OUR COMPANY

Alpha Technologies Group, Inc. ("Alpha" or the "Company") designs, extrudes, fabricates and sells thermal management and non-thermal fabricated products for use in a variety of industries including automotive, telecommunication, industrial controls, transportation, power supply, factory automation, consumer electronics, aerospace, defense and microprocessor industries. The Company extrudes aluminum for its use in the production of thermal management and non-thermal fabricated products and sells aluminum extrusions to a variety of industries including the construction, sporting goods and other leisure activity markets. Extruded aluminum is the primary raw material in the production of thermal management and non-thermal fabricated products.

The Company was incorporated as Synercom Technology, Inc., in Texas in 1969, and was reincorporated in Delaware in 1983. In April 1995, it changed its name to Alpha Technologies Group, Inc. The Company's business is conducted through its wholly-owned subsidiaries Wakefield Thermal Solutions, Inc. ("Wakefield") which includes the Wakefield-Pelham, Wakefield-Fall River and Wakefield-Temecula divisions, Specialty Extrusion Corp. ("Specialty") and Lockhart Industries, Inc. ("Lockhart").

In January 2001, the Company acquired National Northeast Corporation ("NNE"), which was engaged in the thermal management and aluminum extrusion business in Pelham, New Hampshire. (See Footnote 2: Acquisitions). The Company integrated NNE into its Wakefield subsidiary.

PRODUCTS

The Company designs, extrudes, fabricates and sells thermal management and non-thermal fabricated products and aluminum extrusion products for use in a variety of industries including automotive, telecommunication, industrial controls, transportation, power supply, factory automation, consumer electronics, aerospace, defense and microprocessor industries. The Company extrudes aluminum for its use in the production of its products and sells aluminum extrusions, standard shapes and custom profiles, to a variety of industries including the construction, automotive, industrial platforms sporting goods, and other leisure activity markets.

The Company's principal products include:

Extruded Heat Sinks Heat sinks and heat sink assemblies designed for high power industrial applications, including transportation equipment; automotive, stereo amplifiers and others; bonded fin heat sinks used by makers of power supplies, transportation equipment and other industrial equipment.

Active Cooling Components These products use air or liquid to dissipate heat. Air-to-air heat exchangers use fans to exchange heat with cooler air and are used in high-performance telecommunications, military and aerospace systems. These products also include sophisticated precision formed fin/fluxless vacuum brazed chassis, heat exchangers and cold plates used to cool and protect computer, radar and laser systems for the aerospace, military and commercial markets. Liquid cooling systems are used in applications which require the removal of significantly greater amounts of heat than can be achieved by air cooling.

Penguin(TM) Coolers Heat sinks specifically designed to solve thermal problems for the latest high-speed microprocessors offered by major manufacturers. These products are used in personal computers and servers. Older versions of Penguin Coolers are used in embedded microprocessor

applications. In addition, these products solve thermal problems for ASICs, ball grid arrays ("BGA") and multichip modules.

Stamped and Low Power Heat Sinks Heat sinks designed to dissipate heat generated by power semiconductors, transistors, rectifiers, diodes and other electronic components used in electronic applications. Typically, these are smaller components used on printed circuit boards.

Precision Compression Mounting Clamp Systems These products are complete mounting clamp and heat sink assembly systems for proper installation, compression and cooling of high-power compression pack (SCR) silicon-controlled rectifiers. These products are used in industrial welding, transportation and motor control systems.

Accessory Products The Company's accessories include high-performance thermal compounds, adhesives, interface materials and other accessories.

Aluminum Extrusions The Company extrudes aluminum for its use in the production of thermal management products and sells aluminum extrusions to a variety of industries including the construction, sporting goods and other leisure activity markets.

Non Thermal Fabricated Products The Company's non-thermal fabricated products include a variety of items such as van racks, steering wheel columns, recreational trailers, louvers, dampers and fencing which are sold for commercial, industrial, and residential use.

CUSTOMERS

The principal customers for the Company's products are leading original equipment manufacturers ("OEM's") and contract manufacturers ("CM's") of electronic equipment, including: Harman, IBM, Flextronics, Solectron, Rockwell Automation, Lockheed Martin, General Electric, Delphi, SCI/Sanmina, Celestica and Raytheon. The Company has approximately 1,600 customers. Harman International Industries, Inc. accounted for 10.4%, 11.6% and 10.1% of its revenues in fiscal years 2003, 2002 and 2001 respectively.

The Company's products must meet its OEM customer's exacting specifications. Some of the Company's OEM customers require the Company to qualify as an approved supplier. In order to so qualify, the Company must satisfy stringent quality control standards and undergo extensive in-plant inspections of its manufacturing processes, equipment and quality control systems. In conformity with the above, the Company's Wakefield-Temecula division is QS 9000 registered (a quality specification required by numerous automotive customers) and the Company's Wakefield-Fall River and Wakefield-Pelham divisions are ISO 9001-2000 registered (a quality standard required by numerous customers from certain other industries).

SALES, MARKETING AND DISTRIBUTION

While the Company designs, manufactures and sells thermal management and non-thermal fabricated products and aluminum extrusion products, it seeks to become a strategic supplier to its customers and to differentiate itself from its competitors by leveraging its ability to extrude, fabricate, and anodize products under one umbrella. This vertical integration not only gives the Company complete control over its processes, management believes that it also gives the Company the shortest lead times and lowest cost structure of all domestic suppliers.

The Company has applications engineers who are dedicated to providing ongoing technical support to the Company's customers. These engineers provide solutions to customers for their thermal management problems, answer customers' questions regarding the use and application of the Company's products, provide field support to customers and work with certain key customers to develop new product solutions. The Company believes the technical services provided by its engineers are an important factor in its product sales.

The Company sells its products through its in-house sales personnel and a network of independent manufacturers' representatives and distributors. In North America, the Company's products sales are supported by a customer sales support staff of 14 individuals, six factory direct key account managers, six independent manufacturers' representatives and 13 distributors. In international markets, the Company's thermal management products are sold by: five companies functioning both as manufacturers' representatives and distributors, two manufacturers' representatives and nine distributors.

In general, the Company's manufacturers' representatives and distributors enter into agreements that allow for termination by either party upon 60 days notice. Generally, distributors are permitted to return a small portion of products purchased by them during the term of their agreement with the Company. They are allowed to return all products other than obsolete, minimum buy and custom products upon termination of the agreement. Historically, the amount of returns has been insignificant to the Company's business. The Company's distributors are generally not precluded from marketing competitive products.

RESEARCH AND PRODUCT DEVELOPMENT

The Company's product development strategy continues to focus on engineering modifications of existing products to provide customers with higher performance and lower cost products. The Company maintains technical relationships with certain key customers in order to understand their future thermal management requirements and focuses on developing new or modifying existing products to meet such requirements. The Company strives to be included on the recommended vendor list of its customers, however, such recommendation is typically not exclusive.

During fiscal 2003, 2002 and 2001, the Company spent $396,000, $496,000, and $926,000, respectively, on product research and development with respect to its thermal management products. The Company believes that its technical capabilities, in conjunction with its relationships with customers, will allow it to continue to introduce solutions to new thermal management problems responsively.

COMPETITION

The thermal management and non-thermal fabricated products and aluminum extrusion products markets are highly competitive. There are many companies which compete directly with the Company in these businesses and offer products and services similar to those offered by the Company. In the thermal management products market, the Company's principal competitor is Aavid Thermal Technologies, Inc. In the non-thermal fabricated products and aluminum extrusion markets, we compete with numerous small and large companies such as Alcoa Inc. and RD Werner Company, Inc. We differentiate ourselves from our competitors by leveraging our ability to extrude, fabricate, and anodize products within one company.

BACKLOG

The Company's backlog was approximately $6.9 million and $7.5 million on October 26, 2003 and October 27, 2002, respectively. Backlog consists of purchase orders typically scheduled for shipment from two to eight weeks following the order date. The Company's backlog at any time is not indicative of the amount of future revenue to be recognized in any one period.

PROPRIETARY RIGHTS

The Company applies for patents with respect to its most significant patentable developments. It owns 16 patents related to its thermal management products, which expire from 2009 to 2019. Management believes that its competitive position is not dependent on patents and that patent expirations will not materially adversely affect the Company's competitive position.

RAW MATERIALS

The principal raw materials used in the Company's products are aluminum billet and extrusions. The Company owns facilities and equipment which produce the majority of the extruded aluminum it needs to

manufacture its thermal management and non-thermal fabricated products. Raw materials represent a significant portion of the cost of the Company's products. Prices for raw materials are based upon market prices at the time of purchase. Historically, the price of aluminum has experienced substantial volatility. Because raw materials for an order are usually purchased within a short time after an order is accepted and products are generally shipped within 60 days following the order date, the Company does not believe the price volatility for aluminum billet represents a significant risk. All raw materials are readily available from multiple suppliers at competitive prices.

ENVIRONMENTAL REGULATIONS

Several aspects of the Company's operations utilize hazardous materials, the removal of which is subject to government regulation. The Company contracts with licensed third party waste companies to remove such hazardous materials. While the Company believes that it conducts its operations in substantial compliance with applicable environmental laws and regulations and has all environmental permits necessary to conduct its business, more stringent environmental regulations may be enacted in the future, and there can be no assurance that the Company will not incur significant costs in the future in complying with such regulations. Local environmental agencies monitor the Company's operations for ongoing compliance with environmental requirements, and the Company is required to correct any violations revealed by such monitoring. The Company is not aware of any violations or events that would require the Company to incur material cost, nor has the cost of complying with environmental laws represented a material cost to the Company.

EMPLOYEES

At October 26, 2003, the Company employed 337 people of which 315 were full time. Management believes that employee relations are excellent.

FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

Financial information about export sales is set forth in Note 16 in the Notes to Consolidated Financial Statements.