UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 20-F
(Mark One)

/_/        REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

/X/           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

                                       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                                                 0-30376

                               MIRAE CORPORATION
             (Exact name of Registrant as specified in its charter)

                               Republic of Korea
                (Jurisdiction of incorporation or organization)
                               #9-2, Cha Am-Dong,
                      Chun An, Chung Chong Nam-Do 330-200
                               Republic of Korea
                    (Address of principal executive offices)

         Securities registered or to be registered pursuant to Section 12(b) of
the Act.

                                                     Name of Each Exchange
         Title of Each Class                          on Which Registered
         -------------------                         ---------------------

American Depositary Shares, Common                  The NASDAQ National Market
 Stock par value Won 100 per share

         Securities registered or to be registered pursuant to Section 12(g) of
the Act.

                                      None
                                (Title of Class)
                               -------------------

         Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.

                                      None
                                (Title of Class)
                               -------------------

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

             Common Stock                                179,186,000

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 which financial statement item the Registrant has
elected to follow.

               Item 17  /_/                      Item 18   /X/


<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                   Page

<S>                                                                                 <C>
CERTAIN TERMS AND CONVENTIONS........................................................1


PART I...............................................................................6
     ITEM 1.        Identity of Directors, Senior Management and Advisors............6
     ITEM 2.        Offer Statistics and Expected Timetable..........................6
     ITEM 3.        Key Information..................................................6
     ITEM 4.        Information on the Company......................................21
     ITEM 5.        Operating and Financial Review and Prospects....................44
     ITEM 6.        Directors, Senior Management and Employees......................64
     ITEM 7.        Major Shareholders and Related Party Transactions...............72
     ITEM 8.        Financial Information...........................................74
     ITEM 9.        The Offer and Listing...........................................75
     ITEM 10.       Additional Information..........................................76
     ITEM 11.       Quantitative and Qualitative Disclosures About Market Risk......90
     ITEM 12.       Description of Securities Other Than Equity Securities..........91

PART II.............................................................................91
     ITEM 13.       Defaults, Dividend Arrearages and Delinquencies.................91
     ITEM 14.       Material Modifications to the Rights of Security Holders
                    and Use of Proceeds.............................................91
     ITEM 15.       Controls and Procedures.........................................91
     ITEM 16A.      Audit Committee Financial Expert................................91
     ITEM 16B.      Code of Ethics..................................................92
     ITEM 16C.      Principal Accountant Fees and Services..........................92
     ITEM 16D.      Exemptions from the Listing Standards for Audit Committes.......92
     ITEM 16E.      Purchases of Equity Securities by the Issuer and Affiliated
                    Purchasers......................................................93

ART III.............................................................................93
     ITEM 17.       Financial Statements............................................93
     ITEM 18.       Financial Statements............................................93
     ITEM 19.       Exhibits........................................................93
</TABLE>

                                      -i-
<PAGE>

                           Forward-Looking Statements

     This annual report includes "forward-looking statements". All statements,
other than statements of historical facts, included in this annual report that
address activities, events or developments which we expect or anticipate will
or may occur in the future are forward-looking statements. The words "believe",
"intend", "expect", "anticipate", "project", "estimate", "predict" and similar
expressions are also intended to identify forward-looking statements.

     These forward-looking statements address, among others, such issues as:

     o    future prices of and demand for our products,

     o    future earnings and cash flow,

     o    future plans and capital expenditures,

     o    expansion and other development trends of the semiconductor industry,

     o    expansion and other development trends of the SMD placement system
          industry,

     o    expansion and growth of our business and operations, and

     o    our prospective operational and financial information.

     These statements are based on assumptions and analyses made by us in light
of our experience and our perception of historical trends, current conditions
and expected future developments, as well as other factors we believe are
appropriate in particular circumstances. However, whether actual results and
developments will meet our expectations and predictions depends on a number of
risks and uncertainties which could cause actual results to differ materially
from our expectations, including the risks set forth in "Item 3--Key
Information--Risk Factors" and the following:

     o    fluctuations in prices of our products,

     o    potential acquisitions and other business opportunities,

     o    general economic, market and business conditions, and

     o    other risks and factors beyond our control.

     Consequently, all of the forward-looking statements made in this annual
report are qualified by these cautionary statements. We cannot assure you that
the actual results or developments anticipated by us will be realized or, even
if substantially realized, that they will have the expected effect on us or our
business or operations.

                         CERTAIN TERMS AND CONVENTIONS


Definitions

     Unless the context otherwise requires, references in this annual report
to:

<PAGE>

     o    "Mirae", the "Company", "we", "our" and "us" are to Mirae Corporation
          and its consolidated subsidiaries.

     o    "Korea" is to the Republic of Korea.

     o    "Government" is to the Korean government.

     o    "Won," "won" or "(won)" is to the currency of Korea.

     o    "US$" or "dollar" is to U.S. dollars, the currency of the United
          States of America.

     o    "ADS" is to Mirae's American Depositary Shares.

     o    "ADR" is to Mirae's American Depositary Receipts.

     o    "Depositary" is to The Bank of New York, the depositary of the ADRs.

Glossary of Technical Terms

     Unless otherwise indicated in the context, references to the following
technical terms shall have the meanings set forth below:

     o    "BGA" - Ball grid array, a type of semiconductor package containing
          ball-shaped terminal leads.

     o    "Bit" - The smallest units of information recognized by a digital
          computer, a bit is a digit (1 or 0) used to represent one of two
          states in the binary number system. The term "bit" is a contraction
          of "binary digit".

     o    "Chip" - (1) Semiconductor manufacturing: a piece of silicon on which
          a large amount of circuitry is implanted. Also known as a die. (2)
          PCB Assembly: a simple electronic device, not including IC.

     o    "CRT" - Cathode ray tube.

     o    "CSP" - Chip scale package, a type of semiconductor package.

     o    "DDR" - Dual data rate memory, a type of memory device.

     o    "Device" - Semiconductors, semiconductor packages, ICs and other
          electronic components including registers, capacitors and conductors.

     o    "Die" - A piece of semiconductor wafer containing the circuitry of a
          single chip.

     o    "DIMM" - Dual in-line memory module, a type of memory module which
          has memory devices placed on both sides of a PCB.

     o    "DRAMs" - Dynamic random access memory chips, the most popular type
          of semiconductor memory chip. "Dynamic" means that the device's
          memory cells need to be periodically recharged. Information, stored
          in the memory cells in the form of bits as a positive or negative
          charge, is accessed randomly.


                                      -2-

<PAGE>

     o    "EMS" - Electronics manufacturing service.

     o    "Flash memory" - A computer chip with a read only memory that retains
          its data when the power is turned off and that can be electronically
          erased and reprogrammed without being removed from the circuit board.

     o    "IC" - Integrated circuit, an electronic circuit in which many active
          or passive elements are fabricated and connected on a continuous
          substrate.

     o    "Index time" - Average time needed by a test handler to change
          testing trays.

     o    "Information Technology" - IT (information technology) is a term that
          encompasses all forms of technology used to create, store, exchange,
          and use information in its various forms (business data, voice
          conversations, still images, motion pictures, multimedia
          presentations, and other forms, including those not yet conceived).
          The term includes both telephony and computer technology.

     o    "Internet" - An open global network of interconnected commercial,
          educational and governmental computer networks that utilize a common
          communications protocol, TCP/IP.

     o    "LCD" - Liquid crystal display.

     o    "Lead frame" - The skeleton of the semiconductor chip to which the
          die is bonded; after packaging the only visible parts are the
          protruding metal pins.

     o    "Lead frame magazines" - Aluminum carriers used to transport lead
          frames in their fragile state, before the dies are bonded onto them.

     o    "Mechatronics" - An engineering field combining principles of
          mechanical engineering and electrical engineering.

     o    "Memory chip" - A semiconductor device that stores data in electronic
          form.

     o    "OEM" - Original equipment manufacturer.

     o    "PCB" - Printed circuit boards.

     o    "PKI" - Public key infrastructure, a system of public key encryption
          using digital certificates from certificate authorities and other
          registration authorities that verify and authenticate the validity of
          each party involved in an electronic transaction.

     o    "QFP" - Quad flat package, ceramic or plastic chip carrier with leads
          projecting down and away from all four sides of a square package.

     o    "RAMbus" - RAMbus technology is a superscalar silicon technology that
          narrows the data bus width without any decline in transmission speed
          by using the PC buffer as a cache memory, thereby resulting in a
          brighter bandwidth and transmission rate. The main advantage of
          RAMbus DRAM is a performance speed of 800 Mhz vs. 100-133 Mhz for
          current PC 100/133 Synchronous DRAMs. Accordingly, it is an effective
          solution to the problem of bridging the growing speed disparity
          between CPU and the main memory.


                                      -3-

<PAGE>

     o    "RIMM" - RAMbus in-line memory module, a type of memory module which
          is used for RAMbus DRAMs.

     o    "Semiconductor" - A material, like silicon, whose properties lie in
          between those of a conductor and an insulator. Through doping
          (introducing impurities), it can be made slightly conductive or
          slightly insulative. (Also see "chip".)

     o    "SIMM" - Single in line memory module, a type of memory module, which
          is used in edge connector type sockets.

     o    "SMD placement system" - Surface mount device placement system for
          PCB assembly equipment. SMD placement systems are robotic machines
          used for high-speed and accurate placement of various electronic
          devices onto PCBs. This term is used interchangeably with "SMT
          placement system," or surface mount technology placement system.

     o    "Test handlers" - Specialized robotic machinery that form part of the
          back end equipment of the IC packaging and testing line. After the
          micro-chips are packaged in their black protective container, test
          handlers convey the devices to testing equipment, feed the devices in
          and out of the testers and finally sort the devices according to
          grading information received from the tester. Generally, two test
          handlers work with one tester.

     o    "TFT" - Thin film transistor.

     o    "TFT-LCD" - Liquid crystal display creates images by changing
          molecular arrays of liquid crystals, in which light and darkness are
          generated and then an image is formed when electricity is supplied.
          Liquid crystals of LCD are inserted between two thin glasses, and are
          characterized as material, which lies in the middle of a gas and
          solid. TFT-LCD falls in the category of active matrix LCD, rather
          than passive, which means each picture cell can be independently
          controlled for on and off switching activities, as a transistor
          (switching element) is attached directly onto each picture cell. This
          allows fast response and high resolution.

     o    "Throughput" - Product output quantity per unit of time.

     o    "TSOP" - Thin small outline package, a type of semiconductor package
          which is widely used in a PCB.

     o    "UPH" - Units per hour, a measure of throughput.

     o    "Wafer" - Commonly, a slice of a semicrystal crystalline ingot whose
          active surface has been processed into arrays of ICs.

Currencies

     We publish our financial statements in won. Unless otherwise indicated,
all translations from won to U.S. dollars have been made at a rate of Won
1,192.00 to US $1.00, which was the noon buying rate as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on
December 31, 2003. We do not represent that won or U.S. dollar amounts could be
converted into U.S. dollars or won, as the case may be, at any


                                      -4-

<PAGE>

particular rate or at all. On June 25, 2004, the Noon Buying Rate was
Won 1,150.00 to US $1.00.

<PAGE>

                                    PART I

ITEM 1.  Identity of Directors, Senior Management and Advisors

     Not applicable.

ITEM 2.  Offer Statistics and Expected Timetable

     Not applicable.

ITEM 3.  Key Information

A.       Selected Financial Data

     Our selected consolidated financial information set forth below should be
read in conjunction with, and is qualified in its entirety by reference to, our
audited consolidated financial statements, as of and for the years ended
December 31, 2001, 2002 and 2003, together with the notes thereto, which appear
elsewhere in this annual report.

     Our consolidated financial statements are prepared in accordance with
Korean generally accepted accounting principles ("Korean GAAP"), which differs
in certain material respects from United States generally accepted accounting
principles (U.S. GAAP). See notes 27 and 28 of notes to our consolidated
financial statements.

<TABLE>
<CAPTION>
Consolidated Statements of Operations Data         1999        2000        2001        2002       2003        2003
                                                ---------------------------------------------------------------------
                                                    Won        Won         Won         Won         Won       US$(1)

                                                    (Won in millions and US$ in thousands, except per share data)
                                                ---------------------------------------------------------------------
<S>                                             <C>        <C>          <C>         <C>         <C>         <C>
Korean GAAP(2):
Sales .................................         45,681     146,099      68,977      64,430      95,053      79,742
Cost of sales .........................         36,111     111,377      63,590      56,863      72,703      60,992
                                                ---------------------------------------------------------------------
  Gross profit ..........................          9,570      34,722       5,387       7,567      22,350      18,750
  Selling, general and administrative
  expenses ..............................         19,988      27,233      45,321      37,651      27,973      23,467
                                                ---------------------------------------------------------------------
  Operating income (loss) ...............        (10,418)      7,499     (39,934)    (30,084)     (5,623)     (4,717)
                                                ---------------------------------------------------------------------
  Other income ..........................         14,603      12,809      11,020      13,285      36,810      30,881
  Other expenses ........................          9,601      20,173      54,945      56,091      30,271      25,395
                                                ---------------------------------------------------------------------
  Income (loss) before income taxes and
     minority interest ..................         (5,416)        135     (83,859)    (72,890)        916         768
  Income tax expense (benefit) ..........         (5,396)     (3,602)     14,234         277          18          15
                                                ---------------------------------------------------------------------
  Income (loss) before minority interest             (20)      3,737     (98,093)    (73,167)        898         753
                                                ---------------------------------------------------------------------
  Minority interest in net loss (gain) of
     consolidated Subsidiaries ..........           (216)        533      (1,055)        176       1,626       1,364
                                                ---------------------------------------------------------------------
  Net income (loss) .....................           (236)      4,270     (99,148)    (72,991)      2,524       2,117
                                                =====================================================================
  Net income (loss) per share (3) .......             (2)         28        (654)       (470)         16       0.013
                                                =====================================================================
  Cash dividends per share ..............             17          20          15        --          --          --

  U.S. GAAP(4):
  Sales .................................         51,358     143,643      69,827      69,715      96,039      80,570
  Gross profit (loss) ...................         15,526      43,545      (8,193)     (7,071)     13,867      11,633
  Operating loss ........................        (11,163)    (11,903)    (62,687)    (50,195)    (21,518)    (18,053)
                                                ---------------------------------------------------------------------

                                                              -6-

<PAGE>

  Net income (loss) .....................           (117)      9,290     (84,811)    (62,607)    (24,278)    (20,367)
                                                =====================================================================
  Net income (loss) per share(3) ........             (1)         61        (560)       (403)       (152)     (0.128)
                                                =====================================================================
</TABLE>



<TABLE>
<CAPTION>

         Consolidated Balance Sheet Data           1999           2000          2001           2002         2003        2003
                                                ---------------------------------------------------------------------
                                                    Won           Won            Won           Won          Won        US$(1)

                                                                    (Won in millions and US$ in thousands)
                                               ---------------------------------------------------------------------------------
<S>                                               <C>            <C>           <C>            <C>           <C>         <C>
         Korean GAAP(2):
         Cash and cash equivalents and
            short-term financial
            instruments................           20,137         35,338        57,724         39,784        36,197      30,367
         Working capital(5)............           66,542        148,087        89,333         83,491        78,545      65,894
         Total assets..................          181,221        379,172       351,122        240,512       231,717     194,394
         Current liabilities...........           21,252         38,136        95,594         51,061        36,349      30,494
         Long-term liabilities.........            1,957         11,819         5,076         14,565        18,776      15,751
         Total shareholders' equity....          158,012        329,217       250,452        174,886       176,592     148,149

         U.S. GAAP(4):
         Total assets..................          172,743        356,154       338,607        236,177       223,876     187,815
         Total liabilities.............           26,779         68,053       129,088         87,926        74,967      62,892
         Total shareholders' equity....          145,964        288,101       209,519        148,251       148,909     124,923
</TABLE>


(1)  The translation of Korean won amounts into U.S. dollar amounts is included
     solely for the convenience of readers outside of Korea and has been made
     at the rate of Won 1,192.00 to US $1.00, the Noon Buying Rate on the last
     business day of the year ended December 31, 2003.

(2)  The Korean GAAP balance sheet of the Company has been prepared in
     accordance with Statement of Korea Accounting Standards ("SKAS") No. 2
     through No. 9, which are effective from the fiscal year beginning after
     December 31, 2002.

     In 2003, we adopted SKAS No. 6 which requires that appropriations of
     retained earnings, including declaration of dividends (or dispositions of
     accumulated deficit) be recorded in our financial statements when approved
     by shareholders. Our financial statements as of December 31, 1999, 2000,
     2001 and 2002 have been restated to reflect the effect of this accounting
     change retrospectively. As a result, total liabilities as of December 31,
     1999, 2000, 2001 and 2002 decreased by Won 2,161 million, Won 1,846
     million, Won 422 million and Won 230 million, respectively, and
     shareholders' equity as of December 31, 1999, 2000, 2001 and 2002
     increased by the same amount.

(3)  Net income (loss) per share is calculated by dividing net income (loss) by
     the weighted average number of shares outstanding for the relevant period.
     In addition, net income (loss) per share was recalculated considering the
     effect (5.12%) of additional issuance with consideration in 2003 which
     were issued less than fair value, and 20% stock dividends in 2003. See
     note 20 of the notes to consolidated financial statements.

(4)  See notes 27 and 28 of the notes to our consolidated financial statements
     for reconciliation to U.S. GAAP.

(5)  Working capital means current assets minus current liabilities.


Exchange Rate

     The following table sets forth, for the periods indicated, the Noon Buying
Rate expressed in won per US$1.00.


                                      -7-

<PAGE>


<TABLE>
<CAPTION>

                                                                       Noon Buying Rate
                                             -------------------------------------------------------------------
                 Period                           End            Average(1)           High               Low
----------------------------------------------------------------------------------------------------------------
                                                                      (won per US $1.00)
<S>                                            <C>                <C>               <C>               <C>
1999...............................            1,136.00           1,188.00          1,243.00          1,125.00
2000...............................            1,267.00           1,140.00          1,267.00          1,106.00
2001...............................            1,314.00           1,293.00          1,369.00          1,234.00
2002 ..............................            1,186.30           1,242.00          1,332.00          1,160.60
2003 ..............................            1,192.00           1,192.08          1,258.00          1,146.00
December 2003......................            1,192.00              -              1,200.00          1,183.00
January 2004.......................            1,174.00              -              1,195.10          1,172.00
February 2004......................            1,179.00              -              1,180.00          1,152.20
March 2004.........................            1,146.70              -              1,181.00          1,146.70
April 2004.........................            1,173.60              -              1,173.60          1,141.40
May 2004...........................            1,165.00              -              1,191.00          1,165.00
June 2004 (through June 25, 2004)..            1,150.00              -              1,164.80          1,150.00
--------------
</TABLE>

(1)  The average of the Noon Buying Rate on the last business day of each month
     during the period.


B.       Capitalization and Indebtedness

     Not applicable.

C.       Reasons for the Offer and Use of Proceeds

     Not applicable.

D.       Risk Factors

Risks Relating to Mirae Corporation

Our business could be adversely affected by the cyclical nature of the
semiconductor industry.

     We sell our products to the semiconductor industry, which industry is
subject to sudden, extreme, cyclical variations in product supply and demand.
Since late 2000, the semiconductor industry has been in a cyclical downturn
characterized by reduced demand for products, lower average selling prices,
reduced investment in semiconductor capital equipment and other factors all of
which have resulted in lower sales and earnings for our business. The timing,
length and severity of these cycles are difficult to predict. In some cases,
these cycles have lasted more than a year. The latest downturn has lasted
longer than past cycles and, although conditions in the industry improved in
the fourth quarter of 2003, the market remains volatile and hard to predict.
Semiconductor manufacturers in the past have contributed to the severity of
these cycles by not properly gauging market conditions and have in the past
made untimely capital expenditures, over-investing or under-investing. Such
downturns may have a material adverse effect on our business, financial
condition and results of operations to the extent that we are unable to respond
effectively to these industry cycles.

     Downturns in the semiconductor industry often occur in connection with, or
anticipation of, maturing product cycles and declines in general economic
conditions. Industry downturns


                                      -8-
<PAGE>

have been characterized by reduced demand for semiconductor devices and
equipment, production over-capacity and a decline in average selling prices.
During a period of declining demand, we must be able to quickly and effectively
reduce expenses and motivate and retain key employees. Our ability to reduce
expenses in response to any downturn in the semiconductor industry is limited
by our need for continued investment in engineering and research and
development and extensive ongoing customer service and support requirements. In
addition, the long lead time for production and delivery of some of our
products creates a risk that we may incur expenditures or purchase inventories
for products, which we cannot sell. During periods of extended downturn, a
portion of our inventory may be written down if it is not sold. No assurance
can be given that any future downturns in the semiconductor industry will not
be as or more severe than in the past, or that our results of operations or
financial condition will not be materially and adversely affected by such
downturns or other developments in these industries.

     Industry upturns have been characterized by fairly abrupt increases in
demand for semiconductor devices and equipment and insufficient production
capacity. During a period of increasing demand and rapid growth, we must be
able to quickly increase manufacturing capacity to meet customer demand and
hire and assimilate a sufficient number of additional qualified personnel. Our
inability to quickly respond in times of increased demand could harm our
reputation and cause some of our existing or potential customers to place
orders with our competitors rather than us.

     In addition, the semiconductor industry has been highly cyclical from
quarter to quarter and as a result our operating results can fluctuate from
quarter to quarter, which could negatively impact our business and our stock
price. For a detailed summary of historical semiconductor industry performance,
see "Item 4. Information on the Company--Industry Background--The Semiconductor
Market".

Our customer concentration may adversely affect our profitability.

     The semiconductor manufacturing industry is highly concentrated, with a
relatively small number of large semiconductor manufacturers worldwide
accounting for a substantial portion of the purchases of semiconductor test
handling equipment. We are heavily dependent on several major customers,
including Hynix Semiconductor Inc. (formerly Hyundai Electronics Industries
Co., Ltd.) and Samsung Electronics Co., Ltd., both Korean companies, SanDisk
Corporation and Infineon Technologies AG. In the SMD placement systems
industry, mechatronics companies including E-Pro Co., Ltd., CS Tech Co., Ltd.
and WeTech Co., Ltd. are our major customers in Korea. SanDisk Corporation is
the world's largest supplier of flash memory data storage card products and
Infineon is a leading innovator in the international semiconductor industry.

     Although one of our strategies is to expand our domestic customer base and
increase our overseas sales to reduce our reliance on a few large customers,
such customers will likely remain important customers for the foreseeable
future. Financial difficulties of any of these customers, the loss of any of
these customers or a reduction in orders or sales by any of these customers
would have a material adverse effect on our business, financial condition and
results of operations.

Our products may become obsolete as a result of rapid technological change in
semiconductor related industries.


                                      -9-
<PAGE>

     The semiconductor industry and the semiconductor equipment manufacturing
industry are subject to rapid technological change and new product
introductions and enhancements. Our ability to remain competitive will depend
in part upon our ability to develop new products and to introduce these
products at competitive prices and on a timely and cost effective basis. Our
success in developing new and enhanced products depends upon a variety of
factors, including:

     o    timely and efficient completion of product design;

     o    timely and efficient implementation of manufacturing and assembly
          processes;

     o    enhancement of product performance; and

     o    effective sales and marketing.

     Since new product development commitments must be made well in advance of
sales, we must anticipate both future demand and the technology that will be
available to supply that demand. Furthermore, introductions of new and complex
products typically involve a period in which we identify design, engineering
and reliability issues. While we believe that we have the technological
resources and ability to identify these issues, manage technological advances
in the industry and, in many instances, improve upon that technology, future
improvements in semiconductor design and in manufacturing technology may make
our products obsolete.

We may not be able to increase our market share because certain of our
competitors are more established than we are in some of our key and target
markets.

     We seek to increase sales of our products in Korea, other Asian markets,
the United States and Europe. Since certain of our competitors already operate
in these key markets, many of whom have greater resources than we do, we may
not be able to compete effectively for market share in such markets.

     Some of our major competitors have the following advantages:

     o    greater name recognition;

     o    more diversified product lines;

     o    larger customer bases; and

     o    significantly greater financial, technical and marketing resources.

     As a result, as compared with us, they may be able to:

     o    better withstand downturns in our key markets;

     o    adapt more quickly to new or emerging technologies or changes in
          customer requirements; and

     o    market, sell and support their products more effectively.

                                     -10-

<PAGE>

     Our inability to compete effectively in such markets and increase sales
and market share in such markets will likely have a material adverse effect on
our financial condition and results of operations.

Our new products and new business lines may not be successful.

     Our strategies entail expanding the range of our products, as well as
widening our customer base in the Asia Pacific region, the United States and
Europe. Our ability to implement these strategies will depend upon our use of
our core competencies to develop new products and market them successfully both
in and outside of Korea. We have expanded our core product offerings to include
flash card specialized handler products, SMD placement systems and Information
Technology related products and services. Through our subsidiary, SoftForum
Co., Ltd., we have developed and have begun selling security solutions for on
line banking, trading and electronic commerce. Although SoftForum has
PKI-oriented solutions which we believe are technologically advanced in the
area of infrastructure design and system integration, SoftForum's competitors
may introduce a new technology and may have greater resources to compete in its
market. Although we have accumulated several years of experience, our
Information Technology and software security solutions business lines are
relatively new businesses for us and we may not have the necessary market know
how or the operating and managerial experience to compete in these markets. See
"Item 4 --Information on the Company--Business Overview--Information Technology
Businesses and On line Solutions". No assurance can be given that any of these
products or businesses or any future products or businesses developed by us
will be accepted by the market and be profitable or that we will be able to
find suitable markets with sufficient demand for our products. The failure of
one or more of these products or business lines could have a material adverse
effect on our business, results of operations and financial condition.

We may have significant amounts of uncollected and uncollectable trade accounts
receivable.

     In order to penetrate new markets and build market share quickly, in
particular the SMD placement systems market beginning in 1999, we offered
longer payment periods to our customers. To increase our market share in the
SMD placement systems market, we also provided credit to customers whose credit
was not as strong as our semiconductor test handler customers. Although we have
recently begun to control credit quality, the amount of our uncollected and
uncollectable trade accounts have continued to rise. We had total outstanding
trade accounts receivable of Won 33,965 million and Won 40,589 million as of
December 31, 2002 and 2003, respectively. As a result of such marketing efforts
and due to the weakness in the markets in which we operate, we have experienced
significant uncollected and uncollectable trade accounts receivable. Our
allowance for doubtful accounts increased from Won 14,323 million in 2002 to
Won 17,415 million in 2003. See "Item 4--Information on the Company--Business
Overview--SMD Placement Systems--Sales and Marketing." No assurance can be
given that we will not have to extend credit terms in the future in order to be
competitive or as a result of deteriorating economic conditions.

We may hold excess raw material and product inventories.

     We had inventories of Won 9,664 million as of December 31, 2003. This was
a decrease of 56.6%, or Won 12,597 million, from Won 22,261 million as of
December 31, 2002 resulting from our adoption of a new inventory management
system in 2002. Generally, we make advance purchases of raw material
inventories for the production of SMD placement


                                     -11-

<PAGE>

systems and advance manufacturing of SMD placement systems in order to reduce
the time required for delivery to meet our projected customer demand on a
timely basis. We may misjudge the size of raw material and product inventories
needed, and thereby hold excess and unusable inventories, which are expensed as
inventory valuation losses. We reported Won 12,428 million of loss from loss in
valuation of inventories in 2003, which was a 39.1% decrease from Won 20,409
million in 2002. Our financial condition and results of operations would be
adversely affected if we were unable to maintain adequate inventory level or if
there were significant increases in the costs of raw materials or problems with
the quality of these raw materials.

Market prices for our products may decline in the future.

     We anticipate that market prices for our main products may decline in the
future due to intensified competition. We expect that significant competition
among local and international companies, including from new entrants, may
continue to drive equipment prices lower. In the past few years, average prices
for certain models of our SMD placement systems have declined 5-10%, which we
attribute in part to the contraction in this industry as well as increased
competition. We also expect that there may be increases in promotional spending
by companies in our industry that would also contribute to increasing movement
of customers between competitors. Such increased competition and the resulting
decline of market prices for our products would have a material adverse effect
on our business, financial condition and results of operations.

We have only limited experience in providing Information Technology related
products and services.

     Our future success may be dependent on the success of our Information
Technology related products and services. If we are unable to successfully
establish and expand these businesses, we may lose market share to competitors
who are more successful.

     The success of our (including our subsidiaries') Information Technology
related businesses depends on a variety of factors, including:

     o    our ability to establish electronic commerce and licensing
          relationships and other strategic alliances;

     o    the quality and reliability of our Internet products and services and
          our network infrastructure;

     o    our ability to develop new products and services superior to that of
          our competitors;

     o    our pricing policies and the pricing policies of our competitors;

     o    our ability to introduce new products and services before our
          competitors;

     o    the success of our advertisements for our products and services; and

     o    general economic trends.

     Our inability to grow and make profitable our Information Technology
business may have an adverse effect on our business, financial condition and
results of operations.


                                     -12-

<PAGE>

The recent slowdown in the Information Technology industry may cause
bankruptcies or significant losses in some or all of our Information Technology
related investments.

     We have made significant investments in Information Technology businesses.
We hold a greater than 20% stake in four subsidiaries and affiliates engaged in
Information Technology related businesses. See "Item 4--Information on the
Company--Business Overview--Information Technology Businesses and On line
Solutions". During the last three years, we sustained losses from several of
our Information Technology related investments. Due to the difficult market
conditions currently prevailing in the information technology industry, there
is a possibility that some of the Information Technology related companies in
which we have invested may continue to sustain a large amount of losses or
eventually become insolvent. In such a case, the value of our equity in these
subsidiaries would decline.

Our Information Technology related businesses depend on the growth and
maintenance of the Internet infrastructure.

      The success of our Information Technology related businesses will depend
on the continued growth and maintenance of the Internet infrastructure. This
includes maintenance of a reliable network backbone with the necessary speed,
data capacity and security for providing reliable Internet services. Internet
infrastructure may be unable to support the demands placed on it if the number
of Internet users continues to increase, or if existing or future Internet
users access the Internet more often or increase their bandwidth requirements.
In addition, viruses, worms and similar programs may harm the performance of
the Internet. The Internet has experienced a variety of outages and other
delays as a result of damage to portions of its infrastructure, and it could
face outages and delays in the future. These outages and delays could reduce
the level of Internet usage as well as our ability to provide our solutions,
which could hinder the performance of our Internet related investments.

The Information Technology industry's standards and technology are evolving.

     Our future success may depend upon our ability to enhance our existing
Information Technology related products and services and to develop new
products and services that meet changing customer requirements. The Information
Technology market is characterized by rapidly changing technology, evolving
industry standards, intense competition and frequent new product and service
introductions. No assurance can be given that we can successfully identify new
opportunities and develop and bring new Information Technology related products
and services to market in a timely manner or that our products or services will
be competitive and meet market expectations and demand. Also, we can give no
assurance that we will have the necessary resources to obtain advances in
technology necessary to remain competitive.

     The announcement or introduction of new products or services by us or our
competitors and any change in industry standards could cause customers to defer
or cancel purchases of existing products or services, which could have a
material adverse effect on our business, financial condition and results of
operations. The failure by us to anticipate the prevailing standards, or the
failure of common standards to emerge, could have a material adverse effect on
our business, financial condition and results of operations. In addition,
services or technologies developed by others could render our services or
technology uncompetitive or obsolete.

We may not be able to manage our growth into new products, new product lines
and new markets.


                                     -13-

<PAGE>

     Our diversification and expansion strategy may place strains on our
administrative, operational and financial resources and affect our
competitiveness. Such expansion will increase responsibilities placed upon
management personnel and will require development or enhancement of
operational, managerial and financial systems and controls. If we are unable to
effectively manage the expansion of our mechatronics product lines and the
integration of our Information Technology businesses and security solutions
into our operations, our business, financial condition and results of
operations will likely be adversely affected. Our diversification and expansion
strategy may also require that we hire additional administrative, sales and
marketing personnel, which would increase overall expenses and make it more
difficult to maintain our simplified decision making process.

Our operating results may fluctuate due to the seasonality of our sales of
semiconductor test handlers and SMD placement systems.

     Our business has been seasonal and our sales have typically been higher in
the second half of the year as a result of our semiconductor manufacturing
customers making more of their capital expenditures decisions during such
period. In addition, our operating results may fluctuate considerably from
quarter to quarter. Changes in the nature or level of customer orders or a
particularly large customer order or customer cancellation in any particular
quarter could cause significant variations in our revenues. For instance, for
our handlers, our major customers typically provide to us the specifications
needed for their orders. Our success may be dependent upon our ability to
mobilize our various divisions to manufacture products to meet our customers'
customization and volume demands in a timely and cost efficient manner and, if
we are unable to do so, our results will be adversely affected.

     Normally, we deliver our handlers between 1 1/2 and 3 1/2 months after we
receive an order. During these lead times, customers may modify or cancel their
orders due to their own changing technology or for various other reasons,
including economic downturns. The volume and timing of orders placed by our
customers vary due to fluctuations in product demand, the development of new
semiconductor devices and other microeconomic and macroeconomic factors.
Likewise, customers may misinterpret the marketplace direction and incorrectly
indicate to us the future customization or volume demand for a particular
product. Although our entry into the SMD placement system industry has reduced
our dependence on our semiconductor test handler sales, changes in the volume
of customer orders could have a material effect on our profitability, in part
because of the fixed costs associated with our handler product line and because
the volume of customer orders affects the utilization rate of our equipment,
labor and other overhead costs.

Our sales and results may be adversely impacted by worldwide economic downturns.

     Our sales and results are increasingly linked to worldwide economic
trends, especially economic downturn in the United States, the European Union,
Japan and Asia. The economic downturn in Asia in 1998 had a negative effect on
the worldwide semiconductor market and made semiconductor and end-user market
requirements more difficult to predict. The deterioration of the economic
conditions in 2001 and 2002 in the United States and in most economically
developed countries has been negatively impacting the semiconductor market
since 2001. According to industry data provided by Worldwide Semiconductor
Trade Statistics (WSTS) Inc., following a growth of 36.8% in 2000, the
semiconductor market declined by 32% in 2001 and increased by a mere 1.3% in
2002. Economic downturn and uncertainties worldwide may have a material adverse
effect on our customers' business,


                                     -14-

<PAGE>

which will likely reduce demand for our products. See "--Risks Relating to
Korea--Our businesses may be adversely affected by developments affecting the
Korean economy."

Infringement of our intellectual property rights could negatively impact our
results of operations.

     Our success is dependent in part on our technology and our ability to
continue to use our technology as well as our ability to obtain from third
party sources technology used in our business. We rely on a combination of
contractual rights and patent, copyright, trademark and trade secret laws to
establish and protect proprietary rights in our technology. If we are unable to
establish or protect these rights in the domestic and international markets in
which we compete, our competitors may be able to use our intellectual property
to compete against us in such markets. This could limit our growth and
adversely affect our operating results. The laws of certain countries in which
our products are distributed do not protect our products and intellectual
property rights to the same extent as the laws of the United States and Korea.
Accordingly, effective patent, copyright and trademark protection may be
unavailable in certain foreign countries.

     It is possible that no additional patents will be issued to us or any of
our affiliates. In addition, our issued patents and trademarks may not prevent
other companies from competing with us. Furthermore, although we maintain
confidentiality agreements with many of our employees to limit disclosure or
use of any information obtained as a result of an employee's position with us,
these employees may leave us or may be terminated by us at any time, and no
assurance can be given that an employee will not misappropriate our proprietary
information or that the Korean courts will enforce our rights under the
confidentiality agreements. We cannot guarantee that any of the foregoing
measures will discourage others from misappropriating our technology or
independently developing similar technology.

     We also rely on, through contracts, purchases and other means, the
intellectual property rights of others in our business. The inability to obtain
commercially reasonable terms on such intellectual property or the threat by a
third party of intellectual property right infringement may have a material
adverse effect on our business and results of operations. Intellectual property
rights in Korea may not be as extensive as those in the United States or
elsewhere. Additionally, a Korean court may apply a less strict enforcement
standard and/or award a smaller amount of damages than a U.S. court. The laws
of other countries may not protect our intellectual property as vigorously as
in the United States or Korea. An adverse outcome in any dispute could subject
us to significant liabilities, require us to cease manufacture, sales and
shipments of products or our use of processes requiring the relevant
technologies or alter the design of our products or make it necessary for us to
obtain licenses from third parties. Litigation could also adversely affect our
sales of the challenged product and divert the efforts of our technical and
management personnel, whether or not such litigation is resolved in our favor.
We do not believe that we have infringed on the intellectual property rights of
any third party.

We are controlled by a major shareholder.

     Moon Soul Chung, founder and former President, Chief Executive Officer and
Chairman of the Board of Directors of the Company, together with his family
members, beneficially owns approximately 13.86% of our outstanding common
stock, on a fully diluted basis as of December 31, 2003. See "Item
6--Directors, Senior Management and Employees--Share Ownership." Accordingly,
Mr. Chung may be able to influence the composition and


                                     -15-

<PAGE>

decisions of our Board of Directors and shareholder votes relating to certain
types of decisions and transactions, including those involving an actual or
potential change of control.

We rely on key personnel.

     As is common in the semiconductor and related industries, success depends
to a significant extent upon our key senior executives and research and
development, engineering, marketing, sales, manufacturing, support and other
personnel. Our success also depends upon our ability to continue to attract,
retain and motivate qualified personnel. The competition for such employees is
intense, and the loss of the services of any of these key personnel without
adequate replacement or the inability to attract new qualified personnel could
have a material adverse effect on us. Although we have "key man" life insurance
for all executive officers, the loss of the services of key personnel or the
inability to attract additional qualified personnel could have a material
adverse effect on our business, financial condition and results of operations.

We may be classified as a passive foreign investment company for United States
federal income tax purposes, which could result in negative tax consequences to
you.

     Since we presently hold a significant amount of short term investments and
other passive assets, including cash, and as we anticipate that we will
continue to hold a significant amount of passive assets, there is a risk that
we will be classified as a passive foreign investment company (a "PFIC") for
United States federal income tax purposes. If we are classified as a PFIC for
the current or any future taxable year, a U.S. Holder (as defined in "Item
10--Additional Information--Taxation--United States Federal Income Tax
Considerations") of ADSs or common stock generally would, upon certain
distributions by us with respect to the ADSs or common stock or upon a
disposition of the ADSs or common stock by the U.S. Holder, be treated as if
the distribution or gain had been recognized ratably over the U.S. Holder's
holding period for the ADSs or common stock during which we were a PFIC, and
the U.S. Holder would be liable for: (i) tax thereon, computed at ordinary
income rates for any taxable year prior to the first taxable year in which we
are classified as a PFIC, and at the highest applicable rate in effect for the
U.S. Holder for each taxable year beginning with the first taxable year in
which we are classified as a PFIC (other than the current taxable year) and
(ii) an interest charge on the tax attributable to taxable years beginning with
the first taxable year in which we are classified as a PFIC (other than the
current taxable year). Certain aspects of this adverse tax treatment, however,
may be avoided by a U.S. Holder who makes a "mark to market" election. See
"Item 10--Additional Information--Taxation--United States Federal Income Tax
Considerations" for a more detailed discussion of the United States federal
income tax consequences of our classification as a PFIC and the tax
consequences of the mark to market election. Each prospective investor is urged
to consult his or her tax advisor regarding the application and the effect of
the PFIC rules in connection with the purchase, ownership and disposition of
ADSs or common stock.

Becoming an investment company would preclude us from making subsequent
offerings.

     While we believe we are not an investment company, as defined in the U.S.
Investment Company Act of 1940, as amended, and we do not intend to become an
investment company. To the extent we acquire additional investment securities
as the result of which the value of our total investment securities exceeds 40%
of the value of our total assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis, we could become an investment company.
If we became an investment company, we would be precluded from raising
additional capital in the United States.


                                     -16-

<PAGE>

Risks Relating to Korea

Our businesses may be adversely affected by developments affecting the Korean
economy.

     We are dependent to a large extent on sales of our products to Korean
companies. As a result, our future performance will depend in large part on
Korea's economic growth and stability. Adverse developments in Korea's economy
or in political or social conditions in Korea may have an adverse effect on our
results of operations, which could have an adverse effect on our business.

     In 1997 and 1998, Korea experienced a significant increase in the number
and size of companies filing for corporate reorganization and protection from
their creditors. As a result of these corporate failures, high levels of
short-term foreign currency borrowings from foreign financial institutions and
the non-market oriented factors in making lending decisions, Korea's financial
institutions experienced a sharp increase in non-performing loans and a
deterioration in their capital adequacy ratios. These developments led to a
substantial increase in the number of unemployed workers, reducing the
purchasing power of consumers in Korea. These developments also led
international credit rating agencies to downgrade the credit ratings of Korea
and various companies and financial institutions in Korea to below investment
grade, although Standard & Poor's, or S&P, and Moody's raised the credit rating
of Korea back to investment grade levels in early 1999. The current long-term
foreign currency rating of Korea by S&P is A- and the current foreign currency
rating on bond obligations of Korea by Moody's is A3. Prompted by heightened
security concerns stemming from nuclear weapons program of Democratic People's
Republic of Korea, or North Korea, Moody's changed the outlook on the long-term
ratings of Korea from positive to negative in February 2003.

     Although the Korean economy began to experience a recovery in 1999, the
pace of the recovery has since slowed and has been volatile. The economic
indicators in 2001, 2002 and 2003 have shown mixed signs of recovery and
uncertainty, and future recovery or growth of the economy is subject to many
factors beyond our control. Events related to terrorist attacks in the United
States that took place on September 11, 2001, recent developments in the Middle
East, including the war in Iraq, higher oil prices, the general weakness of the
global economy and the outbreak of severe acute respiratory syndrome, or SARS,
in Asia and other parts of the world have increased the uncertainty of world
economic prospects in general and continue to have an adverse effect on the
Korean economy. Any future deterioration of the Korean economy would adversely
affect our financial condition and results of operations.

     Furthermore, in March 2003, SK Global (which subsequently changed its name
to SK Networks Co., Ltd.), an affiliate of Korea's third largest conglomerate,
the SK group, was charged with an accounting fraud. The SK Global scandal
caused temporary disruptions to the financial market as interest rates soared
and investors withdrew their funds from investments in bonds and commercial
papers issued by SK Global. In addition, the Korean labor market experienced
several labor disturbances in 2003, including the strike led by the Korean
Cargo Workers Federation of the Korean Confederation of Trade Unions in May and
August 2003.

     The Korean economy in 2004 has been volatile and growth has been limited,
in part as a result of decrease in the domestic demand and deterioration in
consumer sentiment due to the record-high credit card and household debt, which
constrains any increases in consumption. In the political arena, the first half
of 2004 was fraught with political controversy caused by President Roh
Moo-Hyun's alleged breach of election laws, which eventually culminated in


                                     -17-

<PAGE>

an impeachment of the President by Korea's National Assembly on March 12, 2004.
President Roh's presidential powers were suspended for 64 days until the Korean
Constitutional Court revoked the impeachment in May 2004. Recent discussions
between governments of Korea and the United States about withdrawing the
American Forces stationed in Korea have become another factor of uncertainty
affecting the Korean economy.

     Developments that could hurt Korea's economy in the future include:

     o    financial problems relating to Korean conglomerates, or chaebols, or
          their suppliers, and their potential adverse impact on Korea's
          financial sector, including as a result of recent investigations
          relating to unlawful political contributions by chaebols;

     o    failure of restructuring of large troubled companies, including LG
          Card and other troubled credit card companies and financial
          institutions;

     o    adverse changes or volatility in foreign currency reserve levels,
          commodity prices (including oil prices), exchange rates (including
          depreciation of the U.S. dollar or Yen), interest rates and stock
          markets;

     o    increased reliance on exports to service foreign currency debts,
          which could cause friction with Korea's trading partners;

     o    adverse developments in the economies of countries such as the United
          States, China and Japan to which Korea exports, or in emerging market
          economies in Asia or elsewhere that could result in a loss of
          confidence in the Korean economy;

     o    the continued emergence of China, to the extent its benefits (such as
          increased exports to China) are outweighed by its costs (such as
          competition in export markets or for foreign investment and the
          relocation of the manufacturing base from Korea to China);

     o    social and labor unrest or declining consumer confidence or spending
          resulting from lay-offs, increasing unemployment and lower levels of
          income;

     o    another widespread outbreak of severe acute respiratory syndrome, or
          SARS, or any similar contagion, in Asia and other parts of the world;

     o    a decrease in tax revenues and a substantial increase in the Korean
          government's political uncertainty or increasing strife among or
          within political parties in Korea; and

     o    political uncertainty or increasing strife among or within political
          parties in Korea; and

     o    a deterioration in economic or diplomatic relations between Korea and
          its trading partners or allies, including such deterioration
          resulting from trade disputes or disagreements in foreign policy.

     Any developments that could adversely affect Korea's economic recovery
will likely also decrease demand for our products and adversely affect our
financial condition and results of operations.


                                     -18-

<PAGE>


Depreciation of the value of the Won against the U.S. dollar and other major
foreign currencies may have a material adverse effect on our results of
operations and on the prices of our common stock and the ADSs.

     All of our revenues are denominated in Won. Depreciation of the Won may
materially affect our results of operations because, among other things, it
causes:

     o    an increase in the amount of Won required by us to make interest and
          principal payments on our foreign currency-denominated debt, which
          accounted for approximately 45% of our total consolidated long-term
          debt, including current portion, as of December 31, 2003; and

     o    an increase in Won terms, of the costs of equipment that we purchase
          from overseas sources which we pay for in U.S. dollars or other
          foreign currencies.

     Fluctuations in the exchange rate between the Won and the U.S. dollar will
affect the U.S. dollar equivalent of the Won price of the shares of our common
stock on the Korea Stock Exchange. These fluctuations also will affect the
amounts a registered holder or beneficial owner of ADSs will receive from the
ADR depositary in respect of:

     o    dividends, which will be paid in Won to the ADR depositary and
          converted by the ADR depositary into U.S. dollars;

     o    the U.S. dollar value of the proceeds that a holder will receive upon
          sale in Korea of the shares; and

     o    the secondary market price of the ADSs.

Increased tensions with North Korea could have an adverse effect on us and the
prices of our common stock and the ADSs.

     Relations between Korea and North Korea have been tense over most of
Korea's history. The level of tension between Korea and North Korea has
fluctuated and may increase or change abruptly as a result of current and
future events, including ongoing contacts at the highest levels of the
governments of Korea and North Korea and increasing hostility between North
Korea and the United States. In December 2002, North Korea removed the seals
and surveillance equipment from its Yongbyon nuclear power plant and evicted
inspectors from the United Nations International Atomic Energy Agency, and has
reportedly resumed activity at its Yongbyon power plant. In January 2003, North
Korea announced its intention to withdraw from the Nuclear Non-Proliferation
Treaty, demanding that the United States sign a non-aggression pact as a
condition to North Korea dismantling its nuclear program. In August 2003,
representatives of Korea, the United States, North Korea, China, Japan and
Russia held multilateral talks in an effort to resolve issues relating to North
Korea's nuclear weapons program. While the talks concluded without resolution,
participants in the August meeting indicated that further negotiations may take
place in the future and, in February 2004, six party talks resumed in Beijing,
China. Any further increase in tensions, resulting for example from a
break-down in contacts or an outbreak in military hostilities, could hurt our
business, results of operations and financial condition and could lead to a
decline in the market value of our common stock and the ADSs.

Korea's new legislation allowing class action suits related to securities
transactions may expose us to additional litigation risk.


                                     -19-

<PAGE>

     A new law enacted on January 12, 2004 allows class action suits to be
brought by shareholders of companies listed on the Korea Stock Exchange
(including us) for losses incurred in connection with purchases and sales of
securities and other securities transactions arising from (i) false or
inaccurate statements provided in registration statements, prospectuses,
business reports and audit reports; (ii) insider trading and (iii) market
manipulation. This law would become effective starting from January 1, 2005,
provided that class action suits with respect to item (i) above against
companies whose total assets are less than Won 2.0 trillion as of the end of
the fiscal year immediately preceding January 1, 2005 will become effective
from January 1, 2007. This law permits 50 or more shareholders who collectively
hold 0.01% of the shares of a company to bring a class action suit against,
among others, the issuer and its directors and officers. It is uncertain how
the courts will apply this law. Litigation can be time-consuming and expensive
to resolve, and can divert management time and attention from the operation of
a business. We are not aware of any basis under which such suit may be brought
against us, nor are any such suits pending or threatened. Any such litigation
brought against us could have a material adverse effect on our business,
financial condition and results of operations.

Risks Relating to the ADSs

Liquidity of our ADSs may be limited.

     Our ADSs were first quoted for trading on The Nasdaq National Market on
November 17, 1999 under the symbol "MRAE" and we issued new ADSs on February
17, 2000. An active market for our ADSs has not yet developed and trading
volumes of our ADSs in The Nasdaq National Market remain low. There can be no
assurance that an active market will develop or, if such a market does develop,
that it will continue.

An investor in our ADSs may not be able to exercise preemptive rights for
additional shares and may suffer dilution of his equity interest in us.

     The Korean Commercial Code and our articles of incorporation require us,
with some exceptions, to offer shareholders the right to subscribe for new
shares in proportion to their existing ownership percentage whenever new shares
are issued. If we offer any rights to subscribe for additional shares of our
common stock or any rights of any other nature, the ADR depositary, after
consultation with us, may make the rights available to an ADS holder or use
reasonable efforts to dispose of the rights on behalf of the ADS holder and
make the net proceeds available to the ADS holder. The ADR depositary, however,
is not required to make available to an ADS holder any rights to purchase any
additional shares unless it deems that doing so is lawful and feasible and:

     o    a registration statement filed by us under the U.S. Securities Act of
          1933, as amended, is in effect with respect to those shares; or

     o    the offering and sale of those shares is exempt from, or is not
          subject to, the registration requirements of the U.S. Securities Act.

     We are under no obligation to file any registration statement with respect
to any ADSs. If a registration statement is required for an ADS holder to
exercise preemptive rights but is not filed by us, the ADS holder will not be
able to exercise his preemptive rights for additional shares. As a result, ADS
holders may suffer dilution of their equity interest in us.

Your ability to deposit shares with the Depositary and obtain ADSs may be
limited.


                                     -20-

<PAGE>

     Under current Korean laws and regulations, neither shares of our common
stock acquired in the open market nor shares withdrawn from the depositary
facility may be deposited or re deposited, as the case may be, in the
depositary facility without our consent. Although we have in the past consented
to such deposit unless such deposit was prohibited by Korean law or violated
our Articles of Incorporation, no assurance can be given that we will always
consent to the deposit of such shares.

As a holder of ADSs, you will have fewer rights than a shareholder has and you
will have to act through the Depositary to exercise those rights.

     The rights of shareholders under Korean law to take actions, including
voting their shares, receiving dividends and distributions, bringing derivative
actions, examining our accounting books and records and exercising appraisal
rights, are available only to holders of record. Since the Depositary, through
Korea Securities Depository, is the holder of record of the shares underlying
the ADSs, only the Depositary can exercise those rights in connection with the
deposited shares. The Depositary will, if we ask it to, make efforts to vote
the shares underlying your ADSs as instructed by you and will pay to you the
dividends and distributions collected from us. However, in your capacity as an
ADS holder, you will not be able to bring a derivative action, examine our
accounting books and records or exercise appraisal rights. Furthermore, we may
not ask the Depositary to solicit your instructions on how to vote. If you
surrender your ADSs and take delivery of the underlying shares, you can
exercise all the rights of a shareholder, including voting your shares.
However, you may not be informed of events affecting shareholders sufficiently
in advance.

ITEM 4.   Information on the Company

A.        History and Development of the Company

General

     Our legal and commercial name is Mirae Corporation. Our registered office
is at 9-2, Cha Am-Dong, Chun An City, Chung Chong Nam-Do 330-200, Republic of
Korea and our telephone number is (8241) 621-5070.

     Mirae Corporation was founded as a sole proprietorship in 1983 and
incorporated as a limited liability company under the laws of Korea in December
1990. Shares of our common stock were listed on the Korea Stock Exchange on
November 2, 1996. Our ADSs were first quoted for trading on The Nasdaq National
Market on November 17, 1999 under the symbol "MRAE" and we issued new ADSs on
February 17, 2000.

     Since 1983, we have manufactured and sold lead frame magazines and
products related to machine tools, and after 1989, we diversified our product
line into semiconductor test handlers primarily for sale to domestic
semiconductor manufacturers. Handlers are specialized robotic machines used to
move devices during the testing phase of the semiconductor manufacturing
process. Since 1991, we have further diversified our handler product line to
include various models of memory test handlers, module test handlers, logic
test handlers, flash card test handlers and burn-in sorters. With improvement
of our handler product line, our research and development capability has become
the foundation of what we believe to be our core competencies: precision
mechanisms, intelligent control and machine vision. For the years ended
December 31, 2001, 2002 and 2003, sales of handlers accounted for 26.7%, 22.4%
and 46.5% of our total sales, respectively.


                                     -21-

<PAGE>

     In 1998, we designed and developed advanced surface mount placement
systems (SMD placement systems), which are machines that affix electronic
devices onto printed circuit boards, and TFT-LCD handlers and testers, which
are machines that handle and test a new generation of flat panel displays. In
1999, we began to sell these new product lines in Korea and worldwide. We
believe that our semiconductor handler products and SMD placement systems are
among the most advanced products in the industry. For the years ended December
31, 2001, 2002 and 2003, SMD placement systems became our major product,
accounting for 30.4%, 36.5% and 20.2% of our total sales, respectively.

     Beginning in 1999, we started to establish and invest in Information
Technology related companies and joint ventures that focus on the development
of Information Technology services in Korea.

Corporate Restructuring

     When the general economy, in particular, the semiconductor industry and
related markets, experienced a significant downturn in 2001 through 2003, we
undertook a strategic corporate restructuring process in order to reduce our
risks related to such downturn and to focus on our core competencies as well as
our mechatronics businesses. We completed the following steps as part of our
corporate restructuring process:

     o    To reduce the Company's expenses, we downsized the number of
          employees by 43.6%, or 227 employees, to 294 in 2003 from 521
          employees in 2000. As of December 31, 2001, 2002 and 2003, the total
          number of our employees was 324, 296 and 294, respectively. As of
          March 31, 2004, the Company had a total of 280 employees.

     o    To focus on our core competencies as well as our mechatronics
          businesses that would enhance our semiconductor test handler and SMD
          placement system businesses, we sold our investments in certain
          Information Technology related businesses that had been experiencing
          losses. In August 2002, through issuing new shares of SK
          Communications Corporation (formerly Lycos Korea) to SK Telecom Co.,
          Ltd. for cash, our ownership decreased from 43.25% to 4.54%. In
          addition, by exercise of our appraisal right as a dissenting
          shareholder upon SK Communication's agreement to merge with Cyworld
          Inc., we disposed fully our remaining 6,836,690 shares of SK
          Communications on June 13, 2003. As a result of such disposal, we
          recorded gain on disposal of available-for-sale securities of Won
          26,940 million.

     o    We divested our Kang-nam Mirae building, which had been used for our
          non-mechatronics operations, for Won 60 billion on May 24, 2002.

     o    On August 1, 2001, we transferred our TFT-LCD test handler division
          to Display Equipment & Total Solutions Co., Ltd. ("DE&T"), which was
          our affiliate in 2001, for Won 825 million.

Capital Expenditures

     Our capital expenditures in 2001 was Won 23,593 million, primarily for the
establishment of the Mirae Research Center in Hwasung City at a cost of Won
17,421 million and for purchases of machinery, supplies and other items at a
cost of Won 6,172 million. Our capital expenditures in 2002 was Won 3,238
million, primarily for purchases of machinery, supplies and other items. Our
capital expenditures in 2003 was Won 22,669 million, primarily for the


                                     -22-

<PAGE>
acquisition of the land and building now housing Softforum Co., Ltd. in Seoul
City at a cost of Won 18,401 million and for purchases of machinery, supplies
and other items at a cost of Won 4,268 million.

     We estimate that we will spend approximately Won 10,000 million for
capital expenditures in 2004 for a range of projects, including primarily for
purchases of machinery, supplies and other items. We may also make additional
capital expenditure investments as opportunities arise. In addition, we may
increase, reduce or suspend our planned capital expenditure investments for
2004 or change the timing and area of our capital expenditure spending from the
estimates reflected above in response to market conditions or for other
reasons.

B.       Business Overview

     We design and manufacture mechatronics machines, including the
high-precision robotic parts and software that controls these robotic parts,
primarily for sale to the semiconductor manufacturing and PCB assembly
industries. Our product lines consist of semiconductor test handlers and their
components and SMD placement systems. In addition, we provide Information
Technology related services in Korea through our subsidiaries and joint
ventures and other strategic alliances with, and by making strategic
investments in, Information Technology related companies.

Competitive Strengths

     We believe that our principal products, such as handlers and SMD placement
systems, are among the most advanced and efficient in the industry. We
attribute this to our ability to combine our core competencies in mechatronics
with our process know-how in semiconductor manufacturing and PCB assembly and
inspection processes, together with our software design expertise.

Core Competencies in Mechatronics

     Our core competencies are concentrated in three mechatronics disciplines:
precision mechanism, intelligent control and machine vision.

Precision Mechanism

     Precision mechanism consists primarily of four sub-fields: structural
analysis and design, kinetic analysis and design, thermofluid analysis and
design and tribology.

     Structural Analysis. Structural analysis and design entails the
development of mechanical parts to achieve an optimized balance between high
rigidity and low weight.

     Kinetic Analysis. Kinetic analysis and design entails the analysis of the
dynamic characteristics of mechanical moving parts and their development to
maximize the speeds at which such parts operate and minimize the vibrations
which result from operating such parts at increasingly higher speeds.

     Thermofluid Analysis. Thermofluid analysis and design entails the analysis
of the effect of temperature on certain materials, the study of the
transmission of varying temperatures through these materials and the methods
used to control temperature and its related effects.


                                     -23-

<PAGE>

     Tribology. Tribology entails the study of the friction, wear and
lubrication of interacting surfaces in relative motion.

Intelligent Control

     Intelligent control consists primarily of five sub-fields: intelligent
process planning, optimal motion planning, precision control, high speed
control architecture and power electronics technology.

     Intelligent Process Planning. Intelligent process planning consists of the
development of software to manage certain manufacturing processes in order to
derive optimal work flow and process planning.

     Optimal Motion Planning. Optimal motion planning consists of the
development of software to determine optimal task sequencing to minimize
certain mechanical movements.

     Precision Control. Precision control consists of the development of
software to control the position, velocity, temperature, vibration and force of
mechatronic machinery.

     High Speed Control Architecture. High speed control architecture consists
of the development of microprocessors and application specific integrated
circuits (ASICs) based hardware to control and maintain the accuracy of
fast-moving components.

     Power Electronics Technology. Power electronics technology is used to
develop dedicated servo amplifiers designed to drive linear or rotary motors
for use in mechatronic products. Dedicated servo amplifiers may achieve higher
productivity at lower costs than general purpose servo amplifiers.

Machine Vision

     Machine vision consists primarily of three sub-fields: vision processing,
parallel processing architecture and the use of high precision vision
algorithms.

     Vision Processing. Vision processing consists of the development of ASICs
and supporting hardware for image processing at high speed.

     Parallel Processing. Parallel processing architecture consists of the
development of technology that enhances the speed and efficiency of
multi-tasking.

     High Precision Vision Algorithms. High precision vision algorithms are
used to develop formulae to calculate optimal positioning of items by taking
into consideration such factors as rotational angle and the center of gravity
of particular components, and to inspect the leads and balls of the electronic
devices.

Process Know-How

     In addition to our mechatronics core competencies, in order to manufacture
and improve upon our principal products, we require the know-how and
understanding of highly specialized engineering processes utilized by our
customers. We possess process know-how accumulated through experience and
research in areas of semiconductor handling during the testing phase and PCB
assembly and inspection. We believe that our core competencies in mechatronics,
along with our know-how and understanding of these processes, will enable us


                                     -24-

<PAGE>

to implement our Semiconductor test handler products and SMD placement systems
according to market standards.

Software Design Expertise

     In addition to our core competencies, we design software to control a
variety of functions in our mechatronics products and have developed expertise
in the following three key areas:

     o    real-time control software: a software program needed to implement
          control functions and to respond to signals in a synchronous manner;

     o    motion planning software: real-time operating system-based software
          that plans the movement of each robotic mechanism to complete a given
          task; and

     o    job planning software: a type of PC-based artificial intelligence
          software for planning the most efficient way for the end user to
          operate the production equipment.

     While our mechatronics engineers develop algorithms and formulae, our
software engineers design software to implement these algorithms and formulae.
This permits real-time feedback from various sensors within our mechatronics
machines to be processed and used. The ability to develop algorithms, formulae
and related software is necessary to design our high-quality mechatronics
machines. The close working relationship of our control and software engineers
enables us to develop and implement our software more efficiently and
effectively.

Principal Businesses

Mechatronics Business

Semiconductor Test Handlers

     General. Since 1989, we have designed and manufactured approximately 83
test handler models, including test handlers with minor modifications. We
currently design, manufacture and sell four categories of test handlers: memory
test handlers, memory module test handlers, logic pick-and-place test handlers
and burn-in loader/sorters. In developing and manufacturing these machines, we
are utilizing faster and more precise pick-and-place technology applied from
our development experience of SMD placement systems, which is one of our core
competencies.

     The following table sets forth information about our major test handler
models manufactured by us from 1998 to 2003:

<TABLE>
<CAPTION>
            Product                      Specifications                  Market focus              Year Introduced
--------------------------------------------------------------------------------------------------------------------
<S>                               <C>                            <C>                                   <C>
Memory test handler
MR5500.......................     32/64 device parallel          Pick-and-place type (TSOP,             1998
                                  testing; 7,200 UPH;            QFP, BGA, CSP, Memory
                                  Tri-temperature control;       cards); very short test
                                  Vertical docking               time; for fine pitch
                                                                 devices:  DRAM, Flash
                                                                 memories (SD, MMC)

MR5700.......................     128/64 device parallel         Pick-and-place type (TSOP,             2003
                                  testing (Dual test sites);     TQFP, BGA, CSP); very short
                                  9,000 UPH; Tri-temperature     test time; for fine pitch
</TABLE>


                                                          -25-

<PAGE>

<TABLE>
<CAPTION>

            Product                      Specifications                  Market focus              Year Introduced
--------------------------------------------------------------------------------------------------------------------
<S>                               <C>                            <C>                                   <C>
                                  control, Heat compensation     devices
                                  option, Vertical docking

Memory module test handler
MR7300.......................     8 device parallel testing;     Pick-and-place type (SIMM,             1998
                                  1,000 UPH; Dual-temperature    DIMM, RIMM)
                                  control; Vertical docking

MR7500.......................     16/8 device parallel           Pick-and-place type (SIMM,             2000
                                  testing; 2,000 UPH;            144 SODIMM, 168 DIMM, 184
                                  Tri-temperature control;       RIMM, 184 DDR-DIMM, 200
                                  Vertical docking               SODIMM, 232 DIMM); High-end
                                                                 applications
Logic Pick-and-place test handler
MR2700.......................     4/2/1 device parallel          Pick-and-place type (QFP,              2003
                                  testing (8 para:  option);     TQFP, TSOP, BGA, PGA, CSP)
                                  7,500 UPH; Dual -temperature
                                  control; Horizontal docking
Burn-in loader/sorter
MR9200.......................     Maximum throughput:  15,000    TSOP, fBGA                             2000
                                  UPH

</TABLE>

     Memory Test Handler. We began manufacturing memory test handlers in 1992,
and we believe we are currently one of the leading manufacturers of memory test
handlers in Korea. We started with a design based upon the vertical gravity
technology that was a common standard of the market more than 10 years ago. In
1997, we hired a group of senior engineers, who specialized in SMD placement
systems technology, from the LG Group of Korea for our research and development
division. As a result of research relating to SMD placement systems, we were
able to develop pick-and-place technology, which is more advanced than our
existing vertical gravity technology, and precision heat controlled chamber
technology. In 1998, using this new enhanced technology, we successfully
introduced our fastest memory test handler, MR5500, which is mostly suited for
the handling of flash memories due to its higher speed performance. MR5500 has
been continuously upgraded during the last five years in order to meet customer
demands. The same group of engineers later developed the 128 para memory test
handler with a fully closed loop heat compensation capability as an option.
This model was introduced to customers as MR5700 in 2003. Due to the limited
availability of 128 para testers in the market, the application of MR5700 has
been limited to DRAMs thus far. When 128 para testers for flash memories are
introduced to the market by tester manufacturers, we expect that applications
for MR5800, which is the fully upgraded version of MR5700, will significantly
increase in the future. In addition, each of our memory test handlers includes
a Microsoft Windows-based graphical user interface, which provides for easy
set-up, status monitoring and productivity analysis.

     Memory Module Test Handler. In introducing our first memory module test
handlers in 1995, we were one of the first companies to develop and manufacture
such machines. Since that time, we have maintained our position as one of the
leading suppliers of such handlers. Memory modules are used to expand memory
functions in computers and other IC-related products by combining multiple
memory ICs and placing the combined devices onto standardized PCBs. The
assembled nature of the memory module, as well as specific memory module tests,
require specialized memory module test handler design features.


                                     -26-

<PAGE>


     Each of our memory module test handlers applies a Microsoft Windows
NT-based graphical user interface. In addition, each of our memory module test
handlers utilizes pick-and-place technology and, in the case of the MR7500,
offers tri-temperature control ranges. Depending on the design specifications,
our memory module test handlers can conduct 16 modules simultaneously and, in
addition, can test under various temperature conditions and offer vertical
docking of loader trays.

     Logic Pick-and-place Test Handler. Although we had developed and
manufactured various non-memory test handlers, including logic pick-and-place
test handlers since 1989, we did not fully focus on this category as domestic
manufacturers are some of the largest manufacturers of DRAM. Since 2001,
however, we began focusing our research and development activity on developing
the next generation logic pick-and-place test handler because the overseas
market for logic pick-and-place handlers is a much bigger market with a larger
number of customers than the market for memory test handlers. As a result, we
introduced MR2700 in 2003.

     Burn-in Loader/Sorter. We began manufacturing burn-in sorters in 1997. Our
burn-in sorter, the MR9200, is used in the extensive reliability screening and
stress testing procedure of ICs known as "burn-in." The burn-in process screens
for early failures by operating the IC at elevated voltages and temperatures of
up to 125 degrees Celsius (257 degrees Fahrenheit) for periods typically
ranging from 12 to 48 hours. The MR9200 is a burn-in-board loading and
unloading handler. Before loading the devices into the burn-in-board, the
MR9200 performs certain basic functional tests. Combining a linear motor system
with pick-and-place technology, we believe the MR9200 is one of the fastest
sorters available, with a maximum throughput of 15,000 UPH. In responding to
various customer requirements for the handling of different devices, including
the BGA, on the burn-in-board, our research and development group has put their
efforts to developing advanced models, such as MR9210 and MR9220.

     Sales and Marketing. The following table shows sales volume and sales
value of the handlers manufactured and sold by us for each of the periods
indicated:


<TABLE>
<CAPTION>

                                                                 Year ended December 31,
                                         --------------------------------------------------------------------------
                                                2001                      2002                      2003
                                         --------------------------------------------------------------------------
                                         Units                     Units                     Units
               Model                     sold         Sales        sold         Sales        sold         Sales
-------------------------------------------------------------------------------------------------------------------
                                                                 (Sales in Won millions)
<S>                                           <C>       <C>             <C>       <C>          <C>          <C>
Memory test handlers..........                35   (won)8,683           17   (won)3,790        127     (won)32,275
Memory module test handlers...                 4          745            4        1,303          2             687
Logic pick-and-place test                     17        1,681            7          605          3             440
   handlers...................
Burn-in sorters...............                 -            -            8        3,334          7           2,631
Gravity handlers                               -            -            -            -          8             666
Handler components............                 -        7,309            -        5,401          -           7,485
                                         --------------------------------------------------------------------------
Total.........................                    (won)18,418           36  (won)14,433        147     (won)44,184
                                         ==========================================================================
</TABLE>

     In 2001, 2002 and 2003, the sales of our memory test handlers accounted
for 47.1%, 26.3% and 73.1% of total semiconductor equipment revenues,
respectively.

     Until 1998, we had focused our sales and marketing efforts for handlers in
the domestic market, with the vast majority of our sales being made to Samsung
Electronics Co., Ltd.


                                     -27-

<PAGE>

and Hynix Semiconductor Inc. However, as a result of the significant slowdown
in the semiconductor and related industries in 1998, we have started to
diversify customers and to develop and penetrate into the worldwide market. In
order to mitigate the decline in domestic sales volumes and to reduce our
dependence on major Korean semiconductor manufacturers, we redoubled our
marketing efforts outside Korea. Our sales volumes of handlers increased to 147
units in 2003 from 36 units in 2002, representing an approximately 300%
increase in volume, compared to sales in 2002. In the United States, Europe and
Southeast Asia, we increased our export sales of handlers from Won 7.3 billion
in 2002 to more than Won 21.1 billion in 2003. Our export sales were
significantly higher in 2003 compared with 2001 and 2002 primarily as a result
of the recovery of the flash memory market from the severe global downturn of
the semiconductor industry as well as the resumed capital expenditures of
Infineon Technologies AG. We expect that our export sales of test handlers will
increase further in the future and will be assisted by our marketing of our
logic pick-and-place test handlers, in particular, MR2700.

     We market and distribute our handlers in the domestic market through a
direct sales force comprised of three employees based at the Mirae Research
Center in Hwasung City. Outside of Korea, we market and distribute our handlers
through our worldwide sales team, which is based at the Mirae Research Center
in Hwasung City and consists of five sales personnel. In order to enhance our
marketing efforts in the United States and Europe, we established Mirae
America, Inc. in 2000. We also participate in trade shows, which provides us
with a forum for product demonstrations and gives us access to potential new
and existing customers. In addition, we market our handlers through
non-exclusive distribution arrangements with various international sales and
support agents, including agents in Taiwan, Singapore, Germany, Italy,
Malaysia, Brazil, Philippines, Japan, and the United States. Starting from
November of 2003, we sell and support our handlers directly in China through
sales and support agents, who have sold our handlers to more than 12 customers
worldwide in 2003.

     Customers. Our principal handler customers are one local DRAM manufacturer
and one US-based Flash Memory manufacturer. Hynix Semiconductor Inc. was our
largest customer in 2003 accounting for 39.1% of handler sales and Sandisk was
our second largest customer in 2003 accounting for 34.1% of handler sales. As
our export sales have increased, our customers have diversified and non-Korean
customers now represent a major portion of our handler sales. In 2003, our
export sales accounted for 49% of our total handler sales, comprised of
regional export sales for North America, Europe and Asia of 70.4%, 13.4% and
16.2%, respectively. In 2003, our major foreign customers, Sandisk and Infineon
Technologies AG, accounted for 34.1% and 9.4% of handler sales, respectively.
In 2002, these customers accounted for 3.0% and 33.6% of handler sales,
respectively.

     Competition. The mechatronics market is characterized by intense
competition, rapid technological and product changes, changing market
requirements and significant expenditures for product and market development.
In the handler market in particular, the principal competitive factors are
throughput, accuracy, reliability and price.

     We believe that we are well positioned to compete in the test handler
market due to our primary competitive advantages, including: (i) our
technological expertise stemming from our core competencies, (ii) our
established brand-name recognition, and (iii) our research and product
development, which we believe is among the most advanced in the industry. We
believe our ability to price our products competitively is due principally to
our core competencies, applied across our mechatronics products, and our
relatively horizontal organizational structure. There can be no assurance,
however, that we will be able to



                                     -28-

<PAGE>continue to compete in our markets, that we
will be able to expand our markets or that these markets will continue to grow.

     In the memory test handler market, we believe our primary competitors are
Advantest Corporation of Japan, Hitachi, Ltd. of Japan and Techwing of Korea.
In the logic pick-and-place test handler market, we believe our primary
competitors are Seiko-Epson of Japan, Delta Design of US and Synax of Japan.

     Seasonality. Our sales of test handlers tend to be concentrated in the
second half of each year because most overseas customers tend to place orders
for such handlers during the third quarter as many of such customers' fiscal
year ends in September of each year and most Korean customers tend to place
orders during the fourth quarter as many of such customers' fiscal year ends in
December of each year.

SMT Placement Systems

     General. In March 1999, Mirae began manufacturing surface mount technology
(SMT) component placement systems. SMT component placement systems are robotic
machines used for the high precision, high-speed placing of a broad range of
electronic components, such as resistors, capacitors and integrated circuits
(ICs), onto printed circuits boards (PCBs) used in computers,
telecommunications equipment, consumer electronic products, industrial
equipment, medical instruments, automotive systems, military systems and
aerospace systems.

     Based upon the definitions developed by the Japanese Robotics Association
(JARA) PROTEC Market Data Reporting Convention, SMT component placement
equipment can be divided into categories in relation to the types of components
the equipment is capable of placing onto PCBs and the size of the PCB that can
be processed. Chip shooters are used for the placement of small components,
such as resistors and capacitors, onto PCBs. Chip shooters are further
classified into three categories based on the type of placement head used,
turret type and non-turret type, and for non-turret type, the speed at which
they can place components, high-speed (more than 24,000 components per hour)
and mid-speed (less than 24,000 components per hour). The second category of
SMT component placement equipment is multi-functional placement systems. These
systems can place a full range of components, including ICs, onto PCBs.
Multi-functional component placement systems are further classified based on
the list price range of the system (high end - list price, which are generally
systems with list price exceeding US$150,000 and low end - list price, which
are generally systems with list price less than US$150,000).

     The following table shows the classification of Mirae's current SMT
component placement systems:

<TABLE>
<CAPTION>

              Current Mirae SMT Component Placement System Models

                                                                  Performance Specification
            Products                       Sub-Class                 (ICP-9850 Standard)           Year Introduced
---------------------------------------------------------------------------------------------------------------------
Chip Shooters


<S>                                <C>                         <C>      <C>                             <C>
MPS-1010.....................      Non-Turret High-Speed       Chips:   28,000 chips/hour               1999
                                   (Regular Board)
MPS-1010 Alpha...............      Non-Turret High-Speed       Chips:   27,500 chips/hour               2002
                                   (Large and Regular Board)
MPS-1025.....................      Non-Turret Mid-Speed        Chips:   14,000 chips/hour               2001
</TABLE>


                                                           -29-

<PAGE>

<TABLE>
<CAPTION>

                                                                  Performance Specification
            Products                       Sub-Class                 (ICP-9850 Standard)           Year Introduced
---------------------------------------------------------------------------------------------------------------------
<S>                                <C>                         <C>     <C>                          <C>

                                   (Regular Board)
Mx310........................        Non-Turret High-Speed     Chips:   32,000 chips/hour               2003
                                   (Large and Regular Board)

Multi-Functional

MPS-1020P....................      High End                    Chips:   15,500 chips/hour               1999
                                   (Regular Board)             ICs (QFP100): 1,500 ICs/hour
MPS-1020QP...................      High End                    Chips:   12,000 chips/hour               2001
                                   (Regular Board)             ICs:      5,500 ICs/hour
MPS-1020QP Alpha.............      High End                    Chips:   12,000 chips/hour               2002
                                   (Large Board)               ICs:      5,500 ICs/hour
MPS-1025P....................      Low End                     Chips:   11,000 chips/hour               2001
                                   (Regular Board)             ICs:      1,500 ICs/hour
Mx240........................      High End                    Chips:    9,000 chips/hour               2003
                                   (Large Board)               ICs:      5,600 ICs/hour
</TABLE>

     The table below shows the percentage of SMT component placement systems
sold worldwide in 2003 that each major type of system represents and the number
of machine models that we offer in each category.

<TABLE>
<CAPTION>

                     Coverage of Our Models with Respect to
              Percent of Total Worldwide Sales by Machine Category

                                                                         Percentage of Total       Number of Mirae
           Major Category                       Machine Type                Sales of 2003              Models
---------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                      <C>                     <C>
Chip Shooters                          Turret Type                                -                       -
                                       Non-Turret High Speed                     30%                      3
                                       Non-Turret Mid Speed                      27%                      2
Multi-Functional                       High End                                  14%                      4
                                       Low End                                   29%                      2
                                                                       -----------------------------------------------
Total                                                                           100%                     11
                                                                       ===============================================

</TABLE>


Source:  PROTEC Market Data Convention


     All of our SMT placement systems use linear motors to drive the X Y
gantries containing the heads that are used to pick-and-place the electronic
components. We believe that the use of linear motors allows higher speed and
reliability, as well as lower maintenance than the belt or screw driven systems
used by most of our competitors. Additionally, all of our SMT placement systems
use linear scales to position the gantries. The use of linear motors and linear
scales allows our placement systems to achieve speeds (or tact times) of up to
0.09 seconds per chip and accuracy of 0.065mm for chip type devices and 0.025
mm for fine-pitch IC type devices. The use of X Y gantries versus table
turret-type drive allows our placement systems to achieve a smaller system size
(footprint) while maintaining similar performance, which is an important factor
for many customers. Our Mx310, MPS-1010 and MPS-1010 Alpha systems contain two
X Y gantries while the remaining systems contain a single X Y gantry.

     The type of component placement head located on the X Y gantry determines
the type of component capable of being placed by the system. Our chip shooters
use multiple spindle modular heads containing four, six or eight chip type
spindles, while our multi-functional placement systems have one or more
precision heads that are used to place fine pitch ICs.


                                     -30-

<PAGE>

     Each of our SMT placement systems also includes a Mirae-designed and
manufactured vision system that permits inspection of components at high
speeds. All of our placement systems also use a common Microsoft Windows 2000
based graphical user interface that allows customers to mix multiple types of
placement systems in the same facility without having to retrain operators.

     We also design and manufacture a full line of accessories to support
component feeding on our placement systems. These accessories include
"intelligent" tape feeders that can reduce the miss-picking (loss) of parts and
enhance placement reliability and automated tray feeders for IC components.

     Many of the technologies used in our component placement systems have been
adapted from the technologies that we developed from our core competencies and
in the manufacturing of our semiconductor test handler products. We believe
these technologies will enable us to produce and sell SMT placement systems
that are among the most advanced in the industry.

         Market Description. The market for SMT placement equipment is
influenced by many factors and is presently undergoing many changes.

     SMT placement systems are used by two types of electronics manufacturers,
original equipment manufacturers (OEMs) who use the equipment to assemble PCBs
for use in their own systems, and electronics manufacturing services (EMSs) who
use the equipment to assemble PCBs for customers on a contract basis. During
the past few years, there has been a major shift from in-house assembly of PCBs
to the use of contract manufacturers to perform PCB assembly. When Mirae
entered the market in 1999, EMS-produced PCBs accounted for about 10% of the
total electronics market according to PROTEC Market Data Convention. Since
then, the growth rate of the revenues of EMSs has been roughly 30% per year,
accumulating to approximately a 17% share of the total electronics market in
2002 and is forecasted to grow to a 30% share by 2005 according to the same
source. The major factors driving this growth are that EMSs offer lower
production costs through a number of advantages, including lower labor costs,
superior competency, utilization improvement, economies of scale and business
risk mitigation. The placement equipment purchasing criteria used by OEMs and
EMSs often differs, with OEMs selecting the lowest cost component technology
and equipment capable of assembling their PCB board, whereas EMSs are
interested in equipment that has the widest flexibility and minimizes costs.
These factors have been responsible for the increase in popularity of
non-turret type chip shooters, such as our products, with their reduced floor
space and set up time requirements, over turret-type, as well as the rapid
growth in multi-functional placement systems, both in the high-end (large EMSs)
and low-end (small EMSs and OEMs). Both OEMs and EMSs place a great deal of
importance on equipment reliability and local customer service support.

     Unlike semiconductor test handlers, which are primarily purchased by major
semiconductor manufacturers who make up a market of a relatively small number
of potential customers, SMT placement systems are bought by both large and
small electronic manufacturers in a market of thousands of potential customers.
Large and small electronic manufacturers differ widely in the manner in which
they buy component placement systems. Large manufacturers have enormous buying
power. A recent study on the EMS market segment concluded that although there
are thousands of EMSs worldwide, the top 50 EMSs account for approximately 50%
of EMS revenues. Although they produce products from regional facilities
located throughout the world, these large electronics manufacturers use
centralized purchasing functions usually located at the headquarters to qualify
vendors and


                                     -31-

<PAGE>

negotiate supply contracts. These large manufacturers desire to work directly
with a dedicated sales team from the placement system manufacturer and require
on-site service support for each manufacturing facility. We are currently in
the qualification process with one of the top three EMSs. Small manufacturers
tend to buy placement systems once they have secured new business that requires
additional capacity or capabilities not present in their existing systems. In
order to handle these thousands of small manufacturers around the world, we
rely on a network of distributors and sales representatives. We are currently
expanding our geographic distribution network to increase sales and service
coverage.

     There has been a major geographical shift in sales of new SMT component
placement systems, as shown in the table below. When Mirae entered the market
in 1999, the Americas and Europe accounted for 45.8% of new machine placements
in the world. In 2003, these two regions accounted for only 16% of new machine
placements worldwide. Asia not including Japan accounted for 32.5% and 70% of
new machine placements in 1999 and 2003, respectively. In 2003, new machine
placements in China alone exceeded machine placements in the Americas, Europe
and Japan combined. This change has been gradually accelerating since 2002 and
indicates the trend of relocation of PCB assembly, especially for low margin
consumer products, PCs and cellular phones, to Asia due to lower labor costs. A
significant number of these procurements are made by large OEMs and EMSs whose
purchasing contracts are made in the Americas and Europe.

<TABLE>
<CAPTION>

               Comparison of New SMT Placement System Sales by Region (1999 compared with 2003)


                                                                             Percentage of Total Worldwide Sales
                                                                       ----------------------------------------------

                             Region                                     1999              2003           % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>               <C>                <C>
Americas                                                                23.3%             6%                -17.3%
Europe                                                                  22.5%            10%                -12.5%
Japan                                                                   21.7%            14%                 -7.7%
Rest of Asia (1)                                                        32.5%            --                  --
Rest of Asia (excluding China)                                            --             26%                 --
China                                                                     --             44%                 --
                                                                    --------------------------------
Total                                                                    100.00%        100.00%
                                                                    ================================
</TABLE>


(1) Data as it relates to China was reported as part of Rest of Asia in 1999

Source:  PROTEC Market Data Convention

         The demand for new SMT component placement systems has been affected
by the general electronics industry such as mobile phone, computer and other
electronic products. The table below shows a comparison of the total demand for
SMT placement systems by region in 2002 and 2003. As shown, overall demand in
the SMT system market has increased by approximately 50% on average except for
the American market.

<TABLE>
<CAPTION>
                          Comparison of SMT Placement Sales by Region (2002 vs. 2003)

                                                                                      (Unit: Number of systems)

                              Region
                                                                                       Total Sales
                                                                       --------------------------------------------
                                                                          2002             2003          % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>              <C>         <C>
Americas                                                                    578              575
Europe                                                                      692              896         + 30%
Japan                                                                       881            1,337         + 52%
Rest of Asia (excluding China)                                            1,703            2,487         + 46%
</TABLE>


                                                           -32-

<PAGE>

<TABLE>
<CAPTION>

                              Region
                                                                                       Total Sales
                                                                       --------------------------------------------
                                                                          2002             2003          % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>              <C>         <C>
China                                                                     2,545            4,175         + 64%
                                                                       --------------------------------------------
Total                                                                     6,399            9,470         + 48%
                                                                       ============================================
Source:  PROTEC Market Data Convention

</TABLE>


      Competition. In the high end of the market, our major competitors are
Fuji Machine Manufacturing, Matsushita Electric Industrial Co., Ltd. and
Siemens AG. In the low end, we face competition from Yamaha Motor Co. Ltd.,
Juki Corporation and Samsung Techwin Co., Ltd. Although most of our competitors
have been established in this market for over 15 years, we believe that our
core competencies in mechatronics give us advantages over other manufacturers,
primarily as a result of our experience and expertise in producing advanced
control hardware, machine vision and linear motor design technologies, and
advanced real-time control software-based robots utilized in our semiconductor
test handlers. We believe our SMD placement systems are some of the most
advanced in the market in terms of performance and accuracy, and are
price-competitive. In addition, we believe that our system hardware and
software design allow customers to have short changeover times from one PCB
board to another, provide a high degree of flexibility in terms of line
configuration and types of systems available and are easy to operate.

     Sales and Marketing. We market and distribute our SMD placement systems in
Korea through a direct sales force comprised of our employees. At the time of
delivery and acceptance, customers are typically required to pay 30% of the
contract price. The balance (plus interest) is typically due within sixty days
following delivery and acceptance. However, we may offer longer payment periods
to our customers of up to twelve months in installment payments following
delivery and acceptance if such payment is secured by collateral.

     In China, we have Mirae sales offices located in Shen Zhen and Shanghai.
We also use Banner Ever International Group as our sales representative in this
region. Schmidt Electronics (S.E.A.) Pte., Long Shine Equipment & Supplies Ptd.
Ltd., GAT (Global Active Technology in Thailand) and Agate & Agate cover sales
in Asia. Our Asian sales agents act as non-stocking distributors. Most of our
agency agreements provide that an agent may only sell SMT placement systems
manufactured by us.

     Previously, we sold our SMT placement systems in the Americas and Europe
on an exclusive OEM basis through Quad Systems Corporation through a three-year
distribution agreement entered into on June 1, 1999. Quad was authorized to
sell our systems under its own name and logo. On December 18, 2000, Quad filed
a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. During the bankruptcy period, we were barred from selling our machines in
the Americas and Europe. After the final disposition of the bankruptcy petition
of Quad in July 2001, we began selling our machines and providing after-sales
services for our products in the Americas through Mirae America, Inc. The
decreased market activity in the Americas coupled with the fact that we did not
have an established brand name resulted in limited sales success in the
Americas in 2002. However, we were able to establish a relationship with one of
the top three EMS companies headquartered in the U.S. and are currently in the
supplier qualification process at one of its facilities. If we become
qualified, the EMS will authorize purchases of our SMT placement systems for
use in all of its facilities worldwide.


                                     -33-

<PAGE>

     In September 2001, we entered into a distribution agreement with Tyco
Electronics Group that grants Tyco distribution rights of our SMT placement
systems in Europe and Africa. Tyco Electronics is a major division of Tyco
Corporation, a Fortune 500 corporation. Under the terms of the agreement, Tyco
sells the equipment under the Mirae brand name. During 2002, Tyco sold our
systems in most European and African countries. On March 31, 2003, we entered
into a new distribution agreement with Tyco Electronics. Under the terms of the
new agreement, Tyco Electronics has exclusive rights to sell and service our
SMT placement systems in the Americas and in Europe, excluding Belgium,
Luxembourg, the Netherlands, Greece, Italy, Israel and Turkey. In addition,
Tyco Electronics has agreed to place a minimum of US$1.5 million in SMT
equipment purchases by October 1, 2003, including an initial purchase of up to
US$500,000 at the contract signing. The equipment is to be sold under a joint
Mirae/Tyco Electronics brand. In addition to the sales commitment this year, we
expect the partnership to have a much greater effect in increased sales and
market share if and when the market recovers, due to Tyco Electronics'
extensive customer base. This agreement provides us with the benefit of Tyco
Electronics' existing sales and service infrastructure without the need for us
to make further investments in these areas. We have already signed a
distribution agreement with Laryo of Italy and are in the process of selecting
distributors in the other European countries in which we have retained the
right to market and sell our systems.

     On March 31, 2004, we renewed distribution agreement with Tyco
Electronics. This renewal allows Tyco to sell our systems in Belgium,
Luxembourg, the Netherlands, Greece, Israel and Turkey. In addition, we raised
transfer price of some model influencing performance of systems and market
changes. In the Americas, we continue to sell and service equipment directly to
certain customers selected as in-house accounts, including Flextronics
International.

     The table below summarizes our SMT component placement system sales for
2003.

<TABLE>
<CAPTION>

                       2003 SMT Placement System Sales(1)
                    (Unit: unit, in millions of Korean won)

       Major Category               Machine Type                 Model                        2003 Sales
                                                                                --------------------------------------
                                                                                      Systems            Revenues
----------------------------------------------------------------------------------------------------------------------
<S>                           <C>                           <C>                           <C>              <C>
Chip Shooters                 Non-Turret High Speed     MPS-1010                          30          (won)3,556
                                                        MPS-1010 Alpha                     4                 632
                                                        Mx310                              -                   -
                              Non-Turret Mid Speed      MPS-1020                           1                  55
                                                        MPS-1025                          27               1,793
                                                        MPS-1030                           5                 273
Multi-Function                High End                  MPS-1020P                          7                 685
                                                        MPS-1020QP                         6                 632
                                                        MPS-1020QP Alpha                   2                 288
                                                        Mx240                              -                   -
                              Low End                   MPS-1025P                         27               1,937
                                                        MPS-1030P                          8                 438
Accessories, Spare Parts &
   Service                                                                                                 8,912
                                                                                --------------------------------------
Total                                                                                    117         (won)19,201
                                                                                ======================================
__________

(1) Classified by categories designated by PROTEC Machine Category.

TFT-LCD Handlers and Testers

</TABLE>


                                     -34-

<PAGE>

     We began developing our TFT-LCD handler and tester products in 1994 with
the production of the MR6520, and began to actively market additional TFT-LCD
handler and tester models in 1997. From 1999 to 2001, we manufactured three
different TFT-LCD handler models, the MC2410, the MC2510 and the MC2510A, and
one TFT-LCD tester model, the MR6560, respectively.

     As of December 31, 2001, the market for our TFT-LCD handlers and testers
was comprised exclusively of domestic manufacturers of TFT-LCD screens. As we
had existing relationships with Korean semiconductor manufacturers who also
manufactured TFT-LCDs, we focused our marketing efforts on these customers to
strengthen our relationships and on other major individual producers of
TFT-LCDs in Korea, with frequent direct one-on-one sales contacts. In 2001, we
delivered an aggregate of 13 units of our MC2410, MC2510 and MC2510A models for
Won 5,608 million.

     On August 1, 2001, we transferred our TFT-LCD test handler division with
total assets of Won 1,445 million and total liabilities of Won 620 million to
DE&T, which was our affiliate in 2001, for Won 825 million. In December 2002,
we disposed fully our remaining 478,000 shares, or 19.92%, of DE&T for Won 239
million.

Lead Frame Magazines

     Since 1983, we manufactured lead frame magazines, which are essentially
the skeleton of the semiconductor chip to which dies are bonded. We originally
manufactured our lead frames exclusively for the Korean domestic market using
the cutting technology. In 1984, we began using the machine tool technology,
especially the press-cutting technology, because it increased the uniformity
and precision of the finished lead frame magazines compared with the cutting
technology. Our principal customers were Samsung Electronics Co., Ltd., Anam
Semiconductors & Technology Co., Ltd., ChipPAC, Inc. and Hynix Semiconductor
Inc.

     In September 1999, we transferred our manufacturing division of lead frame
magazines to Nail System Co., Ltd., a company formed by a group of our previous
employees to manufacture lead frame magazines, in line with our strategy to
outsource low value-added, labor intensive production processes. Nail System
has been marketing these products directly starting in 2001. However, upon our
previous customer's request, we sold Won 218 million of lead frame magazines,
which was transferred at cost from Nail System, and recorded such one-time sale
as other sales in 2001. We have not recognized any additional sales of lead
frame magazines thereafter.

Information Technology Businesses and On-line Solutions

     Beginning in 1999, we made a strategic decision to become a leading
provider of Information Technology services in Korea through the formation of
and investment in companies and joint ventures that focus on such technology.
In line with this strategy, in March 1999 we established Lycos Korea (now SK
Communications Corporation), a leading Internet portal, and formed in March
1999 our subsidiary, SoftForum, a leading Korean provider of security solutions
for cyber banking, trading and electronic commerce.

     We also formed other joint ventures and strategic alliances with, and made
investments in, Information Technology companies. Most of these investments
were primarily focused on building synergistic partnerships with our then
flagship companies, SoftForum and SK Communications Corporation (formerly Lycos
Korea).


                                     -35-

<PAGE>

     However, with adverse market conditions in 2001 as a result of the overall
local and global decline in technology, advertising and capital spending, we
significantly reduced our investments in Information Technology related
businesses and have been focusing on building greater value to certain of our
existing Information Technology assets. Currently, we are undergoing a
corporate restructuring process in order to improve on our negative profits as
well as reduce our expenses. In addition, we are planning to dispose of our
investments in Information Technology related and non-mechatronics-related
businesses that have not been profitable.

SoftForum Co., Ltd.

     SoftForum provides security solutions for on-line banking, on-line trading
and electronic commerce. It was incorporated in April 1999 under the laws of
Korea as our 70%-owned subsidiary. SoftForum was originally a research annex
institute for security software within us. SoftForum's shares have been listed
on the Korea Securities Dealers Automated Quotation ("KOSDAQ") market since
October 30, 2001. As of December 31, 2003, SoftForum was 41.51%-owned by us,
6.94%-owned by Dongwon Venture Capital Co., Ltd., 3.77%-owned by SoftForum
employees and 52.22%-owned by others, which are widely held. SoftForum's
accounts are consolidated with our financial statements as we effectively
control the nomination of a majority of its board of directors.

     We intend to continue to manage SoftForum by aggressively marketing its
products and services and by investing as much as 10% of SoftForum's total
sales into research and development. Capital expenditures of SoftForum in 2001,
2002 and 2003 were Won 318 million, Won 215 million and Won 18,401 million,
respectively. SoftForum's security solutions products and services generated
revenues of Won 15,517 million, Won 15,881 million and Won 17,189 million in
2001, 2002 and 2003, respectively. Its net income (loss) was Won 1,973 million,
Won 965 million and (Won 2,925) million in 2001, 2002 and 2003, respectively.

Korea Internet.com Co., Ltd.

      Korea Internet.com was incorporated in July 2000 under the laws of Korea
as a joint venture company between internet.com Corporation, a United States
corporation, and us in order to provide e-business related information,
real-time news and information for Internet professionals on the Internet. As
of December 31, 2003, we own 87.38% of Korea Internet.com, which is our
consolidated subsidiary.

Alpha Logics Co., Ltd.

      Alpha Logics, incorporated in December 2002 under the laws of Korea, is
engaged in developing and selling security solutions and related equipment. As
of December 31, 2003, Alpha Logics is a wholly-owned subsidiary of our
subsidiary, SoftForum.

Cyber Bank Corporation.

      Cyber Bank Corporation, incorporated in January 1999 under the laws of
Korea, specializes in the mobile information devices (Personal Digital
Assistants, or PDA), mobile communications technology, Local Area Network
(LAN), operating systems and its applications. As of December 31, 2003, we own
28.24% of Cyber Bank. In 2003, our accounting method for the investment in
Cyber Bank was changed to the equity method of accounting from the cost method
due to an additional investment.

Recent Disposals


                                     -36-

<PAGE>

        We recently disposed of our equity interest in the following
   Information Technology related businesses as part of our corporate
   restructuring:

          o    Mobile Game Co., Ltd. Mobile Game Co., Ltd. (formerly Java Games
               Co., Ltd.) was incorporated in December 1999 under the laws of
               Korea as our 59.98%-owned affiliate and is currently engaged in
               designing and developing game programs. In April 2002, the
               status of Mobile Game changed to an affiliate accounted for
               using the equity method from a consolidated subsidiary due to
               the decrease in our ownership from 59.98% to 29.99%. In 2003, we
               disposed all of our equity interest in Mobile Game to our
               affiliate, Cyber Bank for Won 252 million. On April 19, 2004,
               Cyber Bank disposed of all of its equity interest in Mobile Game
               to Mforma Group in U.S.A.

          o    SK Communications Corporation. SK Communications Corporation
               (formerly Lycos Korea), formed in March 1999 under the laws of
               Korea as a joint venture company between Lycos, Inc., a
               Massachusetts corporation (currently known as Terra Lycos
               Barcelona), and us, launched its Internet operations in July
               1999. SK Communication Corporation offers a Korean language
               search and portal site on the Internet. In 2002, Lycos Korea
               changed its name to SK Communications Corporation. In August
               2002, through issuing new shares of SK Communications to SK
               Telecom Co., Ltd. for cash, our ownership percentage decreased
               from 43.25% to 4.54%. As a result, the investment in SK
               Communications was accounted for using the equity method through
               July 2002 and thereafter we are using the cost method of
               accounting. In June 2003, we disposed of all of our 6,836,690
               shares of SK Communications for Won 660 per share. As a result
               of such disposal, we recorded gain on disposal of
               available-for-sale securities of Won 26,940 million.

Other Investments

     Our other investments are as follows:

          o    MR Tech Town Co. MR Tech was incorporated in April 1999 under
               the laws of Korea, and we acquired a 100% equity interest in MR
               Tech on July 2, 1999. MR Tech is engaged in providing building
               administration services. On April 4, 2003, all of the
               outstanding shares (a total of 20,000 common shares) of MR Tech
               valued at Won 46 million on such date were sold to our
               subsidiary, SoftForum, as a part of corporate restructuring.

          o    Mirae Online, Co., Ltd. Mirae Online, incorporated in March 2000
               under the laws of Korea, is a two-way satellite based data
               broadcasting service provider and launched its Internet
               broadband service in June 2000 and data broadcasting service in
               November 2000. Mirae Online has entered into several contracts
               with cable TV program providers for the delivery of their
               programming through Mirae Online's satellite services. As of
               December 31, 2003, we own 67.47% of Mirae Online.

          o    Mirae America, Inc. Mirae America, incorporated in February 2001
               under the laws of California as a joint venture company,
               currently sells products manufactured by us and provides
               after-sales services for our products in the United States. As
               of December 31, 2003, we own 50% of Mirae America.


                                     -37-

<PAGE>

          o    AIO Corporation. AIO Corporation, incorporated in California in
               1990, designs, manufactures and markets silicon safer cleaning
               systems, track systems and ancillary equipment. As of December
               31, 2003, we own 21.63% of AIO Corporation.

Raw Materials

     We generally had not accumulated raw materials inventory as we typically
commence production of our various mechatronics products only upon receipt of
confirmed orders from our customers. However, in 1999, we began to accumulate
raw material inventory required for the production of SMD placement systems in
order to meet our projected customer demand on a timely basis. Our principal
raw materials include:

          o    for handlers: board, motor, manipulator; and

          o    for SMD placement systems: board, motor, feeder assembly.

     With respect to our handlers and SMD placement systems, we typically use
between 22,000 and 24,000 component parts. The majority of these component
parts is fabricated by our suppliers (or their manufacturers) based on our
design specifications and instructions. The remaining component parts are
commodity goods that are available from a wide variety of suppliers. In 2001,
2002 and 2003, we did not have any supplier that accounted for more than 10% of
our raw materials costs.

     The raw materials costs for our handlers and SMD placement systems and
testers were 41.0% (including raw material costs for our TFT-LCD handlers),
56.6% and 62.07% of manufacturing costs in 2001, 2002 and 2003, respectively.
In 1999 and 2000, approximately 60% and 65%, respectively, of the raw materials
costs for these products were imported. However, the imported raw material
costs represented only 11%, 3% and 2.2% of the total raw materials costs for
our products in 2001, 2002 and 2003, respectively, primarily due to our efforts
to replace imported raw materials with domestic raw materials. In the future,
we expect to continue purchasing many of our raw materials domestically to
lower our overall costs.

     As we pay in foreign currencies (primarily U.S. dollars and Japanese yen)
for many of our export products, we have been able to maintain foreign currency
balances with which to purchase imported raw materials. Accordingly, we have
not been adversely affected by exchange rate fluctuations on the cost of such
raw materials.

Manufacturing and Assembly

     We outsource many of our basic assembly line functions to reduce total
fixed costs, particularly labor. Internally, each of our engineering team is
responsible for sharing technology and applying many of the same core
competencies across these product lines.

     We have developed detailed procedures for production management. Our
three-person development verification test team oversees production management
and technology, and is responsible for gathering customer feedback. Typically,
our manufacturing process includes four major stages: raw material inspection,
processing, assembly and final testing. After each stage, the quality testing
takes place. Defective products or components are analyzed to assess the defect
and prevent recurrences in the future.


                                     -38-

<PAGE>

     In connection with production management, we prepare a detailed manual
outlining the assembly and parts inspection process. By developing a detailed
standardized document, we can assure consistency in manufactured products and
easily train new employees. We then establish criteria for parts inspection and
final testing. We frequently update the criteria to reflect customer input, as
well as feedback collected throughout the manufacturing process, and we believe
that having detailed pre-set criteria makes inspection and testing more
efficient. Finally, we emphasize a rigorous final testing procedure. We believe
our commitment to quality management, for which we have received ISO 9001
certification in 1995 and CE Mark in 2000 for our handlers, results in higher
levels of customer satisfaction.

Intellectual Property

     Intellectual property rights that apply to our various products include
patents, copyrights, trade secrets and trademarks. We attained more than 930
patents or pending patent applications corresponding to various aspects of our
handlers, SMD placement systems and linear motors, most of which have been
registered in several countries around the world. As of December 31, 2003, we
have filed 786 patent applications around the world, and have acquired 382
patent applications. Management believes that our intellectual property
represents valuable property and intends to protect our investment in
technology by enforcing all of our intellectual property rights.

      We expect to file additional patent applications as we deem appropriate
to protect our technology and products. As of December 31, 2003, we held 288
domestic patents with expiration dates between May 2007 and September 2021, as
well as 33 patents in the United States, with expiration dates in October 2022,
22 patents in Japan, with expiration dates between February 2016 and May 2020,
and 18 patents in Taiwan, with expiration dates in November 2016. We have 166
domestic patents pending and 238 overseas patents pending in the United States,
Japan, Germany, Taiwan, China, Italy, Singapore and Malaysia. In Korea, we also
hold 72 registered utility models, 37 registrations of designs and 20
registered trademarks. Our success depends in part on our ability to obtain
patents, licenses and other intellectual property rights covering our products
and their design and manufacturing processes. To that end, we have acquired
certain patents and patent licenses and intend to continue to seek patents on
our inventions and manufacturing processes. The process of seeking patent
protection can be long and expensive, and there can be no assurance that
patents will issue from currently pending or future applications or that, if
patents are issued, they will be of sufficient scope or strength to provide
meaningful protection or any commercial advantage to us. In addition, effective
copyright and trade secret protection may be unavailable or limited in certain
countries. Competitors may also develop technologies that are protected by
patents and other intellectual property rights and therefore such technologies
may be unavailable to us or available to us subject to adverse terms and
conditions. As our sales increase compared to those of our competitors, the
strength of our patent portfolio may not be sufficient to guarantee the
conclusion or renewal of broad patent which do not affect our results of
operations. Furthermore, litigation, which could demand financial and
management resources, may be necessary to enforce our patents or other
intellectual property rights.

      Also, there can be no assurance that litigation will not be commenced in
the future against us regarding patents, copyrights, trademarks or trade
secrets, or that any licenses or other rights to necessary intellectual
property could be obtained on acceptable terms. The failure to obtain licenses
or other intellectual property rights, as well as the expense or outcome of
litigation, could adversely affect our results of operations or financial
condition. We have from time to time received, and we may in the future
receive, communications


                                     -39-

<PAGE>

alleging possible infringement of certain patents and other intellectual
property rights of others. Regardless of the validity or the successful
assertion of such claims, we could incur significant costs with respect to the
defense thereof, which could have a material adverse effect on our results of
operations or financial condition.

      Korea's intellectual property legal framework is similar to that of the
United States. However, a broader array of items may be protected as
intellectual property in the United States, and a Korean court may apply a less
strict enforcement regime and award a smaller amount of damages as compared to
a United States court. We know of no pending, threatened or actual infringement
of any of our intellectual property rights, other than the following
litigation. Presently, we are a plaintiff in a patent infringement suit, the
Company is claiming that the line of memory module test handlers of the
defendant, the Nexscien company, infringe on our patents. We demanded the
defendant in excess of 22 billion won in damages. We expect resolution of this
litigation by the end of 2004. In addition, we applied for provisional
injunction against the Techwing company in Korea for infringing our 2 patent
rights. The provisional injunction includes prohibiting the Techwing company
from making, using and selling the memory test handler. We do not believe that
we have infringed on the intellectual property rights of any third party.

Industry Background

The Semiconductor Market

      The following table sets forth information with respect to worldwide
semiconductor sales by type of semiconductor and geographic region:

<TABLE>
<CAPTION>
---------------------------- -------------------------------------------------- ---------------------------------------

Category                     Worldwide Semiconductor Sales (1)                  Compound Annual Growth Rates (1) (2)
                             -------------------------------------------------- ---------------------------------------
                             1987    1997    2000     2001    2002     2003     1987-2003 2000-2001 2001-2002 2002-2003
                             ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
                                    (Unit: in billions of U.S. dollars)                       (Unit: %)
                             -------------------------------------------------- ---------------------------------------
<S>                            <C>    <C>      <C>     <C>      <C>      <C>        <C>     <C>          <C>      <C>
Integrated Circuits            25.4   119.5    176.9   118.5    120.5    140.0      11.3    (33.0)       1.7      16.2
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Analog                          6.0    19.8     30.5    23.2     23.9     28.8      10.3    (24.0)       3.0      20.5
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Digital Logic                  14.0    70.4     97.2    70.4     69.6     78.7      11.4    (27.6)     (1.1)      13.0
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
   Memory
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
     DRAM                       2.4    19.8     28.9    11.2     15.2     16.7       2.9    (61.3)      35.7       9.8
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
     Others                     3.0     9.5     20.3    13.7     11.8     15.8      10.6    (32.7)    (13.9)      33.9
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
   Total Memory                 5.4    29.3     49.2    24.9     27.0     32.5      11.9    (49.5)       8.4      20.4
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Total digital                  19.4    99.7    146.4    95.3     96.6    111.2      11.5    (34.9)       1.4      15.1
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Discrete                        5.8    13.2     17.7    13.1     13.4     14.4       5.8    (25.8)       2.3       7.5
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Optoelectronics                 1.3     4.5      9.8     7.4      6.8      9.5      13.2    (24.8)     (8.1)      39.7
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Total Available Market         32.5   137.2    204.4   139.0    140.7    166.4      10.7    (32.0)       1.2   18.3(3)
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
</TABLE>


                                                        -40-

<PAGE>

<TABLE>
<CAPTION>
<S>                            <C>    <C>      <C>     <C>      <C>      <C>        <C>     <C>          <C>      <C>
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Europe                          6.2    29.1     42.3    30.2     27.8     32.3      10.9    (28.6)     (7.9)      16.3
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Americas                       10.3    45.8     64.1    35.8     31.2     32.4       7.4    (44.2)    (12.8)       3.4
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Asia Pacific                    3.3    30.2     51.3    39.8     51.2     62.8      20.2    (22.3)      28.6      22.8
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Japan                          12.7    32.1     46.7    33.2     30.5     38.9       7.2    (29.1)     (8.1)      27.7
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Total Available Market         32.5   137.2    204.4   139.0    140.7    166.4      10.7    (32.0)       1.2   18.3(3)
---------------------------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
_______________

Notes:
(1) Source: World Semiconductor Trade Statistics
(2) Calculated using end points of the periods specified.
(3) Calculated on a comparable basis, the Total Available
    Market increased 16.8%.

</TABLE>


     Although cyclical changes in production capacity in the semiconductor
industry and demand for electronic systems have resulted in pronounced cyclical
changes in the level of semiconductor sales and fluctuations in prices and
margins for semiconductor products from time to time, the semiconductor
industry has experienced substantial growth over the long term. Factors that
are contributing to long-term growth include the development of new
semiconductor applications, increased semiconductor content as a percentage of
total system cost, emerging strategic partnerships and growth in the electronic
systems industry in the Asia Pacific region.

     The semiconductor manufacturing process involves two principal phases,
wafer processing (the "front-end") and assembly/test processing (the
"back-end"). Since the production costs associated with front-end processing
are high, manufacturers seek to minimize losses during back-end operations from
defective processing, and to maximize throughput and shorten the time-to-market
for semiconductors and other devices.

     The back-end manufacturing process involves separating individual dies or
chips from the wafer, bonding each chip on a plated metal lead frame or other
carrier and connecting the chip onto external leads. The chips are then
encapsulated in an epoxy plastic, the leads are deflashed and tin-plated, the
devices are separated, and the leads are trimmed and formed. Throughout the
back-end process, devices are tested to ensure functionality, and sorted in
accordance with the test results.

     Different types of devices, such as linear ICs and logic ICs, memory and
individual transistors (discretes), and different types of packages require
different assembly and packaging and, therefore, different testing solutions.
Semiconductor manufacturers rely on a multiple-step testing and reliability
screening procedures to detect defects or weaknesses that may result at any
stage during the manufacturing process. The initial testing phase is typically
performed before the processed semiconductor wafer is cut into individual die.
After the die is packaged, a test for packaging defects is performed. Certain
devices then undergo an extensive reliability screening and stress testing
procedure known as "burn-in". The final testing phase involves the use of
automated test equipment - or "testers" - that evaluate numerous devices
simultaneously and perform a variety of tests at various temperatures.

     Test handlers facilitate the testing process. Test handlers are
specialized robotic machines that (i) carry devices on loader trays to testing
equipment, (ii) feed devices into and


                                      -41

<PAGE>

remove devices from the testers once the testing process is complete, and (iii)
sort tested devices into bins based on pre-programmed grading criteria. The
grade received determines the type of application for which a device may be
used, with a higher grade allowing for more sophisticated applications.

     Test handlers use either "vertical gravity" or "pick-and-place" technology
to interface devices with a tester. Vertical gravity handlers essentially drop
devices onto the contact point of a tester. Pick-and-place test handlers, which
became the industry standard following the development of the 64MB DRAM, use
vacuum technology and are designed for linear processing of a device to a
contact point on a test handler.

     Typically, test handlers are customized to meet the product specifications
of a customer to ensure proper operation with its tester. A customer's
specifications relate principally to the tester software program and the tester
interface software program to be used, the shape of the interface board linking
the tester to the test handler, the function, shape and design of the
individual device package, and the shape of the device loader tray. The number
of units processed per hour is dependent on the operational specifications of a
particular test handler, the speed of the tester to which it is connected, and
the type and number of devices being tested. A test handler's index time, which
exceeds a tester's device test time prevents a tester from sitting idle,
thereby ensuring productivity of the testing process.

C.       Organizational Structure

     For a list of our significant subsidiaries, see "Item 10--Additional
Information--Subsidiary Information."

D.       Property, Plants and Equipment

     We currently operate three main business facilities in Korea. The table
below sets forth certain information with respect to our current manufacturing
and business facilities.

<TABLE>
<CAPTION>
----------------------------- ------------------------- ---------------------------- ---------------------------

          Facility                    Location                 Size of Land               Gross Floor Size

                                                                (Unit: m2)                   (Unit: m2)
----------------------------- ------------------------- ---------------------------- ---------------------------

<S>                           <C>                                         <C>                         <C>
Headquarters                  ChonAn City                                 19,960.00                   10,922.49
----------------------------- ------------------------- ---------------------------- ---------------------------

2nd Production Factory        ChonAn City                                 17,572.00                   16,857.42
----------------------------- ------------------------- ---------------------------- ---------------------------

3rd Production Factory        ChonAn City                                 18,990.70                    4,781.35
----------------------------- ------------------------- ---------------------------- ---------------------------

R&D Center                    Hwasung City                                38,413.00                    5,596.92
----------------------------- ------------------------- ---------------------------- ---------------------------

SoftForum                     Seoul City                                   1,777.70                    9,253.21
----------------------------- ------------------------- ---------------------------- ---------------------------

Others                        ChonAn City                                    168.75                      482.54
----------------------------- ------------------------- ---------------------------- ---------------------------

                              Bundang City                                 1,022.19                    7,873.17
----------------------------- ------------------------- ---------------------------- ---------------------------

                              Other                                           47.40                      115.02
----------------------------- ------------------------- ---------------------------- ---------------------------
</TABLE>

Headquarters


                                     -42-

<PAGE>

     Our headquarters for corporate administration is located in Chun An City,
Korea. These premises, which we own, consist of 19,960.00 m2 of land and
10,922.49 m2 of office building. Our business administration division is
located at our headquarters.

2nd Production Factory

     Our production division for semiconductor test handlers and SMD placement
systems is located at our 2nd factory in Chun An City, which consists of 17,572
m2 of land and 16,587.42 m2 of production factory and office building. The
table below sets forth information on the production results for 2001, 2002 and
2003.

<TABLE>
<CAPTION>
                                                (Unit: unit)
------------------------------------------------------------------------------------------------------------
       Division               Product              FY 2003              FY 2002              FY 2001
----------------------- -------------------- -------------------- -------------------- ---------------------
<S>                     <C>                                  <C>                   <C>                   <C>
SE                      Test handler                         138                   36                    47
----------------------- -------------------- -------------------- -------------------- ---------------------
SMT                     Chip Mounter                          50                  159                    67
----------------------- -------------------- -------------------- -------------------- ---------------------
LCD                     LCD Tester                             -                    -                    12
----------------------- -------------------- -------------------- -------------------- ---------------------
Other                   Others                                 -                    -                     -
----------------------- -------------------- -------------------- -------------------- ---------------------
</TABLE>


3rd Production Factory

     Our 3rd production factory was constructed in September 2003, for Won
2,149 million for display related business, in Chun An City, which consists of
18,990.70 m(C)/ of land and 4,781.35 m(C)/of office space.

Mirae Research and Development Center

     In November 2001, we completed the construction of the building, the Mirae
Research Center, which consists of 38,413.00 m2 of land and 5,596.92 m2 of
office space, in Hwasung City, Korea. Our R&D personnel and sales force are
located in this center. Capital expenditures of approximately Won 15 billion
were invested in connection with this research center.

Bundang Office Building

     Previously, we conducted research and development for mechatronics related
technology and products at our 7,873.17 m2 facility in Bundang City, Korea.
This office space has been rented to tenants since we moved these activities to
the Mirae Research Center in Hwasung in November 2001.

SoftForum Building

     SoftForum purchased an office building in Seoul City in May 2003, which
consists of 1,777.70 m2 of land and 9,253.21 m2 of office space.

Seoul Branch


                                     -43-

<PAGE>

     We have reinstated a branch of the Company in Seoul, Korea with 386 m(2)
of leased office space in a building owned by SoftForum located in Dokok-dong,
Seoul. Our lease runs from April 13, 2003 through April 13, 2005 and a
guarantee deposit of Won 386 million was paid to SoftForum.

Office Building for Information Technology related Venture Companies

     We acquired 17,766.36 m2 of space in a building in Seoul, Korea for use by
our Information Technology related venture companies in 2000. As of May 24,
2002, we sold our space in the building for Won 60,000 million to Pagoda
Academy Company. The divestiture was part of corporate restructuring process we
undertook in order to enhance our mechatronics businesses.

     Our existing facilities have been adequate for our needs through the end
of 2003. We believe that any additional space we may need in the future will be
available on commercially reasonable terms.

ITEM 5.   Operating and Financial Review and Prospects

     The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto included elsewhere herein.
Our consolidated financial statements have been prepared in accordance with
Korean GAAP, which differs in certain significant respects from U.S. GAAP.
Notes 27 and 28 to our consolidated financial statements provide a description
of the significant differences between Korean GAAP and U.S. GAAP as they relate
to Mirae and provide reconciliation to U.S. GAAP for operating income (loss),
net income (loss) and shareholders' equity. In addition, the section titled
"--Critical Accounting Policies, Estimates and Judgments" as well as note 2 to
our consolidated financial statements should be read carefully which provide
summaries of certain critical accounting policies that require our management
to make difficult, complex or subjective judgments relating to matters which
are highly uncertain and that may have a material impact on our financial
conditions and results of operations.

Overview

     We design and manufacture mechatronics machines, including the
high-precision robotic parts and software that controls these robotic parts,
primarily for sale to the semiconductor manufacturing and PCB assembly
industries. Our product lines consist of semiconductor test handlers and their
components and SMD placement systems. We transferred our TFT-LCD test handler
line to DE&T, which was our affiliate in 2001, for Won 825 million on August 1,
2001. In addition, we provide Information Technology related services in Korea
through our subsidiaries and joint ventures and other strategic alliances with,
and by making strategic investments in, Information Technology related
companies.

     Historically, our sales had been concentrated among a small number of
Korean customers that are semiconductor manufacturers as well as major
conglomerates in Korea. In 1999, we began to market our products
internationally in pursuit of customer diversification and profit maximization,
and our global sales have gradually increased thereafter. However, in 2001, our
export sales decreased significantly, in large part due to the worldwide
decline in the semiconductor industry and the bankruptcy of Quad Systems
Corporation, formerly one of our major customers for SMD placement systems,
which filed a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code on September 29, 2000. In 2001, the portion of total sales
derived from export sales decreased to 18% from 41% in


                                     -44-

<PAGE>

2000. In 2002 and 2003, however, export sales were almost double the 2001
figure, or 32% and 31%, respectively, of our total sales revenue, due to sales
increases in the United States and Asia.

     Our sales and results of operations depend significantly on levels of
capital expenditures by semiconductor manufacturers, electronic manufacturers
and PCB assemblers, which in turn depend on the current and anticipated market
demand for semiconductors and products utilizing semiconductors and PCB
assemblies.

     Demand for semiconductor devices and expenditures for related capital
equipment is cyclical and is dependent on levels of worldwide demand for
computing and peripheral equipment, telecommunications devices and automotive
and industrial components, as well as the production capacity of global
semiconductor manufacturers. Historically, changes in production capacity in
the semiconductor industry and in the demand for electronic systems have
resulted in pronounced periodic declines in the level of semiconductor sales
and significant fluctuations in prices and margins for semiconductor devices.

     The cyclical variations in the supply and demand of DRAM chips and the
fluctuations in the electronic manufacturing industry have affected and will
continue to affect our sales and results of operations. Our principal means of
responding to this situation have been and will be as follows:

     o    we adopted a concerted marketing and export strategy focused beyond
          our traditional Korean customer base;

     o    we expanded our mechatronics product lines to include SMD placement
          systems;

     o    we implemented an early retirement program in 2000 and downsized the
          number of our employees to 294 as of December 31, 2003 from 521 as of
          December 31, 2000;

     o    we will concentrate our research and development on several projects
          that would enhance our product advancement, which will be on-going
          projects; and

     o    we will cut back on our investments in multimedia and Information
          Technology related businesses and focus on maximizing the value of
          and minimizing the risks from current investments.

     Future operating profits will depend on many factors, some of which are
beyond our control, including:

     o    the cyclicality of the semiconductor and electronic manufacturing
          industry;

     o    our ability to successfully expand our product markets outside of
          Korea;

     o    receipt, timing and shipment of orders;

     o    the introduction and industry acceptance of our new semiconductor
          test handlers;

     o    SMD placement systems and Internet and software-based products; and

     o    the success of our competitors.


                                     -45-

<PAGE>

     Results of operations for the periods discussed herein should not be
considered indicative of the results to be expected in any future period, and
fluctuations in operating results may also result in fluctuations in the market
price of our common stock and the ADSs.

A.       Operating Results

     The following table sets forth certain information regarding our financial
performance for each of the years ended December 31, 2001, 2002 and 2003.

<TABLE>
<CAPTION>
                                                       2001                     2002                     2003
                                       ----------------------------------------------------------------------------------------
                                                  (in      (% of           (in         (% of          (in          (% of
                                                millions    total        millions      total        millions       total
                                                 of Won)    sales)        of Won)      sales)        of Won)       sales)
                                       ----------------------------------------------------------------------------------------
<S>                                              <C>        <C>             <C>         <C>            <C>         <C>
 Sales..................................     (won)68,977     100.0%    (won)64,430      100.0%    (won)95,053      100.0%
   Semiconductor test handlers..........          18,418      26.7          14,434       22.4          44,184       46.5
   SMD placement systems................          20,992      30.4          23,486       36.5          19,201       20.2
   TFT-LCD handlers and testers (1).....           5,608       8.1              --         --              --         --
   Security solutions...................          15,517      22.5          15,881       24.6          17,189       18.1
   Other................................           8,442      12.3          10,629       16.5          14,479       15.2
Cost of sales...........................          63,590      92.2          56,863       88.2          72,703       76.5
Gross profit............................           5,387       7.8           7,567       11.8          22,350       23.5
Selling, general and administrative expenses      45,321      65.7          37,651       58.4          27,973       29.4
Operating income (loss).................         (39,934)    (57.9)        (30,084)     (46.6)         (5,623)      (5.9)
Other income............................          11,020      16.0          13,285       20.6          36,810       38.7
Other expense...........................          54,945      79.7          56,091       87.1          30,271       31.8
Income (loss) before income taxes and
   minority interest....................         (83,859)   (121.6)        (72,890)    (113.1)            916        1.0
Income tax expense (benefit)............          14,234      20.6             277        0.4              18        0.02
Net income (loss) before minority
   interest.............................         (98,093)   (142.2)%       (73,167)    (113.6)            898        0.9
Minority interest in net loss (gain) of
   consolidated subsidiaries............          (1,055)     (1.5)            176        0.3           1,626        1.7
Net income (loss).......................         (99,148)   (143.7)        (72,991)    (113.3)          2,524        2.7
                                         ======================================================================================
___________

Note:

(1)      On August 1, 2001, we transferred our TFT-LCD test handler line to
         DE&T, which was our affiliate in 2001, for Won 825 million.
</TABLE>

Factors Affecting Operating Results

     Our operating results have experienced, and may continue to experience,
severe fluctuation and downward pressure as a result of a number of
interrelated factors associated with the markets in which we operate, including
the following:

     o    Prior to 1999, our sales had historically been derived principally
          from sales of semiconductor test handlers. We have diversified into
          SMD placement systems and successfully launched new models of SMD
          placement systems in the domestic market since the second half of
          1999. As a result, our earnings structure has been less vulnerable to
          the cyclical nature of the semiconductor industry than it had been
          prior to 1999. Our revenues from the sale of SMD placement systems
          have accounted for 30.4%, 36.5% and 20.2% of our total revenues in
          2001, 2002 and 2003, respectively However, because we have applied
          price-discounting policies to such sales in order to develop and
          penetrate into the SMD placement systems market, which policies we
          have continued due to intense competition and a decline in this
          market, our gross


                                     -46-


          profit margins on these products were not as high as the gross profit
          margins on our semiconductor test handlers.

     o    As of December 31, 2003, we invested Won 49.1 billion into
          Information Technology related companies since 1999. We have
          strategically invested most of these amounts, including indirect
          investments, into content and service related companies, which
          subsequently entered into exclusive or first-right contracts to
          provide contents and services to SK Communications Corporation and
          SoftForum. Not all of these investments have been profitable.

     o    On December 18, 2000, Quad Systems Corporation, an OEM contractor of
          our SMD placement systems in North America and Europe, filed for
          bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result,
          our sales to North America and Europe had ceased for approximately 12
          months, from September 2000 to August 2001, until we had
          reestablished our distribution channel of SMD placement systems in
          North America and Europe.

     o    Virtually all of our handler products are subject to life cycles,
          which generally range from 18 to 24 months. During this cycle, the
          price of each product typically declines as newer models with
          improved performance go on demand. If new products are not introduced
          on a regular basis to replace older models, our overall gross margins
          will experience downward pressure as the gross margins on the older
          model decline.

     o    Our semiconductor test handlers and SMD placement systems come with
          an one-year product warranty. As we expense warranty costs as
          incurred rather than provide for estimated costs at the time of sale,
          recognition of warranty costs usually lags behind the sale of our
          products by approximately one year. Our domestic semiconductor test
          handler customers have historically focused on front-end
          manufacturing processes and do not have the facilities or expertise
          necessary to maintain and repair their back-end equipment. When our
          customers experience difficulties with one of our handler products,
          we have provided complimentary after-sale services even if the
          problem is not expressly covered by the terms of the product
          warranty. The costs incurred in providing these services are booked
          as product warranty expenses. We do not intend to provide similar
          non-warranty related services for which we receive no compensation in
          respect of our SMD placement systems.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Sales

     Sales revenue for the year ended December 31, 2003 increased by Won 30,623
million, or 47.5%, to Won 95,053 million, compared to Won 64,430 million for
the year ended December 31, 2002. The increase of sales revenues in 2003 was
primarily due to the increase of revenues derived from sales of semiconductor
test handlers, which was partially offset by the decrease of revenues derived
from sales of SMD placement systems. Sales revenue also increased due to
increased sales revenues derived from SoftForum, for sales of software-based
securities solutions.

     The sales revenue derived from semiconductor test handlers and components
increased by Won 29,750 million, or 206.1%, from Won 14,434 million in 2002 to
Won 44,184 million in 2003. The sales increase in semiconductor test handlers
and components was largely due to the recovery in the semiconductor and related
industries as well as the sales of our new


                                     -47-

<PAGE>

products, flash memory test handlers, which generated Won 14,860 million or
33.6% of our semiconductor equipment sales in 2003.

     Sales revenue derived from SMD placement systems decreased by Won 4,285
million, or 18.2%, from Won 23,486 million in 2002 to Won 19,201 million in
2003. This decrease was attributable to the fact that we changed our policy of
expanding our SMD market penetration to a strategy of focusing on profit and
more credit-worthy customers.

     We recognized revenues of Won 17,189 million from sales of software-based
securities solutions for on-line banking, trading and electronic commerce for
the year ended December 31, 2003 compared to Won 15,881 million for the year
ended December 31, 2002 from our subsidiary, SoftForum.

     The proportion of export sales revenue compared to total sales revenue
slightly decreased to 31.4% for the year ended December 31, 2003, from 32.2%
for the year ended December 31, 2002.

Cost of Sales

     The principal components of cost of sales are raw material costs, labor
costs, depreciation expense, research and development costs and outsourced
manufacturing expenses. Cost of sales increased by Won 15,840 million, or
27.9%, to Won 72,703 million for the year ended December 31, 2003 from Won
56,863 million for the year ended December 31, 2002. . This increase was
primarily due to increase of semiconductor test handlers and components sales.

     The ratio of cost of sales to total sales revenue in 2003 was 76.5%
compared to 88.2% in 2002. As the total sales volume increased, the ratio of
cost of sales to sales revenue decreased due to our efforts to reduce
manufacturing costs resulting in part from higher capacity utilizations caused
by increased production volumes for our test handler equipment manufacturing.

Gross Profit

     Gross profit increased by Won 14,783 million, or 195.4%, to Won 22,350
million for the year ended December 31, 2003 from Won 7,567 million for the
year ended December 31, 2002 primarily due to a greater rate of increase in our
sales revenues compared to the rate of increase in our cost of sales.

     Gross profit to sales ratio also increased to 23.5% in 2003 from 11.7% in
2002, primarily a result of an increase in the sales of semiconductor test
handlers, which have higher gross margins than that of SMD placement systems.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased by Won 9,678
million, or 25.7%, to Won 27,973 million in 2003 from Won 37,651 million in
2002.

     Selling, general and administrative expenses decreased primarily as a
result of a decrease in bad debts. We recognized Won 3,224 million of bad debts
in the year ended December 31, 2003, which represented a decrease of Won 8,562
million, or 72.6%, compared to bad debts expense of Won 11,786 million for the
year ended December 31, 2002. This result was primarily due to our efforts to
control credit quality of our potential and current customers


                                     -48-

<PAGE>

through our credit control process upon opening up an account with us.
Therefore, a chance to have uncollected account receivable on trade becomes
inconsequential.

     Salaries decreased by Won 535 million, or 5.2%, from Won 10,203 million in
2002 to Won 9,668 million in 2003 due to a change in the composition of our
employees seniority levels. Research and development costs expensed as selling,
general and administrative expenses decreased by Won 1,357 million, or 56.3%,
from Won 2,410 million in 2002 to Won 1,053 million in 2003 primarily due to
the application to our research and development division of our corporate
management and cost control system, known as ERP, which aims to streamline and
make efficient our various business divisions.

     The decrease in selling, general and administrative expenses was offset in
part by a Won 1,041 million, or 31.3%, increase in commission, from Won 3,329
million in 2002 to Won 4,370 million in 2003. The commission, including sales
and customer service commissions, increased as the sales revenues increased.

Operating Loss

     Operating loss for the year ended December 31, 2003 was Won 5,623 million,
which represents an improvement of Won 24,461 million, or 81.3%, from our
operating loss of Won 30,084 million for the year ended December 31, 2002. The
decrease in operating loss resulted primarily from the increase in total sales
revenues and the decrease in selling, general and administrative expenses in
2003, as compared to 2002.

Other Income

     Other income consists primarily of interest income, gain on disposal and
valuation of trading securities, foreign exchange and translation gains and
miscellaneous income. Other income increased by Won 23,525 million, or 177.1%,
from Won 13,285 million in 2002 to Won 36,810 million in 2003.

     Other income increased primarily due to a Won 26,940 million gain on
disposal of available-for-sale securities, which was incurred when we sold all
of our 6,836,690 shares in SK Communications Corporation.

Other Expenses

     Other expenses for the year ended December 31, 2003 consist primarily of
valuation loss on inventories, equity in losses of affiliates and interest
expenses. Other expenses decreased by Won 25,820 million, or 46.0%, to Won
30,271 million in 2003 from Won 56,091 million in 2002 primarily due to a
decrease in inventory valuation loss and impairment of deferred development
costs.

     Inventories, especially finished products, were written down to net
realizable value where applicable and Won 12,428 million of inventory valuation
loss was accounted for as other expenses in 2003 compared to Won 20,409 million
in 2002 primarily due to our inventory revaluation process on obsolescent raw
materials and finished products.

     Loss from impairment of deferred development costs in 2003 decreased by
Won 9,816 million, or 86.6%, to Won 1,521 million in 2003 from Won 11,337
million in 2002 primarily due to the discontinuation of certain development
projects. However, equity in losses of affiliates in 2003 increased by Won
7,126 million, or 861.7%, to Won 7,953 million in 2003


                                     -49-

<PAGE>

from Won 827 million in 2002 primarily due to additional Won 10,000 million
investment in Cyber Bank, which increased our ownership to 28.24% from 1.05%.

     Other expenses in 2003 also included Won 2,160 million of interest
expense, Won 1,746 million of provision for doubtful accounts and Won 477
million of foreign currency exchange and translation losses.

Income Taxes

     A full valuation allowance has been provided for the tax effect of
temporary differences, net operating loss carry-forwards and tax credit
carry-forwards as of December 31, 2003 since we believe that the realization of
the deferred tax assets is uncertain. Income tax expense decreased by Won 259
million, or 93.5%, to Won 18 million in 2003 from Won 277 million in 2002 due
to decrease of net profit in SoftForum.

Net Income

     Net income for the year ended December 31, 2003 was Won 2,524 million,
which was an improvement of Won 75,515 million, or 103.5%, compared to the net
loss of Won 72,991 million in 2002, principally as a result of the factors
discussed above.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Sales

     Sales revenue for the year ended December 31, 2002 decreased by Won 4,547
million, or 6.6%, to Won 64,430 million, compared to Won 68,977 million for the
year ended December 31, 2001. This decrease was mainly due to the transfer of
our TFT-LCD test handler line to DE&T on August 1, 2001, which generated Won
5,608 million of sales revenue in 2001. The decrease of sales revenues in 2002
was also due to the decrease of sales revenues derived from semiconductor test
handlers, which was offset by the increase of sales revenues derived from SMD
placement systems.

     Sales revenue derived from SMD placement systems increased by Won 2,494
million, or 11.9%, to Won 23,486 million in 2002 from Won 20,992 million in
2001. The increase in sales was largely due to our greater penetration into
overseas markets, particularly in Asia, as well as our resumed sales to North
America and Europe after reestablishing our distribution channel of SMD
placement systems after Quad Systems' bankruptcy in 2001.

     Sales revenue derived from sales of semiconductor handlers and components
decreased by Won 3,984 million, or 21.6%, to Won 14,434 million in 2002 from
Won 18,418 million in 2001, as a result of the continued downturn in the
semiconductor and related industries, forcing many of our customers to
discontinue or limit components and purchases of new components.

     We recognized revenues of Won 15,881 million from sales of software-based
securities solutions for on-line banking, trading and electronic commerce for
the year ended December 31, 2002, compared to Won 15,517 million for the year
ended December 31, 2001 from our subsidiary, SoftForum.

     The proportion of export sales revenue compared to total sales revenue
increased to 32.2% for the year ended December 31, 2002 from 17.9% for the year
ended December 31, 2001.


                                     -50-

<PAGE>

Cost of Sales

     The principal components of cost of sales are raw material costs, labor
costs, depreciation expense, research and development costs and outsourced
manufacturing fees. Cost of sales decreased by Won 6,727 million, or 10.5%, to
Won 56,863 million in 2002 compared to Won 63,590 million in 2001. This
decrease was primarily attributable to a decrease in sales of semiconductor
handlers and SMT placement systems as a result of the continued downturn in the
semiconductor and related industries.

     The ratio of cost of sales to total sales revenue in 2002 was 88.2%
compared to 92.2% in 2001, resulting in part from the convergence of product
parts for handlers and SMT placement systems.

Gross Profit

     Gross profit increased by Won 2,180 million, or 40.5%, to Won 7,567
million in 2002 from Won 5,387 million in 2001 primarily due to a greater rate
of increase in our sales revenues compared to the rate of increase in our cost
of sales.

     Gross profit to sales ratio also increased to 11.8% in 2002 from 7.8% in
2001, primarily a result of an increase in the proportion of export sales,
which have higher sales prices than domestic sales.

     Since export sales prices are higher than domestic sales prices, our gross
profit ratio to sales increased as the proportion of exports sales increased by
14.3% in 2002 from 2001.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased by Won 7,670
million, or 16.9%, to Won 37,651 million in 2002 from Won 45,321 million in
2001.

     Selling, general and administrative expenses decreased primarily as a
result of a decrease in product warranty costs. Won 1,004 million of product
warranty costs was incurred in 2002, which represented Won 4,290 million, or
81.0%, decrease compared to our product warranty costs of Won 5,294 million in
2001. This decrease was primarily attributable to our efforts on product
quality enhancement program that would eliminate potential obstacles when our
products are installed in our customer's site.

     Advertising costs decreased by Won 1,408 million, or 59.9%, to Won 941
million in 2002 from Won 2,349 million in 2001 due to reduced advertisements
for Information Technology related businesses.

     In addition, salaries decreased by Won 1,140 million, or 10.1%, to Won
10,203 million in 2002 from Won 11,343 million in 2001, as a result of the
downsizing of the number of employees. Our employees decreased in number to 296
as of December 31, 2002 from 324 as of December 31, 2001.

     The decrease in selling, general and administrative expenses was offset in
part by an increase in bad debts of Won 1,519 million, or 14.8%, to Won 11,786
million in 2002 from Won 10,267 million in 2001 primarily due to our aggressive
marketing strategy for SMD placement systems, particularly in China.


                                     -51-

<PAGE>

Operating Loss

     Operating loss for the year ended December 31, 2002 was Won 30,084
million, which represents an improvement of Won 9,850 million, or 24.7%, from
our operating loss of Won 39,934 million for the year ended December 31, 2001.
The decrease in operating loss resulted primarily from the improvement of cost
of sales and the decrease in selling, general and administrative expenses in
2002, as compared to 2001.

Other Income

     Other income consisted primarily of interest income, gain on disposal and
valuation of trading securities, foreign exchange and translation gains and
miscellaneous income. Other income increased by Won 2,265 million, or 20.6%, to
Won 13,285 million in 2002 from Won 11,020 million in 2001.

     Other income increased primarily due to a Won 3,739 million reversal of
provision for guarantees issued for Miraeonline, which was accounted for as
other expenses in 2001. The guarantee expired in 2002.

     The increase in other income was offset in part by a Won 1,837 million
decrease in foreign exchange and translation gains due to rising Won value to
US dollars. Interest income also decreased by Won 752 million due to both
reductions in interest-bearing financial assets and the interest rate, compared
to 2001.

Other Expenses

     Other expenses for the year ended December 31, 2002 consisted primarily of
valuation loss on inventories, provision for doubtful accounts, impairment loss
on deferred development costs and impairment loss on investment securities.
Other expenses increased by Won 1,146 million, or 2.1%, to Won 56,091 million
in 2002 from Won 54,945 million in 2001 primarily due to increase of inventory
valuation loss.

     Inventories, especially finished products, were written down to net
realizable value where applicable and Won 20,409 million of inventory valuation
loss was accounted for as other expenses in 2002, compared to Won 16,837
million in 2001 primarily due to our inventory revaluation process on
obsolescent raw materials and finished products. Investment securities were
also written down to their net asset value and Won 3,631 million of impairment
loss on investment securities was accounted for as other expenses in 2002
primarily due to the decline in net asset value of investments that was not
deemed to be temporary.

     In 2002, several development projects were discontinued and related
deferred development costs of Won 11,337 million were written off as other
expenses.

     Other expenses in 2002 also included Won 3,663 million of interest
expense, Won 7,087 million of provision for doubtful accounts and Won 2,102
million of foreign currency exchange and translation losses.

Income Taxes

     A full valuation allowance has been provided for the tax effect of
temporary differences, net operating loss carry-forwards and tax credit
carry-forwards as of December 31, 2002 since we believe that the realization of
the deferred tax assets is uncertain. Income tax


                                     -52-

<PAGE>

expense decreased by Won 13,957 million, or 98.1%, to Won 277 million in 2002
from Won 14,234 million in 2001 due to our net loss.

Net Loss

     Net loss for the year ended December 31, 2002 was Won 72,991 million,
which was an improvement of Won 26,157 million, or 26.4%, compared to the net
loss of Won 99,148 million in 2001, principally as a result of the factors
discussed above.

U.S. GAAP Reconciliation

     Our consolidated financial statements are prepared in accordance with
Korean GAAP, which differs in certain significant respects from U.S. GAAP. The
significant differences are described below:

     o    under U.S. GAAP, the realization of deferred tax assets depends on an
          objectively verifiable estimate of future income which is commonly
          based on pretax accounting income (losses) of the current and
          immediate two preceding years. Under Korean GAAP, no such practice
          has evolved;

     o    under Korean GAAP, research and development costs that meet specific
          conditions, such as new product development, technological
          feasibility, marketability and usefulness, are deferred and amortized
          over a period not to exceed 20 years, while such costs are expensed
          under U.S. GAAP;

     o    under Korean GAAP, through 2002, sales are recognized at the time
          products are delivered to customers while under U.S. GAAP, product
          sales are recognized upon final customer acceptance and passage of
          legal title. However, effective January 1, 2003, Korean GAAP was
          revised so that products sales are recognized upon final acceptance
          and passage of legal title. This accounting change has been applied
          prospectively;

     o    under U.S. GAAP, if the decline in fair value is judged to be other
          than temporary, the cost basis of the individual securities is
          written down to fair value as a new cost basis and the amount of the
          write-down is included in current operations. Under Korean GAAP, if
          the collectible value from the securities is less than acquisition
          costs with objective evidence of impairment such as bankruptcy of
          investees, an impairment loss is recognized;

     o    under Korean GAAP, the subsequent recoveries of impaired
          available-for-sale securities, held-to-maturity debt securities and
          equity securities without readily determinable fair value result in
          an increase of their carrying amount up to the original acquisition
          cost, and the recovery gains are reported in current operations up to
          the previously recognized impairment loss as reversal of loss on
          impairment of investment securities. Under U.S. GAAP, the subsequent
          increase in carrying amount of the impaired and written down
          held-to-maturity debt securities and equity securities without
          readily determinable fair value is not allowed. The subsequent
          increase in fair value of available-for-sale securities is reported
          in other comprehensive income;

     o    under U.S. GAAP, after a long-lived asset write-down, representing
          the new carrying amount, subsequent recoveries in value may not be
          recognized, whereas under Korean


                                     -53-

<PAGE>

          GAAP, such recoveries are recognized as gains to the extent of
          impairment losses previously recognized;

     o    Under previous Korean GAAP, product warranty expenditures as incurred
          in manufacturing costs were allocated between cost of sales and
          inventories. Under U.S. GAAP, warranty costs are accrued at the time
          of sale based on historical experience and expected future costs and
          recorded as costs of sales. In accordance with revised Korean GAAP,
          effective January 1, 2001, we classify product warranty expenditures
          incurred as an item of selling, general and administrative expenses
          for a more appropriate financial statement presentation;

     o    under Korean GAAP, there is no requirement to present comprehensive
          income. Under US GAAP, comprehensive income and its components must
          be presented in the financial statements. Comprehensive income
          includes all changes in shareholders' equity during a period except
          those resulting from investments by, or distributions to, owners,
          including certain items not included in the current results of
          operations. There were no such changes in our shareholders' equity in
          all periods presented;

     o    under Korean GAAP, loss from valuation of inventories is classified
          as other expenses while under U.S. GAAP, it is classified as cost of
          sales; however, effective January 1, 2004, loss from valuation of
          inventories will be classified as cost of sales under Korean GAAP;

     o    under US GAAP, when an investor holds other types of interest (for
          example, loans and preferred stock) in addition to common stock of an
          investee accounted for by the equity method of accounting and the
          investor's share of losses of the investee exceed the carrying amount
          of the common stock investment, additional equity method losses are
          recognized by the investor. Under Korean GAAP, no such additional
          losses are required to be recognized by the investor. If the investee
          subsequently reports net income or issues its common stock, the
          investor shall resume applying the equity method and recognize its
          share of the net loss not recognized during the period the equity
          method was suspended as an adjustment to retained earnings from prior
          periods, under Korean GAAP;

     o    under Korean GAAP, a parent company is required to account for sales
          of stock by a subsidiary as an equity transaction to be included in
          capital surplus, while under U.S. GAAP, a parent company may elect
          income statement or equity transaction treatment, depending on
          certain criteria being met and so long as such election is applied
          consistently and on a prospective basis for all subsidiary stock
          transactions;

     o    under Korean GAAP, a purchase by a subsidiary of a non-controlling
          equity interest in the subsidiary is recorded as a capital adjustment
          in the consolidated financial statements in proportion to the
          parent's equity interest. Under U.S. GAAP, this purchase is accounted
          for using the purchase method in the consolidated financial
          statements;

     o    Korean GAAP permits all entities to exclude the volatility factor in
          estimating the value of their stock options, which results in
          minimizing the measurement. Under U.S. GAAP, public entities are not
          permitted to exclude the volatility factor in estimating the value of
          their stock options. In addition, under U.S. GAAP, if the fair value
          of the modified option exceeds the value of the related old option,
          the entity


                                     -54-


          recognizes additional compensation cost for the difference. Under
          Korean GAAP, no such practice has evolved;

     o    under Korean GAAP, depreciation for six months was permitted to be
          recorded for any asset placed in service during the second half of
          the year in accordance with Korean tax law until 2001. Effective from
          2002, depreciation expense commences in the month the related asset
          is placed in service. Under U.S. GAAP, depreciation expense starts to
          accrue from the month the related asset is deployed into service;

     o    under Korean GAAP, gain on disposal of investments in common stock of
          a subsidiary incurred from a transaction between the Company and its
          subsidiary's employees, which should be included in capital surplus,
          is measured based on the actual selling price and the carrying value
          of such investment. Under U.S. GAAP, however, if the actual selling
          price differs from the fair value of the investment, the difference
          between the fair value and the actual selling price should be
          recorded as an employee benefits expense;

     o    under Korean GAAP, provisions for doubtful accounts other than trade
          receivables are classified as other expenses while provisions for
          doubtful trade receivables are classified as selling, general and
          administrative expenses. Under U.S. GAAP, this provision is recorded
          as selling, general and administrative expenses considering the
          original nature of those receivables;

     o    under Korean GAAP, minority interest in equity of consolidated
          subsidiaries is presented to be included in shareholders' equity.
          Under U.S. GAAP, minority interest is presented as an item separate
          from shareholders' equity;

     o    under Korean GAAP, loans provided by the Company to employees to
          finance purchases of the Company's shares are accounted for as
          receivables, and related payment guarantees provided by the Company
          to a lender are accounted for as a contingency. Under U.S. GAAP, such
          loans are deducted from stockholders' equity and the related payment
          guarantees are recorded as a liability with a corresponding deduction
          from stockholders' equity;

     o    In November 2002, the FASB issued Interpretation No. 45 ("FIN 45") -
          "Guarantor's Accounting and Disclosure Requirements for Guarantees,
          Including Indirect Guarantees of Indebtedness of Others". FIN 45
          elaborates on the disclosures to be made by a guarantor about its
          obligations under certain guarantees issued. It also clarifies that a
          guarantor is required to recognize, at the inception of certain
          guarantees, a liability for the fair value of the obligation
          undertaken in issuing the guarantee. The initial recognition and
          measurement provisions of FIN 45 apply on a prospective basis to
          guarantees issued or modified after December 31, 2002. The
          disclosures are effective for the Company's annual financial
          statements for the year ended December 31, 2002. The adoption of this
          Interpretation did not have a significant impact on the Company's
          consolidation financial position or results of operations;

     o    On January 17, 2003, the FASB issued Interpretation No.46 ("FIN 46")
          - "Consolidation of Variable Interest Entities", which addresses
          consolidation by business enterprises where equity investors do not
          bear the residual economic risks and rewards. These entities have
          been commonly referred to as "Special purpose entities ("SPEs")." The
          underlying principle behind the new Interpretation is that if a


                                     -55-

<PAGE>

          business enterprise has the majority financial interest in an entity,
          which is defined in the guidance as a variable interest entity, the
          assets, liabilities and results of the activities of the variable
          interest entity should be included in the consolidated financial
          statements with those of the business enterprise. The Interpretation
          also explains how to identify variable interest entities and how an
          enterprise should assess its interest in an entity when deciding
          whether or not it will consolidate that entity. In December 2003, the
          FASB released a revision of FIN No. 46 ("FIN No. 46R") in which the
          calculation of expected losses and expected residual returns have
          been altered to reduce the impact of decision maker and guarantor
          fees. In addition, FIN No. 46R changes the definition of a variable
          interest. The Company as a foreign private issuer is required to
          apply either FIN 46 or FIN 46R to variable interest entities ("VIEs')
          created after January 31, 2003. The adoption of this Interpretation
          did not have a significant impact on the Company's consolidation
          financial position or results of operations;

     o    In April 30, 2003, the FASB issued Statement No. 149 - "Amendment of
          Statement 133 on Derivative Instruments and Hedging Activities". The
          statements amends and clarifies accounting for derivative
          instruments, including certain derivative instruments embedded in
          other contracts, and for hedging activities under Statement 133. The
          new guidance amends Statement 133 regarding implementation issues
          raised in relation to the application of the definition of a
          derivative, particularly regarding the meaning of an underlying and
          the characteristics of a derivative that contains financing
          components. The amendments set forth in SFAS No. 149 improve
          financial reporting by requiring that contracts with comparable
          characteristics be accounted for similarly. In particular, this
          statement clarifies under what circumstances a contract with an
          initial net investment meets the characteristic of a derivative as
          discussed in SFAS No. 133. In addition, it clarifies when a
          derivative contains a financing component that warrants special
          reporting in the statement of cash flows. The adoption of SFAS No.
          149 did not have a significant impact on its consolidated financial
          position or results of operations; and

     o    On May 15, 2003, the FASB has issued Statement No.150 - "Accounting
          for Certain Financial Instruments with Characteristics of both
          Liabilities and Equity". The Standard improves the accounting for
          certain financial instruments that, under previous guidance, issuers
          could account for as equity. The new statement requires that the
          following instruments be classified as liabilities in statements of
          financial position. One type of instrument is mandatory redeemable
          stock, which the issuing company is obligated to buy back in exchange
          for cash or other assets. A second type of instrument, which includes
          put options and forward purchase contracts, involves instruments that
          do or may require the issuer to buy back some of its shares in
          exchange for cash or other assets. The third type of instrument that
          is considered a liability under this statement is obligation that can
          be settled with variable number of its equity shares, the monetary
          value of which is fixed or tied solely or predominantly to a variable
          such as a market index, or varies inversely with the value of the
          issuers' shares. The statement does not apply to features embedded in
          a financial instrument that is not a derivative in its entirety. In
          addition to its requirements for the classification and measurement
          of financial instruments in its scope, SFAS No. 150 also requires
          disclosures about alternative ways of settling the instruments and
          the capital structure of entities, all of whose shares are mandatory
          redeemable. Most of the guidance in this statement is effective for
          all financial instruments entered into or modified after May 31,
          2003, and otherwise is effective at the beginning of the first


                                     -56-

<PAGE>

          interim period beginning after June 15, 2003. The adoption of SFAS
          No.150 had no significant impact on its consolidation financial
          position or results of operations.

     For a discussion of these and other significant differences between Korean
GAAP and U.S. GAAP, see notes 27 and 28 of notes to consolidated financial
statements. For a discussion of the Company's blank check arrangements, see
note 23 of notes to consolidated financial statements.

     Sales, cost of sales, gross profit (loss), operating expenses, operating
loss, net income (loss) and shareholders' equity under U.S. GAAP as of and for
the years ended December 31, 2001, 2002 and 2003 are as follows:

<TABLE>
<CAPTION>
                                                        2001                  2002                2003
                                                --------------------------------------------------------------
                                                                 (in millions of Korean won)
<S>                                                       <C>                  <C>                   <C>
Sales......................................          (won)69,827          (won)69,715           (won)96,039
Cost of sales..............................               78,020               76,786                82,172
Gross profit (loss)........................               (8,193)              (7,071)               13,867
Operating expenses.........................               54,494               43,124                35,386
Operating loss.............................              (62,687)             (50,195)              (21,518)
Net income (loss)..........................              (84,811)             (62,607)              (24,278)
Shareholders' equity.......................              209,519              148,251               148,909

</TABLE>


Taxation


     We have benefited from, and may continue to benefit from, certain tax
benefits as set forth below:

     o    The Korean tax code provides for various special tax credits for
          expenses related to the development of technology and human resources
          and capital investments. However, we could not benefit from such tax
          credits in 2001, 2002 and 2003 because we did not realize taxable
          income for these years. Such tax credits can be carried forward for a
          period of four to seven years from the date of accrual. As of
          December 31, 2003, we had Won 7,360 million in tax credit
          carry-forwards expiring between 2004 and the end of 2010.

     o    SoftForum, one of our subsidiaries, received a special tax credit
          applicable to small- and medium-sized venture companies of Won 415
          million and Won 266 million, for the years ended December 31, 2001
          and 2002, respectively. The special tax credit equals 50% of income
          taxes payable. Therefore, SoftForum did not benefit this special tax
          credit in 2003 because SoftForum realized a net loss and did not have
          income taxes payable. SoftForum can benefit from this tax credit up
          to 2004.

     o    Korean customs duty laws provide for the imposition of a general duty
          of 8% on certain equipment imported for use in the sector of the
          economy in which we operate. As a result, in the domestic market our
          semiconductor test handlers and SMD placement systems benefit from a
          competitive price advantage compared to similar products imported
          into Korea. Korean customs duty laws also provide for the imposition
          of a special duty of 18% on medium-speed general gantry type SMD
          placement systems with test times slower than 0.1 second per chip.
          This special duty had been applied until December 31, 2001, and
          further, has been imposed continuously thereafter. It is not known
          when it will expire.


                                     -57-

<PAGE>

Critical Accounting Policies, Estimates and Judgments

     Our consolidated financial statements are prepared in accordance with
Korean GAAP. The preparation of these financial statements requires management
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses as well as the disclosure of contingent
assets and liabilities. Management continually evaluates our estimates and
judgments including those related to allowances for doubtful accounts,
inventories, useful lives of property and equipment, investments, employee
stock option compensation plans and income taxes. Management bases their
estimates and judgments on historical experience and other factors that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. We believe that
of our significant accounting policies, the following may involve a higher
degree of judgment or complexity:

         Allowances for Doubtful Accounts

     An allowance for doubtful accounts is provided based on the estimated
collectibilty of individual accounts and historical bad debt experience. We
maintain allowances for doubtful accounts for estimated losses that result from
the inability of our customers to make required payments. We base our
allowances on the likelihood of recoverability of accounts receivable based on
past experience and taking into account current collection trends that are
expected to continue. If economic or specific industry trends worsen beyond our
estimates, we increase our allowances for doubtful accounts by recording
additional expense.

         Inventories

     Inventories are stated at the lower of cost, determined using the weighted
average method, or net realizable value. Inventories consist of raw materials,
finished goods, merchandise, work-in-process and inventories in transit.

         Estimated Useful Lives of Property and Equipment

     We estimate the useful lives of property and equipment in order to
determine the amount of depreciation and amortization expense to be recorded
during any reporting period. The useful lives are estimated at the time the
asset is acquired and are based on historical experience with similar assets as
well as taking into account anticipated technological or other changes. If
technological changes were to occur more rapidly than anticipated, or in a
different form than anticipated, the useful lives assigned to certain assets
may need to be shortened, resulting in the recognition of increased
depreciation and amortization expense in future periods. Alternatively, these
technological changes could result in the recognition of an impairment charge
to reflect the write-down in value of the asset. We review these types of
assets for impairment annually or when events or circumstances indicate that
the carrying amount may not be recoverable over the remaining lives of the
assets. In assessing impairments, we use cash flows that take into account
management's estimates of future operations.

     The cost of maintenance and repairs is charged to operations as incurred;
expenditures which extend the useful life of the asset or result in increased
future economic benefits, such as increase in capacity and improvement in the
quality of output or standard of performance, are capitalized. When assets are
retired or otherwise disposed of, their carrying values and the related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is reflected in the current operations.


                                     -58-

<PAGE>

         Investments

     Investment securities of non-consolidated-affiliated companies, over which
we exercise significant influence, are stated using the equity method of
accounting, whereby our initial investment is recorded at cost. The carrying
value is subsequently increased or decreased to reflect our share of income or
loss of the investee and dividends received therefrom. Our share in net losses
of its affiliates is reflected only to the extent of its investment-carrying
amount.

     Other investments in equity securities of listed companies are stated at
fair value and the net unrealized gain or loss on investments in equity
securities of listed companies is recorded as a capital adjustment. Other
investments in equity securities of non-listed companies are stated at
acquisition cost. If the fair value (or the net asset value for non-listed
companies) of the investments declines significantly below the acquisition cost
and is not expected to recover, such investments are carried at fair value (or
net asset value) and the resulting unrealized loss on investments is charged to
current operations.

         Employee Stock Option Compensation Plan

     We adopted the fair value based method of accounting for the employee
stock option compensation plan, which was established, effective as of March
25, 2000, in order to reward the performance of individual officers and other
employees who have contributed, or have the ability to contribute,
significantly to us. Under the fair value based method, compensation cost is
measured at the grant date, based on the value of the award, and is recognized
over the service period. For stock options, fair value is determined using an
option-pricing model that takes into account the stock price at the grant date,
the exercise price, the expected life of the option, the volatility of the
underlying stock, the expected dividends and a risk-free interest rate over the
expected life of the option. However, as permitted under Korean GAAP, we
exclude the volatility factor in estimating the value of its stock options,
which results in measurement at minimum value. The total compensation cost at
the grant date is not subsequently adjusted for changes in the price of the
underlying stock or its volatility, the expected life of the option, dividends
on the stock, or the risk-free interest rate.

         Valuation of Long-term Receivables

     Long-term receivables resulted from long-term installment transactions are
stated at the present value of the expected future cash flows. Imputed interest
amounts are recorded in present value discount accounts that are deducted
directly from the related nominal receivable balances. Such imputed interest is
included in operations using the effective interest rate method over the
redemption period.

         Derivative Instruments

     We record rights and obligations arising from derivative instruments as
assets and liabilities, which are stated at fair value. The gains and losses
that resulted from the change in the fair value of derivative instruments are
reported in the current earnings. However, derivative instruments designed as
hedging instruments are recorded as a separate component of shareholders'
equity and credited/charged to operations when the hedged transactions affect
earnings, and the ineffective portion of the gains or credited/changed
immediately to operations.


                                     -59-

<PAGE>

     Income Taxes

     Deferred tax assets and liabilities are recognized for the future tax
consequences of operating loss carry-forwards, tax credits and temporary
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets are
recognized to the extent that they are expected to be realizable. Deferred tax
assets and liabilities are presented on the balance sheet as a single
non-current net number.

B.       Liquidity and Capital Resources

     We have traditionally met our working capital and capital requirements
principally from cash provided by operations, while addressing the remainder of
our requirements primarily through the issuance of common stock and short- and
long-term borrowings. We believe that our working capital is sufficient for our
present requirements.

     Net cash provided by or (used in) operating activities in 2001, 2002 and
2003 was (Won 11,957 million), (Won 24,340 million) and Won 519 million,
respectively. We have continuously focused our efforts on collecting
receivables and reducing inventories. Despite our success in decreasing the
level of trade receivables and inventories, we realized negative cash flow from
operating activities, mainly due to our low sales volume in 2001 and 2002. We
realized positive cash flow from operating activities in 2003 as the sales
volume increased.

     Cash and cash equivalents, short-term financial instruments, trading
securities and current portion of available-for-sale securities as of December
31, 2001, 2002 and 2003 were Won 81,485 million (23% of total assets), Won
70,202 million (29% of total assets) and Won 57,582 million (25% of total
assets), respectively. Short-term financial instruments are comprised of time
deposits and financial instruments readily convertible into cash within one
year. Trading securities are primarily comprised of Korean debt unit trusts.
The increase for the year ended December 31, 2001 was primarily due to
SoftForum's initial public offering on the KOSDAQ, which resulted in
cash-inflows of Won 14,741 million. The decrease for the year ended December
31, 2002 was mainly due to lower sales volume. In order to compensate for this
decrease in our cash flow, we made a divestiture of our Kang-nam Mirae building
for Won 60 billion in 2002. The decrease for the year ended December 31, 2003
was mainly due to the acquisition of equity (4,000,000 shares) of Cyber Bank
Co. at Won 2,500 per share. Cyber Bank Co. develops and manufactures
telecommunication appliance, and develops total information system and
software. As a result of acquisition, our ownership percentage increased to
28.24% from 1.05%.

     Cash provided by financing activities for the year ended December 31, 2001
were Won 71,210 million. Cash provided by financing activities in 2001 was
mainly due to an increase in short-term borrowings of Won 55,330 million, as
well as net cash inflows from the purchase and disposal of treasury stock of
Won 7,448 million. Cash used in financing activities for the year ended
December 31, 2002 was Won 13,375 million. Cash used in financing activities in
2002 was mainly due to a payment of short-term borrowings of Won 21,885
million. While short-term borrowings decreased, long-term borrowings increased
by Won 10,000 million for the year ended December 31, 2002. Cash provided by
financing activities for the year ended December 31, 2003 was Won 12,217
million. Cash provided by financing activities in 2003 was mainly due to an
issuance of 24,927,500 additional shares at Won 1,020 per share.


                                     -60-

<PAGE>

     Our capital expenditures for the years ended December 31, 2001, 2002 and
2003 were Won 23,593 million, Won 3,238 million and Won 22,669 million,
respectively. For the year ended December 31, 2001, we spent Won 23,729 million
in connection with the construction of a research and development center in
Hwasung City and other equipment, most of which relates to this center. We do
not have any material commitments for capital expenditures other than our
regular research and development activities. For the year ended December 31,
2002, we received Won 58,655 million for the disposal of an office building in
Seoul and spent Won 3,238 million for capital expenditures. For the year ended
December 31, 2003, we spent Won 17,683 million and Won 2,149 million,
respectively, in connection with the purchase of an office building in Seoul by
SoftForum, one of our subsidiaries, and construction of a plant in Chunan City.

     As of December 31, 2003, we had short-term credit lines with Korea
Exchange Bank, Shinhan Bank and Kookmin Bank, the aggregate limits of which
were Won 17,000 million, Won 5,000 million and Won 2,000 million, respectively.
The interest rates for our credit lines with Korea Exchange Bank are 6.5%-6.9%
and for our credit lines with Shinhan Bank and Kookmin Bank, the interest rates
are 5.9% and 6.5%, respectively. As of such date, the amounts of these credit
lines being used were Won 15,000 million from Korea Exchange Bank and Won 5,000
million from Shinhan Bank. These lines of credit will expire within one year.
However, we believe that such credit lines will be renewed. A certain portion
of our land and buildings is pledged as collateral for the credit line with
Korea Exchange Bank.

     As of December 31, 2003, we had long-term credit lines with Korea
Development Bank and Korea Exchange Bank bearing interest at a rate range from
4.17% to 6.20%. The aggregate limit of these credit lines was Won 10,032
million and these are due to expire in 2008. As of such date, we were utilizing
the full amount of this credit line. A certain portion of our land and
buildings is pledged as collateral for this credit line.

     The tables below set forth our contractual obligations and commercial
commitments as of December 31, 2003.

<TABLE>
<CAPTION>
Contractual Obligations as of December 31, 2003

                                                                     Payments Due by Period
                                                -------------------------------------------------------------------
                                                             Less Than 1                                    After 5
Contractual Obligations                           Total          year         1-3 years      4-5 years       years
-------------------------------------------------------------------------------------------------------------------
                                                                   (Unit: in millions of Won)
<S>                                               <C>            <C>            <C>            <C>
Long-Term Debt                                    10,032        1,787          4,766           3,479            -
Capital Lease Obligations                            621          461            160               -            -
Other Long-Term Obligations                            -            -              -               -            -
                                                -------------------------------------------------------------------
Total Contractual Cash Obligations                10,653        2,248          4,926           3,479            -

Other Commercial Commitments as of
  December 31, 2003

</TABLE>


<TABLE>
<CAPTION>

                                                                                         (Unit: in million won)


                                                           Amount of Commitment Expiration Per Period
                                               ---------------------------------------------------------------------------
                                                             Less than 1                                    Over 5
Other Commercial Commitments                    Total           year          1-3 years      4-5 years       years
                                               ---------------------------------------------------------------------------
                                                                   (Unit: in millions of Won)
<S>                                                <C>           <C>             <C>            <C>           <C>
Lines of Credit(1)                               24,000        24,000              -               -            -
Standby Letters of Credit                         2,396         2,396              -               -            -
</TABLE>


                                     -61-

<PAGE>

<TABLE>
<CAPTION>

<S>                                                 <C>            <C>          <C>            <C>             <C>
Guarantees                                        2,965         2,965              -               -            -
Other Commercial Commitments                          -             -              -               -            -
                                              ----------------------------------------------------------------------------
Total Commercial Commitments                     29,361        29,361              -               -            -
</TABLE>

__________________


Note:

(1) Excluding a long-term credit line of Won 10,032 million included under
Long-Term Debt.

     Traditionally, the functional currency for our operations has been the
Korean won. We believe that with overseas sales, our liquidity may be affected
by exchange rate fluctuations, especially rates for US dollars. However, for
the periods referred to above, there had been no material operating trends or
effects on liquidity as a result of fluctuations in currency exchange rates.

     We had total outstanding trade accounts receivable of Won 36,409 million,
Won 33,965 million and Won 40,589 million, net of allowance, as of December 31,
2001, 2002 and 2003, respectively.

     As of December 31, 2003, a lawsuit relating to payment of construction
costs for a building, which we purchased in 2000, had been outstanding between
the former building owner and his creditors. In connection with this, we made a
payment in 2002 of Won 6 billion to a court on behalf of the former building
owner in order to protect our assets and recorded the payment as an advance
payment. In 2002, we sold this building to a third party. As of December 31,
2002, we recorded a full allowance for the advance payments and an additional
provision for guarantees of Won 650 million.

     In the future, we may need to raise additional funds to develop new and
enhanced products and to respond to competitive pressures. Such funds, if
necessary, would be raised through additional equity or debt financing, credit
facilities or disposal of properties, although no assurance can be given that
we will be able to obtain such financing, facilities or disposals on
satisfactory terms. We also plan for additional sales of stock in our
subsidiaries in the near future as part of our business strategy.

     As our working capital and capital requirements are principally satisfied
by cash provided by operations, circumstances affecting our operations will in
turn affect our liquidity. Our operations may be detrimentally affected by
several factors, including the highly cyclical nature of the electronics,
semiconductor and semiconductor related industries, intense competition,
economic downturn, especially in Korea, periodic industry downturn, loss of
customers and the lack of success of future products or business lines. Any of
these factors or a combination thereof could depress our sales revenue and
overall profitability and thereby constrain our operating cash flow. For an in
depth discussion of risks related to our operations see "Item 3--Key
Information--Risk Factors". For an in depth discussion of factors that have
historically affected our operating results, see "Item 5--Operating and
Financial Review and Prospects--Operating Results".

     We have provided and may in the future provide performance guarantees on
our affiliates' or third parties' behalf, in accordance with common business
practices in Korea. Accordingly, collection by a secured party on a guarantee
could affect our liquidity.

     We have provided collateral to Seoul Guarantee Insurance Company
guaranteeing the performance of certain of Mirae's significant customers for
their timely delivery of goods and satisfaction of their warranty obligations.
In the event Seoul Guarantee collects on our


                                     -62-

<PAGE>

guarantees, our maximum liability is Won 1,000 million. We have also provided a
promissory note to a significant customer guaranteeing our performance on a
contract. In the event we fail to satisfy our contractual obligations, the
customer could utilize the guarantee to cover its resulting losses. Our
management does not presently anticipate any losses as a result of any of the
above guarantees.

     We provided our employee association with guarantees totaling Won 1,056
million for their purchases of common stock of SoftForum, a subsidiary of the
Company.

C.       Research and Development, Patents and Licenses, Etc.

     The semiconductor equipment manufacturing industry is subject to rapid
technological change. We believe that continued and timely development and
introduction of new and enhanced products is essential for us to maintain our
competitive position. We believe a short lead time for product development may
contribute to our ability to maintain our competitive position in the global
marketplace. If product cycles become shorter due to the rapid pace of
technological advancements, we believe that our research and development
capabilities may help us maintain our competitive position in the marketplace.
In order for us to maintain our competitive position in the global marketplace,
Mirae research center is adapting six months development lead time rule from
concept design stage to design verification test stage.

     Mirae research center in Hwasung City, which was built in 2002 is focusing
on developing new generations of mechatronics equipment and software, and on
advancing our core competencies and current system features relating primarily
to accuracy, reliability and flexibility. Mirae research center has developed
core technologies such as machine vision technology, high performance linear
motor design technology, intelligent control technology and the distributed
motion control technology. Since most of our essential technology is developed
by Mirae research center, we do not license outside technology and,
consequently, are not obligated to pay royalty fees.

     In 2003, Mirae research center developed new SMT equipment named Mx310 and
Mx240 and new test handlers named MR2700 and MR5700. High speed chip placement
system, Mx310, and multi-functional chip placement system, Mx240, successfully
passed qualification process of a large EMS company in the United States. These
two models can be used in production of mobile phone with high density PCB. The
evaluation of the new SMT machines was accomplished in California and for
successful evaluation, Mirae dispatched development engineers to EMS company
for six months. The two new models are currently used for production in PCB
assembly line at the company. At present, the customer is satisfied to use the
new models. Two models are currently in mass production stage and we expect
that they will contribute to our revenue and profits in 2004.

     We are widely known as memory test handler manufacturer. In 2003, Mirae
research center completed development of logic test handler with high
throughput, MR2700. MR2700 passed qualification process of a testing house and
chip maker in Korea and have been used in production of CIS (CMOS Image
Sensor). We expect that MR2700 will contribute to our revenue and profits in
2004. In order to maintain the competitive position in memory test handler
marketplace, Mirae research center completed development of memory test handler
with 128 parallelism, MR5700, in 2003 and MR5700 product contributed to the
revenue of 2003 year. From the second half of 2003, for diversification of our
businesses, Mirae research center has focused its resource on the development
of assembly and test equipments associated with flash memory cards and mobile
phones. These application equipment has been developed by using the
technologies accumulated in Mirae research center. As a result,


                                     -63-

<PAGE>

our businesses will be diversified into flash memory card market and mobile
phone market and we expect that this equipment will contribute to our revenue
and profits in 2004.

     Historically, we have placed high strategic importance on fostering our
research and development expertise. As a result, our aggregate research and
development expenditures for the years ended December 31, 2003, 2002 and 2001
amounted to Won 7.6 billion, Won 9.3 billion and Won 16.0 billion,
respectively. Over the next several years, we plan to allocate up to 10% of our
sales revenue to research and development expenditures, though this percentage
may vary depending upon our financial results in any given year.

     For information on our patents and other intellectual property, please
refer to "Item 4--Information on the Company--Business Overview--Intellectual
Property".

D.       Trend Information

     See "Item 4--Information on the Company--Business Overview" and "Item
5--Operating and Financial Review and Prospects--Operating Results".

E.       Off Balance Sheet Arrangements

     We have provided our employee association with guarantees totaling Won
1,056 million for their purchases of common stock of SoftForum, a subsidiary of
the Company. See note 23 to our consolidated financial statements. Otherwise,
we do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on our financial condition,
change in financial conditions, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.

ITEM 6.       Directors, Senior Management and Employees A. Directors and
              Senior Management

     Our Board of Directors consists of six Directors, three of whom are
independent (or "outside") non-executive Directors. The functions and duties
conferred on the Board of Directors include:

     o    convening shareholders' meetings and providing reports at the
          shareholders' meetings;

     o    implementing the resolutions of the shareholders' meetings;

     o    determining our business plans and investment plans;

     o    formulating our annual budget and final accounts;

     o    formulating our proposals for dividend and bonus distributions and
          for the increase or reduction of capital; and

     o    exercising other powers, functions and duties as conferred by our
          Articles of Incorporation and By-laws.

     Our Board of Directors has the ultimate responsibility for the management
of our affairs. Under our Articles of Incorporation, our Board must consist of
at least three but not more than ten Directors, and at least one but not more


                                     -64-

<PAGE>

than two Statutory Auditors. The term of office for Directors is three years
but may be extended to the close of the ordinary general meeting of
shareholders convened in the last fiscal year ending during such term. Our
Articles of Incorporation preclude cumulative voting.

     In February 1998, in order to enhance the transparency of the management
of companies listed on the Korea Stock Exchange and to provide increased
investor protection, the Korea Stock Exchange enacted a regulation requiring
all listed companies to appoint the greater of (a) one outside Director and (b)
one-fourth (1/4) or more of the total number of Directors, as outside
Directors. If a listed company fails to comply with this requirement its common
stock may be de-listed from the Korea Stock Exchange. Pursuant to amendments
promulgated on January 21, 2000 to the Korean Securities and Exchange Act of
1962, as amended, certain companies listed on the Korea Stock Exchange, to be
designated by a Presidential Decree, will be required to appoint one-half (1/2)
or more, but in any event, no fewer than three, of the total number of
Directors as outside Directors. Because the Presidential Decree has not yet
been issued, we do not know whether we will be required to appoint additional
outside Directors. There are no family relationships among the Directors or
senior managers of Mirae.

         Board of Directors

     The following table provides certain information about the members of our
Board of Directors.

<TABLE>
<CAPTION>

                                       Year        Expiration
         Name             Age       Appointed        of Term              Position Held
----------------------------------------------------------------------------------------------------------------
<S>                       <C>        <C>             <C>          <C>
Hyung Yun Lee              55         2001            2006       Chief Executive Officer and President of Mirae
                                                                 Corporation
                                                                 CEO of Mirae America, Inc.

Soon Do Kwon               46         1999            2006       An absentee Director of Mirae Corporation
                                                                 CEO and  President of SoftForum Co., Ltd.
                                                                 CEO and President of MR TechTown Co., Ltd.

Young Sun Cho              46         2004            2007       President, Chief Executive Officer of Cyber
                                                                 Bank Corporation

Kwang Hyung Lee            49         1999            2005       Outside Director

Hyun Kyo Jung              48         1999            2005       Outside Director

Yeon Ho Lee                45         2003            2006       Outside Director
</TABLE>


     The principal occupation, employment and education histories of the
members of our Board are as follows:

     Hyung Yun Lee joined Mirae in 2001 as President of Mirae America, Inc. On
May 2, 2003 he was appointed President, Chief Executive Officer and as a
Director of Mirae Corporation and is currently the Chairman of the Board of
Director. Prior to that, Mr. Lee worked for LG Electronics Co., Ltd. (formerly
Kum-Sung Electronics Co., Ltd.) as a general manager and as President of
Teradyne Korea and Schlumberger Korea. Mr. Lee received a


                                     -65-

<PAGE>

B.S. in Electronics from Seoul National University and a M.S. in Electricity
from KAIST (Korea Advanced Institute of Science & Technology).

     Soon Do Kwon joined the Company as Chief Financial Officer in 1999 and was
elected as a Director in March 2000. In May 2003, he was appointed as Vice
President of the Company. In March 2004, he resigned as Vice President and
Chief Financial Officer and appointed as absentee Director at the same time.
Prior to joining Mirae, he was employed at Ssangyong Oil and Refinery Co. from
1982 to 1999, during which time he held various positions, including serving as
an internal auditor. Mr. Kwon received a B.B.A. from Korea University. Mr. Kwon
is the Representative Director and Chief Executive Officer of Mobile Game Co.,
Ltd., as well as the Chief Executive Officer of SoftForum Co., Ltd. and Mirae
Online Co., Ltd., each of which are subsidiaries of Mirae.

     Young Sun Cho joined Mirae as a Director in March 2, 2004 and he is a
President and Chief Executive Officer at Cyber Bank Corporation. Prior to
joining Mirae, Mr. Cho was employed at Daewoo Precision Industries CO., Ltd. in
the research and development center. He received a B.E in School of Mechanical
and Aerospace engineering from Seoul National University.

     Kwang Hyung Lee was elected as an outside Director in 1999. He is a
professor at Korea Advanced Institute of Science and Technology. Mr. Lee
received a B.S. in Industrial Engineering from Seoul National University and a
Ph.D. from Institute National Sciences Appliques de Lyon in Computer Science.

     Hyun Kyo Jung was elected as an outside Director in October 1999. He is a
professor at Seoul National University. Mr. Jung received a B.E., M.E. and Ph.D
from Seoul National University in Electrical Engineering.

     Yeon Ho Lee was elected as an outside Director in March 2003. He is a
certified public accountant and is currently employed by Kwang-Jang Accounting
Corporation. He received a Master in Business Administration from Yonsei
University.

         Senior Management

     The following table provides certain information about our senior
management.

<TABLE>
<CAPTION>
           Name                Age    Year Appointed                        Position Held
------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>         <C>
Yoon Hee Bae                   52          2003        Executive Managing Director of Sales Division
Heung Seon Hwang               45          2003        Executive Director of Business Support Division
Hee Rak Beom                   45          2003        Executive Director of Research & Development Center
Ji Hyun Hwang                  41          2003        Director of Research & Development Center
Hyeon Tae Kyeong               41          2003        Director of Production Division
Do Young Cho                   45          2003        Director of Display Division
Suk Joo Ko                     39          2004        Director of Accounting Team; Currently performing the
                                                       role of CFO
                                                       CFO of Miraeonline Co., Ltd.
Laurent Robert                 37          2004        Director of SMT Software Team
</TABLE>

     The principal occupation, employment and education histories of the senior
managers are as follows:


                                     -66-

<PAGE>

     Yoon Hee Bae joined Mirae in 1997 as Director of New Business Development,
served as Director of Overseas Business Support from 1999 to 2001 and Executive
Director of the Customer Support Division from 2001 to 2003, and currently
serves as a Executive Managing Director of the Sales Division. Before joining
Mirae, Mr. Bae worked as a Director of the Customer Support Division at Applied
Materials, Inc., Manager of Field Service Group LTX Korea Co. and Manager of
Device Test Engineering Group at Hynix Semiconductor Inc.

     Hee Rak Beom joined Mirae in 1997 as Director of the R&D Division and now
he serves as Executive Director of R&D Center. Prior to joining Mirae, Mr. Beom
worked at LG Electronics Co. R&D Center and at LG Industrial Systems Co. as a
general manager in the R&D Center. Mr. Beom received a Ph.D in Mechanics from
KAIST (Korea Advanced Institute of Science & Technology).

     Heung Seon Hwang joined Mirae in 2000 as a Director of the Production
Division and currently holds the position of Executive Director of Business
Support Division. Prior to joining Mirae, Mr. Hwang worked for Samsung
Electronics and Samsung Techwin as a Unit Leader. Mr. Hwang graduated from
Hongsung College.

     Ji Hyun Hwang joined Mirae in 1998 and currently serves as a Director of
the R&D Center. Mr. Hwang worked for LG Industrial Systems Ltd. as a senior
research engineer and received a M.S. in Precision Machinery Engineering from
Hang Yang University.

     Hyeon Tae Kyeong joined Mirae in 1997 and currently serves as Director of
the Production Division. Mr. Kyeong worked for LG Industrial Systems Ltd. as a
manager of research and development. Mr. Kyeong received a M.S. in Applied
Mechanics from Yonsei University.

     Do Young Cho became a member of Mirae as a Director of Display Division in
December 1, 2003. Prior to joining Mirae, Mr. Cho was employed at Sangnong
Corporation as a Research Engineer of R&D Center from 1984 to 1986 and also was
worked at Samsung SDI as Research Engineer of R&D Center from 1987 to 2000.
Then, Mr. Cho was worked at Young System Co., Ltd. as a Director of Sales
Division from 2001 to 2003.

     Suk Joo Ko joined Mirae in 2000 as a General Manager of Accounting Team
and currently holds the position as a Director of Accounting Team as well as
the Chief Financial Officer of Miraeonline Co., Ltd. which is a subsidiary of
Mirae. Mr. Ko is also currently performing the role of our Chief Financial
Officer. Prior to joining Mirae, Mr. Ko worked at Planning Department of SK
Corporation and also was employed at AhnKwon & co., as the part of the
International Department. Mr. Ko is a certificated public accountant and
received a B.A. in school of Business from Yonsei University.

     Laurent Robert joined Mirae in 1998 and currently serves as a Director &
Chief Research Engineer of SMT Software Team. Mr. Laurent received a B.Sc in
microelectronics in 1988 and a M.Sc in microelectronics in 1989 as well as
Engineer School (Grande Ecole) in microelectronics in 1990 from Montpellier
University and a Ph.D degree in Computer Science from the university of
Montpellier.

B.       Compensation

         Directors' and Senior Managers' Compensation


                                     -67-

<PAGE>

     We pay our Directors salaries and bonuses as determined by shareholder
resolutions which is determined on an annual basis. For the year ended December
31, 2003, the aggregate compensation (salaries, bonuses and allowances) paid
and accrued to all Directors and senior managers was approximately Won 1,376
million. In addition, the aggregate amount set aside for all Directors and
senior managers for pension, retirement and insurance was approximately Won 639
million. The foregoing amounts do not include amounts expended by us for
automobiles made available to our Directors and senior managers, expenses
reimbursed to Directors and senior managers (including business travel expenses
and professional and business association dues and expenses) and other benefits
commonly reimbursed or paid by companies in Korea.

         Stock Options Granted to Employees, Directors and Senior Managers

     As of March 31, 2004, stock options to our employees representing
7,856,896 common shares of the Company remain outstanding. In March 2001, with
the approval of our shareholders, an aggregate of 3,201,045 stock options
exercisable into the same number of our common shares were granted at an
exercise price of Won 1,379 per share, which shall become exercisable on March
24, 2004 and expire on March 23, 2009. However, 1,187,479 stock options were
cancelled upon employees' resignation and 2,013,566 stock options remain
unissued. In June 2002, with the approval of our shareholders, an aggregate of
1,072,456 stock options exercisable into the same number of our common shares
were granted at an exercise price of Won 1,261 per share, which shall be
exercisable on June 25, 2004 and expire on June 24, 2009. However, 153,208
stock options were cancelled upon employees' resignation and 919,248 stock
options remain unissued. In March 2003, with the approval of our shareholders,
an aggregate of 2,599,025 stock options exercisable into the same number of our
common shares were granted at an exercise price of Won 988 per share, which
shall be exercisable on March 22, 2005 and expire on March 21, 2010. However,
184,764 stock options were cancelled upon employees' resignation and 2,414,261
stock options remain unissued.

     In July 2003, with the approval of our shareholders, an aggregate of 1,
288,690 stock options exercisable into the same number of our common shares
were granted at an exercise price of Won 1,368 per share, which shall be
exercisable on July 16, 2005 and expire on July 15, 2010. However, 128,869
stock options were cancelled upon employees' resignation and 1,159,821 stock
options remain unissued.

     In March 2004, with the approval of our shareholders, an aggregate of
1,350,000 stock options exercisable into the same number of our common shares
were granted at an exercise price of Won 1,218 per share, which shall be
exercisable on March 20, 2006 and expire on March 19, 2011.

     We use our stock option plans to reward the performance of our officers
and other employees who have contributed and/or have the ability to contribute
significantly to us. When the length of employment is less than two years after
the grant of stock options, we may cancel the stock options awarded. Upon
exercise of stock options, in accordance with the sole discretion of the Board
of Directors, we may (i) grant newly issued common stock, (ii) grant treasury
stock or (iii) grant the net difference in exercise price and market price with
either cash and/or treasury stock.

     As described in note 2(u) to our consolidated financial statements, we
adopted the fair value based method of accounting for the stock option
compensation plan, in which fair value is determined using the Black-Scholes
option-pricing model, without considering a volatility


                                     -68-

<PAGE>

factor in estimating the value of its stock options, as permitted under Korean
GAAP. Under this accounting policy, total compensation costs were valued at Won
617 million and Won 1,267 million for options granted in 2002 and 2003,
respectively, and are recognized over the service period (2 years).
Compensation cost amounting to Won 159 million and Won 356 million in 2002 and
2003, respectively, was recognized.

<TABLE>
<CAPTION>

                          List of Stock Option Awarded
                        to Directors and Senior Managers

                                                                                    Number of
                                                                                      Stock
                                                                       Stock         Options
           Name                            Position                   Option*       Exercised
----------------------------------------------------------------------------------------------
<S>                          <C>                                       <C>             <C>
Hyung Yun Lee                CEO & President                           1,064,538       None
Soon Do Kwon                 Absentee Director                           129,079       None
Tae Seok Oh                  Senior Research Engineer                     25,815       None
Byeong Sung Lee              General Manager of Semiconductor             83,897       None
                             Equipment Worldwide sales Team
Yoon Hee Bae                 Executive Managing Director of Sales        288,028       None
                             Division
Heung Seon Hwang             Executive Director of Business              288,028       None
                             Support Division
Hee Rak Beom                 Executive Director of R&D Center            187,715       None
Hyeon Tae Kyeong             Director of Productions Division            187,715       None
Ji Hyun Hwang                Director of R7D Center                      187,715       None
Kwang Hyung Lee              Outside Director                             19,361       None
Hyun Kyo Jung                Outside Director                             19,361       None
Jeong Yul Jeon               Team Leader of Core Technology Team         129,075       None
                             II
Robert Laurent               Director & Chief Research Engineer          129,075       None
                             of SMT Software Team
Min Suke Suh                 Chief Research Engineer of Product          103,259       None
                             Team I
Jae Myeong Song              Senior Research Engineer of Product          90,353       None
                             Development Team II
Suk Joo Ko                   Director of Accounting Team                  80,000       None
Gun Hong Yang                General Manager of Management                90,353       None
                             Planning Team
Je Il Lee                    General Manager of Administrative            90,353       None
                             Team
Mi Ri Chung                  General Manager of Investor Relation         70,000       None
                             Team
Do Young Cho                 Director of Display Division                150,000       None


--------------

* All stock options are exercisable into the same number of our common shares.

</TABLE>

C.       Board Practice

         Audit and Other Committees

         Audit Committee


                                     -69-

<PAGE>

     Pursuant to the rules of The Nasdaq National Market, our Board of
Directors established an Audit Committee in November 1999 to review Mirae's
financial reporting, administrative systems and internal control systems and
structure. The Audit Committee also reviews Mirae's policies relating to the
avoidance of conflicts of interest. Our Audit Committee members are Mr.
Kwang-Hyung Lee, Mr. Hyun-Kyo Jung and Mr. Yeon-Ho Lee. Pursuant to an
amendment to the Korean Commercial Code, effective as of December 31, 2002,
certain companies may establish an Audit Committee in lieu of a statutory
auditor. In addition, pursuant to the January 2000 amendments to the Korean
Securities and Exchange Act, certain companies listed on the Korea Stock
Exchange, which will be designated by Presidential Decree, will be required to
establish an Audit Committee. In each case, the Audit Committee must consist of
three or more members, two-thirds or more being outside Directors.

     The following table sets forth the details of our Audit Committee members.

<TABLE>
<CAPTION>

           Name                                        Career                                Year Appointed
-------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                                  <C>
Kwang Hyung Lee              Ph.D in Computer Science from Institut National Sciences             2002
                             Appliques de Lyon

                             Professor of Korea Advanced Institute of Science and
                             Technology (KAIST)

Hyun Kyo Jung                Ph.D in Electrical Engineering from Seoul National                   2002
                             University
                             Professor of Seoul National University

Yeon Ho Lee                  M.B.A. from Yonsei University, Certified Public                      2003
                             Accountant, Kwang-Jang Accounting Firm

</TABLE>

         Governance Committee

     The Governance Committee oversees the composition, structure and
evaluation of the Board of Directors and its committees, and develops and
maintains a set of corporate governance guidelines. Our Governance Committee
members are Mr. Hyung Yun Lee, Mr. Soon Do Kwon, Mr. Young Sun Cho, Mr. Kwang
Hyung Lee, Mr. Hyun Kyo Jung and Mr. Yeon Ho Lee.

         Compensation Committee

     The Compensation Committee oversees our programs that foster employee and
executive development, determines executive compensation and oversees
significant employee benefits programs, policies and plans relating to our
employees and executives. Our Compensation Committee members are Mr. Hyung Yun
Lee and Mr. Soon Do Kwon.

         Outside Director Nominating Committee

     The Outside Director Nominating Committee assists the Board of Directors
in identifying individuals qualified to be outside directors. The Outside
Director Nominating Committee members are Mr. Hyung Yun Lee, Mr. Soon Do Kwon,
Mr. Young Sun Cho, Mr. Kwang Hyung Lee, Mr. Hyun Kyo Jung and Mr. Yeon Ho Lee.

D.         Employees


                                     -70-

<PAGE>

     Competition for technical personnel in our industry is intense. We believe
that we have been successful in recruiting qualified employees, and that our
future success depends in part on our continued ability to hire, assimilate and
retain qualified personnel.

     We maintain a retirement plan, as required by Korean labor law, pursuant
to which an employee terminating his or her employment after one year or more
of service is entitled to receive a lump-sum payment based on length of service
and average monthly compensation over the employee's final three months. We
have an employee stock ownership association through which members may, with
certain exceptions, purchase up to an aggregate of 15% of any of our shares
offered publicly in Korea.

     Our employees do not belong to any labor unions. We have not been subject
to any strikes or other labor disturbances that have interfered with our
operations, and we believe that our relations with our employees are good.

     The following table sets forth the number of our employees by department
for the periods indicated. Our employees decreased in number during these
periods due to our downsizing as part of our corporate restructuring.

<TABLE>
<CAPTION>

                                                                         Number of Employees
                                                                   At December 31,                    At March 31,
                                                      ----------------------------------------------
                                                        2001             2002           2003              2004
                                                      -------------------------------------------------------------
<S>                                                      <C>             <C>             <C>               <C>
Management & Administration.......................       109             148             46                82
Research & Development............................       102              78             79                73
Manufacturing.....................................        88              53             105               98
Sales & Marketing.................................        20              21             71                27
Total.............................................       319             300             301              280
</TABLE>


E.       Share Ownership


     The following table sets forth the beneficial ownership of our common
shares by our directors and senior managers:

<TABLE>
<CAPTION>

                                          Number of shares issued          Percentage shareholder
            Shareholder                       and outstanding                   ownership(1)
------------------------------------------------------------------------------------------------------
<S>                                                   <C>                           <C>
Soon Do Kwon.....................                     31,250                        0.02%
Moon Soul Chung(2)...............                 22,395,692                       13.86%

--------------

Notes:

(1)  Calculation includes the 1,474,139 shares of stock held in treasury by us.

(2)  Mr. Chung is our founder and served as President since our inception in
     1983 and as Chief Executive Officer, Chairman of the Board of Directors
     and Representative Director since our incorporation in 1990. Mr. Chung
     resigned from these positions as of January 3, 2001 and is currently named
     Honorary Chairman of the Board of Directors. This number includes
     22,395,692 (12.50%) held by Moon Soul Chung, 1,744,081 (0.97%) held by
     Boon Soon Yang (wife), 275,824 (0.15%) held by Eun Kyoung Chung
     (daughter), 137,770 (0.08%) held by Eun Hee Chung (daughter), 137,770
     (0.08%) held by Jin Man Chung (son) and 137,278 (0.08%) held by Ki Won
     Chung (son).

</TABLE>

     For information regarding ownership of stock options to acquire our common
shares which are held by our Directors, senior managers and employees, please
refer to "Directors, Senior Management and Employees--Compensation--Stock
Options Granted to Employees, Directors and Senior Managers".


                                     -71-

<PAGE>

ITEM 7.  Major Shareholders and Related Party Transactions

A.       Major Shareholders

     To the best of our knowledge, our only major shareholder (i.e.,
shareholder beneficially owning five percent (5%) or more of our common shares)
is Mr. Moon Soul Chung, our former Chairman of the Board, President and Chief
Executive Officer until January 3, 2001. As of December 31, 2003, Mr. Chung has
a shareholding of 12.50% and, including his family members, 13.86% and his
voting rights as a holder of Mirae common shares do not differ from the rights
of our other shareholders. For a description of Mr. Chung's shareholdings,
please see "Item 6--Directors, Senior Management and Employees--Share
Ownership".

B.       Related Party Transactions

     We have in the normal course of our business taken certain equity
positions in companies with which we are in pursuit of the synergistic benefits
for both parties where certain of these companies provide us services on
arm's-length terms. These transactions are not material to our business. Mirae
believes that all of the transactions described below have terms that are no
more favorable to either party than had such transactions been negotiated
between independent parties.

     o    In May 1999, Mirae agreed to provide SK Communications (formerly
          Lycos Korea) with a loan of up to Won 6,250 million pursuant to the
          joint venture agreement between Mirae and Lycos, Inc. that
          established Lycos Korea. Mirae received interest of Won 688 million
          in 2001 and repayment of the principal in full of Won 6,250 million
          together with interest of Won 359 million on August 22, 2002. A
          payment guarantee by us of Won 12,477 million on behalf of Lycos
          Korea to Lycos, Inc. and Lycos Business Trust I (U.S.A.) was
          dissolved when SK Telecom Co., Ltd. purchased Lycos Inc.'s interest
          in Lycos Korea. In addition, Mirae received other income, including
          rental fees, of Won 147 million in 2001, from SK Communications until
          its head office moved to another location in 2002.

     o    Mirae sold Won 1,783 million and Won 58 million of SMD placement
          systems to Mirae America, Inc., in 2002 and 2003, respectively, and
          paid to Mirae America sales commissions of Won 26 million in 2002 and
          Won 289 million in 2003. As of December 2003, Mirae had a balance of
          Won 1,408 million in accounts receivable, Won 800 million of advance
          payments and Won 10 million of accrued expenses in connection with
          its dealings with Mirae America.

     o    In 2002, Mirae received total rental fees of Won 253 million from
          Mobile Game Co., Ltd., Mirae's affiliate, for its use of our Kang-nam
          Building in Seoul, Korea, which we then sold in June 2002. As of
          December 31, 2002, Mirae had Won 7 million of other accounts
          receivable and Won 2 million of advance payments. In 2003, Mirae
          disposed all of its equity holdings in Mobile Game to Cyber Bank, its
          affiliates.

     o    Mirae imported and sold telecommunication devices, including PDAs, to
          Cyber Bank Co., Ltd. The total amounts of sales were Won 5,571
          million, Won 3,974 million and Won 7,494 million in 2001, 2002 and
          2003, respectively. In addition, Mirae received interest income of
          Won 235 million in 2002 due on a late payment of Won 2,382 million in
          accounts receivable. As of December 31, 2003, Mirae had a balance of
          Won 6,065 million of accounts receivable and Won 199 million of
          guarantee deposits payable to Cyber Bank.


                                     -72-

<PAGE>

     o    In 2003, Mirae additionally acquired equity of Cyber Bank's 4,000,000
          common shares at Won 2,500 per share. As a result of acquisition,
          Mirae's ownership percentage increased to 28.24% from 1.05%, and the
          accounting method for the investment in Cyber Bank was changed to the
          equity method of accounting from the cost method. In addition, Mirae
          provided Cyber Bank with a guarantee in the amount of Won 15,000
          million for operating fund in May 2004 in order to ensure a recent
          contract with KT for providing PDA phone.

     o    Mirae provided short-term loans of Won 800 million and Won 1,200
          million in 2001 and 2002, respectively, to a subsidiary, Mirae
          Online, Co., Ltd. in order to enhance its competitiveness in
          providing program broadcasting and a home shopping channel service.
          The full amount of the principal of Won 2,000 million and interest
          (9%) of Won 109 million were paid to us on April 19, 2002. In
          addition, Mirae received total rental fees of Won 93 million and Won
          66 million in 2002 and 2003, respectively, from Mirae Online for its
          lease of office space in our building in Bundang City, Korea.

     o    Mirae also provided Mirae Online with a guarantee in the amount of
          Won 11 billion and U.S. $700,000 for Mirae Online's short-term
          borrowings. In connection with the subsidiary's obligations
          subsequent to 2001, estimated losses Mirae would incur for payments
          to be made on behalf of Mirae Online were recorded in the amount of
          Won 3,739 million at December 31, 2001, as a provision of guarantees
          issued. However, in 2002, the guarantee expired, and accordingly,
          Mirae reversed the provision for guarantee of Won 3,739 million. In
          November 2003, Mirae provided Mirae Online with a guarantee in the
          amount of Won 2,000 million for a bank-issued letter of credit.

     o    On December 16, 2002, SoftForum made an acquisition of 359,997 common
          shares of Alpha Logics Co., Ltd. at Won 5,000 per share, or Won 1,800
          million in aggregate, from Cyber Bank. This acquisition was part of
          management strategy to enhance SoftForum's security market, including
          security solutions and related equipment.

     o    As of December 31, 2002, our major shareholder, Mr. Moon Soul Chung,
          had a 29.8%-ownership of Testech Co., Ltd.; therefore, Testech is a
          related company through common ownership. In July 2003, Mr. Chung
          donated his shareholding of Testech to Korea Advanced Institute of
          Science and Technology. In November 2001, the Company sold its
          fingerprint system division to Testech and in connection therewith,
          received Won 1,250 million in 2002. The Company sold Won 88 million
          of property and equipment to Testech in 2002 and purchased Won 7
          million of property and equipment from Testech in 2003. The Company
          received Won 10 million of other income for acting as a patent rights
          agency for Testech in 2002 and 2003. The Company purchased Won 1,784
          million and Won 460 million of raw materials from Testech in 2002 and
          2003, respectively, and for the same period, paid Won 15 million and
          Won 3 million for services provided by Testech. As of December 31,
          2003, the Company had Won 88 million of accounts payable to Testech.

     o    We have reinstated a branch of the Company in Seoul, Korea with 386
          square meters of leased office space in a building owned by SoftForum
          located in Dokok-dong, Kang Nam-gu. Our lease runs from April 13,
          2003 through April 13, 2005. We paid a guarantee deposit of Won 386
          million to SoftForum.


                                     -73-

<PAGE>

      Sales to our affiliates totaled approximately Won 7,552 million in 2003.
For the years ended December 31, 2001, 2002 and 2003, the related party
transactions were primarily with Mirae America, Cyber Bank, Testech and DE&T.
For further information, see note 12 to our consolidated financial statements.

ITEM 8.   Financial Information

A.       Consolidated Statements And Other Financial Information

         Consolidated Financial Statements

     See Item 18 "Financial Statements" and pages F-1 to F-52 following Item
19.

         Legal Proceedings

     Our exclusive distributor for SMT placement systems until 2000 in North
America, South America, Europe, Africa and Israel, Quad Systems Corporation,
filed a voluntary petition for reorganization on December 18, 2000 under
Chapter 11 of the U.S. Bankruptcy Code. As a major creditor of Quad Systems, we
were an interested party actively participating in such proceedings. During the
settlement period, we were barred from selling our machines in the Americas and
Europe. The bankruptcy settlement took place in July 2001.

     As of December 31, 2002, a lawsuit relating to payment of construction
costs for a building in Seoul, Korea we sold in 2002 had been outstanding
between the former building owner and his creditors. In connection with this,
we made a payment of Won 6 billion to a court on behalf of the former building
owner in order to protect our assets and recorded the payment as an advance
payment. As of December 31, 2002, we recorded an allowance for the aggregate of
the advance payments and an additional provision for guarantees of Won 649
million. In 2003, we diverted the full amount, Won 6,649 million, to the
long-term loan.

     In November 2001, we filed a lawsuit against Nexscien (formerly Yuil
Semicon Company), a Korean company, in Suwon Central District Court alleging
infringement of our memory module test handler patents. The lawsuit seeks to
prohibit all use of our patented technology, including manufacturing, using,
selling, assigning and leasing module test handlers and any advertisement or
display for assignment and lease of these products. The lawsuit allegedly
demands Nexscien to pay us damages in excess of Won 22 billion. In February
2004, we applied for provisional injunction against Techwing, a Korean company,
in Suwon Central District Court for infringing two of our patent rights. The
provisional injunction seeks to prohibit Techwing from making, using and
selling memory test handlers. Both of the legal proceedings are currently
pending in Suwon Central District Court. We cannot ascertain at this time the
likely outcome of the above legal proceedings.

     Except as described above, neither we nor any of our subsidiaries are
involved in any litigation, arbitration or administrative proceedings relating
to claims which may have, or have had, a significant effect on our financial
position or the financial position of our subsidiaries taken as a whole, and,
so far as we are aware, no such litigation, arbitration or administrative
proceedings are pending or threatened.

         Dividend Distribution Policy

     Our Board of Directors determines annually the payment of dividends, if
any, with respect to our shares on a per share basis. Any final dividend for a
financial year is subject to shareholders' approval. A decision to declare or
to pay any dividends in the future, and the


                                     -74-

<PAGE>

amount of any dividends, will depend on our results of operations, cash flows,
financial condition, the payment by our subsidiaries of cash dividends to us,
future prospects and other factors which our Directors may determine are
important.

B.       Significant Changes

     No significant changes have occurred since the date of our consolidated
financial statements for the fiscal year ended December 31, 2003.

ITEM 9.  The Offer and Listing

     Shares of our common stock are traded in Korea on the Korea Stock
Exchange. Our American Depositary Shares ("ADSs") are quoted on The Nasdaq
National Market under the symbol "MRAE".

     Each ADS represents two shares of our common stock. ADRs evidencing ADSs
are issued by The Bank of New York as Depositary.

     The table below shows the high and low closing prices (in won and U.S.
dollars, as applicable) of trading activity on the Korea Stock Exchange for our
common stock since 1999 and on The Nasdaq National Market for our ADSs since
November 17, 1999. With respect to our common stock, the share prices and
average daily trading volume have been adjusted to reflect a 50 for one stock
split effected on March 2, 1998. Liquidity of our ADSs may be limited as an
active market for these securities has not yet developed.

<TABLE>
<CAPTION>

                                          (KSE figures in won, NASDAQ figures in US$)

                                        KSE(1)                                  NASDAQ(2)
                             -----------------------------------------------------------------------
        Year                  High                  Low                 High                  Low
----------------------------------------------------------------------------------------------------
<S>                            <C>                  <C>                  <C>                  <C>
2003(3)                        2,065                1,055                3.90                 1.75
2002                           3,480                1,250                5.75                 2.00
2001                           2,840                  740                3.625                1.37
2000                          11,300                1,260               23.00                 1.063
1999                          11,300                3,050               16.75                15.00

</TABLE>

<TABLE>
<CAPTION>

                                        KSE(1)                                  NASDAQ(2)
                             -------------------------------------------------------------------------
        Year             Quarter           High              Low               High             Low
------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>              <C>                 <C>              <C>
2002                      1Q               3,480            2,105               5.75             3.30
                          2Q               2,390            1,110               3.56             2.00
                          3Q               2,410            1,250               3.90             2.00
                          4Q               1,850            1,255               3.58             2.00
2003(3)                   1Q               1,500            1,055               2.75             1.69
                          2Q               2,065            1,095               3.05             1.75
                          3Q               1,955            1,360               3.90             1.90
                          4Q               1,835            1,055               3.80             1.75
2004(3)                   1Q               1,475            1,055               3.60             1.66
                      2Q(through           1,365              680               2.25             1.25
                    June 25, 2004)
______________

Notes:
(1) Source: Korea Stock Exchange

(2) Source: Bloomberg


                                     -75-

<PAGE>

(3) The prices of our common stock and our ADSs were diluted by the effect of
additional issuance of common stock (5.12%) with consideration in 2003, which
were issued less than fair value, as well as distribution of 20% stock
dividends in 2003.

</TABLE>

<TABLE>
<CAPTION>

                                        KSE(1)                                  NASDAQ(2)
                             -------------------------------------------------------------------------
        Month                            High              Low               High                 Low
------------------------------------------------------------------------------------------------------
<S>                            <C>                  <C>                  <C>                  <C>
December 2003                           1,460             1,165              3.80                1.78
January 2004                            1,475             1,300              3.60                2.02
February 2004                           1,330             1,210              2.45                2.05
March 2004                              1,270             1,055              2.38                1.66
April 2004                              1,365             1,095              2.25                1.68
May 2004                                1,125              870               1.73                1.25
June 2004 (through June 25,
   2004)                                 935               680               1.55                1.28
</TABLE>

ITEM 10. Additional Information

A.       Share Capital

     Not applicable.

B.       Memorandum and Articles of Association

     Article 2 of our Articles of Incorporation states our business objectives
as being the following: the manufacture and sale of semiconductor equipment,
automation equipment, electronic precision instruments, manufacture and sale of
software, the leasing of real estate, the data base business (internet related
business), the electronic communication sales business (electronic commerce
related business), the cable broadcasting business, manufacture and sale of
communications equipment and measuring instruments for communications
equipment, development and sale of display products, manufacture and sale of
lighting related products, and business incidental or related to the foregoing.

     No Director with a special interest as defined under the KCC with respect
to a resolution of the Board of Directors may exercise his voting right. The
remuneration for Directors is determined annually by resolution by shareholders
at each general meeting of shareholders the general meetings of shareholders.
Severance allowances for Directors are paid in accordance with the Officer's
Severance Pay Regulation of the Company, adopted by resolution of a general
meeting of shareholders annually.

C.       Material Contracts

     On May 24, 2002, we agreed to sell 17,838 square meters of space in a
building located in Seoul, Korea to Pagoda Academy Company, an unrelated party,
for Won 60,000 million. We used this space for our Internet venture companies
and subsequently divested the property as part of a corporate restructuring
process we undertook in order to enhance our mechatronics business. We received
full consideration for the sale in May and June 2002.

     As of December 31, 2002, a lawsuit relating to payment of construction
costs for this building had been outstanding between the former building owner
and his creditors. In connection with this, we made a payment of Won 6 billion
to a court on behalf of the former building owner in order to protect our
assets and recorded the payment as an advance payment. As of December 31, 2002,
we recorded an allowance for the aggregate of the advance payments and an
additional provision for guarantees of Won 649 million.


                                     -76-

<PAGE>

D.       Exchange Controls

         Korea Foreign Exchange Controls and Securities Regulations

         General

     Prior to April 1, 1999, investments in Korean securities by non-residents
and issuance of securities outside of Korea by Korean companies were regulated
by the Foreign Exchange Management Act and the Presidential Decrees and
regulations thereunder (collectively, the "Foreign Exchange Management Laws").
On April 1, 1999, the Foreign Exchange Management Laws were abolished and the
Foreign Exchange Transaction Act and the Presidential Decree and regulations
thereunder (collectively, the "Foreign Exchange Transaction Laws") were
enacted. Under the Foreign Exchange Transaction Laws, many restrictions on
foreign exchange transactions have been deregulated and many currency and
capital transactions have been liberalized. Although non-residents may invest
in Korean securities only to the extent specially allowed by such laws or
otherwise permitted by the Minister of Finance and Economy, many approval
requirements have become more lenient. However, the Government has instituted
certain measures to curb capital flight and international money laundering
which may result from liberalization of capital transfer. The Financial
Supervisory Commission ("FSC") also has adopted, pursuant to its authority
under the Korean Securities and Exchange Act, regulations that restrict
investment by foreigners (as defined therein) in Korean securities and regulate
issuance of securities outside Korea by Korean companies.

     Under the Foreign Exchange Transaction Laws, if the Government deems that
certain emergency circumstances, including, but not limited to, sudden
fluctuations in interest rates or exchange rates, extreme difficulty in
stabilizing the balance of payment or a substantial disturbance in the Korean
financial and capital markets, are likely to occur, it may impose any necessary
restrictions, other than in respect of foreign investments prescribed under the
Foreign Investment Promotion Act, such as requiring foreign investors to obtain
prior approval from the Minister of Finance and Economy ("MOFE") for the
acquisition of Korean securities or for the repatriation of interest, dividends
or sales proceeds arising from Korean securities or from disposition of such
securities.

         Government Review of Issuance of ADSs

     In order for the Company to offer for purchase common stock held in
treasury in the form of ADSs or issue common stock represented by the ADSs, the
Company is required to file a prior report of such offer or issuance with the
MOFE (in case the amount exceeds $30 million) or a designated foreign exchange
bank (in case the amount is $30 million or less). No further Korean government
approval is necessary for the initial offering and issuance of the ADSs.

     In order for a depositary to receive any existing common stock from
holders of such common stock (other than from the Company) for the purpose of
issuance of depositary receipts representing such common stock, the Depositary
would be required to obtain the Company's consent. The Company has agreed that
it will consent to any deposit if the deposit will not violate applicable law
or its Articles of Incorporation. No assurance can be given that the Company
will always grant such consent. Therefore, a holder of ADSs who surrenders ADSs
and withdraws common stock may not be permitted subsequently to deposit such
common stock and obtain ADSs.


                                     -77-

<PAGE>

         Reporting Requirements for Holders of Substantial Interests

     Under the Korean Securities and Exchange Act, any person whose direct or
beneficial ownership of common stock (whether in the form of common stock or
ADSs), certificates representing the right to subscribe for common stock and
certain equity related debt securities such as convertible bonds, bonds with
warrants and certain exchangeable bonds (collectively, the "Equity
Securities"), together with any Equity Securities beneficially owned by certain
related persons or by any person acting in concert with such person, accounts
for 5% or more of the aggregate of the total issued shares of common stock and
those other Equity Securities issued by the Company, is required to report the
status of such holdings to the FSC and the Korea Stock Exchange within five
business days after reaching the 5% ownership interest. Moreover, any change in
the ownership interest subsequent to such report which equals or exceeds 1% of
the aggregate of the total issued shares of common stock and those other Equity
Securities issued by the Company is required to be reported to the FSC and the
Korea Stock Exchange within five business days from the date of such change.

     Violation of such reporting requirements may subject a person to criminal
sanctions such as fines or imprisonment and may result in a loss of voting
rights with respect to that portion of Equity Securities exceeding 5% which
violated such reporting requirements. Furthermore, the FSC may issue an order
to dispose of such non-reported Equity Securities.

     In addition to the reporting requirements described above, any person
whose direct or beneficial ownership of the Company's common shares accounts
for 10% or more of the total issued and outstanding shares with voting rights
(a "major shareholder") must report the status of his/her shareholding to the
Securities and Futures Commission ("SFC") and the Korea Stock Dealers
Association (the "KSDA") within 10 days following the date on which the person
becomes a major shareholder. In addition, any change in the ownership interest
subsequent to the report must be reported to the SFC and the KSDA by the 10th
day of the calendar month immediately following the month in which the relevant
change occurred. Violations of these reporting requirements may subject a
person to criminal sanctions such as fines or imprisonment.

         Restrictions Applicable to ADSs

     No Korean governmental approval is necessary for the sale and purchase of
the ADSs in the secondary market outside Korea or for the withdrawal of common
stock underlying the ADSs and the delivery inside Korea of such common stock in
connection with such withdrawal, provided that a foreigner who intends to
acquire such common stock must obtain an Investment Registration Card from the
Financial Supervisory Service as described below. A foreigner acquiring the
common stock underlying ADSs must cause the Korea Securities Depositary to
immediately report the acquisition to the Governor of the Financial Supervisory
Service.

     Persons who have acquired common stock as a result of the withdrawal of
common stock underlying the ADSs may exercise all shareholder rights without
any further governmental approval.

         Restrictions Applicable to Common Stock

     As a result of amendments to the Foreign Exchange Transaction Laws and FSC
regulations (together, the "FSC Rules") adopted in connection with the stock
market opening from January 1992 and thereafter, foreigners are permitted to
invest, with certain exceptions


                                     -78-

<PAGE>

and subject to certain procedural requirements, in all shares of Korean
companies unless prohibited by specific laws. Foreign investors may trade
shares listed on the Korea Stock Exchange or registered on the Korea Securities
Dealers Association Automated Quotation system (the "KOSDAQ") only through the
Korea Stock Exchange or through the KOSDAQ except in certain limited
circumstances, including odd lot trading of shares, acquisition of shares
("Converted Shares") by exercise of warrant under bonds with warrants,
conversion right under convertible bonds, exchange right under exchangeable
bonds or withdrawal right under depositary receipts, where such bonds with
warrants, convertible bonds, exchangeable bonds and depositary receipts have
been issued outside of Korea by a Korean company, acquisition of shares as a
result of exercising allocable conversion rights attached to domestic
convertible bonds, bonds with warrants and exchangeable bonds issued by listed
companies, acquisition of shares by foreign companies as a result of a merger,
acquisition of shares as a result of inheritance, donation, bequest or exercise
of shareholders' rights (including preemptive rights or rights to participate
in free distributions and receive dividends), and acquisition or disposition of
shares in connection with a tender offer. Odd lot trading of shares outside the
Korea Stock Exchange or the KOSDAQ must involve a licensed securities company
in Korea as the other party. Foreigners are prohibited from engaging in margin
transactions involving borrowed securities with respect to shares which are
subject to a foreign ownership limit.

     The FSC Rules require a foreign investor who wishes to invest in shares on
the Korea Stock Exchange or the KOSDAQ (including Converted Shares) to register
its identity with the Financial Supervisory Service prior to making any such
investment; provided, however, that such registration requirement does not
apply to foreign investors who acquire Converted Shares with the intention of
selling such Converted Shares within three months from the date of acquisition
thereof. Upon registration, the Financial Supervisory Service will issue to the
foreign investor an Investment Registration Card which must be presented each
time the foreign investor opens a brokerage account with a securities company.
Foreigners eligible to obtain an Investment Registration Card include foreign
nationals (who are individuals with residence abroad for six months or more),
foreign governments, foreign municipal authorities, foreign public
institutions, international financial institutions or similar international
organizations, corporations incorporated under foreign laws and any person in
any additional category designated by the decree of the MOFE under the Korean
Securities and Exchange Act. All Korean branches of a foreign corporation as a
group are treated as a separate foreigner from the head office of the foreign
corporation. However, a foreign corporation or a depositary issuing depositary
receipts may obtain one or more Investment Registration Cards in its name in
certain circumstances as described in the relevant regulations.

     Upon a foreign investor's purchase of shares through the Korea Stock
Exchange or the KOSDAQ, no separate report by the investor is required because
the Investment Registration Card system is designed to control and oversee
foreign investment through a computer system. However, a foreign investor's
acquisition or sale of shares outside the Korea Stock Exchange or the KOSDAQ
(as discussed above) must be reported by the foreign investor or his standing
proxy to the Governor of the Financial Supervisory Service at the time of each
such acquisition or sale; provided, however, that a foreign investor must
ensure that any acquisition or sale by it of shares outside the Korea Stock
Exchange or the KOSDAQ, in the case of trades in connection with a tender
offer, odd lot trading of shares or trades of a class of shares for which the
aggregate foreign ownership limit has been reached or exceeded, is reported to
the Governor of the Financial Supervisory Service by the securities company
engaged to facilitate such transaction. A foreign investor must appoint one or
more standing


                                     -79-

<PAGE>

proxies from among the Korea Securities Depository, foreign exchange banks
(including domestic branches of foreign banks), securities companies (including
domestic branches of foreign securities companies), asset management companies,
futures trading companies, and internationally recognized foreign custodians to
exercise shareholders' rights, place an order to sell or purchase shares or
perform any matters related to the foregoing activities if the foreign investor
does not perform these activities himself. However, a foreign investor may be
exempted from complying with these standing proxy rules with the approval of
the Governor of the Financial Supervisory Service in cases deemed inevitable by
reason of conflict between laws of Korea and the home country of such foreign
investor.

     Certificates evidencing shares of Korean companies must be kept in custody
with an eligible custodian in Korea. Only foreign exchange banks (including
domestic branches of foreign banks), securities companies (including domestic
branches of foreign securities companies), the Korea Securities Depository,
asset management companies, futures trading companies and internationally
recognized foreign custodians are eligible to act as a custodian of shares for
a foreign investor. A foreign investor must ensure that his custodian deposits
such shares with the Korea Securities Depository. However, a foreign investor
may be exempted from complying with this deposit requirement with the approval
of the Governor of the Financial Supervisory Service in circumstances where
such compliance is made impracticable, including cases where such compliance
would contravene the laws of the home country of such foreign investor.

     Under the FSC Rules, with certain exceptions, all foreign investors may
acquire shares of a Korean company without being subject to any foreign
investment ceiling. As one such exception, certain designated public
corporations are subject to a 40% ceiling on acquisitions of shares by
foreigners in the aggregate. With certain exceptions, certain companies
designated by the government as being "public corporations" may set a ceiling
on the acquisition of shares by a single person within 3% of the total number
of shares in their articles of incorporation. Of the Korean companies listed on
the Korea Stock Exchange, Korea Electric Power Corporation has been so
designated. The FSC may increase or decrease these percentages if it deems
necessary for the public interest, protection of investors or industrial
policy. There currently is no foreign investment ceiling that applies to our
shares. Furthermore, an investment by a foreign investor of not less than 10%
of the outstanding shares with voting rights of a Korean company is defined as
a direct foreign investment under the Foreign Investment Promotion Law, which
is, in general, subject to report to the Ministry of Commerce, Industry and
Energy which delegates its authority to receive such report to foreign exchange
banks or the Korea Trade Investment Promotion Agency under the relevant
regulations. The acquisition of shares of a Korean company by a foreign
investor may also be subject to certain foreign shareholding restrictions in
the event that the restrictions are prescribed in each specific law which
regulates the business of the Korean company.

     Under the Foreign Exchange Transaction Laws, a foreign investor who
intends to acquire shares must open a foreign currency account and a won
account exclusively for stock investments ("Foreign Currency Account" and "Won
Account", respectively). No approval is required for remittance into Korea and
deposit of foreign currency funds in the Foreign Currency Account. Foreign
currency funds may be transferred from the Foreign Currency Account at the time
required to place a deposit for, or settle the purchase price of, a stock
purchase transaction to a Won account opened at a securities company. Funds in
the Foreign Currency Account may be remitted abroad without any governmental
approval.


                                     -80-

<PAGE>

     Dividends on common stock are paid in won. No governmental approval is
required for foreign investors to receive dividends on, or the won proceeds of
the sale of, any such shares to be paid, received and retained in Korea.
Dividends paid on, and the won proceeds of the sale of, any such shares held by
a non-resident of Korea must be deposited either in a Won account with the
investor's securities company or his Won Account. Funds in the investor's Won
Account may be transferred to his Foreign Currency Account or withdrawn for
local living expenses (provided that any withdrawal of local living expenses
exceeding a certain limit will be reported to the tax authorities by the
foreign exchange bank at which the Won Account is maintained). Funds in the Won
Account may also be used for future investment in shares or for payment of the
subscription price of new shares obtained through the exercise of preemptive
rights.

     Securities companies and asset management companies are allowed to open
foreign currency accounts with foreign exchange banks exclusively for
accommodating foreign investors' stock investments in Korea. Through such
accounts, these securities companies and asset management companies may enter
into foreign exchange transactions on a limited basis, such as conversion of
foreign currency funds and won funds, either as a counterpart to or on behalf
of foreign investors, without such investors having to open their own accounts
with foreign exchange banks.

     The Korean Securities and Exchange Act was amended several times from
January 1997 through January 2004 to internationalize the systems for issuing
and distributing securities and the systems for mergers and acquisitions of
businesses, to enhance the autonomy of the securities industry through
deregulation and to strengthen the independence of auditors and the protection
of minority shareholders. The amendments made the tender offer requirements
more specific by requiring a tender offer where the purchaser and the persons
who have a special relationship with the purchaser will hold 5% or more of the
total issued and outstanding shares with voting rights concerned as a result of
the purchase of the shares outside the Korea Stock Exchange or the KOSDAQ from
a certain number of persons, enhanced the rights of minority shareholders,
repealed certain limitations for the acquisition of its own shares by a listed
company, permitted stock splits by companies of shares listed on the Korea
Stock Exchange or registered with the KOSDAQ with a par value of not less than
Won 100 and permitted the payment of interim dividends on a quarterly basis by
companies listed on the Korea Stock Exchange or registered with the KOSDAQ if
provided for in their articles of incorporation. In addition, to strengthen the
protection of shareholders, the amendments also include the requirement that
companies listed on the Korea Stock Exchange and companies exceeding a certain
size that are registered with the KOSDAQ appoint a certain minimum number of
outside directors to their boards; companies listed on the Korea Stock Exchange
or registered with the KOSDAQ that exceed a certain size are required to
maintain an audit committee; and a company listed on the Korea Stock Exchange
or registered with KOSDAQ is, in principle, prohibited to engage in the act of
providing a loan, lending of property, pledging collateral, and providing
guarantees, for the benefit of any of the major shareholders, directors and
statutory auditor of such company.

E.   Taxation

Korean Taxation

     The following is a summary of the principal Korean tax consequences to
owners of ADSs that are non-resident individuals or non Korean corporations
without a permanent establishment in Korea to which the relevant income is
attributable ("non-resident holders"). The statements regarding Korean tax laws
set forth below are based on the laws in force and


                                     -81-

<PAGE>

as interpreted by the Korean taxation authorities as of the date hereof. This
summary is not exhaustive of all possible tax considerations which may apply to
a particular investor and prospective investors are advised to satisfy
themselves as to the overall tax consequences of the acquisition, ownership and
disposition of common stock, including specifically the tax consequences under
Korean law, the laws of the jurisdiction of which they are resident, and any
tax treaty between Korea and their country of residence, by consulting their
own tax advisors.

Taxation of Dividends

     For the purpose of Korean taxation of distributions made on common stock
represented by ADSs, a non-resident holder will be treated as the owner of the
common stock represented by such ADS. Dividends paid (whether in cash or in
shares) to a non-resident holder are generally subject to withholding tax at a
rate of 27.5% (which includes a 10% local tax) or such lower rate as is
applicable under a treaty between Korea and such non-resident holder's country
of tax residence. Such tax is required to be deducted from such dividends and
only the net amount is paid to the non-resident holder of the common stock. In
order to obtain a reduced rate of withholding tax pursuant to an applicable tax
treaty, the non-resident holder must submit to the Company, prior to the
dividend payment date, such evidence of tax residence as may be required by the
Korean tax authorities. Evidence of tax residence may be submitted to the
Company through the Depositary. In addition, to obtain the benefit of a tax
exemption available under applicable tax treaties, the non-resident holder must
submit to the Company an application for exemption prior to the dividend
payment date, together with a certificate of tax residence issued by a
competent authority of the non-resident holder's tax residence country. Excess
taxes withheld are not automatically recoverable even if the non-resident
holder subsequently produces evidence that it was entitled to have taxes
withheld at a lower rate.

     Under the income tax treaty between the United States and Korea (the "U.S.
Korea Tax Treaty"), the maximum rate of withholding on dividends paid to U.S.
residents eligible for treaty benefits generally is 15% (10% if the recipient
of the dividends has owned at least 10% of the outstanding shares of the voting
stock of the Company and certain other conditions are satisfied) which does not
include withholding of local tax. If local withholding tax is included, the
maximum rate of withholding is generally 16.5%. A beneficial owner of ADSs or
common stock generally will be entitled to benefits under the U.S. Korea Tax
Treaty if it (i) is an individual U.S. resident, a U.S. corporation, or a
partnership, estate or trust to the extent its income is subject to taxation in
the United States as the income of a U.S. resident; (ii) is not also a resident
of Korea for purposes of the U.S. Korea Tax Treaty; (iii) is not subject to an
anti treaty shopping article that applies in limited circumstances; and (iv)
does not hold ADSs or common stock in connection with the conduct of business
in Korea through a permanent establishment or the performance of independent
personal services in Korea through a fixed base.

     Distributions of free shares representing a transfer of certain capital
reserves or asset revaluation reserves into paid in capital may be subject to
Korean tax.

Taxation of Capital Gains

     In the absence of any applicable treaty, a non-resident holder will
generally be subject to Korean taxation on capital gains realized on a sale of
ADSs or of common stock acquired as a result of a withdrawal of common stock
underlying ADSs. However, capital gains earned by a non-resident without a
permanent establishment in Korea from the sale of shares listed on


                                     -82-

<PAGE>

the Korea Stock Exchange or registered with the KOSDAQ of a Korean company
(such as the common stock or ADSs) may be exempt from Korean withholding tax if
the non-resident seller, together with certain of its related parties, did not
own or has not owned 25% or more of the total issued and outstanding shares of
the company at any time during the year of the transfer date and during the
five years before the year within which the transfer occurs. Under the Special
Tax Treatment Control Law, capital gains earned by a non-resident holder
(whether or not they have a permanent establishment in Korea) from the transfer
outside Korea of securities issued outside Korea by a Korean company which are
denominated in a foreign currency or satisfy certain criteria established by
the MOFE are exempt from Korean taxation. The Korean tax authorities have
issued a tax ruling confirming that depositary receipts (which would include
the ADSs) are deemed to be securities issued outside Korea by the issuer of the
underlying stock. Further, capital gains earned by a non-resident from the
transfer of stocks issued by a Korean company are also exempt from Korean
taxation if sold through an overseas securities market having functional
similarity to the Korean Stock Exchange or KOSDAQ under the Korean Securities
and Exchange Act.

     Under the U.S. Korea Tax Treaty, capital gains realized by holders who are
residents of the United States eligible for treaty benefits upon the
disposition of common stock or ADSs generally will not be subject to Korean
taxation, so long as the common stock or ADSs are not effectively connected
with a permanent establishment or, in the case of an individual holder, a fixed
base maintained by the holder in Korea and the holder is not present in Korea
for 183 days or more during the taxation year.

     Capital gains with respect to the sale of ADSs, or common stock which were
acquired by a non-resident holder as a result of a withdrawal, would be
calculated based on the acquisition cost to such holder of the ADSs
representing such common stock, although there are no specific Korean tax
provisions or rulings on this issue. In the absence of the application of a tax
treaty which exempts or reduces the rate of tax on capital gains, capital gains
which are subject to Korean tax will be subject to tax at the lesser of (i) 11%
of the gross realization proceeds or (ii) (subject to the production of
satisfactory evidence of the acquisition cost of the ADSs) 27.5% of the gains
made (the excess of the gross realization proceeds over the non-resident
holder's acquisition cost for the ADSs (including any transaction charges,
commissions, fees or taxes paid at the time of the acquisition or
disposition)).

     The purchaser or, in the case of the sale of common stock on the Korea
Stock Exchange or through a licensed securities company in Korea, the licensed
securities company, is required under Korean law to withhold the applicable
amount of Korean tax from the sales price in an amount equal to 11% of the
gross realization proceeds and to make payment thereof to the relevant Korean
tax authority, unless the seller establishes its entitlement to an exemption or
lower rate of taxation under an applicable tax treaty or produces satisfactory
evidence of its acquisition cost for the ADSs. In order to obtain the benefit
of an exemption or reduced rate of tax pursuant to a tax treaty, a non-resident
holder must submit to the purchaser or the securities company (or through the
Depositary), as applicable, prior to or at the time of payment, in the case of
a tax exemption, an application for tax exemption along with a certificate of
the non-resident holder's tax residency issued by a competent authority of the
non-resident holder's tax residence country, and in the case of a tax rate
reduction, just such certificate of residency. Excess taxes withheld are not
automatically recoverable even if the non-resident holder subsequently produces
evidence that it was entitled to have taxes withheld at the lower rate.


                                     -83-

<PAGE>

Inheritance Tax and Gift Tax

     Korean inheritance and gift taxes are imposed upon (a) all assets
(wherever located) of the deceased if at the time of his death he was domiciled
in Korea and (b) all property located in Korea which passes on at the time of
his death (irrespective of the domicile of the deceased).

     It is unclear whether ADSs will be deemed to be located in Korea for
Korean inheritance and gift tax purposes. However, the Korean tax authorities
have interpreted that shares and bonds issued by Korean corporations,
wheresoever held, are deemed for inheritance and gift tax purposes to be
located in Korea. According to such interpretation, American Depositary Shares,
including the ADSs, which are held outside of Korea and represent shares issued
by Korean corporations, shall be subject to Korean inheritance or gift tax at
the rate of 10% to 50%, provided that the value of such ADSs is greater than
amounts specified under Korean law.

Securities Transaction Tax

     If you transfer shares, you will be subject to a securities transaction
tax at the rate of 0.15% and an agriculture and fishery special tax at the rate
of 0.15% of the sale price of the share when traded on the Korea Stock
Exchange. If you transfer shares through the KOSDAQ, you will be subject to a
securities transaction tax at the rate of 0.3% of the sales price of the shares
and will not be subject to an agriculture and fishery special tax. If your
transfer of shares is not made on the Korea Stock Exchange or the KOSDAQ,
subject to certain exceptions, you will be subject to a securities transaction
tax at the rate of 0.5% and will not be subject to an agriculture and fishery
special tax.

     To date, the imposition of the securities transaction tax has not been
enforced on transfers of ADSs, however, the MOFE recently issued a ruling on
February 25, 2004 to the Korean National Tax Service ("NTS") holding that
depositary receipts fall under the meaning of share certificates that are
subject to the securities transaction tax. In the ruling, the MOFE treats
transfers of depositary receipts the same as the transfer of the underlying
Korean shares. In light of the recent MOFE ruling, the securities transaction
tax that would be due on transfers of the ADSs will be 0.5% of the sales price
of the ADSs, unless the ADSs are listed or registered on the New York Stock
Exchange, Nasdaq National Market or any other foreign exchanges designated by
the MOFE (the MOFE has not yet designated any other exchanges through which the
transfer of ADSs will be exempted from the securities transaction tax), and
transfer of the ADSs takes place on such exchange. It is unclear as to when the
Korean government will begin to enforce the imposition of the securities
transaction tax, although they may start to do so at any time.

     The securities transaction tax, if applicable, must be paid in principle
by the transferor of the shares on the rights to subscribe to such shares. When
the transfer is effected through a securities settlement company, such
settlement company is generally required to withhold and pay the tax to the
Korean tax authority. When such transfer is made through a securities company,
such securities company is required to withhold and pay the tax. Where the
transfer is effected by a non-resident without a permanent establishment in
Korea, other than through a securities settlement company or a securities
company, the transferee is required to withhold the securities transaction tax
and pay it to the Korean tax authority. The failure to pay the securities
transaction will result in a penalty of 10% of the tax due. The penalty is
imposed on the party responsible for paying the securities transaction tax or,
if the securities


                                     -84-

<PAGE>

transaction tax is to be paid via withholding, the penalty is imposed on the
party that has the withholding obligation.

Tax Treaties

     Each non-resident holder should consult his tax advisor regarding whether
he is entitled to the benefit of a tax treaty with Korea. It is the
responsibility of the party claiming the benefits of a tax treaty in respect of
dividend payments or capital gains to submit to the Company through the
Depositary, the purchaser or the securities company, as applicable, an
application for tax exemption and a certificate as to his residence. In the
absence of sufficient proof, the Company, the purchaser or the securities
company, as applicable, must withhold tax at the normal rates.

     At present, Korea has not entered into any tax treaties regarding
inheritance or gift tax.

United States Federal Income Tax Considerations

     The following is a summary of United States federal income tax
considerations that are anticipated to be material for U.S. Holders (as defined
below) who purchase common shares or ADSs of Mirae. This summary is based upon
existing United States federal income tax law as currently in effect, which is
subject to change, possibly with retroactive effect. This summary does not
discuss all aspects of United States federal income taxation that may be
important to particular investors in light of their individual investment
circumstances, such as investors subject to special tax rules, including:
financial institutions, insurance companies, broker dealers, tax-exempt
organizations, non-U.S. Holders, persons that will hold common shares or ADSs
as part of a straddle, hedge, conversion, or constructive sale transaction for
United States federal income tax purposes, persons that own, directly or by
attribution, 10% or more of the combined voting power of all classes of stock
of Mirae, or persons that have a functional currency other than the United
States dollar, all of whom may be subject to tax rules that differ
significantly from those summarized below. In addition, this summary does not
discuss any foreign, state, or local tax considerations. This summary assumes
that investors will hold their common shares or ADSs as "capital assets"
(generally, property held for investment) under the United States Internal
Revenue Code. Each prospective investor is urged to consult its tax advisor
regarding the United States federal, state, local, and foreign income and other
tax considerations of the purchase, ownership, and disposition of common shares
or ADSs.

     For purposes of this summary, a U.S. Holder is a beneficial owner of
common shares or ADSs that is for United States federal income tax purposes:

     o    an individual who is a citizen or resident of the United States;

     o    a corporation (or other entity treated as a corporation for United
          States federal income tax purposes) created in or organized under the
          laws of, the United States or any State or political subdivision
          thereof;

     o    an estate the income of which is includible in gross income for
          United States federal income tax purposes regardless of its source;

     o    a trust the administration of which is subject to the primary
          supervision of a United States court and which has one or more United
          States persons who have the authority to control all substantial
          decisions of the trust; or


                                     -85-

<PAGE>

     o    a trust that was in existence on August 20, 1996, was treated as a
          United States person, for United States federal income tax purposes,
          on the previous day and elected to continue to be so treated.

     The tax treatment of a partner in a partnership generally will depend on
the status of the partner and the activities of the partnership. Each
prospective investor that is a partnership or a partner in a partnership should
consult its tax advisor regarding the particular tax consequences to you.

General

     For United States federal income tax purposes, a U.S. Holder of an ADS
will be treated as the owner of the proportionate interest of the common shares
held by the depositary that is represented by an ADS and evidenced by such ADS.
Accordingly, no gain or loss will be recognized upon the exchange of an ADS for
the holder's proportionate interest in the common shares. A U.S. Holder's tax
basis in the withdrawn common shares will be the same as the tax basis in the
ADS surrendered therefor, and the holding period in the withdrawn common shares
will include the period during which the holder held the surrendered ADS.

Dividends

     Subject to the discussion below under the heading "PFIC Considerations",
any cash distributions paid by Mirae out of earnings and profits, as determined
under United States federal income tax principles, will be treated as foreign
source dividend income and will be includible in the gross income of a U.S.
Holder upon receipt. A non-corporate recipient of dividend income will
generally be subject to tax on dividend income from a "qualified foreign
corporation" at a maximum U.S. federal tax rate of 15% rather than the marginal
tax rates generally applicable to ordinary income so long as certain holding
period requirements are met. A non-U.S. corporation (other than a foreign
personal holding company, foreign investment company, or passive foreign
investment company) generally will be considered to be a qualified foreign
corporation (i) if it is eligible for the benefits of a comprehensive tax
treaty with the United States which the Secretary of Treasury of the United
States determines is satisfactory for purposes of this provision and which
includes an exchange of information program or (ii) with respect to any
dividend it pays on stock which is readily tradable on an established
securities market in the United States. There is currently a tax treaty in
effect between the United States and the Republic of Korea which the Secretary
of Treasury of the United States determined is satisfactory for these purposes.
Additionally, our ADSs are expected to be readily tradable since our ADSs are
listed on the NASDAQ National Market, an established securities market in the
United States. Cash distributions paid by Mirae in excess of its earnings and
profits will be treated as a tax-free return of capital to the extent of the
U.S. Holder's adjusted tax basis in its shares or ADSs, and after that as gain
from the sale or exchange of a capital asset. Dividends received on common
shares or ADSs will not be eligible for the dividends-received deduction
allowed to corporations. Dividends paid in won will be includible in income in
a United States dollar amount calculated by reference to the United States
dollar - won exchange rate prevailing at the time of receipt of such dividends
by the depositary, in the case of ADSs, or by the U.S. Holder, in the case of
common shares held directly by such U.S. Holder. If a U.S. Holder does not
convert the won it receives as a dividend into United States dollars on the
date of receipt, it will have a tax basis in the won equal to the United States
dollar value of the won on the date of receipt. Any gain or loss realized by a
U.S. Holder on a subsequent conversion or other disposition of the won will be
treated as ordinary income or loss.


                                     -86-

<PAGE>

     A U.S. Holder may be eligible, subject to a number of complex limitations,
to claim a foreign tax credit in respect of any foreign withholding taxes
imposed on dividends received on common shares or ADSs. U.S. Holders who do not
elect to claim a foreign tax credit for foreign income tax withheld may instead
claim a deduction, for United States federal income tax purposes, in respect of
such withholdings, but only for a year in which the U.S. Holder elects to do so
for all creditable foreign income taxes. Each prospective investor should
consult its tax advisor regarding the availability of the foreign tax credit
under its particular circumstances.

     A distribution of additional shares of Mirae's stock to U.S. Holders with
respect to their common shares or ADSs that is pro rata to all Mirae's
shareholders may not be subject to United States federal income tax. The tax
basis of such additional shares will be determined by allocating the U.S.
Holders' adjusted tax basis in the common shares or ADSs between the common
shares or ADSs and the additional shares, based on their relative fair market
values on the date of distribution.

Sale or Other Disposition of Common Shares or ADSs

     Subject to the discussion below under the heading "PFIC Considerations", a
U.S. Holder will recognize capital gain or loss upon the sale or other
disposition of common shares or ADSs in an amount equal to the difference
between the amount realized upon the disposition and the U.S. Holder's adjusted
tax basis in such common shares or ADSs, as each is determined in United States
dollars. Any such capital gain or loss will be long term if the common shares
or ADSs have been held for more than one year and will generally be United
States source gain or loss. The claim of a deduction in respect of a capital
loss, for United States federal income tax purposes, may be subject to
limitations.

PFIC Considerations

     A foreign corporation will be treated as a "passive foreign investment
company" (a "PFIC"), for United States federal income tax purposes if 75% or
more of its gross income consists of certain types of "passive" income, or 50%
or more of the gross value of its assets is attributable to assets that produce
passive income or are held for the production of passive income. For this
purpose, "passive" income generally includes dividends, interest, royalties,
rents, annuities and the excess of gains over losses from the disposition of
assets that produce passive income. Mirae currently believes that it is not a
PFIC and does not anticipate becoming a PFIC. This is, however, a factual
determination made on an annual basis and is subject to change.

     If Mirae were to be classified as a PFIC in any taxable year, a U.S.
Holder would be subject to special rules generally intended to reduce or
eliminate any benefits from the deferral of United States federal income tax
that a U.S. Holder could derive from investing in a foreign company that does
not distribute all of its earnings on a current basis. In such event, a U.S.
Holder of the common shares or ADSs may be subject to tax at ordinary income
tax rates on (i) any gain recognized on the sale of the common shares or ADSs
and (ii) any "excess distribution" paid on the common shares or ADSs
(generally, a distribution in excess of 125% of the average annual
distributions paid by Mirae in the three preceding taxable years). In addition,
a U.S. Holder may be subject to an interest charge on such gain or excess
distribution.

     As an alternative to the rules described above, a holder of "marketable
stock" in a PFIC may make a mark-to-market election, provided that the shares
are regularly traded on a


                                     -87-

<PAGE>

"qualified exchange." Under applicable Treasury regulations, a "qualified
exchange" includes the NASDAQ National Market on which ours ADSs are listed and
any foreign exchange that is regulated by a governmental authority in which the
exchange is located and in respect of which certain other requirements are met.
Shares will be treated as regularly traded for any year during which such class
of stock is traded, other than in de minimis quantities, on at least 15 days
during each calendar quarter. Whether our shares will be treated as regularly
traded on a qualified exchange for any particular taxable year is a factual
matter dependent upon the future trading of our shares. If you make this
election, you will generally (i) include as income for each taxable year the
excess, if any, of the fair market value of your shares at the end of the
taxable year over the adjusted tax basis of the shares and (ii) deduct as a
loss the excess, if any, of the adjusted tax basis of the shares over the fair
market value of the shares at the end of the taxable year, but only to the
extent of the amount previously included in income as a result of the
mark-to-market election. Your adjusted tax basis in the shares would be
adjusted to reflect any income or loss resulting from the mark-to-market
election.

     Further, if the Company is classified as a PFIC, a U.S. Holder would not
be eligible for a reduced tax rate on dividends paid on ADSs or common shares.
See "Taxation of Dividends."

     We will not provide you with information to enable you to make a
"qualified electing fund" election under which, generally in lieu of the
treatment described above, our earnings would be currently included in your
gross income.

     If you own shares during any year that we are a PFIC, you must file an
annual IRS Form 8621. Each prospective investor is urged to consult its tax
advisor regarding the potential application of the PFIC provisions, as well as
the availability and advisability of certain elections that may be made by such
investor with respect to common shares or ADSs if we are classified as a PFIC.

F.        Dividends and Paying Agents

     Not applicable.

G.       Statement by Experts

     Not applicable.

H.       Documents on Display

     We filed with the Securities and Exchange Commission in Washington, D.C. a
Registration Statement on Form F-1 (Registration No. 333 11390) under the
Securities Act in connection with the ADSs offered in Mirae's global offering.
The Registration Statement contains exhibits and schedules. Any statement in
this annual report about any of our contracts or other documents is not
necessarily complete. If the contract or document is filed as an exhibit to the
Registration Statement, the contract or document is deemed to modify the
description contained in this annual report. You must review the exhibits
themselves for a complete description of the contract or documents.

     You may inspect and copy our registration statements, including their
exhibits and schedules, and the reports and other information we file with the
Securities and Exchange Commission in accordance with the Exchange Act at the
public reference facilities


                                     -88-

<PAGE>

maintained by the Securities and Exchange Commission at Judiciary Plaza, 450
Fifth Street, Room 1024, N.W., Washington, D.C. 20549 and at the regional
offices of the Securities and Exchange Commission located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may also inspect the
registration statements, including their exhibits and schedules, at the office
of the New York Stock Exchange, Wall Street, New York, New York 10005. Copies
of such material may also be obtained from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. You may obtain information regarding the Washington
D.C. Public Reference Room by calling the Securities and Exchange Commission at
1 800 SEC 0330 or by contacting the Securities and Exchange Commission over the
internet at its website at http://www.sec.gov.

I.       Subsidiary Information

     Other than Mirae America, Inc., a California corporation, and Mirae Hong
Kong Co., Ltd., a Hong Kong corporation, Mirae has a shareholding interest in
30 companies, all of which are Korean corporations. Set forth below is a list
of such invested companies and Mirae's percentage of shareholding interest in
them.

<TABLE>
<CAPTION>
                             Company Name                                   Percentage
        ------------------------------------------------------- --------------------------
<S>      <C>                                                                   <C>
         SoftForum Co., Ltd.............................                        41.51
         MR Tech Town Co................................                       100.00
         Mirae Online, Co., Ltd.........................                        67.47
         Korea Internet.com Co., Ltd....................                        87.38
         Alpha Logics Co., Ltd..........................                       100.00
         Mirae America, Inc.............................                        50.00
         AIO Corporation................................                        21.63
         Cyber Bank Co., Ltd............................                        28.25
         On-net Corporation.............................                        14.71
         Intro System Co., Ltd..........................                        15.16
         JIT Corporation................................                         3.65
         Nara Vision ...................................                        17.43
         NetThru........................................                        19.73
         Infinity Telecom Co., Ltd......................                        16.70
         Telefree Co., Ltd..............................                         2.57
         Streambox Korea................................                         5.11
         NeoBill Co., Ltd...............................                         4.37
         Mobens Co., Ltd................................                        15.09
         Mirae (HongKong) Co., Ltd......................                        99.00
         Linxtek Co., Ltd...............................                         1.22
         Seoul Venture Base.............................                         5.69
         EON Group......................................                         1.33
         CAMIS Co., Ltd.................................                         0.26
         YESS World Inc.................................                         0.72
         Sunwoo Information system......................                         1.00
         Dabonet Co., Ltd...............................                         0.79
         Digital Photo Corporation......................                         0.93
         Telinker.......................................                         0.75
         E-GIOS Corporation.............................                         1.59
         Hackers Lab Co., Ltd...........................                         1.47
         Interchem Korea................................                         8.00
         Imobiz.........................................                         2.32

</TABLE>


                                     -89-

<PAGE>

ITEM 11. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to market risks from changes in interest rates and foreign
exchange rates, which may adversely affect our results of operations and
financial condition. We seek to minimize the risks from fluctuations of
interest rates and foreign exchange rates through our regular operating and
financing activities. We do not use financial instruments for trading or other
speculative purposes and have not used derivative instruments to manage these
risks.

Equity Risk

     We have invested Won 663 million in Hynix Semiconductor Inc., which is
listed on the Korea Composite Stock Price Index ("KOSPI"). As of December 31,
2002, this investment had decreased in market value from our initial investment
by approximately Won 151 million, Won 453 million and Won 3 million in 2001,
2002 and 2003, respectively.

     As of December 31, 2003 we held interest-bearing Korean debt unit trusts
comprised of Government, public and corporate bonds with a fair market value of
approximately Won 21,382 million. The unit trusts bear interest at variable
rates and generally have maturities of less than one year. The weighted average
yield rate of the public and corporate bonds was 6.3%, or a valuation gain of
Won 1,263 million, on an investment of Won 20,063 million in 2003. The unit
trusts are not traded over any organized exchange in Korea, but are traded over
the counter primarily by securities firms, investment trust companies and
investment management companies. Fluctuations in the net asset value of these
investments will fluctuate with changes in the value of the underlying
securities.

     The following table sets forth the costs and fair values of the
above-discussed equity and debt securities as of December 31, 2003 and 2002:

<TABLE>
<CAPTION>

                                                                 As of December 31,
                          --------------------------------------------------------------------------------------------
                                                  2003                                        2002
                          --------------------------------------------------------------------------------------------
                                      Cost                Fair Value               Cost               Fair Value
                          --------------------------------------------------------------------------------------------
                                                             (Unit: in millions of Won)


<S>                                         <C>                     <C>                  <C>                   <C>
Debt unit trusts                            20,063                  21,326               31,200                28,609
Equity securities                               59                      56                  512                    59

</TABLE>


Interest Rate Risk

     Our debt obligations consist of several short-term and long-term credit
lines at both fixed and variable rates. As of December 31, 2003, the amount of
borrowings we had under the short-term and long-term credit lines with variable
interest rates was Won 22,685 million. We believe that because these are
short-term and long-term borrowings, their risk exposure to interest rate
fluctuations is insignificant.

Foreign Currency Exchange Rate Risk

     As a consequence of the growing emphasis on our overseas businesses, our
operations and reported financial results and cash flows are exposed to the
risks associated with fluctuations in the exchange rate between the Korean won
and other major world currencies. In 2001, 2002 and 2003, sales outside of
Korea comprised 17.9%, 32.2% and 31.4%,


                                     -90-

<PAGE>
respectively, of our total sales. As foreign exchange rates change, translation
of the statements of operations of our international sales into won affects
year on year comparability. Historically, we have not hedged currency
translation risks.

ITEM 12. Description of Securities Other Than Equity Securities

         Not applicable.


                                    PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies

     None.

ITEM 14. Material Modifications to the Rights of Security Holders and
         Use of Proceeds

     None.

ITEM 15. Controls and Procedures

Disclosure Controls and Procedures

     Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act") as of the end
of the period covered by this annual report on Form 20-F (the "Evaluation
Date"). Based on such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the Evaluation Date, our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in our reports that we file or submit under the
Securities Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and
Exchange Commission (the "SEC") and are operating in an effective manner.

Changes in Internal Controls over Financial Reporting

     During the period covered by this annual report on Form 20-F, there have
not been any significant changes in our internal controls over financial
reporting that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

ITEM 16A. Audit Committee Financial Expert

     The members of our audit committee are all independent, outside directors
of our board of directors. We believe that one or more of the members of our
audit committee satisfy the criteria for "audit committee financial expert"
prescribed by the SEC. Our board of directors has determined that Mr. Yeon-Ho
Lee qualifies as an audit committee financial expert. See "ITEM 6. Directors,
Senior Management and Employees - Board Practices - Audit and other Committees"
for additional information regarding our Audit Committee.


                                     -91-

<PAGE>

ITEM 16B. Code of Ethics

     We have a code of ethics that applies to all of our employees, including
our Chief Executive Officer, Chief Financial Officer and other senior
accounting officers. We also have internal control and disclosure policy
designed to promote full, fair, accurate, timely and understandable disclosure
in all of our reports and publicly filed documents. We are in the process of
revising our code of ethics to ensure that it appropriately addresses our
initiatives to improve our corporate governance policies. A copy of this code
of ethics has been filed as Exhibit 11.1 to this annual report on Form 20-F.
Our code of ethics is also available on our website at www.mirae.co.kr in
Korean and at www.mirae.com in English.

ITEM 16C. Principal Accountant Fees and Services

     The following table sets forth the total fees we paid to our independent
auditors, Deloitte & Touche LLC for the year ended December 31, 2003 and Ahn
Kwon & Co. for the year ended December 31, 2002:

                                           (Unit: in millions of Won)
                                  --------------------------------------------
                                 |         Years Ended December 31,           |
                                 |--------------------------------------------|
                                 |      2003          |            2002       |
                                 |--------------------|-----------------------|
Audit........................    |      105           |             90        |
                                 |--------------------|-----------------------|
Total.........................   |      105           |             90        |
                                  ============================================

         "Audit Fees" are the aggregate fees billed by Deloitte & Touche LLC in
2003 and by Ahn Kwon & Co. in 2002 for the audit of our consolidated annual
financial statements, reviews of interim financial statements and attestation
services that are provided in connection with statutory and regulatory filings
or engagements.

Pre-approval Policies and Procedures of Audit Committee of Independent
Auditors' Engagement

     Our audit committee pre-approves all audit services to be provided by
Deloitte & Touche LLC, our independent auditors. Our audit committee's policy
regarding the pre-approval of non-audit services to be provided to us by our
independent auditors is that all such services shall be pre-approved by the
audit committee. Non-audit services that are prohibited to be provided to us by
our independent auditors under the SEC and applicable law may not be
pre-approved. In addition, prior to the granting of any pre-approval, our audit
committee must be satisfied that the performance of the services in question
will not compromise the independence of our independent auditors.

     Our audit committee did not pre-approve any non-audit services under the
de minimis exception of Rule 2-01 (c)(7)(i)(c) of Regulation S-X as promulgated
by the SEC.

ITEM 16D. Exemptions from the Listing Standards for Audit Committees.

     Not applicable.


                                     -92-

<PAGE>

ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated
          Purchasers.

     Not applicable.


                                   PART III

ITEM 17. Financial Statements

     Not applicable.

ITEM 18. Financial Statements

     See pages F-1 through F-57, incorporated herein by reference.

ITEM 19. Exhibits


--------------------------------------------------------------------------------
  Exhibit No.                        Description
--------------- ----------------------------------------------------------------
      1.1       Articles of Incorporation, as amended (English translation)
--------------- ----------------------------------------------------------------
      8.1       List of Subsidiaries
--------------- ----------------------------------------------------------------
      11.1      Code of Ethics
--------------- ----------------------------------------------------------------
      12.1      Certification of CEO pursuant to Rule 13a-14(a) of the
                Securities Exchange Act
--------------- ----------------------------------------------------------------
      12.2      Certification of CFO pursuant to Rule 13a-14(a) of the
                Securities Exchange Act
--------------- ----------------------------------------------------------------
      13.1      Certification of CEO pursuant to Rule 13a-14(b) of the
                Securities Exchange Act and 18 U.S.C. Section 1350 as adopted
                pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002
--------------- ----------------------------------------------------------------
      13.2      Certification of CFO pursuant to Rule 13a-14(b) of the
                Securities Exchange Act and 18 U.S.C. Section 1350 as adopted
                pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002
--------------- ----------------------------------------------------------------


                                     -93-

<PAGE>


                                   SIGNATURES

   The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                               MIRAE CORPORATION

                               By: /s/ Hyung Yun Lee
                                   ---------------------
                                   Name:   Hyung Yun Lee
                                   Title:  Chief Executive Officer and President


Date:    June 28, 2004


                                     -94-

<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----
Report of Independent Registered Public Accounting Firm ....................F-2
Consolidated balance sheets as of December 31, 2002 and 2003................F-4
Consolidated statements of operations for the years ended
  December 31, 2001, 2002 and 2003..........................................F-6
Consolidated statements of shareholders' equity for the years
  ended December 31, 2001, 2002 and 2003....................................F-7
Consolidated statements of cash flows for the years ended
  December 31, 2001, 2002 and 2003..........................................F-8
Notes to consolidated financial statements..................................F-10


                                      F-1

<PAGE>

Report of Independent Registered Public Accounting Firm


To the Board of Directors and Shareholders of
Mirae Corporation


We have audited the accompanying consolidated balance sheets of Mirae
Corporation (the "Company") and its subsidiaries as of December 31, 2002 and
2003, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 2003 (all expressed in Korean won). These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the Republic of Korea and standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Mirae Corporation and its
subsidiaries at December 31, 2002 and 2003, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2003, in conformity with financial accounting standards generally accepted
in the Republic of Korea ("Korean GAAP").

Our audits also comprehended the translation of the Korean won amounts into
U.S. dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in note 2(a) to the consolidated financial
statements. Such U.S. dollar amounts are presented solely for the convenience
of readers outside of the Republic of Korea.

Financial accounting standards generally accepted in the Republic of Korea vary
in certain respects from accounting principles generally accepted in the United
States of America. Application of accounting principles generally accepted in
the United States of America would have affected the determination of net
income (loss) for the years ended December 31, 2001, 2002 and 2003 and the
determination of shareholders' equity and financial position as of December 31,
2002 and 2003 to the extent summarized in notes 27 and 28 to the consolidated
financial statements.


                                      F-2
<PAGE>

As described in note 26 to the accompanying consolidated financial statements,
the operations of the Company and its subsidiaries have been affected, and may
continue to be affected for the foreseeable future, by the general unstable
economic conditions in the Republic of Korea. In addition, the Company and its
subsidiaries have been affected, and may continue to be affected for the
foreseeable future, by rapid technological changes and fluctuating product
prices in the semiconductor industry. The ultimate effect of these
uncertainties of the financial position of the Company and its subsidiaries as
of the balance sheet date cannot presently be determined.

/s/ DELOITTE & TOUCHE LLC
Seoul, Korea



April 9, 2004


                                      F-3
<PAGE>

<TABLE>
<CAPTION>



                                 MIRAE CORPORATION AND ITS SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEETS
                                       DECEMBER 31, 2002 AND 2003




                                                                                  2002          2003             2003
                                                                            ------------  --------------   --------------
                                                                                                            (In thousands
                                                                                                               of U.S.
                                                                                                               dollars)
                                                                            (In millions of Korean won)        (note 2)
<S>                                                                              <C>            <C>           <C>
ASSETS
 Current assets:
     Cash and cash equivalents (notes 2 and 13).....................       (won) 19,008   (won) 21,569        $18,095
     Short-term financial instruments (notes 4 and 13)..............             20,776         14,628         12,272
     Trading securities (note 2)....................................             28,669         21,382         17,938
     Current portion of available-for-sale securities (notes 2 and 5)             1,749              3              3
     Accounts receivable - trade, net (notes 2, 12, 13 and 21)......             33,965         40,589         34,051
     Accounts receivable - other, net (notes 2 and 12)..............              1,218          3,320          2,785
     Inventories (notes 2 and 3)....................................             22,261          9,664          8,107
     Accrued interest income........................................                250            189            159
     Advance payments and other (notes 2, 7 and 12).................              6,656          3,550          2,978
                                                                           ------------   ------------     ----------
        Total Current Assets........................................            134,552        114,894         96,388
                                                                           ------------   ------------     ----------

 Non-current assets:
     Property, plant and equipment, net (notes 2, 8, 12, 22 and 24).             75,317         91,056         76,389
     Intangible assets - net (note 2)...............................
        Development costs...........................................              4,054          4,668          3,916
        Other.......................................................              2,957          2,851          2,392
     Available-for-sale securities (notes 2 and 5)..................              6,311          3,055          2,563
     Equity securities valued using the equity method of accounting
        (notes 2, 6 and 12).........................................                137          2,173          1,823
     Long-term financial instruments (note 4).......................                643            991            831
     Guarantee deposits.............................................              8,909          3,819          3,204
     Long-term loans and other, net (notes 2 and 7).................              7,632          8,210          6,888
                                                                           ------------   ------------     ----------
     Total Non-Current Assets.......................................            105,960        116,823         98,006
                                                                           ------------   ------------     ----------

          TOTAL ASSETS..............................................       (won)240,512   (won)231,717       $194,394
                                                                           ============   ============     ==========
</TABLE>





                                                           F-4
<PAGE>

<TABLE>
<CAPTION>

                                   MIRAE CORPORATION AND ITS SUBSIDIARIES
                                  CONSOLIDATED BALANCE SHEETS (continued)
                                         DECEMBER 31, 2002 AND 2003


                                                                                     2002          2003             2003
                                                                                -----------    ------------    -------------
                                                                                                               (In thousands
                                                                                                                  of U.S.
                                                                                (In millions of Korean won)       dollars)
                                                                                  (restated)                      (note 2)
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
<S>                                                                                 <C>               <C>          <C>
    Accounts payable - trade (notes 12 and 13)..............................   (won)10,014       (won)7,908        $6,634
    Short-term borrowings (notes 9 and 13)..................................        33,542           19,955        16,741
    Accounts payable - other (note 12)......................................         2,621            3,035         2,546
    Income taxes payable....................................................             -               13            11
    Advance receipts from customers.........................................           323              147           123
    Dividends payable (note 2)..............................................             1                1             1
    Guarantee deposits payable (note 12)....................................         1,737              301           253
    Provision for guarantees issued.........................................           649                -             -
    Current portion of long-term lease payable (notes 2 and 10).............           458              461           387
    Current portion of long-term debt (notes 2,11 and 13)...................             -            1,787         1,499
    Accrued expenses and other (note 12)....................................         1,716            2,741         2,299
                                                                                -----------       ----------    ---------
    Total Current Liabilities...............................................        51,061           36,349        30,494
                                                                                -----------       ----------    ---------

Long-term liabilities:
    Long-term borrowings (notes 11 and 13)..................................         9,543            8,245         6,917
    Long-term guarantee deposits payable (note 12)..........................           354            6,665         5,591
    Long-term lease payable (notes 2 and 10)................................           621              160           134
    Accrued severance indemnities, net (note 2).............................         4,047            3,706         3,109
                                                                                -----------       ----------    ---------
    Total Long-Term Liabilities.............................................        14,565           18,776        15,751
                                                                                -----------       ----------    ---------
    Total Liabilities.......................................................        65,626           55,125        46,245
                                                                                -----------       ----------    ---------

Shareholders' equity:
    Capital stock...........................................................
    Common stock - par value(won)100 per share; issued and outstanding
    125 million shares and 179 million shares as of December 31,
    2002 and 2003, respectively (note 14)...................................        12,464           17,919        15,033
    Capital surplus:
    Additional paid-in capital (notes 2 and 14).............................       219,862          140,792       118,115
    Retained earnings (deficit):
    Unappropriated (undisposed) (notes 2 and 15)............................       (73,457)           2,805         2,353
    Capital adjustments:                                                                                                -
    Treasury stock (notes 2 and 16).........................................        (4,814)          (4,344)       (3,644)
    Stock options (notes 2 and 25)..........................................           357              713           598
    Other capital adjustment (notes 5 and 6)................................          (911)          (1,231)       (1,033)
    Minority interest in equity of consolidated subsidiaries (note 2).......        21,385           19,938        16,727
                                                                                -----------       ----------    ---------
    Total Shareholders' Equity..............................................       174,886          176,592       148,149
                                                                                -----------       ----------    ---------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..............................  (won)240,512     (won)231,717      $194,394
                                                                               ===========      ============    ==========
</TABLE>


                                                           F-5
<PAGE>

<TABLE>
<CAPTION>


                     MIRAE CORPORATION AND ITS SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003


                                                                         2001           2002           2003            2003
                                                                     ------------    -----------    -----------   -------------
                                                                                                                  (In thousands
                                                                                                                     of U.S.
                                                                            (In millions of Korean won)              dollars)
                                                                                                                     (note 2)
<S>                                                                        <C>             <C>           <C>         <C>
SALES (notes 2, 12, 17, 21 and 22)..............................     (won)68,977     (won)64,430    (won)95,053     $79,742
COST OF SALES (note 12).........................................         (63,590)        (56,863)       (72,703)    (60,992)
                                                                     ------------    ------------   -------------  ------------
GROSS PROFIT....................................................           5,387           7,567         22,350      18,750
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (notes 12 and 18)..         (45,321)        (37,651)       (27,973)    (23,467)
                                                                     ------------    ------------   -------------  ------------
OPERATING LOSS (note 22)........................................         (39,934)        (30,084)        (5,623)     (4,717)
                                                                     ------------    ------------   -------------  ------------
OTHER INCOME:
    Interest income (note 12)...................................           3,284           2,532          1,861       1,561
    Gain on disposal and valuation of trading securities........           2,297           2,725          2,875       2,412
    Gain on disposal and valuation of current portion of
       available-for-sale securities............................               -             156              4           3
    Gain on disposal of available-for-sale securities...........               -               -         28,378      23,807
    Gain on disposal of equity securities using the equity method              -               -            101          85
    Foreign exchange and translation gains (note 2).............           2,472             635            796         668
    Reversal of provision for guarantees issued (note 23).......               -           3,739              -           -
    Other (note 12).............................................           2,967           3,498          2,795       2,345
                                                                     ------------    ------------   -------------  ------------
                                                                          11,020          13,285         36,810      30,881
                                                                     ------------    ------------   -------------  ------------
OTHER EXPENSES:
    Interest expense............................................          (3,093)         (3,663)        (2,160)     (1,812)
    Donations ..................................................              (3)           (121)           (99)        (83)
    Foreign exchange and translation losses (note 2)............            (221)         (2,102)          (477)       (400)
    Loss from valuation of inventories..........................         (16,837)        (20,409)       (12,428)    (10,426)
    Loss on disposal and valuation of trading securities........            (179)         (3,377)          (328)       (275)
    Loss on disposal and valuation of current portion of
       available-for-sale securities............................               -              (1)            (1)         (1)
    Provision for doubtful other accounts.......................            (229)         (7,087)        (1,746)     (1,465)
    Provision for guarantees issued.............................          (3,739)           (649)             -           -
    Loss from impairment of deferred development costs (note 2).          (4,429)        (11,337)        (1,521)     (1,276)
    Loss from impairment of available-for-sale securities (note 2)        (8,717)         (3,631)        (1,343)     (1,127)
    Equity in losses of affiliate (notes 2 and 6)...............         (15,677)           (827)        (7,953)     (6,672)
    Other (note 12).............................................          (1,821)         (2,887)        (2,215)     (1,858)
                                                                     ------------    ------------   -------------  ------------
                                                                         (54,945)        (56,091)       (30,271)    (25,395)
                                                                     ------------    ------------   -------------  ------------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST ........         (83,859)        (72,890)           916         768
INCOME TAX EXPENSE (notes 2 and 19).............................          14,234             277             18          15
                                                                     ------------    ------------   -------------  ------------
INCOME (LOSS) BEFORE MINORITY INTEREST..........................         (98,093)        (73,167)           898         753
                                                                     ------------    ------------   -------------  ------------
MINORITY INTEREST IN NET LOSS (GAIN) OF CONSOLIDATED SUBSIDIARIES         (1,055)            176          1,626       1,364
NET INCOME (LOSS)...............................................    ((won)99,148)    (won)72,991)    (won)2,524      $2,117
                                                                     ============    ============   =============  ============
WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING
    (In millions of shares).....................................             152             155            160         160
                                                                     ============    ============   =============  ============
INCOME (LOSS) PER SHARE (note 20)
    (In Korean won and U.S. dollars)............................       ((won)654)      ((won)470)       (won)16      $    0.013
                                                                     ============    ============   =============  ============

                               See accompanying notes to consolidated financial statements.
</TABLE>


                                                           F-6
<PAGE>

<TABLE>
<CAPTION>

                     MIRAE CORPORATION AND ITS SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003


                                                                           Capital Adjustments             Minority
                                                                      -------------------------------     Interest in
                                                          Retained                                         Equity of      Total
                                   Common     Capital     Earnings    Treasury       Stock                Consolidated Shareholders'
(In millions of Korean won)        Stock      Surplus    (Deficit)     Stock        Options    Other      Subsidiaries    Equity
                                ----------- ------------ ----------- ------------ ----------- ----------  ------------ ------------
<S>                                  <C>        <C>         <C>         <C>            <C>        <C>        <C>       <C>

Balance, January 1, 2001        (won)12,464 (won)276,609 (won)32,858 (won)(4,843)    (won)588     (won)-   (won)9,695 (won)327,371
  Net loss                                -           -      (99,148)          -            -          -            -      (99,148)
  Additional issuance by
      consolidated subsidiary
      to outside entity                   -       2,649           -           -            -          -            -         2,649
  Gain on disposal of
      treasury stock                      -       7,448           -           -            -          -            -         7,448
  Cancellation of stock
      compensation plans                  -           -           -           -         (390)         -            -          (390)
  Increase in minority
      interest in equity
      of consolidated
      subsidiaries                        -           -           -           -            -          -       12,506        12,506
  Other                                   -           -          16           -            -          -            -            16
                                ----------- ------------ ----------- ------------ ----------- ----------  ------------ ------------
Balance, December 31, 2001           12,464     286,706     (66,274)     (4,843)         198          -       22,201       250,452
  Net loss                                -           -     (72,991)          -            -          -            -       (72,991)
  Decrease in capital surplus
      relating to additional
      stock transactions by
      consolidated subsidiaries
      (note 14)                           -      (1,616)          -           -            -          -            -        (1,616)
  Gain on disposal of treasury
      stock (note 14)                     -          35           -           -            -          -            -            35
  Offsetting against deficit
      (notes 2 and 14)                    -     (65,263)     65,263           -            -          -            -             -
  Reversal of losses in excess
      of minority interest                -           -         377           -            -          -            -           377
  Treasury stock transactions             -           -           -          29            -          -            -            29
  Stock compensation plans
      (notes 2 and 25)                    -           -           -           -          159          -            -           159
  Gain on valuation of equity
      securities valued using
      the equity method                   -           -           -           -            -        332            -           332
  Increase in treasury stock by
      consolidated subsidiary             -           -           -           -            -     (1,188)           -        (1,188)
  Decrease in minority interest
      in equity of consolidated
      subsidiaries                        -           -           -           -            -          -         (816)         (816)
  Other                                   -           -         168           -            -        (55)           -           113
                                  ----------  ---------     ---------   ---------     --------   -------   ---------    -----------
Balance, December 31, 2002           12,464     219,862     (73,457)     (4,814)         357       (911)      21,385       174,886
  Net income                              -           -       2,524           -            -          -            -         2,524
  Additional issuance                 2,493      22,611           -           -            -          -            -        25,104
  Additional issuance without
      consideration                   2,962      (2,962)          -           -            -          -            -             -
  Treasury stock transactions
      (note 16)                           -           -           -         470            -          -            -           470
  Loss on disposal of treasury
      stock (note 16)                                                                               (113)                     (113)
  Stock compensation plans
      (notes 2 and 25)                    -           -           -           -          356          -            -           356
  Offsetting against deficit
      (notes 2 and 14)                    -     (73,738)     73,738           -            -          -            -             -
  Decrease in capital surplus and
      capital adjustment relating
      to disposal of
      available-for-sale
      securities (note 14)                -     (24,628)          -           -            -       (332)           -       (24,960)
  Decrease in capital surplus and
      capital adjustment relating
      to disposal of subsidiary's
      stock (note 14)                     -        (353)          -           -            -        125            -          (228)
  Decrease in minority interest
      inequity of consolidated
      subsidiaries                        -           -           -           -            -          -       (1,447)       (1,447)
                                ----------- ------------ ----------- ------------ ----------- ----------  ------------ ------------
Balance, December 31, 2003      (won)17,919 (won)40,792  (won)2,805 (won)(4,344)    (won)713 (won)(1,231)  (won)9,938  (won)176,592
                                =========== ============ ==========  ============ =========== ==========  ============ ============

(In thousands of U.S. dollars)
  (note 2)
Balance, December 31, 2002          $10,456    $184,448     ($61,625)    ($4,039)        $299      ($764)     $17,940      $146,715
  Net income                              -           -        2,117           -            -          -            -         2,117
  Additional issuance                 2,091      18,970            -           -            -          -            -        21,061
  Additional issuance without
      consideration                   2,486      (2,486)           -           -            -          -            -             -
  Treasury stock transactionsx
      (note 16)                           -           -            -         395            -          -            -           395
  Loss on disposal of treasury
       stock (note 16)                    -           -            -           -            -        (95)           -           (95)
  Stock compensation plans
      (notes 2 and 25)                    -           -            -           -          299          -            -           299
  Offsetting against deficit
      (notes 2 and 14)                    -     (61,861)      61,861           -            -          -            -             -
  Decrease in capital surplus and
      captal adjustment relating
      to disposal of available-
      for-sale securities (note 14)       -     (20,661)           -           -            -       (279)           -       (20,940)
  Decrease in capital surplus and
      captal adjustment relating
      to disposal of subsidiary's
      stock (note 14)                     -        (295)           -           -            -        105            -          (190)
  Decrease in minority interest
      in equity of
      consolidated subsidiaries           -           -            -           -            -          -       (1,213)       (1,213)
                                ----------- ------------ ----------- ------------ ----------- ----------  ------------ ------------

Balance, December 31, 2003          $15,033    $118,115       $2,353     ($3,644)        $598    ($1,033)     $16,727      $148,149
                                =========== ============ ==========  ============ =========== ==========  ============ ============


                                    See accompanying notes to consolidated financial statements
</TABLE>



                                                           F-7
<PAGE>

<TABLE>
<CAPTION>


                     MIRAE CORPORATION AND ITS SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003

                                                                   2001             2002             2003              2003
                                                              ------------    -------------     ------------      ------------
                                                                                                                  (In thousands
                                                                                                                     of U.S.
                                                                                                                     dollars)
                                                                         (In millions of Korean won)                 (note 2)

<S>                                                               <C>              <C>                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)........................................ ((won)99,148)    ((won)72,991)      (won)2,524           $2,117
                                                              ------------    -------------     ------------      ------------
   Expenses not involving cash payments:
     Depreciation and amortization..........................       10,098            8,066            7,579            6,358
     Loss from impairment of deferred development cost......        4,429           11,337            1,521            1,276
     Provision for severance indemnities....................        2,834            2,264            1,705            1,430
     Provision for doubtful accounts........................       10,496           18,874            4,970            4,169
     Provision for guarantees issued........................        3,739              649                -                -
     Loss from valuation of inventories.....................       16,837           20,409           12,428           10,426
     Loss on disposal and valuation of trading securities...          179            3,377              328              275
     Loss on disposal and valuation of current portion of
       available-for-sale securities........................            -                1                1                1
     Foreign currency translation loss......................            -            1,419               23               19
     Equity in losses of affiliate..........................       15,677              827            7,953            6,672
     Minority interest in net gain of consolidated affiliates       1,055                -                -                -
     Loss from impairment of available-for-sale securities..        8,717            3,631            1,343            1,127
     Compensation cost related to stock options.............          198              159              356              299
     Deferred income taxes..................................       13,763                -                -                -
     Other .................................................        1,053              542              146              122
                                                              ------------    -------------     ------------      ------------

     Sub-total..............................................       89,075           71,555           38,353           32,174
                                                              ------------    -------------     ------------      ------------
   Income not involving cash receipts:
     Foreign currency translation gain......................         (899)            (542)            (192)            (161)
     Reversal of provision for doubtful accounts............         (588)               -                -                -
     Reversal of provision for guarantees issued............            -           (3,739)               -                -
     Gain on disposal and valuation of trading securities...       (2,297)          (2,725)          (2,875)          (2,412)
     Gain on disposal and valuation of current portion of
       available-for-sale securities........................            -             (156)              (4)              (3)
     Gain on disposal of available-for-sale securities......         (665)               -          (28,378)         (23,807)
     Gain on disposal of equity securities using the
       equity method........................................            -                -             (101)             (85)
     Gain on disposal of property, plant and equipment......         (178)          (1,832)            (272)            (228)
     Minority interest in net loss of consolidated
       affiliates....... ...................................            -             (176)          (1,626)          (1,364)
     Other..................................................           (7)            (462)            (553)            (464)
                                                              ------------    -------------     ------------      ------------

     Sub-total..............................................       (4,634)          (9,632)         (34,001)         (28,524)
                                                              ------------    -------------     ------------      ------------

   Changes in assets and liabilities related to operating
     activities:
     Accounts receivable  trade.............................       19,317          (10,491)          (9,731)          (8,164)
     Accounts receivable  other.............................           32             (345)          (2,219)          (1,862)
     Inventories............................................        1,474           10,783              115               96
     Accrued interest income................................          (73)             (40)              61               51
     Advance payments and other current assets..............       (8,901)          (1,636)           8,295            6,959
     Accounts payable - trade...............................       (9,723)           4,535           (2,108)          (1,768)
     Accounts payable - other...............................       11,156          (13,916)             335              281
     Income taxes payable...................................       (1,887)            (251)              13               11
     Advance receipts from customers........................       (1,040)              47             (176)            (148)
     Accrued expenses and other current liabilities.........       (4,815)            (718)           1,026              861
     Severance indemnity payments...........................       (2,790)          (1,240)          (1,968)          (1,651)
                                                              ------------    -------------     ------------      ------------
     Sub-total..............................................        2,750          (13,272)          (6,357)          (5,334)
                                                              ------------    -------------     ------------      ------------
     Net cash provided by (used in) operating activities....      (11,957)         (24,340)             519              433
                                                              ------------    -------------     ------------      ------------

</TABLE>

(Continued)


                                                           F-8
<PAGE>

<TABLE>
<CAPTION>


                     MIRAE CORPORATION AND ITS SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003


                                                                   2001             2002             2003              2003
                                                              ------------    -------------     ------------      ------------
                                                                                                                  (In thousands
                                                                                                                     of U.S.
                                                                                                                     dollars)
                                                                         (In millions of Korean won)                 (note 2)


<S>                                                                         <C>            <C>               <C>         <C>

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from disposal of property, plant and equipment..........   (won)1,902     (won)58,655       (won)965         $810
   Decrease (increase) in short-term financial instruments..........      (30,385)          9,765          6,194        5,196
   Decrease in long-term loans......................................        1,388           9,770            235          197
   Decrease in guarantee deposits...................................        1,531             614          5,918        4,965
   Decrease (increase) in trading securities -net...................      (12,783)         (7,153)         9,833        8,249
   Decrease (increase) in current portion of
     available-for-sale securities - net............................            -               -          1,750        1,468
   Acquisition of property, plant and equipment.....................      (23,729)         (3,238)       (22,669)     (19,018)
   Acquisition of available-for-sale securities.....................       (1,142)         (6,565)             -            -
   Proceeds from disposal of available-for-sale securities..........            -               -          4,206        3,529
   Acquisition of equity securities valued using
     the equity method accounting...................................            -               -         (9,818)      (8,237)
   Decrease (increase) in long-term and restricted
     bank deposits - net............................................          265            (618)          (348)        (292)
   Increase in long-term loans......................................       (1,435)         (3,200)        (8,966)      (7,522)
   Decrease (increase) in investments and other
     non-current assets.............................................        1,587          (8,311)         1,693        1,420
   Increase in guarantee deposits...................................         (290)         (5,879)        (1,158)        (971)
   Increase in deferred development costs...........................       (5,898)         (4,002)        (2,884)      (2,419)
   Disposal of deferred development costs...........................            -           1,250              -            -
   Increase (decrease) in long-term guarantee deposits payable......        1,737         (11,406)         4,874        4,089
                                                                      ------------   -------------  -------------  -----------
   Net cash provided by (used in) investing activities..............      (67,252)         29,682        (10,175)      (8,536)
                                                                      ------------   -------------  -------------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in short-term borrowings................................       55,330               -             94           79
   Increase in long-term borrowings.................................            -          10,000            500          419
   Increase in long-term lease payable..............................            -             918              -            -
   Issuance of common stock.........................................            -               -         25,103       21,060
   Increase (decrease) in minority interest in equity
     of consolidated affiliate......................................       11,029            (218)           180          151
   Increase in additional paid-in capital...........................        2,649               -              -            -
   Disposal of treasury stock.......................................       17,448           1,273            373          313
   Payment of short-term borrowings.................................       (3,400)        (21,885)       (13,684)     (11,480)
   Payment of current portion of long-term lease payable............            -            (152)          (458)        (384)
   Payment of long-term lease payable...............................            -            (146)             -            -
   Acquisition of treasury stock....................................      (10,000)         (1,499)           (16)         (13)
   Decrease (increase) of other capital adjustment..................            -          (1,243)           125          105
   Payment of dividends.............................................       (1,846)           (423)             -            -
                                                                      ------------   -------------  -------------  -----------

Net cash provided by (used in) financing activities.................       71,210         (13,375)        12,217       10,250
                                                                      ------------   -------------  -------------  -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS FROM
   CHANGES IN CONSOLIDATED SUBSIDIARY...............................            -             126              -            -
                                                                      ------------   -------------  -------------  -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................       (7,999)         (7,907)         2,561        2,149
                                                                      ------------   -------------  -------------  -----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................       34,914          26,915         19,008       15,946
                                                                      ------------   -------------  -------------  -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR............................  (won)26,915     (won)19,008    (won)21,569      $18,095

CASH PAID FOR INTEREST, NET OF AMOUNT CAPITALIZED...................   (won)3,247      (won)3,609     (won)2,041       $1,712

CASH PAID (REFUNDED) FOR INCOME TAXES...............................   (won)3,166        (won)220       ((won)88)        ($74)
                                                                     =============   =============  =============  ===========
</TABLE>


                                                           F-9
<PAGE>


                     MIRAE CORPORATION AND ITS SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   GENERAL

     Mirae Corporation (the "Company") was incorporated in December 1990 under
     the laws of the Republic of Korea ("Korea") and is currently engaged in
     the manufacture of semiconductor-related equipment including handlers, SMD
     placement systems for sale in domestic and overseas markets, as well as in
     the sale of on-line electronic commerce security solutions through its
     subsidiary, SoftForum Corporation. The Company's common shares and
     American Depositary Shares ("ADSs") are listed on the Korea Stock Exchange
     and the Nasdaq National Market, respectively. Each ADS represents two
     shares of common stock. As of December 31, 2003, the Company's largest
     shareholder was Mr. Moon-Soul Chung, the Company's former president, with
     a shareholding of 12.50% and, including his family members, 13.86%.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Significant accounting policies followed by the Company in the preparation
     of the accompanying consolidated financial statements are summarized as
     follows:

     a.  Basis of Presentation

         The official accounting records of the Company are expressed in Korean
         won and are maintained in accordance with the relevant laws and
         regulations of the Republic of Korea. The accounting principles and
         reporting practices followed by the Company and generally accepted in
         the Republic of Korea ("Korean GAAP") may differ in certain respects
         from accounting principles and reporting practices generally accepted
         in other countries and jurisdictions.

         The financial statements are stated in Korean won, the currency of the
         country, in which the Company is incorporated and operates. The
         translation of Korean won amounts into U.S. dollar amounts is included
         solely for the convenience of readers outside of the Republic of
         Korea and have been made at the rate of (won)1,192.00 to US$1, the
         Noon Buying Rate in the City of New York for cable transfers in Korean
         won as certified for customs purposes by the Federal Reserve Bank of
         New York on the last business day of the year ended December 31, 2003.
         Such translations should not be construed as representations that the
         Korean won amounts could be converted into U.S. dollars at that or any
         other rate.

     b.  Principles of Consolidation

         The consolidated financial statements include the accounts of the
         Company and all subsidiaries. Significant inter-company accounts and
         transactions have been eliminated in consolidation. Affiliates, over
         which the Company exercises significant influence, are accounted for
         using the equity method of accounting (see note 2(i)).


                                     F-10
<PAGE>

         The Company's consolidated subsidiaries and its affiliates, which are
         accounted for using the equity method of accounting, are as follows:

<TABLE>
<CAPTION>
                                                        Year of      Ownership Percentage           Remark
                                                     Establishment            (%)
                                                   ----------------------------------------------------------
<S>                                                      <C>                 <C>
          SoftForum Corporation ("SoftForum")            1999                41.51%              Consolidated
          MR Tech Town Co. ("MR Tech")
           (formerly MR Tech Corporation)                1999               100.00%              Consolidated
          Mirae Online Co., Ltd. ("MOL")                 2000                67.47%              Consolidated
          Korea Internet. Com. ("KIC")                   2000                87.38%              Consolidated
          Alpha Logics Co., Ltd. ("Alpha Logics")        2002               100.00%              Consolidated
          Mirae America, Inc. ("Mirae America")          2001                50.00%              Equity method
          AIO Corporation ("AIO")                        1990                21.63%              Equity method
          Cyber Bank Corporation ("Cyber Bank")          1999                28.25%              Equity method
</TABLE>

         SoftForum was incorporated in April 1999 under the laws of Korea as a
         70%-owned subsidiary of the Company and is currently engaged in
         providing security solutions for on-line banking, trading and
         electronic commerce. SoftForum's shares have been listed in the Korea
         Securities Dealers Automated Quotation ("KOSDAQ") market since October
         30, 2001. As of December 31, 2003, SoftForum is 41.51%-owned by the
         Company, 6.94%-owned by Dongwon Venture Capital Co., Ltd., 3.77%-owned
         by SoftForum employees and 52.22%-owned by others. SoftForum's
         accounts were consolidated due to the Company's effective control
         through the nomination of a majority of the board of directors by the
         Company.

         MR Tech was incorporated in April 1999 under the laws of Korea and the
         Company acquired 100% equity interest in MR Tech on July 12, 1999. In
         2003, the Company disposed total equity of MR Tech to SoftForum, the
         Company's subsidiary. As of December 31, 2003, MR Tech is engaged in
         providing building administration services.

         MOL was incorporated in March 2000 under the laws of Korea in order to
         engage in providing broadcasting program sending service. As of
         December 31, 2003, MOL is 67.47%-owned by the Company.

         KIC was incorporated in July 2000 under the laws of Korea as a joint
         venture company between the Company and internet.com Corporation, a
         United States corporation, in order to provide e-business related
         information, real-time news, and information for internet
         professionals on the internet. As of December 31, 2003, KIC is
         87.38%-owned by the Company.

         Alpha Logics was incorporated in December 2002 under the laws of Korea
         in order to develop and sell security solutions and related equipment.
         As of December 31, 2003, Alpha Logics is 100%-owned by SoftForum, the
         Company's subsidiary.

         Mirae America was incorporated in February 2001 under the laws of
         United States of America as a joint venture company. Mirae America
         currently sells products manufactured by the Company and provides
         after-sales services for the products.


                                     F-11
<PAGE>

         AIO Corporation was incorporated in the United States of America in
         1990 in order to design, manufacture and market silicon wafer cleaning
         systems, track systems and ancillary equipment.

         Cyber Bank was incorporated in January 1999 under the laws of Korea in
         order to develop and manufacture telecommunication appliances, and
         develop total information systems and software.

     c.  Use of Estimates

         The preparation of the Company's financial statements, in conformity
         with accounting principles generally accepted in the Republic of
         Korea, requires management to make estimates and assumptions. These
         estimates and assumptions affect the reported amounts of assets and
         liabilities and the disclosure of contingent assets and liabilities at
         the date of the financial statements, and the reported amounts of
         revenues and expenses during the reporting period. Actual results
         could differ from these estimates.

     d.  Adoption of Statements of Korea Accounting Standards ("SKAS")

         The accompanying financial statements of the Company have been
         prepared in accordance with SKAS No. 2 through No. 9, which are
         effective from the fiscal year beginning after December 31, 2002.

         In 2003, the Company adopted SKAS No. 6 and accordingly,
         appropriations of retained earnings, including declaration of
         dividends (or dispositions of accumulated deficit) are not recorded in
         the balance sheet until approved by shareholders. The balance sheet as
         of December 31, 2002, which is comparatively presented, is restated to
         reflect the effect of this accounting change retrospectively and, as a
         result, total liabilities as of December 31, 2002 decreased by
         (won)230 million and minority interest in equity of consolidated
         subsidiaries as of December 31, 2002 increased by the same amount. In
         connection with this accounting change, operating loss, net loss and
         net loss per share for the year ended December 31, 2002 were not
         affected.

     e.  Revenue Recognition

         Product sales are recognized upon delivery because at that time
         customers contractually assume all risks of ownership and the earnings
         process is considered to be substantially complete. Sales of software
         products are recognized after the installation process is complete.

     f.  Allowance for Doubtful Accounts

         An allowance for doubtful accounts is provided based on the estimated
         collectibility of individual accounts and historical bad debt
         experience.

         Activity in the allowance for doubtful accounts balances for the years
         ended December 31, 2002 and 2003 is as follows (in millions of Korean
         won):


                                     F-12
<PAGE>

<TABLE>
<CAPTION>
                                                                                      2002             2003
                                                                               ---------------------------------
<S>                                                                            <C>               <C>
          (Allowance for doubtful accounts receivable-trade)
            Beginning balance                                                   (won) 4,001        (won)14,322
            Provision (charged to selling, general and administrative
              expenses)                                                              11,787              3,224
            Offset against uncollectible trade receivables                           (1,466)              (132)

            Ending balance                                                      (won)14,323        (won)17,415
                                                                               =================================

                                                                                      2002             2003
                                                                               ---------------------------------
          (Allowance for doubtful advance payments, long-term loans and other)
            Beginning balance                                                   (won)     -        (won) 6,999
            Provision (charged to other expenses)                                     7,087              1,746
            Transfer from provision for guarantees                                        -                649
            Offset against uncollectible advance payments, long-term loans
              and other                                                                 (88)                 -

            Ending balance                                                      (won) 6,999        (won) 9,394

                                                                               =================================
</TABLE>
     g.  Inventories

         Inventories are stated at the lower of cost, determined using the
         weighted average cost method (the specific identification method for
         inventories-in-transit), or net realizable value.

     h. Securities (Except for securities valued using the equity method)

         In accordance with SKAS No. 8, the Company changed its accounting
         method for securities. In connection with this accounting change, the
         financial position as of December 31, 2002 was not affected.

         Debt and equity securities are initially stated at their acquisition
         costs (fair value of considerations paid) including incidental cost
         incurred in connection with acquisition of the related securities
         using the weighted average method and divided into trading,
         available-for-sale and held-to-maturity securities depending on the
         acquisition purpose and nature. The following details the Company's
         accounting for trading securities and available-for-sale securities,
         except for the equity securities valued using the equity method of
         accounting:

         i) Trading Securities

         Debt and equity securities bought and held for the purpose of selling
         them in the near term are classified as trading securities. Trading
         securities are recorded at their fair value and valuation gains or
         losses from trading securities are recorded in current earnings.


                                     F-13
<PAGE>

         ii) Available-for-sale Securities

         Debt and equity securities that do not fall under the classifications
         of trading or held-to-maturity securities are categorized as
         available-for-sale securities in the long-term asset section. However,
         if an available-for-sale security matures or it is certain to dispose
         of such security within one year from the balance sheet date, it is
         presented as a current asset.

         Available-for-sale securities are recorded at fair value. However,
         available-for-sale equity securities, of which fair value cannot be
         reliably measured, are recorded at cost, and the fair value of
         available-for-sale debt securities without quoted market price is
         estimated discounting the expected future cash flows at an interest
         rate commensurate with the credit rating published by independent
         credit rating institutions. Unrealized gains or losses from
         available-for-sale securities are recorded as capital adjustments and
         when the decline in fair value is not deemed recoverable, an
         impairment loss is recognized in the current operations. If the value
         of impaired securities subsequently recovers and the recovery
         objectively relates to an event arising after the period when the
         impairment loss was recorded, such recovery is credited in the current
         operations up to the previously recorded impairment losses. In
         connection with this policy, the Company recorded impairment losses of
         (won)8,717 million, (won)3,631 million and 1,343 million for the
         years ended December 31, 2001, 2002 and 2003, respectively, and
         recorded recovery of impairment losses of (won)11 million for the
         year ended December 31, 2002.

     i. Equity method of accounting

         Investments in equity securities of companies, over which the Company
         exercises significant influence, are reported using the equity method
         of accounting. Such investments are initially carried at acquisition
         cost including incidental cost incurred in connection with acquisition
         of the related securities, using the weighted average method. Under
         the equity method of accounting, the Company records changes in its
         proportionate equity of the book value of the investee as current
         operations, capital adjustments or adjustments to retained earnings,
         depending on the nature of the underlying changes in the investee.

         The details of applying the equity method of accounting are as
         follows:

         Differences between the acquisition cost and net asset value of the
         investee are amortized over 20 years using the straight-line method.
         However, when the Company's ownership decreases due to the investee's
         issuance of additional stock, the difference is accounted for in
         capital adjustment (valuation loss in investment securities using the
         equity method of accounting).

         Unrealized profits arising from sales by the Company to equity-method
         investees are eliminated. The Company's proportionate unrealized
         profits arising from sales by equity-method investees to the Company
         or transactions between equity-method investees are also eliminated.


                                     F-14
<PAGE>

     j.  Property, Plant and Equipment

         Property, plant and equipment are stated at cost. Major renewals and
         betterments are capitalized; expenditures for repairs and maintenance
         are charged to current operations as incurred.

         Depreciation is computed using the declining balance or straight-line
         methods over the estimated economic useful lives (four to sixty years)
         of the related assets.

     k.  Research and Development Costs

         Development costs which meet certain specific conditions such as new
         product development, technological feasibility, marketability and
         usefulness are deferred and amortized over five years, while all
         research and ordinary development costs are expensed as incurred.
         Amortization of deferred development costs is to commence when the
         related revenue or benefit is first realized. In addition, the
         amortization of deferred development costs and research and ordinary
         development expenses are classified as manufacturing or selling,
         general and administrative expenses depending on their nature.

         During 2001, 2002 and 2003, the Company discontinued some of its
         research and development projects. As a result, the Company wrote off
         the related deferred development costs of (won)4,429 million,
         (won)11,337 million and 1,521 million for the years ended December
         31, 2001, 2002 and 2003, respectively.

         Expenditures on research and development activities for the years
         ended December 31, 2001, 2002 and 2003 are as follows (in millions of
         Korean won):

<TABLE>
<CAPTION>
                                                    2001         2002         2003            Remark
                                               ----------------------------------------------------------------

<S>                                             <C>         <C>           <C>           <C>
         Research expenses                       (won) 3,315 (won) 2,410   (won) 1,053  Selling, general and
                                                                                          administrative expenses
         Ordinary development expenses                 6,768       2,866         3,716  Cost of sales
         Deferred development costs                    5,898       4,002         2,884  Intangible assets
         Total                                   (won)15,981 (won) 9,278   (won) 7,653
                                               =======================================
</TABLE>

         Changes in deferred development costs for the years ended December 31,
         2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                              2002                        2003
                                                                        ----------------------------------------------
<S>                                                                        <C>                           <C>
         Beginning balance                                                  (won)13,637                 (won)4,054
         Incurred                                                                 4,002                      2,884
         Changes in consolidated subsidiary                                         (23)                         -
         Disposed                                                                (1,250)                         -
         Amortized                                                                 (975)                      (749)
         Loss from impairment                                                   (11,337)                    (1,521)

                                                                        ----------------------------------------------
         Total                                                               (won)4,054                 (won)4,668

                                                                        ==============================================
</TABLE>


                                                          F-15
<PAGE>

     l.  Other Intangible Assets

         Other intangible assets are stated at cost, less amortization,
         computed using the straight-line method over five to ten years.

     m.  Stock Issuance Costs

         Stock issuance costs are shown as a direct reduction to shareholders'
         equity.

     n.  Accounting for Impairment

         When the book value of an asset exceeds its estimated recoverable
         value, which is the greater of the net realizable value or useful
         value of the asset, due to obsolescence, physical damage or a sharp
         decline in market value, and the amount is material, the asset is
         recorded at its reduced value and the resulting impairment loss is
         charged to current operations. In subsequent periods, if the
         recoverable value exceeds the adjusted book value of the asset, the
         recoveries of previously recognized losses is recognized as a gain in
         subsequent periods until the net realizable value equals the original
         book value of the asset.

     o.  Accrued Severance Indemnities

         In accordance with Korean labor laws, all employees with more than one
         year of service are entitled to receive severance indemnities, based
         on length of service and rate of pay, upon termination of their
         employment. Accruals for severance indemnities are recorded to
         approximate the amount required to be paid if all employees were to
         terminate at the balance sheet date.

         Changes in accrued severance indemnities for the years ended December
         31, 2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                         2002                     2003
                                                                 ---------------------   ----------------------
<S>                                                                    <C>                     <C>
         Beginning balance                                               (won)3,032             (won)4,047
         Provision                                                            2,264                  1,705
         Changes in consolidated subsidiary                                      (9)                     -
         Payments                                                            (1,240)                (1,968)
         Other                                                                    -                    (78)
                                                                 ---------------------   ----------------------

         Ending balance                                                  (won)4,047              (won)3,706
                                                                 =====================   ======================
</TABLE>

     p.  Treasury Stock

         Treasury stock is shown separately as a capital adjustment item within
         stockholders' equity. Gains on sales of treasury stock are credited to
         capital surplus, and losses are charged against either capital surplus
         arising from previous treasury stock transactions or against retained
         earnings.

     q.  Costs for Product Warranties

         Through 2000, product warranty expenditures had been included as
         incurred in manufacturing costs, which had been allocated between cost
         of sales and inventories.


                                     F-16
<PAGE>

         Effective January 1, 2001, product warranties expenditures incurred
         related to selling and administrative activities are classified as an
         item of selling, general and administrative expenses for a more
         appropriate financial statement presentation as the Company
         established a customer satisfaction division. This change in
         classification did not have any significant effect on the reported
         financial position of the Company and its subsidiaries as of December
         31, 2001 or their net loss for the year then ended.

     r.  Income Taxes

         Deferred tax assets and liabilities are recorded for future tax
         consequences of operating loss carryforwards, tax credits and
         temporary differences between the financial statement carrying amounts
         of existing assets and liabilities and their respective tax bases.
         Deferred tax assets are recognized to the extent that they are
         expected to be realizable. Deferred tax assets and liabilities are
         presented on the balance sheet as a single non-current net number.

     s.  Accounting for Foreign Currency Transactions

         The Company and its subsidiaries maintain their accounts in Korean
         won. Transactions in foreign currencies are recorded in Korean won
         based on the prevailing rate of exchange at the dates of transactions.
         Monetary assets and liabilities denominated in foreign currencies are
         translated in the accompanying consolidated financial statements at
         the Base Rates announced by Seoul Money Brokerage Service, Ltd. on the
         balance sheet dates, which, for U.S. dollars, were
         (won)1,200.40=$1.00 and (won)1,197.80=$1.00, at December 31,
         2002 and 2003, respectively. The resulting gains and losses arising
         from the translation or settlement of such assets and liabilities are
         included in current operations.

     t. Valuation of Long-Term Receivables

         Long-term receivables resulting from long-term installment
         transactions are stated at the present value of the expected future
         cash flows. Imputed interest amounts are recorded in present value
         discount accounts which are deducted directly from the related nominal
         receivable balances. Such imputed interest is included in operations
         using the effective interest rate method over the redemption period.

     u. Accounting for Employee Stock Option Compensation Plan

         The Company adopted the fair value based method of accounting for the
         employee stock option compensation plan, which was established,
         effective as of March 25, 2000, to reward the performance of
         individual officers and other employees who have contributed, or have
         the ability to contribute, significantly to the Company (see note 25).
         Under the fair value based method, compensation cost is measured at
         the grant date based on the value of the award and is recognized over
         the service period. For stock options, fair value is determined using
         an option-pricing model that takes into account the stock price at the
         grant date, the exercise price, the expected life of the option, the
         volatility of the underlying stock, the expected dividends, and a
         risk-free interest rate over the expected life of the option. However,
         as permitted under Korean GAAP, the Company excludes the volatility
         factor in estimating the value of its stock options, which results in
         measurement at minimum value. The total compensation cost at the grant
         date is not subsequently adjusted for changes in the price of the


                                     F-17
<PAGE>

         underlying stock or its volatility, the expected life of the option,
         dividends on the stock, or the risk-free interest rate.

     v.  Accounting for Leases

         Lease agreements that include a bargain purchase option, result in
         transfer of ownership at the end of the lease term, have a term longer
         than 75% of the estimated economic life of the leased property or have
         present value of minimum lease payments equal to or exceeding 90% of
         fair market value of the leased property, are accounted for as capital
         leases. Leases that do not meet any of these criteria are accounted
         for as operating leases.

         The leased properties and related capital lease obligations are
         recorded at an amount equal to the total minimum lease payments over
         the lease term, less the portion attributable to interest.
         Depreciation of leased properties accounted for as capital leases is
         computed using the straight-line method over the useful lives of
         related assets.

     w.  Derivative Instruments

         The Company records rights and obligations arising from derivative
         instruments as assets and liabilities, which are stated at fair value.
         The gains and losses that result from the change in the fair value of
         derivative instruments are reported in current earnings. However, for
         derivative instruments designated as hedging the exposure of variable
         cash flows, the effective portion of the gains or losses on the
         hedging instruments are recorded as a separate component of
         shareholders' equity and credited/charged to operations at the time
         the hedged transactions affect earnings, and the ineffective portion
         of the gains or losses is credited/charged immediately to operations.
         The Company has no outstanding derivative instruments as of December
         31, 2002 and 2003.

3.   INVENTORIES

     Inventories as of December 31, 2002 and 2003 are as follows (in millions
     of Korean won):

<TABLE>
<CAPTION>
                                                              2002                    2003
                                                     ---------------------   ----------------------

<S>                                                      <C>                     <C>
                   Merchandise                            (won)2,840              (won)202
                   Finished goods                              6,599                 2,278
                   Work in-process                             2,478                 4,748
                   Raw materials                              10,343                 2,410
                   Inventories in-transit                          1                    26
                                                     ---------------------   ----------------------
                                                         (won)22,261            (won)9,664
                                                     =====================   ======================
</TABLE>

4.   RESTRICTED DEPOSITS

     Restricted deposits as of December 31, 2002 and 2003 are as follows (in
     millions of Korean won):



                                     F-18
<PAGE>

<TABLE>
<CAPTION>
                                                 2002             2003                       Description
                                             ------------    --------------     -------------------------------------
<S>                                         <C>             <C>                 <C>
     Short-term financial instruments        (won)8,873      (won)7,482        Collateral of letters of credit
                                                                                 and other
     Long-term financial instruments                110             458        Guarantee deposits for checking
                                             ------------    --------------      accounts and other

                                             (won)8,983      (won)7,940
                                             ============    ==============
</TABLE>

5.   AVAILABLE-FOR-SALE SECURITIES

     Available-for-sale securities and investments in affiliates as of December
     31, 2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                                                      Net asset
                                                Ownership                                             value or
                                              percentage (%)          Acquisition cost               fair value
                                             -----------------  ----------------------------- ------------ -------------
                                                   2003             2003            2002         2003          2003
                                             -----------------  --------------  ------------- ------------ -------------

    (Available-for-sale securities in equity securities of non-listed companies)
<S>                                                    <C>            <C>             <C>          <C>            <C>
     SK Communications Corporation
     (note a)                                               -         (won) -     (won)2,532       (won)-        (won)-
     On-net Corporation                                14.71%             795            459          459           478
     Intro System (note b)                             15.16%             500              -            -             -
     JIT Corporation (note b)                           3.65%             100              -            -             -
     Nara Vision                                       17.43%           3,500            264          264           221
     NetThru (note b)                                  19.73%             296             64           24            24
     Cyber Bank (note c)                                    -               -             62            -             -
     Infinity Telecom                                  16.70%             500             62           62           226
     Korea Technology Transfer Center                       -           1,500          1,500        1,500         1,386
     TeleFree (note b)                                  2.57%             504             62           62            62
     Streambox Korea (note b)                           5.11%           1,500              -            -             -
     NeoBill Co., Ltd.                                  4.37%             525             52           52            44
     Mobens Co., Ltd. (note b)                         15.09%           1,000              -            -             -
     Mirae (Hongkong) Co., Ltd.                        99.00%               2              2            2             2
     Linxtek                                            1.22%              28             28           28            24
     Seoul Venture Base (note b)                        5.69%              80              -            -             -
     EON Group (note b)                                 1.33%              13              6            6             6
     CAMIS Co., Ltd.                                    0.26%              10             10           10            17
     YESS World Inc.                                    0.72%              20             20           20            23
     Sunwoo Information system (note b)                 1.00%              10              5            -             -
     Dabonet Co., Ltd.                                  0.79%               8              8            8             7
     Digital Photo Corp.                                0.93%               5              5            5             6
     Telinker (note b)                                  0.75%              22             22            6             6
     E-GIOS Corporation (note b)                        1.59%             200            200            -             -
     Hackers Lab Co., Ltd. (note b)                     1.47%              81             81            -             -
     Interchem Korea                                    8.00%             100            100          100            50
     Imobiz (note b)                                    2.32%              12              -            -             -
     Other                                                  -               5              5            5             -
                                                                --------------  ------------- ------------ -------------



                                                          F-19
<PAGE>

     Sub-total                                                         11,316          5,549        2,613         2,582
                                                                --------------  ------------- ------------ -------------
    (Available-for-sale securities in debt securities)
     Public Bonds                                                         445          1,749          445           445
     KMT Co., Ltd. (note d)                                                 -            762            -             -
     Cen21 Co., Ltd.                                                      250              -            -             -
     Mobens Co., Ltd. (note e)                                          1,000              -            -             -
                                                                --------------  ------------- ------------ -------------
     Sub-total                                                          1,695          2,511          445           445
                                                                --------------
     Less current portion                                                            (1,749)          (3)           (3)
                                                                                ------------- ------------ -------------
     Long-term portion                                                                   762          442           442
                                                                                ------------- ------------ -------------

    Total long-term portion of
       available-for-sale securities                                              (won)6,311   (won)3,055    (won)3,024
                                                                                ============= ============ =============

    (note a)   The  Company's initial investment cost was (won) 50 million.  In 1999,  the  carrying  value was
               subsequently  reduced to zero to reflect the Company's share of SK Communications'  loss for the
               year  ended  December  31,  1999  which  exceeded  the  carrying  amount  of  the  common  stock
               investment.  In February  2000, SK  Communications  issued and sold 3,122  additional  shares of
               its  common  stock at a premium to outside  entities  including  Mirae  Asset  Venture  Capital,
               Sumitomo  Corp.,  SingTel  and  Hikari, for(won) 18,000,000 per share (par value:(won) 5,000 per
               share).  As a result of such  issuance,  the  Company's  equity  ownership in SK  Communications
               decreased from 50% to 43.25% and its investment increased by (won) 24,628 million. The resulting
               gain on sale of stock by SK  Communications  was  accounted  for as an  equity  transaction  and
               included in capital surplus. In August 2002, the Company's ownership  percentage  decreased from
               43.25% to 4.54%  through a sale to SK  Telecom  Co.,  Ltd.  As a result,  the  investment  in SK
               Communications  was accounted for using the equity method  through July 2002 and  thereafter the
               Company  used the  cost  method  of  accounting.  In June  2003,  the  Company  disposed  of its
               6,836,690 shares of SK  Communications for (won) 660 per share. As a result of such disposal, the
               Company  recorded a gain on  disposal of  available-for-sale  securities of (won) 26,940 million.
               Details are as follows (in millions of Korean won):
</TABLE>

<TABLE>
<CAPTION>
                  Book value        Capital surplus       Capital       Disposal amount         Gain on disposal
                                                        adjustment
                     (A) (B) (C) (D) (B)+(C)+(D)-(A)
             ---------------------  ----------------- ---------------- ------------------  ----------------------------
<S>                   <C>               <C>                 <C>              <C>                          <C>
                       (won)2,532        (won)24,628      (won)332        (won)4,512               (won)26,940
             ---------------------  ----------------- ---------------- ------------------  ----------------------------

    (note b)    The carrying values of investments were adjusted to the relevant net asset value of each investee
                where the decline in net asset value is not deemed to be temporary.

    (note c)    In 2003, the accounting method for the investment in Cyber Bank was changed to the equity method of
                accounting from the cost method due to additional acquisitions.

    (note d)    In 2003, the Company disposed of convertible bonds issued by KMT Co., Ltd. As a result of such
                disposal, the Company recorded a gain on disposal of available-for-sale securities of (won)1,438
                million.


                                                          F-20
<PAGE>

    (note e)    In 2003, the Company acquired convertible bonds of (won)1,000 million issued by Mobens Co., Ltd.
                However, since the decline in fair value is not deemed recoverable, the Company recorded an impairment
                loss of (won)1,000 million.
</TABLE>

6.   EQUITY SECURITIES VALUED USING THE EQUITY METHOD

     Securities accounted for using the equity method of accounting as of
     December 31, 2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                Ownership        Acquisition                                Net asset
                                              percentage (%)        cost                                      value
                                             -----------------  --------------                             ------------
                                                   2003             2003           2002         2003          2003
                                             -----------------  -------------- ------------- ------------  ------------
<S>                                                   <C>      <C>             <C>           <C>           <C>
                                                            -         (won)-       (won)137       (won) -        (won)-
    Mobile Game (note a)
    Mirae America (note b)                             50.00%            126              -             -             -
    AIO Corporation preferred stock
       (note c)                                        21.63%          3,513              -             -             -
    Cyber Bank (note d)                                28.24%         12,250              -         2,173         2,173
                                                                -------------- ------------- ------------  ------------
                                                                 (won)15,889       (won)137    (won)2,173    (won)2,173
    Total
                                                                ============== ============= ============  ============



    (note a)    In 2003, the Company disposed of its investment in Mobile Game to Cyber Bank, its affiliates.

    (note b)    As of December 31, 2003, Mirae America has a net asset deficit.

    (note c)    The carrying value was fully written down in 2001 since the Company's management believes that there is
                uncertainty relating to AIO Corporation's ability to continue as a going concern and the recoverability
                of the carrying value was remote.

    (note d)    In 2003, the Company acquired an additional equity 4,000,000 shares of Cyber Bank at (won) 2,500 per
                share. As a result of the acquisition, the Company's ownership percentage increased to 28.24% from
                1.05%, and the investment in Cyber Bank was accounted for using the equity method of accounting.
</TABLE>

Changes in securities accounted for using the equity method of accounting for
the years ended December 31, 2002 and 2003 are as follows (in millions of
Korean won):

<TABLE>
<CAPTION>
                                                   Mobile Game     Mirae America     AIO Corporation     Cyber Bank
                                                 ---------------- ----------------- ------------------ ----------------
<S>                                                <C>              <C>               <C>                <C>
        At January 1, 2002                             (won)-           (won)-            (won)-             (won)-
        Changes in consolidated subsidiary                116                -                 -                  -
        Equity in gains of affiliates                      21                -                 -                  -
                                                 ---------------- ----------------- ------------------ ----------------

         At December 31, 2002                             137                -                 -                  -
        Changes in equity method securities                 -                -                 -                 62
        Acquisition                                         -                -                 -             10,000


                                                          F-21
<PAGE>

        Disposal                                          (74)               -                 -                  -
        Valuation gain in equity securities
           valued using the equity method of
           accounting (capital adjustments)                 1                -                 -                  -
        Equity in losses of affiliates                    (64)               -                 -             (7,889)
                                                 ---------------- ----------------- ------------------ ----------------

         At December 31, 2003                          (won)-           (won)-            (won)-         (won)2,173
                                                 ================ ================= ================== ================
</TABLE>


                                                          F-22
<PAGE>

7.   SHORT-TERM AND LONG-TERM LOANS TO EMPLOYEES

     Short-term and long-term loans to employees as of December 31, 2002 and
     2003 are (won)1,561 million and (won)3,292 million, respectively.

8.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment as of December 31, 2002 and 2003 are as
     follows (in millions of Korean won):

<TABLE>
<CAPTION>

                                                      Useful lives
                                                        (years)                  2002                     2003
                                                    -----------------    ---------------------    ---------------------

<S>                                                       <C>                   <C>                      <C>
     Land                                                  -                 (won)15,494              (won)25,700
     Buildings and structures                             5-60                    53,532                   62,677
     Machinery                                            4-10                     6,871                    7,163
     Vehicles                                             5-6                        716                      886
     Tools, furniture and fixtures                        4-10                    30,184                   31,033
                                                                         ---------------------    ---------------------

     Total                                                                       106,797                  127,459
     Less accumulated depreciation                                               (31,480)                 (36,403)
                                                                         ---------------------    ---------------------

     Net                                                                     (won)75,317              (won)91,056
                                                                         =====================    =====================

</TABLE>

Changes in net book value of property, plant and equipment for the years ended
December 31, 2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                 Building                                      Tools,
                                                    and                                    furniture and
                                   Land         structures      Machinery      Vehicles       fixtures         Total
                               --------------  -------------- -------------- ------------- --------------- --------------
<S>         <C>                      <C>             <C>             <C>              <C>         <C>           <C>
    January 1, 2002             (won)52,176     (won)68,348     (won)4,134       (won)216    (won)9,999    (won)134,873
    Purchases                           144             276            257            180         2,381           3,238
    Disposals                       (36,826)        (19,106)           (61)           (43)         (899)        (56,935)
    Transfers                             -               -            118              -           799             917
    Changes in consolidated
      subsidiary                          -               -             (3)            (8)          (54)            (65)
    Depreciation                          -          (1,569)          (637)           (97)       (4,408)         (6,711)
                               --------------  -------------- -------------- ------------- --------------- --------------

    December 31, 2002                15,494          47,949          3,808            248         7,818          75,317
    Purchases                        10,369           9,669            292            210         2,129          22,669
    Disposals                          (163)           (388)             -             (7)         (137)           (695)
    Impairment loss                       -               -              -              -          (103)           (103)
    Depreciation                          -          (1,509)          (598)          (122)       (3,903)         (6,132)
                               --------------  -------------- -------------- ------------- --------------- --------------
                                (won)25,700     (won)55,721     (won)3,502       (won)329    (won)5,804     (won)91,056
    December 31, 2003          ==============  ============== ============== ============= =============== ==============
</TABLE>

The Korean government's declared standard value of land compared to the
book value of land owned as of December 31, 2002 and 2003 is as follows (in
million of Korean won):


                                                          F-23
<PAGE>

<TABLE>
<CAPTION>
                                                                                2002                      2003
                                                                        ---------------------     ---------------------
<S>                                                                               <C>                      <C>
    Standard value                                                           (won)15,596              (won)24,821
    Book value                                                                    15,494                   25,700
</TABLE>

    A certain portion of the Company's land and buildings is pledged as
    collateral for the Company's short-term borrowings and long-term borrowings
    up to (won)4,500 million with Korea Exchange Bank and (won)6,000
    million and US$4,600 thousand with Korea Development Bank.

9.   SHORT-TERM BORROWINGS

     Short-term borrowings as of December 31, 2002 and 2003 are as follows (in
     millions of Korean won):

<TABLE>
<CAPTION>

                                                Annual interest
                    Lender                           rate (%)                   2002                       2003
     --------------------------------------     -------------------     ----------------------     ---------------------
<S>                                                 <C>  <C>                  <C>                     <C>
     Korea Exchange Bank                            1.0%~8.4%               (won)20,542                (won)14,652
     Hana Bank                                         6.3%                           -                        153
     Kookmin Bank                                      7.4%                       4,000                          -
     Shinhan Bank                                      5.9%                       9,000                      5,000
     Other                                            12.0%                           -                        150
                                                                        ----------------------     ---------------------
     Total                                                                  (won)33,542                (won)19,955
                                                                        ======================     =====================

</TABLE>

10.  LEASED PROPERTY AND LIABILITIES UNDER CAPITAL LEASES

     Lease payables as of December 31, 2002 and 2003 are as follows (in
     millions of Korean won):

<TABLE>
<CAPTION>
                   Leasing company                                  2002                               2003
     --------------------------------------------        ----------------------------       ---------------------------
<S>                <C>                                               <C>                               <C>
                   KDB Capital Co.                              (won)1,079                        (won)621
                                                         ============================       ===========================

</TABLE>


     Leased property under capital leases as of December 31, 2002 and 2003 are
     as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                           2002                                   2003
                                           -------------------------------------   ------------------------------------
                                                                                         Tools,
                                           Tools, furniture                         furniture and
                                             and fixtures         Machinery           fixtures             Machinery
                                           ------------------  -----------------   -----------------   ----------------
<S>                                                 <C>                 <C>                 <C>                  <C>
                                               (won)799            (won)591            (won)799             (won)591
     Acquisition cost
     Accumulated depreciation                      (507)                (61)               (799)                (127)
                                           ------------------  -----------------   -----------------   ----------------

     Net book value                            (won)292            (won)530              (won)-             (won)464
                                           ==================  =================   =================   ================
</TABLE>

     Future lease payments at December 31, 2003 are as follows (in millions of
     Korean won):


                                                          F-24
<PAGE>

<TABLE>
<CAPTION>

       Year ending December 31,          Total lease payment           Interest expense               Principal
     ------------------------------    -------------------------   -------------------------   ------------------------
<S>              <C>                               <C>                          <C>                        <C>
                 2004                              475                          14                         461
                 2005                              162                           2                         160
                                       -------------------------   -------------------------   ------------------------
                 Total                        (won)637                     (won)16                    (won)621
                                       =========================   =========================   ========================
</TABLE>

11.  LONG-TERM BORROWINGS

     Long-term borrowings denominated in Korean won as of December 31, 2002 and
     2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>

                                               Annual interest
                    Lender                         rate (%)                   2002                       2003
     --------------------------------------   -------------------    -----------------------     ----------------------
<S>                                                  <C>                      <C>                      <C>
     Korea Development Bank                          6.2%                   (won)5,000                  (won)5,000
     Korea Exchange Bank                             4.2%                            -                         500
                                                                     -----------------------     ----------------------
                                                                                 5,000                       5,500
     Sub-total
     Less current portion                                                            -                        (938)
                                                                     -----------------------     ----------------------
     Total                                                                  (won)5,000                  (won)4,562
                                                                     =======================     ======================
</TABLE>

     Long-term borrowings denominated in foreign currency as of December 31,
     2002 and 2003 are as follows (in thousands of U.S. dollars):

<TABLE>
<CAPTION>

                                                         Annual interest
                          Lender                             rate (%)               2002                   2003
     -------------------------------------------------   -----------------   --------------------   -------------------

<S>                                                            <C>                 <C>                    <C>
     Korea Development Bank                                    4.98                US$3,784              US$3,784
     Less current portion                                                                 -                  (710)
                                                                             -------------------   ------------------
                                                                                   US$3,784              US$3,074
     Total
                                                                             ===================   ==================
     Current portion of equivalent in Korean won                                     (won)-              (won)849
                                                                             ===================   ==================
     Long-term portion of equivalent in Korean won                               (won)4,543            (won)3,683
                                                                             ===================   ==================

</TABLE>


     The future maturities of long-term borrowings at December 31, 2003 are as
     follows (in millions of Korean won and thousands of U.S. dollars):


                                                          F-25
<PAGE>

<TABLE>
<CAPTION>
                                          Long-term            Long-term          Equivalent in            Total
                                        borrowings in        borrowings in
       Year ending December 31,           Korean won        foreign currency       Korean won
     ------------------------------    -----------------    -----------------   ------------------   ------------------
<S>              <C>                            <C>                 <C>                  <C>                <C>
                 2004                      (won)938               US$710            (won)849           (won)1,787
                 2005                         1,250                  946               1,133                2,383
                 2006                         1,250                  946               1,133                2,383
                 2007                         1,250                  946               1,133                2,383
                 2008                           812                  236                 283                1,095
                                       -----------------    -----------------   ------------------   ------------------
                 Total                   (won)5,500             US$3,784          (won)4,532          (won)10,032
                                       =================    =================   ==================   ==================
</TABLE>

12.  RELATED PARTY TRANSACTIONS

     Detailed related party transactions for the years ended December 31, 2001,
     2002 and 2003 and account balances as of December 31, 2002 and 2003 are as
     follows (in millions of Korean won):

     (1) Transactions with affiliates which are accounted for using the equity
         method

<TABLE>
<CAPTION>

                                                                 2001              2002              2003
                                                            ---------------   ----------------  ----------------
<S>                                                                 <C>             <C>                  <C>
         Sales to:
            Mirae America                                      (won)352        (won)1,783           (won)58
            Cyber Bank                                                -                 -             7,494
            DE&T                                                  1,653                 -                 -
                                                            ---------------   ----------------  ----------------
                                                                  2,005             1,783             7,552
            Total
                                                            ---------------   ----------------  ----------------

         Interest income from SK Communications                     688                 -                 -
                                                            ---------------   ----------------  ----------------

         Other income (expense) from:
            SK Communications                                       147                 -                 -
            Mirae America                                          (211)              (26)             (289)
            Mobile Game                                               -               253                 -
            DE&T                                                     29                 -                 -
                                                            ---------------   ----------------  ----------------
                                                                    (35)              227              (289)
            Total                                           ---------------   ----------------  ----------------

         Acquisition of equity securities valued using the equity method
            accounting:
            Cyber Bank                                                -                 -            10,000
                                                            ---------------   ----------------  ----------------

         Acquisition of property and equipment from
            Mirae America                                             3                 -                 -
                                                            ---------------   ----------------  ----------------
</TABLE>

     (2) Account balances with affiliates, which are accounted for using the
         equity method


                                                          F-26
<PAGE>

<TABLE>
<CAPTION>
                                                                               2002                      2003
                                                                      -----------------------    ----------------------
<S>                                                                              <C>                        <C>
         (Assets)
           Accounts receivable - trade:
            Mirae America                                                   (won)1,977                 (won)1,408
            Cyber Bank                                                               -                      6,065
                                                                      -----------------------    ----------------------
            Sub - total                                                          1,977                      7,473
                                                                      -----------------------    ----------------------

           Accounts receivable - other:
            Cyber Bank                                                               -                          1
            Mobile Game                                                              7                          -
                                                                      -----------------------    ----------------------
            Sub - total                                                              7                          1
                                                                      -----------------------    ----------------------

           Advance payments:
            Mirae America                                                        1,102                        800
            Mobile Game                                                              2                          -
                                                                      -----------------------    ----------------------
            Sub - total                                                          1,104                        800
                                                                      -----------------------    ----------------------
            Total                                                           (won)3,088                 (won)8,274
                                                                      =======================    ======================

         (Liabilities)

           Accrued expenses to Mirae America                                         2                         10
                                                                      -----------------------    ----------------------

           Guarantee deposits payable to
             Cyber Bank                                                              -                        199
                                                                      -----------------------    ----------------------
                                                                                (won)2                   (won)209
            Total                                                     =======================    ======================
</TABLE>

         In 2003, Cyber Bank became an affiliate of the Company accounted for
         using the equity method and Mobile Game was not an affiliate of the
         Company. In addition, since 2002, SK Communications and DE&T have not
         been affiliates of the Company.

         (3) Transactions with other related parties

<TABLE>
<CAPTION>

                                                                 2001               2002               2003
                                                            ---------------    ---------------    ---------------
<S>                                                               <C>                <C>
         Sales to:
         Cyber Bank                                          (won)5,571         (won)3,974             (won)-
         Mirae HongKong                                               -                  -              1,063
                                                            ---------------    ---------------    ---------------
         Sub-total                                                5,571              3,974              1,063
                                                            ---------------    ---------------    ---------------

         Disposition of property and equipment and
           intangible assets to Testech                               -              1,338                  -
                                                            ---------------    ---------------    ---------------

         Purchase of property and equipment and
           intangible assets from Testech                             -                  -                  7
                                                            ---------------    ---------------    ---------------

         Interest income from Cyber Bank                             54                235                  -
                                                            ---------------    ---------------    ---------------

         Other income from Testech                                    -                 10                 10
                                                            ---------------    ---------------    ---------------


                                                          F-27
<PAGE>


         Purchases from Testech                                   2,536              1,784                460
                                                            ---------------    ---------------    ---------------

         Other expense to Testech                                     -                 15                  3
                                                            ---------------    ---------------    ---------------

         Acquisition of investments from Cyber Bank                   -              1,800                  -
                                                            ---------------    ---------------    ---------------
</TABLE>

         (note) Testech is a related company through common ownership.

     (4) Account balances with other related parties

<TABLE>
<CAPTION>
                                                                            2002                     2003
                                                                     -------------------      -------------------
<S>                                                                           <C>                        <C>
         (Assets)

           Accounts receivable - trade
            Cyber Bank                                                  (won)6,753                  (won)-
            Mirae HongKong                                                       -                     624
                                                                     -------------------      -------------------
                                                                        (won)6,753                (won)624
           Total                                                     ===================      ===================

         (Liabilities)
           Accounts payable - trade to Testech                          (won)1,004                 (won)88
                                                                     -------------------      -------------------
           Accounts payable - other to Mirae HongKong                            -                      14
                                                                     -------------------      -------------------
           Total                                                        (won)1,004                (won)102
                                                                     ===================      ===================
</TABLE>

13.  ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

     The details of monetary assets and liabilities denominated in foreign
     currencies as of December 31, 2002 and 2003 are as follows (in millions of
     Korean won, thousands of U.S. dollars, H.K. dollars, and Japanese yens):

<TABLE>
<CAPTION>
                                                                                   Foreign currencies
                                                                  -----------------------------------------------------
                                                                           2002                          2003
                                                                  ------------------------      -----------------------
<S>                                                                        <C>                           <C>
     Cash and cash equivalents                                             $1,188                        $2,451
                     "                                                     (yen)8                       (yen)86
                     "                                                     HKD288                        HKD154
     Short-term financial instruments                                      $4,147                            $-
     Accounts receivable - trade                                          $15,045                       $12,665
                     "                                                   (yen)994                    (yen)2,044
     Accounts payable - trade                                              $2,154                            $-
                     "                                                   (yen)105                      (yen)885
     Short-term borrowings                                                 $2,953                            $-
                     "                                                (yen)10,000                   (yen)13,557
     Current portion of long-term debt                                         $-                          $710
     Long-term borrowings                                                  $3,784                        $3,075

</TABLE>

<TABLE>
                                                                  Korean won equivalent
                                                                  -----------------------------------------------------


                                                          F-28
<PAGE>

                                                                             2002                          2003
                                                                  ------------------------      -----------------------
<S>                                                                     <C>                           <C>
     Cash and cash equivalents                                         (won)1,427                    (won)2,936
                     "                                                          -                             1
                     "                                                         44                            24
     Short-term financial instruments                                       4,978                             -
     Accounts receivable - trade                                           18,060                        15,170
                     "                                                         10                            23
     Accounts payable - trade                                               2,586                             -
                     "                                                          1                            10
     Short-term borrowings                                                  3,545                             -
                     "                                                        101                           152
     Current portion of long-term debt                                          -                           849
     Long-term borrowings                                                   4,543                         3,683
</TABLE>

14.  CAPITAL STOCK AND CAPITAL SURPLUS

     The Company's capital stock consists entirely of common stock. The par
     value and the number of shares authorized, issued and outstanding as of
     December 31, 2002 and 2003 are as follows:

<TABLE>
<CAPTION>
                                                                             2002                        2003
                                                                    -----------------------      ----------------------
<S>                                                                         <C>                          <C>
        Par value (in Korean won)                                              (won)100                     (won)100
        Authorized shares                                                   351,000,000                  351,000,000
        Issued shares                                                       124,637,500                  179,186,000
        Outstanding shares, net of treasury stock                           122,877,500                  177,711,861
</TABLE>

     Changes in capital stock and additional paid-in capital in 2002 and 2003
     are as follows (in millions of Korean won except for share data):

<TABLE>
                                                                      Numbers of                          Additional
                                                                    shares issued     Capital stock   paid-in capital
                                                                   ----------------  ---------------- -----------------
<S>                 <C>                                                <C>              <C>              <C>
         At January 1, 2002                                            124,637,500     (won)12,464       (won)286,706

        Decrease in capital surplus relating to additional stock
           transactions by consolidated subsidiaries (note a)                    -               -             (1,616)
        Gain on disposal of treasury stock                                       -               -                 35
        Offset against deficit                                                   -               -            (65,263)
                                                                   ----------------  ---------------- -----------------

         At December 31, 2002                                          124,637,500          12,464            219,862

        Additional issuance  (note b)                                   24,927,500           2,493             22,611
        Additional issuance without consideration                       29,621,000           2,962             (2,962)
        Decrease in capital surplus relating to disposal of
           available-for-sale securities (note c)                                -               -            (24,628)


                                                          F-29
<PAGE>

        Decrease in capital surplus relating to disposal of
           investment in consolidated subsidiaries (note d)                      -               -               (353)
        Offset against deficit                                                   -               -            (73,738)
                                                                   ----------------  ---------------- -----------------
                                                                       179,186,000     (won)17,919       (won)140,792
        At December 31, 2003                                       ================  ================ =================


        (note a)      MOL issued 2,560,000 additional shares for(won)5,000 per
                      share to the Company in March 2002 and retired 2,366,429
                      shares in May 2002. As a result of such issuance and
                      retirement, the Company's equity ownership in MOL
                      increased from 64.78% to 81.39% and the Company's
                      investment cost exceeding its proportionate share of net
                      asset value of(won)1,166 million was deducted from
                      additional paid-in capital. In addition, KIC issued
                      260,000 additional shares for(won)5,000 per share to the
                      Company in May 2002. As a result of such issuance, the
                      Company's equity ownership in KIC increased from 47.94%
                      to 87.38% and the difference of(won)450 million between
                      the Company's investment cost and its proportionate share
                      of net asset value was deducted from additional paid-in
                      capital.

        (note b)      In August 2003, the Company issued 24,927,500 additional
                      shares for(won)1,020 per share.

        (note c)      In June 2003, the Company disposed of 6,836,690 shares
                      of SK Communications for (won)660 per share. As a
                      result of such disposal, the Company's additional paid-in
                      capital of (won)24,628 million decreased.

        (note d)      In 2003, the Company disposed of 130,000 shares of
                      MOL. As a result of such disposal, the Company's equity
                      ownership in MOL decreased from 81.39% to 67.47% and the
                      Company's investment cost exceeding its proportionate
                      share of net asset value of (won)353 million was
                      deducted from additional paid-in capital.

</TABLE>


15.  RETAINED EARNINGS (DEFICIT)

     Changes in unappropriated retained earnings (undisposed deficit) for the
     years ended December 31, 2002 and 2003 are as follows (in millions of
     Korean won):

<TABLE>
<CAPTION>
                                                                                   2002                    2003
                                                                           ----------------------  ---------------------

        Undisposed deficit at beginning of the year                         ((won)66,274)          ((won)73,457)
        Changes in unappropriated retained earnings:
<S>                                                                                  <C>                    <C>
            Reversal of losses in excess of minority interest                        377                      -
            Other                                                                    168                      -
                                                                           ----------------------  ---------------------
           Sub-total                                                             (65,729)          ((won)73,457)
                                                                           ----------------------  ---------------------

        Transfers from appropriated reserves or disposition of deficit:
           Additional paid-in capital                                             65,263                 73,738
                                                                           ----------------------  ---------------------
           Sub-total                                                              65,263                 73,738
                                                                           ----------------------  ---------------------

        Net income (loss)                                                        (72,991)                 2,524
                                                                           ----------------------  ---------------------
        Unappropriated retained earnings (undisposed deficit) to be         ((won)73,457)            (won)2,805
           carried forward to the following year                            ======================  =====================


                                                          F-30
<PAGE>


        (note)     In 2003, the Company adopted SKAS No. 6 and accordingly,
                   appropriations of retained earnings, including declaration
                   of dividends (or dispositions of accumulated deficit) are
                   not recorded in the balance sheet until approved by
                   shareholders.

</TABLE>

16.  TREASURY STOCK

     As of December 31, 2003, the Company holds 1,474,139 shares of treasury
     stock (book value: (won)4,344 million) purchased in order to stabilize
     the market price of its stock. During the year ended December 31, 2003,
     the Company acquired 14,139 shares of treasury stock in the market for
     (won)17 million and later sold 300,000 shares for (won) 374 million.
     A loss from disposal of treasury stock amounting to (won)113 million
     was deducted from other capital adjustments. Changes in treasury stock
     during the years ended December 31, 2002 and 2003 are as follows (in
     millions of Korean won except for share data):

<TABLE>
<CAPTION>
                                                                     Number of treasury
                                                                            stock                   Carrying amount
                                                                   ------------------------      ----------------------
<S>                <C>                                                      <C>                            <C>
        At January 1, 2002                                                  1,634,000                    (won)4,843
           Purchase of treasury stock                                         900,000                         1,499
           Disposal of treasury stock                                        (774,000)                       (1,528)
                                                                   ------------------------      ----------------------

        At December 31, 2002                                                1,760,000                    (won)4,814

           Purchase of treasury stock                                          14,139                            17
           Disposal of treasury stock                                        (300,000)                         (487)
                                                                   ------------------------      ----------------------
        At December 31, 2003                                                1,474,139                    (won)4,344
                                                                   ========================      ======================
</TABLE>


     The Company intends to sell its treasury stock in the market in the
     future. No dividends will be paid on treasury stock.

17.  SALES

     Details of sales for the years ended December 31, 2001, 2002 and 2003 are
     as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                   2001                 2002               2003
                                                             ------------------   -----------------  ------------------
<S>                                                                  <C>                  <C>                <C>
        Handlers and components                                 (won)18,418          (won)14,434        (won)44,184
        SMD placement systems                                        20,992               23,486             19,201
        TFT-LCD handlers and testers                                  5,608                    -                  -
        Security solutions products and services                     15,517               15,881             17,189
        Other                                                         8,442               10,629             14,479
                                                             ------------------   -----------------  ------------------
                                                                (won)68,977          (won)64,430        (won)95,053
                                                             ==================   =================  ==================
</TABLE>

18.  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


                                                          F-31
<PAGE>

     The details of selling, general and administrative expenses for the years
     ended December 31, 2001, 2002 and 2003 are as follows (in millions of
     Korean won):

<TABLE>
<CAPTION>
                                                                    2001                2002                2003
<S>                                                                   <C>                  <C>                  <C>
        Salaries                                                 (won)11,343          (won)10,203          (won)9,668
        Commissions                                                    3,527                3,329               4,370
        Travel                                                         1,165                  745                 810
        Depreciation                                                   3,269                3,142               2,699
        Entertainment                                                    707                  826               1,179
        Advertising                                                    2,349                  941               1,035
        Research and development                                       3,315                2,410               1,053
        Product warranty                                               5,294                1,004                  86
        Bad debts                                                     10,267               11,786               3,224
        Other                                                          4,085                3,265               3,849
                                                                ------------------------------------------------------
                                                                 (won)45,321          (won)37,651         (won)27,973
                                                                ======================================================
</TABLE>



19.  INCOME TAXES

     The following is a reconciliation between financial accounting income and
     taxable income, together with a computation of income taxes for the years
     ended December 31, 2001, 2002 and 2003 (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                              2001             2002            2003
                                                                        ---------------   --------------  --------------
<S>                                                                            <C>               <C>                <C>
        Income (loss) before income taxes and minority interest          ((won)83,859)     ((won)72,890)       (won)916
        Additions (deductions):
           Provision for severance indemnities                                     92               799            (540)
           Loss from valuation of inventories                                  16,020             2,497          (7,692)
           Entertainment expenses                                               7,879               672             921
           Accrued interest income                                                (74)              (39)             60
           Gain (loss) on valuation of trading securities                        (158)            3,227          (3,238)
           Reversal of tax-free reserves                                        1,081             1,081               -
           Net loss of consolidated affiliate                                   1,680             3,943             402
           Provision for doubtful accounts                                      9,197             3,429          10,534
           Depreciation                                                          (401)               50               -
           Loss from impairment of deferred development costs                   1,171             8,345          (2,466)
           Loss from impairment of available-for-sale securities                8,457             3,830           1,343
           Gain from disposal of treasury stock                                 7,448                 -               -
           Equity in losses of affiliate                                       14,580            11,434         (15,484)
           Other                                                               (1,868)              957           1,229
                                                                        ---------------   --------------  --------------
                                                                              (18,755)          (32,665)        (14,015)
           Total
           Add back
             - Net operating loss carryforwards (note a)                       21,844            34,746          14,119
                                                                        ---------------   --------------  --------------

        Net taxable income                                                 (won)3,089        (won)2,081        (won)104
                                                                        ===============   ==============  ==============

</TABLE>


                                                          F-32
<PAGE>

<TABLE>
<CAPTION>

                                                                             2001             2002            2003
                                                                        ---------------   --------------  --------------
<S>                     <C>                                                    <C>               <C>              <C>
        Corporate income taxes at statutory Korean corporate income
           tax rates of 27% (note b)                                      (won)843          (won)542         (won)16
        Special tax credit for small and medium-sized venture companies       (415)             (266)              -
        Tax credit for technology and human resource development and
           capital investments                                                   -               (24)              -
                                                                        ---------------   --------------  --------------
                                                                               428               252              16
        Corporate income taxes payable
        Resident surtax payable                                                 43                25               2
                                                                        ---------------   --------------  --------------

        Total income taxes payable                                        (won)471          (won)277         (won)18
                                                                        ===============   ==============  ==============


        (note a)      In Korea, there is no tax payment system based on
                      consolidated taxable income (or loss). The net operating
                      loss carryforwards of the Company and subsidiaries, which
                      have no tax liabilities due to the net operating loss,
                      for the years ended December 31, 2001, 2002 and 2003,
                      were added to show taxable income for subsidiaries with
                      tax liabilities.

        (note b)      Since 2002, the corporate tax rate declined from 28% to 27%.

</TABLE>


     The provision for income taxes for the years ended December 31, 2001, 2002
     and 2003 consists of the following (in millions of Korean won):

<TABLE>
<CAPTION>

                                                                    2001                2002                2003
                                                              -----------------   -----------------   -----------------
<S>                                                                     <C>                 <C>                  <C>
        Currently payable                                          (won)471            (won)277             (won)18
        Deferred                                                     13,763                   -                   -
                                                              -----------------   -----------------   -----------------
        Income tax expense                                      (won)14,234            (won)277             (won)18
                                                              =================   =================   =================
</TABLE>

     The difference between income tax expense computed using the statutory
     income tax rate and the recorded income tax expense for the years ended
     December 31, 2001, 2002 and 2003 is attributable to the following (in
     millions of Korean won):

<TABLE>
<CAPTION>
                                                                       2001                   2002              2003
                                                                 -----------------      ----------------  ---------------
<S>                                                                       <C>                    <C>               <C>
        Income tax expense (benefit) at statutory income tax
           rate of 27%                                              ((won)23,481)          ((won)19,680)      (won)247
        Resident surtax                                                   (2,348)                (1,968)            25
        Tax credit for technology and human resource
           development and capital investments                              (451)                  (242)             -
        Special tax credit for small and medium-sized venture
           companies                                                        (457)                  (293)             -
        Tax effect of permanent differences                                4,879                    472            729
        Change in valuation allowance                                     36,480                 22,037         (4,748)
        Change in income tax rate (note a)                                     -                      -          3,551
        Other                                                               (388)                   (49)           214
                                                                 -----------------      ----------------  ---------------

        Recorded income tax expense                                  (won)14,234               (won)277        (won)18
                                                                 =================      ================  ===============
</TABLE>


                                                          F-33
<PAGE>


        (note a)      Pursuant to a revision in the Korean Corporate Income
                      Tax Law, statutory corporate income tax rate will be
                      changed from current 27% to 25%, effective January 1,
                      2005.

     The tax effects of each type of temporary difference, net operating loss
     carryforwards and tax credit carryforwards that gave rise to a significant
     portion of the deferred income tax assets at December 31, 2002 and 2003
     are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                                2002                      2003
                                                                        ---------------------      --------------------
<S>                                                                                <C>                           <C>
        Current:

           Accrued interest income                                             ((won)56)                  ((won)41)
           Gain on valuation of trading securities                                  887                        (56)
           Loss from valuation of inventories                                     5,742                      3,457
                                                                        ---------------------      --------------------
           Sub-total                                                              6,573                      3,360
                                                                        ---------------------      --------------------

</TABLE>


<TABLE>
<CAPTION>
                                                                                  2002                      2003
                                                                        ---------------------      --------------------
<S>                                                                                 <C>                        <C>
        Non-current portion:
           Provision for severance indemnities                                      693                        589
           Net operating loss carryforwards (note c)                             16,807                     19,445
           Net loss of consolidated subsidiaries                                  4,642                      4,408
           Tax credit carryforwards (note c)                                      7,747                      7,360
           Deferred development costs                                             2,357                      1,494
           Impairment loss from available-for-sale securities                     3,607                      3,734
           Equity in losses of affiliate                                         11,788                      6,657
           Depreciation                                                             275                        275
           Provision for doubtful accounts                                        5,229                      7,748
           Other                                                                    135                         35
                                                                        ---------------------      --------------------

           Sub-total                                                             53,280                     51,745
                                                                        ---------------------      --------------------

        Total deferred income tax assets                                         59,853                     55,105
        Valuation allowance (note b)                                            (59,853)                   (55,105)
                                                                        ---------------------      --------------------

        Net deferred income tax assets                                           (won)-                     (won)-
                                                                        =====================      ====================

</TABLE>


        (note b)      A full valuation allowance has been provided for deferred
                      income tax assets as of December 31, 2003 since the
                      Company's management believes that the realization of the
                      deferred tax assets is uncertain.

        (note c)      At December 31, 2003, the Company had tax credit
                      carryforwards for tax purposes relating to technology and
                      human resource development and capital investments, of
                      which (won)489 million will expire in 2004, (won)2,536
                      million in 2006, (won)3,369 million in 2007, (won)547
                      million in 2008, (won)242 million in 2009 and (won)177
                      million in 2010. The Company also had net operating loss
                      carryforwards, of which (won)56,590 million will expire
                      in 2007 and (won)14,119 million in 2008, respectively.



                                                          F-34
<PAGE>

20.  INCOME (LOSS) PER COMMON SHARE

     Net income (loss) per common share for the years ended December 31, 2001,
     2002 and 2003 are computed as follows (in millions of Korean won, except
     for share data):

<TABLE>
<CAPTION>
                                                                          2001             2002              2003
                                                                    ----------------- ----------------  ----------------

<S>                                                                    <C>               <C>                 <C>
       Net income (loss)                                               ((won)99,148)     ((won)72,991)       (won)2,524
       Weighted average number of shares outstanding                    151,524,256       155,173,720       159,684,809
                                                                    ----------------- ----------------  ----------------

       Basic income (loss) per common share
         (in Korean won) (note a)                                         ((won)654)        ((won)470)          (won)16
                                                                    ================= ================  ================

       (note a)       Weighted average number of shares outstanding for the
                      years ended December 31, 2001, 2002 and 2003 is
                      calculated as follows:
</TABLE>

<TABLE>
<CAPTION>
                 2001
                ------
                                                                                                    Weighted number of
                                                                Number of shares        Days               shares
                                                               -------------------- -------------- -----------------------
<S>                                                                  <C>                  <C>                  <C>
                 Beginning balance                                   157,217,552          365          57,384,406,379
                 Treasury stock                                       (2,061,125)         365            (752,310,661)
                 Acquisition of treasury stock                        (9,712,768)         144          (1,398,638,623)
                 Disposal of treasury stock                              908,207           18               16,347,724
                            "                                            673,145           15               10,097,179
                            "                                            227,052           14                3,178,724
                            "                                            542,401            8                4,339,211
                            "                                          4,112,159            6               24,672,954
                            "                                          1,261,398            5                6,306,992
                            "                                          1,988,405            4                7,953,622
                                                               --------------------                -----------------------
                 Total                                               155,156,426                         55,306,353,501
                                                               ====================
                                                                                                                  %365
                                                                                                   -----------------------

                 Weighted average number of shares (note a)                                                 151,524,256
                                                                                                   =======================

</TABLE>

<TABLE>

                 2002
                ------
                                                                                                       Weighted number of
                                                                 Number of shares        Days                shares
                                                               -------------------- -------------- -----------------------
<S>                                                                 <C>                    <C>           <C>
                 Beginning balance                                  157,217,552            365           57,384,406,379
                 Treasury stock                                      (2,061,125)           365             (752,310,661)
                 Disposal of treasury stock                             219,483            224               49,164,267
                 Acquisition of treasury stock                         (365,806)           219              (80,111,417)
                            "                                          (239,666)           218              (52,247,125)
                            "                                          (151,368)           216              (32,695,448)
                 Disposal of treasury stock                             378,420            173               65,466,581
                            "                                           350,669            170               59,613,692


                                                          F-35
<PAGE>

                            "                                            27,751            169                4,689,880
                 Acquisition of treasury stock                         (378,420)            20               (7,568,391)
                                                               --------------------                -----------------------
                 Total                                              154,997,490                          59,638,407,756
                                                               ====================
                                                                                                                  %365
                                                                                                   -----------------------
                 Weighted average number of shares (note a)                                                 155,173,720
                                                                                                   =======================
</TABLE>

<TABLE>
<CAPTION>
                 2003
                 -----                                                                                Weighted number of
                                                                 Number of Shares         Days             shares
                                                            ----------------------- -------------- -----------------------
<S>                                                                   <C>                  <C>           <C>
                 Beginning balance                                    157,217,552          365           57,384,406,379
                 Treasury stock                                        (2,220,061)         365             (810,322,377)
                 Disposal of treasury stock                               252,280          331               83,504,579
                            "                                             126,140          329               41,500,010
                 Additional issuance                                   22,350,090           71            1,586,856,393
                 Acquisition of treasury stock                            (14,139)          70                 (989,730)
                                                            -----------------------                -----------------------
                 Total                                                177,712,862                        58,284,955,254
                                                            =======================
                                                                                                                   %365
                                                                                                   -----------------------

                 Weighted average number of shares (note a)                                                 159,684,809
                                                                                                   =======================

                 (note a)      The Company's weighted average number of
                               shares was recalculated considering the effect
                               (5.12%) of additional issuance with
                               consideration in 2003 which were issued less
                               than fair value, and 20% stock dividends in
                               2003.


</TABLE>



     Diluted income per share for the year ended December 31, 2003 is computed
     as follows (in millions of Korean won, except for share data):

<TABLE>
<CAPTION>
                                                                                    2002                   2003
                                                                              -------------------    -------------------

<S>                                                                                      <C>                  <C>
       Basic net income (loss)                                                     ((won)72,991)         (won)2,524
       Stock option                                                                         159                 172
                                                                              -------------------    -------------------
                                                                                        (72,832)              2,696
       Diluted net income
       Adjusted weighted average number of shares outstanding                       155,514,136         160,050,203
                                                                             -------------------    -------------------

       Diluted income (loss) per common share (in Korean won) (note b)                ((won)468)            (won)17
                                                                             ===================    ===================

       Basic income (loss) per common share (in Korean won)                           ((won)470)            (won)16
                                                                             ===================    ===================

       (note b)   Assuming that dilutive stock options were exercised, as of
                  December 31, 2002 and 2003, such effect would be
                  anti-dilutive shown as the above table. In


                                                          F-36
<PAGE>

                  addition, the outstanding stock options as of December 31,
                  2001 were not included in the computation of diluted earnings
                  per share because the options exercise price were greater
                  than the average market price of the common shares during the
                  year ended December 31, 2001 and therefore, the effect would
                  be anti-dilutive.

</TABLE>


21.  CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

     A substantial portion of the Company and its subsidiaries' sales for the
     years ended December 31, 2001, 2002 and 2003 are made to customers in the
     semiconductor industry. Details of customers accounting for 10% or more of
     the Company and its subsidiaries' sales are as follows (in millions of
     Korean won):

<TABLE>
<CAPTION>
                          Customers                                2001                 2002                2003
       -------------------------------------------------     ------------------   ------------------   ----------------

<S>                                                         <C>                 <C>                       <C>
       Samsung Electronics Co., Ltd.                           (won)15,212           (won)4,804               (won)-
       Hynix Semiconductor Co., Ltd.                                 1,333                  923               17,151
       SanDisk                                                           -                  436               14,860
       Other                                                        52,432               58,267               63,042
                                                             ------------------   ------------------   ----------------

                                                               (won)68,977          (won)64,430          (won)95,053
                                                             ==================   ==================   ================
</TABLE>

     The related accounts receivable balances from the above major customers as
     of December 31, 2002 and 2003 are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                              Customers                                        2002                       2003
       --------------------------------------------------------        ---------------------       --------------------

<S>                                                                         <C>                        <C>
       Samsung Electronics Co., Ltd.                                            (won)1                      (won)-
       Hynix Semiconductor Co., Ltd.                                               310                       9,012
       SanDisk                                                                       -                         255
       Other                                                                    47,977                      48,736
                                                                       ---------------------       --------------------

       Total                                                                    48,288                      58,003
       Allowance for doubtful accounts                                         (14,323)                    (17,414)
                                                                       ---------------------       --------------------

       Net                                                                  (won)33,965                 (won)40,589
                                                                       =====================       ====================
</TABLE>


22.  SEGMENT INFORMATION

     a.  Export Sales

         The Company had foreign export sales amounting to 17.87%, 32.24% and
         31.36% of total sales for the years ended December 31, 2001, 2002 and
         2003, respectively. The export sales were made principally to the
         following locations:

<TABLE>
<CAPTION>
                                                                    2001                2002                2003
                                                               ---------------    -----------------    ---------------

<S>                                                                      <C>                <C>                  <C>
             Asia                                                        10.16%             12.21%               11.10%
             Europe                                                       5.56%             15.32%                3.51%
             United States of America                                     2.15%              4.71%               16.75%
                                                               ---------------    -----------------    ---------------
                                                                         17.87%             32.24%               31.36%
                                                               ===============    =================    ===============


                                                          F-37
<PAGE>

</TABLE>

     b.  Business Segment Information

         Through 1998, the Company operated in one major business segment, the
         handler manufacturing business. As the Company expanded its sales of
         SMD placement systems and security solutions, additional business
         segments were designated. Sales, operating income (loss), identifiable
         assets, capital expenditures and depreciation as of and for the years
         ended December 31, 2001, 2002 and 2003, pertaining to the business
         segments in which the Company and its subsidiaries operated are
         presented as follows (in millions of Korean won):

<TABLE>
<CAPTION>

                                                                                                        Depreciation of
                                                             Operating    Identifiable     Capital     property, plant
                                                 Sales      Income (loss)    assets      expenditures    and equipment
                                           -----------------------------------------------------------------------------

         (As of and for the year ended December 31, 2001)

<S>                                   <C>                 <C>              <C>            <C>              <C>
          Handlers and components         (won)18,418   ((won)11,059)   (won)36,077      (won)134          (won)717
          SMD placement systems                20,992        (18,334)        91,642           205             1,925
          TFT-LCD handlers and testers          5,608         (1,753)             -             -               119
          Security solutions                   15,517          1,406         37,017           318               468
          Research and development center           -              -         25,217        17,421             1,754
          Other                                 8,442        (10,194)             -         5,515             2,588
                                           -----------------------------------------------------------------------------

          Consolidated                    (won)68,977   ((won)39,934)  (won)189,953   (won)23,593        (won)7,571
                                           =============================================================================

                                                                                                        Depreciation of
                                                             Operating    Identifiable     Capital     property, plant
                                                 Sales      Income (loss)    assets      expenditures    and equipment
                                           -----------------------------------------------------------------------------

          (As of and for the year ended December 31, 2002)

          Handlers and components         (won)14,434    ((won)8,468)   (won)18,515      (won)327          (won)594
          SMD placement systems                23,486        (16,760)        37,469           537               977
          Security solutions                   15,881             99         38,897           215               321
          Research and development center           -              -         20,441           189               343
          Other                                10,629         (4,955)             -         1,970             4,476
                                           -----------------------------------------------------------------------------

          Consolidated                    (won)64,430   ((won)30,084)  (won)115,322    (won)3,238        (won)6,711
                                           =============================================================================

         (As of and for the year ended December 31, 2003)
          Handlers and components         (won)44,184     (won)1,093    (won)23,931      (won)398          (won)468
          SMD placement systems                19,201         (2,406)        25,776           654               770
          Security solutions                   17,189         (1,860)        41,549        18,401               588
          Research and development center           -              -         19,610         1,097             1,290
          Other                                14,479         (2,450)             -         2,119             3,016
                                           -----------------------------------------------------------------------------

          Consolidated                    (won)95,053    ((won)5,623)  (won)110,866   (won)22,669        (won)6,132
                                           =============================================================================
</TABLE>

23.  COMMITMENTS AND CONTINGENCIES



                                                          F-38
<PAGE>

     a. Checks and Promissory notes Provided as Collateral

         In accordance with normal Korean business practices the Company has
         provided two blank checks to Seoul Guarantee Insurance Company ("Seoul
         Guarantee") as collateral for performance guarantees it has provided
         to certain of the Company's significant customers for the timely
         delivery of goods and satisfaction of warranty obligations. In the
         event Seoul Guarantee pays claims on such guarantees, the blank checks
         would be utilized by Seoul Guarantee to recover resulting losses from
         the Company up to a total maximum amount of (won)1,000 million.
         Company management does not currently anticipate any such losses.

         In addition, in accordance with normal Korean business practices, at
         the request of a significant customer the Company has provided a blank
         promissory note to such customer in order to guarantee the timely
         delivery of goods and satisfaction of warranty obligations. In the
         event the Company failed to properly perform its contractual
         obligations to such customer, the blank note would be utilized by the
         customer to recover resulting losses. There is no legal limit to the
         exposure of the Company in connection with this arrangement. Because
         of the general nature of the underlying contractual agreement with
         such customer, it is not possible to determine the Company's potential
         loss exposure associated with this arrangement. Company management
         does not currently anticipate any such loss.

     b. Guarantees Provided by the Company and Subsidiaries

         The Company has provided its employee association with guarantees
         totaling (won)1,056 million for the Company's common stock
         purchases.

     c.  Guarantees Provided by Other Parties

         Guarantees provided for the Company by other companies as of December
         31, 2003 are as follows (in millions of Korean won and thousands of
         U.S. dollars):

<TABLE>
<CAPTION>
                                                       Amount                            Remark
                                                   ----------------     -----------------------------------------

            <S>                                     <C>                 <C>
            Seoul Guarantee                            (won)2,965       Guarantees for timely delivery and other
            KEB                                             1,198       Letters of credit and other
                                                        (US$1,000)
            Woori Bank                                      1,198       Local letters of credit and other
                                                        (US$1,000)
                                                   ----------------

                                                       (won)5,361
                                                   ================
</TABLE>

24.  INSURANCE

     At December 31, 2003, certain of the Company's assets are insured with
     local insurance companies as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                 Asset                               Risk                       Book value            Coverage
        -------------------------     -----------------------------------    ------------------    ----------------

        <S>                           <C>                                      <C>                   <C>
        Property, plant and
           equipment                  Fire and comprehensive liability         (won)58,165          (won)57,043
                                                                             ==================    ================
</TABLE>

                                                          F-39
<PAGE>

     The Company carries director and officer liability insurance policies with
     up to US$3 million and (won)1,000 million of coverage against losses
     arising from any claims made against the directors and officers for any
     alleged wrongful acts in their respective capacities as directors or
     officers of the Company.

25.  STOCK OPTION COMPENSATION PLAN

     In accordance with the approval of the Company's shareholders, the Company
     granted stock options to its employees. Changes in options outstanding for
     the years ended December 31, 2002 and 2003 are as follows (in Korean won):
<TABLE>
<CAPTION>

                                                                                             Weighted average
                                                                  Number of shares            exercise price
                                                                     (note a)                    (note a)
                                                              -----------------------     -----------------------

<S>                                                                   <C>                             <C>
     Options outstanding - January 1, 2002                            2,929,989                  (won)1,379
     Granted                                                          1,072,456                       1,261
     Cancelled                                                         (741,337)                      1,367
                                                              -----------------------     -----------------------

     Options outstanding - December 31, 2002                          3,261,108                       1,343
     Granted                                                          3,887,715                       1,114
     Cancelled                                                         (403,068)                      1,306
                                                              -----------------------     -----------------------

     Options outstanding - December 31, 2003                          6,745,755                  (won)1,213
                                                              =======================     =======================
</TABLE>

     (note a)     The Company's number of stock option and exercise price
                  was recalculated considering the effect of 20% stock dividend
                  and additional issuance.

     The stock options shall become exercisable after two to three years from
     the date of grant and shall be exercisable within five years from the
     first exercisable date. When the length of employment is less than two
     years after the grant of stock option, the Company may cancel the stock
     options awarded. Upon exercise of stock options, in accordance with the
     sole discretion of the board of directors, the Company may (1) grant newly
     issued common stock, (2) grant treasury stock or (3) grant the net
     difference between the exercise price and the market price with either
     cash or treasury stock.

     As described in note 2, the Company adopted the fair value based method of
     accounting for the stock option compensation plan, in which fair value is
     determined using the Black-Scholes option-pricing model, without
     considering a volatility factor in estimating the value of its stock
     options, as permitted under Korean GAAP. Under these accounting policies,
     total compensation costs were measured at (won)768 million, (won)617
     million and (won)1,267 million for options granted in 2001, 2002 and
     2003 and are recognized over the service period (2 years). Such
     compensation costs amounting to (won)198 million in 2001, (won)159
     million in 2002 and (won)356 million in 2003 were recognized.

     Assuming the Company had considered a volatility factor in estimating the
     value of its stock options, the pro forma consolidated net income



                                                          F-40
<PAGE>

     and consolidated net income per common share for the years ended December
     31, 2001, 2002 and 2003 would have been as follows (in millions of Korean
     won except per share data):

<TABLE>
<CAPTION>

                                                    2001                       2002                        2003
                                              --------------------       --------------------        -------------------

       Net income (loss):
<S>                                              <C>                        <C>                           <C>
          As reported                            ((won)99,148)              ((won)72,991)                 (won)2,524
          Pro forma                                   (99,529)                   (73,449)                      1,394

       Income (loss) per share:
          As reported                               ((won)654)                 ((won)470)                    (won)16
          Pro forma                                      (657)                      (473)                          9
</TABLE>

     The assumptions and variables used by the Company in measuring the fair
     value of stock options granted in the respective years are as follows:
<TABLE>
<CAPTION>

                                                      2001                   2002                      2003
                                               ----------------------  --------------------   --------------------------
                                                         6.70%                 5.80%                4.32% ~ 4.75%
       Risk free interest rate
<S>                                                    <C>                   <C>                          <C>
       Expected life                                   4 years               4 years                      4 years
       Volatility factor                                72.21%                92.14%              81.95% ~ 91.17%
       Dividend yield                                    17.5%                 11.6%                           -%
       Expected expiration rate of rights                   -%                    -%                           -%
</TABLE>

26.  UNCERTAINTIES IN BUSINESS ENVIRONMENT

     The economic environment in the Republic of Korea continues to be
     volatile. In addition, the Korean government and the private sector
     continue to implement structural reforms to historical business practices,
     including corporate governance. The Company may be either directly or
     indirectly affected by these economic conditions and the reform program
     described above.

     The accompanying financial statements reflect management's assessment of
     the impact to date of the economic environment on the financial position
     and results of operations of the Company. Actual results may differ
     materially from management's current assessment.

     The semiconductor industry in Korea is highly competitive and
     concentrated, with a relatively small number of large semiconductor
     manufacturers. The industry is characterized by rapid technological
     changes and fluctuating product prices. The rapid rate of technological
     change within the industry will require the Company to continually develop
     new and improved products and processes to maintain its competitive
     position. The Company's future operating results will be affected by a
     wide variety of factors, including general economic conditions and
     conditions specific to semiconductor-related industries, timing of new
     product introductions (both by the Company and its competitors),
     competitive pricing, timely and efficient completion of product design and
     the availability of new manufacturing technologies.

27. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA



                                     F-41
<PAGE>

     The consolidated financial statements have been prepared in accordance
     with Korean GAAP, which differs in certain respects from accounting
     principles generally accepted in the United States of America ("US GAAP").
     The significant differences are described below. Other differences were
     determined not to have a significant effect on either the Company and its
     subsidiaries' consolidated net income or shareholders' equity.

     a. Deferred Income Taxes (see note 2)

         The need for a valuation allowance on deferred tax assets depends on
         the likelihood of realization. Under US GAAP, the realization of
         deferred tax assets depends on an objectively verifiable estimate of
         future income which is commonly based on pretax accounting income (or
         losses) of the current and immediate two preceding years. Under Korean
         GAAP, no such practice has evolved.

         Under US GAAP, deferred tax assets and liabilities are separated into
         their current and non-current portions based on the classification of
         related asset or liability for financial reporting purposes. Under
         Korean GAAP, deferred tax assets and liabilities are presented on the
         balance sheet as a single non-current net number.

     b. Research and Development Costs (see note 2)

         Under Korean GAAP, the Company defers development costs which meet
         specific conditions such as new product development, technological
         feasibility, marketability and usefulness, and expenses research costs
         and ordinary development costs as incurred. Amortization of deferred
         development costs and research and ordinary development expenses are
         classified as manufacturing costs or selling, general and
         administrative expenses depending on their nature.

         All research and development costs are charged to expense as incurred
         under US GAAP, which totaled (won)15,981 million and (won) 9,278
         million and (won)7,653 million for the years ended December 31,
         2001, 2002 and 2003, respectively.

     c.  Revenue Recognition

         Through 2002, under Korean GAAP, sales are recognized at the time
         products are delivered to customers. Effective January 1, 2003, Korean
         GAAP was revised that products sales are recognized upon final
         acceptance and passage of legal title. This accounting change has been
         applied prospectively.

         Under US GAAP, product sales are recognized upon final customer
         acceptance and passage of legal title. Final customer acceptance and
         passage of legal title first require the completion of installation
         and final calibration of the products within the customer's production
         line, which typically occurs between one month and one year after
         product delivery. Under US GAAP, amounts received on products where
         delivery has occurred but final customer acceptance and passage of
         legal title have not yet occurred are recorded as advance receipts
         from customers in the current liabilities section of the balance
         sheets.

     d. Marketable Securities and Investment Securities (see note 2)

         Through 2002, under Korean GAAP, debt and equity securities were
         classified into marketable securities and investment securities.
         Effective January 1, 2003, Korean


                                     F-42
<PAGE>

         GAAP was revised to classify investment in securities into three
         separate categories; trading securities, available-for-sales
         securities and held-to-maturity securities in a similar manner as
         Statement of Financial Accounting Standards No.115 (SFAS No.115),
         "Accounting for Certain Investments in Debt and Equity Securities",
         described below. The valuation method for each category is similar to
         SFAS No.115; however, the accounting treatment for impairment of
         investment securities and recoveries under Korean GAAP differ from
         those under U.S. GAAP as described in note 27-(e).

         Under US GAAP, Statement of Financial Accounting Standards No. 115
         (SFAS No. 115) "Accounting for Certain Investments in Debt and Equity
         Securities", requires that equity securities with readily determinable
         fair value and all debt securities be classified into three categories
         and be accounted for as follows:

o             Debt securities that the enterprise has the positive intent and
              ability to hold to maturity are classified as held-to-maturity
              securities and reported at amortized cost.

o             Debt and equity securities that are bought and held principally
              for the purpose of selling them in the near term are classified
              as trading securities and reported at fair value, with unrealized
              gains and losses included in income.

o             Debt and equity securities not classified as either
              held-to-maturity securities or trading securities are classified
              as available-for-sale securities and reported at fair value, with
              unrealized gains and losses excluded from earnings and reported
              in other comprehensive income.

         Gross proceeds from the sale of trading securities were
         (won)127,529 million, (won)187,908 million and (won) 71,071
         million for the years ended December 31, 2001, 2002 and 2003,
         respectively. The net realized gains(losses) arising from such sales
         were (won)1,959 million, (won)2,580 million and ((won)1,757)
         million for the years ended December 31, 2001, 2002 and 2003,
         respectively.

         Information with respect to trading securities at December 31, 2002
         and 2003 is as follows (in millions of Korean won):

<TABLE>
<CAPTION>

                                                                     Gross              Gross
                                                                   unrealized         unrealized        Fair value
                                                    Cost             gains              losses         (book value)
                                              -----------------  ---------------   -----------------  ----------------

<S>                                                <C>               <C>              <C>                 <C>
           At   December 31, 2002:
                Equity securities                  (won)512            (won)-          ((won)453)           (won)59
                Debt securities                      31,200                371            (2,805)            28,608
                                              -----------------  ---------------   -----------------  ----------------

                                                (won)31,712           (won)371       ((won)3,258)       (won)28,669
                                              =================  ===============   =================  ================
           At   December 31, 2003:
                Equity securities                   (won)59             (won)-           ((won)3)           (won)56
                Debt securities                      20,063              1,512              (249)            21,326
                                              -----------------  ---------------   -----------------  ----------------

                                                (won)20,122         (won)1,512          ((won)252)      (won)21,382
                                              =================  ===============   =================  ================
</TABLE>

                                                          F-43
<PAGE>

         All of gross unrealized losses of (won)252 million at December 31,
         2003 for which impairment has not been recognized, have been in a
         continuous unrealized loss position for less than twelve months.

     e.  Impairment of Investment Securities and Recoveries

         Under U.S. GAAP, if the decline in fair value is judged to be other
         than temporary, the cost basis of the individual securities is written
         down to fair value as a new cost basis and the amount of the
         write-down is included in current operations. Under Korean GAAP, if
         the collectible value from the securities is less than acquisition
         costs with objective evidence of impairment such as bankruptcy of
         investees, an impairment loss is recognized.

         Under Korean GAAP, the subsequent recoveries of impaired
         available-for-sale securities, held-to-maturity debt securities and
         equity securities without readily determinable fair value result in an
         increase of their carrying amount up to the original acquisition cost,
         and the recovery gains are reported in current operations up to the
         previously recognized impairment loss as reversal of loss on
         impairment of investment securities. Under U.S. GAAP, the subsequent
         increase in carrying amount of the impaired and written down
         held-to-maturity debt securities and equity securities without readily
         determinable fair value is not allowed. The subsequent increase in
         fair value of available-for-sale securities is reported in other
         comprehensive income.

     f. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

         US GAAP (SFAS No. 144) requires that long-lived assets and certain
         identifiable intangibles to be held and used by an entity, be reviewed
         for impairment whenever events or changes in circumstance indicate
         that the carrying amount of an asset may not be recoverable. If the
         sum of the expected future cash flows (undiscounted and without
         interest charges) is less than the carrying amount of the asset, an
         impairment loss is recognized. Otherwise, an impairment loss is not
         recognized. Measurement of an impairment loss for long-lived assets
         and identifiable intangibles that an entity expects to hold and use is
         based on the fair value of the asset.

         SFAS No. 144 also requires that long-lived assets and certain
         identifiable intangibles to be disposed of by sale be reported at the
         lower of the carrying amount or fair value, less cost to sell. Under
         US GAAP after an asset write-down, representing the new cost basis,
         subsequent recoveries in value may not be recognized, whereas under
         Korean GAAP, such recoveries are recognized as gains to the extent of
         impairment losses previously recognized.

         The Company has made significant additions to its facilities in recent
         years. Because of a decline in sales, the Company has reviewed its
         long-lived assets for potential impairment in accordance with the
         provisions of SFAS No. 144 and determined the carrying values are
         appropriately recorded.

     g. Costs for Product Warranties (see note 2)

         Under previous Korean GAAP, product warranty expenditures have been
         included as incurred in manufacturing costs, which have been allocated
         between cost of sales and inventories. Effective January 1, 2001 such
         expenditures are classified as an item of selling, general and
         administrative expenses for more appropriate financial statement


                                     F-44
<PAGE>

         presentation. Under US GAAP, warranty costs are accrued and expensed
         at the time of sale based on historical experience and expected future
         costs and classified as cost of sales.

         Changes in reserve for product warranties for the years ended December
         31, 2002 and 2003 are as follows (in millions of Korean won):
<TABLE>
<CAPTION>

                                                                         2002                            2003
                                                                ------------------------        -----------------------

<S>                                                                <C>                             <C>
          Beginning balance                                             (won)674                        (won)607
          Provided                                                         1,313                           1,899
          Incurred                                                        (1,004)                            (86)
          Adjustment                                                        (376)                         (1,471)
                                                                ------------------------        -----------------------

          Ending balance                                                (won)607                        (won)949
                                                                ========================        =======================
</TABLE>

     h.  Comprehensive Income

         Under Korean GAAP, there is no requirement to present comprehensive
         income. Under US GAAP, comprehensive income and its components must be
         presented in the financial statements. Comprehensive income includes
         all changes in shareholders' equity during a period except those
         resulting from investments by, or distributions to, owners, including
         certain items not included in the current results of operations. There
         were no such changes in the Company's shareholders' equity in all
         periods presented.

     i.  Loss from Valuation of Inventories

         Under Korean GAAP, loss from valuation of inventories is classified as
         other expense, while loss from valuation of inventories is classified
         as cost of sales under US GAAP. Effective January 1, 2004, loss from
         valuation of inventories will be classified as cost of sales under
         Korean GAAP.

     j.  Applying the Equity Method of Accounting

         Under US GAAP, when an investor holds other types of interest (for
         example, loans and preferred stock) in addition to common stock of an
         investee accounted for using the equity method of accounting and the
         investor's share of losses of the investee exceeds the carrying amount
         of the common stock investment, additional equity method losses are
         recognized by the investor. Under Korean GAAP, no such additional
         losses are required to be recognized by the investor. If the investee
         subsequently reports net income or issues its common stock, the
         investor shall resume applying the equity method and recognize its
         share of the net loss not recognized during the period the equity
         method was suspended as an adjustment to retained earnings from prior
         periods, under Korean GAAP.

     k.  Sales of Stock and Purchase by Subsidiary and Affiliate and Purchase
         of Non-controlling Equity Interest

         Under US GAAP, a parent company or investor may elect to reflect the
         accounting effect of sales of stock by a subsidiary or affiliate which
         is accounted for by the equity


                                     F-45
<PAGE>

         method, in either the income statement or as an equity transaction
         depending on certain criteria being met. Such election must be applied
         consistently and on a prospective basis for all subsidiary and/or
         affiliate stock transactions. The Company elected income statement
         recognition in accounting for the sales of stock by its subsidiary and
         affiliate. Under Korean GAAP, a parent company or investor is required
         to account for sales of stock by a subsidiary or affiliate which is
         accounted for by the equity method, as an equity transaction included
         in capital surplus.

         Under Korean GAAP, a purchase by a subsidiary of the noncontrolling
         equity interest in the subsidiary is presented as a capital adjustment
         in the consolidated financial statements in proportion to the parent's
         equity interest, while under US GAAP such purchase is accounted for
         using the purchase method in the consolidated financial statements.

     l. Accounting for Employee Stock Option Compensation Plan

         Korean GAAP permits all entities to exclude the volatility factor in
         estimating the value of their stock options, which results in
         minimizing the measurement. Under US GAAP, public entities are not
         permitted to exclude the volatility factor in estimating the value of
         their stock options. In addition, under US GAAP, a modification of the
         terms of a stock-based compensation award is accounted for based on a
         comparison of the fair value of the modified option at the date it is
         granted and the value at that date of the old option that is
         repurchased (immediately before its terms are modified) determined
         based on the shorter of (a) its remaining initially estimated expected
         life or (b) the expected life of the modified option. If the fair
         value of the modified option exceeds the value of the old option
         repurchased, the entity recognizes additional compensation cost for
         the difference. Under Korean GAAP, however, no such practice has
         evolved.

     m.  Depreciation

         As allowed under Korean GAAP, six months' depreciation expense is
         recorded for assets placed in service in the second half of the year
         in accordance with Korean tax law. Effective from 2002, depreciation
         expense commences in the month the related asset is placed in service.
         Under US GAAP, depreciation expense commences in the month the related
         asset is placed in service.

     n. Gain on Disposal of the Investments in Common Stock of Subsidiary

         Under Korean GAAP, gain on disposal of investments in common stock of
         subsidiary incurred from a transaction between the Company and its
         subsidiary's employees, which should be included in capital surplus,
         is measured based on the actual selling price and the carrying value
         of such investment. Under US GAAP, however, if the actual selling
         price differs from the fair value of the investment at the transaction
         date, such gain should be measured based on the fair value of the
         investment and the difference between the fair value and the actual
         selling price should be recorded as an employee benefits expense.

     o.  Provision for Doubtful Other Accounts

         Under Korean GAAP, provisions for doubtful accounts other than trade
         receivables are classified as other expenses while provisions for
         doubtful trade receivables are classified as selling, general and
         administrative expenses. Under US GAAP,


                                     F-46
<PAGE>

         however, this provision was recorded as selling, general and
         administrative expenses considering the original nature of those
         receivables.

     p. Minority Interest in Equity of Consolidated Subsidiaries

         Under Korean GAAP, minority interest in equity of consolidated
         subsidiaries is presented to be included in shareholders' equity.
         Under US GAAP,

         minority interest is presented as a separate item from
         shareholders' equity.

     q.  Financing to Purchase Treasury Shares

         Under Korean GAAP, loans provided to the company's employee
         association to finance purchase of the company's shares are presented
         as receivables of the company and payment guarantees provided by the
         company to a lender who gave loans to the company's employee
         association for the same purpose are presented as a contingency. Under
         US GAAP, such loans are presented as a deduction of stockholders'
         equity of the company and such payment guarantees are presented as
         liabilities of the company with a corresponding deduction of
         stockholders' equity.

     r.  Recently Issued Accounting Pronouncement

         In November 2002, the FASB issued Interpretation No. 45 ("FIN 45") -
         "Guarantor's Accounting and Disclosure Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others". FIN 45
         elaborates on the disclosures to be made by a guarantor about its
         obligations under certain guarantees issued. It also clarifies that a
         guarantor is required to recognize, at the inception of certain
         guarantees, a liability for the fair value of the obligation
         undertaken in issuing the guarantee. The initial recognition and
         measurement provisions of FIN 45 apply on a prospective basis to
         guarantees issued or modified after December 31, 2002. The disclosures
         are effective for the Company's annual financial statements for the
         year ended December 31, 2002. The adoption of this Interpretation did
         not have a significant impact on the Company's consolidation financial
         position or results of operations.

         On January 17, 2003, the FASB issued Interpretation No.46 ("FIN 46") -
         "Consolidation of Variable Interest Entities", which addresses
         consolidation by business enterprises where equity investors do not
         bear the residual economic risks and rewards. These entities have been
         commonly referred to as "Special purpose entities ("SPEs")." The
         underlying principle behind the new Interpretation is that if a
         business enterprise has the majority financial interest in an entity,
         which is defined in the guidance as a variable interest entity, the
         assets, liabilities and results of the activities of the variable
         interest entity should be included in the consolidated financial
         statements with those of the business enterprise. The Interpretation
         also explains how to identify variable interest entities and how an
         enterprise should assess its interest in an entity when deciding
         whether or not it will consolidate that entity. In December 2003, the
         FASB released a revision of FIN No. 46 ("FIN No. 46R") in which the
         calculation of expected losses and expected residual returns have been
         altered to reduce the impact of decision maker and guarantor fees. In
         addition, FIN No. 46R changes the definition of a variable interest.
         The Company as a foreign private issuer is required to apply either
         FIN 46 or FIN 46R to variable interest entities ("VIEs') created after
         January 31, 2003. The adoption of this Interpretation did not have a
         significant impact on the Company's consolidation financial position
         or results of operations.



                                     F-47
<PAGE>

         In April 30, 2003, the FASB issued Statement No. 149 - "Amendment of
         Statement 133 on Derivative Instruments and Hedging Activities". The
         statements amends and clarifies accounting for derivative instruments,
         including certain derivative instruments embedded in other contracts,
         and for hedging activities under Statement 133. The new guidance
         amends Statement 133 regarding implementation issues raised in
         relation to the application of the definition of a derivative,
         particularly regarding the meaning of an underlying and the
         characteristics of a derivative that contains financing components.
         The amendments set forth in SFAS No. 149 improve financial reporting
         by requiring that contracts with comparable characteristics be
         accounted for similarly. In particular, this statement clarifies under
         what circumstances a contract with an initial net investment meets the
         characteristic of a derivative as discussed in SFAS No. 133. In
         addition, it clarifies when a derivative contains a financing
         component that warrants special reporting in the statement of cash
         flows. The adoption of SFAS No. 149 did not have a significant impact
         on its consolidated financial position or results of operations.

         On May 15, 2003, the FASB has issued Statement No.150 - "Accounting
         for Certain Financial Instruments with Characteristics of both
         Liabilities and Equity". The Standard improves the accounting for
         certain financial instruments that, under previous guidance, issuers
         could account for as equity. The new statement requires that the
         following instruments be classified as liabilities in statements of
         financial position. One type of instrument is mandatory redeemable
         stock, which the issuing company is obligated to buy back in exchange
         for cash or other assets. A second type of instrument, which includes
         put options and forward purchase contracts, involves instruments that
         do or may require the issuer to buy back some of its shares in
         exchange for cash or other assets. The third type of instrument that
         is considered a liability under this statement is obligation that can
         be settled with variable number of its equity shares, the monetary
         value of which is fixed or tied solely or predominantly to a variable
         such as a market index, or varies inversely with the value of the
         issuers' shares. The statement does not apply to features embedded in
         a financial instrument that is not a derivative in its entirety. In
         addition to its requirements for the classification and measurement of
         financial instruments in its scope, SFAS No. 150 also requires
         disclosures about alternative ways of settling the instruments and the
         capital structure of entities, all of whose shares are mandatory
         redeemable. Most of the guidance in this statement is effective for
         all financial instruments entered into or modified after May 31, 2003,
         and otherwise is effective at the beginning of the first interim
         period beginning after June 15, 2003. The adoption of SFAS No.150 had
         no significant impact on its consolidation financial position or
         results of operations.

     s.  Summary Financial Information

         Sales, cost of sales, gross profit (loss), operating expenses,
         operating loss and net loss under US GAAP in 2001, 2002 and 2003 are
         as follows (in millions of Korean won):
<TABLE>
<CAPTION>

                                                              2001                  2002                  2003
                                                        ------------------    ------------------    ------------------

<S>                                                    <C>                   <C>                     <C>
         Sales                                            (won)69,827           (won)69,715           (won)96,039
         Cost of sales                                         78,020                76,786                82,172
         Gross profit (loss)                                   (8,193)               (7,071)               13,867
         Operating expenses                                    54,494                43,124                35,386
         Operating loss (*)                                   (62,687)              (50,195)              (21,518)
         Net loss (*)                                         (84,811)              (62,607)              (24,278)
</TABLE>

                                                          F-48
<PAGE>

         (*) See reconciliation of amounts from Korean GAAP to US GAAP below.

     t. Reconciliation of Korean GAAP to US GAAP

         The following table reconciles net income (loss) and operating loss
         for the years ended December 31, 2001, 2002 and 2003 and shareholders'
         equity as of December 31, 2001, 2002 and 2003 under Korean GAAP, as
         reported in the consolidated financial statements, to the net loss,
         operating loss and shareholders' equity amounts determined under US
         GAAP, giving effect to adjustments for the differences listed above
         (in millions of Korean won, except per share amounts):

<TABLE>
<CAPTION>
                                                                          2001                2002             2003
                                                                    ------------------   ---------------  ----------------

<S>                                                                      <C>                   <C>                    <C>
         Net income (loss) based on Korean GAAP                       ((won)99,148)      ((won)72,991)        (won)2,524
         Adjustments:
            Revenue recognition timing difference related to
               deliveries awaiting final customer acceptance                 1,958                (51)              (633)
            Warranty cost accrual                                            1,182                 67                342
            Development costs recorded as intangible assets                 (3,627)            (1,755)            (2,135)
            Research and development costs charged to ending
               inventory cost                                               (3,424)             3,006                237
            Write-off of impaired deferred development costs
                under Korean GAAP                                            4,429             11,337              1,521
            Depreciation                                                      (597)                 -                  -
            Sales of stock by subsidiary and affiliate                       2,650                  -               (228)
            Adjustment of capital surplus upon sale of stock                     -                  -            (24,628)
            Loss relating to additional stock transactions by
               consolidated subsidiaries                                         -             (1,616)                 -
            Employee benefits related to consolidated subsidiary's
               treasury stock purchased from employee exceeding
               fair value                                                        -               (359)               115
            Compensation cost related to stock options                      (1,997)              (611)            (1,393)
            Reversal of loss from impairment of investment
               securities                                                        -                (11)                 -
            Reversal of losses in excess of minority interest                    -                377                  -
            Deferred income taxes                                           13,763                  -                  -
                                                                    ------------------   ---------------  ----------------

         Net loss based on US GAAP                                    ((won)84,811)      ((won)62,607)      ((won)24,278)
                                                                    ==================   ===============  ================
         Net loss per share (basic and diluted) based on US GAAP         ((won)560)         ((won)403)         ((won)152)
           (In Korean won)
                                                                    ==================   ===============  ================


                                                                          2001                2002             2003
                                                                    ------------------   ---------------  ----------------

         Operating loss based on Korean GAAP                          ((won)39,934)      ((won)30,084)       ((won)5,623)
         Adjustments:
            Revenue recognition timing difference related to
               deliveries awaiting final customer acceptance                 1,958                (51)              (633)
            Warranty cost accrual                                            1,182                 67                342
            Development costs recorded as intangible assets                 (3,627)            (1,755)            (2,135)
            Research and development costs charged to ending
               inventory cost                                               (3,424)             3,006                237
            Depreciation                                                      (597)                 -                  -


                                                          F-49
<PAGE>

            Employee benefits related to consolidated
               subsidiary's treasury stocks purchased
               from employee exceeding fair value                                -               (359)               115
            Compensation cost related to stock options                      (1,409)              (611)            (1,393)
            Loss from valuation of inventories                             (16,836)           (20,408)           (12,428)
                                                                    ------------------   ---------------  ----------------

         Operating loss based on US GAAP                              ((won)62,687)      ((won)50,195)      ((won)21,518)
                                                                    ==================   ===============  ================

                                                                           2001               2002             2003
                                                                      ----------------   ---------------  ----------------

         Shareholders' equity based on Korean GAAP                     (won)250,452      (won)174,886       (won)176,592
         Adjustments:
            Revenue recognition timing difference related to
              deliveries awaiting final customer acceptance                     784                98                  -
            Warranty cost accrual                                            (1,457)             (756)              (949)
            Development costs recorded to intangible assets                 (13,637)           (4,054)            (4,668)
            Research and development costs charged to ending
              inventory cost                                                 (3,425)             (419)              (182)
            Reversal of loss from impairment of investment securities             -               (11)               (11)
            Minority interest in equity of consolidated subsidiaries        (22,201)          (21,385)           (19,938)
            Other adjustments due to loans for purchasing treasury
               stock and consolidated subsidiaries' stock
               transactions                                                    (997)             (108)            (1,935)
                                                                      ----------------   ---------------  ----------------

         Shareholders' equity based on US GAAP                         (won)209,519      (won)148,251       (won)148,909
                                                                      ================   ===============  ================

         Changes in shareholders' equity based on US GAAP for the years ended
         December 31, 2001, 2002 and 2003 are as follows (in millions of Korean
         won):

                                                                           2001               2002             2003
                                                                      ----------------   ---------------  ----------------

         Balance, beginning of the period                              (won)288,101       (won)209,519     (won)148,251
            Net loss for the period                                         (84,811)           (62,607)         (24,278)
            Cash dividends                                                   (1,845)                 -                -
            Issuance of common stock                                              -                  -           25,104
            Gain (loss) on disposal of treasury stock                         7,448                 35             (113)
            Stock options                                                     1,607                770            1,749
            Treasury stock transactions                                           -                 29              470
            Increase (decrease) of gain on valuation of investment
                securities                                                        -                332             (332)
            Other adjustments due to loans for purchasing treasury
                stock and consolidated subsidiaries' stock
                transactions                                                   (997)                 5           (1,935)
            Other                                                                16                168               (7)
                                                                      ----------------   ---------------  ----------------

         Balance, end of the period                                    (won)209,519       (won)148,251     (won)148,909
                                                                      ================   ===============  ================
</TABLE>

         A reconciliation of the significant balance sheet accounts, except for
         the shareholders' equity items listed above, to the amounts determined
         under US GAAP as of December 31 2002 and 2003, is as follows (in
         millions of Korean won):


                                                          F-50
<PAGE>

<TABLE>
<CAPTION>
                                                                                  2002                    2003
                                                                           --------------------   ---------------------
         Current assets:
<S>                                                                         <C>                     <C>
            As reported                                                         (won)134,552             (won)114,894
            US GAAP adjustments
              - accounts receivable - trade                                             (126)                      -
              - inventories                                                            1,057                    (182)
                                                                           --------------------   ---------------------

            As adjusted                                                              135,483                 114,712
                                                                           --------------------   ---------------------

         Non-current assets:
            As reported                                                              105,960                 116,822
            US GAAP adjustments
              - deferred development costs                                            (4,054)                 (4,668)
              - investment securities                                                    (11)                    (11)
              - long-term loans                                                       (1,201)                 (2,979)
                                                                           --------------------   ---------------------

            As adjusted                                                              100,694                 109,164
                                                                           --------------------   ---------------------

         Total assets based on US GAAP                                          (won)236,177            (won)223,876
                                                                           ====================   =====================


                                                                                  2002                    2003
                                                                           --------------------   ---------------------
         Current liabilities:
            As reported                                                         (won)51,061              (won)36,349
            US GAAP adjustments
              - advance receipts from customers                                       1,401                       -
              - provision for warranty cost                                             607                     949
              - provision for guarantee issued                                        1,056                   1,056
                                                                           --------------------   ---------------------

            As adjusted                                                              54,125                  38,354
                                                                           --------------------   ---------------------

         Long-term liabilities:
            As reported                                                              14,565                  18,776
            US GAAP adjustments                                                           -                       -
                                                                           --------------------   ---------------------

            As adjusted                                                              14,565                  18,776
                                                                           --------------------   ---------------------

         Minority interest in equity of consolidated subsidiaries:
            As reported                                                                  -                        -
            US GAAP adjustments                                                     19,236                   17,837
                                                                           --------------------   ---------------------

            As adjusted                                                             19,236                   17,837
                                                                           --------------------   ---------------------

         Total liabilities and minority interest based on US GAAP              (won)87,926              (won)74,967
                                                                           ====================   =====================
</TABLE>

         The following table reconciles cash flows from operating, investing
         and financing activities for the years ended December 31, 2001, 2002
         and 2003 under Korean GAAP, as reported in the consolidated financial
         statement, to cash flows from operating, investing and financing
         activities for the years ended December 31, 2001, 2002 and 2003 under
         US GAAP, giving effect to adjustments for the differences listed in
         this note (in millions of Korean won):


                                                          F-51
<PAGE>

<TABLE>
<CAPTION>

                                                                           2001                    2002              2003
                                                                     ---------------       ---------------    ----------------
         Cash flows from operating activities based on Korean
<S>                                                                  <C>                  <C>                      <C>
             GAAP                                                       ((won)11,957)         ((won)24,340)            (won)519
         Adjustments:
             Reclassification of payments for research and
                development                                                   (5,898)               (2,752)              (2,884)
             Reclassification of other capital adjustments                         -                  (359)                 115
                                                                     ---------------       ---------------     ----------------
         Cash flows from operating activities based on US GAAP          ((won)17,855)         ((won)27,451)         ((won)2,250)

         Cash flows from investing activities based on Korean
             GAAP                                                       ((won)67,252)          (won)29,682         ((won)10,175)
         Adjustments:
             Reclassification of payments for research and
                development                                                    5,898                 2,752                2,884
             Long-term loans to employee                                       1,346                  (145)               1,777
                                                                     ---------------       ---------------     ----------------
         Cash flows from investing activities based on US GAAP          ((won)60,008)          (won)32,289          ((won)5,514)
                                                                     ===============       ===============     ================

         Cash flows from financing activities based on Korean
             GAAP                                                        (won)71,210          ((won)13,375)         (won)12,217
         Adjustments:
             Reclassification of other capital adjustments                    (1,346)                  504               (1,892)
                                                                     ---------------       ---------------     ----------------

         Cash flows from financing activities based on US GAAP           (won)69,864          ((won)12,871)         (won)10,325
                                                                     ===============       ===============     ================
</TABLE>


28.  ADDITIONAL DISCLOSURES REQUIRED BY US GAAP

a.       Income Taxes

         Income tax expense under US GAAP for the years ended December 31,
         2001, 2002 and 2003 is as follows (in millions of Korean won):

<TABLE>
<CAPTION>
<S>                                                                      <C>             <C>              <C>
                                                                         2001            2002             2003
                                                                    ---------------  --------------  ---------------

          Currently payable                                            (won)471         (won)277         (won)18
          Deferred                                                            -                -               -
                                                                    ---------------  --------------  ---------------

          Income tax expense                                           (won)471         (won)277         (won)18
                                                                    ===============  ==============  ===============
</TABLE>

         The difference between income tax expense computed using the statutory
         income tax rate and the recorded income tax expense for the years
         ended December 31, 2001, 2002 and 2003 is attributable to the
         following (in millions of Korean won):

<TABLE>
<CAPTION>
<S>                                                                     <C>              <C>              <C>
                                                                        2001             2002             2003
                                                                  -----------------  --------------  ---------------

          Income tax benefit at statutory Korean corporate
            income tax rates of 27%                                ((won)23,320)      ((won)16,876)    ((won)6,989)
          Resident surtax                                                (2,332)            (1,688)           (699)
          Tax credit for technology and human resource
            development and capital investments                            (451)              (242)              -
          Special tax credit for small and medium-sized venture
            companies                                                      (457)              (293)              -
          Tax effect of permanent differences                             4,879                472             729
         Change in valuation allowance                                   22,723             18,953           3,178


                                                          F-52
<PAGE>

          Change in income tax rate (note a)                                  -                  -           3,518
          Other                                                            (571)               (49)            281
                                                                  -----------------  --------------  ---------------
                                                                       (won)471           (won)277         (won)18
          Recorded income tax expense
                                                                  =================  ==============  ===============
                                                                              -                  -               -
          Effective tax rate
                                                                  =================  ==============  ===============
</TABLE>

         (note a)     Pursuant to a revision in the Korean Corporate Income
                      Tax Law, statutory corporate income tax rate will be
                      changed from current 27% to 25%, effective January 1,
                      2005.

         The tax effects of each type of temporary difference, net operating
         loss carryforwards and the tax credit carryforwards that gave rise to
         a significant portion of the deferred tax assets and liabilities at
         December 31, 2001, 2002 and 2003, computed under US GAAP, and a
         description of the financial statement items that created these
         differences are as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                            2001            2002             2003
                                                                        --------------  --------------   -------------
          Current:
<S>                                                                    <C>             <C>               <C>
            Accrued interest income                                        ((won)33)       ((won)56)        ((won)41)
            Gain on valuation of trading securities                             (48)            887              (56)
            Loss from valuation of inventories                                4,988           5,742            3,457
            Revenue recognition timing difference related to
                deliveries awaiting final customer acceptance                  (233)            (29)               -
            Warranty cost accrual                                               433             225              282
            Other                                                                 -               -               54
                                                                        --------------   -------------  --------------
                                                                              4,786           6,769            3,696
                                                                        --------------  --------------   -------------
          Non-Current:
            Provision for severance indemnities                                 530             693              589
            Net operating loss carryforwards                                  6,488          16,807           19,445
            Net loss of consolidated subsidiaries                             3,410           4,642            4,408
            Tax credit carryforwards                                          7,604           7,747            7,360
            Research and development costs                                    4,926           3,686            2,777
            Impairment loss from available-for-sale securities                2,512           3,607            3,734
            Equity in losses of affiliate                                     8,289          11,788            6,657
            Sales of stock by subsidiary and affiliate                      (11,050)        (11,050)          (3,458)
            Stock options                                                       913           1,142            1,342
            Depreciation                                                        259             275              275
            Provision for bad debt accounts                                   4,221           5,229            7,748
            Other                                                                 -             506              447
                                                                        --------------   -------------   -------------
                                                                             28,102          45,072           51,324
                                                                        --------------  --------------   -------------

          Total deferred income tax assets                                   32,888          51,841           55,020
          Valuation allowance (note a)                                      (32,888)        (51,841)         (55,020)
                                                                        --------------  --------------   -------------

         Net deferred income tax assets                                     (won) -         (won) -          (won) -
                                                                        ==============  ==============   =============
</TABLE>

         (note a)      A full valuation allowance has been provided for the
                       tax effect of deferred income tax assets as of December
                       31, 2003 since the Company's management believes that
                       the realization of the deferred tax assets is uncertain.


                                                          F-53
<PAGE>

     b.  Fair Value of Financial Instruments

         The following methods and assumptions were used to estimate the fair
         value of each class of financial instruments as of December 31, 2002
         and 2003.

         Cash and Cash Equivalents, Short-term Financial Instruments, Accounts
         Receivable (trade and other), Short-term Loans, Accounts Payable
         (trade and other) and Short-Term Borrowings

         The carrying amount approximates fair value due to the short maturity
         of these instruments.

         Securities

         The fair value of trading securities is estimated based on quoted
         market price. For equity securities without readily determinable fair
         value and equity method investments, a reasonable estimate of fair
         value could not be made without incurring excessive costs. Additional
         information pertinent to these investments is provided in notes 5 and
         6.

         Long-Term Bank Deposits

         The carrying amount approximates fair value based on interest rates
         currently available for similar deposits.

         Long-Term Loans and Long-Term Receivables

         The fair value of long-term loans and long-term receivables is
         estimated by discounting the future cash flows using the current
         interest rate of time deposits with a maturity of one year.

         Long-Term Borrowings and Lease Payables

         The carrying amount of long term borrowings and lease payables
         approximates fair value due to repricing of interest rate based on
         floating rate.

         The fair value of financial instruments under US GAAP as of December
         31, 2002 and 2003 is as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                     2002                             2003
                                                        ------------------------------- ---------------------------------
                                                           Carrying          Fair          Carrying           Fair
                                                            amount           value          amount            value
                                                        ---------------- -------------- ---------------- ----------------
          Financial assets:
            <S>                                       <C>              <C>            <C>              <C>
             Cash and cash equivalents                    (won)19,008      (won)19,008    (won)21,569      (won)21,569
             Short-term financial instruments                  20,776           20,776         14,628           14,628
             Trading securities                                28,669           28,669         21,382           21,382
             Accounts receivable (trade and other)
                 including long-term receivable                41,178           41,178         48,533           48,533
             Available-for-sale securities, including
                 current portion of available-for-sale
                 securities                                     2,511            2,511            445              445


                                                          F-54
<PAGE>

             Other investments, including equity
                securities valued using the equity
                method accounting                               5,686              N/A          4,786              N/A
             Long-term bank deposits                              533              533            533              533
             Restricted deposits                                  110              110            458              458
             Short-term and long-term loans                       465              464            478              465
                                                        ----------------                ----------------


                                                         (won)118,936                    (won)112,812
                                                        ================                ================


          Financial liabilities:
             Accounts payable (trade and other)           (won)12,635      (won)12,635    (won)10,943      (won)10,943
             Short-term borrowings                             33,542           33,542         19,955           19,955
             Lease payable                                      1,079            1,079            621              621
             Current portion of long-term borrowings                -                -          1,787            1,787
             Long-term borrowings                               9,543            9,543          8,245            8,245
                                                        ----------------                ----------------

                                                          (won)56,799                     (won)41,551
                                                        ================                ================
</TABLE>

     c.  Segment Information

         Export Sales

         The Company had foreign export sales under US GAAP amounting to
         17.64%, 29.79% and 31.05% of total sales for the years ended December
         31, 2001, 2002 and 2003, respectively. The export sales under US GAAP
         were made principally to the following locations:
<TABLE>
<CAPTION>

                                                                    2001                2002                2003
                                                               ----------------    ----------------    ----------------

<S>                                                                    <C>                 <C>                 <C>
         Asia                                                          10.03%              11.28%              10.99%
         Europe                                                         5.49%              14.16%               3.48%
         United States of America                                       2.12%               4.35%              16.58%
                                                               ----------------    ----------------    ----------------

                                                                       17.64%              29.79%              31.05%
                                                               ================    ================    ================
</TABLE>

         Business Segment

         Through 1998, the Company had operated in one major business segment,
         the handler manufacturing business. As the Company expanded its sales
         of SMD placement systems and security solutions, additional business
         segments were designated. Sales, operating income, identifiable
         assets, capital expenditures and depreciation under US GAAP as of and
         for the years ended December 31, 2001, 2002 and 2003, pertaining to
         the business segments in which the Company and its subsidiaries
         operated are presented as follows (in millions of Korean won):

<TABLE>
<CAPTION>
                                                                                                      Depreciation of
                                                      Operating        Identifiable    Capital        property, plant
                                         Sales       income (loss)       assets      expenditures      and equipment
                                       --------------------------------------------------------------------------------

         (As of and for the year ended December 31, 2001)



                                                          F-55
<PAGE>

<S>                                 <C>               <C>               <C>              <C>            <C>
          Handlers and components      (won)19,823 ((won)14,184)     (won)36,215       (won)134       (won)803
          SMD placement systems             20,992      (35,485)          82,026            205          2,348
          TFT-LCD handlers and testers       5,053       (1,458)           2,860              -            207
          Security solutions                15,517          494           35,671            318            468
          Research and development
            center                               -            -           23,562         17,421          1,754
           Other                             8,442      (12,054)               -          5,515          2,588
                                       --------------------------------------------------------------------------------

          Consolidated                 (won)69,827 ((won)62,687)    (won)180,334    (won)23,593     (won)8,168
                                       ================================================================================


                                                                                                      Depreciation of
                                                      Operating        Identifiable    Capital        property, plant
                                         Sales       income (loss)       assets      expenditures      and equipment
                                       --------------------------------------------------------------------------------

         (As of and for the year ended December 31, 2002)

          Handlers and components      (won)16,859 ((won)14,192)     (won)19,794       (won)327       (won)594
          SMD placement systems             23,486      (30,472)          35,404            537            977
          TFT-LCD handlers and testers       2,860           19                -              -              -
          Security solutions                15,881         (788)          35,360            215            321
          Research and development
            center                               -            -           20,441            189            343
           Other                            10,629       (4,762)               -          1,970          4,477
                                       --------------------------------------------------------------------------------

          Consolidated                 (won)69,715 ((won)50,195)    (won)110,999     (won)3,238     (won)6,711
                                       ================================================================================

                                                                                                      Depreciation of
                                                      Operating        Identifiable    Capital        property, plant
                                         Sales       income (loss)       assets      expenditures      and equipment
                                       --------------------------------------------------------------------------------

         (As of and for the year ended December 31, 2003)

          Handlers and components      (won)45,170  ((won)6,870)     (won)22,891       (won)398       (won)468
          SMD placement systems             19,201       (9,222)          24,852            654            770
          Security solutions                17,189       (2,601)          37,574         18,401            588
          Research and development
            center                               -            -           19,610          1,097          1,290
           Other                            14,479       (2,825)               -          2,119           3016
                                       --------------------------------------------------------------------------------

          Consolidated                 (won)96,039 ((won)21,518)    (won)104,927    (won)22,669     (won)6,132
                                       ================================================================================
</TABLE>

         In addition to business segment identifiable assets, total assets as
         of December 31, 2001, 2002 and 2003 of (won)338,607 million,
         (won)236,177 million and (won)223,876 million, respectively,
         include unallocated corporate assets consisting of cash and
         investments ((won)60,347 million, (won)60,496 million and
         (won)57,447 million as of December 31, 2001, 2002 and 2003,
         respectively), land ((won)31,208 million, (won)7,749 million and
         (won)7,730 million as of December 31, 2001, 2002 and 2003,
         respectively), loans - net ((won)6,513 million, (won)441 million
         and (won)478 million as of December 31, 2001, 2002 and 2003,
         respectively) and other ((won)60,204 million, (won)56,492
         million and (won)53,294 million as of December 31, 2001, 2002 and
         2003, respectively).


                                     F-56
<PAGE>

         The unallocated other corporate assets of (won)60,204 million as of
         December 31, 2001 mainly consisted of buildings of (won)29,690
         million, advance payments of (won)8,883 million and other assets of
         (won)21,631 million. Unallocated other corporate assets of
         (won)56,492 million as of December 31, 2002 mainly consisted of
         buildings of (won)16,311 million, long-term receivable-net of
         (won)6,099 million and other assets of (won)34,082 million.
         Unallocated other corporate assets of (won)53,295 million as of
         December 31, 2003 mainly consisted of buildings of (won)17,727
         million, long-term receivable-net of (won)4,602 million and other
         assets of (won)30,966 million.


                                     F-57
<PAGE>