DAMAGE SURVEY REPORT No.

: 11548E/HCM
Date : Sep. 07, 2005

This is to certify that we, the undersigned surveyor(s) of The

Pacific Inspection J.S. Co., did at the request of

for and on behalf of

On Jul. 19, 2005 attended at the consignees warehouse - Quality Textiles Co. Ltd.,
Phnompenh, Cambodia - to perform a joint survey and investigate on the cause, nature and
extents of damage to containers No. GESU 4394524 and its cargo. Hereunder are our findings:

1. Container particulars:
Container No. : GESU 4394524.
Size : 40GP
Type : CF40H - 4108049
Manufacture No. : SFE02H
Maker : SHANGHAI CIMC FAR EAST CONTAINER.CO., LTD.
C.S.C due : D - HH - 2766/GL 4367
T.C.T plated : IM/BASILEUM /2002
GWT : 30,480.00 KGS / 67,200.00 LBS
Payload : 26,700.00 KGS / 58,870.00 LBS
Tare : 3,780.00 KGS / 8,330.00 LBS

2. Cargo particulars:
Cargo description : RAW MATERIAL FOR GARMENTS.
B/L No. : SHASIH1101185.
Quantity as per B/l : 1,033 ROLLS IN 01 * 40GP CONTAINER.
Loading port : SHANGHAI PORT CHINA.
Discharge port : SIHANOUKVILLE PORT CAMBODIA.
Consignee : QUALITY TEXTILES CO., LTD.

3. Participants:
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Attendance On behalf of Date of attending

PICO surveyors: SPICA SERVICES

Mr. Pham Minh Nguyen for and on behalf of
SHIPOWNERS P & I On Sep. 19, 2005
Quality Textiles Co. Ltd.:
AS CONSIGNEE / NOTIFY PARTY
Mr. Son Soteang

4. Circumstances:
According to the available document and information supplied by the local agent, we have
learnt as followings:
- The two 40 containers / seals No. GESU 4255404 / 3183491 and GESU 4394524 /
3183783 were stuffed at Shanghai, China in way of FCL, shipper count and seal. They
were transported from Shanghai to Hong Kong onboard the vessel SAIPAN CARRIER /
V. SC077S as per B/L No. SHASIH110185 dated June 23, 2005, then transited at Hong
Kong onto the vessel SAIPAN MARINER/V. SM126S. The both containers had arrived
Sihanoukville port of Cambodia on Jul. 06, 2005 and stripped at the consignee warehouse
on Jul. 08, 2005. No destroy or broken to their seals was noted.

- At Hong Kong as transshipment port - on Jul.01, 2005 - before delivery from transferring
barge named Million Harvest No. 38 onto the M/VSAIPAN MARINER, some damage
on the roof of container No. GESU 4394524 had been found, and temporarily repaired for
waterproof, and noted to concerned parties.

- In stripping at the consignee warehouse at Jul. 09, 2005, a number of fabric in rolls had
been found with wet damages, while the roof of the container No. GESU 4394524 was in
open holed condition. Water ingress and make wet the container floor as well as rolls
locating at the respective areas. The damages cargo had been temporarily separated and
stored into a corner of consignee warehouse, to wait for inspection and suppliers decision.

5. Inspection findings:

At the time of our attendance at the consignees warehouse of Quality Textiles Co., Ltd
Building No.22, Trapang Thloeung village, Sangkat chaunchao, Khan Dangkor, Phnompenh,
Cambodia on 19/07/2005 at 1300 LT, the cargo stripping operation from the container into
receivers warehouse had already done and all damage cargo had been orderly separated and
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stored in the warehouse. According to the declaration and studying relevant documents,
available photos supplied by the rep. of the consignee, we recorded that:

5.1. Damage to the container:

Basing on available photo supplied by representative of consignee, we studied and recorded

that container No. GESU 4394524 was damaged with details as followings:

- The roofing panel:

At approx. one third of container length away door end, the roof plates were cut /
open holed at five places on the top of corrugations, close to the top side rail area
(of right hand side), while the roofing panel was dent downward around this area.
The traces of previous temporary repairs had left around the open holes with silicon
glued on and around the holes, then covered by waterproof plastic tapes. But most
of temporary repair materials had been removed, the holes opened and water were
accumulating there in the dentate area.

- The left side panel: A vertical open hole appeared near by the second and third hinger
(count bottom upward) that was sealed by waterproof tape.

- From the internal: The roofing plate appeared with traces of water ingress and drop
down to the cargo underneath. The rolls of fabrics locating respectively to the above-
mentioned area got wet / humidified at different extents.

5.2. Damage to the cargo:

Carefully carry out the joint survey with the consignee rep. at the warehouse, we record:

5.2.1. Cargo description, packing & marks:

The involved cargo of 109 rolls is in one type: they are fibers cloth manifested: As per S/C No.
9405036 - customer order No. SH FALL05 - JPC crepe with satin shells (3CSC) 100%
polyester width 57 cuttable Pattern No. HH50178 Pattern Name: Legacy Crepe style
No. 20-55663 Color: black

- Packing:
Outer: wrapped by one ply of PE sheet, heat glue at ends, added with plastic tapes.
Inner: the cloth roll is fastened at both ends by paper threads.
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- Marks:

Outer mark (delivery mark): HCTC

SIHANOUKVILLE
STYLE NO.
PATT NO.
COLOR: BLACK
B/NO.:
MADE IN CHINA

Inner mark (manufacturer mark):

H.C.T. TEXTILES CO., LTD

ORDER NO.
PTN NO.
LENGTH WIDTH
LOT NO. ROLL NO.

5.2.2. Nature and extent of damage:

At time of our attendant, we recorded that there are 109 rolls were separated and stored in the
warehouse. The list of involved roll and their quantity is attached hereto for your reference.
However, upon carefully inspect - in way of roll by roll all the alleged wetted cargo - together
with rep. of consignee, we recorded:

- One roll (No. 721): packing torn, content got heavily wetted with water penetrating into
the core of roll. The paperboard core got decayed, while the inner fiber is still
humidified.

- 8 rolls: their packing were partly torn with dirty water traces left outside, slightly wetted
at one end or moistened with the present of small water drops condensing in the PE
packing.

- The rest of rolls: packing partly torn with traces of dirty water left outside, while their
content are visually in sound condition.

The quantity of 109 rolls are carefully checked and accepted as same as consignee list
prepared. However, their detailed quantity were checked and recorded:
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- As per consignee calculation: totally 9,485.6 yards with the unit price of US$ 1.38 per
yard as per respective commercial invoice, or approx. US$ 13,090.13 in sum

- As per our calculations: totally 9,517.5 yards involved, or US$ 13,134.15 in sum.

Test results / Comment:

The damage samples were carefully tested in an independent lab. - not only the packing, but
also the wetted fibre and core with result recorded: wetted or moistened by fresh water.

Most of them are visually usable, and not yet be opened the PE sheet packing, hence our
survey could not go far enough. Upon carry out the survey, we had suggested the consignee to
open the all rolls for inspect their content in way of roll by roll, separate the sound rolls from
damage ones, but be informed that they already asked their Supplier for such plan, but did not
receive any instruction until the time of our survey. Its the property of their Supplier, and the
quality for cargo importing to the US market is very high and strict, so they could not decide
on the matter.

5.2.3. Commercial value depreciations:

Basing on the actual damage condition, referring to the local market prices at Phnompenh of
Cambodia, where there are many textile processing company, we would comment:

- As per relevant commercial invoice, the unit price of involved cargo is US$ 1.38 per yard

- The alleged wetted cargo could be sold to local market for textile processing purposes,

And the below-mentioned commercial value depreciations considered fair and reasonable:

. Category A - one (1) roll No. 721 of 94.5 yard that could only be used for other purposes -
depreciation 75% its commercial value, equivalent to:

94.5 yard x 75% x USD 1.38/yard = US$ 97.81 (1)

. Category B eight (8) rolls that could be used for original processing, just need to cut a
part of roll should be depreciated of 20% their commercial value, equivalent to:
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Roll No. Quantity (yard) Depreciation value (US$)

287 97.5 97.5 * 20% * 1.38 = 26.91

186 31.0 31.0 * 20% * 1.38 = 08.56
360 92.0 92.0 * 20% * 1.38 = 25.39
400 99.0 99.0 * 20% * 1.38 = 27.32
380 89.5 89.5 * 20% * 1.38 = 24.70
266 98.0 98.0 * 20% * 1.38 = 27.05
344 96.0 96.0 * 20% * 1.38 = 26.50
373 91.5 91.5 * 20% * 1.38 = 25.25

Sum 694.5 US$ 191.68 (2)

. Category C: the rest of rolls should be depreciated of 5% its original value for the cost and
expenses for reconditioning their stained packing, with details:

( 9,517.50 94.5 694.5) * 5% * 1.38 = US$ 600.07 (3)

. And finally, the total depreciation value is calculated:

(1)+ (2) + (3) = 97.81 + 191.68 + 600.07 = US$ 889.56

6. Comments:
- On the cause of damage: We would focus that in July, it is raining season at Cambodia.
Upon reviewing on the available photos and documents of the container No. GESU
4394524, basing on our inspection and testing results, we considered that all the
temporary repair components that done on Jul. 01, 2005 at Hongkong had been physical
removed or scratched or loosen before arrival the consignee warehouse. Such loosen or
removes of temporary repair materials might occur at the destination port / container
yard or during unloading, as the cause of fresh water (rain water) ingress and make wet
to the cargo.

- Its clear that this damage is visually not serious, but the claim might be far different,
depending on the claimant. We after investigate on the textile industry accepted that
just some small defects on the material body could result the whole lot of finished
products to be rejected at the destination of US, but also noted to the consignee that they
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have their QC, who have to check and remove all defect materials as normal procedures
of their process.

- After many time to contact by telephone, email, facsimile we always receive the
negative reply of the consignee representative: have to wait their supplier, without
further action to mitigate damage. Surely that in such closely storage between sound roll
and humidified ones, mould or contamination or moisten could be growth and spread.
That is why, on Aug. 10, 2005, we have to issued a letter and sent to the Consignee, by
both facsimile and email, to remind on their long outstanding settlement and decision,
as well as hold them fully responsible for damage arising thereof. Unluckily, until the
time of this report issuance, nothing responds had been received from the consignee.

* Enclosure: D. Manager,
- Attachment 1: One set of photo.
- Attachment 2: Surveyor list of separated rolls.
List of damage rolls supplied by consignee.
Involved documents
Our letter dated Aug. 10, 2005
Pham Minh Nguyen