Asia Tech Source is in the business of working with its customers to source and develop OEM parts and products from concept to completion. From time to time, we also agree to take on a limited amount of "Inspection Only" business that utilizes our engineering strengths to offer our customers the quality assurance that their shipments from Asian suppliers (whether or not sourced through ATS) will in fact match the appearance, form, fit and function of approved samples. The following Inspection Procedure describes how an "Inspection Only" transaction works with Asia Tech Source.

The customer provides approved samples and/or photos and/or written part or product specifications in the form of English narratives or engineering drawings or an inspection checklist which define the appearance, form, fit, and function of the subject part or product including but not limited solely to any or all of the following items that may be viewed by the customer as critical to quality: metallurgy (chemical composition), Rockwell hardness, plating thickness, plastic composition, wood composition, dimensions, finish, smoothness, drop test, Pantone color, printed matter, bar code, accessories to be included in the package (screws, nails, instruction sheets, etc.), packaging method (bulk, skin-card, blister-card), carton labeling, packing configuration (qty per inner box and per master carton), corrugated carton strength, pallet requirement, and the tolerance for min/max deviations on all of the above that are critical to quality.

The customer provides written authorization in advance to the Asian supplier to allow Asia Tech Source (ATS) to represent the customer in performing an on-factory-site inspection of the subject part or product. An agreed-upon date for the inspection is selected.

ATS arrives at the supplier factory site and per the customer's instruction performs a rigorous single or double-sampling inspection of the entire production lot or pilot lot or prototype based on a sample size taken at random from the subject lot according to Military Standard 105E. Immediately following the inspection, ATS provides a copy of the inspection result both to the supplier's representative and to the customer. In the case of a failed lot, ATS requests confirmation of the failure from the customer based on the claimed and quantified reason(s) for the inspector's rejection. If the customer concurs with the ATS inspector's judgment, ATS requests the supplier to initiate immediate corrective action including a rework plan which provides a date for re- inspection to ATS and the customer. If the customer chooses to allow the inspected lot to be shipped despite the inspector's rejection, the customer provides a letter which approves the claimed deviation from the approved sample or approved specification and authorizes the supplier to proceed with the shipment. In the case of a passed lot or a customer- approved deviated lot, ATS requests that the supplier attach a physical copy of the formal ATS inspection report to the pallet(s) of goods to be shipped.

Following the completion of the inspection, ATS prepares and forwards an invoice to the customer documenting the inspector's travel time and distance to and from the supplier's factory site to be assessed at actual cost based on economy class air fares and ground transportation costs. In addition a daily charge will be assessed. This daily charge includes the inspector's labor, meals, lodging, telephone and fax charges related to the conduct of the inspection. The ATS inspection invoice is due and payable by the customer upon receipt.