---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

[ ] 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, 196-35, Anyang-Dong, Manan-Gu, Anyang-Si, Gyeonggi-Do,
Korea 430-857 (Tel: 82-31-463-7700)(Address of principal executive
offices)

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

Title of Each Class: None

Name of each exchange on which registered: Not applicable

Securities registered or to be registered pursuant to section
12(g) of the act:

Common shares with par value(Title of
Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

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 August 12, 2010:
35,094,156

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No
[X]

If this report is an annual report or transition report,
indicate by check mark if the registrant is not required to file reports
pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. Yes [ ]
No [X]

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 whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer [ ]
    Accelerated filer [ ]
    Non-accelerated filer [ ]
    Smaller reporting company [X]


Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|U.S. GAAP [X] | International Financial
      Reporting Standards as issued | Other [ ]
|------------- | ----------------------------------------------------------- | ---------
|              | by the International Accounting
      Standards Board [ ]   |          

Indicate by check mark which financial statement item the
registrant has selected to follow. Item 17 [ ] Item 18 [X]

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

---

TABLE OF CONTENTS

References Currency Translation

|ITEM 1. IDENTITY OF DIRECTORS,
      SENIOR MANAGEMENT AND ADVISERS                       
|------------------------------------------------------------------------------------------
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                           
|ITEM 3. KEY INFORMATION                                                                   
|ITEM 4. INFORMATION ON THE COMPANY                                                        
|ITEM 5. OPERATING AND FINANCIAL
      REVIEW AND PROSPECTS                                
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
      EMPLOYEES                                  
|ITEM 7. MAJOR SHAREHOLDERS
      AND RELATED PARTY TRANSACTIONS                           
|ITEM 8. FINANCIAL INFORMATION                                                             
|ITEM 9. THE OFFER AND LISTING                                                             
|ITEM 10. ADDITIONAL INFORMATION                                                           
|ITEM 11. QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK                 
|ITEM 12. DESCRIPTION OF SECURITIES OTHER
      THAN EQUITY SECURITIES.                    
|ITEM 13.DEFAULTS, DIVIDENDS
      ARREARAGES AND DELINQUENCIES                            
|ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS
      OF SECURITY HOLDERS AND USE OF PROCEEDS
|ITEM 15. CONTROLS AND PROCEDURES                                                          
|ITEM 16. [RESERVED]                                                                       
|ITEM 16A. AUDIT COMMITTEE
      FINANCIAL EXPERT                                          
|ITEM 16B. CODE OF ETHICS                                                                  
|ITEM 16C. PRINCIPAL ACCOUNTANT
      FEES AND SERVICES                                    
|ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS
      FOR AUDIT COMMITTEES                
|ITEM 16E. PURCHASES OF EQUITY
      SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS    
|ITEM 17. FINANCIAL STATEMENTS                                                             
|ITEM 18. FINANCIAL STATEMENTS                                                             
|ITEM 19. EXHIBITS                                                                         

---



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 $0.09
at December 31, 2009).

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 and presented in accordance with accounting principles generally accepted
in the United States for the fiscal years ended December 31, 2009, 2008 and
2007. Solely for the convenience of the reader and to improve clarity, certain
items in this annual report were expressed in US$ at specified rates. Those US$
amounts are not audited. All translations from Won to US$ 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, 2009, which was Won 1,163.70
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 US$. On June 30, 2010 the exchange rate was Won 1,220.8
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 2. OFFER STATISTICS AND EXPECTED
TIMETABLE

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, 2009 and 2008 and for the
years ended December 31, 2009, 2008 and 2007 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, 2009, 2008, 2007, 2006 and 2005 are derived from the
audited consolidated financial statements of Meridian, which have been audited
by Choi, Kim and Park LLP, independent accountants

Our consolidated financial statements are compiled in Won and
presented in accordance with accounting principles generally accepted in the
United States.

---

|Meridian Co., Ltd. and Subsidiary                                     
|----------------------------------------------------------------------
|Condensed Consolidated Statements of Operations                       
|For the years ended December 31, 2009, 2008, 2007, 2006
      and 2005
|(Korean Won (W) in thousands, except per share amounts)               

|                                                             |   | 2009(1)(in US$) |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|------------------------------------------------------------ | - | --------------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                             |   | (unaudited)     |   |   | 2009       |   |   | 2008       |   |   | 2007       |   |   | 2006       |   |   | 2005       |  
|                                                             |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Sales                                                        | $ | 1,180,184       |   | W | 1,373,379  |   | W | 3,324,923  |   | W | 2,604,541  |   | W | 1,526,828  |   | W | 1,434,519  |  
|Cost of sales                                                |   | 379,322         |   |   | 441,416    |   |   | 944,250    |   |   | 819,418    |   |   | 591,819    |   |   | 1,099,194  |  
|Gross profits                                                |   | 800,862         |   |   | 931,963    |   |   | 2,380,673  |   |   | 1,785,123  |   |   | 935,009    |   |   | 335,325    |  
|Operating expenses                                           |   | 2,565,111       |   |   | 2,985,018  |   |   | 2,608,778  |   |   | 2,347,469  |   |   | 1,186,416  |   |   | 2,293,172  |  
|Loss from operations                                         |   | (1,764,249      | ) |   | (2,053,055 | ) |   | (228,105   | ) |   | (562,346   | ) |   | (251,407   | ) |   | (1,957,847 | )
|Other income(expenses)                                       |   | (381,844        | ) |   | (444,353   | ) |   | 401,089    |   |   | (45,317    | ) |   | (83,600    | ) |   | (1,424,510 | )
|                                                             |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Income(Loss) before income taxes                             | $ | (2,146,093      | ) | W | (2,497,408 | ) | W | 172,984    |   | W | (607,663   | ) | W | (335,007   | ) | W | (3,382,357 | )
|Income taxes                                                 |   | -               |   |   | -          |   |   | -          |   |   | -          |   |   | -          |   |   | -          |  
|Net income(loss)                                             |   | (2,146,093      | ) |   | (2,497,408 | ) |   | 172,984    |   |   | (607,663   | ) |   | (324,747   | ) |   | (3,349,406 | )
|                                                             |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Net income(loss) per common share
         Basic and diluted | $ | (0.061          | ) | W | (71        | ) | W | 5          |   | W | (19        | ) | W | (10        | ) | W | (106       | )
|Weighted average number of
      common shares               |   | 35,094,156      |   |   | 35,094,156 |   |   | 35,033,418 |   |   | 32,553,528 |   |   | 31,393,984 |   |   | 31,603,847 |  

|Condensed Consolidated Balance Sheets              
|---------------------------------------------------
|As of December 31, 2009, 2008, 2007, 2006, and 2005
|(Korean Won (W) in thousands)                      

|                                           |   | 2009(1)(in US$) |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|------------------------------------------ | - | --------------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                           |   | (unaudited)     |   |   | 2009       |   |   | 2008       |   |   | 2007       |   |   | 2006       |   |   | 2005       |  
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Cash and cash equivalents                  | $ | 4,838           |   | W | 5,630      |   | W | 2,927      |   | W | 103,865    |   | W | 2,387      |   | W | 22,967     |  
|Accounts receivable                        |   | 718,073         |   |   | 835,623    |   |   | 2,319,328  |   |   | 1,195,182  |   |   | 453,747    |   |   | 368,226    |  
|Inventories                                |   | 303,089         |   |   | 352,705    |   |   | 491,769    |   |   | 549,798    |   |   | 371,209    |   |   | 488,455    |  
|Other current assets                       |   | 5,880           |   |   | 6,843      |   |   | 46,124     |   |   | 23,893     |   |   | 21,337     |   |   | 1,749      |  
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Total current assets                       |   | 1,031,880       |   |   | 1,200,801  |   |   | 2,860,148  |   |   | 1,872,738  |   |   | 848,680    |   |   | 881,397    |  
|Property, plant and
      equipment, net   |   | 51,274          |   |   | 59,668     |   |   | 83,304     |   |   | 50,565     |   |   | 16,546     |   |   | 23,804     |  
|Investments and other assets               |   | 37,478          |   |   | 43,614     |   |   | 150,564    |   |   | 132,090    |   |   | 104,792    |   |   | 50,636     |  
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|TOTAL ASSETS                               | $ | 1,120,632       |   | W | 1,304,083  |   | W | 3,094,016  |   | W | 2,055,393  |   | W | 970,018    |   | W | 955,837    |  
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|Trade accounts payable and current debt    | $ | 6,402,806       |   | W | 7,450,947  |   | W | 5,902,010  |   | W | 4,457,132  |   | W | 5,085,477  |   | W | 3,669,845  |  
|Long-term borrowings                       |   | 1,841,509       |   |   | 2,142,966  |   |   | 3,072,011  |   |   | 3,683,599  |   |   | 3,984,116  |   |   | 5,072,441  |  
|Shareholders deficiency                   |   | (7,123,683      | ) |   | (8,289,830 | ) |   | (5,880,005 | ) |   | (6,085,338 | ) |   | (8,099,575 | ) |   | (7,786,449 | )
|                                           |   |                 |   |   |            |   |   |            |   |   |            |   |   |            |   |   |            |  
|TOTAL LIABILITIES AND    
      DEFICIENCY |   | $ 1,120,632     |   | W | 1,304,083  |   | W | 3,094,016  |   | W | 2,055,393  |   | W | 970,018    |   | W | 955,837    |  

(1) For convenience only, the Won amounts are expressed in U.S.
dollars at the rate of Won 1,163.7 to US$1.00, the noon buying rate as quoted by
the Federal Reserve Bank of New York in effect on December 31, 2009. This
translation should not be construed as a representation that the Won amounts
represent, have been or could be converted to US$ at that rate or any other
rate.

---

Exchange rate informationThe 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.

|         |  | Won per U.S dollar(noon buying
      rate) | 
|-------- |  | ------------------------------------------ | 
|YEAR     |  | Period-End                                 | 
|2005     |  | 1,010.0                                    | 
|2006     |  | 930.0                                      | 
|2007     |  | 935.8                                      | 
|2008     |  | 1,262.0                                    | 
|2009     |  | 1,163.7                                    | 
|2010     |  |                                            | 
|January  |  | 1,158.7                                    | 
|February |  | 1,159.0                                    | 
|March    |  | 1,131.2                                    | 
|April    |  | 1,108.0                                    | 
|May      |  | 1,194.5                                    | 
|June     |  | 1,220.8                                    | 

(1) The average of the daily noon buying rates of the Federal
Reserve Bank in effect during the relevant period (or portion thereof)

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
restructuring plan for a total of 4,697,927 thousand Won 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 4,697,927
thousand Won of the Company's debt.

In January 2005, Woori Bank exercised its security right on the
apartment owned by Meridian. The proceeds of 42,837 thousand Won from
foreclosure were used to pay debt principal, interest and other direct expenses
related to foreclosure.

Aside from the debt restructuring, Meridian had a borrowing
from Chohung Bank (Chohung Bank has been merged into Shinhan Bank as of April 1,
2006), which was not included in the original restructuring plan, as the bank
did not agreed to the terms. In December 2005, Chohung Bank exercised its
security right on the land and building, which had been provided as collaterals
by Meridian. The proceeds of 883,308 thousand Won from the foreclosure, was paid
to preemptive other creditors and Chohung Bank. Subsequent to the foreclosure,
the original debt restructuring plan was modified to include the outstanding
principal of 1,074,455 thousand Won to Chohung Bank.

The repayments under the modified plan were scheduled as
follows:

---

(in thousand)

|          |   | 2007    |  |   | 2008    |  |   | 2009    |  |   | 2010    |  |   | 2011    |  |   | 2012    |  |   | 2013    |  |   | Total     | 
|--------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | --------- | 
|Principal | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,756 |  | W | 4,555,298 | 
|Interest  |   | 159,435 |  |   | 136,659 |  |   | 113,883 |  |   | 91,106  |  |   | 68,329  |  |   | 45,553  |  |   | 22,777  |  |   | 637,742   | 
|Total     | W | 810,192 |  | W | 787,416 |  | W | 764,640 |  | W | 741,863 |  | W | 719,086 |  | W | 696,310 |  | W | 673,533 |  | W | 5,193,040 | 

In December 2008, Korea Technology Credit Guarantee Fund
reduced their original principal from 1,151,884 thousand Won to 1,142,064
thousand Won. The repayments under the re-modified plan were scheduled as
follows:

|(in thousand) |   |         |  |   |         |  |   |         |  |   |         |  |   |         |  |   |         |  |   |         |  |  
|------------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | -
|              |   | 2007    |  |   | 2008    |  |   | 2009    |  |   | 2010    |  |   | 2011    |  |   | 2012    |  |   | 2013    |  |  
|Principal     | W | 493,159 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,336 |  | W
|Interest      |   | 423,601 |  |   | 178,217 |  |   | 162,399 |  |   | 90,907  |  |   | 68,180  |  |   | 45,461  |  |   | 22,727  |  |  
|Total         | W | 916,760 |  | W | 827,554 |  | W | 811,736 |  | W | 740,244 |  | W | 717,517 |  | W | 694,798 |  | W | 672,063 |  | W

However, due to the recurring losses from operations, Meridian
was not able to meet the repayment schedule. As of December 31, 2009, Meridian
has not paid 1,791,833 thousand Won of principal and 764,217 thousand Won of
accrued interest outstanding to financial institutions, and 882,656 thousand Won
of accounts payable to various vendors.

In June, 2004, the Company received funds of US$530,000 from
investors through an equity financing whereby, the Company issued 3,312,500
common shares of the Company to three non-U.S. investors at the price of US$0.16
per share.

In April 2007, the Company raised 517,000,000 Won from twenty
non-U.S. investors for total 933,506 common shares at the price of 554 Won per
share and warrants to purchase 133,358 common shares at 950 Won per share. As of
December 31 2009, due to the end of exercisable period, those warrants are not
effective any more.

In June 2007, the Company raised US$350,000 from one non-U.S.
investor for 700,000 common shares at the price of US$0.50 per share.

In December 2007, the Company raised 1,779,000,000 Won from
forty nine non-U.S. investors for total 1,976,666 common shares at the price of
900 Won per share.

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 incurred significant operating losses in the
past and may not be able to achieve or sustain profitability in the
future.

For the year ended December 31, 2009, the Company had a net
loss of 2,497,408 thousand won ($2,146,093) and an accumulated deficit of
17,878,998 thousand won ($15,363,923). Although the Company had achieved the net
profit for the fist time of its history for the year ended December 31, 2008,
the Company gone into deficit for the year ended December 31, 2009. 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.

The Company expects increasing 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.

The Company may need to upgrade products and develop new
technologies to succeed in product life cycles.

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.

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.

The Company currently depends on a limited number of
domestic 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.

Macroeconomic factors in regional markets may adversely
affect the business.

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 affect
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 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, restructuring 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.

A limited number of customers generate a significant portion
of the Companys revenue.

The Company's accounts receivable are derived primarily from
  revenue earned from customers located in the U.S., Canada, Europe, Japan and
  Korea. The Company performs ongoing credit evaluations of its customers' financial
  condition and, generally, requires no collaterals from its customers. The Company
  maintains an allowance for doubtful accounts receivable based upon the expected
  collectability of accounts receivable. 992,089 thousand Won of the Companys
  accounts receivable was written off in the year ended December 31, 2005. There
  were no write offs in the years ended December 31, 2009, and 2008. In 2009,
  the Company had two customers that each represented more than 10% of its revenues,
  one of which represented approximately 47.5% of revenues and the other which
  represented approximately 11% of revenues. In 2008, the Company had three customers
  that each represented more than 10% of its revenues, one of which represented
  29% and two of which represented approximately 11% of revenues. In 2007, the
  Company had two customers that each represented more than 10% of its revenues,
  one of which represented 36% and the other which represented approximately 26%
  of revenues.

---

At December 31, 2009, the Company had one customer that accounted
  for 65% of accounts receivable. At December 31, 2008, the Company had three
  customers that accounted for 78% of accounts receivable.

Expansion of the Companys operations abroad is important to
its long-term successes, and its limited experience in the operation outside
Korea increases the risk that each international expansion efforts would not be
successful.

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;
- 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.

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.

Country Risks

There are unique economic and political risks associated with
investing in companies from Korea. Some of Korea's recent financial and economic
difficulties have included:

- Exchange rate fluctuations;
- Interest rate fluctuations;
- Reduced credit from foreign banks;
- Volatile stock prices; and
- Higher unemployment.

---

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.

Compliance with corporate governance regulations could
increase the cost of our operations

As a result of changing laws, regulations and standards
relating to accounting, corporate governance and public disclosure, the costs of
being a public company in general have increased in recent years. The
Sarbanes-Oxley Act of 2002 requires changes in some of corporate governance and
securities disclosure or compliance practices. The Company expects that the
on-going implementation of these regulations will further increase its legal
compliance costs and will make some activities more time consuming. The Company
is presently planning and implementing regulatory developments and cannot
estimate the magnitude of additional costs it may incur as a result of such
developments in connection with its future implementation of Section 404 of the
Sarbanes-Oxley Act of 2002, which governs.

---

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Meridian Co., Ltd. (Meridian or the Company) was
incorporated in the Republic of 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 acquired 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.

In February 2004, the Company received an approval for a debt
restructuring plan for a total of 4,697,927 thousand Won from Chooncheon
District Court, Korea. The adjusted period of payment is generally 7 years after
3 years of grace period.

The Company's corporate head office is located at 4F, 196-35,
Anyang-Dong, Manan-Gu, Anyang-Si, Gyeonggi-Do, Korea 430-857.

B. BUSINESS OVERVIEW

Meridian is an established leader in the research, development,
manufacturing, and marketing of integrative medical devices in the healthcare
industry.

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 5 registered and pending patents, 2 design
rights and 7 trademarks and has received 4 FDA 510(k) clearances for their
medical devices. In order to distribute worldwide, Meridian has also gained 3
SDA approvals in China and 3 FIP approvals in South America. Successfully
marketed in Korea, Japan, EU, Middle East, USA, Canada, and China, Meridian
continues to provide its superior product line to a growing number of clients
worldwide. Meridian has over 5,000 clients, which include physicians, hospitals,
healthcare professionals, medical device manufacturers, beauty salons and health
and fitness centers.

The Company currently sells three different products to
healthcare practitioners throughout the domestic and overseas market. These
include DPA (Digital Pulse Analyzer), Lapex-2000 and Lapex BCS (Lapex-2000
LipoLaser)

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. (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. 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.

---

The Company identified the United States as a significant
market and incorporated Meridian America Medical Inc (MAMI) in the United
States as a 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. has been fully concentrating on the marketing and sales of the DPA
and Lapex-2000. 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.

On March 4, 2002, Meridian acquired 100% ownership of Meridian
America Medicals, Inc. located in the city of Irvine, California, USA to
establish distribution post for the North American market. On December 13, 2004
and February 15, 2005, Meridian America Medicals, Inc. issued new common stock,
of which the shares were entirely subscribed by a non-controlling shareholder,
Meridian Medical, Inc. Consequently; the ownership by Meridian was diluted from
100% to 75.76% .

On September 29, 2005, Meridian acquired 100% ownership of
Rapha & Health Co., Ltd. for 50 million Won in cash to systemize its sales
process in domestic (Korea) market. On June 7, 2006, Rapha & Health Co.,
Ltd. changed its name to Meitian Co., Ltd. However, Meitian Co., Ltd. closed
down in April 2008, so that Meridian could concentrate its resources on the
overseas markets.

On January 19, 2007, Meridian entered into an exclusive
distribution agreement with a Japanese corporation, Leichel, for the sales Lapex
BCS. In December 2008, Meridian replaced its Japanese distributor with Profit
Co., Ltd. The total sales revenues generated in the Japanese market were
1,080,469 thousand Won in 2007 and 436,108 thousand Won in 2008.

In April 2007, Meridian expanded its business in the European
market by signing a distribution agreement with Laser Lipo based in the U.K.
Currently, Meridian has 7 regional distributors in Europe and achieved 1,444,010
thousand Won in 2008.

In 2009, Meridian has entered into new markets, such as
Portugal, Bulgaria, Albania in EU and South Africa, Egypt, Kuwait for the
diversification of revenue. The revenue from new markets amounts to 136,369
thousand Won which accounted for 10% of total revenue.

Products of the Company

The Meridian line of products includes DPA (Digital Pulse
Analyzer), Lapex-2000, LAPEX BCS (Lapex-2000 LipoLaser), and Meridian II.

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

The DPA (Digital Arterial Pulsewave Analyzer) has the
additional feature of measuring heart rate variability(HRV), 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, SpO2 electrode, and computer software with WINDOWS base.

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:Point Laser Probe -
Trigger Point Monitoring Function and Applying Laser to Trigger Point Multi
Laser Probe - To address the largely affected parts at once LIB (Laser
Irradiation of Blood) probe - Non-invasive irradiation of venous blood, easy to
operate, solid curative effect

Lapex BCS (Lapex-2000 LipoLaser)

LAPEX BCS is a modified version of the Lapex-2000 specifically
to target the growing obesity market. The LAPEX BCS's non-invasive treatment is
considered one of the most innovative methods of body contouring to liquefy
adipose tissue under skin layer, and the demand for this type of treatment is
expected to grow rapidly, not only in the plastic surgery profession, but in any
clinical and aesthetic setting, such as spas and wellness centers, that treat
localized body fat deposits which may not have responded to diet and exercise.

It uses 2 multi-beam and 2 enhanced probes which irradiate a
powerful cold red laser (635  680nm/ 40mW) on adipose (fat) Cell.

Lapex BCS Pro

LAPEX BCS Pro is an upgraded version of the Lapex BCS
specifically to target the growing obesity market.

The enhanced features of this upgraded device are
following:

- New technologies on the platform of the main body. (i.e. main
chip, color LCD, Interface etc.) - Enhanced design and color of the main
body- New technologies, materials and designs on the Laser applicators in
order to make it slimmer and more effective - 4 multi-beams and 2 enhanced
probes

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 98Acupuncture Point finder (ARC) / Better curative effect (UPM)
Easy operation (TOUCH SCREEN) Single body design

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

---

Revenue by Geographic Market

Sales revenue is attributable to geographic locations based on
the location of the customer, as follows: (Korean Won (W) in thousands)

2009
    
    
    2008
    
    
    2007ExportNorth America
    W
    693,543
    
    W
    1,143,757
    
    W
    848,459Asia
    
    111,835
    
    
    544,461
    
    
    1,109,121Europe
    
    186,687
    
    
    1,444,010
    
    
    266,629Other
    
    107,966
    
    
    15,615
    
    
    41,8841,100,031
    
    
    3,147,843
    
    
    2,266,093Domestic Sales
    
    273,348
    
    
    177,080
    
    
    338,448W
    1,373,379
    
    W
    3,324,923
    
    W
    2,604,541


Industry Background

The medical instruments industry is characterized by low-volume
production of various medical equipments 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.

Size of Industry

World Medical Device 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. In the fact,
World Medical Market reported that the global medical device market was expected
to be valued at $210 billion in 2008, of which $86 billion was generated from
the U.S. market. The largest medical device markets next to the U.S. are Japan
($23 billion in 2008) and Germany ($12 billion in 2008).

The world medical device industry is expected to grow at a
compound annual growth rate of 6.4 percent between 2008 and 2013.

World Medical Device Market size (US $ M), 2009-2013

2009
    2010
    2011
    2012
    2013
    CAGR(09 ~ 13, %)Market size
    223,262
    237,289
    252,394
    268,853
    286,181
    6.4


Source: Espicom, The World Medical Markets Fact Book 2008,
2008.05

The U.S. is still the largest medical device market and leads
the world in advanced medical technologies. 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.

Cardiovascular Device Market (U.S.)

According to US Medical Device Industry Outlook, 2008 released
by Frost & Sullivan, the total revenue generated from medical device market
in the U.S. was close to $83 billion in 2006. The revenue in the U.S. medical
device market is expected to grow average 11.7% annually until 2011. The revenue
from cardiovascular devices was the highest, $21.3 billion with the expected
annual growth rate at 7.6% until 2013, the cardiovascular device industry is
expected to be remaining the biggest industry in the U.S. medical device market
for next several years. The total cardiovascular device market in the U.S. is
forecasted to reach $35.6 billion by way of revenues by 2013.

Medical Laser Market

In 2007, Global Industry Analysts, Inc. reported that the estimated
  size of the world medical laser system market US$4 billion in 2007. United States
  is the largest market for medical laser systems worldwide at an estimated US$2.4
  billion in 2007. Europe is the second largest market followed by Japan at a
  distant third. United States and Europe together account for about 82 percent
  of the global share. The global and regional markets are expected to grow at
  a compound annual grow rate ranging between 9% and 13%. The expected global
  market value in 2010 is $5.8 Billion.

---

Cellulite Reduction Laser Market

The market for cellulite reduction laser devices was valued at
over $14 million in 2006. This market will achieve high growth over the
forecast, driven by the adoption of new product innovations. Despite the great
challenge from alternative methods of cellulite reduction, including
electrotherapy and mesotherapy, which are gaining in popularity due to improved
media coverage, the market for cellulite reduction laser devices will achieve
high growth over the forecast period. (US Markets for Aesthetic Laser and Energy
Devices 2007 by Millennium Research Group, June, 2007)

Body Contouring Device Market

Body Contouring Devices market is composed of Cellulite
Reduction Device, Fat Reduction Device and Skin Tightening Device mainly. By
2012, Body Contouring Device market in the United States will be expended
because of the increases of SPA facilities and the increasing demands for
patients who are interested in invasive and non invasive treatments. Cellulite
removal treatment and skin tightening is used in Plastic Surgery and cosmetic
skin medical area also and this makes it possible the body contouring markets
continuously increase. Especially the combination of the traditional fat
reduction and laser skin tightening will effects on the growth of the body
contouring device market.

Medical Device (MD) Resource Exhibit 9 : Body Contouring
Device Market, by Indication, US (US $), 2006-2012

Year
    Cellulite Reduction Device Market
      Value (US$M)
    Growth (%)
    Fat Reduction Device Market Value
      (US$M)
    Growth (%)
    Skin Tightening Device Market Value
      (US$M)
    Growth (%)
    Total Market Value (US$M)
    Growth (%)2006
    $67.7
    
    $38.1
    
    $38.2
    
    $144.12007
    $78.7
    16.2%
    $65.2
    70.9%
    $43.9
    14.9%
    $187.8
    30.4%2008
    $92.7
    17.7%
    $74.0
    13.5%
    $50.3
    14.5%
    $216.9
    15.5%2009
    $112.8
    21.7%
    $120.3
    62.7%
    $57.5
    14.3%
    $290.6
    34.0%2010
    $139.1
    23.3%
    $148.2
    23.2%
    $65.7
    14.3%
    $352.9
    21.5%2011
    $172.4
    24.0%
    $175.7
    18.6%
    $75.0
    14.3%
    $423.1
    19.9%2012
    $214.4
    24.3%
    $202.9
    15.5%
    $85.8
    14.3%
    $503.0
    18.9%CAGR (08-12)
    
    23.3%
    
    28.7%
    
    14.3%
    
    23.4%


Source: Millennium Research Group

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 both corporate
  head office and manufacturing plant are located at 4F, 196-35, Anyang-Dong,
  Manan-Gu, Anyang-Si, Gyeonggi-Do, Korea 430-857.

As of December 31, 2009, the Company had one subsidiary. The
acquisition dates and Meridian Co., Ltd.'s ownership percentages of its
consolidated subsidiaries as at December 31, 2009, 2008 and 2007 are as
follows:

|                                |                          |                                                 | Acquisition        | Percentage ownership at December 31,
|------------------------------- | ------------------------ | ----------------------------------------------- | ------------------ | ------------------------------------
|Subsidiary                      | Country of Incorporation | Primary Business                                | Date               | 2009                                
|Meridian America Medicals, Inc. | USA                      | Wholesale and retail of
      medical equipment | March 4, 2002      | 75.76%                              
|Meitian Co., Ltd                | Korea                    | "                                               | September 29, 2005 | Dissolved                           

On March 4, 2002, Meridian acquired 100% ownership of Meridian
America Medicals, Inc. located in the city of Irvine, California, USA to
establish distribution post for the North American market. On December 13, 2004
and February 15, 2005, Meridian America Medicals, Inc. issued new common stock,
of which the shares were entirely subscribed by a non-controlling shareholder,
Meridian Medical, Inc. Consequently; the ownership by Meridian was diluted from
100% to 75.76% .

On September 29, 2005, Meridian acquired 100% ownership of
Rapha & Health Co., Ltd. for 50 million Won in cash to systemize its sales
process in domestic (Korea) market. On June 7, 2006, Rapha & Health Co.,
Ltd. changed its name to Meitian Co., Ltd. However, Meitian Co., Ltd. closed
down in April 2008, so that Meridian could concentrate its resources on the
overseas markets.

---

Directors and Senior Management Team

IN BEOM PARK, President, CEO and DirectorMr. Park graduated
from the Seoul National University 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 Planning Department and CFO and was
appointed as CEO in November 2009.

JOHN Y.C. MYUNG, Secretary, CFO and Director (President and CEO
resigned in November 2009)Mr. Myung graduated from the Pusan University with
a degree in Computer Statistics. From 1985 to 1991 he worked in the R&D
department of LG Electronics. He was appointed as a chief of Planning Department
of Medison Co., Ltd. in 1991 and later appointed and served as a director of
international sales. While he was in charge of international sale in Medison, he
contributed on significant growth of oversea sales in Europe, North America,
Japan and Southeast Asia and the oversea sales was increased from US$20M to
$70M. He also served as a director of Management & International Marketing
Business of Korea Strategic Partners that the primary businesses are dental
X-ray and panoramic sales in Korea from 2001 to 2007. Mr. Myung joined Meridian
in 2007 as an international sale director and was appointed as CEO in April
2009. In November 2009, Mr Myung resigned and appointed Secretary and CFO.

HYUNG KYOON KIM, Director (appointed in April 2009)Mr. Kim
graduated from Seoul National University a degree in Anthropology in 1989. From
1995 to 2007 he was the manager of the Security Trading department of Daewoo
Securities. In April 2006, he was appointed a Director of Meridian.

HYEON-SEONG MYEONG, (President, CEO and Director resigned in
April 2009)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 Coordination and the Vice President of a Joint Corporation with Russia
(Ultramed) as a director of Medison Co., Ltd. Since 1994, Mr. Myeong has been
the President and CEO of the Company and is the founder of the Company.

SOON WOONG JANG, Director (Director resigned in April,
2009)Mr. Jang graduated from Korea University in South Korea with
Agriculture as his major. From 1988 to 1992 he was the Business Manager for
Hyundai Department Store, a subsidiary of KeumKang Development Industrial Co.,
Ltd. He established Samgong Distribution Co., Ltd., a wholesale distributor, and
had been a CEO of Samgong until 2003. From 2001 he has been a vice president of
Korea E-commerce Association. On March 31, 2006, he was appointed a Director of
Meridian.

D. PROPERTY, PLANTS AND EQUIPMENT

The Company relocated its factory from Kangwon Province to Seoul
  in November 2005. The previous factory in Kangwon Province (687-6, Sangohan-Ri,
  Hongchun-Eup, Hongchun-Kun, Kangwon-Do, Korea) was disposed to repay its debts
  to pre-emptive creditors and Chohung Bank.

The Company signed the lease contract for its current office
and factory at 4F, 196-35, Anyang-Dong, Manan-Gu, Anyang-Si, Gyeonggi-Do, Korea
in October 2009. The Companys products are assembled from purchased and
manufactured components at its factory. Virtually all of the components making
up the Companys products are readily available from domestic suppliers. Some of
the components have been designed by the Company and/or are custom manufactured
to its specifications.

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 Korean Won and presented in accordance with accounting
principles generally accepted in the United States.

A. OPERATING RESULTS

RevenueThe following table sets forth, for the
periods indicated, our consolidated revenue by product:

(Korean Won (W) in thousands)

|          |  | For the year ended Dec. 31, 2009 |  |  | For the year ended Dec. 31, 2008 |  |  | For the year ended Dec. 31, 2007 | 
|--------- |  | -------------------------------- |  |  | -------------------------------- |  |  | -------------------------------- | 
|Product   |  | Revenues                         |  |  | Revenues % to total              |  |  | Revenues                         | 
|          |  |                                  |  |  |                                  |  |  |                                  | 
|Lapex BCS |  | 909,583                          |  |  | 66.2%                            |  |  | 2,859,231                        | 
|DPA       |  | 167,071                          |  |  | 12.2%                            |  |  | 258,982                          | 

---

|Others |  | 296,725   |  |  | 21.6%  |  |  | 206,710   |  |  | 6.2%   |  |  | 160,373   |  |  | 6.1%   | 
|------ |  | --------- |  |  | ------ |  |  | --------- |  |  | ------ |  |  | --------- |  |  | ------ | 
|Total  |  | 1,373,379 |  |  | 100.0% |  |  | 3,324,923 |  |  | 100.0% |  |  | 2,604,541 |  |  | 100.0% | 

The following table sets forth, for the periods indicated, our
consolidated revenue by market: (Korean Won (W) in thousands)

|               |   | 2009      |  |  | 2008         |  |   | 2007      | 
|-------------- | - | --------- |  |  | ------------ |  | - | --------- | 
|Regions        |   | Revenue   |  |  | % to revenue |  |   | Revenue   | 
|North          |   |           |  |  |              |  |   |           | 
|America        | W | 693,543   |  |  | 50.5         |  | W | 1,143,757 | 
|Asia           |   |           |  |  |              |  |   |           | 
|Japan          |   | -         |  |  |              |  |   | 436,108   | 
|Taiwan         |   | 111,835   |  |  |              |  |   | 107,788   | 
|Others         |   | -         |  |  |              |  |   | 565       | 
|Total in Asia  |   | 111,835   |  |  | 8.1          |  |   | 544,461   | 
|Europe         |   |           |  |  |              |  |   |           | 
|UK             |   | 13,267    |  |  |              |  |   | 842,959   | 
|Sweden         |   | 103,784   |  |  |              |  |   | 28,864    | 
|Others         |   | 69,636    |  |  |              |  |   | 572,187   | 
|Total in       |   |           |  |  |              |  |   |           | 
|Europe         |   | 186,687   |  |  | 13.6         |  |   | 1,444,010 | 
|Other regions  |   | 107,966   |  |  | 7.9          |  |   | 15,615    | 
|               |   |           |  |  |              |  |   |           | 
|International  |   |           |  |  |              |  |   |           | 
|Sales          |   | 1,100,031 |  |  | 80.1         |  |   | 3,147,843 | 
|Domestic Sales |   | 273,348   |  |  | 19.9         |  |   | 177,080   | 
|Total          | W | 1,373,379 |  |  | 100          |  | W | 3,324,923 | 

The following table sets forth, for the periods indicated,
financial data as percentage of total revenues by item as a percentage of the
amount over the comparable period in the previous years.

|                                  |  | Percentage of Sales For the year
      ended |  
|--------------------------------- |  | -------------------------------------------- | -
|                                  |  | December 31,                                 |  
|                                  |  | 2009                                         |  
|Sales                             |  | 100                                          |  
|Cost of sales                     |  | 32.1                                         |  
|Gross profits                     |  | 67.9                                         |  
|Operating expenses                |  | 217.3                                        |  
|Loss from operations              |  | (149.4                                       | )
|Other income (expenses)           |  | (32.4                                        | )
|Minority interest                 |  | -                                            |  
|                                  |  |                                              |  
|Income (loss) before income taxes |  | (181.8                                       | )
|Income taxes                      |  | -                                            |  
|Net income (loss)                 |  | (181.8                                       | )

Sales Revenue

The sales revenue of the Company for the year ended December
31, 2009 decreased 58.7% to 1,373,379 thousand Won from 3,324,923 thousand Won
for the year ended December 31, 2008. The decreases in the sales revenue during
the year ended December 31, 2009 and 2008 were mainly attributable to:

---

- Lost the market share of Japan & UK due to financial crisis made
  customer financing program destroyed as well as entrance of imitation machines
  in those market. In special, financial Crisis made Aesthetic market of UK and
  Japan corrupted and reduced very much in short time. The customer price of
  LAPEX BCS and BCS Pro was decreased to 50% of 2008 as well as export price of
  LAPEX was cut over 30% more.
- In case of North America, it was decreased too due to financial crisis and
  new marketing preparation. DPA sales decreased too due to delayed new design
  of DPA and second hands DPA market was so activated.

However, the Company tried to change the target market segment
of DPA in North America and to expend sales area to Europe. Sweden was one of
successful case in marketing of DPA.

Gross Profits & Gross Margin

For the year ended December 31, 2009, the gross profits were
931,963 thousand Won, as compared to 2,380,673 thousand Won for the year ended
December 31, 2008 and 1,785,123 thousand Won for the year ended December 31,
2007. The significant decreases of gross profits in 2009 were due to the sales
decrease in major market such as North America, Japan, and UK.

Total gross margin as a percentage of total revenues was 67.9%
for the year ended December 31, 2009, as compared to 71.6% for the year ended
December 31, 2008 and 68.5% for the year ended December 31, 2007. The
significant decrease of sales caused the reduction of total gross margin as a
percentage of total revenues.

Operating Expenses

The Companys operating loss has increased to 2,053,055
thousand Won for the year ended December 2009 from loss of 228,105 thousand Won
in 2008 and from the loss of 562,346 thousand Won in 2007. The increase in the
operating loss in 2009 was due primarily to the increase of operating expenses.
Operating expenses as a percentage of total sales increased to 217.3% for the
year ended December 31, 2009, as compare to 78.5 % in 2008 and 90.1% in 2007.
The increase was mainly attributable to increase in bad debt expenses by 220% to
1,211,829 thousand Won in 2009 from 378,654 thousand Won in 2008.

Research and Development Expenses

Research and development costs consist primarily of payroll,
depreciation expense and other overhead expenses which are all expensed as
incurred until technological feasibility is reached. The Company has expensed
283,237 thousand Won, 392,902 thousand Won and 305,307 thousand Won during the
years ended December 31, 2009, 2008 and 2007, respectively.

Other Expense(Income)

Other expense was 444,353 thousand Won in 2009, as compared to
other income of 401,809 thousand Won in 2008 and other expense 45,317 thousand
Won in 2007. This was primarily due to 231,489 thousand Won of interest expense
and 148,378 thousand Won of expense on foreign currency translation. For the
year ended December 31, 2009, the Korean Won appreciated by approximately 7.8%
against the U.S. dollar compared to the exchange rate for the year ended
December 31, 2008. This appreciation resulted loss on foreign currency
transactions to the Company.

B. LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth the summary of our cash flows
for the periods indicated:

|                                                    |  | For
      the Years Ended December 31,       |    
|--------------------------------------------------- |  | -------------------------------------------- | ---
|                                                    |  | 2009                                         | (1)
|                                                    |  | (Korean Won (W) in thousands, and
      US$) |    
|Net cash used in operating activities               |  | US$ (15,209                                  | )  
|Net cash provided by (used in) investing activities |  | (30,076                                      | )  
|Net cash provided by financing activities           |  | 47,608                                       |    
|Net increase(decrease) in cash                      |  | 2,323                                        |    
|Cash at beginning of year                           |  | 2,515                                        |    
|Cash at end of year                                 |  | 4,838                                        |    

Note:
  For the convenience of the reader, the Won amounts are expressed in US$ at the
  rate of Won 1,163.7 to US$1.00, the exchange rate announced by the Federal Reserve
  Bank of New York on December 31, 2009.

---

Net cash used in operating activities was 17,698 thousand Won
  ($15,209) in 2009, 282,775 thousand Won in 2008 and 1,974,975 thousand Won in
  2007. We have not been able to generate positive cash flow from operating activities
  over the last three years.

Net cash used in investing activities was 35,000 thousand Won
($30,076) in 2009, 68,484 thousand Won in 2008 and 70,103 thousand Won in 2007.
The main reason of the negative net cash in investing activities is the increase
of the tangible asset acquisitions and the increase of short-term loan..

Net cash provided by financing activities was 55,401 thousand
Won ($47,608) in 2009, mainly due to the issuance of short-term and long-term
borrowings. We generated positive cash flow from financing activities of 250,321
thousand Won in 2008 and 2,146,556 thousand Won in 2007 reflecting the increase
in our capital stock.

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 5 registered and pending patents, 2 design
rights and 7 trademarks at the Korea and Japan Industrial Property Office. The
Company also has 1 pending patent under the Patent Cooperation Treaty as well as
the United States and EU, China, Canada. 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 | KR130791                   | November  97             
|Automatic detection
      of 
      meridians by probe device                      | KR210233                   | April  99                
|Pulse formation analysis
      device                                              | KR0368021                  | December  02             
|Laser beam irradiation
      device                                                | KR0457964                  | January  03              
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: Korea                  | KR0653441                  | March  06                
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: PCT                    | PCT 
      KR20061000694  | May 
      06            
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: Japan                  | JP4143114                  | May  08                  
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: USA (pending)          | US2008114418, US2008119831 | May  08                  
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: EU (pending)           | EP1853190                  | November  07             
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: Canada (pending)       | CA2604112                  | March  09                
|Adipose Resolve Apparatus
      for 
      Low-Power LASER: China
      (pending)  | CN101115449                | January  08              

|(DESIGN)                                   |         |                
|------------------------------------------ | ------- | ---------------
|Electrode
      holder for laser treatment | 0302314 | June 
      02
|Electrode for laser treatment              | 0302315 | June  02      
|                                           |         |                
|(TRADEMARK)                                |         |                
|Lapex                                      | 500915  | September  01 
|Biomeridian                                | 0522196 | June  02      
|Pulsecare                                  | 0538120 | December  02  
|Mcview                                     | 0531965 | October  02   

---

|Meridian CI Logo | 0685047    | November 06   
|---------------- | ---------- | --------------
|DPA              |            |               
|USA              |            | December - 07 
|Korea            | 40-0755763 | August  07   
|Lapex            |            |               
|USA              | 3523481    | December - 08 
|EU               | 006327399  | September - 08
|Japan            | 5134672    | May - 08      
|China (pending)  | 6312375    | December - 08 

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. 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BCS (LipoLaser), LAPEX BCS Pro (LAPEX 2000P), DPA
      (Digital Pulse Analyzer)
|China         | SDA                           | Meridian-II, Lapex-2000                                                                                            
|Taiwan        |                               | LAPEX 2000                                                                                                         
|U.S.A.        | FDA                           | Meridian-II, Meridian Portable,
      Lapex-2000, ABR-2000, DPA(Digital Pulse Analyzer), LAPEX BCS                 
|Canada        | Health Canada                 | DPA (Digital
      Pulse Analyzer), Lapex-2000 LipoLaser                                                           
|South America | FIP                           | Meridian-II, Lapex-2000                                                                                            
|EU            | CE EMC, CE LVD CE MDD         | Lapex-BCS, Lapex
      BCS Pro : CE LVD, CE EMC DPA: CE MDD (CE0123)                                               
|International | ISO13485:2003 ISO13485:CMDCAS | Quality Assurance System for DPA
      and Laser Therapy Device                                                    

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 from 2003
to 2005. The Company is actively seeking to expand its sales into new markets,
principally North America, Europe and Japan. From 2005, the Company is in
transition of its target market, mainly preventive medicine and aesthetic laser
market with Lapex BCS and DPA. These two products contributed 78.4% of the total
sales revenue in 2009 and 93.8% in 2008. In 2009, the sales portions from North
America, Europe and Asia (excluding Korea) were 50.5%, 13.6% and 8.1% of the
total revenue of the Company.

E. OFF-BALANCE SHEET ARRANGEMENTS

Not applicable.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS



---

|                               |   | Payments due (by period) (Korean Won (W) in thousands) | 
|------------------------------ | - | ------------------------------------------------------ | 
|                               |   |                                                        | 
|Contractual Obligations        |   | Total                                                  | 
|Long-term accounts payable     | W | 1,186,391                                              | 
|Operating lease obligations    |   | 206,485                                                | 
|                               |   |                                                        | 
|Long-term debt obligations (1) |   | 4,430,692                                              | 
|Grand total                    | W | 5,823,568                                              | 

(1) See Note 11. Long-Term Borrowings of consolidated
financial statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

See Item 4.C.

B. COMPENSATION

|                                                                            |      | Salary      | Bonus          | Accrued Severance    |             
|--------------------------------------------------------------------------- | ---- | ----------- | -------------- | -------------------- | ------------
|Name & Principal (Position)                                                 | Year | (Korean Won | (Korean        | Benefits (Korean Won | All Other   
|                                                                            |      | (W))        | Won
      (W)) | (W))                 | Compensation
|                                                                            |      |             |                |                      |             
|Myeong, Hyeon-Seong (Director, President,
      CEO resigned in April 2009) | 2009 | 58,800,000  | Nil            | 74,203,676           | Nil         
|                                                                            |      |             |                |                      |             
|Park, In Beom (Director, President, CEO
      appointed in November 2009)   | 2009 | 50,400,000  | Nil            | 17,500,000           | Nil         
|                                                                            |      |             |                |                      |             
|Soon Woong Jang (Director resigned in April
      2009)                     | 2009 | Nil         | Nil            | Nil                  | Nil         
|                                                                            |      |             |                |                      |             
|John YC Myung (Director, Secretary, CFO
      appointed in November 2009)   | 2009 | 56,700,000  | Nil            | 9,800,000            | Nil         
|                                                                            |      |             |                |                      |             
|Hyung Kyoon Kim (Director appointed in
      April 2009)                    | 2009 | Nil         | Nil            | Nil                  | Nil         

*Hyeon Seong Myeong was granted options for 2,218 shares of the
Companys common stock at the price of 680 Won in March 2001 (expired in
February 2008).

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

Employment Contracts with employees and officersThe
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 14 employees in the following areas:

Department
    Number of EmployeesCEO
    1CFO
    1Finance and Accounting
    3


---

Sales and Customer Support
    1Research and Development
    3Technical Support
    3Purchasing
    1Quality Control
    1Total
    14


E. SHARE OWNERSHIP

The following table sets forth certain information regarding
the beneficial ownership of the common stock of the Company as of December 31,
2009 and June 30, 2010, (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 and position
      with the company                                                                                          | Amount Stock Beneficially Owned as of
      Dec. 31, 2009 | Percentage of Class as of
      Dec.31,2009 | Amount Stock Beneficially Owned as of
      June 30, 2010 | Percentage of Class as of June 30,
      2010
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|Myeong, Hyeong-seong. (President, CEO
      and Director resigned in April 2009) 201-2101, Hyundai I-Park 2cha
      APT. 815,Chang-dong, Dobong-gu, Seoul, Korea | 971,500 common shares                                     | 2.77%                                       | 971,500 common shares                                     | 2.77%                                        
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|In Beom Park (Director, President, CEO
      appointed in November 2009) #603 605, JungSan town,
      Ilsan-dong, Ilsan-gu, Goyang-city, Gyeonggi-do, Korea      | Nil                                                       | Nil                                         | Nil                                                       | Nil                                          
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|Soon Woong Jang (Director resigned in
      April 2009) #122-75 Noranggin dong, Dongjak-gu, Korea,                                                                | Nil                                                       | Nil                                         | Nil                                                       | Nil                                          
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|John YC Myung (Director, Secretary, CFO
      appointed in November 2009) 476-2, munhwa-dong, joong-gu,
      Deajeon-si, Korea                                   | Nil                                                       | Nil                                         | Nil                                                       | Nil                                          
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|Hyung Kyoon Kim* (Director appointed in April 2009)
      Dongil-hivill apt, 2102-802, joong-dong, kiheung-gu,
      Yongin-si, Gyeonggi-do, Korea                | Nil                                                       | Nil                                         | Nil                                                       | Nil                                          
|                                                                                                                                                                  |                                                           |                                             |                                                           |                                              
|All officers and Directors as a Group                                                                                                                             | 971,500                                                   | 2.77%                                       | 971,500                                                   | 2.77%                                        

*Hyung Kyoon Kim owned 267,670 common shares at December 31,
2008, but was not a director of the Company at that time.

Stock Option PlansUnder 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 willful 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, practicing 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; and.
- stock option holders shall be entitled to exercise their stock options only
  after having served in the Company for two (2) years.

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 per share. The options vested on March 19, 2004
and were exercisable until March 18, 2008. At December 31, 2009 there was no
stock option plan outstanding.

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, 2009 and June 30, 2010),
by each person known to us to own beneficially more than five percent (5%) of
our shares.

|Name and address                                                                                                                 | Amount Stock Beneficially Owned As of
      Dec. 31 2009 | Percentage of Class of Dec.31, 2009 | Amount Stock Beneficially Owned as of
      June 30 2010 | Percentage of Class of June 30, 2010 | Number of Stock Option Held
|-------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------- | -------------------------------------------------------- | ------------------------------------ | ---------------------------
|                                                                                                                                 |                                                          |                                     |                                                          |                                      |                            
|The Hong Group of Companies including:                                                                                           |                                                          |                                     |                                                          |                                      |                            
|Solbon Venture Investment Co. Ltd. (931,175shares),
      Cheongdam Spopia 1st, Cheongdam dong, Gangnam-Gu Seoul Korea           | 3,171,400 common shares                                  | 9.04%                               | 3,171,400 common shares                                  | 9.04%                                | Nil                        
|Mok-Won Assets Management Co. Ltd(1,375,000
      shares), 2004 Ho, Anam tower 702-10 Yuksam-dong Gangnam-ku, Seoul,
      Korea |                                                          |                                     |                                                          |                                      |                            
|Bio & Medical Research Co. Ltd. (524,425 shares),
      702-10 Yuksam-dong, Gangnam-ku, Seoul, Korea                             |                                                          |                                     |                                                          |                                      |                            
|Ki-tae Hong (127,800 shares) 
      Cheongdam Spopia 1st, Cheongdam dong, 
       Gangnam-Gu, Seoul, Korea                       |                                                          |                                     |                                                          |                                      |                            

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|                                                                                                  
|--------------------------------------------------------------------------------------------------
|Hye-sook Lee (213,000 shares) Cheongdam
      Spopia 1st, Cheongdam dong, Gangnam-Gu, Seoul, Korea

Note: Every shareholders right and interest is not
different.

Securities held in the host countryThe Company has legally issued its shares and complied with the filing requirements
  pursuant to the SEC regulations. However, 13,975,159 common shares issued through
  S-8 registrations, (i) for acquisition of By George Holdings, (ii) debt-for-equity
  swap on October 21, 2004 and (iii) service fee for IR and marketing activities,
  have not been included in the Korean Commercial Registration Office due to the
  different requirements of the share issuance between the US and Korean Commercial
  Laws. The number of outstanding shares and capital stock as of December 31,
  2008 in SEC and in Korean Commercial Registration Office are as follows:

(Korean Won (W) in thousands,)

Korean CommercialSEC
    
    
    Registration OfficeNumber of outstanding shares
    
    35,094,156
    
    
    19,421,182Capital Stock
    W
    3,509,415
    
    W
    1,942,118


Related party transactionsThere 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 or on 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 subsidiary are
disclosed in the Note 18 to the consolidated financial statements.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
INFORMATION

See Item 18- Financial Statements

Legal ProceedingsOn February 27, 2004, the Company
received approval for a debt restructuring plan for a total of 4,697,927
thousand Won 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 4,697,927 thousand Won of the Companys debt. An
application for the restructuring plan was subsequently filed with Chooncheon
District Court and approved by the court on the same day.

Meridian America Medical Inc., a subsidiary of Meridian Co.,
Ltd. was served in October 2007 as a defendant in a lawsuit claiming trademark
infringement and false advertising filed by Therapy Products, Inc. d/b/a
Erchonia Medical to the United States District Court for the Southern District
of New York. The Court dismissed Erchoinas claims in May 2009.

Dividend PolicyWe 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

On April 30, 2008, Meitian Co., Ltd., a subsidiary in Korea,
closed down and discontinued its operations. The decision was made by management
to concentrate the Companys resources on growing overseas markets.



---

ITEM 9. THE OFFER AND LISTING

A. OFFER AND LISTING DETAILS

Price History

The common shares of the Company began trading on the OTC
Bulletin Board on February 13, 2002 under the symbol MRDAF. The following table
sets forth the high and low sales of prices of our common shares on the OTC
Bulletin Board for the periods indicated.

OTC Bulletin BoardHigh (U.S.$)
    Low (U.S.$)Annual Highs and Lows2008
    1.35
    0.162007
    1.54
    0.42006
    0.74
    0.112005
    0.48
    0.2Quarterly Highs and Lows2009Fourth Quarter
    0.1
    0.06Third Quarter
    0.16
    0.07Second Quarter
    0.25
    0.09First Quarter
    0.3
    0.092008Fourth Quarter
    0.43
    0.16Third Quarter
    0.7
    0.26Second Quarter
    1.15
    0.65First Quarter
    1.35
    0.6Monthly Highs and Lows2010June
    0.13
    0.07May
    0.16
    0.12April
    0.19
    0.12March
    0.19
    0.13February
    0.18
    0.11January
    0.21
    0.08


The transfer of our common shares is managed by our transfer
agent, Computershare Investor Services (formerly called Pacific Corporate Trust
Company), 3rd Floor  510 Burrard Street, Vancouver, British Columbia, V6C 3B9
(Telephone: 604.689.9853; Facsimile: 604.689.8144) .

B. PLAN OF DISTRIBUTION

Not applicable.

C. MARKETS

Our common shares are quoted on the Over-the-Counter Bulletin
Board (as they have been quoted since February 13, 2002). Our symbol is "MRDAF"
and our CUSIP number is Y6020X 10 3.

D. SELLING SHAREHOLDERS

Not applicable.

E. DILUTION

Not applicable.

---

F. EXPENSES OF THE ISSUER

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

The Company is authorized to issue 100,000,000 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, 2009 there were 35,094,156 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.

DividendsDividends 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 SharesIn 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
SharesThe 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 ShareholdersUnder 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 RightsHolders 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 Computershare
Investor Service of Vancouver BC Canada is the Company's sole transfer agent.
Computershare Investor Service 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 ReportsAt 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 SharesUnder 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 SharesThe 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 RightsIn 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 RecordsUnder 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

Not applicable.

D. EXCHANGE CONTROLS

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 RequirementsIn 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 WonThe 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 TAXATIONThe 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 DividendsFor 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 GainsA 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 TaxUnder 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 TaxUnder 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 TaxesUnder 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 Note 2 of the Consolidated Financial Statements.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Market Risk DisclosureMarket 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, 2009, the Company had an aggregate 1,100,031,236 Won
export sales, accounting for 80.1% 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, 2009, 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, 2009, the Company estimates that the payment receivable from its
overseas customers will decrease by approximately 196,788,180 thousand Won
($169,106) in 2009. 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,
2009, 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 currently has the default tax payment of 55,293 thousand
  Won ($47,515) to the federal tax office and the default interest payment of
  764,217 thousand Won ($656,713).

Due to the recurring losses from operations, Meridian was not
able to meet the repayment schedule. As of December 31, 2009, Meridian has not
paid 1,791,833 thousand Won of principal and 764,217 thousand Won of accrued
interest outstanding to financial institutions, and 882,656 thousand Won of
accounts payable to various vendors.

The details of the debt restructuring of the Company, which is
disclosed in Item 8 and Note 2 to the consolidated financial statements in this
report, were reported in the form 6-K filed on March 28, 2004.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
  HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and ProceduresOur management
has evaluated, with the participation of our Chief Executive Officer and
Director, the effectiveness of our disclosure controls and procedures, as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of
December 31, 2009. There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable assurance of achieving their control objectives. Based upon our
evaluation, our Chief Executive Officer and Director concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this report. Our disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commissions rules and forms,
and that it is accumulated and communicated to our management, including our
Chief Executive Officer and Director, as appropriate to allow timely decisions
regarding required disclosure.

B. Managements Annual Report on Internal Control over
Financial ReportingOur management is responsible for establishing and
maintaining adequate internal control over financial reporting. Our internal
control over financial reporting is a process designed by, and under the
supervision of, our principal executive, principal operating and principal
financial officers, and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over
financial reporting is not intended to provide absolute assurance that a
misstatement of our financial statements would be prevented or detected. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.

Our management has completed an assessment of the effectiveness
of our internal control over financial reporting as of December 31, 2009 based
on criteria in Internal Control  Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Based on this
assessment, management concluded that our internal control over financial
reporting was effective as of December 31, 2009.

C. Attestation Report of the Independent Registered Public
  Accounting FirmThis annual report does not include an attestation report of the companys
  registered public accounting firm regarding internal control over financial
  reporting. Managements report was not subject to attestation by the companys
  registered public accounting firm pursuant to temporary rules of the Securities
  and Exchange Commission that permits the company to provide only managements
  report in this annual report.

---

D. Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial
  reporting that occurred during the year covered by this annual report that has
  materially affected, or is reasonably likely to materially affect, our internal
  control over financial reporting.

ITEM 16A. 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: In the fiscal year 2009, the Company was charged
  75,471,651 Won ($60,565) for professional services rendered by its auditors
  for the audit of the Company's annual financial statements or services normally
  provided in connection with statutory and regulatory filings for the fiscal
  year 2009.

(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. FINANCIAL STATEMENTS

The Company has responded to Item 18 in lieu of this item.

---

ITEM 18. FINACIAL STATEMENTS

Meridian Co., Ltd.

CONSOLIDATED FINANCIAL STATEMENTS

For the Years ended December 31, 2009, 2008 and 2007

Table of Contents

|Independent Auditors' Report                                        
|--------------------------------------------------------------------
|Consolidated Balance Sheets                                         
|Consolidated Statements
      of Income                             
|Consolidated Statements of Changes in
      Shareholders' Deficiency
|Consolidated Statements
      of Cash Flows                         
|Notes to Consolidated Financial Statements                          

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors and Shareholders of Meridian Co.,
Ltd.

We have audited the accompanying consolidated balance sheets of
Meridian Co., Ltd., and subsidiary (the Company) as of December 31, 2009 and
2008, and the related consolidated statements of operations, shareholders
deficiency, and cash flows for the years ended December 31, 2009, 2008 and 2007.
Our responsibility is to express an opinion on the consolidated financial
statements based on our audits.

We conducted our audits 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. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purposes
of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Meridian Co., Ltd.
and subsidiary as of December 31, 2009 and 2008, and the results of their
operations and cash flows for the years ended December 31, 2009, 2008 and 2007,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, the Company's
significant operating losses and working capital deficit 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.

/s/ Choi, Kim & Park LLP

Los Angeles, California July 28, 2010

---

|Meridian Co., Ltd. and Subsidiary
|---------------------------------
|Consolidated Balance Sheets      
|As of December 31, 2009 and 20010
|(in thousands of Korean Won ( W))

|                                                                                                                                                                                   |   | 2009 (in US$) |  |   |           |  |   |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- |  | - | --------- |  | - | --------- | 
|                                                                                                                                                                                   |   | (Note 4)      |  |   |           |  |   |           | 
|ASSETS                                                                                                                                                                             |   | (unaudited)   |  |   | 2009      |  |   | 2008      | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Current assets :                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Cash and cash
      equivalents (Note 3)                                                                                                                                           | $ | 4,838         |  | W | 5,630     |  | W | 2,927     | 
|Trade
      accounts receivable - less allowance for doubtful accounts 
                           
      of 1,997,878 (USD 1,716,833) in 2009 and 883,512 in 2008 (Notes 3 and 5) |   | 646,440       |  |   | 752,263   |  |   | 2,278,454 | 
|Short-term
      loans - less allowance for doubtful accounts 
                            of
      218,485 (USD 187,750) in 2009 and 218,485 in 2008                              |   | 30,076        |  |   | 35,000    |  |   | -         | 
|Other
      accounts receivable - less allowance for doubtful accounts 
                           
      of 3,020 (USD 2,595) in 2009 and 3,020 in 2008                           |   | 41,557        |  |   | 48,360    |  |   | 40,874    | 
|Inventories,
      net (Note 6)                                                                                                                                                    |   | 303,089       |  |   | 352,705   |  |   | 491,769   | 
|Other
      current assets                                                                                                                                                         |   | 5,880         |  |   | 6,843     |  |   | 46,124    | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Total current assets                                                                                                                                                               |   | 1,031,880     |  |   | 1,200,801 |  |   | 2,860,148 | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Property, plant and equipment, net (Notes 3 and 7)                                                                                                                                 |   | 51,274        |  |   | 59,668    |  |   | 83,304    | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Investments and other assets :                                                                                                                                                     |   |               |  |   |           |  |   |           | 
|Investments
      (Note 8)                                                                                                                                                         |   | 32,123        |  |   | 37,382    |  |   | 40,617    | 
|Security deposits                                                                                                                                                                  |   | 5,032         |  |   | 5,856     |  |   | 109,382   | 
|Patents
      and trademarks, net of amortization (Notes 3 and 9)                                                                                                                  |   | 323           |  |   | 376       |  |   | 565       | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|Total investments
      and other assets                                                                                                                                           |   | 37,478        |  |   | 43,614    |  |   | 150,564   | 
|                                                                                                                                                                                   |   |               |  |   |           |  |   |           | 
|TOTAL ASSETS                                                                                                                                                                       | $ | 1,120,632     |  | W | 1,304,083 |  | W | 3,094,016 | 

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

---

|(Continued)                      
|---------------------------------
|Meridian Co., Ltd. and Subsidiary
|Consolidated Balance Sheets      
|As of December 31, 2009 and 20010
|(in thousands of Korean Won ( W))

|                                                                                                                                                                                                                                                  |   | 2009 (in US$) |   |   |             |   |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ----------- | - | - | ----------- | -
|                                                                                                                                                                                                                                                  |   | (Note 4)      |   |   |             |   |   |             |  
|LIABILITIES AND DEFICIENCY                                                                                                                                                                                                                        |   | (unaudited)   |   |   | 2009        |   |   | 2008        |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Current liabilities                                                                                                                                                                                                                               |   |               |   |   |             |   |   |             |  
|Accounts payable                                                                                                                                                                                                                                  | $ | 1,857,111     |   | W | 2,161,121   |   | W | 1,630,050   |  
|Current
      portion of long-term accounts payable (Note 2)                                                                                                                                                                                      |   | 758,491       |   |   | 882,656     |   |   | 891,266     |  
|Short-term
      borrowings (Note 10)                                                                                                                                                                                                             |   | 588,210       |   |   | 684,500     |   |   | 655,000     |  
|Current
      portion of long-term borrowings (Note 11)                                                                                                                                                                                           |   | 2,355,563     |   |   | 2,741,169   |   |   | 1,798,833   |  
|Accrued expenses                                                                                                                                                                                                                                  |   | 659,131       |   |   | 767,031     |   |   | 617,049     |  
|Advanced
      received                                                                                                                                                                                                                           |   | 121,385       |   |   | 141,256     |   |   | 188,166     |  
|Deferred warranty
      revenue                                                                                                                                                                                                                   |   | 21,975        |   |   | 25,573      |   |   | 88,524      |  
|Other
      current liabilities                                                                                                                                                                                                                   |   | 40,940        |   |   | 47,641      |   |   | 33,122      |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Total current liabilities                                                                                                                                                                                                                         |   | 6,402,806     |   |   | 7,450,947   |   |   | 5,902,010   |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Long-term accounts payable (Note 2)                                                                                                                                                                                                               |   | 3,210         |   |   | 3,736       |   |   | 304,024     |  
|Long-term borrowings (Note 11)                                                                                                                                                                                                                    |   | 1,709,652     |   |   | 1,989,523   |   |   | 2,597,347   |  
|Accrued severence benefits (Note 12)                                                                                                                                                                                                              |   | 128,647       |   |   | 149,707     |   |   | 170,640     |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Total liabilities                                                                                                                                                                                                                                 |   | 8,244,315     |   |   | 9,593,913   |   |   | 8,974,021   |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Commitments and contingencies (Note 13)                                                                                                                                                                                                           |   | -             |   |   | -           |   |   | -           |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Deficiency (Note 14)                                                                                                                                                                                                                              |   |               |   |   |             |   |   |             |  
|Meridian Co.
      shareholders' deficiency                                                                                                                                                                                                       |   |               |   |   |             |   |   |             |  
|Common
      stock - par value 100 WON per share; 100 million shares authorized; 
                             issued
      and outstanding 35,094 thousand shares 
                            
      at December 31, 2009 and December 31, 2008 |   | 3,015,738     |   |   | 3,509,415   |   |   | 3,509,415   |  
|Additional
      paid-in capital                                                                                                                                                                                                                  |   | 5,355,766     |   |   | 6,232,505   |   |   | 6,232,505   |  
|Accumulated deficit                                                                                                                                                                                                                               |   | (15,363,923   | ) |   | (17,878,998 | ) |   | (15,617,514 | )
|Accumulated
      other comprehensive income (loss)                                                                                                                                                                                               |   | 53,226        |   |   | 61,940      |   |   | (4,411      | )
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Total Meridian Co. shareholders' deficiency                                                                                                                                                                                                       |   | (6,939,193    | ) |   | (8,075,138  | ) |   | (5,880,005  | )
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Non-controlling interest                                                                                                                                                                                                                          |   | (184,490      | ) |   | (214,692    | ) |   | -           |  
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|Total deficiency                                                                                                                                                                                                                                  |   | (7,123,683    | ) |   | (8,289,830  | ) |   | (5,880,005  | )
|                                                                                                                                                                                                                                                  |   |               |   |   |             |   |   |             |  
|TOTAL LIABILITIES AND DEFICIENCY                                                                                                                                                                                                                  | $ | 1,120,632     |   | W | 1,304,083   |   | W | 3,094,016   |  

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

---

|Meridian Co., Ltd. and Subsidiary                                    
|---------------------------------------------------------------------
|Consolidated Statements of Operations and Comprehensive Income (Loss)
|For the Years Ended December 31, 2009, 2008 and 2007                 
|(in thousands of Korean Won ( W), except number of shares)           

|                                                                |   | 2009 (in US$) |   |   |            |   |   |            |   |   |            |  
|--------------------------------------------------------------- | - | ------------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                |   | (Note 4)      |   |   |            |   |   |            |   |   |            |  
|                                                                |   | (unaudited)   |   |   | 2009       |   |   | 2008       |   |   | 2007       |  
|                                                                |   |               |   |   |            |   |   |            |   |   |            |  
|Sales (Notes 3 and 19)                                          | $ | 1,180,184     |   | W | 1,373,379  |   | W | 3,324,923  |   | W | 2,604,541  |  
|Cost of sales                                                   |   | 379,322       |   |   | 441,416    |   |   | 944,250    |   |   | 819,418    |  
|Gross profits                                                   |   | 800,862       |   |   | 931,963    |   |   | 2,380,673  |   |   | 1,785,123  |  
|Selling, general and administrative expenses                    |   | 2,321,717     |   |   | 2,701,781  |   |   | 2,215,876  |   |   | 2,042,162  |  
|Research and development expenses                               |   | 243,394       |   |   | 283,237    |   |   | 392,902    |   |   | 305,307    |  
|Loss from operations                                            |   | (1,764,249    | ) |   | (2,053,055 | ) |   | (228,105   | ) |   | (562,346   | )
|Other income (expense) (Note 15)                                |   |               |   |   |            |   |   |            |   |   |            |  
|Interest income                                                 |   | 45            |   |   | 52         |   |   | 104        |   |   | 87         |  
|Interest
      expense                                          |   | (198,925      | ) |   | (231,489   | ) |   | (188,350   | ) |   | (235,760   | )
|Foreign transaction
      loss                                  |   | (12,599       | ) |   | (14,660    | ) |   | (140       | ) |   | (10,425    | )
|Income
      (expense) on foreign currency translation, net     |   | (127,505      | ) |   | (148,378   | ) |   | 427,512    |   |   | 7,260      |  
|Other, net                                                      |   | (42,860       | ) |   | (49,878    | ) |   | 161,963    |   |   | 193,521    |  
|Total
      other income (expense)                              |   | (381,844      | ) |   | (444,353   | ) |   | 401,089    |   |   | (45,317    | )
|Income (loss) before provision (benefit)
      for income taxes |   | (2,146,093    | ) |   | (2,497,408 | ) |   | 172,984    |   |   | (607,663   | )
|Income taxes (Note 16)                                          |   | -             |   |   | -          |   |   | -          |   |   | -          |  
|Net income (loss)                                               |   | (2,146,093    | ) |   | (2,497,408 | ) |   | 172,984    |   |   | (607,663   | )
|Less:
      Net loss attributable to non-controlling interest   |   | 202,736       |   |   | 235,924    |   |   | -          |   |   | -          |  
|                                                                |   |               |   |   |            |   |   |            |   |   |            |  
|Net Income (loss)
      attributable to Meridian Co., LTD.      |   | (1,943,357    | ) |   | (2,261,484 | ) |   | 172,984    |   |   | (607,663   | )
|                                                                |   |               |   |   |            |   |   |            |   |   |            |  
|Net income (loss) per common share (Note 17)                    |   |               |   |   |            |   |   |            |   |   |            |  
|Basic and diluted                                               | $ | (0.061        | ) | W | (71        | ) | W | 5          |   | W | (19        | )
|Weighted average number of common shares                        |   |               |   |   |            |   |   |            |   |   |            |  
|Basic and diluted                                               |   | 35,094,156    |   |   | 35,094,156 |   |   | 35,033,418 |   |   | 32,553,528 |  

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

---

|Meridian Co., Ltd. and Subsidiary                            
|-------------------------------------------------------------
|Consolidated Statement of Changes in Shareholders' Deficiency
|For the Years Ended December 31, 2009, 2008 and 2007         
|(in thousands of Korean Won ( W))                            

|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   | Accumulated   |   |   |                 |   |   |            |  
|---------------------------------------------------- |  | ------------------- |  | - | ---------- |  | - | --------- |  | - | ----------- | - | - | ------------- | - | - | --------------- | - | - | ---------- | -
|                                                     |  | Common Stock Issued |  |   | Additional |  |   |           |  |   | Other       |   |   |               |   |   |                 |  
|                                                     |  |                     |  |   |            |  |   | Paid-in   |  |   | Accumulated |   |   | Comprehensive |   |   | Non-Controlling |   |   |            |  
|                                                     |  | Shares              |  |   | Amount     |  |   | Capital   |  |   | Deficit     |   |   | Income (Loss) |   |   | Interest        |   |   | Total      |  
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Balance at January 1, 2007                           |  | 31,393,984          |  | W | 3,139,398  |  | W | 3,929,900 |  | W | (15,182,835 | ) | W | 13,962        |   | W | -               |   | W | (8,099,575 | )
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Issuance of common shares                            |  | 3,610,172           |  |   | 361,017    |  |   | 2,259,783 |  |   | -           |   |   | -             |   |   | -               |   |   | 2,620,800  |  
|Net income(loss)                                     |  |                     |  |   |            |  |   | -         |  |   | (607,663    | ) |   | -             |   |   | -               |   |   | (607,663   | )
|Other comprehensive income:                          |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Foreign translation gain                             |  |                     |  |   |            |  |   | -         |  |   | -           |   |   | 1,100         |   |   | -               |   |   | 1,100      |  
|Balance at December 31, 2007                         |  | 35,004,156          |  | W | 3,500,415  |  | W | 6,189,683 |  | W | (15,790,498 | ) | W | 15,062        |   | W | -               |   | W | (6,085,338 | )
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Issuance of common shares                            |  | 90,000              |  |   | 9,000      |  |   | 42,822    |  |   | -           |   |   | -             |   |   | -               |   |   | 51,822     |  
|Net income (loss)                                    |  |                     |  |   |            |  |   | -         |  |   | 172,984     |   |   | -             |   |   | -               |   |   | 172,984    |  
|Other comprehensive loss:                            |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Foreign translation loss                             |  |                     |  |   |            |  |   | -         |  |   | -           |   |   | (19,473       | ) |   | -               |   |   | (19,473    | )
|Balance at December 31, 2008                         |  | 35,094,156          |  | W | 3,509,415  |  | W | 6,232,505 |  | W | (15,617,514 | ) | W | (4,411        | ) | W | -               |   | W | (5,880,005 | )
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Net income (loss)                                    |  |                     |  |   |            |  |   | -         |  |   | (2,261,484  | ) |   | -             |   |   | (235,924        | ) |   | (2,497,408 | )
|Other comprehensive income:                          |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Foreign translation gain                             |  |                     |  |   |            |  |   | -         |  |   | -           |   |   | 66,351        |   |   | 21,232          |   |   | 87,583     |  
|Balance at December 31, 2009                         |  | 35,094,156          |  | W | 3,509,415  |  | W | 6,232,505 |  | W | (17,878,998 | ) | W | 61,940        |   | W | (214,692        | ) | W | (8,289,830 | )
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Balance at December 31, 2008 (in US$) (Note
      4) |  | 35,094,156          |  | $ | 3,015,738  |  | $ | 5,355,766 |  | $ | (13,420,566 | ) | $ | (3,798        | ) |   | -               |   | $ | (5,052,860 | )
|                                                     |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Net income (loss)                                    |  |                     |  |   |            |  |   | -         |  |   | (1,943,357  | ) |   | -             |   |   | (202,736        | ) |   | (2,146,093 | )
|Other comprehensive income:                          |  |                     |  |   |            |  |   |           |  |   |             |   |   |               |   |   |                 |   |   |            |  
|Foreign translation gain                             |  |                     |  |   |            |  |   | -         |  |   | -           |   |   | 57,024        |   |   | 18,246          |   |   | 75,270     |  
|Balance at December 31, 2009                         |  | 35,094,156          |  | $ | 3,015,738  |  | $ | 5,355,766 |  | $ | (15,363,923 | ) | $ | 53,226        |   | $ | (184,490        | ) | $ | (7,123,683 | )

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

---

|Meridian Co., Ltd. and Subsidiary                   
|----------------------------------------------------
|Consolidated Statements of Cash Flows               
|For the Years Ended December 31, 2009, 2008 and 2007
|(in thousands of Korean Won( W))                    

|                                                                                     |   | 2009 (in US$) |   |   |            |   |   |            |   |   |            |  
|------------------------------------------------------------------------------------ | - | ------------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                                     |   | (Note 4)      |   |   |            |   |   |            |   |   |            |  
|                                                                                     |   | (unaudited)   |   |   | 2009       |   |   | 2008       |   |   | 2007       |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES :                                               |   |               |   |   |            |   |   |            |   |   |            |  
|Net income (loss)                                                                    | $ | (2,146,093    | ) | W | (2,497,408 | ) | W | 172,984    |   | W | (607,663   | )
|Adjustments to reconcile net income
      (loss) from operations to net cash used in |   |               |   |   |            |   |   |            |   |   |            |  
|operating activities                                                                 |   |               |   |   |            |   |   |            |   |   |            |  
|Depreciation                                                                         |   | 32,802        |   |   | 38,172     |   |   | 53,325     |   |   | 22,918     |  
|Provision for severance benefits                                                     |   | 64,950        |   |   | 75,583     |   |   | 74,580     |   |   | 76,955     |  
|Bad debt
      expenses, net (recovery income)                                       |   | 1,041,357     |   |   | 1,211,828  |   |   | 378,653    |   |   | (39,712    | )
|Amortization of intangible
      assets                                              |   | 162           |   |   | 189        |   |   | 189        |   |   | 189        |  
|Loss on disposal
      of property, plant and equipment                              |   | -             |   |   | -          |   |   | -          |   |   | 3,656      |  
|Equity in loss(gain) of investee                                                     |   | 337           |   |   | 393        |   |   | 712        |   |   | 548        |  
|Loss on disposal
      of inventory                                                  |   | -             |   |   | -          |   |   | 2,190      |   |   | -          |  
|Gain on forgiveness of debt                                                          |   | -             |   |   | -          |   |   | (9,820     | ) |   | -          |  
|Changes in operating assets and
      liabilities                                    |   |               |   |   |            |   |   |            |   |   |            |  
|Decrease (increase) in accounts
      receivable                                     |   | 341,475       |   |   | 397,375    |   |   | (1,193,225 | ) |   | (691,723   | )
|Decrease
      (increase) in inventory                                               |   | 105,686       |   |   | 122,987    |   |   | 71,251     |   |   | (178,588   | )
|Decrease (increase) in other
      current assets                                    |   | 33,755        |   |   | 39,281     |   |   | (22,230    | ) |   | (2,554     | )
|Decrease
      (increase) in security deposits                                       |   | 6,090         |   |   | 7,088      |   |   |            |   |   |            |  
|Increase (decrease) in accounts
      payable - trade                                |   | (70,974       | ) |   | (82,593    | ) |   | (192,695   | ) |   | (86,187    | )
|Increase
      (decrease) in accounts payable - other                                |   | 609,834       |   |   | 709,664    |   |   | 292,558    |   |   | (449,945   | )
|Increase (decrease) in other
      current liabilities                               |   | 70,913        |   |   | 82,522     |   |   | 86,913     |   |   | 10,480     |  
|Increase
      (decrease) in accrued severence benefits                              |   | (66,585       | ) |   | (77,485    | ) |   | (16,003    | ) |   | (32,722    | )
|Other                                                                                |   | (38,918       | ) |   | (45,294    | ) |   | 17,843     |   |   | (627       | )
|Sub-total                                                                            |   | 2,130,884     |   |   | 2,479,710  |   |   | (455,759   | ) |   | (1,367,312 | )
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|Net
      cash used in operating activities                                          |   | (15,209       | ) |   | (17,698    | ) |   | (282,775   | ) |   | (1,974,975 | )
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES :                                               |   |               |   |   |            |   |   |            |   |   |            |  
|Decrease in short-term loans                                                         |   | -             |   |   | -          |   |   | 10,000     |   |   | -          |  
|Proceeds from sales of property, plant and equipment                                 |   | -             |   |   | -          |   |   | -          |   |   | 10,193     |  
|Increase in short-term loans                                                         |   | (30,076       | ) |   | (35,000    | ) |   | -          |   |   | (10,000    | )
|Acquisition of property, plant and equipment                                         |   | -             |   |   | -          |   |   | (78,484    | ) |   | (70,296    | )
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|Net cash used in
      investing activities                                          |   | (30,076       | ) |   | (35,000    | ) |   | (68,484    | ) |   | (70,103    | )
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES :                                               |   |               |   |   |            |   |   |            |   |   |            |  
|Proceeds from issuance of common stocks                                              |   | -             |   |   | -          |   |   | -          |   |   | 2,620,800  |  
|Proceeds from short-term borrowings                                                  |   | 25,350        |   |   | 29,500     |   |   | 585,000    |   |   | 490,950    |  
|Proceeds from long-term borrowings                                                   |   | 29,657        |   |   | 34,512     |   |   | -          |   |   | -          |  
|Payment of long-term accounts
      payable                                          |   | (7,399        | ) |   | (8,611     | ) |   | -          |   |   | -          |  
|Repayment of short-term borrowings                                                   |   | -             |   |   | -          |   |   | (124,609   | ) |   | (626,556   | )
|Repayment of long-term borrowings                                                    |   | -             |   |   | -          |   |   | (210,070   | ) |   | (338,638   | )
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|Net
      cash provided by financing activities                                      |   | 47,608        |   |   | 55,401     |   |   | 250,321    |   |   | 2,146,556  |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                         |   |               |   |   |            |   |   |            |   |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 |   | 2,323         |   |   | 2,703      |   |   | (100,938   | ) |   | 101,478    |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       |   | 2,515         |   |   | 2,927      |   |   | 103,865    |   |   | 2,387      |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                             | $ | 4,838         |   | W | 5,630      |   | W | 2,927      |   | W | 103,865    |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|                                                                                     |   |               |   |   |            |   |   |            |   |   |            |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                     |   |               |   |   |            |   |   |            |   |   |            |  
|Cash paid for interest                                                               | $ | 69,863        |   | W | 81,300     |   | W | 64,221     |   | W | 155,137    |  
|SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES                              |   |               |   |   |            |   |   |            |   |   |            |  
|Accrued severance benefits transferred
      to other current liability              | $ | 16,353        |   | W | 19,031     |   | W | 5,858      |   | W | 4,423      |  
|Stock issued in lieu of service fees                                                 | $ | -             |   | W | -          |   | W | 51,822     |   | W | -          |  

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

---

|Meridian Co., Ltd. and Subsidiary         
|------------------------------------------
|Notes to Consolidated Financial Statements

Note 1. Nature of Operation

Meridian Co., Ltd. (Meridian), incorporated on April 19, 1994
under the laws of the Republic of Korea ("Korea"), and its subsidiary
(hereinafter collectively referred to as the Company), are in the business of
developing, manufacturing and selling of integrated medical equipment in
domestic (Korea) and overseas markets.

On March 4, 2002, Meridian acquired 100% ownership of Meridian
America Medicals, Inc. located in the city of Irvine, California, USA to
establish distribution post for the North American market. On December 13, 2004
and February 15, 2005, Meridian America Medicals, Inc. issued new common stock,
of which the shares were entirely subscribed by a non-controlling shareholder,
Meridian Medical, Inc. Consequently; the ownership by Meridian was diluted from
100% to 75.76% .

On September 29, 2005, Meridian acquired 100% ownership of
Rapha & Health Co., Ltd. for W 50 million in cash to systemize its sales
process in domestic (Korea) market. On June 7, 2006, Rapha & Health Co.,
Ltd. changed its name to Meitian Co., Ltd. However, Meitian Co., Ltd. closed
down in April 2008, so that Meridian could concentrate its resources on the
overseas markets.

Note 2. Liquidity and Going Concern

The Company has recorded W 2,497,408 net loss in this year.
Although the Company had recorded W 172,984 net income (or surpluses) in last
fiscal year, the Company has an accumulated deficit of W 17,878,998 and working
capital deficits W 6,250,147 of as of December 31, 2009. As of December 31,
2009, the Companys principal source of liquidity is W 5,630 of cash and W
752,263 of trade and other accounts receivable. Such conditions raise
substantial doubt that the Company will be able to continue as a going concern.
These operating results occurred while the Company continues to develop and
commercialize new products. These factors have placed a significant strain on
the financial resources of the Company. The ability of the Company to overcome
these challenges depends on its ability to continue to generate higher revenue,
and achieve positive cash flows from continuing operations, profitability and
continued sources of debt and equity financing. The consolidated financial
statements do not include any adjustments that might result from the outcome of
the uncertainties.

On August 4, 2003, when Meridian suffered deteriorated
liquidity, the bank accounts of Meridian were suspended from the transactions
such as check clearing and direct deposits. In addition, on February 27, 2004,
Chooncheon District Court in Korea approved the Companys debt restructuring
plan (or composition) for the total debt of W 4,697,927, which constituted
approximately 68% of the total outstanding borrowings and payables of Meridian
at that time. The creditors who have agreed to the debt restructuring include
the following:

Account
    
    Creditor
    
    
    AmountBorrowings
    
    Woori Bank
    
    W
    391,787SMI ABS Specialty Co., Ltd.
    
    
    1,000,000Rainbow Specialty
      Securitization Co., Ltd.
    
    
    500,000Korea Technology Credit Guarantee
      Fund
    
    
    1,151,884Small Business
      Corporation
    
    
    300,000Korea Exchange Bank
    
    
    125,831Shinhan Bank
    
    
    41,612Subtotal  financial institutions
    
    
    3,511,114Accounts payable
    
    Various vendors
    
    
    1,186,813Total
    
    W
    4,697,927


The original terms of the borrowings, which include secured W
34,200 and unsecured W 3,476,914 of debts to various financial institutions,
were alleviated. The new terms require installment payments over 7 years through
2013 at the fixed interest rate of 3.5% per annum. All accrued and unpaid
interests on the borrowings were forgiven.

New terms were obtained for the accounts payable due to various
vendors, which require installment repayments over 3 years through 2007 at no
interest.

In January 2005, Woori Bank exercised its security right on an
  apartment owned by Meridian. The proceeds of W 42,837 from
  foreclosure were used to pay debt principal, interest and other direct expenses
  related to the foreclosure.

---

Aside from the debt restructuring, Meridian had a borrowing from
  Chohung Bank (Chohung Bank has been merged into Shinhan Bank as of April 1,
  2006), which was not included in the original restructuring plan, as the bank
  did not agreed to the terms. In December 2005, Chohung Bank exercised its security
  right on the land and building, which had been provided as collaterals by Meridian.
  The proceeds of W 883,308 from the foreclosure, was paid to
  preemptive other creditors and Chohung Bank. Subsequent to the foreclosure,
  the original debt restructuring plan was modified to include the outstanding
  principal of W 1,074,455 to Chohung Bank. The repayments under
  the modified plan were scheduled as follows:

|          |   | 2007    |  |   | 2008    |  |   | 2009    |  |   | 2010    |  |   | 2011    |  |   | 2012    |  |   | 2013    |  |   | Total     | 
|--------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | --------- | 
|Principal | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,757 |  | W | 650,756 |  | W | 4,555,298 | 
|Interest  |   | 159,435 |  |   | 136,659 |  |   | 113,883 |  |   | 91,106  |  |   | 68,329  |  |   | 45,553  |  |   | 22,777  |  |   | 637,742   | 
|Total     | W | 810,192 |  | W | 787,416 |  | W | 764,640 |  | W | 741,863 |  | W | 719,086 |  | W | 696,310 |  | W | 673,533 |  | W | 5,193,040 | 

In December 2008, Korea Technology Credit Guarantee Fund
reduced their original principal from W 1,151,884 to W 1,142,064. The repayments
under the re-modified plan were scheduled as follows:

|          |   | 2007    |  |   | 2008    |  |   | 2009    |  |   | 2010    |  |   | 2011    |  |   | 2012    |  |   | 2013    |  |   | Total     | 
|--------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | --------- | 
|Principal | W | 493,159 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,337 |  | W | 649,336 |  | W | 4,389,180 | 
|Interest  |   | 423,601 |  |   | 178,217 |  |   | 162,399 |  |   | 90,907  |  |   | 68,180  |  |   | 45,461  |  |   | 22,727  |  |   | 991,492   | 
|Total     | W | 916,760 |  | W | 827,554 |  | W | 811,736 |  | W | 740,244 |  | W | 717,517 |  | W | 694,798 |  | W | 672,063 |  | W | 5,380,672 | 

However, due to the recurring losses from operations, Meridian
was not able to meet the repayment schedule. As of December 31, 2009, Meridian
has not paid W  1,791,833 of principal and W 764,217 of accrued interest
outstanding to financial institutions, and W 882,656 of accounts payable to
various vendors.

The status of the restructuring plan is reported to Chooncheon
District Court, Korea every quarter. However, under the restructuring plan (or
composition), the Court does not have authorities to dictate or supervise
day-to-day financial activities, which is typical for court receivership.
Therefore, any additional debt or equity financing could be made with no
intervention from the Court.

Meridian carried out an aggressive global marketing in last 2
years with the funds raised in late 2007. Despite of this effort, due to the
global financial crisis and the entrance of imitation machines in export market,
the companys performance has stagnated in 2009. However, the Company has a plan
for attract new foreign investment that will improve financial structures and
reinforce the R&D activity and marketing activity.

Note 3. Summary of Significant Accounting Policies

The consolidated financial statements are presented in
accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP). Significant accounting policies followed by the Company
in the preparation of the accompanying consolidated financial statements are
summarized below.

Principles of Consolidation

The accompanying consolidated financial statements include the
accounts of Meridian, the parent company, and its majority-owned subsidiary,
Meridian America Medicals, Inc. and its wholly-owned subsidiary, Meitian Co.,
Ltd. All significant inter-company balances and transactions have been
eliminated. Non-controlling interest in consolidated financial statements
represent the share of Meridian Medical Inc. who owns 24.24% of common stock of
Meridian America Medicals, Inc.

Revenue Recognition

Revenue is recognized pursuant to applicable accounting
standards including Securities and Exchange Commission (SEC) Staff Accounting
Bulletin (SAB) No. 101 (SAB 101), Revenue Recognition in Financial
Statements, and SAB 104, Revenue Recognition. SAB 101 as amended and SAB 104
summarize certain points of the SEC staffs views in applying generally accepted
accounting principles to revenue recognition in financial statements and provide
guidance on revenue recognition issues in the absence of authoritative
literature addressing a specific arrangement or a specific industry. The
Companys revenue recognition policy complies with the requirements of SAB 101
and SAB 104.

Revenue from sales of products is recognized when the products
  are shipped to the customers. Title and the risks and rewards of ownership are
  transferred or services have been rendered and accepted, and collectability
  is reasonably assured. For medical equipment, the Companys sales policy
  does not allow returns unless the products are defective. The customers
  acceptance is governed by the terms on the contract or arrangement, and any
  transactions not meeting the predetermined conditions are not recorded as revenue.

---

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.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly
liquid investments, including term deposits and short-term bonds which are
readily convertible into known amounts of cash and have an original maturity of
three months or less. For the purposes of the statements of cash flows, the
Company considers all highly liquid instruments with original maturities of
three months or less to be cash equivalents.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is estimated based on analysis
of individual accounts and past experience of collection. When circumstances
indicate that collection of an accounts receivable is doubtful, an allowance and
a charge against earnings are recognized. When circumstances indicate that
collection of an accounts receivable is not to be realized, the outstanding
accounts receivable and the associated allowance are written off.

Concentrations of credit risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist primarily of cash, cash equivalents,
short-term and long-term investments and accounts receivable. The Company places
its cash primarily in deposit accounts with reputable financial institutions.
The Company's accounts receivable are derived primarily from revenue earned from
customers located in the U.S., Canada, Europe, Japan and Korea. The Company
performs ongoing credit evaluations of its customers' financial condition and,
generally, requires no collaterals from its customers. The Company maintains an
allowance for doubtful accounts receivable based upon the expected
collectability of accounts receivable. There were no write offs in the years
ended December 31, 2009, and 2008.

In 2009, the Company had two customers that each represented
more than 10% of its revenues, one of which represented approximately 47.5% of
revenues and the other which represented approximately 11% of revenues. In 2008,
the Company had three customers that each represented more than 10% of its
revenues, one of which represented 29% and two of which represented
approximately 11% of revenues. In 2007, the Company had one customer that
represented more than 10% of its revenues, one of which represented 36% and the
other which represented approximately 26% of revenues.

At December 31, 2009, the Company had one customer that
accounted for 65% of accounts receivable. At December 31, 2008, the Company had
three customers that accounted for 78% of accounts receivable.

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 VAT") and
collects VAT from its customers equal to 10% of sales ("output VAT"). The net
amount is recorded as prepaid VAT, if the input VAT is greater than the output
VAT, or VAT payable if the output VAT is greater than the input VAT.

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 average cost method. The Company reviews the components of
inventories on a regular basis for excess or obsolete inventories and makes
appropriate adjustments to the value of inventories in the period that such
excess or obsolete inventories are identified.

Investment in Affiliate

Investee entities, in which the Company may exercise
significant influence, but not control, are accounted for under the equity
method of accounting. Whether the Company exercises significant influence with
respect to an investee depends on an evaluation of several factors including,
among others, representation on the entitys board of directors and ownership
level, generally 20% to 50% interest in the voting securities of the entity
including voting rights associated with the Companys holdings in common,
preferred and other convertible instruments in the entity. Under the equity
method of accounting, the Companys share of the earnings or losses of these
entities is included in the equity income (loss) section of the consolidated
statements of operations.

A loss in value of an investment that is other than a temporary
decline is recognized as a charge to current operations. Evidence of a loss in
value might include, but would not necessarily be limited to, absence of an
ability to recover the carrying amount of the investment or inability of the
investee to sustain an earnings capacity that would justify the carrying amount
of the investment.

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 using
rates based on useful lives of 4 years.

Impairment of Long-Lived Assets

The Company reviews for the impairment of long-lived assets,
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.

No impairment loss was recognized in 2009, 2008 and 2007.

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.

Accrued 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 Plan in Korea,
the Company was required to transfer 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 and
is accordingly reflected in the accompanying financial statements as a reduction
from the accrued severance benefits liability. Since April 1999, however, under
a new regulation, such transfers to the National Pension Fund became no longer
required.

Shipping and Handling Costs

The Company includes shipping and handling costs in selling,
general and administrative costs. Shipping and handling costs for the years
ended December 31, 2009, 2008 and 2007, amounted to W 4,202, W 13,440, and W
12,421, respectively.

Research and Development Costs

Research and development costs consist primarily of payroll,
depreciation expense and other overhead expenses which are all expensed as
incurred until technological feasibility is reached. The Company has expensed W
283,237, W 392,902 and W 305,307 during the years ended December 31, 2009, 2008
and 2007, respectively.

Advertising Costs

The Company expenses advertising expenses as they are incurred.
Advertising expenses for the years ended December 31, 2009, 2008 and 2007 are W
10,372, W 45,290 and W 25,938, respectively.

Fair Value of Financial Instruments

The estimated fair value of amounts reported in the
consolidated financial statements have been determined using available market
information and valuation methodologies, as applicable. The carrying amount of
cash and cash equivalents, accounts receivable, accounts payable, and all other
current assets and liabilities approximate their fair value because of their
short term maturities at December 31, 2009 and 2008, unless otherwise stated.
The fair value of non-current assets and liabilities approximate their carrying
value unless otherwise stated. The fair value of the Company's long-term debt is
based on interest rates that would be available to the Company for the issuance
of debt with similar terms.

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.

Other Comprehensive Income

---

Other comprehensive income refers to revenues, expenses, gains
and losses that, under U.S GAAP are included in comprehensive income, but are
excluded from net income as these amounts are recorded directly as an adjustment
to shareholders deficiency. The Companys other comprehensive income is
primarily comprised of foreign currency translation gain (loss).

Translation of Foreign Currency

The Company appliesASC 830, Foreign Currency Matters,
for translating foreign currency into Korean Won in its consolidation of the
financial statements. Upon consolidation of the Companys foreign subsidiary
into the Companys consolidated financial statements, any balances with the
subsidiary denominated in the foreign currency are translated at the exchange
rate at year end. The financial statements of Meridian America Medicals, Inc.
(MAMI) have been translated based upon US Dollar as the functional currency.
MAMIs assets and liabilities were translated using the exchange rate at year
end and income and expense items were translated at the average exchange rate
for the year. The resulting translation adjustment was included in other
comprehensive income (loss).

The Company used the exchange rates published by The Korea
Financial Telecommunications & Clearings Institute.

Noncontrolling Interest in Consolidated Subsidiary

The Companys consolidated financial statements include 100% of
the assets, liabilities, revenues and expenses of its majority-owned subsidiary
over which it has effective control. The ownership interests of the other
stockholders are reflected as noncontrolling interests.

Earnings (Loss) Per Share

Basic earnings per share (EPS) is computed by dividing
earnings (losses) attributable to common shareholders by the weighted average
number of common shares outstanding for the periods. Diluted EPS is computed
using the weighted average number of common and redeemable common shares and
dilutive common equivalent shares outstanding during the year using the treasury
stock method for warrants.

Stock Option Plan

The Company previously applied 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 permitted, the Company had previously elected to adopt
provisions of ASC 718, Compensation - Stock Compensation, for options granted
to non-employees who perform services for the Company and the disclosure-only
provisions of options granted to employees.

Pursuant to ASC Topic 718, the company measures the cost of
employee services received in exchange for an award of stock-based compensation
based on the grant-date fair value of the award. The cost is recognized over the
requisite service period, except for awards granted to retirement-eligible
employees, which are fully expensed by the grant date. No compensation cost is
recognized for awards that are subsequently forfeited. However, the Company did
not recognize compensation cost related with stock options as the vesting period
was completed up prior to 2004 for all outstanding options.

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 2001 was W607.

At December 31, 2009 there is no stock option plan
outstanding.

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168,The FASB
Accounting Standards Codification (ASC) and the Hierarchy of Generally
Accepted Accounting Principles, a replacement of FASB Statement No. 162.
This statement modifies the GAAP hierarchy by establishing only two levels of
GAAP, authoritative and nonauthoritative accounting literature. Effective July
2009, the FASB ASC, also known collectively as the Codification, is considered
the single source of authoritative U.S. accounting and reporting standards,
except for additional authoritative rules and interpretive releases issued by
the SEC. Nonauthoritative guidance and literature would include, among other
things, FASB Concepts Statements, American Institute of Certified Public
Accountants Issue Papers and Technical Practice Aids, and accounting textbooks.
The Codification was developed to organize GAAP pronouncements by topic so that
users can more easily access authoritative accounting guidance. It is organized
by topic, subtopic, section, and paragraph, each of which is identified by a
numerical designation. This statement is effective for financial statements for
interim and annual reporting periods ending after September 15, 2009. All
accounting references have been updated, and therefore SFAS references have been
replaced with ASC references.

In December 2007, the FASB issued SFAS No. 141 (revised),Business Combinations, which was primarily codified into theBusiness
Combinations Topic, ASC 805. This guidance changes the accounting for
business combinations, including the measurement of acquirer shares issued in
consideration for a business combination, the recognition of contingent
consideration, the accounting for pre-acquisition gain and loss contingencies,
the recognition of capitalized in-process research and development, the
accounting for acquisition-related restructuring cost

---

accruals, the treatment of acquisition related transaction costs, and the recognition of changes in the acquirers income tax valuation allowance. This guidance is effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. The adoption of this guidance did not have any impact on the Companys consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51, which was primarily codified into theConsolidations Topic, ASC 810-10-65. This guidance
establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance is effective for fiscal years beginning on or after December 15, 2008. The adoption of this
guidance did not have any impact on the Companys consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165,Subsequent Events, which was primarily codified into theSubsequent Events Topic, ASC 855. This guidance establishes general standards of accounting for and disclosure of events that occur
after the balance sheet data but before financial statements are issued. This guidance is effective for interim or annual financial periods ending after June 15, 2009. The adoption of this guidance did not have any impact on the Companys
consolidated financial statements.

In September 2009, the FASB issued ASU No. 2009-12,Fair Value Measurements and Disclosure, or ASU 2009-12. This standard provides additional guidance on using the net asset value per share, provided by an investee, when estimating the fair
value of an alternate investment that does not have a readily determinable fair value and enhances the disclosures concerning these investments. Examples of alternate investments, within the scope of this standard, include investments in hedge funds
and private equity, real estate, and venture capital partnerships. This standard is effective for interim and annual periods ending after December 15, 2009. The Company does not expect the adoption of this guidance to have any impact on our
consolidated financial statements.

In December 2009, the FASB issued ASU No. 2009-17,Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, or ASU 2009-17. The amendments in this update replace the
quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to
direct the activities of a variable interest entity that most significantly impact the entitys economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is
expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this update also require additional disclosures about a
reporting entitys involvement in variable interest entities, which will enhance the information provided to users of financial statements. This standard is effective for fiscal years beginning on or after December 15, 2009. The Company does
not expect the adoption of this guidance to have any impact on our consolidated financial statements.

In January 2010, the FASB issued ASU No. 2010-06,Fair Value Measurements and Disclosures (ASC Topic 820)  Improving Disclosures About Fair Value Measurements. The amendments in this update require new disclosures about transfers into
and out of Levels 1 (fair value determined based on quoted prices in active markets for identical assets and liabilities) and 2 (fair value determined based on significant other observable inputs), and separate disclosures about purchases, sales,
issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. Except for the detailed Level 3
roll-forward disclosures, the new standard is effective for interim and annual reporting periods beginning after December 31, 2009. The requirement to provide detailed disclosures about the purchases, sales, issuances, and settlements in the
roll-forward activity for Level 3 fair value measurements is effective for interim and annual reporting periods beginning after December 31, 2010. We do not expect the adoption of this guidance to have a material impact on the Companys
consolidated financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC did not or are not believed by management to have a material impact on our companys present or future consolidated
financial statements.

Note 4. United States Dollar Amounts

The Company reports its consolidated financial statements in the Korean Won. The United States dollar (US dollar) amounts disclosed in the accompanying consolidated financial statements are presented solely for the convenience of the
reader, and have been converted at the rate of 1,163.70 Korean Won to one US dollar, which is the noon buying rate of the US Federal Reserve Bank of New York in effect on December 31, 2009. Such translations should not be construed as
representations that the Korean Won amounts represent, have been, or could be, converted into, US dollars at that or any other rate. The US dollar amounts are unaudited and are not presented in accordance with generally accepted accounting
principles either in Korea or the United States of America.

Note 5. Accounts Receivable

Trade and other accounts receivable at December 31 are as follows:

---

2009
    
    
    2008Trade
    W
    2,750,141
    
    W
    3,161,966Others
    
    51,380
    
    
    43,8942,801,521
    
    
    3,205,860Allowance for doubtful accounts
    
    (2,000,898
    )
    
    (886,532
    )Accounts Receivable, net
    W
    800,623
    
    W
    2,319,328


Note 6. Inventories

Inventories are comprised of the following as of December
31:

2009
    
    
    2008Merchandise
    W
    71,949
    
    W
    212,148Finished goods
    
    193,680
    
    
    109,580Work-in-process
    
    106,098
    
    
    202,841Raw material
    
    248,432
    
    
    354,552620,159
    
    
    879,121Reserves
    
    (267,454
    )
    
    (387,352
    )W
    352,705
    
    W
    491,769


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

Note 7. Property, Plant and Equipment

Property, plant and equipment are comprised of the following at
December 31:

2009
    
    
    2008Machinery
    W
    55,416
    
    W
    55,855Vehicles
    
    32,769
    
    
    35,292Tools
    
    47,900
    
    
    47,900Furniture and fixtures
    
    930,281
    
    
    914,2051,066,366
    
    
    1,053,252Less accumulated depreciation
    
    (1,006,698
    )
    
    (969,948
    )Property, plant and equipment, net
    W
    59,668
    
    W
    83,304


Depreciation expenses for the years ended December 31, 2009,
2008 and 2007 are W 38,172, W 53,325 and W 22,918, respectively.

Note 8. Equity Method Investment

The Company accounts for its ownership interest in Beijing
Meridian Medicals Equipment Co., Ltd. ("Beijing Meridian") under the equity
method of accounting and adjusts its investment balance for its share of Beijing
Meridian income and losses. Beijing Meridians primary business is wholesale and
retail of medical equipment in China.

On November 10, 2001, the Company acquired 45% ownership of
Beijing Meridian for W 76,956 in cash. The changes of ownership percentage
occurred in 2002 and 2003 when Beijing Meridian issued additional capital
stocks. The ownership percentage was 25% in 2009 and 2008.

The recognized loss on this investment was W 393 and W 712 in
2009 and 2008, respectively. And the carrying amount of the investment was W
37,382 and W 40,617 as of December 31, 2009 and 2008, respectively. There have
been no factors indicating that a decrease in value of the investment has
occurred.

Note 9. Patents and Trademarks

Patents and trademarks are comprised of the following at
December 31:

2009
    
    
    2008Acquisition cost
    W
    5,466
    
    W
    5,466Less accumulated amortization
    
    (5,090
    )
    
    (4,901
    )


---

Intangible assets, net
    W
    376
    
    W
    565


Amortization expenses for the years ended December 31, 2009,
2008 and 2007 are W 189, W 189 and W 189, respectively.

Note 10. Short-Term Borrowings

Short-term borrowings as of December 31 are as follows:

AnnualCreditor
    
    interest rate
    
    
    2009
    
    
    2008Other (third party individuals)
    
      7 ~8 %
    
    W
    684,500
    
    W
    655,000


Note 11. Long-Term Borrowings

Long-term borrowings as of December 31 are as follows:

|                                         |  | Annual        |  |  |                   |  |   |            |   |   |            |  
|---------------------------------------- |  | ------------- |  |  | ----------------- |  | - | ---------- | - | - | ---------- | -
|Creditor                                 |  | interest rate |  |  | Maturity Date     |  |   | 2009       |   |   | 2008       |  
|                                         |  |               |  |  |                   |  |   |            |   |   |            |  
|Chohung Bank (Note a)                    |  | 3.5 %         |  |  | December 31, 2013 |  | W | 1,074,455  |   | W | 1,074,455  |  
|Korea Technology Credit Guarantee Fund   |  | 3.5 %         |  |  | December 31, 2013 |  |   | 1,009,160  |   |   | 1,016,160  |  
|Korea Exchange Bank                      |  | 3.5 %         |  |  | December 31, 2013 |  |   | 125,831    |   |   | 125,831    |  
|Woori Bank                               |  | 3.5 %         |  |  | December 31, 2013 |  |   | 361,516    |   |   | 361,516    |  
|Small Business Corporation               |  | 3.5 %         |  |  | December 31, 2013 |  |   | 276,606    |   |   | 276,606    |  
|Shinhan Bank                             |  | 3.5 %         |  |  | December 31, 2013 |  |   | 41,612     |   |   | 41,612     |  
|SMI ABS Specialty Co., Ltd. (Note b)     |  | 3.5 %         |  |  | December 31, 2013 |  |   | 1,000,000  |   |   | 1,000,000  |  
|Rainbow Specialty Sec Co., Ltd. (Note b) |  | 3.5 %         |  |  | December 31, 2013 |  |   | 500,000    |   |   | 500,000    |  
|Shareholder                              |  | 2%            |  |  | December 31, 2011 |  |   | 41,512     |   |   | -          |  
|                                         |  |               |  |  |                   |  |   |            |   |   |            |  
|                                         |  |               |  |  |                   |  |   | 4,430,692  |   |   | 4,396,180  |  
|Less current portion                     |  |               |  |  |                   |  |   | (2,441,169 | ) |   | (1,798,833 | )
|                                         |  |               |  |  |                   |  | W | 1,989,523  |   | W | 2,597,347  |  

(Note a) Chohung Bank has been merged into Shinhan Bank as of
April 1, 2006.

(Note b) The Company had issued two series of non-guaranteed
corporate bonds in 2001. As explained in Note 2, the Company entered into debt
restructuring plan including debentures. As a result, two series of debentures
were reclassified to long-term borrowings and the maturity date was extended to
December 31, 2013 with a reduced interest rate of 3.5% per annum. Details of
debentures as of December 31, 2009, are as follows:

|              |   |           |  |  | Restructured  |  |  | Original          | 
|------------- | - | --------- |  |  | ------------- |  |  | ----------------- | 
|              |   | Amount    |  |  | Interest rate |  |  | Maturity          | 
|              |   |           |  |  |               |  |  |                   | 
|1stdebentures | W | 1,000,000 |  |  | 3.5%          |  |  | December 31, 2013 | 
|              |   |           |  |  |               |  |  |                   | 
|2nddebentures |   | 500,000   |  |  | 3.5%          |  |  | December 31, 2013 | 
|              | W | 1,500,000 |  |  |               |  |  |                   | 

The repayment schedule for long-term borrowings as of December
31, 2009 is as follows:

---

Year
    
    Amount2010
    W
    2,441,1692011
    
    690,8502012
    
    649,3372013
    
    649,336W
    4,430,692


Note 12. Accrued Severance Benefits

Changes in accrued severance benefits for the years ended
December 31, 2009 and 2008 are summarized as follows:

2009
    
    
    2008Accrued severance benefits at beginning of
      year
    W
    194,114
    
    W
    135,537Provision
    
    75,584
    
    
    74,580Payments
    
    (77,486
    )
    
    (16,003
    )Transfer to National Pension Fund
    
    (4,063
    )
    
    (4,063
    )188,149
    
    
    190,051Less current portion
    
    (38,442
    )
    
    (19,411
    )Balance at end of year
    W
    149,707
    
    W
    170,640


Note 13. Commitments

The Company leases its manufacturing and office facilities from
non-affiliates. Current lease will be expired in October 2011. Thereafter, the
management expects to renew its lease agreement on an annual basis. Total rent
expense were W 135,735, W 165,338 and W 205,110 for the years ended December 31,
2009, 2008 and 2007, respectively.

Total future minimum lease payments under operating leases are
as follows:

Year ending December, 31
    
    Operating Leases2010
    W
    74,6742011
    
    59,6702012
    
    18,4192013
    
    18,4192014 and thereafter
    
    35,303Total
    W
    206,485


Note 14. Shareholders Deficiency

The Companys capital stock consists entirely of common stock
with a par value of 100 Won and the number of authorized, issued and outstanding
shares as of December 31, 2009 and 2008 are as follows:

2009
    
    
    2008Authorized shares
    
    100,000,000
    
    
    100,000,000Issued and outstanding shares
    
    35,094,156
    
    
    35,094,156


In April 2007, the Company raised 517,000 Won from twenty
non-U.S. investors for total 933,506 common shares at the price of 554 Won per
share and warrants to purchase 133,358 common shares at 950 Won per share. As of
December 31 2009, due to the end of exercisable period, those warrants are not
effective any more.

In June 2007, the Company raised US$350,000 from one non-U.S.
investor for 700,000 common shares at the price of US$0.50 per share.

In December 2007, the Company raised 1,779,000 Won from forty
nine non-U.S. investors for total 1,976,666 common shares at the price of 900
Won per share.

On September 4, 2008, the Company issued 90,000 shares of
common stock (par value 100 Won) in exchange for investor relations and
marketing services with the fair value to the Company of W 51,822. 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 has legally issued its shares and complied with the
filing requirements pursuant to the SEC regulations. However, 13,975,159 common
shares issued through S-8 registrations, (i) for acquisition of By George
Holdings, (ii) debt-for-equity swap on October 21, 2004 and

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(iii) service fee for IR and marketing activities, have not
been included in the Korean Commercial Registration Office due to the different
requirements of the share issuance between the US and Korean Commercial Laws.
The number of outstanding shares and capital stock as of December 31, 2008 in
SEC and in Korean Commercial Registration Office are as follows:

Korean CommercialSEC
    
    
    Registration OfficeNumber of outstanding shares
    
    35,094,156
    
    
    19,421,182Capital Stock
    W
    3,509,4156
    
    W
    1,942,118


However, regardless of registration in Korean Commercial
Registration Office, every shareholders right and interest is not
different.

Note 15. Other income (expense)

The Company classifies income (expense) items not generated
from the routine business operation as other, net of other income (expense).
Other, net for the years ended December 31, 2009, 2008 and 2007 are W (49,878),
W 161,963 and W 193,521, respectively. The main components of other, net of
other income (expense) from the statements of operations and comprehensive
income are as follows. For the year ended 2009, the Company classified W
(74,302) loss from correction of accounting error as other, net. For the year
ended 2008, the Company classified W 102,700 refund of service fee as other,
net. For the year ended 2007, the Company classified W 138,480 sales agency
commission as other, net.

Note 16. Income Taxes

The Company adopted ASC Subtopic 740-10-Income Taxes-Overall
(FASB Interpretation No. 48), Accounting for Uncertainty in Income Taxes which
prescribes a recognition threshold and measurement process for recording in the
financial statements, uncertain tax positions taken or expected to be taken in a
tax return. Under ASC Subtopic 740-10, the impact of an uncertain income tax
position on the income tax return must be recognized at the largest amount that
is more-likely-not to be sustained upon audit by the relevant taxing authority.
An uncertain income tax position will not be recognized if it has less than a
50% likelihood of being sustained. ). Management believes that there are no
significant unrecognized tax expense (benefits) as of December 31, 2009.

The Company recognizes federal and state tax liabilities or
assets based on its estimate of taxes payable to or refundable by tax
authorities in the current fiscal year. The Company also recognizes federal and
state tax liabilities or assets based on its estimate of future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. 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. A valuation allowance is required when it is more
likely than not that the Company will not be able to realize all or a portion of
our deferred tax assets.

Income tax provision from continuing operations for the years
ended December 31, 2009 and 2008 are $0.

The provisions for income taxes reconcile to the amount
computed by applying effective federal statutory income tax rate to income
before provision for income taxes as follows:

2009
    
    
    2008Foreign tax
    
    (15.02%
    )
    
    10.96%Federal tax at statutory tax rate
    
    (13.92%
    )
    
    9.55%State tax, net of valuation allowance
    
    (2.39%
    )
    
    2.48%Nondeductible expenses
    
    0.25%
    
    
    10.51%Tax Credits
    
    0.00%
    
    
    0.00%AMT
    
    0.00%
    
    
    0.00%Expired NOL
    
    19.64%
    
    
    242.42%Change of Valuation Allowance
    
    11.44%
    
    
    (275.92%
    )Income Tax Provision
    
    0.00%
    
    
    0.00%


Deferred income taxes reflect the net 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 deferred tax assets at December 31 consisted of the following:

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|                                                   |   | 2009       |   |   | 2008       |  
|-------------------------------------------------- | - | ---------- | - | - | ---------- | -
|Current Deferred Tax Asset (Liabilities)           |   |            |   |   |            |  
|Foreign currency translation                       | W | (69,784    | ) | W | (106,878   | )
|Allowance for accounts receivable                  |   | 152,238    |   |   | 154,277    |  
|Non-current Deferred Tax Asset
      (Liabilities) |   |            |   |   |            |  
|Net Operating Losses                               |   | 3,092,000  |   |   | 2,890,065  |  
|Investment                                         |   | 134,624    |   |   | 134,624    |  
|Intangible asset                                   |   | (107,986   | ) |   | (144,199   | )
|Severance                                          |   | 42,253     |   |   | 43,738     |  
|                                                   |   |            |   |   |            |  
|Total Deferred Tax Asset                           |   | 3,243,345  |   |   | 2,971,627  |  
|Less Valuation allowance                           |   | (3,243,345 | ) |   | (2,971,627 | )
|Net, deferred tax asset                            | W | -          |   | W | -          |  

The significant component of the deferred tax asset (liability)
at December 31, 2009 and 2008 resulted from net operating loss carry-forwards in
the amount of approximately 11.2 billion Won and 11.4billion Won,
respectively.

In assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Based upon
factors such as the scheduled reversal of temporary differences and projected
future taxable income, management considers the scheduled reversal of deferred
income tax assets and liabilities, the projected future taxable income, and tax
planning strategies in making this assessment. Based upon the level of
historical and projected taxable income, management believes it is more likely
than not that the deferred tax assets will be realized. The valuation allowance
increased by 271.7 million Won for the year ended December 31, 2009.

Note 17. Income (loss) Per Share

Income (loss) per share is computed by dividing net income
(loss) by the weighted-average number of shares outstanding during the year.
Diluted income (loss) per share is computed in a manner consistent with that of
basic loss per share while giving effect to all potentially dilutive common
shares that were outstanding during the period.

Income (loss) per share for the years ended December 31, 2009,
2008 and 2007 is calculated as follows (in thousands of Korean won, except for
per share amount and number of shares):

|                                                       |   | 2009       |   |   | 2008       |  |   | 2007       |  
|------------------------------------------------------ | - | ---------- | - | - | ---------- |  | - | ---------- | -
|Basic earnings per shares                              |   |            |   |   |            |  |   |            |  
|Net income (loss)                                      | W | (2,497,408 | ) | W | 172,984    |  | W | (607,663   | )
|Net income (loss) applicable to common shareholders    |   | (2,497,408 | ) |   | 172,984    |  |   | (607,663   | )
|Weighted average common shares
      outstanding-basic |   | 35,094,156 |   |   | 35,033,418 |  |   | 32,553,528 |  
|Basic earnings per share                               |   | (71        | ) |   | 5          |  |   | (19        | )

The Company has potentially dilutive common shares as of
December 31, 2007, 2005 and 2004, however there were no dilutive effects as of
December 31, 2009, 2008 and 2007. Therefore, income (loss) per share is same as
the diluted income (loss) per share.

Note 18. Related Party Transactions

Significant account balance with related company as of December
31 are summarized as follows:

|Related party          |  | Nature of Relationship      |  |  | Account balance      |  |   | 2009      |  |   | 2008      | 
|---------------------- |  | --------------------------- |  |  | -------------------- |  | - | --------- |  | - | --------- | 
|Meridian Medical, Inc. |  | MAMIs minority shareholder |  |  | Account Receivables  |  |   | 1,794,473 |  |   | 2,007,481 | 
|Park hee yo            |  | MAMIs shareholders         |  |  | Long-term borrowings |  |   | 41,512    |  |   | -         | 
|                       |  |                             |  |  |                      |  | W | 1,835,985 |  | W | 2,007,481 | 

The Company recognizes bad debt expenses in regard to account
receivables. The allowances for doubtful accounts were W 135,735 and W 205,110
for the years ended December 31, 2009 and 2008, respectively.

Significant transactions with related company for the year
ended December 31, 2009, 2008 and 2007 are summarized as follows:

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|Related party          |  | Transactions |  |   | 2009    |  |   | 2008      |  |   | 2007    | 
|---------------------- |  | ------------ |  | - | ------- |  | - | --------- |  | - | ------- | 
|Meridian Medical, Inc. |  | Sales        |  |   | 652,436 |  |   | 970,343   |  |   | 676,137 | 
|                       |  | Service fees |  |   | 313,234 |  |   | 297,112   |  |   | 124,736 | 
|                       |  |              |  | W | 965,670 |  | W | 1,267,455 |  | W | 800,873 | 

In June 2004, the Company entered into an exclusive
distribution agreement with Meridian Medical, Inc ("MMI"). Under the agreement,
MMI was entitled to an exclusive distribution right in North American Market. On
January 2 2009, the Company entered into service agreement with MMI. Based on
that agreement, MMI carries out sales, marketing and admin support service on
behalf of the Company in US market.

Note 19. Geographic Information

In 2009, the Company operated in one industry segment, the
development and manufacturing 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, for the years ended
December 31:

|               |   | 2009      |  |   | 2008      |  |   | 2007      | 
|-------------- | - | --------- |  | - | --------- |  | - | --------- | 
|Export         |   |           |  |   |           |  |   |           | 
|North America  | W | 693,543   |  | W | 1,143,757 |  | W | 848,459   | 
|Asia           |   | 111,835   |  |   | 544,461   |  |   | 1,109,121 | 
|Europe         |   | 186,687   |  |   | 1,444,010 |  |   | 266,629   | 
|Other          |   | 107,966   |  |   | 15,615    |  |   | 41,884    | 
|               |   | 1,100,031 |  |   | 3,147,843 |  |   | 2,266,093 | 
|               |   |           |  |   |           |  |   |           | 
|Domestic Sales |   | 273,348   |  |   | 177,080   |  |   | 338,448   | 
|               | W | 1,373,379 |  | W | 3,324,923 |  | W | 2,604,541 | 

Note 20. Subsequent Events

The Company has evaluated all subsequent events to the balance
sheet date of December 31, 2009 through the date that the financial statements
were issued on July 28 2010, and has determined that there are no subsequent
events that require disclosure under FASB Accounting Standards Codification
Topic 855, Subsequent Events.

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                 

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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/In Beom ParkName: In Beom Park Title: President, CEO, Director Date:
August 12, 2010

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