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

FORM 20-F

(MARK ONE)  ̈ REGISTRATION
  STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE 
  SECURITIES EXCHANGE ACT OF 1934 x ANNUAL REPORT PURSUANT TO SECTION
  13 OR 15(D) OF THE SECURITIES EXCHANGEACT OF 1934

For the fiscal year ended **December 31, 2004**

 ̈ TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
  EXCHANGE ACT OF 1934
  For the transition period from __________ or __________

Commission file number: 0-32359

MERIDIAN CO., LTD.
  (Exact name of registrant as specified in its charter)

The Republic of Korea
  (Jurisdiction of incorporation or organization)

4F, Heungseong Bldg., 197-3, Jamsil-Dong, Songpa-Gu,
  Seoul, 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         
|____________________________ | ____________________________
|____________________________ | ____________________________

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION
  12(G) OF THE ACT:

**Common shares**
  (Title of Class)

(Title of Class)

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

(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 shares outstanding December 31, 2004: 29,993,894**

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 selected to follow. Item 17  ̈
  Item 18 x

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References

All references to "Korea" herein are references to The Republic
  of Korea. All references to "Meridian," the "Company", "we," "us" or "our" herein
  are references to Meridian Co., Ltd. All references to the "Government" are
  references to the government of Korea. All references to the "shares" are references
  to the Company's issued common shares of par value Won 100 (US $0.10 at
  December 31, 2004 and US $0.10 at June 18, 2004).

Currency Translation

In this annual report, references to "Won" or "W" are to the
  currency of Korea and all references to "Dollars," "$" or "US$" are
  to the currency of the United States of America. Our financial statements are
  prepared in Won, translated into U.S. dollars and presented in accordance with
  accounting principles generally accepted in the United States for the fiscal
  years ended December 31, 2002, 2003 and 2004. Solely for the convenience of
  the reader and to improve clarity, certain Items in this annual report contain
  translations of certain Won amounts into Dollars at specified rates(see also
  note 2 “Translation of Foreign Currencies” to the Company's audited
  financial statements, included in Item 18, for the Company's accounting policies
  with regard to foreign exchange conversion). All translations from Won to Dollars
  were made (unless otherwise indicated) at the noon buying rate in The City of
  New York for cable transfers in Won per US$1.00 as certified for customs
  purposes by the Federal Reserve Bank of New York in effect on December 31, 2004,
  which was Won 1,035.10 to US$1.00. No representation is made that the Won
  or US$ amounts referred to in this annual report could have been or could
  be converted into US$ or Won, as the case may be, at any particular rate
  or at all. See also Item 3, Key Information, Exchange Rates Information, for
  information regarding the rates of exchange between the Won and the Dollar.
  On July 12, 2005 the noon buying rate was Won 1,035.00 to US$1.00.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A. DIRECTORS AND SENIOR MANAGEMENT

See Item 4.C.

B. ADVISERS 
  Not Applicable

C. AUDITORS 
  Not Applicable

ITEM 3. KEY INFORMATION

A. Selected financial data

The selected consolidated financial and other data set forth
  below should be read in conjunction with the audited consolidated financial
  statements of Meridian Co., Ltd. as of December 31, 2004 2003 and 2002 including
  the notes thereto, and "Item 5 - Operating and Financial Review and Prospects"
  included in this annual report. The selected consolidated financial data set
  forth below for the fiscal years ended December 31, 2004, 2003, 2002, 2001 and
  2000 are derived from the audited consolidated financial statements of Meridian,
  which have been audited by ShinHan Accounting Corporation, independent accountants
  (for the fiscal year ended December 31, 2004, 2003) and by SamDuk Accounting
  Corporation, independent accountants(fiscal years ended December 31, 2002, 2001
  and 2000). The report of SamDuk Accounting Corporation covering the December
  31, 2002 and 2001 financial statements contains an emphasis paragraph related
  to the adverse economic conditions in the Republic of Korea in recent years
  and in the Asia Pacific region in general. Especially, the auditors' report
  also describes the uncertainty about our ability to continue as a going concern,
  based on negative cash flows from operations, accumulated deficit and negative
  working capital. Our consolidated financial statements are compiled in Won,
  expressed in US dollars, and presented in accordance with accounting principles
  generally accepted in the United States.

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MERIDIAN CO., LTD.
  CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in U.S. dollars)
  For the years ended December 31, 2004, 2003, 2002, 2001 and 2000

|                                                         |   | 2004       |   |   | 2003       |   |   | 2002       |   |   | 2001        |   |   | 2000       |  
|-------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ----------- | - | - | ---------- | -
|Sales                                                    | $ | 2,129,489  |   | $ | 2,894,559  |   | $ | 3,521,657  |   | $ | 5,289,561   |   | $ | 5,304,040  |  
|Cost of sales                                            |   | 1,173,609  |   |   | 1,253,544  |   |   | 1,915,811  |   |   | 2,478,106   |   |   | 2,978,975  |  
|                                                         |   | -          |   |   | -          |   |   | -          |   |   | -           |   |   | -          |  
|Gross profit.                                            |   | 955,880    |   |   | 1,641,015  |   |   | 1,605,846  |   |   | 2,811,455   |   |   | 2,325,065  |  
|                                                        
|Operating expenses.                                      |   | 2,378,190  |   |   | 3,082,711  |   |   | 3,133,684  |   |   | 3,996,150   |   |   | 3,338,976  |  
|                                                        
|Operating loss                                           |   | -1,422,311 |   |   | -1,441,696 |   |   | -1,527,838 |   |   | -1,184,695  |   |   | -1,013,911 |  
|Other income                                             |   | 673        |   |   | 11,886     |   |   | 699,711    |   |   | 188,925     |   |   | 400,473    |  
|Other expenses                                           |   | -391,120   |   |   | -813,694   |   |   | -1,461,698 |   |   | -929,442    |   |   | -445,877   |  
|Minority interest in net loss of consolidated affiliates |   | -1,274     |   |   | -          |   |   | -          |   |   | 19,302      |   |   | 367,789    |  
|Income tax expense                                       |   | -          |   |   | -          |   |   |            |   |   | -           |   |   | -11,551    |  
|Extraordinary items.                                     |   | -          |   |   | -          |   |   | -          |   |   | -10,212     |   |   | 6,391      |  
|Other comprehensive gain (loss)                          |   | -          |   |   | 100,780    |   |   | -161,224   |   |   | -26,326     |   |   | -158,508   |  
|                                                        
|Comprehensive loss                                       | $ | (1,986,116 | ) | $ | (2,142,724 | ) | $ | (2,451,049 | ) | $ | (1,959,374) |   | $ | (855,194)  |  
|                                                        
|Weighted average number of common shares                 |   | 22,199,701 |   |   | 18,094,211 |   |   | 16,472,700 |   |   | 15,703,850  |   |   | 14,071,325 |  
|                                                        
|Basic and diluted loss per common share.                 | $ | (0.09      | ) | $ | (0.12      | ) | $ | (0.14      | ) | $ | (0.12       | ) | $ | (0.05      | )

CONSOLIDATED BALANCE SHEETS (in U.S. dollars) 
  As of December 31, 2005, 2003, 2002, 2001 and 2000

|                                           |   |           |         |            |           | 2004    |            |           | 2003      |            |           | 2002      |           |           | 2001      |           |           | 2000    | 
|------------------------------------------ | - | --------- | ------- | ---------- | --------- | ------- | ---------- | --------- | --------- | ---------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | ------- | 
|Cash and cash equivalents.                 |   |           | $       | 40,703     |           | $       | 31,557     |           | $         | 128,674    |           | $         | 105,216   |           | $         | 398,625   |          
|Accounts receivable.- trade.               |   |           | 508,145 |            |           | 405,471 |            |           | 1,058,953 |            |           | 1,759,821 |           |           | 2,708,607 |          
|Inventories.                               |   |           |         |            | 672,395   |         |            | 709,894   |           |            | 702,097   |           |           | 1,187,989 |           |           | 1,093,137 |        
|Other.                                     |   |           |         |            |           | 240,600 |            |           | 86,079    |            |           | 314,351   |           |           | 1,074,919 |           |           | 587,827 | 
|                                          
|Total current assets                       |   |           |         | 1,461,843  |           |         | 1,227,001  |           |           | 2,204,075  |           |           | 4,127,945 |           |           | 4,788,196 |          
|Investments and other assets               |   |           | 155,192 |            |           | 140,574 |            |           | 190,317   |            |           | 433,653   |           |           | 693,331   |          
|Property, plant and equipment - net.       |   | 1,441,085 |         |            | 1,200,467 |         |            | 1,444,278 |           |            | 1,455,295 |           |           | 1,528,395 |          
|Goodwill and other intangible assets - net |   | 1,421     |         |            | 1,684     |         |            | 2,161     |           |            | 932       |           |           | 75,273    |          
|                                          
|TOTAL ASSETS                               |   |           |         | $          | 3,059,541 |         | $          | 2,569,726 |           | $          | 3,840,831 |           | $         | 6,017,825 |           | $         | 7,085,195 |        
|                                          
|                                          
|Trade accounts payable and current debt. . | $ | 3,185,718 |         | $          | 3,583,856 |         | $          | 4,802,926 |           | $          | 3,653,326 |           | $         | 3,779,553 |          
|Long-term borrowings                       |   |           |         | 4,435,491  |           |         | 3,150,845  |           |           | 1,395,089  |           |           | 2,568,413 |           |           | 1,486,641 |          
|-  -  -  -  -                              |   |           |         |            |           |         |            |           |           |            |           |           |           |           |          
|Total liabilities.                         |   |           |         | $          | 7,621,209 |         | $          | 6,734,701 |           |            | 6,198,015 |           |           | 6,221,739 |           |           | 5,266,194 |        
|                                          
|Minority interest.                         |   |           |         |            | -         |         |            | -         |           |            | -         |           |           | 6,593     |           |           | 26,691    |        
|Shareholders' equity                       |   |           |         | -4,580,928 |           |         | -4,164,975 |           |           | -2,357,184 |           |           | -210,507  |           |           | 1,792,310 |          
|                                          
|TOTAL LIABILITIES AND                      |   |           |         |            |           |         |            |           |           |            |           |           |           |           |           |           |          
|SHAREHOLDERS' EQUITY.                      |   |           | $       | 3,059,541  |           | $       | 2,569,726  |           |           | 3,840,831  |           | $         | 6,017,825 |           | $         | 7,085,195 |          

Exchange rate information
  The following table sets forth, for the periods and dates indicated, certain
  information concerning the noon buying rate of a U.S. dollar in Won. No representation
  is made that the Won or Dollar amounts referred to herein could have been or
  could be converted into Dollars or Won, as the case may be, at any particular
  rate, or at all.

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|YEAR |  | AT DECEMBER 31 |  | ANNUAL AVERAGE RATE PER $1.00 US |  | ANNUAL HIGH |  | ANNUAL
      LOW
|---- |  | -------------- |  | -------------------------------- |  | ----------- |  | ----------------
|2000 |  | 1267           |  | 1140.0                           |  | 1267        |  | 1105.5          
|2001 |  | 1314           |  | 1293.4                           |  | 1369        |  | 1234.0          
|2002 |  | 1186           |  | 1242.1                           |  | 1332        |  | 1160.6          
|2003 |  | 1192           |  | 1193.0                           |  | 1262        |  | 1146.0          
|2004 |  | 1035.1         |  | 1139.3                           |  | 1195.1      |  | 1035.1          

B. Capitalization and indebtedness Not applicable

C. Reasons for the offer and use of proceeds Not applicable

D. Risk Factors

The following risks relate specifically to the Company's business
  and should be considered carefully. The Company's business, financial condition
  and results of operations could be materially and adversely affected by any
  of the following risks. In particular, the Company is a Korean Company and is
  governed by a legal and regulatory environment which in some respects may differ
  from that which prevails in other countries.

The Company's additional funding requirements
  The Company has limited financial resources. The Company will require additional
  cash to implement its business strategies, including cash for (i) payment of
  long-term and short-term borrowings (ii) payment of operating expenses, (iii)
  costs associated with bringing new products to market, (iv) continued research
  and development and (v) further implementation of those business strategies.
  The Company anticipates raising such additional capital through public or private
  financings, as well as through loans and other resources. There is no assurance
  that the necessary funds would be available to the Company on terms acceptable
  to it. Failure to obtain such additional funding could result in a delay or
  an indefinite postponement in providing some or all of the Company's products
  to the market place, or the ability to supply sufficient product to the market
  place on a continual and profitable basis. Additional funds raised by the Company
  through the issuance of equity or convertible debt securities will cause the
  Company's current stockholders to experience dilution. Such securities may grant
  rights, preferences or privileges senior to those of the Company's common stockholders.
  The Company does not have any contractual restrictions on the Company's ability
  to incur debt and, accordingly, the Company could incur significant amounts
  of indebtedness to finance its operations. Any such indebtedness could contain
  covenants which would restrict the Company's operations.

In February 2004, the Company received approval for a debt
  rescheduling plan for a total of $3,589,271 from the Chooncheon District
  Court, Korea, whereby a group of creditors of the Company and a representative
  of the Company agreed to reschedule the payments on $3,589,271 of the Company's
  debt which constitute approximately 68% of the total outstanding accounts payable
  and borrowings of the Company.

The Company also received funds of US$530,000.00 from
  investors through an equity financing whereby, on June 8, 2004, the Company
  issued 3,312,500 common shares of the Company to three investors at the price
  of US$0.16 per share. The shares issued are restricted from trading for
  one year. The Company intends to raise additional financing through the issuance
  of debt or equity instruments. However, if the Company's efforts are not successful,
  the Company may not be able to realize its assets and discharge its liabilities
  in the normal course of operations.

The Company anticipates that losses may continue
  For the year ended December 31, 2004 the Company had a net loss of $1,986,116
  and an accumulated deficit of $11,333,786. The Company recognizes the possibility
  of incurring losses for the foreseeable future. The extent of future losses
  will depend, in part, on the amount of growth in revenues from the Company's
  products. The Company expects that operating costs will increase during the
  next several years, especially in the areas of sales and marketing, product
  development and general and administrative expenses as it pursues its business
  strategy. Thus, the Company will need to generate increased revenues faster
  than the rate of growth in costs to achieve profitability. To the extent that
  increases in its operating expenses precede or are not subsequently followed
  by corresponding increases in revenues, or if it is unable to adjust operating
  expense levels accordingly, the Company's business, results of operations and
  financial condition would be materially and adversely affected. There can be
  no assurance that the Company will sustain profitability or that its operating
  losses will not increase in the future.

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Competition from larger companies
  The markets in which the Company competes are intensely competitive and the
  Company competes and will compete with companies that have greater financial
  and technical resources. Therefore, to the extent that the Company is able to
  establish sales revenues, there is no assurance that it would be able to sustain
  such sales revenues. Moreover if, and when, the Company begins achieving its
  objectives, larger, better financed companies in peripheral businesses may be
  attracted to the Company's markets. They may be prepared to spend large sums
  quickly to develop competitive products and to mount major marketing campaigns.
  The risk to the Company's markets could impair the Company's growth and have
  a negative effect on the Company's business.

Need to upgrade products and develop new technologies
  Continued participation by the Company in its market may require the investment
  of the Company's resources in upgrading of its products and technology for the
  Company to compete and meet regulatory and statutory standards. There can be
  no assurance that such resources will be available to the Company or that the
  pace of product and technology development established by management will be
  appropriate to the competitive requirements of the marketplace. The Company's
  success will depend to a substantial degree on its ability to develop and introduce
  in a timely manner new products and enhancements that meet changing customer
  requirements and emerging industry standards. The development of new, technologically
  advanced products and enhancements is a complex and uncertain process requiring
  high levels of innovation as well as the anticipation of technology and market
  trends.

The Company currently depends on a limited number of foreign
  suppliers to manufacture certain key components and these manufacturers may
  not be able to satisfy requirements and could cause the Company's potential
  revenues to decline
  The Company currently buys certain key components from a limited number of suppliers.
  The Company anticipates that these suppliers will manufacture these key components
  in sufficient amounts to meet its production requirements. If these suppliers
  fail to satisfy the Company's requirements on a timely basis and at competitive
  prices, the Company could suffer manufacturing delays, a possible loss of revenues
  or higher than anticipated costs of revenues, any of which could seriously harm
  its operating results.

There can be no assurance that the Company will be able to
  identify, develop, manufacture, market, sell, or support new products and enhancements
  successfully, that new products or enhancements will achieve market acceptance,
  or that the Company will be able to respond effectively to technology changes,
  emerging industry standards or product announcements by competitors.

New product announcements by the Company could cause its customers
  to defer purchases of existing products or cause distributors to request price
  protection credits or stock rotations. Any significant deterioration in the
  general economic conditions would have an adverse effect on the Company's business,
  results of operations and financial condition. The success of the Company's
  operations depends to a significant extent upon a number of factors relating
  to discretionary consumer spending, including economic conditions (and perceptions
  of such conditions by consumers) affecting disposable consumer income such as
  employment, wages, salaries, business conditions, interest rates, availability
  of credit and taxation for the economy as a whole and in regional and local
  markets where the Company operates. There can be no assurance that consumer
  spending will not be adversely affected by general economic conditions, which
  could negatively impact the Company's results of operations and financial conditions.
  Any significant deterioration in general economic conditions or increases in
  interest rates may inhibit consumers' use of credit and cause a material adverse
  effect on the Company's revenues and profitability. Any significant deterioration
  in general economic conditions that adversely affects these companies could
  also have a material adverse effect on the Company's business, results of operations
  and financial condition.

Sales and Distribution
  The Company has yet to establish a significant distribution and support network
  in certain markets. Failure on the part of the Company to put into place an
  experienced and effective marketing infrastructure in a timely manner could
  act to delay or negate the realization of anticipated revenues.

Market Acceptance
  The viability of the Company is dependent upon the market acceptance of its
  current and future products. There is no assurance that the Company's products
  will attain a level of market acceptance that will allow for continuation and
  growth of its business operations. In addition, the Company will need to develop
  new processes and products to maintain its operations in the longer term. The
  development and launching of such processes and products can involve significant
  expenditure. There can be no assurance that the Company will have sufficient
  financial resources to fund such programs and whether such undertaking will
  be commercially successful.

Adequate Labor and Dependence Upon Key personnel; No Employment
  Agreements
  The Company will depend upon recruiting and maintaining qualified personnel
  to staff its operations. The Company believes that such personnel are currently
  available at reasonable salaries and wages. There can be no assurance, however,
  that such personnel will always be available in the future. The continuing development
  of the Company's products has been almost entirely dependent on the skills of
  management and certain key employees of the Company with which the Company has
  no employment agreements. Loss of the services of any of this management team
  and key employees could have a material adverse effect upon the Company.

The Company's growth depends on its ability to commercialize
  products
  Currently a significant amount of the Company's revenue comes from the Meridian
  product line that is central to the Company's growth strategy. This line of
  products encounters competition and is price sensitive. While the Company is
  currently developing new products, the

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Company cannot be assured that these products will reach the market on time, will satisfactorily address customer needs, will be sold in high volume, or will be sold at profitable margins.

The Company's operating expenses are anticipated to be
  relatively fixed and therefore the Company may have limited ability to reduce
  expenses quickly in response to any revenue shortfall
  The Company anticipates that its operating expenses will be relatively fixed,
  and the Company therefore has limited ability to reduce expenses quickly in
  response to any revenue shortfalls. Consequently, the Company's operating results
  will be harmed if the Company's revenues do not meet its revenue projections.
  The Company may experience revenue shortfalls for the following reasons:

|- | significant pricing pressures that occur due to competition, over supply,
      or other reasons;                                                                                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | sudden shortages of raw materials or fabrication, test or assembly capacity
      constraints that lead the Company's suppliers to allocate available supplies
      or capacity to other customers which, in turn, harm the Company's ability
      to meet its sales obligations; and
|- | the reduction, rescheduling or cancellation of customer orders.                                                                                                                                                                                                                        

The Company's markets are subject to rapid technological change and, therefore,
    its success depends upon the Company's ability to develop and introduce new
    products The markets for the Company's products are characterized by:


|- | rapidly changing technologies;                      
|- | ----------------------------------------------------
|- | evolving and competing industry standards           
|- | changing customer needs; and                        
|- | frequent new product introductions and enhancements.

To develop new products for its target markets, the Company
  must develop, gain access to and use leading technologies in a cost-effective
  and timely manner and continue to expand its technical and design expertise.
  In addition, the Company must have its products designed into its customers'
  future products and maintain close working relationships with key customers
  in order to develop new products that meet their changing needs.

The Company cannot be assured that it will be able to identify
  new product opportunities successfully, develop and bring to market new products,
  achieve design wins or respond effectively to new technological changes or product
  announcements by its competitors. In addition, the Company may not be successful
  in developing or using new technologies or in developing new products or product
  enhancements that achieve market acceptance. The pursuit of necessary technological
  advances may require substantial time and expense. Failure in any of these areas
  could harm the Company's anticipated operating results.

The Company's ability to compete successfully will depend,
  in part, on its ability to protect its intellectual property rights, which the
  Company may not be able to protect
  The Company relies on a combination of patent, trade secrets, and copyright,
  nondisclosure agreements and other contractual provisions and technical measures
  to protect its intellectual property rights. Policing unauthorized use of the
  Company's products is difficult, especially in foreign countries. Litigations
  may continue to be necessary in the future to enforce its intellectual property
  rights, to protect its trade secrets, to determine the validity and scope of
  the proprietary rights of others, or to defend against claims of infringement
  or invalidity. Litigation could result in substantial costs and diversion of
  resources and could harm its business, operating results and financial condition
  regardless of the outcome of the litigation.

The Company cannot be assured that any pending patent application
  will be granted
  The Company has acquired ownership or exclusive license to a number of patents
  or patent applications related to its products. However, the Company cannot
  be assured that any pending patent application will be granted, or that all
  such patents can provide adequate protection for its intellectual property.
  The Company's operating results could be seriously harmed by the failure to
  protect its intellectual property. If the Company is accused of infringing the
  intellectual property rights of other parties, it may become subject to time-consuming
  and costly litigation. If the Company loses, it could suffer a significant impact
  on its business and it may be forced to pay damages. Third parties may assert
  that the Company's products infringe their proprietary rights, or may assert
  claims for indemnification resulting from infringement claims against it. Any
  such claims may cause the Company to delay or cancel shipment of its products
  or pay damages that could seriously harm its business, financial condition and
  results of operations. In addition, irrespective of the validity or the successful
  assertion of such claims, the Company could incur significant costs in defending
  against such claims. The Company's litigation may be expensive, may be protracted,
  and confidential information may be compromised. Whether or not the Company
  is successful in any litigation, the Company expects the litigation to consume
  substantial amounts of its financial and managerial resources. Further, because
  of the substantial amount of discovery required in connection with this type
  of litigation, there is a risk that some of the Company's confidential information
  could be compromised by disclosure.

The Company's business may suffer due to risks associated
  with international sales and operations
  The Company anticipates that export products will account for most of its revenues.
  International business activities are subject to a number of risks, each of
  which could impose unexpected costs of the Company that would have an adverse
  effect on its operating results. These risks include:

|- | difficulty in complying with regulatory requirements and standards;
|- | -------------------------------------------------------------------
|- | tariffs and other trade barriers;                                  

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|- | costs and risks of localizing products for foreign countries;  
|- | ---------------------------------------------------------------
|- | reliance on third parties to distribute the Company's products;
|- | longer accounts receivable payment cycles;                     
|- | potentially adverse tax consequences;                          
|- | limits on repatriation of earnings; and                        
|- | burdens of complying with a wide variety of foreign laws       

The Company anticipates that it will have to continue to
  depend on manufacturers' representatives, agents, and distributors to generate
  substantial amounts of its revenues
  The Company anticipates that it will have to continue to rely on manufacturers'
  representatives, agents, and distributors to sell a significant portion of its
  products, and these entities could discontinue selling its products at any time.
  The loss of any significant agent could seriously harm the Company's operating
  results.

The Company's success may be affected by unusual growth
  of competing new products
  There may be new products being introduced by competitors in the future which
  meet unusually high global demands. If the new products' customer base overlaps
  a substantial portion of the Company's products' customer base, or that the
  new products use the same key component as the Company's products, the demand
  for the Company's products or the supply of their key component may be reduced,
  which may seriously harm the Company's operations.

Its officers, directors and entities affiliated with them
  control the Company
  In the aggregate, ownership of the Company's shares by management and entities
  affiliated with the Company own collectively 33.13% of the Company's issued
  and outstanding shares of common stock. These stockholders, if acting together,
  will be able to significantly influence all matters requiring approval by the
  Company's stockholders, including the election of directors and the approval
  of mergers or other business combination transactions.

Conflicts of Interest of certain directors and officers
  of the Company 
  From time to time certain of the directors and executive officers of the Company
  may serve as directors or executive officers of other companies and, to the
  extent that such other companies may participate in the industries in which
  the Company may participate, the directors of the Company may have a conflict
  of interest. In addition, the Company's dependence on directors and officers
  who devote time to other business interests may create conflicts of interest,
  i.e. that the fiduciary obligations of an individual to the other company conflicts
  with the individual fiduciary obligations to the Company and vice versa. Directors
  and officers must exercise their judgment to resolve all conflicts of interest
  in a manner consistent with their fiduciary duties to the Company. In the event
  t hat such a conflict of interest arises at a meeting of the directors of the
  Company, a director who has such a conflict will abstain from voting for or
  against the approval of such participation or such terms. In appropriate cases,
  the Company will establish a special committee of independent directors to review
  a matter in which several directors, or management, may have a conflict. The
  Company is not aware of the existence of any conflict of interest as described
  herein.

Forward Looking Statements
  All statements, other than statements of historical facts, included in this
  registration statement, including, without limitation, the statements under
  and located elsewhere herein regarding industry prospects and the Company's
  financial position are forward-looking statements. Although the Company believes
  that the expectations reflected in such forward-looking statements are reasonable,
  it can give no assurance that such expectation will prove to have been correct.
  A shareholder or prospective shareholder should bear this in mind when assessing
  the Company's business.

Shares Eligible for Future Sales
  There has been no sustained market for the Company's shares, and there can be
  no assurance that a significant market will develop or be sustained. Future
  sales of substantial amounts of the Company's shares (including shares issued
  upon exercise of options and warrants) in the public market could adversely
  affect market prices prevailing from time to time and could impair the Company's
  ability to raise capital through sales of the Company's equity securities.

|- | exchange rate fluctuations;       
|- | ----------------------------------
|- | interest rate fluctuations;       
|- | reduced credit from foreign banks;
|- | reduced liquidity in the economy; 
|- | volatile stock prices; and        
|- | higher unemployment.              

The Korean Consumer Price Index ("CPI") published by the central
  Bank of Korea (the Korean equivalents of the U.S. Federal Reserve Board) for
  the period between 1996 (base year) and 2004 is as follows:

---

|Year        | CPI   | Annual increase (%)
|----------- | ----- | -------------------
|1996 (Base) | 86.4  | -                  
|1997        | 90.2  | 4.4                
|1998        | 97.0  | 7.5                
|1999        | 97.8  | 0.8                
|2000        | 100.0 | 2.3                
|2001        | 104.1 | 4.1                
|2002        | 106.9 | 2.7                
|2003        | 110.7 | 3.6                
|2004        | 114.7 | 3.6                

The Asia Pacific region, including Korea, has been experiencing
  significant economic difficulties. The operations of the Company, and those
  of other companies in Korea, have been significantly affected, and could continue
  to be affected for the foreseeable future, by the general unstable economic
  conditions in the country and in the Asia Pacific region. The continuing weakness
  of the Japanese economy and recent volatility of the Japanese Yen against the
  Dollar increases the uncertainty of economic stability in Asia in general and
  may hinder Korea's ability to recover quickly from its own economic difficulties.
  Future adverse developments in Southeast Asia, Japan and elsewhere in the world
  could worsen Korea's economic difficulties. Other developments that could occur
  in Korea include social and labor unrest resulting from economic difficulties
  and higher unemployment, a substantial increase in the Government's expenditures
  for unemployment compensation and other costs for social programs. Korea may
  need to increase reliance on exports to service foreign currency debts, which
  cause friction with Korea's trading partners. In addition, the economies of
  neighboring countries, including Japan, China and Russia, could deteriorate
  further. Any such developments would hurt Korea's plans for economic recovery.

Relations between South Korea and North Korea have been tense
  over most of Korea's history. The level of tension between the two Koreas has
  fluctuated and may increase or change abruptly as a result of current or future
  events. The occurrence of such events could have a material adverse effect on
  the Company's operations and the price of its shares.

Ownership of shares may be subject to certain restrictions
  under Korean law 
  Prior to making an investment in 10% or more of the outstanding shares of a
  Korean company, foreign investors are generally required under Foreign Investment
  Promotion Law of Korea to submit a report to a Korean bank pursuant to a delegation
  by the Ministry of Commerce, Industry and Energy of Korea. Failure to comply
  with this reporting requirement may result in the imposition of criminal sanctions.
  Subsequent sales by such investors of its shares in such company will also require
  a prior report to such bank.

The Company may not be able to convert and remit dividends
  in Dollars if the Government imposes certain emergency measures 
  The Company does not intend to pay dividends on its shares in the foreseeable
  future. However, if it declares cash dividends, such dividends will be declared
  in Won. In order for the Company to pay such dividends outside Korea, such dividends
  will be converted into Dollars and remitted to the shareholders, subject to
  certain conditions. Fluctuations in the exchange rate between the Won and the
  Dollar will affect, among other things, the amounts a holder of shares of the
  Company will receive as dividends. Under Korean law, if the Government deems
  that certain emergency circumstances are likely to occur it may impose necessary
  restrictions. Emergency circumstances include, but are not limited to, sudden
  fluctuations in interest rates or exchange rates, extreme difficulty in stabilizing
  the balance of payments, or a substantial disturbance in the Korean financial
  and capital markets. The restrictions imposed by the Korean government could
  include requiring foreign investors to obtain prior approval from the Ministry
  of Finance and Economy for the acquisition of Korean securities or for the repatriation
  of interest, dividend or sales proceeds arising from Korean securities or from
  disposition of such securities, including the Company's shares.

The Company cannot give any assurance that it can secure such
  prior approval from the Ministry of Finance and Economy for payment of dividends
  to foreign investors in the future when the Government deems that there are
  emergency circumstances in the Korean financial market.

The Company's ability to raise money in equity offerings
  may be constrained by the need to register those offerings with the SEC
  
  The Commercial Code of Korea and the Company's Articles of Incorporation require
  the Company, with certain exceptions, to offer shareholders the right to subscribe
  for new shares in proportion to their existing ownership percentage whenever
  new shares are issued. The Company cannot exclude U.S. holders of shares from
  these offers, and must thus register those offers with the SEC. If the Company
  cannot, or chooses not to register these offerings, the Company will be unable
  to consummate them, which will restrict the range of capital raising options
  available to the Company.

Exchange rate fluctuations may adversely affect the Company's
  results of operations
  As a result of such sharp depreciation, the Government was forced to effectively
  suspend its efforts to support the value of the Won, and on December 16, 1997,
  the Government allowed the Won to float freely. Such depreciation of the Won
  relative to the Dollar increased the cost of imported goods and services and
  the Won revenue needed by Korean companies to service foreign currency denominated
  debt. Since then, however, the Won, while it has fluctuated, has generally appreciated
  relative to the Dollar and other major foreign currencies.

ITEM 4. INFORMATION ON THE COMPANY

---

A. HISTORY AND DEVELOPMENT OF THE COMPANY The Company was
  incorporated in Korea on April 19, 1994 for the purpose of developing and manufacturing
  medical devices, particularly to the integrative medical markets. In July 1998,
  the Company completed the acquisition of Hippo Medical Devices Co. Ltd. ("Hippo"),
  a Korean company that was engaged in selling medical equipment. The acquisition
  of Hippo by Meridian was a synergistic union whereby the sales and distribution
  offices of Hippo were consolidated with the research and manufacturing divisions
  of the Company.

On August 30, 1999, the Company agreed to sell, in an arm's
  length transaction, certain assets amounting to $1,284,556 relating to two
  product lines acquire in the 1998 acquisition of Hippo, to Medicore Co. Ltd.,
  an unrelated Korean company. In return, Medicore assumed certain liabilities,
  primarily attributed to the two product lines, of the Company in the same amount.
  These product lines are the Urea Breath Test Device (UBT) and Infra-Red Imaging
  System (IR-2000). This transaction was completed on December 31, 1999.

Pursuant to an Agreement and Plan of Reorganization (the Merger
  Agreement) dated February 6, 2001, The Company acquired all the outstanding
  shares of common stock of By George Holding, Corp. (By George), a Georgia corporation,
  from the shareholders thereof in an exchange of an aggregate of 68,142 shares
  (equivalent to 1,703,550 post split shares) of common stock of the Company and
  other consideration of payments of certain fees and expenses. Immediately following
  the Acquisition, ABR Meridian (Georgia) Inc. (Subco), a Georgia corporation
  and a wholly-owned subsidiary of the Company, merged with By George (the Merger)
  in a transaction in which the Subco became the surviving corporation.

Upon effectiveness of the Acquisition and Merger, pursuant
  to Rule 12g-13(a) of the General Rules and Regulations of the Securities and
  Exchange Commission (SEC), the Company elected to become the successor issuer
  to By George for reporting purposes under the Securities Exchange Act of 1934,
  as amended (the 1934 Act) and elects to report under the 1934 Act effective
  February 12, 2001.

On February 13, 2002, the Company's common stock was accepted
  for quotation by the NASD on the OTC Bulletin Board under the symbol MRDAF.

The Company's Corporate head office is located at 4F, Heungseong
  Bldg., 197-3, Jamsil-Dong, Songpa-gu, Seoul, Korea.

In February 2004, the Company received an approval for a debt
  rescheduling plan for a total of $3,589,271 from Chooncheon District Court,
  Korea. The adjusted period of payment is 3 to 7 years.

B. Business Overview 
  Meridian is an established leader in the research, development, manufacturing,
  and marketing of integrative medical devices in the healthcare industry. Integrative
  medicine combines both Western and Eastern expertise in order to obtain the
  highest quality and standard. The Company has grown substantially and has established
  subsidiaries in China and Los Angeles and in 2004 signed an exclusive distribution
  agreement with a corporation in Vancouver, B.C., Canada. With over 25 million
  dollars in revenue to date, Meridian continues to expand and secure its position
  as a global leader of integrative medical devices.

With a dynamic research and development team, Meridian is
  at the forefront in the development of cutting edge medical technologies. The
  Company presently holds a total of 17 technology patents and has received 5
  FDA approvals for their medical devices. In order to distribute worldwide, Meridian
  has also gained regulatory approval in Canada for the Meridian Portable, 4 CE
  approvals in Europe, 2 SDA approvals in China, and 4 FIP approvals in South
  America. Successfully marketed in Korea, USA, China and Europe, Meridian continues
  to provide its superior product line to a growing number of clients worldwide.
  Meridian has over 1500 clients, which include physicians, hospitals, healthcare
  professionals, medical device manufacturers, and health and fitness centers.

The Company currently sells four different products to healthcare
  practitioners throughout the domestic and overseas market. These include the
  DPA (Digital Pulse Analyzer), the Lapex-2000, the ABR-2000 and the Meridian
  II. 
  The Company believes that blending together a combination of intrinsic medical
  knowledge with superior software and technology it can create high quality physiological
  monitoring applications that capitalize on the growing wellness market. 
  Meridian’s strength lies in the unique knowledge base and skills of our
  team who possess medical backgrounds, software engineering skills, and a sincere
  passion for preventative medicine that can improve the quality of one’s
  life. 
  During 2002, the Company completed the development of the Composition Corpulence
  Curer as an aid in the reduction of body fat.

On September 26, 2001 the Beijing Meridian Medical Equipment
  Co., Ltd. (hereafter BMMEC) was established to further pursue the Company's
  business in China. BMMEC is a joint corporation formed by Meridian Co., Ltd.
  and Mr. Trigon Jung, investor and president of BMMEC. The main business of BMMEC
  is publicity activities and setting up dealership networks for sales in China.
  Also, Meridian is planning to give BMMEC a manufacturing license for its products
  in the future. Meridian has made over US $600,000 direct sales in China
  since 1999, including $2,330 during 2002. Expected sales in China have not
  materialized according to the Company's expectations, however, the Company will
  continue to market their product to the Chinese market and is currently designing
  two more products for release in 2004.

The Company identified the United States as a significant
  market and incorporated Meridian America Medical Inc (MAMI) in the United States
  as a 100% owned subsidiary of the Company, in February 2002, in preparation
  for the launch of the Meridian products into the US market.

---

In 2004, Meridian Co. Ltd. entered into an exclusive distribution
  agreement with a corporation in Vancouver, BC, Canada, Meridian Medical Inc.
  Medical Inc. has been fully concentrating on the marketing and sales of the
  Digital Pulse Analyzer. Meridian Medical has secured valuable strategic relationships
  since its inception and is expected to continue its success in the market adding
  further value to Meridian Co. Ltd.

For the year ended December 31, 2004, the Company achieved
  more than $1.2 Million in sales to the U.S. market through its Los Angeles subsidiary
  and expects a further significant increase in sales to the United States in
  the next year.

The CE (Conformities European) Marking is the unification
  standard of the European Union (EU) for products concerning the safety of the
  human body, health and the protection of the environment. The CE Marking is
  the certification necessary to sell the Meridian products in the EU market.
  These approvals increase the product line the Company is able to market to the
  different world markets, and will hopefully in turn increase sales.

Products of the Company

MERIDIAN LINE OF PRODUCTS

The Meridian line of products includes the Meridian-II, ABR 2000, Digital Pulse Analyzer, Lapex-2000 and the Venus 21C.

MERIDIAN-II

The Meridian-II is a computer assisted assessment and diagnostic
  device, which is based on the analysis technique, pioneered by Dr. Reinhold
  Voll, a German medical doctor. Termed Electro-Acupuncture according to Voll
  (E.A.V.), the assessment process incorporates elements of Western science and
  principles of traditional Chinese medicine. Practitioners use electrical, magnetic,
  sonic, acoustic, microwave and infrared devices to screen for or treat health
  conditions by detecting imbalances in the body's energy field and then correcting
  them. E.A.V. works by measuring the meridian lines on the hands and feet that
  correspond to the different organs in the body. The purpose of E.A.V. is to
  establish a functional testing of organs and tissues by measuring their respective
  acupuncture points. The conductance (capacity to let the stimulation current
  through) of an organ or a tissue is measured in order to discover any energetically
  unbalanced points. It is believed that the energetic equilibrium of a human
  is altered, among other things, by the negative ambiance influence exercised
  by some medications, stress, poisons, insecticides, viruses, bacteria, harmful
  electromagnetic fields and inflammations as well as certain ailments.

The Meridian-II is a computer assisted assessment and diagnostic
  device that establishes a functional testing of organs and tissues by measuring
  their respective acupuncture points and delivers a complete computer drafted
  evaluation for analysis. If stress or imbalance is detected in a patient, the
  Meridian-II can identify the meridian imbalances in a person's body and also
  assist the practitioner in recommending a course of treatment or therapy to
  alleviate the stress or to restore balance to the body's meridian systems. This
  provides the health practitioner with the ability to detect a potential health
  problem early and to treat it before the problem manifests itself. Using the
  Meridian-II, the practitioner can monitor the progress of corrective therapies.
  The device is in the structure of a cart that includes a touch screen monitor,
  computer, printer, a set of medical instruments and supplemental parts including
  hand and foot electrodes.

ASPECTS MERIDIAN-II DESCRIPTION

Features 
  Point finder (ARC) MS WINDOWS 98 
  Better curative effect (UPM) 
  Easy operation (TOUCH SCREEN) 
  Single body design

Structure 
  Main body: CART in exclusive use PC: CPU: P-233MHz, MEMORY: 32MB, HDD: 6.4GB OS: WINDOWS 98, CD ROM: 40X, VGA AGP 4MB

---

|15
      inch Colour Monitor (Speaker inside),  HP  930 C
|---------------------------------------------------------
|Inkjet
      Printer                                     
|                                                         
|A set of medical instruments:                            
|PB-Electrode:
      DR/R/L/ST/TS                         
|Cable
      Set                                          
|Band:
      S.L. 2ea                                     
|                                                         
|Parts:                                                   
|Hand
      electrode (BAZ 2ea, CMP 1ea): 3  ea           
|Foot
      electrodes (left, right, foot stool): 1  set  
|Upper
      limited frequency of cable: 1set             
|ARC
      PB: 1ea                                        
|OPERATIONAL
      MANUAL: 1sheet                         
|MULTI
      TAP: 1 set                                   
|MOUSE
      PAD: 1 ea                                    

ABR-2000

The ABR-2000 is a whole body screening stress assessment and
  diagnostic device that identifies the areas of the human body which are experiencing
  trauma due to the effects of stress. The device traces autonomic responsive
  conditions of the different types of stress-related diseases.

The device sends a low-frequency impulse throughout the human
  body and detects minute physical changes by measuring electrophysiological responses
  of the autonomic nervous system. Irregular responses may indicate areas where
  organs or parts of the body are deteriorating due to stress. The patient stress
  analysis report is automatically produced in 5 minutes, allowing the health
  practitioner to quickly make recommendations to the patient.

The device comes equipped with a one-touch assessment and
  diagnostic system and a printer.

ASPECTS ABR-2000 DESCRIPTION

Features 
  To diagnose the differentiation of pathological conditions in accordance with
  the eight principal syndromes Easy to operate One-touch automatic system allows
  the beginner to operate it easily A medical assistant is able to measure it
  for the medical specialist Very Positive Response from the Patients Right after
  measurement, the results print out in real time Automatic measurement in 5 minutes
  No stress, non-invasive, and comfortable diagnosis Print paper is reusable -
  available for chart storage and patient's chart

Structure 
  Body: Single body 
  A set of electrodes: Copper electrodes (a set of head, hand, and foot electrodes)
  
  Plotter: Magnetic 
  Pen: Red, blue, black 
  Print paper: 300 papers

LAPEX-2000

The LAPEX-2000 is a semiconductor laser therapeutic device,
  which applies a laser to the foci of the human body without damaging the skin
  tissue and in turn, promotes healing of any damaged skin tissue. The use of
  laser therapy facilities increases blood flow, vitalization of cells, and increases
  protein synthesis which can assist in the treatment of soft tissue damage, acute
  and chronic joint diseases, chronic pain, and improvement of circulation.

The LAPEX-2000 comes equipped with an advanced digital semiconductor
  laser.

ASPECT LAPEX-2000 DESCRIPTION

Features 
  Advanced digital semiconductor laser, solid curative effect, semi-permanent
  No other supplies are necessary Non-invasive laser Practical for small spaces,
  easy to move

---

Structure 
  Single Laser Probe (PW: Pulsed Wave): Trigger Point Monitoring Function and
  Applying Laser to Trigger Point Multi Laser Probe (CW: Continuous Wave): To
  address the largely affected parts 
  Non-LIB/LIB Laser Probe (Intra/vascular Laser Irradiation of Blood): 
  Non-invasive/Invasive venous blood, easy to operate, solid curative effect

DIGITAL PULSE ANALYZER 
  The DPA uses pulse waveform analysis to measure arterial compliance. The pulse
  wave is the arterial pressure change that originates from the heart and transmits
  through an artery. The pulse wave is changed by the systolic power of the heart,
  the vascular condition (the arterial elasticity, resistance, etc.), and the
  functional status of cardio-vascular circulation. DPA irradiates IR (infrared)
  through the finger-tip and obtains pulse wave information with the light absorbing
  characteristics of HbO2 of arterial blood. All measurements, calculations, analysis,
  and printouts can be performed automatically in less than a minute with a fully
  non-invasive method.

AUTOMATED DIGITAL PULSE WAVEFORM EXAM

|- | Useful device in detecting early signs of cardiovascular dysfunction.
|- | ---------------------------------------------------------------------
|- | Loss of arterial compliance, can be detected in early stages.        
|- | Uses pulse wave analysis.                                            
|- | Completely non-invasive                                              
|- | Diagnosis can be done in a little as one minute.                     
|- | Results are immediate and can be saved to a patient database         

DPA 
  The DPA (Digital Arterial Pulsewave Analyzer) has the additional feature of
  measuring heart rate variability, which gives a good indication of the condition
  of the autonomic nervous system. The software has the capability to store all
  of the patient's data. The structure is configured with a DPA console, EKG electrodes,
  computer software with WINDOWS base, and cart.

VENUS 21C - COMPOSITION CORPULENCE CURER
  Obesity Treatment Machine 
  This product's target market includes anti-aging and wellness clinics, fitness
  centers, health spas etc. This product obtained the manufacturing approval in
  Korea in February 2004.

|- | Various computer-programming modes to control frequency and intensity
      for sebaceous decomposition (Medical treatment solution)
|- | ------------------------------------------------------------------------------------------------------------------------------------
|- | The product includes a 10 x 4 inch color TFT LCD Touch Screen Display
      (safe and convenient)                                   

Industry Background

The medical instruments industry is characterized by low-volume
  production of various medical equipment and apparatus. It contains components
  from a diverse range of industries such as electronics, advanced materials and
  information technology and includes the fields of physics, chemistry, biology
  and medicine. In many countries, government support is provided in the medical
  instruments industry as a priority industry. This industry tends to be technology-intensive,
  low energy consuming and non-polluting.

Industry Trends
  Preventative medicine is a growing trend in the medical industry, particularly
  in the 50+ market, where consumers are more as risk for developing chronic disease.

"Today's mature adults (boomers) control more than $7
  trillion in wealth in the United States" (Harvard Business Review, March 2004),
  "or 70% of all U.S. wealth. In addition, they bring in $2 trillion in annual
  income, and account for 50% of all discretionary spending", notes Ken Dychtwald
  PhD (Associated Press, March 7, 2004).

In the US the 50+ age group numbers 74 million and growing
  - every eight seconds another person turns 50. This makes mature consumers the
  fastest growing segment of the population. By 2010 the 50+ segment in the US
  will grow by 21 million while the 18-34 age segment will grow by just five million.
  The mature market is sophisticated and has unprecedented buying power. The number
  of baby boomers and seniors on the Internet grew by 18.4 % in 2001, making them
  the fastest growing Internet population. The spending habits of older Americans
  make them one of the most desired markets on the Internet today. (marketresearch.com)

The baby boomers demand for healthcare products and services
  is expected to continue for the next 20-30 years as the boomers get older and
  life expectancies increase.

The World Health Organization (WHO) Strategy for Traditional Medicine (alternative/complimentary)
  for 2002-2005 has published some very supportive statistics.

- The global market for traditional therapies stands at US$ 60 billion
    a year and is steadily growing.
- In the USA, expenditure on complementary or alternative medicine stands
    at US$ 2.7 billion per year.

---

Size of Industry

United States Market 
  The demand for medical devices is influenced by an increasing patient population
  and the focus on health care cost containment and preventative therapies. Medical
  devices include a broad range of surgical devices and equipment used in cardiovascular,
  orthopedics, respiratory, ophthalmic, neurology, urinary, disposable, infection
  and more. The global medical device market was valued at over $100 billion,
  of which $43 billion was generated from the U.S. market.

The U.S. is still the largest medical device market and leads
  the world in advanced medical technologies. The U.S. medical device industry
  is expected to grow at a compound annual growth rate of 9 percent between 1999
  and 2004. It will continue to develop new innovative devices in minimal invasive
  surgery, cardiovascular, and orthopedic implants. However, cost containment
  constraints in the healthcare system have contributed to hospital cutbacks in
  medical device purchases.

The medical device industry outside of the U.S. has grown
  significantly in recent decades. During the 1980s, foreign markets accounted
  for less than 25 percent of the global medical device industry. Today, it represents
  about 60 percent. Latin America and Asia (excluding Japan) are the fastest growing
  regions in medical devices. (Frost & Sullivan)

Korean Market 
  According to a report by Korea Medical Devices Industry Association, the size
  of the Korean medical instrument industry was $976 million in 2000, showing
  a huge increase from $325 million in 1991, and was estimated to be approximately
  $1,600million in 2002. In 2001, over 750 companies manufactured medical
  instruments in Korea and generated export revenue of $402million.A recent
  report by the Korean Institute of Oriental Medicine states that until 2005,
  the trend of the Korean medical instrument market is anticipated to show 10%
  annual growth and the size of the market in 2005 is expected to be about $1.8
  trillion.

C. ORGANIZATIONAL STRUCTURE Meridian Co., Ltd. was incorporated
  under the laws of Korea on April 19, 1994 as a private company. The Company
  operates from its corporate headquarters located at4F, Heungseong Bldg., 197-3,
  Jamsil-Dong, Songpa-Gu, Seoul, Korea and has a manufacturing plant in Kangwon
  Province.

MANAGEMENT TEAM 
  HYEON-SEONG MYEONG, President, CEO and a Director Mr. Myeong graduated from
  the Seoul National University in 1982 with a degree in Electronic Engineering.
  From 1983 to 1988 he was Section Chief of Research Center for the GoldStar (LG
  Electronics) Company. From 1990 to 1991 Mr. Myeong was Division Chief of Research
  for Medison Co. Ltd., a large Korean medical device company. From 1992 to 1993
  he was the Chief of the International Technical Corporation and the Vice President
  of a Joint Corporation with Russia (Ultramed). Since 1994, Mr. Myeong has been
  the President and CEO of the Company and was the founder of the Company.

SUNGPIL HONG, Secretary and a Director 
  Mr. Hong graduated from Sin-Gu University in South Korea with Physiotherapy
  as his major. From 1993 to 1995 he was the Business Manager for Dasin Medical
  Ltd.. From 1996 to 1998 he managed Hippo Medica Ltd.. From 1998 to the present,
  he was the Senior Manager for Meridian. On March 29, 2003, he was appointed
  a Director of Meridian.

IN BEOM PARK, Director. (appointed as a director on March,
  2005)
  Mr. Park graduated from the Seoul University in South Korea with a degree in
  Sociology. From 1991 to 1998 he was the head of the Development & Planning
  Department of Kia Techono Co., Ltd. He was the Founder of Eduevision Korea Co.,
  Ltd. In 1999, Mr. Park joined Meridian in 2002 as the head of the Development
  & Planning Department.

D. Property, Plants and Equipment 
  The Company's products are assembled from purchased and manufactured components
  at its factory in Kangwon Province (687-6, Sangohan-Ri, Hongchun-Eup, Hongchun-Kun,
  Kangwon-Do, Korea). Virtually all of the components making up the Company's
  products are readily available from outside domestic suppliers. Some of the
  components have been designed by the Company and/or are custom

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is based on and should
  be read in conjunction with the Company's audited consolidated financial statements,
  including the notes thereto, and other financial information appearing elsewhere
  herein. The audited consolidated financial statements have been prepared using
  US dollars and presented in accordance with accounting principles generally
  accepted in the United States.

---

A. Operating Results

Year comparisons between 2004, 2003, and 2002 For the year
  ended December 31, 2004, the Company achieved sales revenues of $2,129,489 resulting
  in a gross margin of $ 955,880 compared with sales revenues of $2,894,559 that
  resulted in a gross margin of $1,641,015 for the year ended December 31, 2003
  and sales revenues of $3,521,657 that resulted in a gross margin of $1,605,846
  for the year ended December 31, 2002. The Company's operating loss decreased
  to $1,422,311 in 2004 from a loss of $1,441,696 in 2003 and from a loss of $1,527,838
  in 2002. The decrease in the operating loss in 2004 from 2003 and 2002, in spite
  of the decreased sales revenue, was due primarily to a reduction in cost of
  sales and operating expenses. The increase in commissions is a reflection of
  the Company's increased selling and marketing efforts. Total selling, general
  and administrative expenses decreased to $2,378,190 for the year ended December
  31, 2004 from $3,082,711 for the year ended December 31, 2003 and from $3,133,684
  for the year ended December 31, 2002. The Company spent $177,342 on research
  and development for the year ended December 31, 2004 as compared to $227,078
  in 2003 and $379,059 in the year 2002. For the year ended December 31, 2004
  the Company recorded an inventory write-down due to a decline in market value
  amounting to $95,151 as compared to $4,188 for 2002 and $0 for 2002. In the
  same period, working capital increased to $1,723,875 in deficit in 2004 from
  working capital of $2,356,855 in deficit in 2003 and $2,598,851 in deficit in
  2002. The increase in working capital was due primarily to US$530,000.00 financing
  on June 8, 2004 and a debt rescheduling plan that included part of short-term
  borrowings. As of the year ended December 31, 2004, the Company had an accumulated
  deficit of $11,333,786.

B. Liquidity and capital resources

The Company's sources of liquidity have historically been
  cash from operations, capital working lines of credit, debt and equity financing.
  The Company has generated revenues since 1998 but expanding the operations of
  the Company has required significant amounts of cash in excess of cash generated
  from operations. Therefore, the Company has continued to seek additional debt
  and equity financing opportunities. The Company's land and buildings were pledged
  as collateral for the Company's short-term and long-term borrowings. At December
  31, 2004, the Company has a working capital deficiency of $1,723,875 (December
  31, 2003 working capital deficit of $2,356,855).

C. Research and development, patents and licenses, etc.

Research and Development 
  It is the goal of the Company to continually make enhancements and improvements
  to its products. Costs incurred to make routine enhancements or improvements,
  design changes to existing products and trouble shooting in production are excluded
  from research and development expenses.

Proprietary Technology and Other Intellectual Properties 
  The Company has 10 registered and pending patents, 2 utility model rights, 6
  design rights and 10 trademarks at the Korea Industrial Property Office. The
  Company believes that Korean intellectual property laws and regulations afford
  owners of intellectual property protections similar to those enjoyed by owners
  of intellectual property in the United States. Korean intellectual property
  laws were amended at the end of 1995 to harmonize them with the Trade-Related
  Aspects of Intellectual Property Rights Agreement.

The Company's registered patents are summarized in the following table:

|TECHNOLOGY DESCRIPTION               |  | REGISTRATION NUMBER |  | DATE OF REGISTRATION
|------------------------------------ |  | ------------------- |  | --------------------
|                                     |  |                     |  |                     
|(PATENTS)                            |  |                     |  |                     
|Diagnostic device using the electric |  |                     |  |                     
|features of the human body           |  | 130791              |  | November - 97       
|Insulation device of meridian        |  |                     |  |                     
|remedial apparatus                   |  | 144993              |  | April - 98          
|Medicament energy information        |  |                     |  |                     
|Transferring system                  |  | 171667              |  | October - 98        
|Automatic detection of               |  |                     |  |                     
|meridians by probe device            |  | 210233              |  | April - 99          
|Electrode clamp device for           |  |                     |  |                     
|home 99 treatment                    |  | 236276              |  | September - 99      
|Electrode ring device for home       |  |                     |  |                     
|99 treatment                         |  | 236277              |  | September - 99      
|Pulse formation analysis device      |  | 0368021             |  | December - 02       

---

|                                                  |  |            |  |               
|------------------------------------------------- |  | ---------- |  | --------------
|Laser beam irradiation device                     |  | 0457964    |  | January - 03  
|Lipolytic low laser device (pending)              |  | 2005-17330 |  | March – 05    
|Remote Bio-monitoring system (pending) 2005-45139 |  |            |  | May - 05      
|                                                  |  |            |  |               
|(UTILITY MODEL)                                   |  |            |  |               
|Acupoint measuring device with                    |  |            |  |               
|pressure control                                  |  | 144725     |  | February - 99 
|Acupoint measuring device with                    |  |            |  |               
|Pressure display                                  |  | 169502     |  | November - 99 
|                                                  |  |            |  |               
|(DESIGN)                                          |  |            |  |               
|Diagnostic probe                                  |  | 165377     |  | June - 95     
|Medical measuring electrode                       |  | 215383     |  | February - 98 
|Electrode for self-treatment                      |  | 228575     |  | September – 98
|Electrode for self-treatment                      |  | 228576     |  | September - 98
|Electrode holder for                              |  |            |  |               
|laser treatment                                   |  | 0302314    |  | June - 02     
|Electrode for laser treatment                     |  | 0302315    |  | June - 02     
|                                                  |  |            |  |               
|(TRADEMARK)                                       |  |            |  |               
|BRIEF                                             |  | 345494     |  | August - 96   
|BRD                                               |  | 409677     |  | July - 98     
|Lapex                                             |  | 500915     |  | September - 01
|Biomeridian                                       |  | 0522196    |  | June - 02     
|Pulsecare                                         |  | 0538120    |  | December - 02 
|Mcview                                            |  | 0531965    |  | October - 02  
|McPulse (pending)                                 |  | 2002-29908 |  | June - 02     
|Hemoscope (pending)                               |  | 2001-38478 |  | August - 01   
|Pulseview (pending)                               |  | 2001-21430 |  | May - 01      
|Pulsetron (pending)                               |  | 2001-21431 |  | May - 01      

The Company relies on a combination of patent and trade secrets
  to establish and protect the proprietary rights in its products. In order to
  protect and support current and future development of its products, the Company
  expects that it will continue to make application for patents at the Korea Industrial
  Property Office. The Company believes that the ownership of patents will be
  a significant factor in contributing to its business. However, the success of
  the Company will depend primarily on the innovative skills, technical competence
  and marketing abilities of its personnel. In addition, there can be no assurances
  that the Company's current and future patent applications will be granted, or
  if granted, that the claims covered by the patents will not be reduced from
  those included in the Company's applications. Claims by third parties that the
  Company's current or future products infringe upon their intellectual property
  rights may have a material adverse effect on the Company. Intellectual property
  litigation is complex and expensive and the outcome of this litigation is difficult
  to predict. Any future litigation, regardless of outcome, may result in substantial
  expense to the Company and significant diversion of the Company's management
  and technical personnel.

Regulatory Restrictions 
  Use of the Company's products internationally is subject to various government
  regulatory requirements on a country-by-country basis. Europe,

---

the U.S., Canada, Australia, Japan and China each have their
  own product certification systems. As a result, this has slowed the process
  for the Company to expand in the world market. Even if there are no technical
  difficulties, its products are directly involved with human life, and require
  that the Company obtain government approval of clinical safety for the products
  through various analysis and testing procedures. As noted above, the Meridian-II
  received FDA approval to be sold as Class 2 products in the U.S. The table below
  includes all the regions in the world where Meridian's products have been approved
  for sale.

|REGION        | REGULATION | PRODUCTS APPROVED                                                         
|------------- | ---------- | --------------------------------------------------------------------------
|              |            |                                                                           
|Korea         | KFDA       | Meridian-II, ABR-2000, Lapex–2000, Digital
      Pulse Analyzer, Venus 21C
|China         | SDA        | Meridian-II, ABR - 2000                                                   
|U.S.A         | FDA        | Meridian-II, Lapex-2000, ABR-2000, Digital Pulse
      Analyzer           
|Canada.       | CSA        | Applications for approval began in 2005.                                  
|South America | FIP        | Meridian-II, ABR - 2000, Lapex-2000                                       
|EU.           | IEC(CE)    | MERIDIAN-II, ABR-2000, LAPEX - 2000                                       

D. Trend information

The operations of the Company have been significantly affected,
  and may continue to be affected for the foreseeable future, by the general unstable
  economic conditions in Korea and in the Asia Pacific region. The curtailed economic
  activity in the Company's traditional markets resulted in a significant decline
  in the Company's sales, production and inventory. The Company is actively seeking
  to expand its sales into new markets, principally the United States.

E. Off-balance sheet arrangements Not applicable

F. Tabular disclosure of contractual obligations



|                                      |   |           |   | Less than |   |           |   |           |   | more than
|------------------------------------- | - | --------- | - | --------- | - | --------- | - | --------- | - | ---------
|Contractual Obligations               |   | Total     |   | one year  |   | 1-3 years |   | 3-5 years |   | 5 years  
|Long-term debt obligations            | $ | 2,107,855 | $ | 96,741    | $ | 510,387   | $ | 1,007,086 | $ | 493,641  
|Debentures                            | $ | 1,500,000 |   | -         |   | -         |   | -         | $ | 1,500,000
|Long-term accounts payable            | $ | 903,572   |   | -         | $ | 903,572   |   | -         |   | -        
|Retirement and severance indemnities. | $ | 139,865   |   | unknown*  |   | unknown*  |   | unknown*  |   | unknown* 

*The Company's estimated liability under the plan, equal to the amount which would be payable if all employees were to terminate at the balance sheet date, has been accrued according to the National Pension Law of Korea for employees with more than
one year of service and who are entitled to receive severance indemnities, based on length of service and rate of pay, upon termination of their employment.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

See Item 4.C.

B. Compensation

---

|Name & Principal                    | Year | Salary ($) | Bonus ($) | Other Annual     | All Other   
|----------------------------------- | ---- | ---------- | --------- | ---------------- | ------------
|Position                            |      |            |           | Compensation ($) | Compensation
|                                    |      |            |           |                  |             
|Myeong, Hyeon-Seong                 |      |            |           |                  |             
|(Director,                          |      |            |           |                  |             
|President, CEO)                     | 2001 | 45,500     | Nil       | Nil              | Stock Option
|                                    | 2002 | 47,541     | Nil       | Nil              | Nil         
|                                    | 2003 | 49,329     | Nil       | Nil              | Nil         
|                                    | 2004 | 51,342     | Nil       | NIl              | Nil         
|                                    |      |            |           |                  |             
|Park, Sang - Yeul                   |      |            |           |                  |             
|(Director of Manufacturing Affairs, |      |            |          
|resigned on March,05)               |      |            |           |                  |             
|                                    | 2001 | 39,000     | Nil       | Nil              | Stock option
|                                    | 2002 | 37,357     | Nil       | Nil              | Nil         
|                                    | 2003 | 42,282     | Nil       | Nil              | Nil         
|                                    | 2004 | 44,008     | Nil       | Nil              | Nil         
|                                    |      |            |           |                  |             
|Hong, Sung Phil                     |      |            |           |                  |             
|(Director and Secretary)            |      |            |           |                 
|                                    | 2003 | 39,262     | Nil       | Nil              | Nil         
|                                    | 2004 | 40,865     | Nil       | Nil              | Nil         
|                                    |      |            |           |                  |             
|Min, Jae -Ki                        |      |            |           |                  |             
|(Statutory Auditor)                 | 2001 | Nil        | Nil       | Nil              | Nil         
|                                    | 2002 | Nil        | Nil       | Nil              | Nil         
|                                    | 2003 | Nil        | Nil       | Nil              | Nil         
|                                    | 2004 | Nil        | Nil       | Nil              | Nil         

*Hyeon Seong Myeong was granted options for 4,130 shares of
  the Company's common stock at the price of $0.88 in February 2000 and for
  2,218 shares at the price of 680 Won (approximately $0.52) in March 2001.
  Sang Yeul Park was granted options for 3,097 shares at the price of 1,000 Won
  in February 2000 and for 1,849 shares at the price of 680 Won in March 2001.

Compensation of Directors 
  Directors and directors who are also employees of the Company receive no extra
  compensation for their service on the Board of Directors of the Company.

Employment Contracts with employees and officers The Company
  has not entered into any employment contracts, but anticipates entering into
  employment contracts with certain management and other key personnel.

C. Board practices

Not applicable

---

D. Employees

The Company has 19 employees in the following areas:

|Area                                                                                            | Department                | Team Name                           | Number of Staff
|----------------------------------------------------------------------------------------------- | ------------------------- | ----------------------------------- | ---------------
|Seoul, Korea                                                                                    | Administration department | The ministry of Finance and Economy | 3              
|                                                                                                | Business Headquarters     | sales Department                    | 2              
|                                                                                                |                           | Customer Support Team               | 2              
|                                                                                                |                           | Marketing Team                      | 1              
|                                                                                                |                           | Clinical Team                       | 1              
|                                                                                                |                           | Business administration team        | 1              
|                                                                                                | Research Institute        |                                     | 2              
|Hong Chun, Korea                                                                                | Production Department     | Manufacturing Technical Team        | 5              
|                                                                                                |                           | Purchasing Team                     | 1              
|                                                                                                |                           | Quality Guarantee Team              | 1              
|Total                                                                                           |                           |                                     | 19             
|The president excepted in employee's number, and
      head count is 20 with Hyeon-Seong Myeong

E. Share Ownership

Stock Option Plans 
  Under the Company's Articles of Incorporation, the Company may grant options
  for the purchase of its shares to certain qualified officers and employees.
  Set forth below are the details of the Company's stock option plan as currently
  contained in its Articles of Incorporation (the "Stock Option Plan"). In order
  to qualify for participation in the Stock Option Plan, officers and employees
  must have the ability to contribute to, the establishment, development or technological
  innovation of the Company. Notwithstanding the foregoing, the following criteria
  shall not be eligible to receive options under the Stock Option Plan; (i) the
  Company's largest shareholder and its specially related parties, as defined
  in the Securities and Exchange Act of Korea (the "Securities Act of Korea"),
  (ii) major shareholders and their specially related parties, as defined in the
  Securities Act of Korea, and (iii) any shareholder who would become a major
  shareholder upon exercise of stock options granted under the Stock Option Plan.
  Under the Securities Act of Korea, a major shareholder is defined as a shareholder
  who (i) holds 10% or more of shares issued and outstanding or (ii) has actual
  control over major management decisions. Under the Securities Act of Korea the
  largest shareholder of a company is the person who holds the largest number
  of issued and outstanding shares of the company. The specific terms and conditions
  of stock options granted under the Stock Option Plan shall be approved at a
  duly convened shareholders' meeting. Under the Company's Articles of Incorporation,
  stock options shall be offered through (i) issuance of new shares, or (ii) payment
  in cash or treasury stock held by the Company of the difference between the
  market price of its shares and the option exercise price. The maximum aggregate
  number of the Company's shares available for issuance under the Stock Option
  Plan shall not exceed 15% of the total number of its shares outstanding. The
  stock options may not be granted to all officers and employees at the same time.
  Any single officer or employee may not be granted stock options for the shares
  exceeding 10% of the shares issued and outstanding. Stock options granted under
  the Stock Option Plan will have a minimum exercise price equal to the arithmetic
  mean of (i) the weighted average of the daily market share prices for the two-month
  period prior to the date on which the stock options are granted, (ii) the weighted
  average of the daily market share prices for the one-month period prior to such
  date and (iii) the weighted average of the daily market share prices for the
  one-week period prior to such date. When new shares are issued upon the exercise
  of the stock options, the option exercise price shall not be less than the par
  value of the Company's shares. Stock options granted under the Stock Option
  Plan may be exercised after the third anniversary date of the shareholders'
  meeting at which the grant of stock options under the Stock Option Plan is approved
  but prior to the seventh anniversary date thereof, unless otherwise revoked
  by the board of directors. The board of directors may revoke stock options granted
  under the Stock Option Plan if (i) a beneficiary resigns prior to the exercise
  of the stock options, (ii) the beneficiary causes significant loss to the Company
  by his or her negligence or wilful misconduct, or (iii) an event of termination
  specified in the Stock Option Plan occur. Shares purchased upon the exercise
  of stock options granted under the Stock Option Plan will not, at the time of
  their issuance, be registered with the Securities and Exchange Commission but
  may be salable in the public market in the United States in accordance with
  Rule 144 under the Securities Act and applicable Korean laws and regulations.

The Company adopted the following material changes with respect to its Stock
  Option Plan:

|- | persons entitled to receive stock options has been
        expanded to include researchers, faculty members of a university, practising
        lawyers, certified public accountants who possess technological or managerial
        capabilities and Universities and Research Institutes;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                             
|- | the number of stock options granted at any one time
        cannot exceed 50% of the total issued and outstanding shares of the Company;                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                             
|- | stock option holders shall be entitled to exercise
        their stock options only after having served in the Company for two (2)
        years; and                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                             
|- | the exercise price per share upon exercise of stock
        options shall not be less than the greater of the market price of shares
        valued as of the date of the grant of the stock options or the par value
        of the shares concerned.                                      

On February 23, 2000, the Company granted stock options to
  its executive officers, directors and 16 employees to purchase 496,850 shares
  of its common stock at a price of $0.88 per share. Stock options granted
  to its executive officers and directors will vest on February 23, 2003 and

---

are exercisable until February 22, 2007. On March 19, 2001,
  the Company granted stock options to its executive officers, directors and 13
  employees to purchase 425,250 common shares at an exercise price of Won 680
  (equivalent to $0.53 at the spot exchange rate of Won 1,298 to $1) per
  share. The options will vest on March 19, 2004 and are exercisable until March
  18, 2008.

Share ownership 
  The following table sets forth certain information regarding the beneficial
  ownership of the common stock of the Company as of December 31, 2004, after
  taking into effect the Acquisition and the Stock Split of: (a) each of the Company's
  directors and officers, and (b) all directors and officers of the Company, as
  a group:

|Name and address of beneficial owner     | Amount Stock          | Percentage of           | Percentage of            
|---------------------------------------- | --------------------- | ----------------------- | -------------------------
|and position with the company            | Beneficially Owned    | Class as of Dec.31,2004 | Class as of June 30, 2005
|                                         |                       |                         |                          
|                                         |                       |                         |                          
|Myeong, Hyeong-seong.                    | 971,500 common shares | 3.24%                   | 3.09%                    
|(President, CEO and Director)            |                       |                         |                          
|#997-4 Daechi-dong                       |                       |                         |                          
|Gangnam-gu, Seoul, Korea                 |                       |                         |                          
|                                         |                       |                         |                          
|Hong, Sung Phil.                         | 80,450 common shares  | 0.27%                   | 0.26%                    
|(Director and Secretary)                 |                       |                         |                          
|4274 Kum Kwang-dong, Jungwon-gu          |                       |                         |                          
|SungNam city, KyungKi-do, Korea          |                       |                         |                          
|                                         |                       |                         |                          
|Park, Sang-yeul                          | 87,500 common shares  | 0.29%                   | 0.28%                    
|(Director resigned on March, 2004)       |                       |                         |                          
|687-6 Sangoan-ri, Hongchun-eup,          |                       |                         |                          
|Hongchun- kun, Kangwon-do, Korea         |                       |                         |                          
|                                         |                       |                         |                          
|In Beom Park                             | Nil                   | Nil                     | Nil                      
|(Director)                               |                       |                         |                          
|#603 605, JungSan town, Ilsan-dong,      |                       |                         |                          
|Ilsan-gu, Goyang-city, KyungKi-do, Korea |                       |                        
|                                         |                       |                         |                          
|Min, Jae-ki                              | Nil                   | Nil                     | Nil                      
|(Statutory Auditor)                      |                       |                         |                          
|#997-4 Daechi-dong                       |                       |                         |                          
|Gangnam-gu Seoul, Korea                  |                       |                         |                          
|                                         |                       |                         |                          
|                                         |                       |                         |                          
|All officers and Directors as a Group    | 1,139,450             | 3.80%                   | 3.63%                    

On May 2, 2005, the board of directors of the Company authorized
  the return to treasury of 1,000,000 common shares issued to Edward Fitzpatrick.

On , June 20, 2005, the Company issued 2,400,000 common shares
  in exchange for consulting services. The total number of issued and outstanding
  shares is 31,393,984.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS The following table sets forth information
  with respect to the beneficial ownership of our shares as of December 31, 2004
  and June 30, 2005), by each person known to us to own beneficially more than
  five percent (5%) of our shares.

---

|Name and address                                  | Amount Stock             |  | Percentage of Class |  | Percentage of Class |  | Number of        
|------------------------------------------------- | ------------------------ |  | ------------------- |  | ------------------- |  | -----------------
|                                                  | Beneficially Owned       |  | of Dec.31, 2004     |  | of June 30,2005     |  | Stock Option Held
|                                                  |                          |  |                     |  |                     |  |                  
|Terasource Funds                                  |                          |  |                     |  |                     |  |                  
|including:                                        |                          |  |                     |  |                     |  |                  
|Terasource Kosdaq Venture Investment              |                          |  |                     |  |                     |  |                  
|(2,066,700 common shares);.                       | 5,470,600 common shares  |  | 18.24%              |  | 17.43%              |  | Nil              
|Terasource Venture Investment Capital             |                          |  |                     |  |                     |  |                  
|(403,900 common shares);                          |                          |  |                     |  |                     |  |                  
|Terasource Venture Capital Fund 2                 |                          |  |                     |  |                     |  |                  
|(1,070,270 common shares);                        |                          |  |                     |  |                     |  |                  
|Terasource Venture Capital Fund 3                 |                          |  |                     |  |                     |  |                  
|(1,551,350 common shares);                        |                          |  |                     |  |                     |  |                  
|Terasource Venture Capital Fund 4                 |                          |  |                     |  |                     |  |                  
|(378,380 common shares)                           |                          |  |                     |  |                     |  |                  
|8FR Dongshin Bldg. 141-30                         |                          |  |                     |  |                     |  |                  
|Samseong-dong, Kangnam-gu Seoul, Korea            |                          |  |                     |  |                     |  |                  
|                                                  |                          |  |                     |  |                     |  |                  
|                                                  |                          |  |                     |  |                     |  |                  
|The Hong Group of Companies                       |                          |  |                     |  |                     |  |                  
|including:                                        |                          |  |                     |  |                     |  |                  
|Serome Investment Co. Ltd. (1,085,675shares),     |                          |  |                     |  |                     |  |                  
|151-7 Samseong-Dong ;                             | 3,325,900 common shares  |  | 11.09%              |  | 10.59%              |  | Nil              
|Kangnam-Gu Seoul Korea                            |                          |  |                     |  |                     |  |                  
|Mok-Won Assets Management Co. Ltd                 |                          |  |                     |  |                     |  |                  
|(1,375,000 shares),2004 Ho, Anam tower 702-10     |                          |  |                     |  |                     |  |                  
|Yuksam-dong Kangnam-ku, Seoul, Korea;             |                          |  |                     |  |                     |  |                  
|Bio & Medical Research Co. Ltd. (524,425 shares), |                          |  |                     |  |                     |  |                  
|702-10 Yuksam-dong, Kangnam-ku, Seoul, Korea;     |                          |  |                     |  |                     |  |                  
|Ki-tae Hong (127,800 shares) and Hye-sook Lee     |                          |  |                     |  |                     |  |                  
|(213,000 shares)151-7 Samseong-Dong, Kangnam-Gu,  |                          |  |                     |  |                     |  |                  
|Seoul, Korea                                      |                          |  |                     |  |                     |  |                  
|                                                  |                          |  |                     |  |                     |  |                  
|Hsiu Chen Cheng.                                  | 1,450,000 common shares  |  | 4.83%               |  | 5.89%               |  | Nil              
|12F, No. 388 Chun Shan E. Rd.,                    | (1,850,000 common shares |  |                     |  |                     |  |                  
|Taipei, Taiwan                                    | as of June 30, 2005)     |  |                     |  |                     |  |                  

Related party transactions 
  There is no known relationship between any of the Directors and Officers of
  the Company with major clients or provider of essential products and technology.

In the event conflicts do arise the Company will attempt to
  resolve any such conflicts of interest in favor of the Company. The officers
  and directors of the Company are accountable to the Company and its shareholders
  as fiduciaries, which requires that such officers and directors exercise good
  faith and integrity in handling the Company's affairs. A shareholder may be
  able to institute legal action on behalf of the Company on or behalf of that
  shareholder and all other similarly situated shareholders to recover damages
  or for other relief in cases of the resolution of conflicts in any manner prejudicial
  to the Company. 
  The transactions between the Company and its subsidiaries are disclosed in the
  Note 14 to the consolidated financial statements, page 67.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information See "Item 18- Financial
  Statements"

Legal Proceedings 
  On February 27, 2004, the Company received approval for a debt rescheduling
  plan for a total of $3,589,271 from the Chooncheon District Court, Korea,
  whereby a group of creditors of the Company and a representative of the Company
  agreed to reschedule the payments on $3,589,271 of the Company's debt which
  constitute approximately 68% of the total outstanding accounts payable and borrowings
  of the Company. An application for the rescheduling plan was subsequently filed
  with Chooncheon District Court and approved by the court on the same day.

Dividend Policy 
  We intend to retain any earnings for use in our business. We do not intend to
  pay dividends on our shares for the foreseeable future. Dividends, if any, on
  the outstanding shares are recommended by the board of directors and must be
  approved at our annual general meeting of shareholders. This meeting is generally
  held in March each year, and the dividend in respect of the preceding year is
  generally paid shortly thereafter. The declaration of dividends is subject to
  the discretion of the shareholders, and consequently, no assurance can be given
  to the amount of dividends per share or that any such dividends will be declared.
  Future cash dividends, if any, will also depend upon our future operations and
  earnings, capital requirements and surplus, general financial condition, contractual
  restrictions and other factors as may deem relevant. Loan agreements and contractual
  arrangements entered into by Meridian may also restrict distributions of dividends.

---

B. Significant Changes 
  At an extraordinary general meeting of shareholders of the Company, on April
  27, 2004, it was approved that the par value of the common stock of the Company
  be reduced from 200 Korean Won per share (equivalent to US$0.17 per share)
  to 100 Korean Won per share (equivalent to US$0.10 per share). The new par
  value was registered with the Korean registrar of companies on June 1, 2004
  and will be effective as of July 1, 2004. 
  The Company received funds of US$530,000.00 from investors through an equity
  financing whereby, on June 8, 2004 the Company issued 3,312,500 shares of common
  stock ($ 0.16 per share). Share issue costs of $ 26,500 were paid in
  connection with the financing. The stock issued is restricted from trading for
  one year.

Item 9. The Offer and Listing 
  Not Applicable

Item 10. Additional Information

A. Share Capital 
  The Company had 567,853 shares of common stock issued and outstanding prior
  to the Acquisition of By George, and 635,995 shares issued and outstanding following
  the Acquisition. Effective February 15, 2001 the Company forward split all of
  its outstanding common shares on the basis of 10 new shares of common stock
  of the Company for each issued share of common stock of the Company resulting
  in a total of 6,359,950 shares of common stock par value 500 Won per share in
  the capital stock of the Company being issued and outstanding (the "First Stock
  Split"). Effective March 19, 2001 the Company forward split all of its outstanding
  common shares on the basis of 5 new shares of common stock of the Company for
  every 2 issued shares of common stock of the Company resulting in a total of
  15,899,875 shares of common stock par value 200 Won per share in the capital
  stock of the Company being issued and outstanding (the "Second Stock Split")
  (the First Stock Split and the Second Stock Split collectively referred to as
  the "Stock Split"). Effective July 1, 2004, the Company reduced the par value
  of the common stock of the Company from (won) 200 per share to (won) 100 per
  share. As a result, the Company’s capital stock was changed from (won)
  3,830,297 thousand to (won) 1,915,148 thousand.

B. Memorandum and Articles of Association General 
  The Company is authorized to issue 50,000,000 shares of common stock, each share
  of common stock having equal rights and preferences, including voting privileges.
  The Company is not authorized to issue shares of preferred stock. As of December
  31, 2004 there were 29,993,984 shares of the Company's stock issued and outstanding,
  and as of June 30, 2005, there are 31,393,984 shares of the Company's stock
  issued and outstanding. The shares of common stock of the Company constitute
  equity interests in the Company entitling each shareholder to a pro rata share
  of cash distributions made to shareholders, including dividend payments. The
  holders of the Company's common stock are entitled to one vote for each share
  of record on all matters to be voted on by shareholders. There is no cumulative
  voting with respect to election of directors of the Company or any other matter,
  with the result that the holders of more than 50% of the shares voted for the
  election of those directors can elect all of the directors. The holders of the
  Company's common stock are entitled to receive dividends when, as and if declared
  by the Company's Board of Directors from funds legally available therefore;
  provided, however, that cash dividends are at the sole discretion of the Company's
  Board of Directors. In the event of liquidation, dissolution or winding up of
  the Company, the holders of common stock are entitled to share ratably in all
  assets remaining available for distribution to them after payment of liabilities
  of the Company and after provision has been made for each class of stock, if
  any, having preference in relation to the Company's common stock. Holders of
  the shares of the Company's common stock have no conversion, preemptive or other
  subscription rights, and there are no redemption provisions applicable to the
  Company's common stock. All of the outstanding shares of the Company's common
  stock are duly authorized, validly issued, fully paid and non-assessable.

Dividends 
  Dividends are distributed to shareholders in proportion to the number of shares
  of capital stock owned by each shareholder following approval by the shareholders
  at a general meeting of shareholders. Under the Commercial Code and the Company's
  Articles of Incorporation, the Company will pay, to the extent declared, full
  annual dividends on newly issued shares. The Company may declare dividends annually
  ("annual dividends") at the annual general meeting of shareholders which is
  held within three months after the end of the fiscal year. Shortly after the
  annual general meeting, the annual dividend is paid to the shareholders of record
  as of the end of the preceding fiscal year. Annual dividends may be distributed
  either in cash or in shares provided that shares must be distributed at par
  value and dividends in shares may not exceed one-half of the annual dividend.
  Under the Commercial Code and the Company's Articles of Incorporation, the Company
  does have an obligation to pay any annual dividend unclaimed for five years
  from the payment date. The Commercial Code provides that a company shall not
  pay an annual dividend unless it has set aside in its legal reserve an amount
  equal to at least one-tenth of the cash portion of such annual dividend or has
  a legal reserve of not less than one-half of its stated capital. The Commercial
  Code also provides that a company may pay an annual dividend out of the excess
  of its net assets over the sum of (i) its stated capital, (ii) the aggregate
  amount of its capital surplus reserve and legal reserve which have been accumulated
  up to the end of the relevant dividend period, and (iii) the legal reserve to
  be set aside in respect of such annual dividend. Such reserves are not available
  for payment of cash dividends but may be transferred to capital stock or used
  to reduce an accumulated deficit through a shareholder action.

Distribution of Free Shares 
  In addition to dividends in the form of shares to be paid out of retained or
  current earnings, the Commercial Code permits a company to

---

distribute to is shareholders an amount transferred form the
  capital surplus or legal reserve to stated capital in the form of free shares.
  Such distribution must be made pro rata.

Preemptive Rights and Issuance of Additional Shares The authorized
  but unissued shares may be issued at such times and, unless otherwise provided
  in the Commercial Code, upon such terms as the board of directors of a company
  may determine. The new shares must be offered on uniform terms to all shareholders
  who have preemptive rights and who are listed on the shareholders' register
  as of the record date. The Company's shareholders are entitled to subscribe
  for any newly issued shares in proportion to their existing shareholdings, provided
  that pursuant to the Articles of Incorporation, new share that are (i) issued
  by public offering in accordance with the Securities and Exchange Law of Korea,
  (ii) represented by depositary receipts, (iii) issued to foreigners in accordance
  with the Foreign Investment Promotion Law of Korea within 33% of the total number
  of shares outstanding, (iv) issued to the Company's employee stock ownership
  association up to 20% of the newly issued shares (to the extent the total number
  of shares so subscribed and held by th e members of the employee stock ownership
  association does not exceed 20% of the total number of shares), (v)issued outside
  Korea for listing on a foreign stock exchange or foreign securities market trading
  securities by means of an electronic or a quotation system, (vi) issued according
  to a stock option plan, (vii) issued to a domestic corporation having a strategic
  relationship with the Company in connection with the Company's management or
  technology of up to 5% of the total number of issued and outstanding shares
  after such issuance, (viii)issued as consideration for the acquisition of the
  stock or assets of another company up to less than 20% of the total number of
  issued and outstanding shares, or (ix) issued through general public offering
  in accordance with the Securities and Exchange Law of Korea may be issued pursuant
  to a resolution of the board of directors to persons other than existing shareholders.
  Under the Commercial Code, a company may vary, without shareholder approval,
  the terms of such preemptive rights for different classes of shares. Public
  notice of the preemptive rights to new shares and the transferability thereof
  must be given not less than two weeks (excluding the period during which the
  shareholders' register is closed) prior to the record date. The Company will
  notify the shareholders who are entitled to subscribe for newly issued shares
  of the deadline for subscription at least two weeks prior to such deadline.
  If a shareholder fails to subscribe on or before such deadline, such shareholder's
  preemptive rights will lapse. The board of directors may determine how to distribute
  shares in respect of which preemptive rights have not been exercised or where
  fractions of shares occur. If the Company adopts the New Articles of Incorporation
  newly issued shares can be issued pursuant to a resolution of the board of directors
  of the Company to persons other than existing shareholders of the Company under
  the following cases (i) the Company offers new shares or allows underwriters
  to underwrite new shares in accordance with Article 2 and Article 8 of the Securities
  Exchange Act of Korea;(ii) the Company issues new shares through a public offering
  by the resolution of the Board of Directors in accordance with Article 189-3
  of the Securities Exchange Act of Korea; (iii) the Company issues new shares
  through exercises of stock options in accordance with Article 16-3 of the Venture
  Company Promotion Special Measures Act of Korea; (iv) the Company issues new
  shares for the purpose of listing or registration on or with a foreign securities
  exchange or market;(v) the Company issues new shares for foreign direct investments
  in accordance with the Foreign Investment Promotion Act as needed for business
  purposes, including but not limited to improvement of the financial structure;(vi)
  the Company issues new shares to another company with which the Company forms
  or intends to form a business alliance relationship for the purpose of technology
  transfer; or (vii) the Company issues new shares for consideration for the acquisition
  of the shares or assets of another company or the assets of a person.

General Meeting of Shareholders 
  Under the Commercial Code, the ordinary general meeting of shareholders is held
  within three months after the end of each fiscal year and, subject to board
  resolution or court approval, an extraordinary general meeting of shareholders
  may be held as necessary or at the request of holders of an aggregate of 3%
  or more of the outstanding shares of a company or at the request of a company's
  statutory auditor or audit committee. Under the Commercial Code, written notices
  setting forth the date, place and agenda of the meeting must be given to shareholders
  at least two weeks prior to the date of the general meeting of shareholders.
  Currently, the Company uses The Korean Economic Daily for the purpose of providing
  public notices. Shareholders not on the shareholders' register as of the record
  date are not entitled to receive notice of the annual general meeting o f shareholders
  or attend or vote at such meeting. The agenda of the general meeting of shareholders
  is determined at the meeting of the board of directors. In addition, shareholders
  holding an aggregate of 3% or more of the outstanding shares may propose an
  agenda for the general meeting of shareholders. Such proposal should be made
  in writing at least six weeks prior to the meeting. The board of directors may
  decline such proposal if it is in violation of the relevant laws and regulations
  of the Company's Articles of Incorporation. The general meeting of shareholders
  is held at the Company's headquarters or, if necessary, may be held anywhere
  in the vicinity of the Company's headquarters.

Voting Rights

Holders of the Company's shares are entitled to one vote for
  each share, except that voting rights with respect to shares held by the Company
  and shares held by a corporate shareholder, more than one-tenth of whose outstanding
  capital stock is directly or indirectly owned by the Company, may not be exercised.
  Cumulative voting is precluded in the Company's Articles of Incorporation. Under
  the Commercial Code, for the purpose of electing the Company's statutory auditors,
  a shareholder holding more than 3% of the total shares may not exercise voting
  rights with respect to such shares in excess of such 3% limit. The Commercial
  Code also provides that in order to amend the Company's Articles of Incorporation
  (which is required for any change to the Company's authorized share capital)
  and for certain other instances, including removal of any of the Company's director
  and statutory auditor, dissolution, merger or consolidation, transfer of the
  whole or a significant part of the Company's business, acquisition of all of
  the business of any other company or issuance of new shares at a price lower
  than their par value, an approval from holders of at least two-thirds of those
  shares present or represented at such meeting is required, provided that such

---

super-majority also represents at least one-third of the total
  issued and outstanding shares. A shareholder may exercise his voting by proxy
  given to any person. The proxy must present a document evidencing the power
  of attorney prior to the start of the general meeting of shareholders.

Registration of Shareholders and Record Date Pacific Corporate
  Trust Company of Vancouver BC Canada ("Pacific Corporate") is the Company's
  sole transfer agent. Pacific Corporate maintains the register of the Company's
  shareholders and register of transfers of registered shares traded. For the
  purpose of determining the holders of the Company's shares entitled to annual
  dividends, the register of shareholders is closed for a period following December
  31 and ending on the close of the ordinary general shareholders' meeting for
  such fiscal year. The record date for annual dividends is December 31. Further,
  the Commercial Code and the Company's Articles of Incorporation permit the Company,
  upon at least two weeks' public notice, to set a record date and/or close the
  register of shareholders entitled to certain rights pertaining to the Company's
  shares. The trading of the Company's shares and the delivery of certificates
  in respect thereof may continue while the register of shareholders is closed.

Annual and Periodic Reports 
  At least one week prior to the annual general meeting of shareholders, the Company's
  annual report and audited non-consolidated financial statements must be made
  available for inspection at the Company's principal office and at all branch
  offices. Copies of annual reports, the audited consolidated financial statements
  and any resolutions adopted at the general meeting of shareholders will be available
  to the Company's shareholders. In addition, the Company will dispatch the copies
  of its financials and statements and business report to its shareholders at
  least two weeks prior to the date of the annual general meeting of shareholders.

Transfer of Shares 
  Under the Commercial Code, the transfer of shares is effected by delivery of
  share certificates but, in order to assert shareholders' rights against the
  Company, the transferee must have his name and address registered on the register
  of shareholders. For this purpose, shareholders are required to file their name,
  address and seal or specimen signature with the Company. Under the regulations
  of the Financial Supervisory Commission of Korea, non-resident shareholders
  may appoint a standing proxy and may not allow any person other than such standing
  proxy to exercise rights regarding the acquired shares or perform any task related
  thereto on his behalf, subject to certain exceptions. Under current Korean regulations,
  securities companies and banks in Korea (including licensed branches of non-Korean
  securities companies and banks), investment management companies in Korea, internationally
  recognized foreign custodians and the Korean Securities Depository are authorized
  to act as agents and provide related services.

Acquisition by the Company of Shares 
  The Company generally may not acquire its own shares except in certain limited
  circumstances, including, without limitation, a reduction in capital. Under
  the Commercial Code, except in case of a reduction in capital, any of the Company's
  own shares acquired by it must be sold or otherwise transferred to a third party
  within a reasonable time.

Liquidation Rights 
  In the event of a liquidation of the Company remaining after payment of all
  debts, liquidation expenses and taxes will be distributed among shareholders
  in proportion to the number of the Company's shares held.

Inspection of Books and Records 
  Under the Commercial Code, any individual shareholder or shareholders having
  at least 3% of all outstanding shares (irrespective of voting or non-voting
  shares) of a Korean corporation may inspect books and records of the corporation.

C. Material contracts None

D. Exchange Controls General

The Foreign Exchange Transaction Law of Korea and the Presidential
  Decree and regulations established thereunder (collectively the "Foreign Exchange
  Transaction Laws") regulate investment in Korean securities by non-residents
  and issuance of securities outside Korea by Korean companies. Under the Foreign
  Exchange Transaction Laws, non-residents may invest in Korean securities only
  to the extent specifically allowed by such laws or otherwise permitted by the
  Ministry of Finance and Economy. The Financial Supervisory Commission also has
  adopted, pursuant to the delegated authority under the Securities and Exchange
  Law of Korea, regulations that restrict investment by foreigners 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 are likely to occur, it may require certain investors
  to obtain prior approval for certain Capital Transactions as defined in the
  Foreign Exchange Transaction Laws from the relevant Korean authority or to deposit
  a certain portion of the investors' holdings in Korea. Such emergency circumstances
  include sudden fluctuations in interest rates or exchange rates, extreme difficulty
  in stabilizing the balance of payments or a substantial disturbance in the Korean
  financial and capital markets.

Government Reporting Requirements 
  In order for the Company to issue its shares outside of Korea, the Company is
  required to file a prior report of such issuance with the Ministry of Finance
  and Economy. No further approval from the Government is necessary fort he issuance
  of the Company's shares. Furthermore, prior to making an investment to 10% or
  more of the outstanding shares of a Korean company, foreign investors are generally
  required under the

---

Foreign Investment Promotion Law to submit a report to a Korean
  bank pursuant to a delegation by the Ministry of Commerce, Industry and Energy.
  Subsequent sale by such investor of the shares will also require a prior report
  to such bank

Dividend to be declared in Won 
  The Company currently is not in the position to pay dividends on its shares
  for the foreseeable future. However, if the Company declares cash dividends,
  such dividends will be declared in Won. In order for the Company to pay such
  dividends outside Korea, such dividends will be converted into Dollars and remitted
  to the shareholders, subject to certain conditions. The Company will convert
  dividend amount in foreign currency and remit them to shareholders abroad. No
  governmental approval is required for foreign investors to receive dividends.
  However, in order for the Company to convert the Won amount in foreign currency
  and to remit such amount abroad, relevant documents must be submitted to the
  foreign exchange bank to verify (i) that the amount being paid conforms to the
  amount required to be paid and (ii) whether all necessary legal procedures have
  been completed.

E. Taxation

Korean Taxation 
  The following is a summary of the principal Korean tax consequences to owners
  of our shares 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 as interpreted by the Korean taxation
  authorities as of the date hereof. This summary is not exhaustive of all possible
  tax consideration 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 our shares, 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 purposes of Korean taxation of distributions of profits either in cash
  or shares made on the Company's shares, a non-resident holder will be treated
  as the owner of the Company's shares. 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% or such lower rate as is applicable under a treaty between Korean
  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 Company's shares. Under the U.S. - Korea Tax Treaty, the maximum
  rate of withholding on dividends paid to United States residents eligible for
  treaty benefits and beneficial owners of such dividend generally is 15% (10%
  if the recipient of the dividends is a U.S. corporation and owned at least 10%
  of the outstanding shares of voting stock of the relevant Korean company during
  any part of its taxable year which precedes the date of payment of the dividend
  and during the whole of its prior taxable year {if any} and certain other conditions
  are satisfied) which does not include withholding of local tax. In addition,
  a local surtax will be included in the withholding, therefore the maximum rate
  of withholding is generally 16.5% . The aforementioned maximum rate on withholding
  of dividends does not apply if the United States resident has a permanent establishment
  in Korea and the shares to which the dividends are paid are connected with such
  permanent establishment. 
  Distribution of free shares representing a transfer of certain capital reserves
  or asset revaluation reserves into paid-in capital may be treated as dividends
  subject to Korean tax. However, stock splits, if any, will not be treated as
  dividends.

Taxation of Capital Gains 
  A non-resident holder will be subject to Korean taxation on capital gains realized
  on a sale of our shares unless the non-resident holder is eligible for the benefits
  of an applicable tax treaty exempting such capital tax. In addition, the capital
  gains realized from the transfer of shares listed on certain foreign stock exchanges
  (including the Nasdaq National Market), insofar as the transfer is completed
  through such stock exchange, are exempted from Korean income taxation by virtue
  of the Tax Exemption and Limitation Law. Under the U.S.-Korea tax treaty, capital
  gains realized by holders that are residents of the United States eligible for
  treaty benefits will not be subject to Korean taxation upon the disposition
  of our shares, with certain exceptions. In the absence of any applicable treaty
  or the exemption under the Tax Exemption and Limitation Law, a non-resident
  holder will generally be subject to Korean taxation on capital gains realized
  on a sale of our shares at the rate of the lesser of 27.5% of the gains or 11%
  of the gross sales proceeds until December 31, 2000 and the lesser of 26 7/8%
  of the gains and 10 3/4% of the gross sales proceeds thereafter. See "-Withholding
  of Taxes."

Application of the U.S.-Korea Tax Treaty Under the U.S.-Korea
  tax treaty, a resident of the United States means (i) a United States corporation
  and, (ii) any other person (except a corporation or any entity treated under
  United States law as a corporation) resident in the United States for purposes
  of its tax, but in the case of a person acting as partner or fiduciary only
  to the extent that the income derived by such person is subject to United States
  tax as the income of a resident. Further, the reduced Korean withholding tax
  rate on dividends and capital gains under the U.S.-Korea Tax Treaty would not
  be available if (a) the U.S. resident holders are certain investment or holding
  companies or (b) the dividends or capital gains derived by residents of the
  United States from our shares are effectively connected with the United States
  residents' permanent establishment in Korea or, in the case o f capital gains
  derived by an individual, (i) such United States resident maintains a fixed
  base in Korea for a period aggregating 183 days or more during the taxable year
  and our shares are effectively connected with such fixed base or (ii) such United
  States resident is present in Korea for 183 days or more during the taxable
  year.

Securities Transaction Tax

---

Under the Securities Transaction Tax Law of Korea, securities
  transaction tax to be imposed at the rate of 0.5% (this rate may be reduced
  to 0.3%, including other surtax, if traded through the Korea Stock Exchange
  or KOSDAQ) will not be imposed on the trading of shares through a foreign stock
  exchange on which the shares are listed. Although there has been no established
  precedent on the point of whether the Nasdaq National Market will be included
  in the definition of "foreign stock exchange" for the purpose of Securities
  Transaction Tax Law, it is likely that the securities transaction tax will not
  be imposed on the trading through the Nasdaq National Market. Further, securities
  transaction tax will not be applied if the sale is executed between non-residents
  without permanent establishments in Korea and the non-resident holder (together
  with our shares held by any entity which has a certain special relationship
  with such non-resident) did not own 10% or more of the total issued and outstanding
  shares at any time during the five years before the year within which the transfer
  occurs and the non-resident holder did not sell such shares through a securities
  broker in Korea.

Inheritance Tax and Gift Tax 
  Under Korean inheritance and gift tax laws, shares issued by Korean corporations
  are deemed located in Korea irrespective of where they are physically located
  or by whom they are owned. Therefore, Korean inheritance tax and gift tax are
  imposed with respect to our shares. The taxes are imposed currently at the rate
  of 10% to 50%, if the value of the relevant property is above a certain limit
  and vary according to the identity of the parties involved. At present, Korea
  has not entered into any tax treaty with respect to inheritance or gift tax.

Withholding of Taxes 
  Under Korean tax law, holders of our shares in the United States will generally
  be subject to Korean withholding taxes on the capital gains and dividend payments
  by us in respect of those shares, unless exempted by a relevant tax treaty or
  the Tax Exemption and Limitation Law. Failure to withhold Korean taxes may result
  in the imposition of the withholding tax itself and 10% penalty tax, and, if
  prosecuted, a criminal penalty of an imprisonment up to one year and/or a fine
  up to the tax amount, on the relevant withholding agent. We, as payer of dividends,
  will act as withholding agent for the collection of Korean tax on such dividend
  payment. The capital gains realized from the transfer of shares listed and traded
  on the Nasdaq National Market are exempt from Korean income taxation by virtue
  of the Tax Exemption and Limitation Law. Korean tax law provides that, in case
  of transfer of Korean shares, the Korean securities broker broking such transfer,
  or if there is no such securities broker, the purchaser is required to withhold
  the relevant Korean capital gains taxes.

UNITED STATES FEDERAL INCOME TAXATION 
  The following is a general discussion of the material United States federal
  income tax consequences of purchasing, owning, and disposing the common shares
  if you are a U.S. Holder (as defined below) and hold the common shares as capital
  assets for United States federal income tax purposes. This discussion does not
  address all of the tax consequences relating to the ownership of the common
  shares, and does not take into account U.S. Holders subject to special rules
  including:

|- | dealers in securities or currencies;                                                                                                                                                                                                                                                                                                                                                                                                  
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | financial institutions;                                                                                                                                                                                                                                                                                                                                                                                                               
|- | tax-exempt entities;                                                                                                                                                                                                                                                                                                                                                                                                                  
|- | banks;                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | life insurance companies;                                                                                                                                                                                                                                                                                                                                                                                                             
|- | traders in securities that elect to mark-to-market their securities;                                                                                                                                                                                                                                                                                                                                                                  
|- | persons that hold common shares as a part of a straddle or a hedging,
      or conversion transaction;                                                                                                                                                                                                                                                                                                                                
|- | persons liable for the alternative minimum tax;                                                                                                                                                                                                                                                                                                                                                                                       
|- | persons that actually or constructively owns 10% or more of our voting
      stock; or                                                                                                                                                                                                                                                                                                                                                
|- | persons whose "functional currency" is not the U.S.
        dollar. This discussion is based on the Internal Revenue Code of 1986,
        as amended, its legislative history, final, temporary, and proposed Treasury
        regulations, published rulings and court decisions, all as currently in
        effect. These laws are subject to change, possibly on a retroactive basis.
        You are a "U.S. Holder" if you are:
|- | a citizen or resident of the United States;                                                                                                                                                                                                                                                                                                                                                                                           
|- | a corporation, partnership or other entity created
        or organized in or under the laws of the United States or any political
        subdivision thereof;                                                                                                                                                                                                                                                                       
|- | an estate the income of which is subject to United States federal income
      taxation regardless of its source;                                                                                                                                                                                                                                                                                                                     
|- | a trust:                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | if a United States court can exercise primary supervision
        over the trust's administration and one or more United States persons
        are authorized to control all substantial decisions of the trust;
        or                                                                                                                                                                                                          
|- | that has elected to be treated as a United States
        person under applicable Treasury regulations. This discussion addresses
        only United States federal income taxation.                                                                                                                                                                                                                                                 

F. DIVIDENDS AND PAYING AGENT 
  Not Applicable

G. STATEMENTS BY EXPERTS 
  Not Applicable

H. DOCUMENTS ON DISPLAY
  Not Applicable

I. SUBSIDIARY INFORMATION 
  See Item 18. Notes to Financial Statements

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I. SUBSIDIARY INFORMATION See Item 18. Notes to Financial Statements

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosure 
  Market risk generally represents the risk that losses may occur in the value
  of financial instruments as a result of movements in market rates of interest
  and foreign exchange. The Company's primary market risk exposures are fluctuations
  in exchange rates, interest rates and equity prices. The Company is exposed
  to foreign exchange risk related to export sales denominated in foreign currency.
  All of the Company's export sales are denominated in U.S. Dollars, regardless
  of the currencies of the countries/regions in which the purchasers are located.
  For the year ended December 31, 2004, the Company had an aggregate $601,650
  export sales, accounting for 28.2% of the Company's total revenues. The Company
  has no other significant foreign currency denominated revenue. As a result,
  changes in the foreign exchange rate between the Won and the Dollar may significantly
  affect the Company due to the effect of such changes on the amount of payment,
  denominated in Won, the Company receives from foreign purchasers on the export
  sales. As of December 31, 2004, all of the Company's liabilities are denominated
  in Won. Therefore, if the Won depreciates against the Dollar by 10% and all
  other variables are held constant from their levels for the year ended December
  31, 2004, the Company estimates that the payment receivable from its overseas
  customers will decrease by approximately $60,165 in 2005. The Company is exposed
  to interest rate risk due to significant amounts of short-term and long-term
  debt. Upward fluctuations in interest rates increase the cost of additional
  debt. However, as of December 31, 2004, the Company had no floating rate borrowings.
  Currently the Company does not use any derivatives or other financial instruments
  to mitigate these risks discussed above.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
  Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 
  The Company is not currently in default, arrears or delinquent with respect
  to any of its debt obligations or other responsibilities. The details of the
  debt restructuring of the Company, which is disclosed in Item 8. and Note 1
  to the consolidated financial statements in this report, were reported in the
  form 6-K filed on March 28, 2004.

ITEM 14. MATERIAL MODIFICATIONS TOTHE RIGHTS OFSECURITY HOLDERS AND
  USE OF PROCEEDS Not Applicable

ITEM 15. Controls and Procedures 
  Based on their evaluation as of a date within 90 days of the filing date of
  this Annual Report on Form 20-F, the principal executive officers and directors
  of the Company have concluded that the disclosure controls and procedures of
  the Company as defined in 240.13a -15(c) and 240.15d -15(c) of the Securities
  Exchange Act of 1934 (the Exchange Act) are effective to ensure that information
  required to be disclosed by the Company in reports that it files or submits
  under the Exchange Act is recorded, processed, summarized and reported within
  the time periods specified in Securities and Exchange Commission's rules and
  forms. 
  There were no significant changes in internal controls or in other factors of
  the Company that could significantly affect these controls subsequent to the
  date of their evaluation and up to the filing date of this Annual Report on
  Form 20-F. There were no significant deficiencies or material weaknesses, and
  therefore no corrective actions were taken or may occur and not be detected.

ITEM 16. Audit Committee Financial Expert 
  The Company does not yet have an audit committee financial expert.

Item 16B. Code of Ethics 
  The Company does not have in place a written code of ethics that applies to
  its executive, financial or accounting officers or to persons performing similar
  functions. The Company is dependent upon its president to lead by example and
  has faith in his ability to do so. The Company does not plan to grant any waiver,
  including an implicit waiver, from a provision of the code of business conduct
  and ethics to any person.

Item 16C. Principal Accountant Fees and Services
  
  (a)Audit Fees During the last two fiscal years, the Company paid $80,602.31
  for professional services rendered by the former auditors for the audit of the
  Company's annual financial statements or services normally provided in connection
  with statutory and regulatory filings for those fiscal years.

(b)Audit-Related Fees During the last two fiscal years, the
  Company paid $nil for professional services rendered by the current or former
  auditors for audit-related services..

(c)Tax Fees During the last two fiscal years, the Company
  paid $nil for professional services rendered by the principal accountant
  for tax compliance, tax advice and tax planning.

---

(d)All Other Fees During the last two fiscal years, the Company
  paid $nil for professional services rendered by the principal accountant
  for services other than those described under (a) through (c).

(e) The Company's board of directors is currently acting as
  the audit committee. The board approves all of the services provided by the
  principal accountants.

(f)Percentage of work performed by persons other than the
  principal accountant's full-time, permanent employees: 0%

Item 16D. Exemptions from the Listing Standards for Audit Committees 
  Not Applicable

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
  Purchasers 
  Not Applicable

Part III

ITEM 17. Not Applicable

ITEM 18. FINANCIAL STATEMENTS

Meridian Co., Ltd.

CONSOLIDATED FINANCIAL STATEMENTS

For the Years ended December 31, 2004, 2003 and 2002

Table of Contents

Independent Auditors' Report

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Changes
  in Shareholders' Equity

Consolidated Statements of Cash Flows

Notes to consolidated Financial Statements

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MERIDIAN CO., LTD.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2004, 2003 and 2002

with

INDEPENDENT AUDITORS' REPORT

Shinhan Accounting Corporation

AUDITORS' REPORT TO THE DIRECTORS OF: MERIDIAN Co., Ltd.

We have audited the accompanying consolidated balance sheets
  of Meridian Co., Ltd. and its subsidiaries as of December 31, 2004 and 2003,
  and the related consolidated statements of operations, changes in shareholders'
  equity and cash flows for each of the three years in the period ended December
  31, 2004. These financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these financial statements
  based on our audits. The accompanying financial statements for the year ended
  December 31, 2002 was audited by other auditor whose report dated May 14, 2003,
  expressed an unqualified opinion thereon, including an explanatory paragraph
  describing conditions that raised substantial doubt about the Company's ability
  to continue as a going concern.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). 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, the financial statements referred to above
  present fairly, in all material respects, the consolidated financial position
  of Meridian Co., Ltd. and its subsidiary at December 31, 2004 and 2003, and
  the consolidated results of their operations, the changes in shareholder’s
  equity and their cash flows for each of the three years in the period ended
  December 31, 2004, in conformity with U.S. generally accepted accounting principles.

Without qualifying our opinion, we draw your attention to
  the following matters.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 1 to the consolidated financial statements, the Company has suffered
  recurring losses and negative cash flows from operations since inception and
  has current liabilities which significantly exceed its current assets that raise
  substantial doubt about its ability to continue as a going concern. The consolidated
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty. Management's plans in regards to these matters
  are described in Note 1.

The Company has observed SEC regulations and U.S generally
  accepted accounting principles in the process of issuance of shares. However,
  as discussed in Note 15 to the consolidated financial statements, accounting
  principles generally accepted in Korea vary in this respect from U.S. generally
  accepted accounting principles. 12,485,159 common shares (capital stock amount
  (won) 1,248,515 thousand) issued through S-8 registrations, for acquisition
  of By George Holdings Corp. and debt-for-equity swap on October 21, 2004. have
  not been yet included in the Korean Commercial Registration Office due to the
  different requirements of the share issuance between the US and Korean Commercial
  Laws.

Certified Public Accountant 
  Republic of Korea 
  May 13, 2005, except for Note 25, as to which the date is June 20, 2005

Il-Heung bldg. Suite #8 
  126-1 ChungMu-Ro 4Ka, Chung-Ku 
  Seoul, Korea

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Meridian Co., Ltd. 
  Consolidated balance sheets
  As of December 31, 2003 and 2004 
  (in Korean Won)

|                                                                                 |  |                |   |                |   |   | (Note 3)      |  
|-------------------------------------------------------------------------------- |  | -------------- | - | -------------- | - | - | ------------- | -
|A S S E T S                                                                      |  | 2003           |   | 2004           |   |   | 2004 (in USD) |  
|                                                                                 |  |                |   |                |   |   |               |  
|Current assets :                                                                 |  |                |   |                |   |   |               |  
|Cash and cash equivalents                                                        |  | 37,292,198     |   | 42,131,238     |   | $ | 40,703        |  
|Trade accounts and notes receivable -
      less allowance for doubtful accounts |  | 484,798,681    |   | 525,980,674    |   |   | 508,145       |  
|of won 1,803,178,811 in 2003 and won 476,269,309(USD
      460,119) in 2004      |  |                |   |                |   |   |               |  
|Short-term loans receivable, net                                                 |  | 62,795,868     |   | 55,661,875     |   |   | 53,774        |  
|Other accounts receivable, net                                                   |  | 891,320        |   | 4,768,645      |   |   | 4,607         |  
|Inventories                                                                      |  | 838,660,330    |   | 695,996,105    |   |   | 672,395       |  
|Other current assets                                                             |  | 38,011,479     |   | 188,614,870    |   |   | 182,219       |  
|                                                                                 |  |                |   |                |   |   |               |  
|Total current assets                                                             |  | 1,462,449,876  |   | 1,513,153,407  |   |   | 1,461,843     |  
|                                                                                 |  |                |   |                |   |   |               |  
|Investments and other assets                                                     |  |                |   |                |   |   |               |  
|Investment securities                                                            |  | 22,634,827     |   | 13,400,744     |   |   | 12,946        |  
|Long-tem and restricted bank deposits                                            |  | 40,064,819     |   | 41,084,873     |   |   | 39,692        |  
|Guaranty deposits                                                                |  | 105,681,580    |   | 106,153,940    |   |   | 102,554       |  
|                                                                                 |  |                |   |                |   |   |               |  
|Total investmets and other
      assets                                          |  | 168,381,226    |   | 160,639,557    |   |   | 155,192       |  
|                                                                                 |  |                |   |                |   |   |               |  
|Property, plant and equipment                                                    |  |                |   |                |   |   |               |  
|Land                                                                             |  | 928,107,490    |   | 928,107,490    |   |   | 896,636       |  
|Buildings                                                                        |  | 688,533,484    |   | 688,533,484    |   |   | 665,185       |  
|Furniture and fixture                                                            |  | 779,256,776    |   | 793,821,678    |   |   | 766,903       |  
|Others                                                                           |  | 161,031,345    |   | 157,588,521    |   |   | 152,245       |  
|                                                                                 |  | 2,556,929,095  |   | 2,568,051,173  |   |   | 2,480,969     |  
|Less accumulated depreciation                                                    |  | (1,014,593,512 | ) | (1,076,383,667 | ) |   | (1,039,884    | )
|                                                                                 |  |                |   |                |   |   |               |  
|Property, plant and equipment,
      net                                         |  | 1,542,335,583  |   | 1,491,667,506  |   |   | 1,441,085     |  
|                                                                                 |  |                |   |                |   |   |               |  
|Intangible assets                                                                |  |                |   |                |   |   |               |  
|Patents and trademarks                                                           |  | 2,017,238      |   | 1,470,612      |   |   | 1,421         |  
|                                                                                 |  |                |   |                |   |   |               |  
|                                                                                 |  |                |   |                |   |   |               |  
|TOTAL ASSETS                                                                     |  | 3,175,183,923  |   | 3,166,931,082  |   |   | 3,059,541     |  

(Continued)

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Meridian Co., Ltd. 
  Consolidated balance sheets
  As of December 31, 2003 and 2004
  (in Korean Won)

|                                                                                     |  |                |   |                 |   | (Note 3)      |  
|------------------------------------------------------------------------------------ |  | -------------- | - | --------------- | - | ------------- | -
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                 |  | 2003           |   | 2004            |   | 2004 (in USD) |  
|                                                                                     |  |                |   |                 |   |               |  
|Current liabilities                                                                  |  |                |   |                 |   |               |  
|Accounts payable - trade                                                             |  | 779,043,995    |   | 207,983,876     |   | 200,931       |  
|Short-term borrowings                                                                |  | 1,474,455,978  |   | 1,092,929,813   |   | 1,055,869     |  
|Accounts payable - other                                                             |  | 1,497,858,677  |   | 1,091,521,244   |   | 1,054,508     |  
|Current portion of long-term debt                                                    |  | 96,740,790     |   | 557,282,037     |   | 538,385       |  
|Others                                                                               |  | 152,739,951    |   | 347,819,964     |   | 336,025       |  
|                                                                                     |  |                |   |                 |   |               |  
|Total current liabilities                                                            |  | 4,000,839,391  |   | 3,297,536,934   |   | 3,185,718     |  
|                                                                                     |  |                |   |                 |   |               |  
|Long-term accounts payable                                                           |  | 126,336,978    |   | 935,287,781     |   | 903,572       |  
|Long-term borrowings                                                                 |  | 3,480,040,213  |   | 3,511,114,657   |   | 3,392,054     |  
|Accured severence benefits, net                                                      |  | 168,527,418    |   | 144,773,769     |   | 139,865       |  
|                                                                                     |  |                |   |                 |   |               |  
|Total liabilities                                                                    |  | 7,775,744,000  |   | 7,888,713,141   |   | 7,621,209     |  
|                                                                                     |  |                |   |                 |   |               |  
|Commitments and contingencies                                                        |  | -              |   | -               |   | -             |  
|                                                                                     |  |                |   |                 |   |               |  
|Minority interest                                                                    |  | -              |   | 19,936,965      |   | 19,261        |  
|                                                                                     |  |                |   |                 |   |               |  
|Shareholders' equity                                                                 |  |                |   |                 |   |               |  
|Common stock - par value 100 (won) per
      share; authorized 50,000 thousand share |  | 3,830,296,800  |   | 2,999,398,400   |   | 2,897,689     |  
|issued and outstanding 19,151
      thousand shares and 29,994 thousand shares       |  |                |   |                 |   |               |  
|at December 31, 2003 and
      December 31,2004, respectively                        |  |                |   |                 |   |               |  
|Capital Surplus                                                                      |  | 982,908,797    |   | 3,724,910,262   |   | 3,598,599     |  
|Appropriation for business rationalization                                           |  | 267,608,937    |   | 267,608,937     |   | 258,534       |  
|Accumulated deficit                                                                  |  | (9,675,773,315 | ) | (11,731,601,637 | ) | (11,333,785   | )
|Accumulated other comprehensive income
      (loss)                                  |  | (5,601,296     | ) | (2,034,986      | ) | (1,966        | )
|                                                                                     |  |                |   |                 |   |               |  
|                                                                                     |  |                |   |                 |   |               |  
|Total shareholders' equity                                                           |  | (4,600,560,077 | ) | (4,741,719,024  | ) | (4,580,929    | )
|                                                                                     |  |                |   |                 |   |               |  
|TOTAL LIABILITIES AND                                                                |  |                |   |                 |   |               |  
|SHAREHOLDERS' EQUITY                                                                 |  | 3,175,183,923  |   | 3,166,931,082   |   | 3,059,541     |  

The accompanying notes are an integral part of these Consolidated
  Financial Statements.

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Meridian Co., Ltd.Consolidated statements of income
  For the years ended December 31, 2002, 2003 and 2004
  (in Korean Won)

|                                                         |                |   |                |   |                |   |   | (Note 3)      |  
|-------------------------------------------------------- | -------------- | - | -------------- | - | -------------- | - | - | ------------- | -
|                                                         | 2002           |   | 2003           |   | 2004           |   |   | 2004 (in USD) |  
|                                                         |                |   |                |   |                |   |   |               |  
|Sales                                                    | 4,373,897,866  |   | 3,441,119,294  |   | 2,204,234,179  |   | $ | 2,129,489     |  
|                                                         |                |   |                |   |                |   |   |               |  
|Cost of sales                                            | 2,379,436,814  |   | 1,490,837,684  |   | 1,214,803,149  |   |   | 1,173,609     |  
|                                                         |                |   |                |   |                |   |   |               |  
|Gross profit                                             | 1,994,461,052  |   | 1,950,281,610  |   | 989,431,030    |   |   | 955,880       |  
|                                                         |                |   |                |   |                |   |   |               |  
|Selling, general and administrative expenses             | 3,892,035,837  |   | 3,460,603,690  |   | 2,461,664,811  |   |   | 2,378,190     |  
|                                                         |                |   |                |   |                |   |   |               |  
|Operating Income (loss)                                  | (1,897,574,785 | ) | (1,510,322,080 | ) | (1,472,233,781 | ) |   | (1,422,311    | )
|                                                         |                |   |                |   |                |   |   |               |  
|Other income(expense)                                    |                |   |                |   |                |   |   |               |  
|Interest income                                          | 33,870,851     |   | 2,455,770      |   | 563,502        |   |   | 544           |  
|Interest expense                                         | (488,277,745   | ) | (181,974,055   | ) | (404,848,608   | ) |   | (391,120      | )
|Foreign exchange gain, net                               | (7,060,198     | ) | (690,769       | ) | 133,300        |   |   | 129           |  
|Other, net                                               | (1,249,115,693 | ) | (461,140,940   | ) | (180,761,770   | ) |   | (174,632      | )
|                                                         |                |   |                |   |                |   |   |               |  
|Total other income(expense)                              | (1,710,582,785 | ) | (641,349,994   | ) | (584,913,576   | ) |   | (565,079      | )
|                                                         |                |   |                |   |                |   |   |               |  
|Minority interest in net loss of consolidated affiliates | -              |   | -              |   | (1,319,035     | ) |   | (1,274        | )
|                                                         |                |   |                |   |                |   |   |               |  
|Income (loss) before income taxes                        | (3,608,157,570 | ) | (2,151,672,074 | ) | (2,055,828,322 | ) |   | (1,986,116    | )
|                                                         |                |   |                |   |                |   |   |               |  
|Income taxes                                             | -              |   | -              |   | -              |   |   | -             |  
|                                                         |                |   |                |   |                |   |   |               |  
|Net Income (loss)                                        | (3,608,157,570 | ) | (2,151,672,074 | ) | (2,055,828,322 | ) |   | (1,986,116    | )
|                                                         |                |   |                |   |                |   |   |               |  
|                                                         |                |   |                |   |                |   |   |               |  
|Net loss per common share                                |                |   |                |   |                |   |   |               |  
|- Basic                                                  | (219           | ) | (119           | ) | (93            | ) |   | (0.089        | )
|                                                         |                |   |                |   |                |   |   |               |  
|- Diluted                                                | (219           | ) | (119           | ) | (93            | ) |   | (0.089        | )

The accompanying notes are an integral part of these Consolidated
  Financial Statements.

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Meridian Co., Ltd. 
  Consolidated statement 
  of changes in shareholder's equity
  For the years ended December 31, 2002, 2003 and 2004 
  (in Korean Won)

|                                               |                     |  |                |   |               |  |                 |   | Accumulated   |   |                |  
|---------------------------------------------- | ------------------- |  | -------------- | - | ------------- |  | --------------- | - | ------------- | - | -------------- | -
|                                               | Common Stock Issued |  | Additional     |   |               |  | Other           |   |               |  
|                                               |                     |  |                |   | Paid-in       |  | Accumulated     |   | Comprehensive |   |                |  
|                                               | Shares              |  | Amount         |   | Capital       |  | Deficit         |   | Income (Loss) |   | Total          |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2001                   | 15,899,875          |  | 3,179,975,000  |   | 886,083,841   |  | (3,648,334,734  | ) | -             |   | 417,724,107    |  
|Issuance of common shares                      | 1,282,708           |  | 256,541,600    |   | 91,638,400    |  |                 |   |               |   | 348,180,000    |  
|Net Income (loss)                              |                     |  |                |   |               |  | (3,608,157,570  | ) |               |   | (3,608,157,570 | )
|Other comprehensive income (loss):             |                     |  |                |   |               |  |                 |   | (31,974,847   | ) | (31,974,847    | )
|Foreign currency translation
      gain (loss) |                     |  |                |   |               |  |                 |   |               |   | -              |  
|Others                                         |                     |  |                |   | 5,186,556     |  |                 |   |               |   | 5,186,556      |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2002                   | 17,182,583          |  | 3,436,516,600  |   | 982,908,797   |  | (7,256,492,304  | ) | (31,974,847   | ) | (2,869,041,754 | )
|Issuance of common shares                      | 1,968,901           |  | 393,780,200    |   |               |  |                 |   |               |   | 393,780,200    |  
|Net Income (loss)                              |                     |  |                |   |               |  | (2,151,672,074  | ) |               |   | (2,151,672,074 | )
|Other comprehensive income (loss):             |                     |  |                |   |               |  |                 |   | 26,373,551    |   |                |  
|Foreign currency translation
      gain (loss) |                     |  |                |   |               |  |                 |   |               |   | -              |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2003                   | 19,151,484          |  | 3,830,296,800  |   | 982,908,797   |  | (9,408,164,378  | ) | (5,601,296    | ) | (4,600,560,077 | )
|Reduction of capital stock                     |                     |  | (1,915,148,400 | ) | 1,915,148,400 |  |                 |   |               |   | -              |  
|Issuance of common shares                      | 10,842,500          |  | 1,084,250,000  |   | 826,853,065   |  |                 |   |               |   |                |  
|Net Income (loss)                              |                     |  |                |   |               |  | (2,055,828,322  | ) |               |   | (2,055,828,322 | )
|Other comprehensive income (loss):             |                     |  |                |   |               |  |                 |   |               |   |                |  
|Foreign currency translation
      gain (loss) |                     |  |                |   |               |  |                 |   | 3,566,310     |   | 3,566,310      |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2004                   | 29,993,984          |  | 2,999,398,400  |   | 3,724,910,262 |  | (11,463,992,700 | ) | (2,034,986    | ) | (4,741,719,024 | )
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|(Note 3) (in U.S. Dollar)                      |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2003                   | 19,151,484          |  | $3,700,412     |   | $949,578      |  | ($9,089,135     | ) | ($5,411       | ) | ($4,444,556    | )
|Reduction of capital stock                     |                     |  | (1,850,206     | ) | 1,850,206     |  |                 |   |               |   | -              |  
|Issuance of common shares                      | 10,842,500          |  | 1,047,483      |   | 798,815       |  |                 |   |               |   | 1,846,298      |  
|Net Income (loss)                              |                     |  |                |   |               |  | (1,986,116      | ) |               |   | (1,986,116     | )
|Other comprehensive income (loss):             |                     |  |                |   |               |  |                 |   |               |   |                |  
|Foreign currency translation
      gain (loss) |                     |  |                |   |               |  |                 |   | 3,445         |   | 3,445          |  
|                                               |                     |  |                |   |               |  |                 |   |               |   |                |  
|Balance at December 31, 2004                   | 29,993,984          |  | 2,897,689      |   | 3,598,599     |  | (11,075,251     | ) | (1,966        | ) | (4,580,929     | )

The accompanying notes are an integral part of these Consolidated
  Financial Statements.

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Meridian Co., Ltd.Consolidated statements of cash flowsFor the years ended December 31, 2002, 2003 and 2004
  (in Korean Won)

|                                                             |                |   |                |   |                |   | (Note 3)      |  
|------------------------------------------------------------ | -------------- | - | -------------- | - | -------------- | - | ------------- | -
|                                                             | 2002           |   | 2003           |   | 2004           |   | 2004 (in USD) |  
|CASH FLOWS FROM OPERATING ACTIVITIES :                       |                |   |                |   |                |   |               |  
|Net income (loss)                                            | (3,608,157,570 | ) | (2,151,672,074 | ) | (2,055,828,322 | ) | ($1,986,116   | )
|Add (deduct) items not using
      (providing) cash          |                |   |                |   |                |   |               |  
|Depreciation                                                 | 156,129,739    |   | 153,923,984    |   | 61,790,155     |   | 59,695        |  
|Provision for severance
      benefits                       | 111,670,769    |   | 75,101,496     |   | 51,222,136     |   | 49,485        |  
|Provision for doubtful accounts                              | 1,870,482,079  |   | 1,464,577,793  |   | (16,629,671    | ) | (16,066       | )
|Inventory write-down due
      to decline in market value    | -              |   | 4,992,000      |   | 98,491,235     |   | 95,151        |  
|Amortization of intangible
      assets                      | -              |   | 546,626        |   | 546,626        |   | 528           |  
|Valuation loss using equity
      method                     | 21,642,309     |   | 25,910,007     |   | 2,002,543      |   | 1,935         |  
|Other                                                        | 348,180,000    |   | -              |   | 51,011,409     |   | 49,282        |  
|Changes in operating assets
      and liabilities, and other |                |   |                |   |                |   |               |  
|Decrease (increase) in accounts
      receivable - trade     | 421,880,269    |   | (301,663,358   | ) | (41,181,993    | ) | (39,786       | )
|Decrease (increase) in accounts
      receivable - other     | (66,152,505    | ) | (1,362,740     | ) | (7,443,975     | ) | (7,192        | )
|Decrease (increase) in inventory                             | 379,860,453    |   | (10,754,100    | ) | 44,172,990     |   | 42,675        |  
|Decrease (increase) in other
      current assets            | 66,699,457     |   | 10,636,649     |   | (150,603,391   | ) | (145,496      | )
|Increase (decrease) in accounts
      payable - trade        | (452,603,345   | ) | 36,902,587     |   | 93,059,052     |   | 89,903        |  
|Increase (decrease) in accounts
      payable - other        | 441,109,491    |   | 282,868,152    |   | 199,035,446    |   | 192,286       |  
|Increase (decrease) in other
      current liabilities       | (1,150,140     | ) | (166,687,764   | ) | 158,039,246    |   | 152,680       |  
|Retirement and severance
      payment                       | (236,345,021   | ) | (73,901,562    | ) | (38,261,718    | ) | (36,964       | )
|Other                                                        | 57,881,066     |   | 96,376,231     |   | 11,124,550     |   | 10,747        |  
|Sub-total                                                    | 3,119,284,621  |   | 1,597,466,001  |   | 516,374,640    |   | 498,864       |  
|                                                             |                |   |                |   |                |   |               |  
|                                                             | (488,872,949   | ) | (554,206,073   | ) | (1,539,453,682 | ) | (1,487,251    | )
|                                                             |                |   |                |   |                |   |               |  
|CASH FLOWS FROM INVESTING ACTIVITIES :                       |                |   |                |   |                |   |               |  
|Decrease in short-term financial
      instruments           | 879,795,257    |   | 222,500,000    |   | -              |   | -             |  
|Decrease in short-term loans                                 | -              |   | 23,500,000     |   | 28,783,968     |   | 27,808        |  
|Decrease in long-term financial
      instruments            | 92,500,000     |   | -              |   | -              |   | -             |  
|Proceedd from sales of investment
      securities           |                |   | 2,612,000      |   |                |   | -             |  
|Proceeds from sales of property,
      plant and equipment   | 29,086,964     |   | 28,171,609     |   | 3,442,824      |   | 3,326         |  
|Increase in short-term loans                                 | (210,526,062   | ) | (384,608,871   | ) | (1,453,654     | ) | (1,404        | )
|Acquisition of property, plant
      and equipment           | (58,923,271    | ) | (11,084,762    | ) | (14,564,902    | ) | (14,071       | )
|Cash held by former subsidiaries                             |                |   | 6,461,718      |   |                |   |               |  
|Changes in investments and other
      assets, and other     | (80,753,240    | ) | 26,295,681     |   | (1,492,414     | ) | (1,442        | )
|                                                             |                |   |                |   |                |   |               |  
|                                                             | 651,179,648    |   | (86,152,625    | ) | 14,715,822     |   | 14,217        |  
|                                                             |                |   |                |   |                |   |               |  
|CASH FLOWS FROM FINANCING ACTIVITIES :                       |                |   |                |   |                |   |               |  
|Proceeds from issuance of common
      stocks                | -              |   | 393,780,200    |   | 1,170,968,800  |   | 1,131,262     |  
|Proceeds from issuance of short-term
      borrowings        | 197,105,010    |   | 1,414,254,438  |   | 756,898,530    |   | 731,232       |  
|Repayment of short-term borrowings                           | -              |   | (849,898,501   | ) | (398,290,430   | ) | (384,784      | )
|Repayment of current portion
      of long-term debt         | (328,595,000   | ) | (142,068,662   | ) | -              |   | -             |  
|Repayment of long-term borrowings                            | -              |   | (291,062,577   | ) | -              |   | -             |  
|                                                             |                |   |                |   |                |   |               |  
|                                                             | (131,489,990   | ) | 525,004,898    |   | 1,529,576,900  |   | 1,477,709     |  
|                                                             |                |   |                |   |                |   |               |  
|NET INCREASE (DECREASE) IN CASH                              | 30,816,709     |   | (115,353,800   | ) | 4,839,040      |   | 4,675         |  
|                                                             |                |   |                |   |                |   |               |  
|CASH AT BEGINNING OF THE PERIOD                              | 121,829,289    |   | 152,645,998    |   | 37,292,198     |   | 36,028        |  
|                                                             |                |   |                |   |                |   |               |  
|CASH AT END OF THE PERIOD                                    | 152,645,998    |   | 37,292,198     |   | 42,131,238     |   | 40,703        |  

The accompanying notes are an integral part of these Consolidated
  Financial Statements.

---

1. Going Concern

Meridian Co., Ltd. (the "Company") was incorporated on April
  19, 1994 under the laws of the Republic of Korea ("Korea") and is currently
  engaged in the manufacture of alternative medical equipment for sale in domestic
  and overseas markets.

The Company has suffered recurring losses and negative cash
  flows from operations since inception and has current liabilities which significantly
  exceed its current assets that raise substantial doubt about its ability to
  continue as a going concern. The consolidated financial statements do not include
  any adjustments that might result from the outcome of this uncertainty.

For the fiscal year ended December 31, 2004, the Company incurred
  a net loss of (won) 2,055,828 thousand ((won) 2,151,672 thousand for 2003 and
  (won) 3,608,158 thousand for 2002) and net negative cash flow from operating
  activities of (won) 1,539,454 thousand ((won) 554,206 thousand for 2003 and
  (won) 488,873 thousand for 2002). On August 4, 2003, the Company's banking privileges
  were suspended on its accounts of credit/bill by the KFTC (Korea Financial Telecommunications
  & Clearings Institute), which was established as a non-profit organization
  to build up and operate the Financial Information Network Systems (FINS) by
  integrating the Korea Clearing & Credit Reporting Center in charge of check
  clearing systems and the Korea Bank Giro Center in charge of bank giro systems.

Subsequently on February 27, 2004, the Company received approval
  for a debt rescheduling plan for a total of (won) 4,697,927 thousand from the
  Chooncheon District Court, Korea, whereby a group of creditors of the Company
  and a representative of the Company agreed to reschedule the payments on (won)
  4,697,927 thousand of the Company's debt which constitute approximately 68%
  of the total outstanding accounts payable and borrowings of the Company. An
  application for the rescheduling plan was subsequently filed with Chooncheon
  District Court and approved by the court on the same day. The group of creditors
  who have agreed to the debt rescheduling includes the following (in thousand
  of Korean won).

|Creditor                                  |  | Amount of debt rescheduled
|----------------------------------------- |  | --------------------------
|Woori Bank                                |  | 391,787                   
|SMI II UABS Specialty Co., Ltd            |  | 1,000,000                 
|Rainbow Specialty Securitization Co., Ltd |  | 500,000                   
|Korea Technology Credit Guarantee Fund    |  | 1,151,884                 
|Small Business Corporation                |  | 300,000                   
|Korea Foreign Exchange Bank               |  | 125,831                   
|Shinhan Bank                              |  | 41,612                    
|Other                                     |  | 1,186,813                 
|                                          |  |                           
|Total                                     |  | 4,697,927                 

Of the (won) 4,697,927 thousand, (won) 34,200 thousand is
  secured debt to a financial institution and will now be repaid over 7 years
  from 2007 to 2013; the Company will be exempt from paying interest already accrued,
  and future interest will accrue at 3.5% interest per annum. Of the (won) 4,697,927
  thousand, (won) 813,933 thousand due to financial institutions is unsecured
  and will be repaid over 5 years from 2006 to 2010. The Company will be exempted
  from paying interest already accrued, and the future interest will accrue at
  the rate of 5% per annum. Accounts payable due to parties other than financial
  institutions will be repaid over 3 years from January 2005 to December 2007
  and will be exempt from paying any interest.

Progress on the execution of the plan will be reported to
  Chooncheon District Court, Korea every quarter. Except for this, there are no
  further obligations relating to debt rescheduling to the court. . The court
  does not have any authorities such as having the Company cease operations and
  liquidate the assets. The Company does not need to get an approval from the
  court when additionally borrowing from financial institutions. The new borrowing
  of the company depends on the Company's credit evaluated by the creditors. Above
  arrangement do not allow the creditors obtaining new common shares or other
  rights in respect of management or strategic control.

The Company believes that future shares issuance, launch of
  new merchandise and certain sales related efforts will provide sufficient cash
  flow for it to continue as a going concern in its present form. However, there
  can be no assurances that the Company will achieve such results. Accordingly,
  the consolidated financial statements do not include any adjustments related
  to the recoverability and classification of recorded asset amounts or the amount
  and classification of liabilities or any other adjustments that might be necessary
  should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

The parent company and its subsidiary in Korea maintain their
  records and prepare their financial statements in accordance with accounting
  principles generally accepted in Korea. Certain adjustments and reclassifications
  have been incorporated in the accompanying consolidated financial statements
  to conform with accounting principles generally accepted in the United States
  of America.

---

Significant accounting policies after reflecting adjustments
  for the above are as follows:

Basis of Consolidation

The consolidated financial statements include the accounts
  of the parent company and its subsidiaries. All significant inter-company transactions
  and accounts have been eliminated. Investments in affiliated companies in which
  Meridian exercises significant influence, but which it does not control, are
  stated at cost plus equity in undistributed earnings. Consolidated net income
  includes Meridian’s equity in current earnings of such companies, after
  elimination of unrealized inter-company profits.

Changes of Consolidated Subsidiary

The consolidated financial statements include the accounts
  of the Company and its subsidiaries. The following table reflects the Company's
  ownership percentages and acquisition dates of its consolidated subsidiaries
  as at December 31, 2002, 2003 and 2004:

|                   |  |                         |  | Acquisition   |  | Percentage ownership
|------------------ |  | ----------------------- |  | ------------- |  | --------------------
|Subsidiary         |  | Primary Business        |  | Date          |  | 2002                
|Meridian America   |  | wholesaler, retailer of |  | March 4, 2002 |  | 100%                
|Medicals, Inc.     |  | medical equipment       |  |               |  |                     
|Pusan Meridian Inc |  | ”                       |  | March 3, 2000 |  | 54.5%               

Translation of Foreign Currencies

The Company maintains its books of accounts in Korean Won.
  Transactions involving foreign currencies are recorded in the accounts at the
  exchange rate prevailing at the time the transactions are made. Assets and liabilities
  denominated in foreign currencies are translated into Korean Won at exchange
  rates in effect at year-end. The resulting foreign currency exchange gains/losses
  are credited/charged to current operations.

The exchange rates we used in this report were announced by
  The Korea Financial Telecommunications & Clearings Institute as basic rates.

Use of Estimates

The preparation of financial statements in accordance with
  U.S. GAAP requires management to make estimates and assumptions that affect
  the amounts reported in the consolidated financial statements and accompanying
  disclosures. The most significant estimates and assumptions relate to the allowance
  for doubtful accounts, inventory write-down due to decline in market value and
  deferred tax valuation allowance. Although these estimates are based on management’s
  best knowledge of current events and actions that the Company may undertake
  in the future, actual results may be different from the estimates.

Revenue recognition

Product and merchandise revenues are recognized upon shipment
  or delivery to the purchaser and when all significant contractual obligations
  have been satisfied and collection is reasonably assured. Revenues from software
  sales contracts are recognized upon delivery and when collection is reasonably
  assured. The Company's software sales contract does not provide for significant
  production, modification or customization work to the software after sale. Service
  fees are recognized when delivered in accordance with all terms and conditions
  of customer contracts, upon acceptance by the customer, and when collection
  is reasonably assured. The Company's contracts generally provide for return
  of products within three months from the date of sales. The Company's past experience
  indicates that returns are negligible, less than 1% of total sales, and accordingly
  the Company does not provide an allowance for returned products.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly
  liquid investments, including time deposits and short-term bonds which are readily
  convertible into known amounts of cash and have an original maturity of three
  months or less.

Financial Instruments

Long-term financial instruments are time deposit handled by
  financial institutions, which are restricted for withdrawals. The time deposit
  as of December 31, 2003 and 2004 is (won) 40,064 and (won) 40,454 thousand,
  respectively. In addition, the company has special deposit for the security
  of its checking account.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is estimated based on an analysis
  of individual accounts and past experience of collection.

Value - Added Taxes

Under the Korean value-added tax ("VAT") law, the Company
  pays a 10% VAT on each purchase of VAT-taxable goods or services("input

---

tax") and collects VAT from its customers equal to 10% of
  revenue("output tax"). The net amount is recorded as prepaid value-added taxes,
  if the input tax is greater than the output tax. However, if the output tax
  is greater than the input tax, the net amount is recorded as a current liability.

Inventories

Inventories are stated at the lower of cost or net realizable
  value. Net realizable value is the estimated selling price in the ordinary course
  of business, less the estimated selling cost. The cost of inventories is determined
  on the specific identification method for materials in transit and on the average
  cost method for all other inventories.

Investments in Affiliates

Investments in affiliated companies owned 20% or more or over
  which the Company has significant management control are stated at an amount
  as determined using the equity method.

Under the equity method of accounting, the Company’s
  initial investment is recorded at cost and is subsequently increased to reflect
  the Company’s share of the investee income and reduced to reflect the
  Company’s share of the investee losses or dividends received. Any excess
  in the Company’s acquisition cost over the Company’s share of the
  investee’s identifiable net assets is considered as goodwill.

Losses that reduce the investment below zero are applied against
  any long-term interests that, in substance, form part of the investor’s
  net investment in the affiliate; for example, preference shares and long-term
  receivables and loans.

Concentrations of credit risk

Financial instruments which potentially subject the Company
  to concentrations of credit risk consist of cash. The Company maintains cash
  accounts at two financial institutions. The Company periodically evaluates the
  credit worthiness of financial institutions, and maintains cash accounts only
  in large high quality financial institutions, thereby minimizing exposure for
  deposits in excess of federally insured amounts. The Company believes that credit
  risk associated with cash is remote.

Credt risk associated with trade accounts receivable arises
  from the potential for customers and other debtors to default on their contractual
  obligations to the Company. The Company does not anticipate customers and other
  debtors will default on their obligations to any greater extent than that currently
  provided for. The Company limits its credit risk by granting credit only to
  customers and other debtors that are considered to be of high quality.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
  depreciation. Significant additions or improvements extending useful lives of
  assets are capitalized. However, normal maintenance and repairs are charged
  to expense as incurred.

Depreciation is computed by the declining-balance method (buildings,
  structures: straight-line method) using rates based on useful lives of the respective
  assets as follows:

|                        | Useful lives (years)
|----------------------- | --------------------
|Buildings               | 40                  
|Structures              | 20                  
|Machinery and equipment | 8                   
|Tools                   | 4                   
|Furniture and fixtures  | 4                   
|Vehicles                | 4                   

The Company reviews for the impairment of property, plant
  and equipment, whenever events or changes in circumstances indicate that the
  carrying amount of an asset may not be recoverable. An impairment loss would
  be recognized when estimated undiscounted future net cash flows expected to
  result from the use of the asset and its eventual disposition are less than
  its carrying amount. If such assets are considered to be impaired, the impairment
  to be recognized is measured by the amount by which the carrying amount of the
  assets exceeds the fair value of the assets.

Intangible Assets

Intangible assets, which consist of patents and trademarks,
  are stated at cost less accumulated amortization computed using the straight-line
  method over their estimated useful lives of 10 years.

Retirement and Severance Benefits

Employees who have been with the Company for more than one
  year are entitled to lump-sum payments based on current rates of pay and length
  of service when they leave the Company. The Company's estimated liability under
  the plan which would be payable if all employees left

---

on the balance sheet date is accrued in the accompanying balance
  sheets.

Through March 1999, under the National Pension Scheme of Korea,
  the Company transferred a certain portion of retirement allowances of employees
  to the National Pension Fund. The amount transferred will reduce the retirement
  and severance benefit amount to be payable to the employees when they leave
  the Company and is accordingly reflected in the accompanying financial statements
  as a reduction from the retirement and severance benefit liability. Since April
  1999, however, a new regulation applies and such transfers to the National Pension
  Fund are no longer required.

Research and Development Costs

Certain costs incurred in connection with the purchase of
  equipment and facilities used in the Company’s research and development
  activities are capitalized into property, plant and equipment, to the extent
  that they have alternative future uses. However, all other research and development
  costs are expensed as incurred. The Company has expensed (won) 470,792 thousand,
  (won) 57,378 thousand and (won) 183,567 thousand during the years ended December
  31, 2002, 2003 and 2004, respectively.

Advertising costs

The Company expenses advertising costs as they are incurred.
  Advertising expense for the years ended December 31, 2002, 2003 and 2004 are
  (won) 78,176thousand, (won) 53,042 thousand and (won) 30,749 thousand,
  respectively.

Income Taxes

Income taxes are accounted for under the asset and liability
  method. Deferred tax assets and liabilities are recognized for the future tax
  consequences attributable to differences between the financial statement carrying
  amounts of existing assets and liabilities and their respective tax bases and
  operating loss carry forwards. Deferred tax assets and liabilities are measured
  using enacted tax rates expected to apply to taxable income in the years in
  which those temporary differences are expected to be recovered or settled. Deferred
  tax assets are reduced by a valuation allowance when, in the opinion of management,
  it is more likely than not that some portion or all of the deferred tax assets
  will not be realized. Deferred tax assets and liabilities are adjusted for the
  effects of changes in tax laws and rates on the date of enactment.

Earnings (Loss) Per Share

In February, 1997, the Financial Accounting Standards Board
  issued Statement No. 128, Earnings Per Share (SFAS 128), which established new
  standards for computing and presenting earnings per share effective for fiscal
  years ending after December 15, 1997.

With SFAS 128, primary earnings per share is replaced by basic
  earnings per share, which is computed by dividing income available to common
  shareholders by the weighted average number of shares outstanding for the period.
  In addition, SFAS 128 requires the presentation of diluted earnings per share,
  which includes the potential dilution that could occur if dilutive securities
  were exercised or converted into common stock. The computation of diluted EPS
  does not assume the conversion or exercise of securities if their effect is
  anti-dilutive. Common equivalent shares consist of the common shares issuable
  upon the conversion of the convertible loan notes and special warrants (using
  the if-converted method) and incremental shares issuable upon the exercise of
  stock options and share purchase warrants (using the treasury stock method).

Stock Option Plan

The Company applies the intrinsic value-based method of accounting
  prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees,”
  and related interpretations, in accounting for its fixed stock option plan.
  As such, compensation expense would be recorded on the date of grant only if
  the current market price of the underlying stock exceeded the exercise price.
  SFAS 123 "Accounting for Stock-Based Compensation" established accounting and
  disclosure requirements using a fair value-based method of accounting for stock-based
  employee compensation plans. As allowed by SFAS 123, the Company elected to
  apply the intrinsic value-based method of accounting described above, and has
  adopted the disclosure requirement of SFAS 123.

The Company has adopted the disclosure-only provisions of
  SFAS 123. Had compensation cost for the Company's stock option plan been determined
  based on the fair value at the grant date consistent with the provisions of
  SFAS123, the Company's net loss and loss per share for 2003 would have been
  increased to the pro forma amounts indicated below (in Korean won):

| |                          | 2004              | 
| | ------------------------ | ----------------- | 
| | Net income (loss)        |                   | 
| | As reported              | (-) 2,057,147,357 | 
| | Pro forma                | (-) 2,068,339,483 | 
| | Basic earnings per share |                   | 
| | As reported              | (-) 93            | 
| | Pro forma                | (-) 93            | 

The fair value of stock options granted were estimated on
  the dates of grant using the Black-Scholes option pricing model with the following
  assumptions:

---

dividend yield and expected volatility of nil for all years,
  risk-free interest rate of 5.64% to 9% and expected lives of 4 years. The weighted
  average fair value per stock option granted during 2000 and 2001 was (won) 295
  and (won) 607 respectively.

New accounting pronouncements

In March 2004, the FASB approved the consensus reached on
  the Emerging Issues Task Force Issue No. 03-1, “The Meaning of Other-Than-Temporary
  Impairment and Its Application to Certain Investments” (“EITF 03-1”).
  The objective of this Issue is to provide guidance for identifying impaired
  investments. EITF 03-1 also provides new disclosure requirements for investments
  that are deemed to be temporarily impaired. In FASB Staff Position on EITF 03-1,
  the Board directed the FASB staff to delay the effective date for the measurement
  and recognition guidance contained in EITF 03-1. The disclosure requirements
  are effective only for annual periods ending after June 15, 2004. The Company
  does not believe that the impact of adopting EITF 03-1 will be significant to
  the Company’s overall results of operations or financial position.

In December 2004, the Financial Accounting Standards Board
  issued Statement No. 123R (SFAS 123R), Share-Based Payment , which replaces
  SFAS 123 and APB 25 and requires the Company to measure compensation cost for
  all share-based payments at fair value. The Company plans to adopt SFAS 123R
  as of July 1, 2005. The Company will recognize share-based employee compensation
  cost from July 1, 2005, as if the fair-value-based accounting method had been
  used to account for all employee awards granted, modified, or settled after
  the effective date and for any awards that were not fully vested as of the effective
  date. Based on currently existing share-based compensation plans, the Company
  does not expect the adoption of SFAS 123R to have a material impact on its financial
  position or results of operations.

3. United States Dollar Amounts

The Company operates primarily in Korea and its financial
  accounting records are maintained in Korean Won. These translations should not
  be construed as a representation that the Korean Won amounts shown could be
  converted, realized or settled in US dollars at this or any other rate. The
  US dollar amounts are provided herein as supplemental information solely for
  the convenience of the reader. Korean Won amounts are expressed in US dollars
  at the rate of (Won) 1,035.1: US$1, the US Federal Reserve Bank of New York
  noon buying exchange rate in effect on December 31, 2004. The US dollar amounts
  are unaudited and are not presented in accordance with generally accepted accounting
  principles in either Korea or the United States of America.

4. Short term loans receivable

Short-term loans receivable as of December 31, 2003 and 2004
  are as follows (in thousands of Korean won):

|                                |               |  | Interest |  |         |   |         |  
|------------------------------- | ------------- |  | -------- |  | ------- | - | ------- | -
|                                | Maturity year |  | rate     |  | 2003    |   | 2004    |  
|                                |               |  |          |  |         |   |         |  
|Sales Agent                     | -             |  | -        |  | -       |   | 43,387  |  
|Others                          | 2005          |  | 0%       |  | 128,322 |   | 39,245  |  
|                                |               |  |          |  | 128,322 |   | 82,632  |  
|Allowance for doubtful accounts |               |  |          |  | (65,526 | ) | (26,970 | )
|Net                             |               |  |          |  | 62,796  |   | 55,662  |  

5. Accounts Receivable

The following table presents accounts receivable at December
  31, 2003 and 2004 (in thousands of Korean won):

|Account                         |  | 2003       |   | 2004      |  
|------------------------------- |  | ---------- | - | --------- | -
|Trade                           |  | 2,287,978  |   | 1,002,250 |  
|Others                          |  | 158,211    |   | 71,912    |  
|                                |  |            |   |           |  
|Sub total                       |  | 2,446,189  |   | 1,074,162 |  
|Allowance for doubtful accounts |  | (1,960,499 | ) | (543,412  | )
|Accounts Receivable, net        |  | 485,690    |   | 530,750   |  

---

6. Inventories

Inventories comprise the following at December 31, 2003 and
  2004 (in thousands of Korean Won):

|                | 2003    |  | 2004   
|--------------- | ------- |  | -------
|Merchandise     | 243,651 |  | 297,888
|Finished goods  | 175,259 |  | 105,395
|Work-in-process | 169,609 |  | 125,293
|Raw material    | 250,141 |  | 167,420
|                | 838,660 |  | 695,996

Merchandise consists of medical equipment, medical supplies
  and electronic equipment purchased and held for resale by the Company. Finished
  goods are comprised principally of oriental and alternative medical equipments
  manufactured by the Company.

7. Other Current Assets

Other current assets as of December 31, 2003 and 2004 are
  as follows (in thousands of Korean won):

|Account              |  | 2003   |  | 2004   
|-------------------- |  | ------ |  | -------
|Advanced payment     |  | 30,031 |  | 180,897
|Prepaid income taxes |  | 7,980  |  | 69     
|Prepaid expenses     |  | -      |  | 3,653  
|Other                |  | -      |  | 3,996  
|Total                |  | 38,011 |  | 188,615

8. Investments in Nonconsolidated Affiliates

The Company accounts for investments in which it exerts significant
  influence over using the equity method. The Company’ ownerships as of
  December 31, 2003 and 2004 are as follows:

|                                            | 2003   |  | 2004  
|------------------------------------------- | ------ |  | ------
|Beijing Meridian Medicals Equipment Co.,Ltd | 25.00% |  | 25.00%

On November 10, 2001, the Company acquired 45% of the share
  ownership in Beijing Meridian Medicals Equipment Co., Ltd. ("Beijing Meridian")
  for (won) 76,955,623 in cash. The changes of ownership percentage occurred in
  2003 and 2002 when Beijing Meridian increased its issued capital stock. The
  carrying amounts of investments as of December 31, 2003 and 2004 are as follows
  (in thousands of Korean won):

|                                            | 2003   |  | 2004  
|------------------------------------------- | ------ |  | ------
|Beijing Meridian Medicals Equipment Co.,Ltd | 22,635 |  | 13,401

9. Pledge Assets

The following assets are pledged as collateral for short-term
  borrowings as of December 31, 2004 (in thousands of Korean won):

|Assets    |  | Book value |  | Lender                      |  | Collateralized amount
|--------- |  | ---------- |  | --------------------------- |  | ---------------------
|Land      |  | 928,107    |  | ChoHung Bank                |  | 520,000              
|Buildings |  | 688,533    |  | ChoHung Bank and Woori Bank |  | 568,000              
|          |  | 1,616,640  |  |                             |  | 1,088,000            

---

10. Property, Plant and Equipment

Property, plant and equipment comprise the following at December 31, 2003
  and 2004 (in thousands of Korean won):

|                                   | 2003       |   | 2004       |  
|---------------------------------- | ---------- | - | ---------- | -
|Land                               | 928,107    |   | 928,107    |  
|Buildings                          | 693,733    |   | 693,733    |  
|Machinery                          | 49,716     |   | 49,716     |  
|Vehicles                           | 58,216     |   | 54,773     |  
|Tools                              | 47,900     |   | 47,900     |  
|Furniture and fixtures             | 779,257    |   | 793,822    |  
|                                   |            |   |            |  
|Less accumulated depreciation      | (1,014,593 | ) | (1,076,383 | )
|Property, plant and equipment, net | 1,542,336  |   | 1,491,668  |  

Depreciation expenses for the years ended December 31, 2002,
  2003 and 2004 are (won) 156,130 thousand, (won) 153,924 thousand and (won) 61,790
  thousand.

11. Intangible Assets

Intangible assets comprise the following at December 31, 2004
  (in Korean won):

|                         | Patents and trademarks
|------------------------ | ----------------------
|Acquisition cost         | 5,466,260             
|Accumulated amortization | 3,995,648             
|Intangible assets, net   | 1,470,612             

Amortization expenses for the year ended December 31, 2004
  amounted to (won) 546,626.

12. Short-Term Borrowings

Details of Company’s short-term borrowings as of December
  31, 2003 and 2004 are as follows (in thousands of Korean won):

|                | Annual        |  |           |  |          
|--------------- | ------------- |  | --------- |  | ---------
|                | interest rate |  | 2003      |  | 2004     
|Creditor        |               |  |           |  |          
|Chohung Bank    | 5.0%          |  | 977,615   |  | 977,714  
|Medison Co.,Ltd | -             |  | 1,216     |  | 1,216    
|Other           | -             |  | 495,625   |  | 114,000  
|                |               |  | 1,474,456 |  | 1,092,930

13. Long-Term Debt

Details of Company’s long-term debts as of December
  31, 2003 and 2004 are as follows (in thousands of Korean won):

|                                        | Annual        |  |                   |  |            |  |           
|--------------------------------------- | ------------- |  | ----------------- |  | ---------- |  | ----------
|                                        | interest rate |  | Final maturity    |  | 2003       |  | 2004      
|Creditor                                |               |  |                   |  |            |  |           
|Chohung Bank                            | 5.0%          |  | December 31, 2004 |  | 96,741     |  | 96,741    
|Korea Technology Credit Guarantee Fund  | 3.5%          |  | December 31, 2013 |  | 1,120,810  |  | 1,151,884 
|Korea Foreign Exchange Bank             | 3.5%          |  | December 31, 2013 |  | 125,831    |  | 125,831   
|Woori Bank                              | 3.5%          |  | December 31, 2013 |  | 391,787    |  | 391,787   
|Small/Medium Industrial Bank            | 3.5%          |  | December 31, 2013 |  | 300,000    |  | 300,000   
|Shinhan Bank                            | 3.5%          |  | December 31, 2013 |  | 41,612     |  | 41,612    
|SMI ‡UABS Specialty Co., Ltd (note a)   | 3.5%          |  | December 31, 2013 |  | 1,000,000  |  | 1,000,000 
|Rainbow Specialty Sec Co., Ltd (note a) | 3.5%          |  | December 31, 2013 |  | 500,000    |  | 500,000   
|                                        |               |  |                   |  |            |  |           
|Less portion due within one year        |               |  |                   |  | (-) 96,741 |  | (-) 96,741
|Long-term portion                       |               |  |                   |  | 3,480,040  |  | 3,511,115 

---

In accordance with a court-approved rescheduling plan, the
  above rescheduled long-term borrowings are to be repaid over 10 years beginning
  2007 to 2013, after a 3-year grace period.

(Note a) The Company had issued two series of non-guaranteed
  corporate bonds in 2001. As discussed in Note 1, the Company received an approval
  for debt rescheduling plan including debentures. According to that approval,
  two series of debentures were reclassified to long-term borrowings and the Company
  extended the maturity date of those long-term borrowings to December 31, 2013
  with a reduced interest rate (3.5% per annum). Details of debentures (reclassified
  to long-term debt) as of December 31, 2004, are as follows (in thousands of
  Korean Won):

|              |           | Rescheduled   |  | Original         
|------------- | --------- | ------------- |  | -----------------
|              | Amount    | Interest rate |  | maturity         
|1stdebentures | 1,000,000 | 3.5%          |  | December 31, 2013
|2nddebentures | 500,000   | 3.5%          |  | December 31, 2013

The repayment schedule for long-term debts as of December
  31, 2004 is as follows (in thousands of Korean Won):

|2005   |  | 2006  |  | 2007    |  | 2008    |  | Thereafter
|------ |  | ----- |  | ------- |  | ------- |  | ----------
|96,741 |  | 6,844 |  | 503,543 |  | 503,543 |  | 2,497,184 

14. Retirement and Severance Benefits

Changes in retirement and severance benefits for the years
  ended December 31, 2003 and 2004 are summarized as follows (in Korean won):

|                                                   | 2003           |  | 2004          
|-------------------------------------------------- | -------------- |  | --------------
|Estimated severance liability at beginning of year | 279,276,661    |  | 265,480,042   
|Provision                                          | 75,101,496     |  | 51,222,136    
|Payments                                           | (-) 73,901,562 |  | (-) 38,261,718
|Belonged to formal subsidiary                      | (-) 14,996,553 |  | -             
|Transfer to National Pension Fund                  | (-) 20,934,247 |  | (-) 20,607,547
|                                                   |                |  |               
|(-) Less current portion                           | 76,018,377     |  | 113,059,144   
|Net balance at end of year                         | 168,527,418    |  | 144,773,769   

15. Shareholder’s Equity

The Company’s capital stock consists entirely of common
  stock with a par value of (won) 100 and the number of authorized, issued and
  outstanding shares as of December 31, 2003 and 2004 are as follows (in Korean
  won):

|                              | 2003            |  | 2004           
|----------------------------- | --------------- |  | ---------------
|Authorized shares             | 50,000 thousand |  | 50,000 thousand
|Issued and outstanding shares | 19,151 thousand |  | 29,994 thousand
|Par value                     | 200             |  | 100            

At an extraordinary general meeting of shareholders of the
  Company, on April 27, 2004, it was approved that the par value of the common
  stock of the Company be reduced from (won) 200 per share to (won) 100 per share.
  The new par value was registered with the Korean registrar of companies on June
  1, 2004 and was effective as of July 1, 2004. As a result, the Company’s
  capital stock was changed from (won) 3,830,297 thousand to (won) 1,915,148 thousand.

On June 8, 2004, the Company issued 3,312,500 shares of common
  stock (par value won 100) at won 183.49 per share for cash. The stock issued
  is restricted from trading for one year.

On October 21, 2004, the Company experienced debt-for-equity
  swap. As a result, the Company issued 4,230,000 shares of common stock at won
  174.97.

On November 24, 2004, the Company issued 3,300,000 shares
  of common stock (par value won 100) in exchange for investor relations and marketing
  services with the fair value to the Company of won 563,164,800. The shares issued
  were valued at the trading price of the company's common stock as of the date
  of authorization for the issuance.

The Company legally has issued its shares and complied with
  the filing requirements pursuant to the SEC regulations. 12,485,159 common shares
  issued through S-8 registrations, for acquisition of By George Holdings and
  debt-for-equity swap on October 21, 2004 Corp. have not been yet included in
  the Korean Commercial Registration Office due to the different requirements
  of the share issuance between the US and

---

Korean Commercial Laws. The numbers of outstanding shares
  and capital stock as of December 31, 2004 in SEC and in Korean Commercial Registration
  Office are as follows (in thousands of Korean won, except for number of outstanding
  shares):

|                             |            |  | Korean Commercial  
|---------------------------- | ---------- |  | -------------------
|                             | SEC        |  | Registration Office
|Number of outstanding shares | 29,993,894 |  | 17,508,825         
|Capital Stock                | 2,999,389  |  | 1,750,883          

However, the right and interest of the holders of these shares
  are not different from those of other shareholders.

16. Appropriation for Business Rationalization

The Company has appropriated (won) 267,608,937 of retained
  earnings for future investment and business rationalization. The appropriation
  was a legal requirement in Korea until 2001 when the applicable statute was
  repealed. There are presently no restrictions on the use of the appropriation.

17. Contingencies and Commitments:

As of December 31, 2004, the Company is contingently liable
  for promissory notes of (won) 9,010 thousand guaranteed to banks for consumers'
  loan. The Company's management believes that, based upon its past history of
  similar transactions, the possibility of the consumer's defaults on the bank-loan
  is remote.

18. Selling, General and Administrative Expenses

Details of selling, general and administrative expenses for
  the years ended December 31, 2003 and 2004 are as follows (in Korean won):

|                                                | 2003          |  | 2004         
|----------------------------------------------- | ------------- |  | -------------
|Salaries                                        | 559,840,321   |  | 552,666,633  
|Provision for retirement and severance benefits | 39,775,276    |  | 33,175,384   
|Other employee benefits                         | 85,822,375    |  | 74,597,350   
|Travel                                          | 19,551,365    |  | 9,947,114    
|Entertainment                                   | 26,450,872    |  | 3,845,815    
|Advertising                                     | 53,041,650    |  | 30,749,116   
|Research and development                        | 57,378,180    |  | 183,567,322  
|Communications                                  | 25,236,125    |  | 21,964,125   
|Commissions and fees                            | 1,014,455,776 |  | 1,170,015,502
|Insurance                                       | 5,561,016     |  | 9,104,835    
|Transportation                                  | 73,018,763    |  | 66,733,649   
|Depreciation                                    | 134,434,884   |  | 21,991,546   
|Amortization                                    | 546,626       |  | 546,626      
|Taxes and dues                                  | 31,569,878    |  | 41,528,220   
|Bad debt expenses                               | 1,073,100,085 |  | -            
|Rent                                            | 94,174,610    |  | 83,108,735   
|Miscellaneous                                   | 166,645,888   |  | 158,122,839  
|                                                |               |  |              
|Total                                           | 3,460,603,690 |  | 2,461,664,811

19. Income Taxes

Income (loss) before income taxes and tax provision comprises
  the followings (in thousands of Korean won):

|                                  | 2002          |  | 2003          |  | 2004         
|--------------------------------- | ------------- |  | ------------- |  | -------------
|Income (loss) before income taxes | (-) 3,608,158 |  | (-) 2,151,672 |  | (-) 2,057,147
|Income taxes – Current            | -             |  | -             |  | -            
|Income taxes – Deferred           | -             |  | -             |  | -            
|                                  |               |  |               |  |              
|Total income taxes                | -             |  | -             |  | -            

The Company is subject to corporate income tax and resident
  surtax normally at an aggregate rate of 14.3% on taxable income up to (won)
  100,000,000 and 27.5% on taxable income over that amount. However, there was
  no income taxes-current because of consecutive accumulative deficits for tax
  purposes as of December 31, 2002, 2003 and 2004.

---

Deferred income taxes reflect the net tax effects of temporary
  differences between the carrying amounts of assets and liabilities for financial
  reporting purposes and the amounts used for income tax purposes. Significant
  components of the Company's deferred tax assets (liabilities) as of December
  31, 2003 and 2004 are as follows (in thousands of Korean won):

|                                                   | 2003          |  | 2004         
|-------------------------------------------------- | ------------- |  | -------------
|Temporary differences                              | 1,396,048     |  | 1,088,245    
|Tax credit carry forwards                          | 1,198,609     |  | 1,971,580    
|Net loss carry forwards for tax purpose            | 315,212       |  | 315,212      
|Total deferred income tax assets (liabilities)     | 2,909,869     |  | 3,375,037    
|Less – Valuation allowance for deferred tax assets | (-) 2,909,869 |  | (-) 3,375,037
|                                                   |               |  |              
|Net deferred tax assets (liabilities)              | -             |  | -            

As of December 31, 2004, the Company has net operating loss
  carryforwards for income tax purposes, tax credit carryforwards and deductible
  accumulated temporary differences as showed above table. Realization of the
  future tax benefits related to the deferred tax asset is dependent on many factors,
  including the Company’s ability to generate taxable income within the
  period during which the temporary differences reserves, the outlook for the
  Korean economic environment and the overall future industry outlook. Management
  periodically considers these factors in reaching its conclusion and has determined
  that valuation allowance was required as of December 31, 2004 and 2003. Therefore,
  the management concluded that 100% of valuation allowance is recorded in the
  Company’s financial statements with the reason for the remote possibility
  to generate future taxable income within the period during which the all temporary
  differences reserve due to the continuing loss from its inception.

20. Stock Options

Under the Company's Articles of Incorporation, the Company's
  Board of Directors may grant stock options to officers and key employees. The
  maximum aggregate number of shares available for issuance under the Stock Option
  Plan may not exceed 50% of the total number of shares outstanding. Stock options
  may not be granted to all officers and employees at the same time. Any single
  officer or employee may not be granted stock options for shares exceeding 10%
  of shares issued and outstanding.

Stock options granted under the Stock Option Plan will have
  a minimum exercise price equal to the arithmetic mean of (i) the weighted average
  of the daily market prices for the two-month period prior to the date of grant,
  (ii) the weighted average of the daily market prices for the one-month period
  prior to such date, (iii) the weighted average of the daily market prices for
  the one-week period prior to such date. When new shares are issued upon the
  exercise of the stock options, the option exercise price shall not be less than
  the greater of the market price of shares valued as of the date of the grant
  or the par value of the shares concerned.

Details of stock option rights granted by the Company as of
  December 31, 2004, are presented below (in Korean won):

|Grant    |  | Options     |  | Type of stock |  | Exercise |  | Fair  |  | Service           |  | Exercisable      
|-------- |  | ----------- |  | ------------- |  | -------- |  | ----- |  | ----------------- |  | -----------------
|date     |  | Outstanding |  | Options       |  | Price    |  | Value |  | Period            |  | Period           
|February |  |             |  | Issuance of   |  |          |  |       |  | February, 2000    |  | February, 2003   
|23, 2000 |  | 322,625     |  | common stock  |  | 500      |  | 295   |  | to January, 2003  |  | to January, 2007 
|         |  |             |  |               |  |          |  |       |  |                   |  |                  
|         |  |             |  |               |  |          |  |       |  |                   |  |                  
|March    |  |             |  | Issuance of   |  |          |  |       |  | March, 2001       |  | March, 2004      
|19, 2001 |  | 258,825     |  | common stock  |  | 340      |  | 607   |  | to February, 2004 |  | to February, 2008
|         |  | 581,450     |  |               |  |          |  |       |  |                   |  |                  

21. Earnings (loss) Per Share

Earnings (loss) per share is computed by dividing net income
  by the weighted-average number of shares outstanding during the year.

Diluted earnings (loss) per share is computed in a manner
  consistent with that of basic earnings per share while giving effect to all
  potentially dilutive common shares that were outstanding during the period.
  The Company has any potentially dilutive common shares as of December 31 2003
  and 2004, however there was no dilutive effects as of December 31, 2002, 2003
  and 2004. Therefore, earnings per share is the same as diluted earnings per
  share.

Earnings (loss) per share for the years ended December 31,
  2002, 2003 and 2004 are calculated as follows (in thousands of Korean won, except
  for per share amount and number of shares):

---

|                              | 2002         |  | 2003         |  | 2004        
|----------------------------- | ------------ |  | ------------ |  | ------------
|Net income (loss) as reported |              |  |              |  |             
|on the income statements      | (-)3,608,158 |  | (-)2,151,672 |  | (-)2,057,147
|Weighted-average number       |              |  |              |  |             
|of common shares outstanding  | 16,472,700   |  | 18,094,211   |  | 22,199,701  
|Earnings (loss) per share     | (-)219       |  | (-)119       |  | (-)93       

22. Related Party Transactions

Significant transactions and account balances which occurred
  in the normal course of business with related companies, Beijing Meridian Medicals
  Equipment Co., Ltd and Meridian Asia Co., Ltd. as of and for the years ended
  December 31, 2003 and 2004 are summarized as follows (in thousands of Korean
  won):

|                       |  | Transaction or     |  |        |  |        |  |                 
|---------------------- |  | ------------------ |  | ------ |  | ------ |  | ----------------
|Related party          |  | Account balance    |  | 2003   |  | 2004   |  | Description     
|Beijing Meridian       |  | Account receivable |  |        |  |        |  |                 
|Medical Equipment      |  | – trade            |  | 31,921 |  | 27,817 |  |                 
|Co., Ltd               |  | Short-term loans   |  | 37,791 |  | 37,791 |  |                 
|                       |  |                    |  |        |  |        |  |                 
|Meridian Asia  Co.,Ltd |  | Sales              |  | 4,091  |  | 346    |  | Sales of product

23. Statement of Cash Flows

(a) Transactions Not Involving Cash

Significant non-cash investing and financing activities for
  the year ended December 31, 2004 are summarized as follows (in thousands of
  Korean won):

|Reduction of capital stock | 1,915,148
|-------------------------- | ---------
|Debt – equity swap         | 740,134  

(b) Interest and Income Taxes Paid and Received

Interest and income taxes paid and received in cash for the
  years ended December 31, 2002, 2003 and 2004 are as follows (in thousands of
  Korean won):

|                                    | 2002    |  | 2003    |  | 2004   
|----------------------------------- | ------- |  | ------- |  | -------
|Cash paid for interest              | 446,234 |  | 151,799 |  | 202,198
|Cash refunded (paid) for income tax | -       |  | -       |  | -      
|Cash received for interest          | 33,762  |  | 2,456   |  | 462    

24. Segment Information

In 2004, the Company operated in a one industry segment, the
  development and manufacture of alternative medical equipments. The Company's
  identifiable assets are located in one geographic area, the Republic of Korea
  (also known as South Korea). Sales revenue is attributable to geographic locations
  based on the location of the customer, as follows (in thousands of Korean won):

|                 | 2003      |  | 2004     
|---------------- | --------- |  | ---------
|Export           |           |  |          
|U.S.A            | 304,577   |  | 707,917  
|South
      Asia | 4,091     |  | -        
|China            | -         |  | 29,153   
|Other            | -         |  | 946      
|                 | 308,668   |  | 738,016  
|                 |           |  |          
|Domestic Sales   | 3,132,451 |  | 1,466,218
|                 | 3,441,119 |  | 2,204,234

---

25. Subsequent Events

On May 2, 2005, the board of directors of the Company authorized
  the return to treasury of 1,000,000 shares of common stock issued to Edward
  Fitzpatrick (the “Shares”). The Shares had been issued to Mr. Fitzpatrick
  pursuant to a consulting agreement entered into between Fitzpatrick and the
  Company, on February 5th, 2004 (the “Agreement”). The Agreement
  was terminated by the Company due to lack of performance by Fitzpatrick of his
  obligations under the Agreement, and the Shares were subsequently returned to
  the Company’s treasury, effected by resolution of the Company’s
  Board of Directors. As a result, the total outstanding shares of the Company
  have decreased to 28,993,984.

On June 20, 2005, the Company issued 2,400,000 shares of common
  stock (par value won 100) in exchange for investor relations and marketing services
  with the fair value to the Company of won 485,174,884. The shares issued were
  valued at the trading price of the company's common stock as of the date of
  authorization for the issuance.

26. Risk and Uncertainties

The Asia-Pacific regions, including the Republic of Korea,
  are experiencing economic difficulties. The recoverability of the Company's
  assets and ability of the Company to pay its debts as they mature are dependent
  to a large extent on the efficacy of the fiscal measures and other actions,
  beyond the Company's control, undertaken to achieve economic stability. The
  Company is exposed to credit risk in the event of nonperformance by financial
  institutions with which it conducts business. The Company minimizes exposure
  to such risk, however, by dealing only with major Korean banks and financial
  institutions.

Item 19. Exhibits

|Exhibit |                                     
|------- | ------------------------------------
|12.1    | Section 302 Certification of the CEO
|12.2    | Section 302 Certification           
|13.1    | Section 906 Certification of the CEO
|13.2    | Section 906 Certification           

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.

By: /s/ Hyeon Seong Myeong 
  Name: Myeong, Hyeon Seong 
  Title: President, CEO, Director 
  Date: July 14, 2005

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