singapore Securities Exchange Trading Limited (the “Singapore Exchange”). Under the rules of the Singapore Exchange, to the extent that we constitute a principal subsidiary of WBL as defined by the rules of the Singapore Exchange at any time that we submit a matter for the approval of our stockholders, WBL may be required to obtain the approval of its own stockholders for such action before it can vote its shares with respect to our proposal or dispose of our shares of common stock. Examples of corporate actions we may seek to take that may require WBL to obtain its stockholders’ approval include an amendment of our certificate of incorporation, a sale of all or substantially all of our assets, a merger or reorganization transaction, and certain issuances of our capital stock.

To obtain stockholder approval, WBL must prepare a circular describing the proposal, obtain approval from the Singapore Exchange and send the circular to its stockholders, which may take several weeks or longer. In addition, WBL is required under its corporate rules to give its stockholders advance notice of the meeting. Consequently, if we need to obtain the approval of WBL at a time in which we qualify as a principal subsidiary (including this year), the process of seeking WBL’s stockholder approval may delay our proposed action and it is possible that WBL’s stockholders may not approve our proposed corporate action. It is also possible that we might not be able to establish a quorum at our stockholder meeting if WBL was unable to vote at the meeting as a result of the Singapore Exchange rules. The rules of the Singapore Exchange that govern WBL are subject to revision from time to time, and policy considerations may affect rule interpretation and application. It is possible that any change to or interpretation of existing or future rules may be more restrictive and complex than the existing rules and interpretations.

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Our business requires significant investments in capital equipment, facilities and technological improvements, and we may not be able to obtain sufficient funds to make such capital expenditures.

To remain competitive we must continue to make significant investments in capital equipment, facilities and technological improvements. We expect that substantial capital will be required to expand our manufacturing capacity and fund working capital requirements for our anticipated growth. In addition, we expect that new technology requirements may increase the capital intensity of our business. We may need to raise additional funds through further debt or equity financings in order to fund our anticipated growth and capital expenditures, and we may not be able to raise additional capital on reasonable terms, or at all, particularly given the current turmoil in global credit markets. If we are unable to obtain sufficient capital in the future, we may have to curtail our capital expenditures. Any curtailment of our capital expenditures could result in a reduction in net sales, reduced quality of our products, increased manufacturing costs for our products, harm to our reputation, reduced manufacturing efficiencies or other harm to our business.

In addition, WBL’s approval is required for the issuance of securities that would reduce its effective ownership of us to below a majority of the outstanding shares of our common stock as determined on a fully diluted basis. If WBL’s approval is required for a proposed financing, it is possible that it may not approve the financing and we may not be able to complete the transaction, which could make it more difficult to obtain sufficient funds to operate and expand our business.

The global credit market crisis and economic weakness may adversely affect our earnings, liquidity and financial condition.

Global financial and credit markets recently have been, and continue to be, unstable and unpredictable. Worldwide economic conditions have been weak. The instability of the markets and weakness of the economy could affect the demand for our customers’ products, the amount, timing and stability of their orders to us, the financial strength of our customers and suppliers, their ability or willingness to do business with us, our willingness to do business with them, and/or our suppliers’ and customers’ ability to fulfill their obligations to us. These factors could adversely affect our operations, earnings and financial condition.

Tax positions we have taken may be challenged and we are subject to the risk of changing income tax rates and laws.

From time to time, we may be subject to various types of tax audits, during which tax positions we have taken may be challenged and overturned. If this were to occur, our tax rates could significantly increase and we may be required to pay significant back taxes, interests and/or penalties. In addition, a change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate. For example, in February 2010, the United States Department of the Treasury issued a high-level outline of proposed modifications to international tax laws for fiscal year 2011. If any of these, or similar, proposals are passed, our statements of financial position and results of operations could be negatively impacted.

In addition, a number of countries in which we are located allow for tax holidays or provide other tax incentives to attract and retain business. For example, we currently enjoy tax incentives for our facility in Singapore. However, any tax holiday we have could be challenged, modified or even eliminated by taxing authorities or changes in law. In addition, the tax laws and rates in certain jurisdictions in which we operate (China, for example) can change with little or no notice, and any such change may even apply retroactively. Any of such changes could adversely affect our effective tax rate.

If we fail to secure or protect our intellectual property rights, competitors may be able to use our technologies, which could weaken our competitive position and harm our business.

We rely primarily on trade secrets and confidentiality procedures relating to our manufacturing processes to protect our proprietary rights. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. If we fail to protect our proprietary rights adequately, our competitors could offer similar products using processes or technologies developed by us, potentially harming our competitive position. In addition, other parties may independently develop similar or competing technologies.

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We also rely on patent protection for some of our intellectual property. Our patents may be expensive to obtain and there is no guarantee that either our current or future patents will provide us with any competitive advantages. A third party may challenge the validity of our patents, or circumvent our patents by developing competing products based on technology that does not infringe our patents. Further, patent protection is not available at all in certain countries and some countries that do allow registration of patents do not provide meaningful redress for patent violations. As a result, protecting intellectual property in those countries is difficult, and competitors could sell products in those countries that have functions and features that would otherwise infringe on our intellectual property. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed.

We may be sued by third parties for alleged infringement of their proprietary rights.

From time to time, we have received, and expect to continue to receive, notices of claims of infringement, misappropriation or misuse of other parties’ proprietary rights. We could also be subject to claims arising from the allocation of intellectual property rights among us and our customers. Any claims brought against us or our customers, with or without merit, could be time-consuming and expensive to litigate or settle, and could divert management attention away from our business plan. Adverse determinations in litigation could subject us to significant liability and could result in the loss of our proprietary rights. A successful lawsuit against us could also force us to cease selling or require us to redesign any products or marks that incorporate the infringed intellectual property. In addition, we could be required to seek a license from the holder of the intellectual property to use the infringed technology, and it is possible that we may not be able to obtain a license on reasonable terms, or at all. If we fail to develop a non-infringing technology on a timely basis or to license the infringed technology on acceptable terms, our business, financial condition and results of operations could be harmed.

Complying with environmental laws and regulations or the environmental policies of our customers may increase our costs and reduce our profitability.

We are subject to a variety of environmental laws and regulations relating to the storage, discharge, handling, emission, generation, manufacture, use and disposal of chemicals, solid and hazardous waste and other toxic and hazardous materials used in the manufacture of flexible printed circuits and component assemblies in our operations in the United States, Europe and Asia. In addition, certain of our customers have, or may in the future have, environmental policies with which we are required to comply that are more stringent than applicable laws and regulations and certain provisions of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act may soon require us to report on “conflict metals” used in our products and the due diligence plan we put in place to track whether such metals originate from the Democratic Republic of Congo. A significant portion of our manufacturing operations are located in China, where we are subject to constantly evolving environmental regulation. The costs of complying with any change in such regulations or customer policies and the costs of remedying potential violations or resolving enforcement actions that might be initiated by governmental entities could be substantial.

In the event of a violation, we may be required to halt one or more segments of our operations until such violation is cured or we may be fined by a customer. The costs of remedying violations or resolving enforcement actions that might be initiated by governmental authorities could be substantial. Any remediation of environmental contamination would involve substantial expense that could harm our results of operations. In addition, we cannot predict the nature, scope or effect of future regulatory or customer requirements to which our operations may be subject or the manner in which existing or future laws or customer policies will be administered or interpreted. Future regulations may be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new or more stringent regulations or policies could be significant.

Potential future acquisitions or strategic partnerships could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our financial results.

As part of our business strategy, we intend to continue to consider acquisitions of, or partnerships with, companies, technologies and products that we feel could enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. We have limited experience in acquiring or partnering with other businesses and technologies. Potential and completed acquisitions and strategic partnerships involve numerous risks, including:

• difficulties in integrating operations, technologies, accounting and personnel;

• problems maintaining uniform standards, procedures, controls and policies;

• difficulties in supporting and transitioning customers of our acquired companies;

• diversion of financial and management resources from existing operations;

• risks associated with entering new markets in which we have no or limited prior experience;

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• potential loss of key employees; and

• inability to generate sufficient revenues to offset acquisition or start-up costs.

Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could harm our financial results. In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted, which could affect the market price of our stock. As a result, if we fail to properly evaluate acquisitions or partnerships, we may not achieve the anticipated benefits of any such acquisitions or partnerships, and we may incur costs in excess of what we anticipate.

We face potential risks associated with loss, theft or damage of our property or property of our customers.

Some of our customers have entrusted us with proprietary equipment or intellectual property to be used in the design, manufacture and testing of the products we make for them. In some instances, we face potentially millions of dollars in financial exposure to those customers if such equipment or intellectual property is lost, damaged or stolen. Although we take precautions against such loss, theft or damage and we may insure against a portion of these risks, such insurance is expensive, may not be applicable to any loss we may experience and, even if applicable, may not be sufficient to cover any such loss. Further, deductibles for such insurance may be substantial and may adversely affect our operations if we were to experience a loss, even if insured.

Litigation may distract us from operating our business.

Litigation that may be brought by or against us could cause us to incur significant expenditures and distract our management from the operations and conduct of our business. Furthermore, there can be no assurance that we would prevail in such litigation or resolve such litigation on terms favorable to us, which may adversely affect our operations.

The trading price of our common stock is volatile.

The trading prices of the securities of technology companies, including the trading price of our common stock, have historically been highly volatile. During the 12 month period from January 1, 2010 through December 31, 2010, our common stock price closed between $19.70 and $29.02 per share. Factors that could affect the trading price of our common stock include, but are not limited to:

• fluctuations in our financial results;

• the limited size of our public float;

• announcements of technological innovations or events affecting companies in our industry;

• changes in the estimates of our financial results;

• changes in the recommendations of any securities analysts that elect to follow our common stock; and

• market conditions in our industry, the industries of our customers and the economy as a whole.

In addition, although we have approximately 24.0 million shares of common stock outstanding as of December 31, 2010, approximately 14.8 million of those shares are held by WBL. As a result, there is a limited public float in our common stock. If any of our significant stockholders were to decide to sell a substantial portion of its shares the trading price of our common stock could decline.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results.

Effective internal controls are necessary for us to provide reliable financial reports. This effort is made more challenging by our significant overseas operations. If we cannot provide reliable financial reports, our operating results could be misstated, current and potential stockholders could lose confidence in our financial reporting and the trading price of our stock could be negatively affected. There can be no assurance that our internal controls over financial processes and reporting will be effective in the future.

Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management including, among other things, provisions providing for a classified board of directors, authorizing the board of directors to issue preferred stock and the elimination of stockholder voting by written consent. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent certain business combinations with stockholders owning

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15% or more of our outstanding voting stock. These provisions in our charter, bylaws and under Delaware law could discourage delay or prevent potential takeover attempts that stockholders may consider favorable.

Because we do not intend to pay dividends, our stockholders will benefit from an investment in our common stock only if our stock price appreciates in value.

We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price at which it was purchased.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents stock repurchases by month during the first quarter of fiscal 2011:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs(1)
10/01/2010 – 10/31/2010		42,823	$	21.58		42,823		—
11/01/2010 – 11/30/2010		—		—		42,823		—
12/01/2010 – 12/31/2010		—		—		42,823		—
Total		42,823	$	21.58		42,823

⁽¹⁾ On December 5, 2008, our Board of Directors approved the establishment of a share repurchase program for up to 2,250,000 shares in the aggregate of our common stock on the open market; this amount represented approximately nine percent of our common stock outstanding as of November 30, 2008, as reported on our Form 10-K filed with the SEC on December 9, 2008. Stock repurchases could be made from time to time, based on market conditions and other factors, including price, regulatory requirements and capital availability. As of December 31, 2010, under such share repurchase program, we had repurchased a total of 2,250,000 shares for a total value of $48.4 million pursuant to 10b5-1 plans.

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Item 6. Exhibits

3.2(1)	Restated Certificate of Incorporation of the Company.
3.4(2)	Amended and Restated Bylaws of the Company.
4.1(1)	Form of Common Stock Certificate.
10.1(1)(3)	Form of Indemnification Agreement between the Company and its officers, directors and agents.
10.2(1)(3)	1994 Stock Plan of the Company, as amended.
10.3(4)(3)	2004 Stock Incentive Plan of the Company, as amended and restated.
10.20(5)	Amended and Restated Stockholders Agreement dated October 25, 2005 between Multi-Fineline Electronix, Inc., Wearnes Technology Pte. Ltd, United Wearnes Technology Pte. Ltd., and WBL Corporation Limited.
10.38(6)	Master Purchase Agreement between Multi-Fineline Electronix, Inc., Multi-Fineline Electronix (Suzhou) Co., Ltd., and Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. and Sony Ericsson Mobile Communications (USA) Inc. dated April 19, 2006.
10.45(7)(3)	Form of Stock Appreciation Rights Agreement.
10.46(7)	Share Purchase Agreement by and among Multi-Fineline Electronix Singapore Pte. Ltd., Pelikon Limited, Multi-Fineline Electronix, Inc., the members of the Company set forth on the signatures pages thereto, and Michael Powell, as the Shareholders’ Representative, dated November 18, 2008.
10.47(8)	Master Development and Supply Agreement by and between Apple Computer, Inc. and Multi-Fineline Electronix, Inc. dated June 22, 2006.
10.51(9)	Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated February 12, 2009.
10.56(10)	Amendment No. 1 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated August 27, 2009.
10.57(11)(3)	Form of Restricted Stock Unit Agreement.
10.60(12)	Line of Credit Agreement between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.61(12)	Facility Offer Letter between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.62(12)	Line of Credit Agreement between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.63(12)	Facility Offer Letter between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.64(13)	Engineering, Procurement and Construction/Turn Key Project Agreement by and among MFLEX (Chengdu) Co., Ltd., Beijing Shiyuan Xida Construction and Technology Company, and China Electronics Engineering Design Institute, dated April 15, 2010.
10.65(14)	Amendment No. 2 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated February 15, 2010.
10.66(14)	Amendment No. 3 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated March 17, 2010.
10.67(15)	Line of General Credit Agreement between MFLEX Suzhou Co., Ltd. And Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.
10.68(15)	Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.
10.69(16)	Amendment No. 4 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated August 18, 2010.

28

10.70*	Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.
10.71*	Supplemental Agreement to Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.
10.72*	Guarantee Letter by Wearnes Global (Suzhou) Co., Ltd. dated January 6, 2011.
10.73*	Agreement on the Escrow of Transaction Funds for Building Stock (Fund Trusteeship Agreement) by and among Wearnes Global (Suzhou) Co., Ltd., MFLEX Suzhou Co., Ltd. and Wuzhong District Real Estate Transaction Management Center executed January 19, 2011 and dated January 18, 2011.
31.1*	Section 302 Certification by the Company’s chief executive officer.
31.2*	Section 302 Certification by the Company’s principal financial officer.
32.1*	Section 906 Certification by the Company’s chief executive officer and principal financial officer.

* Filed herewith

⁽¹⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Registration Statement on Form S-1, as amended (File No. 333-114510) declared effective by the Securities and Exchange Commission (“SEC”), on June 24, 2004.

⁽²⁾ Incorporated by reference to an exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on May 24, 2005.

⁽³⁾ Indicates management contract or compensatory plan.

⁽⁴⁾ Incorporated by reference to exhibit (as Exhibit A) to the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders on Form DEF 14A filed with the SEC on January 20, 2010.

⁽⁵⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2005.

⁽⁶⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2007. Confidential treatment has been granted for certain portions of this agreement.

⁽⁷⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008.

⁽⁸⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008. Confidential treatment has been granted for certain portions of this agreement.

⁽⁹⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2009. Confidential treatment has been granted for certain portions of this agreement.

⁽¹⁰⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009. Confidential treatment has been granted for certain portions of this agreement.

⁽¹¹⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009.

⁽¹²⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2010.

⁽¹³⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on April 21, 2010.

⁽¹⁴⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2010.

⁽¹⁵⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2010.

⁽¹⁶⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2010.

29

SIGNATURE

Pursuant to the requirements 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.

	Multi-Fineline Electronix, Inc., a Delaware corporation
Date: February 3, 2011	By:	/s/    Thomas Liguori
		Thomas Liguori Chief Financial Officer and Executive Vice-President (Duly Authorized Officer and Principal Financial Officer of the Registrant)

30

EXHIBIT INDEX

3.2(1)	Restated Certificate of Incorporation of the Company.
3.4(2)	Amended and Restated Bylaws of the Company.
4.1(1)	Form of Common Stock Certificate.
10.1(1)(3)	Form of Indemnification Agreement between the Company and its officers, directors and agents.
10.2(1)(3)	1994 Stock Plan of the Company, as amended.
10.3(4)(3)	2004 Stock Incentive Plan of the Company, as amended and restated.
10.20(5)	Amended and Restated Stockholders Agreement dated October 25, 2005 between Multi-Fineline Electronix, Inc., Wearnes Technology Pte. Ltd, United Wearnes Technology Pte. Ltd., and WBL Corporation Limited.
10.38(6)	Master Purchase Agreement between Multi-Fineline Electronix, Inc., Multi-Fineline Electronix (Suzhou) Co., Ltd., and Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. and Sony Ericsson Mobile Communications (USA) Inc. dated April 19, 2006.
10.45(7)(3)	Form of Stock Appreciation Rights Agreement.
10.46(7)	Share Purchase Agreement by and among Multi-Fineline Electronix Singapore Pte. Ltd., Pelikon Limited, Multi-Fineline Electronix, Inc., the members of the Company set forth on the signatures pages thereto, and Michael Powell, as the Shareholders’ Representative, dated November 18, 2008.
10.47(8)	Master Development and Supply Agreement by and between Apple Computer, Inc. and Multi-Fineline Electronix, Inc. dated June 22, 2006.
10.51(9)	Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated February 12, 2009.
10.56(10)	Amendment No. 1 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated August 27, 2009.
10.57(11)(3)	Form of Restricted Stock Unit Agreement.
10.60(12)	Line of Credit Agreement between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.61(12)	Facility Offer Letter between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.62(12)	Line of Credit Agreement between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.63(12)	Facility Offer Letter between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.
10.64(13)	Engineering, Procurement and Construction/Turn Key Project Agreement by and among MFLEX (Chengdu) Co., Ltd., Beijing Shiyuan Xida Construction and Technology Company, and China Electronics Engineering Design Institute, dated April 15, 2010.
10.65(14)	Amendment No. 2 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated February 15, 2010.
10.66(14)	Amendment No. 3 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated March 17, 2010.
10.67(15)	Line of General Credit Agreement between MFLEX Suzhou Co., Ltd. And Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.
10.68(15)	Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.
10.69(16)	Amendment No. 4 to Loan and Security Agreement by and among Multi-Fineline Electronix, Inc., Multi-Fineline Electronix Singapore Pte. Ltd., and Bank of America, N.A. dated August 18, 2010.

31

10.70*	Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.
10.71*	Supplemental Agreement to Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.
10.72*	Guarantee Letter by Wearnes Global (Suzhou) Co., Ltd. dated January 6, 2011.
10.73*	Agreement on the Escrow of Transaction Funds for Building Stock (Fund Trusteeship Agreement) by and among Wearnes Global (Suzhou) Co., Ltd., MFLEX Suzhou Co., Ltd. and Wuzhong District Real Estate Transaction Management Center executed January 19, 2011 and dated January 18, 2011.
31.1*	Section 302 Certification by the Company’s chief executive officer.
31.2*	Section 302 Certification by the Company’s principal financial officer.
32.1*	Section 906 Certification by the Company’s chief executive officer and principal financial officer.

* Filed herewith

⁽¹⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Registration Statement on Form S-1, as amended (File No. 333-114510) declared effective by the Securities and Exchange Commission (“SEC”), on June 24, 2004.

⁽²⁾ Incorporated by reference to an exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on May 24, 2005.

⁽³⁾ Indicates management contract or compensatory plan.

⁽⁴⁾ Incorporated by reference to exhibit (as Exhibit A) to the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders on Form DEF 14A filed with the SEC on January 20, 2010.

⁽⁵⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2005.

⁽⁶⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2007. Confidential treatment has been granted for certain portions of this agreement.

⁽⁷⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008.

⁽⁸⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008. Confidential treatment has been granted for certain portions of this agreement.

⁽⁹⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2009. Confidential treatment has been granted for certain portions of this agreement.

⁽¹⁰⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009. Confidential treatment has been granted for certain portions of this agreement.

⁽¹¹⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009.

⁽¹²⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2010.

⁽¹³⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on April 21, 2010.

⁽¹⁴⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2010.

⁽¹⁵⁾ Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2010.

⁽¹⁶⁾ Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2010.

32

EX-10.70

Exhibit 10.70

AGREEMENT FOR SALES OF

BUILDINGS IN STOCK

No.: Su Wu Qi 201101060075

Made by Bureau of Housing and Urban-Rural Development of

Suzhou City

2010 Edition

NOTICE TO USERS

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I. This agreement is the model text for agreement for sales of buildings in stock which is made by Bureau of Housing and Urban-Rural Development of Suzhou City according to the relevant policies and regulations of state, province and municipality. This agreement shall be used in sales of buildings in stock within urban areas of Suzhou city.

II. Sales of buildings in stock are civil juristic acts. The buyer and seller shall read and understand the content of this agreement before signing it. If the two parties have different interpretation of the fixed content or professional terms in this agreement, they may consult Real Estate Market Management Office of Suzhou City.

III. Buildings in stock in this agreement refer to the houses, owners of which have legally acquired the House Ownership Certificate and the State-owned Land Use-right Certificate.

IV. The fixed contents in this agreement shall not be modified. The two parties may determine the words or content in the brackets, blanks in attachments and the underlined space.

V. After negotiations, the buyer and seller shall prepare, modify and proofread the electronic version of this agreement on line relying on the online management system for sales of buildings in stock in Suzhou downtown and set their own specific passwords after the confirmation. The paper copy of agreement shall be immediately printed out by the transaction office for signing contract on the internet and signed and sealed by both parties, and then the electronic version shall be uploaded for records.

VI. The specific passwords set by both parties shall be composed of English letters (including uppercase and lowercase) and Arabic numerals without any space or other symbols therein and the number of characters shall range from 7 to 20. Once the specific passwords have been set, this agreement mustn’t be changed by any person.

VII. Bureau of Housing and Urban-Rural Development of Suzhou City is in charge of interpreting the fixed contents in this agreement and operating items for signing contract on line.

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AGREEMENT FOR SALES OF BUILDINGS IN STOCK

All Parties:

Seller:        Wearnes Global (Suzhou) Co., Ltd.                                                                                         

No. of Form of Listing & Registration for Sale:    Su Wu Shou Gua 201101060086                            

Name:                                                                                 Nationality:________________

Name of Legal Representative:    Tay Pi Lan                 Nationality: Singapore        

ID Certificate or Passport:               Company’s Certificate or License:

ID Certificate or Passport No.:        320500400010271                                         

Address:    Ground Floor, Building 33, Metropolis Garden, Suzhou City, Jiangsu Province    

Tel:            62567339                                          Postcode:                                

Guardian:                                                                       Nationality:                                    

ID Certificate or Passport:    ID Card       Company’s Certificate or License:              

ID Certificate or Passport No.:                                                                                          

Address:                                                                                                                               

Tel:                                                                                       Postcode:                            

Entrusted Agent Name:                                                                Nationality:                                             

ID Certificate or Passport:                                                Certificate or Passport No.:            

Address:                                                                                                                                           

Tel:                                                                                       Postcode:                                           

Intermediary Agency:                                                                                                                  

Intermediary Agency Entrustment Agreement No.:                                                                                 

Name of Legal Representative:                           Nationality:                        

Business License Registration No.:                                                                 

Broker Agent Registration No.:                                                                                      

Registered Address:                                                         

Tel:                                            Postcode:                                                         

Name of the Real Estate Broker:                        

Qualification Certificate No.:                        

Address:                                                                              

Tel:                                                          Postcode:                                         

The Buyer:   MFLEX (Suzhou) Co., Ltd.                                                             

No. of Form of Listing & Registration for Purchase: Su Wu Gou Gua 201101060075                        

Name of Principal:                                                                                  Nationality:                                    

Spouse: None

Underaged Children: None

- 3 -

Name of Legal Representative:    Jin Lei         Nationality:

ID Certificate or Passport:                     Company’s Certificate or License: Business License        

ID Certificate or Passport No.: 320500400012839  

Address: No. 68 Nanhu Road, Wuzhong District

Tel:  82286514        Postcode:

Guardian:                                                             Nationality:                                 

ID Certificate or Passport:        ID Card    Company’s Certificate or License:                    

ID Certificate or Passport No.:                                                                                                                          

Address:                                                                                                                                               

Tel:                                                                          Postcode:

Entrusted Agent Name:                                             Nationality:                                

ID Certificate or Passport:                    ID Certificate or Passport No.:                    

Address:                                                                                                                                               

Tel:                                                                          Postcode:                                

Intermediary Agency:                                         

Intermediary Agency Entrustment Agreement No.:                                                                             

Name of Legal Representative:                Nationality:                

Business License Registration No.:                                                                             

Broker Agent Registration No.:                                                                             

Registered Address:                                                                 

Tel:                                 Postcode:                                 

Name of the Real Estate Broker:                Qualification Certificate No.:                    

Address:                                                                              

Tel:                                  Postcode:                                 

During performance of the agreement, all the above-mentioned addresses are the legal addresses for service. Where there are any changes of any address, all parties concerned shall be notified in time.

The buyer undertakes that the house shall be the only house (including commercial housing) his family (including the principal, spouse and underaged children) has bought since November 4, 2010. The buyer will bear all legal responsibilities (including banning from house registration) resulting from submitting false information about family member(s) and giving false undertaking mentioned above.

According to the provisions in Contract Law of the People’s Republic of China, Law of the People’s Republic of China on Administration of the Urban Real Estate, Jiangsu Urban Real Estate Trading Management Regulations and Urban Real Estate Transfer Management Regulations, the seller sold the house mentioned below and its state-owned land-use right to the buyer via Real Estate Trading Center of Wuzhong District, Suzhou City. By consensus, the two parties reach the following agreement on the basis of equality, voluntarism, fairness, law-abidingness and faith.

Article 1: The basic information of the house.

1. Location: South Yuehu Rd., Puzhuang Town, Wuzhong District, Suzhou City

2. Housing Ownership Certificate No.:    00046543                                                             

3. State-owned Land Use-right Certificate No.:    20901                                         

4. GFA of Property Registration: 12,102.03       square meters

    Excursus:     Attics                         

- 4 -

             Garages             

             Bicycle storage Rooms             

5. Usage of the House:     industrial warehouse

6. Architectural Structure:       reinforced concrete structure

7. Year of the House Built:

Article 2: The other information of the house.

1. The status of joint ownership (use) of the real estate is    [1]     (Only select an item)

[1] The seller guarantees that other than the ownership certificate held by the owner of the house, there is no other joint ownership certificate.

[2] The Joint Housing Ownership Certificate No.             . The seller guarantees the sale of the house has been agreed by all owners of the house.

2. Mortgage status of real estate is  [1] (Only select an item)

[1] The seller guarantees the house is not mortgaged when signing this agreement.

[2] The house has been mortgaged before singing this agreement. The seller guarantees that he will release the mortgage before applying for registration of transfer of housing ownership, and cancel the corresponding mortgage registration. The seller is in charge of all the corresponding fees.

3. Leasing status of real estate is  [1] (Only select an item)

[1] The seller guarantees the house is not leased to others when singing this agreement.

[2] The house has been leased to others before signing this agreement. The seller guarantees that the lessee gave up the preemption. The seller ensures that he will release the lease before delivering the house, and cancel the corresponding lease registration. The seller is in charge of all the corresponding fees.

4. Property management status of real estate is    [2]     (Only select an item)

[1]                                                                                  is in charge of the property management currently.

[2] The house has not been included in the property management

5. Accessories of the house transferred to the buyer are listed on the Attachment One.

Article 3: The price of the house.

The price of the house (including the accessories listed on the Attachment One) is RMB ( ¥ 32,313,566.00 Yuan), namely thirty two million three hundred and thirteen thousand five hundred and sixty six only.

The amount of money paid by the buyer shall be equivalent to the amount received by the seller.

Article 4: Payment of the house shall be deposited into the designated fund escrow account for real estate trading before applying for transfer registration of housing ownership. After transfer registration of housing ownership is approved, the seller may withdraw the payment for house according to relevant provisions on fund escrow in real estate trading.

Term of the payment is in accordance with    [1]     (Only select an item)

[1] Lump-sum payment:

The buyer shall make a lump-sum payment of RMB ( ¥ 32,313,566 Yuan), namely thirty two million three hundred and thirteen thousand five hundred and sixty six only, in accordance with the house price prescribed in Article 3 of this agreement before January 21, 2011.

[2] Installment payment:

The buyer shall pay          % of the price mentioned in Article 3 of this agreement. The amount is RMB ( ¥      Yuan), namely             (in words).

The buyer shall pay          % of the price mentioned in Article 3 of this agreement. The amount is RMB ( ¥          Yuan), namely             (in words).

The buyer shall pay          % of the price mentioned in Article 3 of this agreement. The amount is RMB ( ¥             Yuan), namely             (in words).

- 5 -

[3] By Loan:

[4] Alternative methods

After receiving the corresponding housing price, the seller shall provide receipt vouchers timely; once the buyer pays out the housing price, the seller shall provide legal receipt voucher of the total amount timely.

Article 5: Liability of the buyer for breach of agreement due to deferred payment.

1. In the case that the buyer could not make the corresponding payment within the agreed deadline prescribed in Article 4, the two parties agree to the following settlements subject to the period overdue (accumulation not applicable):

(1) In case the payment is less than     7     days overdue, the days overdue commence from the next day of the agreed date for corresponding payment mentioned in the Article 4 to the date the corresponding payment is made; the buyer shall pay 0.01% of the housing price agreed in Article 3 as penalty for every day in arrears, and the agreement continues to be effective.

(2) In case the payment is more than     7     days overdue, the seller has the right to terminate this agreement. Within   700 days after the notice for termination of this agreement sent by the seller is served to the buyer, the buyer shall return the house to the seller, and pay 1.00 % of the housing price agreed in Article 3 as penalty. In the case that the buyer requires the continuance of the agreement, provided the seller agrees, the buyer shall pay  0.01% of the housing price agreed in Article 3 as penalty for the days overdue, and the agreement continues to be effective. The days overdue commence from the next day of the agreed date for corresponding payment mentioned in Article 4 to the date the corresponding payment is received by the seller.

2. In the case that the buyer could not pay the corresponding money on time which is agreed in Article 4 because of the refusal of his loan application by the bank or Housing Accumulation Fund Management Institution before the date of             /        , the two parties agree to terminate this agreement, return the house and make refund, cancel the applications for the registration of transfer of housing ownership and the change of the land use right registration and proceed with the settlement with the method      as follow (Only select an item):

(1)   The buyer will not pay the penalty to the seller.

(2)         /

Article 6: Handover.

The seller shall prepare the house for handover before the date of January 30, 2011, and inform the buyer to check the house in written form. Within     7     days after the aforesaid notice is served to the buyer, the buyer shall check the house and the accessories specified in Attachment One together with the seller. If the actual status conforms to what the two parties has then agreed, the seller shall hand over the key to the house and its accessories to the buyer, which signifies the handover of the house. All the risks of damages or loss are born by the buyer after the handover of the house.

Where the failure of handover lies in the fault of the buyer, it may be settled in the way of:

negotiation by both parties.                                                                                              

Article 7: Liability of the seller for breach of agreement due to deferred handover.

In the case that the seller could not hand over the house and its accessories to the buyer within the agreed deadline prescribed in Article 6, the two parties agree to the following settlements subject to the period overdue (accumulation not applicable):

1. In case the handover is less than     7     days overdue, the days overdue commence from the next day of the agreed date for handover of the house and its accessories mentioned in Article 6 to the actual handover date; the seller shall pay 0.01% of the housing price agreed in the Article 3 as penalty for every day in arrears,, and the agreement continues to be effective.

2. In case the payment is more than    7     days overdue, the buyer has the right to terminate this

- 6 -

agreement. Within   70 days after the notice for termination of this agreement sent by the buyer is served to the seller, the seller shall give the received payment for the house back to the buyer, and pay   1.00 % of the housing price agreed in Article 3 as penalty. In the case that the seller requires the continuance of the agreement, provided the buyer agrees, the seller shall pay   0.01% of the housing price agreed in Article 3 as penalty for the days overdue, and the agreement continues to be effective. The days overdue commence from the next day of the agreed date for handover of the house and its accessories mentioned in Article 6 to the actual handover date.

Article 8: Housing maintenance fund is agreed as     [1]     (Only select an item):

[1] In the case that the seller has never paid the housing maintenance fee, the arrears of housing maintenance fund shall be paid as     (2)     (Only select an item):

(1) The seller pays the unpaid fund.

(2) The buyer pays the unpaid fund                                                                                                                                                           

[2] In the case that the seller has paid the housing maintenance fund, the settlement is agreed as  / (Only select an item):

(1) The balance of the fund account will be transferred to the buyer.

(2) The buyer pays the amount of the money which is the same as the balance of the fund account to the seller within        days after registration of transfer of housing ownership. Liability of the buyer for breach of agreement due to deferred payment shall be subject to Article 5 of the agreement.

Article 9: The seller guarantees that the house conditions are in conformity with those described in Article 1, Article 2 and Attachment One, and that there is no ownership, credit & debt or preemption dispute. In the case that the two parties get into trouble after this agreement comes into force because of the dispute on house conditions or other conditions, or on ownership, credit & debt, or preemption dispute, the seller shall pay   1.00% of the housing price agreed in Article 3 as penalty to the buyer; Where there is other damages on the part of the buyer, the seller shall otherwise shoulder the corresponding liability for damages according to law.

Article 10: The seller’s commitment on house and its accessories.

When handing over the house, provided that any damage or loss of the house and its accessories prescribed in Article 1 and Attachment One is found, it may be settled in the way of   [2]   after confirmation of the aforesaid things by the two parties: (Only select an item)

[1] Within       days after handover, the seller shall pay              (agreed or evaluated) amount of money resulting from damages or loss to the buyer as penalty; In the case that the buyer pays the corresponding money which is agreed in Article 3 in the agreed deadline prescribed in Article 4 while the seller does not pay the penalty on time as prescribed in the article, the seller shall pay double penalty to the buyer within       days after the notice sent by the buyer is served to him.

[2]                 negotiation by both parties                                                                 

Article 11: Agreement on change registration of households.

The seller guarantees cancellation of all registered household relationship with respect to the domicile within   0    days after transfer registration of housing ownership. In the case that the change registration is deferred, the days overdue commence from the next day of the agreed date for change registration to the actual registration date; the seller shall pay     0.01% of the housing price agreed in the Article 3 as penalty for every day in arrears; Where there is other damages on the part of the buyer, the seller shall shoulder the corresponding liability for damages according to law.

Article 12: Agreement on transfer registration of housing ownership.

The two parties shall apply for registration of transfer of housing ownership within   20  days after this agreement comes into force. If the registration of transfer of housing ownership isn’t finished within the agreed time limit due to any party, the responsible party shall shoulder the liability for breach of this agreement according to the days overdue ; Where there is other damages on the part of another party, the responsible party shall shoulder the corresponding liability according to law:

1. In the case that the seller shall bear the liability for breach of agreement, the settlements shall be agreed as             (accumulation not applicable):

(1) In case that the registration of transfer is less than     7     days overdue, the days overdue commence from the next day of the agreed date for the said registration to the actual registration date; the seller shall pay 0.01%0 of the housing price agreed in Article 3 as penalty for every day in arrears to the buyer, and the agreement continues to be effective.

- 7 -

(2) In the case that the payment is more than   7       days overdue, The buyer has the right to return the house to the seller. Within 10 days after the notice for return sent by the buyer is served to the seller, the seller shall give the payment for the house back to the buyer, and pay   1.00      % of the housing price agreed in Article 3 as penalty to the buyer. In the case that the seller requires no return of the house, provided the buyer agrees, the seller shall pay  0.01%  of the housing price agreed in Article 3 as penalty for every day in arrears to the buyer; and the agreement continues to be effective. The days overdue commence from the next day of the agreed date for registration of transfer of housing ownership to the actual registration date.

2. In the case that the buyer shall bear the liability for breach of agreement, the settlements shall be agreed as follows (accumulating not applicable):

(1) In case that the registration of transfer is less than     7  days overdue, the days overdue commence from the next day of the agreed date for the said registration to the actual registration date, the buyer shall pay 0.01%       of the housing price agreed in Article as penalty for every day in arrears to the seller; and the agreement continues to be effective.

(2) In case that the registration of transfer is more than     7 days overdue,, the seller has the right to terminate this agreement. Within     7 days after the notice for termination of this agreement sent by the seller is served to the buyer, the buyer shall return the house and its accessories to the seller, and pay     1.00% of the housing price agreed in Article 3 as penalty to the seller. Where the buyer requires continuance of the agreement, provided the seller agrees, the buyer shall pay 0.01% of the housing price agreed in Article 3 as penalty for every day in arrears to the seller, and the agreement continues to be effective. The days overdue commence from the next day of the agreed date for registration of transfer of housing ownership to the actual registration date.

Article 13: Agreement on change registration of the land use right.

1. The type of the state-owned land use right of the house is         “Transfer”         (“transfer”, “allocation” or “            ”) (Only select an item)

2. The two parties shall apply for change registration of use right of land where the house locates after registration of transfer of housing ownership. If the original type of the state-owned land use right of the house is non-transfer, the land transfer fee or land revenue shall be paid in the way of / when dealing with the change registration of the land use right (Only select an item):

[1] The above-mentioned fee shall be paid by the seller.

[2]             /                                                                                                                                                                                                         

Article 14: Agreement on taxes, fees, commissions and other relevant interests.

1. During the sale of the house, relevant taxes should be handled in the way of  [1]  (Only select an item):

[1] Each party shall pay for the taxes respectively in accordance with relevant national, provincial and municipal provisions.

[2]                                                      /                                                                                                                                                                

2. Intermediary agency commission for sales of houses shall be handled in the way of  [1]  (Only select an item):

[1] In the case that both parties have never entrust any real estate brokerage firm to purchase and sell the house on their behalf, there will be no need for them to pay intermediary agency commission for sales of houses.

[2] Both parties shall pay relevant intermediary agency commission for sales of houses respectively according to relevant provisions of state, province and municipality.

[3]                                                                                                                                .

3. The seller shall pay for the property management fee and related facility-use fee that is incurred before the transfer of housing ownership and the buyer shall pay for the property management fee and related facility-use fee that is incurred after the transfer of housing ownership.

4. The buyer has full ownership of house after registration of transfer of housing ownership. The two parties shall apply for going through the transfer procedures of property management and related facilities within     50     days after registration of transfer of housing ownership.

Article 15: The buyer shall not change the architectural structure, load-bearing structure and usage after the transfer of housing ownership. Unless this agreement and its attachments prescribe

- 8 -

otherwise, the buyer has the right to share associated common areas, facilities and equipment with other right-holders during the use of the house, and takes on obligations according to its floor area and the area of common areas and houses.

Article 16: In the case that any party can not perform the agreement due to force majeure and this party immediately notifies the other party within   7  days, and provides evidence within a reasonable time, the said party shall be exempted from the liability for breach due to the failure to perform all or part of articles of this agreement resulting from force majeure.

Article 17: All disputes arising during the performance of this agreement shall be settled through friendly negotiations. If the negotiations fail, it may be settled in the way of   [1]   (Only select an item):

[1] To submit the dispute to Suzhou Arbitration Commission.

[2] To file a lawsuit with a people’s court.

Article 18: Attachment Two is a supplemental agreement to this agreement which provides matters not covered in this agreement.

Article 19: Attachments and this agreement have the same legal effect. All the words, whether the fixed words or the otherwise chosen or filled words, in attachments and this agreement have the same legal effect.

Article 20: This agreement together with attachments and signature & seal page have     12    pages. This agreement is prepared in       4   copies, and the original and the copies have the same legal effect. The electronic version of this agreement is filed in network database of Real Estate Market Management Office of Suzhou City for reference. The seller, the buyer, and the Housing Ownership Registry hold one printed copy of this agreement respectively.

Article 21: This agreement shall come into force upon the signature of the two parties.

- 9 -

Attachment One: List of House Accessories

I. Decoration condition of real estate is   [1]                                                                                                                                               

[1] Fully renovated apartment:                                                                                                                                                                   

[2] Rough apartment:                                                                                                                                                                                    

II. Facilities and equipment is / are   [1, 2]                                                                                                                                                   

[1] Water supply:                                                                                                                                                                                            

[2] Power supply:                                                                                                                                                                                            

[3] Gas supply:                                                                                                                                                                                                

[4] Kitchen equipment:                                                                                                                                                                                    

[5] Sanitary equipment:                                                                                                                                                                                    

[6] Communication equipment:                                                                                                                                                                        

[7] Electrical equipment:                                                                                                                                                                              

[8] Anti-theft devices:                                                                                                                                                                                    

[9] Parking space:                                                                                                                                                                                            

[10] Furniture:                                                                                                                                                                                                  

[11] Others:                                                                                                                                                                                                       

III. Outbuilding(s) without registration is/are

[1] Affiliate attic(s):                                                                                                                                                                                          

[2] Affiliate garage(s):                                                                                                                                                                                      

[3] Affiliate bicycle storage room(s):                                                                                                                                                               

Attachment Two: Supplemental Agreement

I. Co-owner(s)

II. Others

See supplemental agreement to “Agreement for Sales of Buildings in Stock” signed by the two parties on January 6, 2011

- 10 -

Signatures and Seals of All Parties

Seller (seal): Wearnes Global (Suzhou) Co., Ltd.		Buyer (seal): MFLEX (Suzhou) Co., Ltd.
	[seal: illegible]		[seal: MFLEX (Suzhou) Co., Ltd.]
Principal (seal):		Principal (seal):
Legal Representative (seal):		Legal Representative (seal): Lei Jin
Guardian (seal):		Guardian (seal):
Entrusted Agent (seal): [illegible signature]		Entrusted Agent (seal):
Real Estate Intermediary		Real Estate Intermediary
Agency Broker (seal):		Agency Broker (seal):
Date:		Date:
Signed at: Real Estate Trading Management Center of Wuzhong District, Suzhou City
Printed by: Shen Qin		Printing Date: January 6, 2011

- 11 -

[illegible seal]

- 12 -

EX-10.71

Exhibit 10.71

Supplemental Agreement to

Agreement for Sales of Buildings in Stock

This Supplemental Agreement is made by and between:

Party A: Wearnes Global (Suzhou) Co., Ltd., having its business address at 6F Weiyong Building, 10-1 Fengmen Road, Suzhou 215006, Jiangsu Province, hereafter referred to as “the Seller” ; and

10-1 6 215006,

Party B: MFLEX Suzhou Co., Ltd., having its business address at 68 Nan Hu Road, Wuzhong Economic Development Zone, Suzhou 215128, Jiangsu Province, hereafter referred to as “the Buyer” ; and

68 215128,

Party A and B hereafter collectively referred to “Parties”.

Whereas the parties hereto have on the sixth day of January, 2011 signed an Agreement for Sale of Buildings in Stock (hereinafter referred to as the “Master Agreement”).

2011 1 6

With respect to the Master Agreement, the parties reach the following agreements:

Article 1. The total area of transferred state-owned land use rights is 66,906.73 m2. The Seller confirms that any and all pre-conditions according to relevant laws for initial transfer of the land use rights have been met.

1 66,906.73

Article 2. The total purchase price for the transferred land use rights and buildings or any other annexes thereon, shall be RMB thirty two million and three hundred thirteen thousand and five hundred sixty six (RMB 32,313,566) (“Purchase Price”), which will be paid by the Buyer in one lump sum within 15 days after execution of the Master Agreement and this Supplemental Agreement, into the trust account designated by Registration Management Centres of Wuzhong and Linhu Real Estate Transaction (“Management Centre” ).

2 (32,313,566 )15

1

Article 3. The Purchase Price shall be transferred by the Management Centre to the Seller after issuance of new certificates of ownership of the land use rights and buildings to the Buyer reflecting the transfer herein.

3

Article 4. The Seller hereby confirms that as at the date of the signing of this Supplemental Agreement, there is no pending environmental pollution related property damage or personal injury claims or proceedings, or any ownership disputes in connection with the land use rights or the buildings and the annexes thereon. The Buyer shall not be liable for any environmental liabilities, present or future, caused by or attributable to the environmental conditions existing at the time of the execution of this Supplemental Agreement.

The Parties hereto acknowledge and agree that the current site environmental status is as per the Environmental Impact Report issued by Jiangsu Environment Protection Bureau in September, 2008.

4

Article 5. This Agreement is supplemental to the Master Agreement and shall take effect at the same time as the Master Agreement. In case of discrepancy between this Supplemental Agreement and the Master Agreement, the articles in this Supplemental Agreement shall prevail.

5

IN WITNESS WHEREOF, this Supplement Agreement is signed by the duly authorized representatives of the Parties on Jan 6th, 2011.

2011 1 6

For Wearnes Global (Suzhou) Co., Ltd. For MFLEX Suzhou Co., Ltd.

Name: Tay Pi Lan Name Lei Jin

Title: Chairman of Board of Directors Title: Chairman of Board of Directors

Signature: Signature:

3205011029674

2

EX-10.72

Exhibit 10.72

Guarantee Letter Regarding the Purchasing of the Land and the Buildings between MFC and WGSZ

2011

1 6

00046543 (2004)

20901 32,313,566.00

Whereas, Wearnes Global (Suzhou) Co., Ltd. (WGSZ) and Mflex Suzhou Co., Ltd. (MFC) signed the AGREEMENT FOR SALES OF BUILDINGS IN STOCK and a Supplement Agreement, and the FUND TRUSTEESHIP AGREEMENT (“Agreements”) on January 6, 2011. WGSZ sold the building and land (Building Property Right Certificate Number: Wuzhong 00046543; Land Certificate Number: Wuzhong 2004-20901) located at South Yuehu Rd., Puzhuang Town, Wuzhong District, Suzhou at the price of RMB 32,313,566.00 (“Purchase Price”) to MFC; furthermore, according to the Agreements, the Purchase Price shall be deposited into the account of and kept by Lin Hu Real Estate Bureau (“Management Center”) which is entrusted by the parties. The Purchase Price shall be transferred to WGSZ when MFC has received the certificates of both the land and the building.

Therefore, based on the above mentioned Agreements, WGSZ hereby makes further commitments to MFC as follows regarding the trusteeship and transfer of the Purchase Price:

WGSZ and MFC entrusts the Management Center for managing the Purchase Price. WGSZ agrees that it is subject to MFC’s approval that the Purchase Price is deposited into WGSZ’s account after MFC has received the new Land Certificate and the Building Certificate reflecting the transfer herein. WGSZ shall apply for the Purchase Price transfer together with MFC.

(4)

However, notwithstanding the Agreements, if due to reasons not attributable to MFC that MFC is unable to obtain the Building Certificate and/or the Land Certificate within Four (4) months after the execution of the Agreements, WGSZ shall refund the Purchase Price to MFC. At that time, MFC is entitled to applying for such refund in the Management Center upon a unilateral written notice. If any other requirement by the Management Center, WGSZ shall cooperate with MFC and the Management Center in an active manner to get the Purchase Price returned to MFC.

When the Purchase Price is refunded to MFC by the Management Center due the reason as above, the parties may opt to terminate the Agreements or continuously perform the Agreements. If WGSZ decides to sell the buildings and lands herein to a third party, it shall give MFC a 6 months written notice in prior.

Wearnes Global (Suzhou) Co., Ltd.

Date: 2011.1.6

EX-10.73

Exhibit 10.73

[all handwritten text indicated in italics]

Agreement No.: 30411010255

Agreement on the Escrow of Transaction Funds for Building Stock

This Agreement is made by and between:

Party A (the Seller):	Wearnes Global (Suzhou) Co., Ltd.
Party B (the Buyer):	MFLEX Suzhou Co., Ltd.
Party C:	Wuzhong District Real Estate Transaction [Management] Center

Based on the principles of equality, good faith and credibility, and by consensus reached through negotiations, Party A, Party B and Party C hereby enter into this Agreement (hereinafter referred to as the “Escrow Agreement”) concerning the escrow of transaction funds for building stock.

Article 1 On January 18, 2011, Party A and Party B signed the “Contract for Sale and Purchase of Building Stock” (hereinafter referred to as the “Contract”) with contract number: 201101060075, for sale of the property located at Yuehu Road South, Puzhuang Township, Wuzhong District, Suzhou (Original Real Estate Title Certificate No.: 00046543) (hereinafter referred to as the “Property”) to Party B at the transaction price of [RMB] 32,313,566 Yuan. The building area of the Property is 12,102.03 square meters.

Party A and Party B hereby entrust the payment for the Property to Party C for escrow purposes. When all procedures for transfer of the Property are completed, Party C shall be responsible for going through the procedures for handover of real estate title certificate and settlement of funds with Party A and Party B. When going through the escrow procedures, Party A and Party B shall present the original real estate title certificate, the original land certificate, original and duplicate copies of identification documents, and original and duplicate copies of the “Contract.”

Article 2 Party B shall deposit the payment for purchase of the Property in the amount of Renminbi (in words) Thirty-Two Million Three Hundred Thirteen Thousand Five Hundred and Sixty-Six (in numerals) 32,313,566 Yuan into the following escrow account: Bank of Deposit: Agricultural Bank of China, Account No.: 538201040125648.

At the same time, the Seller shall open a settlement account at the designated bank in the name of Wearnes Global (Suzhou) [Co., Ltd.] (ID Document No.: 733332686), Account No.: 540701040006033.

The Buyer shall open a settlement account at the designated bank in the name of MFLEX Suzhou [Co.,] Ltd. (ID Document No.: 320500400012839), Account No.: 538201040055944.

After Party C confirms that the payment for the Property has been deposited into the escrow account, it shall issue a “Suzhou Municipal Escrow Certificate of Transaction Funds for Building Stock” (hereinafter referred to as the “Escrow Certificate”) to Party B.

The “Escrow Certificate” is important documentary proof for going through the procedures of real estate registration, bank loans, and receiving escrow funds. If Party B’s “Escrow Certificate” is lost or damaged, Party B shall immediately go through loss registration procedures with Party C.

Article 3 After applying for loans from the bank, the Buyer shall entrust the bank to directly transfer the loan amount(s) to the escrow account as specified in Article 2.

Article 4 After Party B receives the “Real Estate Title Certificate,” Party A shall present the “Escrow Agreement,” the “Escrow Certificate,” identification document(s), and complete the “Suzhou Municipal Application Form for Receiving Escrow Funds for Building Stock” (hereinafter referred to as the “Application Form for Receiving Funds”) in order to go through the procedures for receiving escrow funds.

[seal: MFLEX Suzhou Co., Ltd; 3205011029674] [seal: Wearnes Global (Suzhou) Co., Ltd.; illegible] [seal: Wuzhong District Real Estate Transaction Management Center; illegible] [seal: Wuzhong District Real Estate Transaction Management Center; illegible]

[all handwritten text indicated in italics]

After the procedures for receiving funds are reviewed by Party C, the funds shall be directly transferred into the settlement account opened by the Seller as specified in Article 2.

The procedures for receiving escrow funds shall not be handled until the certificate(s) for other Property-related rights required by the lending bank are provided.

After receiving the “Real Estate Title Certificate,” Party B shall allow Party C to go through the settlement procedures for escrow funds with Party A.

Article 5 In the event that the Property does not meet registration requirements, or Party A and Party B agree to terminate the transaction, Party A and Party B shall, after reaching consensus through negotiations, complete the “Application Form for Canceling Escrow Agreement” and “Application Form for Receiving Funds” while presenting the “Escrow Agreement,” the “Escrow Certificate” and identification documents at the same time. After the procedures for receiving escrow funds are reviewed by Party C, the funds shall be directly transferred into the settlement account opened by the Buyer as specified in Article 2. If the funds involve bank loans, Party B (the Borrower) shall entrust Party C to transfer the loan principal to the original lending bank; after the accrued interest on said loans is settled between the Borrower and the lending bank, Party B may go through procedures for receiving escrow funds by presenting a loan repayment certificate issued by the [lending] bank, and the funds shall be directly transferred into the settlement account opened by the Buyer as specified in Article 2, after Party C reviews the foregoing procedures.

Article 6 Where either Party A or Party B entrusts an agent to go through the procedures for receiving funds, the agent shall go through the procedures by presented a notarized power of attorney, identification document(s) and duplicate(s) thereof, the “Contract,” the “Escrow Agreement” and the “Escrow Certificate.”

Article 7 Both Party A and Party B agree that interest shall not be calculated on the escrow funds, and Party C undertakes not to charge any fees for escrow of the funds.

Article 8 Both Party A and Party B warrant that any disputes arising from the sale and purchase of the Property have no connection with this Agreement, and shall not impact the performance hereof. Where one party asks for withdrawal or refund of the escrow funds, at the objection of another party, Party C shall suspend payment of the escrow funds until the dispute is settled.

Article 9 Party C’s escrow of payment for the Property does not mean or imply that Party C is liable to provide any guarantee for Party B’s payment obligation.

Article 10 This Agreement is made in triplicate, and Party A, Party B and Party C shall each retain one copy.

Party A (Signature & Seal): Co-Owner (Signature & Seal): ID Document No.: Agent (Signature & Seal):     [signature: CHEN [illegible]] ID Document No.: Contact Phone:	Party B (Signature & Seal): ID Document No.: Agent (Signature & Seal):                     [signature: Lei Jin] ID Document No.: Contact Phone:	Party C (Signature & Seal): Representative (Signature): Contact Phone:         Date of Signature: January 18, 2011                                               2:23:26 p.m.                                                    [illegible]
[seal: Wearnes Global (Suzhou) Co., Ltd.; illegible]	[seal: MFLEX Suzhou Co., Ltd.; 3205011029674]	[seal: Wuzhong District Real Estate Transaction Management Center; illegible]

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Reza Meshgin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Multi-Fineline Electronix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 3, 2011	By:	/s/     Reza Meshgin
		Reza Meshgin Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Thomas Liguori, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Multi-Fineline Electronix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 3, 2011	By:	/s/    Thomas Liguori
		Thomas Liguori Chief Financial Officer and Executive Vice-President

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q (the “Report”) of Multi-Fineline Electronix, Inc. (the “Company”) for the period ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof, Reza Meshgin, as Chief Executive Officer of the Company, and Thomas Liguori, as Chief Financial Officer of the Company, each hereby certifies, to the best of his respective knowledge, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 3, 2011	/s/    Reza Meshgin	/s/    Thomas Liguori
	Chief Executive Officer	Chief Financial Officer and Executive Vice-President