<SEQUENCE>1
<FILENAME>doc1.txt


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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,  2002
                                      ---------------------
[ ]     TRANSITION  REPORT  PURSUANT  TO  SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934
        For  the  transition  period  from  __________  or  __________

Commission  file  number:  0-32359

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

                              The Republic of Korea
                             -----------------------
                 (Jurisdiction of incorporation or organization)

           4F, Heungseong Bldg., 197-3, Jamsilbon-Dong, Songpa-Gu, Seoul, Korea
           --------------------------------------------------------------------
		                        (Address of principal executive offices)

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

<TABLE>
<CAPTION>

                                                         NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                                        ON WHICH REGISTERED

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

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



</TABLE>


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

Common  shares
--------------------------------------------------------------------------------
                                (Title of Class)

--------------------------------------------------------------------------------
                                (Title of Class)

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


--------------------------------------------------------------------------------
                                (Title of Class)


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


Common  shares  outstanding  December  31,  2002:  17,182,583
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Indicate  by  check  mark  whether  the  registrant:  (1)  has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.              Yes  [X]    No  [ ]

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

                                        1
<PAGE>

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 200 (US $0.17
at  December  31,  2002  and  US  $0.17  at  June 18,  2003).

Currency Translation

In  this  annual report, references to "Won" or "W" are to the currency of Korea
and all  references to "Dollars," "$" or "US$" are to the currency of the United
States of America. Our financial statements are prepared in Won, translated into
U.S.  dollars  and  presented in accordance with accounting principles generally
accepted  in  the  United  States  for the fiscal years ended December 31, 2000,
2001, and 2002. Solely for the convenience of the reader and to improve clarity,
certain  Items in this annual report contain translations of certain Won amounts
into  Dollars  at  specified  rates  (see  also note 2c to the Company's audited
financial statements, included in Item 18, for the Company's accounting policies
with  regard  to  foreign  exchange  conversion).  All  translations from Won to
Dollars  were  made  (unless otherwise indicated) at the noon buying rate in The
City of New York for cable transfers in Won per US$1.00 as certified for customs
purposes by the Federal Reserve Bank of New York in effect on December 31, 2002,
which was Won 1,186.30 to US$1.00. No representation is made that the Won or US$
amounts  referred to in this annual report could have been or could be converted
into US$  or Won, as the case may be, at any particular rate or at all. See also
Item 3,  Key  Information, Exchange Rates Information, for information regarding
the rates of exchange between the Won and the Dollar.  On June 18, 2003 the noon
buying  rate  was  Won  1,185.00  to  US$1.00.

                                        2
<PAGE>

                                     PART I


ITEM  1.  IDENTITY  OF  DIRECTORS,  SENIOR MANAGEMENT  AND  ADVISERS
-------------------------------------------------------------------

A.     DIRECTORS  AND  SENIOR  MANAGEMENT

See  Item  4.C.

B.     ADVISERS

Principal  bankers:     Chohung  Bank
                        72-3, Hongchun-Eup, Hongchun-Kun, Kangwon-Do, Korea

                        Woori Bank
                        164,  Samsung-Dong,  Gangnam-Gu,  Seoul,  Korea

Legal  advisors:        J. Bennett  Grocock
                        455  S. Orange Avenue Suite 500, Orlando, Florida, USA

C.     AUDITORS

SamDuk  Accounting  Corporation
(Members of the Korean Institute of Certified Public Accountants)
12/F  SeoHeung  Bldg.
68  Keonji-Dong,  Jongro-Ku
Seoul,  Korea


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, 2002 and 2001 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, 2002, 2001, 2000 and 1999 are derived from the
audited  consolidated  financial statements of Meridian, which have been audited
by SamDuk  Accounting Corporation, independent accountants. The report of SamDuk
Accounting Corp. covering the December 31, 2002 financial statements contains an
emphasis paragraph related to the adverse economic conditions in the Republic of
Korea in recent years and in the Asia Pacific region in general. Especially, the
auditors' report also describes the uncertainty about our ability to continue as
a  going  concern,  based  on  negative  cash flows from operations, accumulated
deficit  and negative working capital. Our consolidated financial statements are
compiled  in  Won,  expressed  in  US  dollars, and presented in accordance with
accounting  principles  generally  accepted  in  the  United  States.

                                        3
<PAGE>

<TABLE>
<CAPTION>

                                         MERIDIAN CO., LTD.
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  (in U.S. dollars)
                        For the years ended December 31, 2002, 2001, 2000 and 1999



                                                               2002          2001          2000          1999
<S>                                                        <C>           <C>           <C>           <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . .  $3,521,657    $ 5,289,561   $ 5,304,040   $ 5,367,091
Cost of sales . . . . . . . . . . . . . . . . . . . . . .   1,915,811      2,478,106     2,978,975     3,988,964
                                                           ------------  ------------  ------------  ------------
Gross profit. . . . . . . . . . . . . . . . . . . . . . .   1,605,846      2,811,455     2,325,065     1,378,127

Operating expenses. . . . . . . . . . . . . . . . . . . .   3,133,684      3,996,150     3,338,976     2,396,014

 Operating loss . . . . . . . . . . . . . . . . . . . . .  (1,527,838)    (1,184,695)   (1,013,911)   (1,017,887)
 Other income . . . . . . . . . . . . . . . . . . . . . .      84,418        188,925       400,473     1,216,384
 Other expenses . . . . . . . . . . . . . . . . .. . . .   (1,461,698)      (929,442)     (445,877)     (441,223)
 Minority interest in net loss of consolidated affiliates           -         19,302       367,789        14,074
 Income tax expense . . . . . . . . . . . . . . . . . . .           -              -       (11,551)     (130,037)
 Extraordinary items. . . . . . . . . . . . . . . . . . .           -        (10,212)        6,391       (13,918)
 Other comprehensive gain (loss). . . . . . . . . . . . .    (161,224)       (26,326)     (158,508)       81,290

 Comprehensive loss . . . . . . . . . . . . . . . . . . . $(2,451,049)   $(1,959,374)   $ (855,194)  $  (291,317)

 Weighted average number of common shares . . . . . . . .  16,472,700     15,703,850    14,071,325     8,371,325

 Basic and diluted loss per common share. . . . . . . .   $     (0.14)   $     (0.12)   $    (0.05)  $     (0.04)
</TABLE>
                                        4
<PAGE>

<TABLE>
<CAPTION>

                     CONSOLIDATED BALANCE SHEETS (in U.S. dollars)
                     As of December 31, 2002, 2001, 2000 and 1999


                                               2002         2001         2000        1999
<S>                                           <C>          <C>         <C>         <C>
Cash and cash equivalents. . . . . . . . .  $  128,674    $   105,216   $  398,625  $1,428,090
Accounts receivable.- trade. . . . . . . .   1,058,953      1,759,821    2,708,607   1,895,453
Inventories. . . . . . . . . . . . . . . .     702,097      1,187,989    1,093,137     509,633
Other. . . . . . . . . . . . . . . . . . .     314,351      1,074,919      587,827     119,658

  Total current assets . . . . . . . . . .   2,204,075      4,127,945    4,788,196   3,952,834
Investments and other assets . . . . . . .     190,317        433,653      693,331     872,284
Property, plant and equipment - net. . . .   1,444,278      1,455,295    1,528,395   1,237,090
Goodwill and other intangible assets - net       2,161            932       75,273      77,792

  TOTAL ASSETS . . . . . . . . . . . . . .  $3,840,831     $6,017,825   $7,085,195  $6,140,000


Trade accounts payable and current debt. .  $4,802,926     $3,653,326   $3,779,553  $1,850,493
Long-term borrowings . . . . . . . . . . .   1,395,089      2,568,413    1,486,641   2,275,676
                                            ----------       ---------   ---------   ---------
  Total liabilities. . . . . . . . . . . .   6,198,015      6,221,739    5,266,194   4,126,169

Minority interest. . . . . . . . . . . . .           -          6,593       26,691      35,669
Shareholders' equity . . . . . . . . . . .  (2,357,184)      (210,507)   1,792,310   1,978,162
                                            ----------      ---------    ---------  ----------
   TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY. . . . . . . . . .   3,840,831     $6,017,825   $7,085,195  $6,140,000
</TABLE>

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

YEAR  AT DECEMBER 31  ANNUAL AVERAGE RATE PER $1.00 US*  ANNUAL HIGH  ANNUAL LOW
----  --------------  ---------------------------------  -----------  ----------
<S>   <C>             <C>                                <C>          <C>

1997      1695                    988.1                      1960        845.5
----  --------------  ---------------------------------  -----------  ----------
1998      1206                   1367.3                      1812       1196.0
----  --------------  ---------------------------------  -----------  ----------
1999      1136                   1188.2                      1243       1124.5
----  --------------  ---------------------------------  -----------  ----------
2000      1267                   1140.0                      1267       1105.5
----  --------------  ---------------------------------  -----------  ----------
2001      1314                   1293.4                      1369       1234.0
----  --------------  ---------------------------------  -----------  ----------
2002      1186                   1242.1                      1332       1160.6
----  --------------  ---------------------------------  -----------  ----------
</TABLE>

                                       5
<PAGE>

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
operating  expenses, (ii) costs associated with bringing new products to market,
iii) continued research and development and (iv) 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.

Subsequent  to year-end, the Company renegotiated the maturity date of $ 842,957
of  debentures  that  had an  original maturity date of January 31, 2003.  These
debentures  are  now  repayable between July and December 2003. The Company must
obtain  at  least $ 2.9 million  in new financing in order to meet its financial
obligations  during  2003.  The  Company  is  making  efforts to restructure its
existing  obligations  and  is contemplating a public offering of common shares.
However,  if  the  Company's  efforts are not successful, the Company may not be
able  to  realize  its assets and discharge its liabilities in the normal course
of operations.

The Company anticipates that losses may continue
For  the  year ended December 31, 2002 the Company had a net loss of  $2,289,825
and an accumulated deficit of $6,155,830. The Company recognizes the possibility
of  incurring  losses  for  the foreseeable future.  The extent of future losses
will  depend,  in part,  on  the amount of growth in revenues from the Company's
products. The Company expects that operating costs will increase during the next
several  years,  especially  in  the  areas  of  sales  and  marketing,  product
development  and  general and administrative expenses as it pursues its business
strategy. Thus, the Company will need to generate increased revenues faster than
the  rate  of  growth  in  costs  to  achieve profitability.  To the extent that
increases  in its operating expenses precede or are not subsequently followed by
corresponding  increases  in  revenues, or  if  it is unable to adjust operating
expense  levels  accordingly,  the  Company's business, results of operations an
financial condition would be materially  and adversely affected. There can be no


                                        6
<PAGE>
assurance  that  the  Company  will  sustain profitability or that its operating
losses  will  not  increase  in  the  future.

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

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

The  Company  currently  depends  on  a limited  number  of foreign suppliers to
manufacture  certain  key  components and these manufacturers may not be able to
satisfy requirements and could cause the Company's potential revenues to decline
The  Company  currently  buys  certain  key  components from a limited number of
suppliers.  The  Company anticipates that these suppliers will manufacture these
key  components  in  sufficient  amounts to meet its production requirements. If
these suppliers fail to satisfy the Company's requirements on a timely basis and
at competitive prices, the Company could suffer manufacturing delays, a possible
loss  of  revenues  or  higher  than anticipated costs of revenues, any of which
could  seriously  harm its operating results. There can be no assurance that the
Company will be able to identify, develop, manufacture, market, sell, or support
new  products  and  enhancements successfully, that new products or enhancements
will  achieve  market  acceptance,  or  that the Company will be able to respond
effectively  to  technology  changes,  emerging  industry  standards  or product
announcements  by  competitors.

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

                                        7
<PAGE>

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, rescheduling or cancellation of customer orders.

The Company's markets are subject  to rapid technological change and, therefore,
its  success  depends  upon  the  Company's ability to develop and introduce new
products
The  markets  for  the  Company's  products  are  characterized  by:
-	rapidly changing technologies;
-	evolving and competing industry standards
-	changing customer needs; and
-	frequent new product introductions and enhancements.

                                        8
<PAGE>

To  develop  new products for its target markets, the Company must develop, gain
access to and use leading technologies in a cost-effective and timely manner and
continue to expand its technical and design expertise.  In addition, the Company
must have its products designed into its customers' future products and maintain
close  working relationships with key customers in order to develop new products
that  meet  their changing needs.  The Company cannot be assured that it will be
able  to  identify  new product opportunities successfully, develop and bring to
market  new  products,  achieve  design  wins  or  respond  effectively  to  new
technological changes or product announcements by its competitors.  In addition,
the  Company may not be successful in developing or using new technologies or in
developing  new products or product enhancements that achieve market acceptance.
The pursuit of necessary technological advances may require substantial time and
expense.  Failure  in  any  of  these areas could harm the Company's anticipated
operating  results.

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

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

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

                                        9
<PAGE>


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

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

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

Its  officers,  directors and entities  affiliated with them control the Company
In  the  aggregate, ownership of the Company's shares by management and entities
affiliated  with  the Company own collectively 58.9% of the Company's issued and
outstanding shares of common stock. These stockholders, if acting together, will
be  able  to  significantly  influence  all  matters  requiring  approval by the
Company's  stockholders, including the election of directors and the approval of
mergers  or  other  business  combination  transactions.

The value and transferability of the Company's shares may be adversely impacted
by the limited trading market for the Company's common stock, the penny stock
rules and future share issuances.  There is a limited market for the Company's
common stock in the U.S.
No assurance can be given that a market for the Company's common stock will
develop on the NASD Over-the-Counter Bulletin Board ("NASD OTC-BB"). The sale or
transfer of the Company's common stock by shareholders in the U.S. may be
subject to the so-called "penny stock rules."
Under Rule 15g-9 of the 1934 Act, a broker or dealer may not sell a "penny
stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny stock by
any person unless:
(a) such sale or purchase is exempt from Rule 15g-9;
(b) prior to  the transaction the broker or dealer has (i) approved the person's
account  for transaction in penny stocks in accordance with Rule 15g-9, and (ii)
received  from  the  person a written agreement to the transaction setting forth
the  identity  and  quantity  of  the  penny  stock  to  be  purchased;  and
(c) the  purchaser  has  been provided an appropriate disclosure statement as to
penny stock investment.
The  SEC adopted regulations that generally define a penny stock to be an equity
security  other  than  a  security excluded from such definition by Rule 3a51-1.
Such  exemptions  include, but are not limited to (i) and equity security issued
by  an  issuer  that has (A) net tangible assets of at least $2,000,000, if such
issuer  has  been  in  continuous  operations  for at least three years, (B) net
tangible  assets  of  at least $5,000,000, if such issuer has been in continuous
operation  for  less  than  three  years,  or  (C)  average  revenue of at least
$6,000,000  for  the  preceding three years; (ii) except for purposes of Section
7(b)  of  the  1934  Act and Rule 419, any security that has a price of $5.00 or
more; and (iii) a security that is authorized or approved for authorization upon
notice  of  issuance  for quotation on the NASDAQ Stock Market, Inc.'s Automated
Quotation  System.

                                       10
<PAGE>

It  is  likely that shares of the Company's common stock, assuming a market were
to  develop  in  the U.S. therefore, will be subject to the regulations on penny
stocks; consequently, the market liquidity for the common stock may be adversely
affected  by such regulations limiting the ability of broker/dealers to sell the
Company's  common stock and the ability of shareholders to sell their securities
in  the secondary market in the U.S.  Moreover, the Company's shares may only be
sold  or transferred by the Company's shareholders in those jurisdictions in the
U.S.  in  which an exemption for such "secondary trading" exists or in which the
shares  may  have  been  registered.

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

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

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

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;
- reduced liquidity in the economy;
- volatile stock prices; and
- higher unemployment.

The Korean  Consumer Price Index ("CPI") published by the central Bank  of Korea
(the Korean equivalents  of  the  U.S. Federal  Reserve  Board)  for  the period
between 1996 (base  year)  and  2002  is  as  follows:

                                       11
<PAGE>


<TABLE>
<CAPTION>

Year         CPI        Annual increase (%)
<S>          <C>           <C>
1996 (Base)  86.4            -
1997. . . .  90.2          4.4
1998. . . .  97.0          7.5
1999. . . .  97.8          0.8
2000. . . .  100.0         2.3
2001. . . .  104.1         4.1
2002. . . .  106.9         2.7
</TABLE>

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

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

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

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

                                       12
<PAGE>

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

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

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

ITEM 4. INFORMATION ON THE COMPANY
----------------------------------

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

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

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

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

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

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

B. Business Overview
The  Company is engaged in the research, development, manufacturing and sales of
medical  devices  for the Natural/Alternative Medicine industries. The Company's
major  customers  are  Oriental medical hospitals and clinics as well as Western
medical  hospitals and clinics. The Company is currently selling its products in
Korea,  China, Latin America, North America and to the Association of South East
Asian  Nations  (ASEAN).  The  Company  intends to continuously expand its sales
efforts in several countries through establishment of additional branch offices,
distributors,  and  sales  agencies.

The  Company's  products cross all boundaries of health care disciplines and are
useful  in  the  practice  of  medicine,  osteopathy,  homeopathy,  naturopathy,
acupuncture  and  other  complementary  disciplines.  If  stress or imbalance is
detected  in  a  patient,  the  Company's  products  can  identify  the meridian
imbalances  in  a  person's  body  and  assist  the  practitioner in a course of
treatment or therapy to alleviate the stress or to restore balance to the body's
meridian systems.

The  Company currently sells four different products to healthcare practitioners
throughout  the  domestic and overseas market. These include the MERIDIAN lines,
the  McPulse,  the  ABR-2000 and the LAPEX. The MERIDIAN medical devices perform
meridian  stress  analysis  through measuring electronic feedback at acupuncture
points  by  using  non-invasive  electro-acupuncture  principles.  The  McPulse
analyzes  heart  function, arterial elasticity, dilations, resistance, and aging
through  measuring  pulse  waveform.  The ABR-2000 automatically analyzes stress
related  body problems by measuring the autonomic electro-physiological response
of  skin. The  LAPEX-2000  is  a  low  power  semiconductor  laser  device  for
non-invasive therapy of blood and tissue. During 2002, the Company completed the
development  of  the  Composition Corpulence Curer as an aid in the reduction of
body fat.

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

The  Company  identified  the  United  States  as  a  significant  market  and
incorporated  Meridian America Medical Inc (MAMI) in the United States as a 100%
owned subsidiary of the Company, in February 2002, in preparation for the launch
of  the  Meridian products into the US market.  The Company has invested $53,587
in  expanding  into the U.S. market since inception. For the year ended December
31, 2002, the  Company achieved $360,449 in sales to the U.S. market and expects
a  further significant increase in sales to the United States in the  next year.
The  Company  initially  sold  3  meridian  lines  to  the  American market, the
Meridian II,  Meridian-Plus,  and  Meridian-Portable.  The  FDA  approved  the
ABR - 2000, an automatic whole body-screening device on August 14, 2002, and the
McPulse,  a  pulse waveform analyzer, on February  19, 2003.  The  Company  also
received the European CE Mark for the LAPEX-2000  on  March  19, 2002.

                                       14
<PAGE>

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

South  Baylor University, one of the major Oriental Medical/ Acupuncture Schools
in  California,  is  home  to the South Baylor University Research Center. After
testing  initial  units  the research center placed an order for several more of
the  Meridian II. The Meridian II is a computer-assisted meridian assessment and
evaluation  device.  The  units  will be placed in their Anaheim and Los Angeles
campuses  as  training  equipment  for the Oriental Medical Intern Program. Both
campuses  are located in California, one of the largest Oriental and alternative
medical  States  in  the US.

Products of the Company

MERIDIAN LINE OF PRODUCTS

The  Meridian line of products includes the Meridian-II, Meridian Plus, Meridian
-Portable  and  ABR  2000.  These  products are computer assisted assessment and
diagnostic  devices, which are 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.

MERIDIAN-II

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

ASPECTS                 MERIDIAN-II  DESCRIPTION

Features
     Point  finder  (ARC)
     MS  WINDOWS  98
     Better  curative  effect  (UPM)

                                       15
<PAGE>

     Easy  operation  (TOUCH  SCREEN)
     Single  body  design

Structure
     Main  body:  CART  in  exclusive  use
PC:
     CPU:  P-233MHz,  MEMORY:  32MB,  HDD:  6.4GB
     OS:  WINDOWS  98,  CD  ROM:  40X,  VGA  AGP  4MB
     15  inch  Colour  Monitor  (Speaker  inside),  HP  930  C
     Inkjet  Printer

A  set  of  medical  instruments:
     PB-Electrode:  DR/R/L/ST/TS
     Cable  Set
     Band:  S.L.  2ea

Parts:
     Hand  electrode  (BAZ  2ea,  CMP  1ea):  3  ea
     Foot  electrodes  (left,  right,  foot  stool):  1  set
     Upper  limited  frequency  of  cable:  1set
     ARC  PB:  1ea
     OPERATIONAL  MANUAL:  1sheet
     MULTI  TAP:  1  set
     MOUSE  PAD:  1  ea

MERIDIAN-PLUS
Similar  to the Meridian-II, the Meridian-Plus is a computer assisted assessment
and  diagnostic  device,  however,  it  comes in a different design and offers a
computer  as  an  option.

ASPECTS                 MERIDIAN-PLUS  DESCRIPTION

Features
     Point  finder  (ARC)
     MS  WINDOWS  98
     Better  curative  effect  (UPM)
     Popular  design

Structure
     Main  Body:  CART  in  exclusive  use

     PC:  (Optional)
     CPU:  PIII-667MHz,  MEMORY:  128MB,  HDD:  10.2GB
     OS:  WINDOWS  98,  CD  ROM:  40X,  VGA  AGP  4MB
     MODEM:  56K  FAX  MODEM
     15  inch  Color  Monitor  (Speaker  inside),  HP  930  C
     Inkjet  Printer

     A  set  of  medical  instruments:
     PB-Electrode:  DR/R/L/ST/TS
     Cable  Set
     Band:  S.L.  each  2ea
                                       16
<PAGE>

     Parts:
     Hand  electrode  (BAZ  2ea,  CMP  1ea):  3ea
     Foot  electrodes  (left,  right,  footstool):  1set
     Upper  limited  frequency  of  cable:  1set
     ARC  PB:  1ea
     OPERATIONAL  MANUAL:  1sheet
     MULTI  TAP:  1set
     MOUSE  PAD:  1ea

MERIDIAN-PORTABLE
The  MERIDIAN-Portable  is  structured  as  a  compact and transportable console
unit  separate from but packaged with the assistant computer.
ASPECTS               MERIDIAN-PORTABLE  DESCRIPTION

Features
     Measurement  probe  with  point  finder
     Expert  software  based  on  MS  WINDOWS  95/98
     (English,  Spanish,  Chinese,  Korean  version)
     Treatment  signal  with  better  penetration  effect
     Remedy  test  with  honeycomb  electrode
     Transportable  separate  console  with  compact  design

Structure
     System  console  with  computer  interface  (RS-232C)
     Electrodes  set
     Measurement  probes
     Hand  electrodes
     Clip  electrode  for  hand-free  point  treatment
     Electrodes  cable  set

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

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

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

ASPECTS           ABR-2000  DESCRIPTION
Features
     To  diagnose  the  differentiation of pathological conditions in accordance
     with  the  eight  principal  syndromes
     Easy  to  operate
     One-touch  automatic  system  allows  the  beginner  to  operate  it easily
     A  medical  assistant  is  able  to  measure  it for the medical specialist

                                       17
<PAGE>

     Very  Positive  Response  from  the  Patients
     Right  after  measurement,  the  results  print  out  in  real  time
     Automatic  measurement  in  5  minutes
     No  stress,  non-invasive,  and  comfortable  diagnosis
     Print  paper  is reusable - available for chart storage and patient's chart

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

LAPEX-2000

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

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

ASPECT          LAPEX-2000  DESCRIPTION

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

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

MCPULSE
McPulse  can  be  used for measurement and analysis of pulse waveform. 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. McPulse 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
-----------------------------------------

-     Exam needed for preventing  geriatric  diseases.
-     Hardening  the arteries, arterial elasticity, and obstruction of periphery
      can  be  detected  in  early  stages.
-     The  Pulse  can  be  seen  while  analysing  the  pulse  waveform.

                                       18
<PAGE>
-     Not  harmful  to  the  human  body
-     Diagnosis  can  be  done  within  a  minute.
-     Results  can  be  obtained  right  after  diagnosis.

DPA
The  DPA  (Digital  Arterial  Pulsewave  Analyzer)  is  a  computer-based  model
succeeding McPulse series.  It supports all the functions of McPulse, and it can
analyze  heart  rate variability (HRV) from EKG data. The computer can store all
of  the  patient's data. The structure is configured with a McPulse console, EKG
electrodes,  computer  software  with  WINDOWS  base,  and cart.

Other Products of the Company

HEMOSCOPE - BLOOD ANALYZER
The  Hemoscope  is  a  digital-based  blood analysis system. The system works by
analyzing  one  drop  of  blood  for  conditions  of  red and white blood cells,
clearness  and  nutritive  conditions, as well as development of immune bodies &
diseases.  It utilizes  a  powerful  microscope using phase differences and dark
vision  to  assess a  person's blood and possibly detect the cause of functional
diseases.

The  Hemoscope  comes  equipped  with  microscope  and  ancillary  components, a
computer,  monitor,  modem  and  printer.

COMPOSITION CORPULENCE CURER

This  product's  target  markets  include  plastic surgery, sports medicine, the
Oriental  medicine clinic,  and  the  Corpulence  Clinic.

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

Industry Background

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

Industry Trends
Throughout  the  world,  the  medical  environment  is  changing.  In Korea, for
example,  the  popularity of Oriental medicine is rising rapidly. The importance
of  alternative  medicine  has been acknowledged in Europe, North America and in
Asia,  and a cordingly,  these  markets  have  been  expanding. As a result, the
interest  in Oriental medicine is growing worldwide with the demand for Oriental
medical  instruments  increasing.  Therefore, as an Oriental medical instruments
manufacturer,  the  Company  is  well  positioned  in  an  expanding  market.

                                       19
<PAGE>

Size of Industry

Korean Market
According  to  information  obtained  from the World Health Organization in 1997
that  was  prepared  by  the  Korean  Institute  of  Oriental  Medicine ("Korean
Institute"), the size of the Korean medical instrument industry was estimated to
be  almost  $1  billion  in  2000.  The  domestic  medical instrument market has
sustained  an  average  annual  growth  rate  of  approximately 12% for the past
several  years.

World Market
The  size  of  the  world  medical  instrument industry was estimated to be $169
billion  in  2000,  according to the Korean Institute. Its annual average growth
rate  has  been  approximately  7%.  Oriental  medical instruments and biorhythm
recorders  have  approximately  $5.4 billion and $4.6 billion of market share in
2000,  translating  to  approximately  3.2% and  2.7% of the total world medical
instrument  market,  respectively.  It is expected that over the next five years
the  total  medical  instrument  market  will  continually  increase.

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

SANG-YEUL  PARK,  DIRECTOR  OF  MANUFACTURING  AFFAIRS
Mr. Park graduated from the Konkuk University, Korea with a degree in Electronic
Engineering.  From  1986 to 1992 he was the manager of production technology for
the  Oriental  Precision  Company(OPC). He was a senior engineer for Medison Co.
Ltd  from 1992 to 1995. He has been a factory manager for the Company since 1995
and was appointed the Director of Manufacturing Affairs for the Company in 2000.

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

HEE-YO  PARK,  GENERAL  MANAGER
Mr. Park was head of the planning department in Chonbang Corp from December 1992
to February 1995. Since February 1995 he has been General Manager, Secretary and
Treasurer  of  the  Company. On March 31, 2002, Mr.Park was promoted to the
Senior Manager of the U.S. operations, MAMI.

                                       20
<PAGE>

SOO-RANG  LEE,  DIRECTOR  OF  RESEARCH  AND  DEVELOPMENT- resigned
Mr.  Lee graduated in 1990 from the Seoul National University, Korea with
a  degree in Electronic Engineering. Mr. Lee was a senior researcher for Medison
Co.  Ltd. from 1990 to 1994. He joined the Company as a research and development
manager  at  the  formation  of  the  Company.  He was appointed the Director of
Research  and  Development  in  1998.Mr. Lee reduced his position on
November 30, 2002 to an indepenedent director. On March 29, 2003, he completely
resigned.

KI-WON  KIM,  DIRECTOR  OF  DOMESTIC  BUSINESS- resigned
Mr.  Kim  graduated  from  The  Han-yang  University,  Korea  with  a  degree in
Electronic  Engineering. He was research and development manager and head of the
domestic  sales  department  for  Medison Co., Ltd. He has been president of the
Taegu Meridian Company since 1997 until joining with the Company as the Director
of  Domestic  Business  in  2000. On May 27, 2002, Mr. Kim resigned from this
position.

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

<TABLE>
<CAPTION>


Office                                            Location
--------------                              -------------------
<S>             <C>                  <C>

Kangwon Factory      Owned               687 - 6, Sangohan - Ri, Hongchun - Eup, Hongchun - Kun,
  -Head Office                           Kangwon - Do, Korea
--------------

Seoul Meridian       Leased              4F, Heungseong Bldg., 197-3, Jamsil-dong, Songpa-gu Seoul,
- Sales and                              Korea
Administration
--------------
Daegu Meridian       Leased              Daegu, Gyeongsangbuk-do, Korea
-Sales Office
--------------

Busan Meridian  . .  Leased              Busan, Gyeongsangnam-do, Korea
-Sales Office
--------------

Gwangju Meridian. .  Leased              Gwangju, Jeola-do, Korea
-Sales Office
--------------
Jejung  Medical      Leased              Gyeonggi-do, Gangwon-do, Korea
-Sales Office
--------------

Segang Medical       Leased              Chungcheong-do, Korea
-Sales Office
--------------

     MAMI. . . . .   Leased              11075 Kamott Ave, Cypress, CA, USA, 90630
-Sales Office
--------------
</TABLE>

Item 5. Operating and Financial Review and Prospects

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

                                       21
<PAGE>

A.  Operating Results

Year comparisons between 2002, 2001, and 2000
For  the year ended December 31, 2002, the Company achieved sales revenues of  $
3,521,657  resulting  in  a  gross  margin  of  $ 1,605,846  compared with sales
revenues  of  $5,289,561  that  resulted in a gross margin of $2,811,455 for the
year ended December 31, 2001 and sales revenues of $5,304,040 that resulted in a
gross  margin  of $2,325,065 for the year ended December 31, 2000. The Company's
operating loss increased to $1,527,838 in 2002 from a loss of $1,184,695 in 2001
and  a  loss of $1,013,911 in 2000.  Such increase in the operating loss was due
primarily  to a reduction in sales caused by economic uncertainty in South Korea
and  a  slower  then  expected  sales growth in China and the United States. The
Company's  allowance  for  bad  debts  expense  results  from  the  Company's
conservative  evaluation  of  its  trade  accounts  receivable  in  the light of
uncertain  economic  times.  The  increase in commissions is a reflection of the
Company's  increased  selling  and marketing efforts. Total selling, general and
administrative  expenses decreased to $3,133,684 for the year ended December 31,
2002  from  $3,996,150  for the year ended December 31, 2001 and from $3,338,976
for the year ended December 31, 2000. The Company spent $379,059 on research and
development for the year ended December 31, 2002 as compared to $555,865 in 2001
and $540,671  in the year 2000. For the year ended December 31, 2001 the Company
recorded  an  inventory write-down due to a decline in market value amounting to
$140,936 as compared to $0 for 2002 and $516,312 for 2000.   The Company expects
that any future loss in value of inventory and any consequent write-down will be
stabilized  at  approximately  2%  of  gross  sales. In the same period, working
capital  decreased  to a deficiency of $(2,598,851) in 2002 from working capital
of $474,619  in  2001 and working capital of $1,008,643 in 2000.  As of the year
ended  December 31, 2002,  the Company had an accumulated deficit of $6,155,830.
The  current  year's contribution to the deficit was financed in part by working
capital  and  in  part  by  short-term  borrowings.

B.  Liquidity and capital resources
The  Company's sources of liquidity have historically been cash from operations,
capital  working  lines  of  credit, debt and equity financing.  The Company has
generated  revenues for the last three years but expanding the operations of the
Company  has  required  significant  amounts of cash in excess of cash generated
from  operations.  Therefore,  the Company has continued to seek additional debt
and  equity  financing  opportunities.  The  Company's  land  and buildings were
pledged  as  collateral  for  the Company's short-term and long-term borrowings.

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
The Company has 18 registered patents at the Korea Industrial Property Office, 7
of  which  were  registered  during  2002.  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:

                                       22
<PAGE>

<TABLE>
<CAPTION>



TECHNOLOGY DESCRIPTION          REGISTRATION NUMBER  DATE OF REGISTRATION
------------------------------  -------------------  --------------------
<S>                             <C>                  <C>
Nervature analysis device . .               0368021  December  - 02
------------------------------  -------------------  --------------------
Pulsecare . . . . . . . . . .               0538120  December - 02
------------------------------  -------------------  --------------------
Mcview . . . . . . . . . . . .              0531965  October - 02
------------------------------  -------------------  --------------------
Electrode holder for
laser treatment . . . . . . .                302314  June - 02
------------------------------  -------------------  --------------------
Electrode for laser treatment               0302315  June - 02
------------------------------  -------------------  --------------------
McPulse . . . . . . . . . . .            2002-29908  June - 02
------------------------------  -------------------  --------------------
Biomeridian . . . . . . . . .               0522196  June - 02
------------------------------  -------------------  --------------------
Lapex . . . . . . . . . . . .                500915  September - 01
------------------------------  -------------------  --------------------
Hemoscope . . . . . . . . . .            2001-38478..August - 01
------------------------------  -------------------  --------------------
Laser beam irradiation
device . . . . . . . . . . . .           2001-35814..July - 01
------------------------------  -------------------  --------------------
Pulseview . . . . . . . . . .            2001-21430..May - 01
------------------------------  -------------------  --------------------
Pulsetron . . . . . . . . . .            2001-21431..May - 01
------------------------------  -------------------  --------------------
Electrode ring device for home
99 treatment . . . . . . . . .               236277  September - 99
------------------------------  -------------------  --------------------
Electrode clamp device for
home 99 treatment. . . . . . .               236276  September - 99
------------------------------  -------------------  --------------------
Automatic detection of
meridians by probe device. . .               210233  April - 99
------------------------------  -------------------  --------------------
Medicament energy
information transferring
system . . . . . . . . . . . .               171667  October - 98
------------------------------  -------------------  --------------------
Insulation device of meridian
remedial apparatus . . . . . .               144993  April - 98
------------------------------  -------------------  --------------------
Diagnostic device using the
electric features of the human
body . . . . . . . . . . . . .               130791  November - 97
------------------------------  -------------------  --------------------
</TABLE>

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

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

                                       23
<PAGE>

<TABLE>
<CAPTION>

REGION                             REGULATION                   PRODUCTS APPROVED

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

Korea . . . . . . . . . . . . . .  KFDA         Meridian - II, Meridian Plus, Meridian, ABR -
                                                2000, Lapex - 2000, Hemoscope


China . . . . . . . . . . . . . .  SDA          Meridian - II, ABR - 2000

U.S.A.. . . . . . . . . . . . . .  FDA          Meridian - II, Meridian Plus, Meridian Portable
                                                ABR-2000,McPulse

Canada. . . . . . . . . . . . . .  CSA          Meridian Portable

South America . . . . . . . . . .  FIP          Meridian - II, Meridian Plus, ABR - 2000, Lapex -
                                                2000

EU. . . . . . . . . . . . . . . .  IEC (CE)     MERIDIAN-II, MERIDIAN-Plus, MERIDIAN-
                                                Portable
                                                ABR-2000, LAPEX - 2000

</TABLE>

D. Trend information

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

E.  Off-balance sheet arrangements
Not applicable

F.  Tabular disclosure of contractual obligations

<TABLE>
<CAPTION>

                                                Payments due (by period)
                                                   Less than                           more than
<S>                                     <C>          <C>         <C>          <C>        <C>
Contractual Obligations . . . . . . . .   Total      one year    1-3 years    3-5 years   5 years
Long-term debt obligations . . . . . . $1,212,880    $433,760     $746,793            -   $32,327
Debentures . . . . . . . . . . . . . . $1,263,233    $842,957     $420,276            -         -
Long-term accounts payable . . . . . .   $105,746     $48,963      $56,784            -         -
Retirement and severance indemnities. .  $138,909     unknown      unknown      unknown   unknown

</TABLE>

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


Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

See Item 4.C.

                                       24
<PAGE>

B.  Compensation

<TABLE>
<CAPTION>

Name & Principal      Year   Salary ($)  Bonus ($)    Other Annual     All Other
Position               .         .           .      Compensation ($)  Compensation

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

Myeong, Hyeon-
seon, (Director,
 President, CEO). .    1998      34,000  Nil        Nil               Nil

                       1999      49,000  Nil        Nil               Nil

                       2000      49,000  Nil        Nil               Nil

                       2001      45,500  Nil        Nil               Nil

                       2002      47,541  Nil        Nil               Nil

Park, Sang - yeul
(Director of ManufacturingA ffairs)

 . . . . . . . . . .   1998      Nil     Nil        Nil               Nil

                       1999      Nil     Nil        Nil               Nil

                       2000      42,000  Nil        Nil               Nil

                       2001      39,000  Nil        Nil               Nil

                       2002      37,357  Nil        Nil               Nil

Lee, Soo-rang
 (Director of Manager of Research and Development)
- resigned as a director on November 30, 2002
- worked as an independent director until
March 29, 2003 when he completely resigned

 . . . . . .  . . .    1998      30,000  Nil        Nil               Nil

                       1999      43,000  Nil        Nil               Nil

                       2000      42,000  Nil        Nil               Nil

                       2001      39,000  Nil        Nil               Nil

                       2002      40,738  Nil        Nil               Nil
<PAGE>

Kim, Ki-Won
 (Director of Domestic Sales)- resigned on May 27, 2002
 . . . . . . .  . .    1998  Nil         Nil        Nil               Nil

                       1999  Nil         Nil        Nil               Nil

                       2000  Nil         Nil        Nil               Nil

                       2001  39,000      Nil        Nil               Nil

                       2002  15,432      Nil        Nil               Nil
Min, Jae -Ki
(Statutory Auditor)    1998  Nil         Nil        Nil               Nil

                       1999  Nil         Nil        Nil               Nil

                       2000  Nil         Nil        Nil               Nil

                       2001  Nil         Nil        Nil               Nil

Park, Hee-yo (General Manager)- transferred on March 31, 2002 to the
Senior Manager Position of MAMI
 . . . . . . . .  .    1998      25,000  Nil        Nil               Nil

                       1999      30,500  Nil        Nil               Nil

                       2000      30,500  Nil        Nil               Nil

                       2001      29,200  Nil        Nil               Nil

                       2002      12,667..Nil        Nil               Nil
</TABLE>

..      Mr.  Park,  Sang-yeul  received an interest free loan from the Company in
       the  amount  of  $8,500  which  he  fully  paid  off  in  March  2000.
..      Total  amount  set aside or accrued by the Company or its subsidiaries to
       provide  pension, retirement or similar benefits: $197,431 USD (insurance
       and pension not as cash)

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

                                       25
<PAGE>

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

C. Board practices

Not applicable

D. Employees

The Company has 26 employees in the following areas:
<TABLE>
<CAPTION>

Area                             Department                     Name Team Name                     Number of Staff
<S>                      <C>                          <C>                                              <C>
Seoul, Korea             Administration department     The ministry of Finance and Economy               2
                         Business Headquarters         Business Department                               3
                                                       Customer Support Team                             2
                                                       Marketing Team                                    1
                                                       Clinical Team                                     2
                                                       Foreign countries business team                   1
                                                       Business administration team                      1
                         Research Institute                                                              4
Hong Chun, Korea         Production Department         Manufacturing technique team                      5
                         Purchase resources team                                                         1
                                                       Hallmark Team                                     1
United States            MAMI                                                                            3
Total                                                                                                   26
The president excepted in employee's number, and head count is 27 with Myeong, Hyeon-seong.
</TABLE>

E. Share Ownership

Stock Option Plans
Under the Company's Articles of Incorporation, the Company may grant options for
the  purchase  of  its  shares  to certain qualified officers and employees. Set
forth  below  are  the  details  of the Company's stock option plan as currently
contained  in  its Articles of Incorporation (the "Stock Option Plan"). In order
to  qualify  for  participation in the Stock Option Plan, officers and employees
must  have  the  ability  to  contribute  to,  the establishment, development or
technological  innovation  of  the  Company.  Notwithstanding the foregoing, the
following  criteria  shall  not  be  eligible to receive options under the Stock
Option  Plan; (i)  the  Company's  largest shareholder and its specially related
parties, as defined in the Securities and Exchange Act of Korea (the "Securities
Act of Korea"),  (ii) major shareholders and their specially related parties, as
defined  in  the  Securities  Act  of Korea, and (iii) any shareholder who would
become  a  major  shareholder  upon  exercise of stock options granted under the
Stock  Option  Plan.  Under  the Securities Act of Korea, a major shareholder is
defined  as  a  shareholder  who  (i)  holds  10%  or  more of shares issued and
outstanding  or  (ii)  has actual control over major management decisions. Under
the  Securities  Act of Korea the largest shareholder of a company is the person
who  holds  the  largest number of issued and outstanding shares of the company.
The  specific  terms  and  conditions  of  stock options granted under the Stock
Option  Plan  shall  be approved at a duly convened shareholders' meeting. Under
the  Company's Articles of Incorporation, stock options shall be offered through
(i)  issuance  of  new shares, or (ii) payment in cash or treasury stock held by
the  Company  of  the  difference between the market price of its shares and the
option  exercise  price.  The  maximum  aggregate number of the Company's shares

                                       26
<PAGE>

available  for  issuance under the Stock Option Plan shall not exceed 15% of the
total  number of its shares outstanding. The stock options may not be granted to
all  officers and employees at the same time. Any single officer or employee may
not  be  granted stock options for the shares exceeding 10% of the shares issued
and  outstanding.  Stock options granted under the Stock Option Plan will have a
minimum  exercise price equal to the arithmetic mean of (i) the weighted average
of  the  daily market share prices for the two-month period prior to the date on
which  the  stock  options  are  granted, (ii) the weighted average of the daily
market  share  prices  for the one-month period prior to such date and (iii) the
weighted  average of the daily market share prices for the one-week period prior
to such date. When new shares are issued upon the exercise of the stock options,
the option  exercise price shall not be less than the par value of the Company's
shares.  Stock  options  granted  under  the  Stock Option Plan may be exercised
after the third anniversary date of the shareholders' meeting at which the grant
of  stock  options  under  the  Stock  Option  Plan is approved but prior to the
seventh  anniversary  date  thereof,  unless  otherwise  revoked by the board of
directors.  The  board  of  directors may revoke stock options granted under the
Stock  Option  Plan  if  (i)  a beneficiary resigns prior to the exercise of the
stock  options,  (ii)  the beneficiary causes significant loss to the Company by
his  or  her  negligence  or wilful misconduct, or (iii) an event of termination
specified  in the Stock Option Plan occur. Shares purchased upon the exercise of
stock options granted under the Stock Option Plan will not, at the time of their
issuance,  be  registered with the Securities and Exchange Commission but may be
salable  in  the  public market in the United States in accordance with Rule 144
under  the  Securities  Act  and  applicable  Korean  laws  and  regulations.

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

-  persons  entitled  to  receive  stock  options  has  been expanded to include
   researchers,  faculty  members of a university, practising lawyers, certified
   public accountants who possess technological  or  managerial capabilities
   and  Universities  and  Research  Institutes;

-  the number  of stock options granted at any one time cannot exceed 50% of the
   total issued and outstanding shares of the Company;

-  stock  option  holders shall be entitled to exercise their stock options only
   after  having  served  in  the Company  for  two  (2)  years;  and

-  the exercise price per share upon exercise of stock options shall not be less
   than  the  greater of the market price of shares valued as of the date of the
   grant  of  the  stock  options  or  the  par  value  of the shares concerned.

On  February  23,  2000,  the  Company  granted  stock  options to its executive
officers,  directors  and  16 employees to purchase 496,850 shares of its common
stock  at  a  price  of  $0.88 per share. Stock options granted to its executive
officers  and directors will vest on February 23, 2003 and are exercisable until
February  22, 2007.  On March 19, 2001, the Company granted stock options to its
executive officers, directors and 13 employees to purchase 425,250 common shares
at  an  exercise price of Won 680 (equivalent to $0.53 at the spot exchange rate
of  Won 1,298 to $1) per share.  The options will vest on March 19, 2004 and are
exercisable  until  March  18,  2008.

Share ownership
The  following  table  sets  forth  certain information regarding the beneficial
ownership  of  the common stock of the Company as of June 13, 2003, after taking
into  effect  the  Acquisition and the Stock Split of: (a) each of the Company's
directors  and officers, and (b) all directors and officers of the Company, as a
group:

                                       27
<PAGE>

<TABLE>
<CAPTION>

Name and address of beneficial owner   Amount Stock Beneficially Owned  Percentage of Class
and position with the company                         .                          .

<S>                                    <C>                              <C>

Myeong, Hyeong-seong. . . . . . . . .  1,130,498 common shares                 6.58%
(President, CEO and Director)
#997-4 Daechi-dong
Gangnam-gu, Seoul, Korea

Park, Sang-yeul (Director). . . . . .     87,500 common shares                 0.51%
687-6 Sangoan-ri, Hongchun-eup,
 Hongchun- kun, Kangwon-do, Korea

Min, Jae-ki . . . . . . . . . . . . .    Nil                                     Nil
(Statutory Auditor)
#997-4 Daechi-dong
Gangnam-gu
Seoul, Korea

Park, Hee-yo. . . . . . . . . . . . .   107,575 common shares                   0.63%
(General Manager)
#974-4 Daechi-dong
Gangnam-gu, Seoul, Korea
-------------------------------------------------------------------------------------
All officers and Directors as a Group 1,325,573                                 7.71%
</TABLE>

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 June 27, 2003 (no change in issued shares from
December 31, 2002), by (1) each person known to us to own beneficially more than
five  percent  (5%)  of our  shares,  and (2) all of our directors and executive
officers  as  a  group.

                                       28
<PAGE>

<TABLE>
<CAPTION>
Name and address                                                Amount Stock Beneficially  Percentage of Class
                                                                          Owned

<S>                                                             <C>                                    <C>

Terasource Kosdaq Venture Investment.
8FR Dongshin Bldg. 141-30 Samseong-dong, Kangnam-gu  . . . . .  2,066,700 common shares            12.03%
Seoul Korea

Terasource Venture Investment Capital
8FR Dongshin Bldg. 141-30 Samseong-dong, Kangnam-gu  . . . . . .  403,900 common shares             2.35%
Seoul, Korea

Terasource Venture Capital Fund 2
8FR Dongshin Bldg. 141-30 Samseong-dong, Kangnam-gu. . . . . .  1,070,270 common shares             6.23%
Seoul, Korea

Terasource Venture Capital Fund 3
8FR Dongshin Bldg. 141-30 Samseong-dong, Kangnam-gu. . . . . .  1,551,350 common shares             9.03%
Seoul, Korea

Terasource Venture Capital Fund 4
8FR Dongshin Bldg. 141-30 Samseong-dong, Kangnam-gu. . . . . . .  378,380 common shares             2.20%
Seoul, Korea


The Hong Group of Companies
including:
Serome Investment Co. Ltd. (1,085,675shares),
151-7 Samseong-Dong Kangnam-Gu Seoul Korea; . . . . . . . . .   3,325,900 common shares            19.36%
Mok-Won Assets Management Co. Ltd (1,375,000 shares),
2004 Ho, Anam tower 702-10 Yuksam-dong Kangnam-ku,
Seoul, Korea;
Bio & Medical Research Co. Ltd. (524,425 shares),
702-10 Yuksam-dong, Kangnam-ku, Seoul, Korea;
Ki-tae Hong (127,800 shares) and Hye-sook Lee (213,000 shares)
151-7 Samseong-Dong, Kangnam-Gu, Seoul, Korea

</TABLE>

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

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

Item 8. Financial Information

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

Legal  Proceedings
We  are  not  party  to  any  material  legal  proceedings.

                                       29
<PAGE>

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

B. Significant Changes

There  has  been  no  significant  change  since the December 31, 2002 financial
statements.

Item 9.  The Offer and Listing
------------------------------
Not Applicable

Item 10. Additional Information
-------------------------------

A. Share Capital
The  Company  had 567,853 shares of common stock issued and outstanding prior to
the  Acquisition  of  By  George,  and  635,995  shares  issued  and outstanding
following the Acquisition. Effective February 15, 2001 the Company forward split
all  of  its  outstanding  common shares on the basis of 10 new shares of common
stock  of  the  Company  for  each  issued  share of common stock of the Company
resulting  in  a total of 6,359,950 shares of common stock par value 500 Won per
share  in  the  capital  stock  of the Company being issued and outstanding (the
"First  Stock Split"). Effective March 19, 2001 the Company forward split all of
its  outstanding  common  shares on the basis of 5 new shares of common stock of
the  Company  for every 2 issued shares of common stock of the Company resulting
in  a  total of 15,899,875 shares of common stock par value 200 Won per share in
the capital stock of the Company being issued and outstanding (the "Second Stock
Split")  (the First Stock Split and the Second Stock Split collectively referred
to  as  the  "Stock  Split").

B. Memorandum and Articles of Association
General
The Company is authorized to issue 50,000,000 shares of common stock, each share
of  common  stock  having  equal  rights  and  preferences,  including  voting
privileges.  The  Company  is not authorized to issue shares of preferred stock.
As  of  June 15, 2003 there were 17,182,583 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,

                                       30
<PAGE>

dissolution  or  winding  up  of  the  Company, the  holders of common stock are
entitled  to share ratably in all assets remaining available for distribution to
them  after  payment  of liabilities of the Company and after provision has been
made  for  each  class  of  stock, if  any, having preference in relation to the
Company's  common  stock.  Holders  of  the shares of the Company's common stock
have  no  conversion,  preemptive or other subscription rights, and there are no
redemption  provisions  applicable  to  the  Company's common stock.  All of the
outstanding  shares  of  the Company's common stock are duly authorized, validly
issued,  fully  paid  and  non-assessable.

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

Distribution of Free Shares
In addition  to  dividends  in  the form of shares to be paid out of retained or
current  earnings,  the  Commercial  Code  permits a company to distribute to is
shareholders  an amount transferred form the capital surplus or legal reserve to
stated  capital  in  the form of free shares. Such distribution must be made pro
rata.

Preemptive Rights and Issuance of Additional Shares
The  authorized  but  unissued  shares  may  be issued at such times and, unless
otherwise  provided  in  the  Commercial  Code, upon  such terms as the board of
directors of a company may determine.  The new shares must be offered on uniform
terms  to  all shareholders who have preemptive rights and who are listed on the
shareholders'  register  as  of the record date.  The Company's shareholders are
entitled  to  subscribe  for  any  newly  issued  shares  in proportion to their
existing shareholdings, provided that pursuant to the Articles of Incorporation,
new  share  that  are  (i)  issued  by  public  offering  in accordance with the
Securities  and  Exchange Law of Korea, (ii) represented by depositary receipts,
(iii)  issued  to foreigners in accordance with the Foreign Investment Promotion
Law  of  Korea within 33% of the total number of shares outstanding, (iv) issued
to  the  Company's  employee  stock ownership association up to 20% of the newly
issued  shares  (to the extent the total number of shares so subscribed and held
by  th e members of the employee stock ownership association does not exceed 20%
of the total number of shares), (v)issued outside Korea for listing on a foreign
stock  exchange  or  foreign securities market trading securities by means of an
electronic  or a quotation system, (vi) issued according to a stock option plan,
(vii)  issued  to a

                                       31
<PAGE>

domestic  corporation  having  a  strategic  relationship  with  the  Company in
connection  with the Company's management or technology of up to 5% of the total
number  of  issued  and  outstanding shares after such issuance, (viii)issued as
consideration  for  the acquisition of the stock or assets of another company up
to  less  than 20% of the total number of issued and outstanding shares, or (ix)
issued  through  general  public  offering in accordance with the Securities and
Exchange  Law  of  Korea  may be issued pursuant to a resolution of the board of
directors  to  persons  other  than existing shareholders.  Under the Commercial
Code,  a  company  may  vary,  without  shareholder  approval, the terms of such
preemptive  rights  for  different  classes  of  shares.  Public  notice  of the
preemptive  rights  to  new shares and the transferability thereof must be given
not  less  than  two  weeks (excluding the period during which the shareholders'
register  is  closed)  prior  to  the  record date.  The Company will notify the
shareholders  who  are  entitled  to  subscribe  for  newly issued shares of the
deadline  for  subscription  at  least  two  weeks  prior to such deadline. If a
shareholder  fails  to  subscribe on or before such deadline, such shareholder's
preemptive  rights  will  lapse.  The  board  of  directors may determine how to
distribute  shares in respect of which preemptive rights have not been exercised
or  where  fractions  of shares occur. If the Company adopts the New Articles of
Incorporation  newly issued shares can be issued pursuant to a resolution of the
board of directors of the Company to persons other than existing shareholders of
the  Company  under  the  following  cases  (i) the Company offers new shares or
allows  underwriters  to  underwrite new shares in accordance with Article 2 and
Article  8  of  the Securities Exchange Act of Korea;(ii) the Company issues new
shares  through a public offering by the resolution of the Board of Directors in
accordance with Article 189-3 of the Securities Exchange Act of Korea; (iii) the
Company  issues new shares through exercises of stock options in accordance with
Article  16-3 of  the  Venture  Company Promotion Special Measures Act of Korea;
(iv) the Company issues new shares for the purpose of listing or registration on
or  with  a  foreign  securities  exchange  or market;(v) the Company issues new
shares  for foreign direct investments in accordance with the Foreign Investment
Promotion  Act  as  needed  for  business purposes, including but not limited to
improvement  of  the  financial  structure;(vi) the Company issues new shares to
another  company  with  which  the  Company  forms or intends to form a business
alliance  relationship  for  the  purpose  of  technology transfer; or (vii) the
Company  issues  new  shares for consideration for the acquisition of the shares
or  assets  of  another  company  or  the  assets  of  a  person.

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

Voting Rights

                                       32
<PAGE>

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

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

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

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

                                       33
<PAGE>

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

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

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

C.  Material contracts
None

D.  Exchange Controls
General

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

Government Reporting Requirements
In  order  for  the Company to issue its shares outside of Korea, the Company is
required  to  file  a prior report of such issuance with the Ministry of Finance
and  Economy.  No  further  approval  from  the  Government is necessary fort he
issuance  of the Company's shares. Furthermore, prior to making an investment to
10% or more of the outstanding shares of a Korean company, foreign investors are
generally required under the Foreign Investment Promotion Law to submit a report
to  a Korean bank pursuant to a delegation by the Ministry of Commerce, Industry
and  Energy.  Subsequent sale by such investor of the shares will also require a
prior report to such bank

Dividend to be declared in Won
The  Company currently is not in the position to pay dividends on its shares for
the  foreseeable  future.  However, if the Company declares cash dividends, such
dividends  will  be  declared  in  Won.  In  order  for  the Company to pay such
dividends  outside  Korea,  such  dividends  will  be converted into Dollars and
remitted  to  the shareholders, subject to certain conditions.  The Company will
convert  dividend  amount

                                       34
<PAGE>

in  foreign  currency  and  remit  them to shareholders abroad.  No governmental
approval  is  required  for  foreign investors to receive dividends. However, in
order for the Company to convert the Won amount in foreign currency and to remit
such amount abroad, relevant documents must be submitted to the foreign exchange
bank to verify (i) that the amount being paid conforms to the amount required to
be  paid  and  (ii)  whether all necessary legal procedures have been completed.

E.  Taxation

Korean Taxation
The following is a summary of the principal Korean tax consequences to owners of
our  shares that are non-resident individuals or non-Korean corporations without
a  permanent establishment in Korea to which the relevant income is attributable
("non-resident holders").  The  statements  regarding  Korean tax laws set forth
below  are  based on the laws in force and as interpreted by the Korean taxation
authorities  as  of  the  date  hereof.  This  summary  is not exhaustive of all
possible  tax  consideration  which  may  apply  to  a  particular  investor and
prospective  investors  are  advised to satisfy themselves as to the overall tax
consequences  of  the  acquisition,  ownership  and  disposition  of our shares,
including  specifically  the  tax consequences under Korean law, the laws of the
jurisdiction  of  which  they are resident, and any tax treaty between Korea and
their  country  of  residence,  by  consulting  their  own  tax  advisors.

Taxation of Dividends
For  the  purposes of Korean taxation of distributions of profits either in cash
or shares made on the Company's shares, a non-resident holder will be treated as
the  owner  of  the  Company's  shares.  Dividends  paid  (whether in cash or in
shares)  to  a non-resident holder are generally subject to withholding tax at a
rate  of 27.5% or such lower rate as is applicable under a treaty between Korean
and  such  non-resident holder's country of tax residence.  Such tax is required
to  be  deducted  from  such  dividends  and  only the net amount is paid to the
non-resident  holder of the Company's shares. Under the U.S. - Korea Tax Treaty,
the  maximum  rate  of  withholding on dividends paid to United States residents
eligible  for  treaty  benefits and beneficial owners of such dividend generally
is 15% (10% if the recipient of the dividends is a U.S. corporation and owned at
least  10%  of  the  outstanding  shares  of voting stock of the relevant Korean
company  during  any part of its taxable year which precedes the date of payment
of  the  dividend  and  during  the whole of its prior taxable year {if any} and
certain  other  conditions  are satisfied) which does not include withholding of
local  tax.  In  addition,  a  local surtax will be included in the withholding,
therefore  the  maximum  rate  of  withholding  is  generally  16.5%.  The
aforementioned  maximum  rate  on withholding of dividends does not apply if the
United  States resident has a permanent establishment in Korea and the shares to
which  the  dividends  are paid are connected with such permanent establishment.
Distribution  of free shares representing a transfer of certain capital reserves
or  asset  revaluation reserves into paid-in capital may be treated as dividends
subject  to  Korean  tax.  However, stock splits, if any, will not be treated as
dividends.

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

                                       35
<PAGE>

proceeds  thereafter.  See "-Withholding  of  Taxes."

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

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

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

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

                                       36
<PAGE>

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

F.     DIVIDENDS  AND  PAYING  AGENT
Not  Applicable

G.     STATEMENTS  BY  EXPERTS
Not  Applicable

H.     DOCUMENTS  ON  DISPLAY
Not  Applicable

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

Item 11.  Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosure
Market risk  generally represents the risk that losses may occur in the value of
financial  instruments  as a result of movements in market rates of interest and
foreign  exchange. The  Company's primary market risk exposures are fluctuations
in  exchange rates, interest rates and equity prices.  The Company is exposed to

                                       37
<PAGE>

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, 2001,  the Company had an aggregate of Won 689.4
million  in  Dollar- denominated  export  sales,  accounting  for  10.1%  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, 2001,
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, 2001, the Company estimates
that  the  payment  receivable  from  its  overseas  customers  will decrease by
approximately  Won  68.9 million  (US$53,301) in 2002. 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, 2001, the Company had no floating rate borrowings.
Currently  the  Company  does  not  use  any  derivatives  or  other  financial
instruments  to  mitigate  these  risks discussed  above.

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

PART  II

ITEM  13.  DEFAULTS,  DIVIDEND  ARREARAGES  AND  DELINQUENCIES
--------------------------------------------------------------
The  Company  is not currently in default, arrears or delinquent with respect to
any  of  its  debt  obligations  or  other  responsibilities.

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

ITEM  15.
---------
Not  Applicable

ITEM  16.
---------
Not  Applicable

ITEM  17.
---------
Not  Applicable

ITEM  18.  FINANCIAL  STATEMENTS
--------------------------------
                                       38
<PAGE>

INDEPENDENT AUDITORS' REPORT


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

We  have  audited  the accompanying consolidated balance sheets of Meridian Co.,
Ltd.("the Company")  and  its  subsidiaries as of December 31, 2002 and 2001 and
the  related  consolidated  statements  of  operations  and  comprehensive loss,
changes  in  shareholders'  equity and cash flows for each of the three years in
the  period ended December 31, 2002. These consolidated financial statements are
the  responsibility  of  the  Company's  management.  Our  responsibility  is to
express  an  opinion  on  these  consolidated  financial statements based on our
audits.

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

In our opinion,  the consolidated financial statements referred to above present
fairly,  in all material  respects, the financial position of Meridian Co., Ltd.
and  its  subsidiaries as of December 31, 2002 and 2001 and the results of their
operations  and their cash flows for each of the three years in the period ended
December  31, 2002,  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 1 to the
consolidated  financial  statements,  the  Company has suffered recurring losses
from  operations  and  has  net  capital deficiency that raise substantial doubt
about  its  ability to continue as a going concern. Management's plans in regard
to  these  matters  are  also  described in Note 1. The outcome of the Company's
financing  efforts  cannot  presently  be  predicted. The consolidated financial
statements  do not contain any adjustments that might result from the outcome of
this  uncertainty.

As discussed in Note 24 to the consolidated financial statements, the operations
of  the  Company  have  been  significantly  affected,  and  will continue to be
affected for the foreseeable future, by the general unstable economic conditions
in  Korea  and  in  the  Asia Pacific region. It is currently uncertain what the
resulting  effect will be on the future operations and financial position of the
Company and its subsidiary. The ultimate outcome of this matter cannot presently
be  determined.  Accordingly, the accompanying consolidated financial statements
do  not  include  any  adjustments  that  might result from those uncertainties.


SamDuk Accounting Corporation
Republic of Korea
May 14, 2003
12/F SeoHeung Bldg.
68 Keonji-Dong, Jongro-Ku
Seoul, Korea

                                       39
<PAGE>

<TABLE>
<CAPTION>
                                      MERIDIAN CO., LTD.
                                  CONSOLIDATED BALANCE SHEETS
                               As of December 31, 2002 and 2001
                                       (in U.S. dollars)

A S S E T S                                                          2002          2001
---------------------------------------------------------------  ------------  ------------
<S>                                                              <C>           <C>
Current assets :
  Cash and cash equivalents . . . . . . . . . . . . . . . . . .  $   128,674   $   105,216
  Short-term investments(Note 9). . . . . . . . . . . . . . . .      189,760       841,476
  Accounts receivable - trade, net of allowance for doubtful
    accounts of $1,505,409 and $863,327, respectively (Note 16)    1,058,953     1,759,821
  Short-term loans-net (Note 3) . . . . . . . . . . . . . . . .       62,810        89,798
  Accounts receivable - other (Note 16) . . . . . . . . . . . .       15,326        20,231
  Inventories (Note 4). . . . . . . . . . . . . . . . . . . . .      702,097     1,187,989
  Other current assets (Note 5) . . . . . . . . . . . . . . . .       46,455       123,414
                                                                 ------------  ------------

    Total current assets. . . . . . . . . . . . . . . . . . . .    2,204,075     4,127,945
                                                                 ------------  ------------

Investments and other assets
  Investments (Note 6). . . . . . . . . . . . . . . . . . . . .       45,293        41,216
  Long-term and restricted bank deposits. . . . . . . . . . . .       11,633        80,929
  Long-term loans-net (Note 3). . . . . . . . . . . . . . . . .            -       220,672
  Guaranty deposits . . . . . . . . . . . . . . . . . . . . . .      133,391        90,836
                                                                 ------------  ------------

    Total . . . . . . . . . . . . . . . . . . . . . . . . . . .      190,317       433,653
                                                                 ------------  ------------

Property, plant and equipment - net (Note 7)
  Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      782,355       706,591
  Buildings . . . . . . . . . . . . . . . . . . . . . . . . . .      580,404       524,198
  Furniture and fixture . . . . . . . . . . . . . . . . . . . .      680,627       752,628
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . .      126,399       142,675
                                                                 ------------  ------------
                                                                   2,169,785     2,126,092
  Less accumulated depreciation . . . . . . . . . . . . . . . .     (725,507)     (670,797)
                                                                 ------------  ------------

    Net . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,444,278     1,455,295
                                                                 ------------  ------------

Intangible assets
  Patents and trademarks. . . . . . . . . . . . . . . . . . . .        2,161           932
                                                                 ------------  ------------

    TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . .  $ 3,840,831   $ 6,017,825
                                                                 ============  ============

                                       40
<PAGE>

(Continued)
MERIDIAN CO., LTD.

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


LIABILITIES AND SHAREHOLDERS' EQUITY. . . . . . . . . . . . . .         2002          2001
---------------------------------------------------------------  ------------  ------------

Current liabilities
  Accounts payable - trade (Note16) . . . . . . . . . . . . . .  $   625,593   $   965,502
  Short-term borrowings (Notes 8,16). . . . . . . . . . . . . .    1,671,246     1,587,573
  Accounts payable - other. . . . . . . . . . . . . . . . . . .    1,024,185       636,342
  Current portion of long-term debt (Notes 9, 10) . . . . . . .    1,276,718       251,535
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . .      205,184       212,374
                                                                 ------------  ------------

    Total current liabilities . . . . . . . . . . . . . . . . .    4,802,926     3,653,326
                                                                 ------------  ------------

Long-term borrowings (Note 9) . . . . . . . . . . . . . . . . .      779,120     1,094,057
Debentures-net(Notes 1, 10) . . . . . . . . . . . . . . . . . .      420,276     1,136,448
Long-term accounts payable-other (Note 11). . . . . . . . . . .       56,784        90,207
Retirement and severance indemnities-net (Note 12). . . . . . .      138,909       247,701
                                                                 ------------  ------------

    Total liabilities . . . . . . . . . . . . . . . . . . . . .    6,198,015     6,221,739
                                                                 ------------  ------------

Commitments and contingencies (Note 15)

Minority interest . . . . . . . . . . . . . . . . . . . . . . .            -         6,593
                                                                 ------------  ------------

Shareholders' equity
  Common stock - par value $0.17 per share : issued and
    outstanding  17,182,583 shares and 15,899,875 shares
    as of December 31, 2002 and 2001 (Note 13). . . . . . . . .    3,233,026     3,011,984
  Additional paid-in capital (Note 13). . . . . . . . . . . . .      901,099       817,769
  Appropriation for business rationalization(Note 14) . . . . .      220,927       224,659
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . .   (6,155,830)   (3,869,737)
  Accumulated other comprehensive loss. . . . . . . . . . . . .     (556,406)     (395,182)
                                                                 ------------  ------------

    Total shareholders' equity  . . . . . . . . . . . . . . . .   (2,357,184)     (210,507)
                                                                 ------------  ------------

    TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . .  $ 3,840,831   $ 6,017,825
                                                                 ============  ============


See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       41
<PAGE>

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

                                                                     2002           2001           2000
                                                                 -------------  -------------  ------------
<S>                                                              <C>            <C>            <C>

Sales (Notes 16, 22)
  Product . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  3,521,657   $  5,289,561   $ 5,176,544
  Grant on government-sponsored R&D . . . . . . . . . . . . . .             -              -       127,496
                                                                 -------------  -------------  ------------
                                                                    3,521,657      5,289,561     5,304,040
                                                                 -------------  -------------  ------------

Cost of sales
  Cost of goods sold. . . . . . . . . . . . . . . . . . . . . .     1,915,811      2,337,170     2,462,663
  Inventory write-down due to decline in market value (Note 2h)             -        140,936       516,312
                                                                 -------------  -------------  ------------
                                                                    1,915,811      2,478,106     2,978,975
                                                                 -------------  -------------  ------------

Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . .     1,605,846      2,811,455     2,325,065
                                                                 -------------  -------------  ------------

Selling, general and administrative expenses
  Advertising . . . . . . . . . . . . . . . . . . . . . . . . .        62,944         94,664        98,275
  Bad debt expense. . . . . . . . . . . . . . . . . . . . . . .       615,688        791,118       109,683
  Commissions. . . . . . . .. . . . . . . . . . . . . . . . . .       653,937        518,484       301,789
  Depreciation. . . . . . . . . . . . . . . . . . . . . . . . .        69,251        103,026       135,051
  Employee benefit. . . . . . . . . . . . . . . . . . . . . . .       108,501        163,351       184,338
  Entertainment . . . . . . . . . . . . . . . . . . . . . . . .        41,672        135,333       155,958
  Overseas market development . . . . . . . . . . . . . . . . .        95,773         96,664       204,198
  Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        78,402         65,618       100,686
  Research and development. . . . . . . . . . . . . . . . . . .       379,059        555,865       540,671
  Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . .       585,393        854,137       960,253
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . .       443,064        617,890       548,074
                                                                 -------------  -------------  ------------
                                                                    3,133,684      3,996,150     3,338,976
                                                                 -------------  -------------  ------------

Operating loss. . . . . . . . . . . . . . . . . . . . . . . . .    (1,527,838)    (1,184,695)   (1,013,911)
                                                                 -------------  -------------  ------------

Other income
  Interest income . . . . . . . . . . . . . . . . . . . . . . .        27,271         60,520        84,883
  Gain on disposal  of investment securities. . . . . . . . . .             -         41,372       230,302
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . .        57,147         87,033        85,288
                                                                 -------------  -------------  ------------
                                                                       84,418        188,925       400,473
                                                                 -------------  -------------  ------------
Other expenses
  Interest expense. . . . . . . . . . . . . . . . . . . . . . .       393,138        360,239       322,271
  Non-trade bad debt expense. . . . . . . . . . . . . . . . . .       895,509        460,889        92,832
  Write off of goodwill . . . . . . . . . . . . . . . . . . . .             -         30,020             -
  Foreign currency transaction loss . . . . . . . . . . . . . .        99,506          6,185         2,128
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . .        73,545         72,109        28,646
                                                                 -------------  -------------  ------------
                                                                    1,461,698        929,442       445,877
                                                                 -------------  -------------  ------------

Minority interest in net loss of consolidated affiliates. . . .             -         19,302       367,789
                                                                 -------------  -------------  ------------

                                       42
<PAGE>

Loss before provision for income taxes. . . . . . . . . . . . .    (2,905,118)    (1,905,910)     (691,526)

  Income tax expense (Note 17). . . . . . . . . . . . . . . . .             -              -        11,551
                                                                 -------------  -------------  ------------

Loss before extraordinary items . . . . . . . . . . . . . . . .    (2,905,118)    (1,905,910)     (703,077)

Extraordinary items
  Gain on disposal of subsidiaries(Note 2b) . . . . . . . . . .       615,293              -             -
  Loss on bankruptcy of a subsidiary. . . . . . . . . . . . . .             -        (10,212)            -
  Gain on exemption of debt
    - less applicable taxes of  $1,185 in 2000. . . . . . . . .             -              -         6,391
                                                                 -------------  -------------  ------------
                                                                      615,293        (10,212)        6,391
                                                                 -------------  -------------  ------------

Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .    (2,289,825)    (1,916,122)     (696,686)
                                                                 -------------  -------------  ------------

Other comprehensive loss
  Foreign currency translation loss . . . . . . . . . . . . . .      (161,224)       (26,236)     (218,967)
  Unrealized holding gain . . . . . . . . . . . . . . . . . . .             -              -        60,459
                                                                 -------------  -------------  ------------
                                                                     (161,224)       (26,236)     (158,508)
                                                                 -------------  -------------  ------------

Comprehensive loss. . . . . . . . . . . . . . . . . . . . . . .   ($2,451,049)   ($1,942,358)    ($855,194)
                                                                 =============  =============  ============

Weighted average number of common shares. . . . . . . . . . . .    16,472,700     15,703,850    14,071,325
                                                                 =============  =============  ============

Basic and diluted loss per common share (Note 2p)
  Loss before extraordinary items . . . . . . . . . . . . . . .        ($0.18)        ($0.12)       ($0.05)
  Extraordinary items . . . . . . . . . . . . . . . . . . . . .          0.04              -             -
                                                                 -------------  -------------  ------------
    Net loss. . . . . . . . . . . . . . . . . . . . . . . . . .        ($0.14)        ($0.12)       ($0.05)
                                                                 =============  =============  ============


See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       43
<PAGE>
<TABLE>
<CAPTION>



                                            MERIDIAN CO., LTD
                                         CONSOLIDATED STATEMENTS
                                   OF CHANGES IN SHAREHOLDERS' EQUITY
                            For the years ended December 31, 2002, 2001 and 2000
                                             (in U.S. dollars)

                                                                         2002           2001           2000
                                                                     -------------  -------------  ------------
<S>                                                                  <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES :
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . .   ($2,289,825)   ($1,916,122)    ($696,686)
                                                                     -------------  -------------  ------------
  Add (deduct) items not using (providing) cash
    Depreciation and amortization . . . . . . . . . . . . . . . . .       125,708        203,737       261,245
    Provision for severance indemnities . . . . . . . . . . . . . .        89,912        120,972       113,777
    Provision for doubtful accounts . . . . . . . . . . . . . . . .     1,511,197      1,252,007       202,515
    Service fees by issuing common shares . . . . . . . . . . . . .       300,000              -             -
    Inventory write-down due to decline in market value . . . . . .             -        140,936       516,312
    Gain on disposal of subsidiaries. . . . . . . . . . . . . . . .      (615,293)             -             -
    Gain on sale of investment securities . . . . . . . . . . . . .             -              -      (230,302)
    Decrease (increase) in accounts receivable - trade. . . . . . .       339,678        100,475    (1,174,177)
    Decrease (increase) in accounts receivable - other. . . . . . .       (53,263)       191,914      (136,847)
    Decrease (increase) in inventory. . . . . . . . . . . . . . . .       305,846       (387,744)   (1,223,384)
    Decrease (increase) in other current assets . . . . . . . . . .        53,703         35,629      (138,336)
    Increase (decrease) in accounts payable - trade . . . . . . . .      (364,415)      (210,125)      684,795
    Increase (decrease) in accounts payable - other . . . . . . . .       355,161        168,607       297,968
    Increase (decrease) in other current liabilities. . . . . . . .          (926)        56,301      (229,226)
    Increase in long-term accounts payable - other. . . . . . . . .       (41,163)       (39,528)       24,269
    Retirement and severance payment. . . . . . . . . . . . . . . .      (190,294)       (31,961)      (47,415)
    Minority interest in net loss of consolidated affiliates. . . .             -        (19,302)     (367,789)
    Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       100,018         28,179       (84,181)
                                                                     -------------  -------------  ------------
       Sub-total. . . . . . . . . . . . . . . . . . . . . . . . . .     1,915,869      1,568,725    (1,530,776)
                                                                     -------------  -------------  ------------

                                                                         (373,956)      (347,397)   (2,227,462)
                                                                     -------------  -------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES :
  Decrease in short-term loans. . . . . . . . . . . . . . . . . . .             -         37,023        78,947
  Proceeds from sale of investment securities . . . . . . . . . . .             -         74,137       342,532
  Decrease in long-term and restricted bank deposits. . . . . . . .        74,477         24,123        60,000
  Decrease in long-term loans . . . . . . . . . . . . . . . . . . .        20,129              -        13,158
  Decrease in short-term investments. . . . . . . . . . . . . . . .       708,370              -             -
  Increase in short-term investments. . . . . . . . . . . . . . . .             -       (852,273)            -
  Increase in short-term loans. . . . . . . . . . . . . . . . . . .      (169,506)      (201,781)     (234,843)
  Acquisition of investment securities. . . . . . . . . . . . . . .             -        (59,501)       (4,386)
  Increase in long-term and restricted bank deposits. . . . . . . .             -              -      (106,588)
  Disposition of property, plant and equipment . . . . . . . . . . .       23,419              -             -

                                       44
<PAGE>

  Acquisition of property, plant and equipment. . . . . . . . . . .       (47,442)       (64,282)     (706,245)
  Cash held by former subsidiaries. . . . . . . . . . . . . . . . .       (12,464)             -             -
  Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (85,148)        12,581       (78,237)
                                                                     -------------  -------------  ------------

                                                                          511,835     (1,029,973)     (635,662)
                                                                     -------------  -------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES :
  Increase in short-term borrowings . . . . . . . . . . . . . . . .       158,700      1,360,659     1,240,833
  Increase in long-term borrowings. . . . . . . . . . . . . . . . .             -        209,242       342,105
  Proceeds from issuance of debentures. . . . . . . . . . . . . . .             -      1,150,646             -
  Contribution from minority interest of consolidated subsidiaries.             -              -       315,965
  Proceeds from issuance of common stock. . . . . . . . . . . . . .             -              -       669,344
  Repayment of short-term borrowings. . . . . . . . . . . . . . . .             -     (1,209,833)      (29,686)
  Repayment of current portion of long-term debt. . . . . . . . . .      (264,569)      (416,991)      (43,860)
  Repayment of long-term borrowings . . . . . . . . . . . . . . . .             -              -      (616,552)
                                                                     -------------  -------------  ------------

                                                                         (105,869)     1,093,723     1,878,149
                                                                     -------------  -------------  ------------

NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . .        32,010       (283,647)     (984,975)
                                                                     -------------  -------------  ------------

EFFECT OF EXCHANGE RATE ON CASH . . . . . . . . . . . . . . . . . .        (8,552)        (9,762)      (44,490)

CASH AT BEGINNING OF THE PERIOD . . . . . . . . . . . . . . . . . .       105,216        398,625     1,428,090
                                                                     -------------  -------------  ------------

CASH AT END OF THE PERIOD . . . . . . . . . . . . . . . . . . . . .  $    128,674   $    105,216   $   398,625
                                                                     =============  =============  ============

 Cash and cash equivalents are comprised of :
    Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     16,770   $     10,682   $    15,070
    Term deposits . . . . . . . . . . . . . . . . . . . . . . . . .       111,904         94,534       383,555
                                                                     -------------  -------------  ------------
                                                                     $    128,674   $    105,216   $   398,625
                                                                     =============  =============  ============


See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                                       MERIDIAN CO., LTD
                                                    CONSOLIDATED STATEMENTS
                                              OF CHANGES IN SHAREHOLDERS' EQUITY
                                       For the years ended December 31, 2002, 2001 and 2000
                                                       (in U.S. dollars)


                                      Common Stock Issued                                         Accumulated
                                      ------------------- Additional  Appropriation                  Other         Accumulated
                                                           Paid-in   for Business    Accumulated  Comprehensive   Shareholders
                                      Shares     Amount    Capital  Rationalization   (Deficit)   Income (Loss)  Equity (Deficit)
                                    ----------  ---------  -------    -----------    ----------    --------      ---------------
<S>                                                          <C>              <C>               <C>             <C>            <C>
Balance at December 31, 1999. . . .13,446,325 $2,607,495  $552,914    $  252,171    $(1,284,441)    $(149,978)    $   1,978,161
Issuance of common shares . . . . .   750,000    133,869   535,475                                                      669,344
Net loss                                                                               (696,686)                       (696,686)
Other comprehensive income (loss):
  Foreign currency translation gain                                                                  (218,968)         (218,968)
  Unrealized holding gain                                                                              60,459            60,459
Reclassification adjustment pursuant
  to legal appropriation requirement                                      (4,317)         4,317
                                    ----------    ---------  -------    -----------    ----------    --------      ---------------

Balance at December 31, 2000. . . .14,196,325  2,741,364  1,088,389      247,854     (1,976,810)     (308,487)        1,792,310
Issuance of common shares . . . . . 1,703,550    270,620   (270,620)
Net loss                                                                             (1,916,122)                     (1,916,122)
Other comprehensive income (loss):
  Foreign currency translation gain                                                                   (26,236)          (26,236)
  Reclassification adjustment for gains
     included in net income                                                                           (60,459)          (60,459)
Reclassification adjustment pursuant
  to legal appropriation requirement                                     (23,195)        23,195
                                    ----------    ---------  -------    -----------    ----------    --------      ---------------



Balance at December 31, 2001. . . .15,899,875  3,011,984    817,769      224,659     (3,869,737)     (395,182)         (210,507)
Issuance of common shares . . . . . 1,282,708    221,042 .   78,958                                                     300,000
Changes in interest of investee                               4,372                                                       4,372
Net loss                                                                           . (2,289,825)                     (2,289,825)
Other comprehensive income (loss):
    Foreign currency translation gain                                                                (161,224)         (161,224)
Reclassification adjustment pursuant
     to legal appropriation requirement . . .                                         .  (3,732)        3,732. . . . . .
                                    ----------    ---------  -------    -----------    ----------    --------      ---------------
Balance at December 31, 2002. . .  17,182,583 $3,233,026   $901,099     $220,927    $(6,155,830)    $(556,406)      $(2,357,184)
                                   ========== ===========  ========== ============= ============  ===============   =============

See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       46
<PAGE>

1.     GOING CONCERN AND NATURE OF OPERATIONS

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

For  the  fiscal  year  ended  December  31, 2002, the Company had a net loss of
$2,289,825 ($1,916,122 for 2001 and $696,686 for 2000)  and  net  negative  cash
flow from operations of    $373,956 ($347,397 for 2001 and $2,227,462 for 2000).
As  at  December 31, 2002, the Company had an excess of current liabilities over
current  assets  of  $2,598,851,  an  accumulated  deficit of $ 6,155,830 and an
excess  of  liabilities  over  assets  of  $2,357,184.

The  ability of the Company to continue as a going concern is dependent upon its
ability to  obtain adequate financing to meet its current financial obligations,
and  is  ultimately  dependent upon its ability to generate profits and positive
net  cash  flow  from business operations.  There is no assurance that financing
will  be  available  to the Company or that the Company will be able to generate
profits  and  positive  cash  flow  in  the  foreseeable  future.

Subsequent  to  year-end, the Company renegotiated the maturity date of $842,957
of  debentures  that  had  an original maturity date of January 31, 2003.  These
debentures  are  now  repayable  between  July  and  December 2003, see Note 10.

The  Company  is  making  efforts to restructure its existing obligations and is
contemplating  a  public  offering  of common shares.  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.  These
financial statements are prepared on the going concern basis, which contemplates
the  continuance  of  normal  business  operations  in  the  foreseeable future.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

a. Basis of Financial Statements
   -----------------------------

The  Company  and  its subsidiaries maintain their statutory books of account in
accordance with accounting principles generally accepted in Korea. However these
consolidated  financial  statements have been prepared in a manner, and reflects
the  adjustments  which  management  believes  are  necessary,  to  conform  to
accounting  principles  generally  accepted  in  the  United  States  of America
("U.S. GAAP").

                                       47
<PAGE>

b. Basis of Consolidation
   ----------------------

The  Company  consolidates all subsidiaries it controls. Effective on January 1,
2002,  the  Company  lost the ability to exercise control over two subsidiaries.
Accordingly,  these  former subsidiaries are no longer consolidated effective on
December  31, 2001.  The  investments  are accounted for using the equity method
from  January 1, 2002. As  a  consequence of these transactions, the Company has
recognized  an  extraordinary gain of $615,293 relating to the disposal of these
subsidiaries.  See  Note  6.

c. Translation of Financial Statements
   -----------------------------------

The  accompanying  consolidated  financial  statements have been translated into
U.S.  dollars  in  accordance with SFAS 52. As such, assets and liabilities have
been  translated into U.S. dollars at the exchange rate in effect on the balance
sheet  dates.  Shareholders'  equity  figures  have been converted at historical
exchange  rates.  Elements  of  income  have  been  translated using the average
exchange rate in effect during the period the transactions occurred. The gain or
loss from  foreign currency translation forms a component of other comprehensive
income  or  loss  of each  period presented and a component of other accumulated
comprehensive  income  or  loss.

The  functional  currency  of the Company and its subsidiaries is the Korean won
("W" or "won").  The  primary economic environment in which the Company operates
is Korea.  The Korean economy was not highly inflationary during the periods for
which  consolidated  financial  statements  are  presented.

d. Estimates and Assumptions
   -------------------------

The preparation of financial statements in accordance with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

e. Cash and Cash Equivalents
   -------------------------

Cash and cash equivalents consist of cash on hand, deposits in banks and highly
liquid investments with an original maturity of three months or less.

f. Short-term Investments
   -----------------------

Short-term investments consist of marketable securities and short-term financial
instruments  which  have  an  original  maturity  exceeding three months and are
readily convertible into cash within one year. If the Company has debt or equity
securities  (with  readily  determinable fair value) that it intends to actively
and  frequently  buy  and  sell  for  short-term profits,  those  securities are
considered  "trading  securities"  and  classified  as  short-term

                                       48
<PAGE>

investments. Unrealized holding gains and losses related to these securities are
included in income from continuing operations.

If  the  Company  has debt or equity securities with a readily determinable fair
value  that  it  intends  to  hold  on  a  long-term  basis,  but are considered
"available  for  sale",  those  securities  are  classified  as  investments  in
non-current  assets.  Unrealized  holding  gains  and  losses  related  to these
securities  are  excluded  from  current  earnings  and  are  included  in other
comprehensive  income  (loss)  for  the  period.

The Company uses the average cost method to account for trading securities.

g. Allowance for Doubtful Accounts
   -------------------------------

Amounts  receivable  are  assessed  for impairment on a regular, periodic basis.
When  circumstances  indicate collection of an amount receivable is doubtful, an
allowance  and  a  charge  against  earnings  are  recognized  immediately. When
circumstances  indicate a doubtful amount receivable is unlikely to be realized,
the  outstanding  amount  and  the  associated  allowance  are  written  off.

h. Inventories
   -----------

Inventories  are stated at the lower of cost and net realizable value, with cost
determined  based  on  the  weighted  average  method  and  net realizable value
determined  based  on  the estimate selling price, less estimated completion and
selling  costs.  The  Company  recorded  a  loss  from  valuation of inventories
totaling  $140,936  and $516,312 for the years ended December 31, 2001 and 2000,
respectively.  No  provision  for inventory impairment was recognized during the
2002  fiscal  year.  These  write-downs establish new cost basis for the written
down  inventory  items  and  may  not  be  reversed  in  the  future.

i. Investments
   -----------
Investments  in  available-for-sale  marketable  securities  are  stated at fair
value,  with  unrealized  gains  and losses excluded from current operations and
reported  in  other  comprehensive  income  (loss)  as  a  separate component of
shareholders'  equity.

Investments  in  business  entities over which the Company exercises significant
influence  are  accounted  for using the equity method. Under the equity method,
the  original  investment  is  recorded  at cost and is adjusted annually by the
Company's  equity in earnings or losses of the investee. Dividends paid, if any,
reduce  the investment. Unrealized gains and losses on intercompany transactions
are  eliminated.

Investments  in  equity  securities  of  non-public  companies  are  carried  at
acquisition cost less provision for impairment in value, if any. If a decline in
net  book value of an investment appears to be of other than temporary nature, a
provision  for impairment in value is recognized and is charged against earnings
of  the  current  period.  The  Company  recorded

                                       49
<PAGE>

loss  on  impairment  of  investment  amounting  to  $27,061  for the year ended
December 31, 2001.  The  Company  did  not  recognize  a  loss  on impairment of
investment  in  2002  and  2000.

The  Company  uses  the  average  cost  method  to  account for the investments.

j. Long-lived Assets
   -----------------

When  events  and  circumstances  warrant  a  review,  the Company evaluates the
carrying  value  of  its  long-lived  assets. The carrying value of a long-lived
asset  is  considered  impaired when the anticipated undiscounted cash flow from
use  is  less  than  its  carrying value. In that event, an impairment charge is
recognized  based  on  the  amount  by  which  the  carrying  value  exceeds the
estimated  fair  value.  No  such impairment charges have been identified by the
Company,  but  for  the  impairment  of  investment  referred  in  Note  2(i).

k. Valuation of Receivables and Payables at Present Value
   ------------------------------------------------------

Receivables  and payables arising from long-term cash loans/borrowings and other
similar  transactions are stated at present value if the difference between book
value  and  present value is material. The difference between the book value and
present  value  of amounts receivable or payable is deducted from the book value
of the related receivable or payable. The present value discount is amortized to
interest  income  (expense)  using  the  effective  interest  rate  method.

In  determining  the  discount  rate,  the  Company  individually  assesses  the
creditworthiness  of  the  counterparty  based  upon  the credit standing of the
issuer,  restrictive  covenants,  the  collateral,  payment  and  other  terms
pertaining  to  the  debt,  and  the  tax  consequences  to  the  Company.

l. Property, Plant and Equipment
   -----------------------------

Property,  plant  and equipment is stated at cost less accumulated depreciation.
Routine maintenance and repairs are expensed as incurred. Expenditures resulting
in  enhancement  of  the value or extension of the useful life of the facilities
involved  are  capitalized.

Depreciation  is  computed  using  the  declining  balance  method  (except  for
buildings  and  structures which are depreciated using the straight-line method)
over  the  estimated  useful  lives  (4  to 40 years)  of  the  related  assets.

For the years ended December 31, 2002, 2001 and 2000, the Company recorded total
depreciation  expense  of  $125,708, $203,737,  and  $261,245  respectively.

                                       50
<PAGE>

m. 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  between  5  and  10  years.

n. Stock Based Compensation
   ------------------------

The Company applies the intrinsic value-based method of accounting prescribed by
APB  Opinion  No.  25, "Accounting  for  Stock issued to Employees", and related
interpretations,  in  accounting  for  its  fixed  stock  option  plan. As such,
compensation  expense would be recorded on the date of grant only if the current
market  price  of  the  underlying  stock exceeded the exercise price. SFAS 123,
"Accounting for Stock-Based Compensation", established accounting and disclosure
requirements  using  a  fair  value-based method  of  accounting for stock-based
employee  compensation  plans.  As  allowed  by SFAS 123, the Company elected to
apply  the  intrinsic  value-based method of accounting described above, and has
adopted  the  disclosure  requirement of SFAS 123. The Company will also provide
SFAS  148  disclosures  which  are  required for fiscal year ending December 31,
2002.

o. Revenue Recognition
   -------------------

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

p. Loss Per Common Share
   ---------------------

Basic  and  diluted  loss per common share is calculated by dividing net loss by
the  weighted  average  number of common shares outstanding during the year , in
accordance  with  SFAS  128.  Outstanding  stock options are not included in the
calculation  of  diluted  loss per share as their effect would be anti-dilutive.

q. Dividends
   ----------

Dividends,  if  any,  would  be  declared  in  Won

                                       51
<PAGE>

r. 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
assets  and  liabilities and their respective tax bases and operating loss carry
forwards.  Future  tax  assets  are  not  recognized unless their realization is
considered  more  likely  than  not.

s. Other Comprehensive Income
   --------------------------

In  addition  to  net  income  (loss),  comprehensive income (loss) includes all
changes  in  equity  during  a fiscal year, such as foreign currency translation
adjustments  and  cumulative  unrealized changes in fair value of available-for-
sale  marketable  securities,  except  those  resulting  from investments by and
distributions  to  stockholders.

t. Fair Value and Financial Instruments
   ------------------------------------

The  following  methods  and assumptions were used to estimate the fair value of
each  class  of financial instruments for which it is practical to estimate that
value.

( i ) Cash and cash equivalents, accounts receivable (trade and other), accounts
payable  (trade and other),  short-term  loans  and  short-term  borrowings: The
carrying  amount  approximates  fair  value  due  to the short maturity of those
instruments.

( ii ) Marketable  securities  and  investments: The fair value of market-traded
investments  are  estimated  based  on quoted market prices for those or similar
investments. For other investments, for which there are no quoted market prices,
a  reasonable  estimate  of  fair  value  could  not  be  made without incurring
excessive costs.

(iii) Long-term  bank  deposits  and  long-term borrowings : The carrying amount
approximates  fair value based on a review of interest rates currently available
for  similar  instruments.

(iv) Long-term loans :  The  carrying  amount approximates fair value because it
was calculated by discounting the future cash flows using the effective interest
rate  of  the  Company.

(v) Long-term payables : The  fair  value  of long-term payables is estimated by
discounting  the  future  cash  flows  using  the  current interest rate of time
deposit  with  a  maturity of one year.

                                       52
<PAGE>

u. Research and Development
   ------------------------
Research and development expenditures are charged to income as incurred.

3.     SHORT-TERM AND LONG-TERM LOANS

Short-term  and  long-term loans as of December 31, 2002 and 2001 are as follows
(in U.S. dollars):
<TABLE>
<CAPTION>

                                  Final      Annual         December 31,
...                                Maturity   Interest
...                                  Year      Rate(%)     2002         2001

<S>                              <C>       <C>         <C>             <C>
Short-term loans

Meridian Oriental Clinic        2003            -             -     $158,333
Sales agent                     2003         11.0%       34,140      160,100
Other                           2003                    111,691       37,081
                                                      ---------     --------
                                                        145,831      265,716

Allowance for doubtful accounts                        (83,021)      (89,798)
                                                      ----------     -------
Net                                                    $ 62,810     $146,327
                                                       ---------    --------

Long-term loans
Meridian Oriental Clinic        2006             -              -   $519,505
Other                          2003             -              -       7,614
                                                       ---------    --------
                                                               -     527,119
Allowance for doubtful accounts                                -    (213,059)
Present value discounts                                        -     (93,388)
                                                       ---------    --------
Net                                                            -    (220,672)
                                                       ---------    --------
</TABLE>


In  calculating  the  present value of non-interest bearing long-term loans, the
Company  has  utilized a 9% imputed interest rate, based on the weighted average
interest  rate  of  short-term  and  long-term  borrowings.

                                       53

During  the  year  ended  December  31, 1999,  the  Company made an organization
development  loan available to Meridian Oriental Clinic (Clinic), an independent
and  unrelated  company,  who,  in  return,  agreed to demonstrate the Company's
products and perform clinical experiments. The loan was non-interest bearing and
would  be  repaid  annually  until  2006. The amount of repayment was determined
annually  by  offsetting  clinical  experiment expense incurred by the Clinic on
behalf  of  the  Company  and  only  the difference would be paid. Such expenses
incurred  by  the  Clinic  were  nil,  $25,515, and  $35,088 for the years ended
December  31,  2002,  2001  and 2000, respectively and these amounts were offset
against  the  short-term  loan  made  to  the  Clinic  in  the respective years.

During  the  year  ended  December  31, 2002,  Meridian  Oriental  Clinic ceased
business  operations  because  of recurring operating losses and working capital
deficiencies.  Therefore the remaining balance of short-term and long-term loans
to  the Clinic, amounting to $142,435 and $562,564, was written-off for the 2002
fiscal  year.

During  the  year  ended  December  31, 2002, short-term loan to sales agents of
$720,210  was  written  off due to the agents going out of business. Other short
-term  loans  to  sales  agent bear interest of 11% per annum and will be repaid
within  the  next  12  months.

Interest  income  arising  from  these  loans is classified as other income. Any
provision  for  bad  debts  is  classified  as  non-trade  bad debt expense as a
component  of  other  expenses.

4. INVENTORIES

Inventories as of December 31, 2002 and 2001 are as follows (in U.S. dollars):

<TABLE>
<CAPTION>

                        December 31,
                       --------------
                     2002            2001
                    -----            ----
<S>              <C>            <C>
Merchandise . .  $     109,095  $  448,622
Finished goods.        250,625     325,200
Work in-process        134,854     223,650
Raw materials .        207,523     190,517

                 $     702,097  $1,187,989
</TABLE>

                                       54
<PAGE>

Merchandise  consists  of  medical  equipment,  medical  supplies and electronic
equipment  purchased  and  held  for  resale  by  the Company. Finished goods is
principally  oriental or alternative medical equipment the Company has produced.

5. OTHER CURRENT ASSETS

Other  current  assets  as  of  December  31,  2002  and  2001  are  as  follows
(in U.S. dollars)

<TABLE>
<CAPTION>


                             December 31,
                            ============

                           2002      2001
                         --------   ------
<S>                      <C>       <C>
Accrued interest income  $  5,447  $  9,510
Advance payments. . . .     6,933    96,894
Prepaid income taxes. .     5,593     8,301
Prepaid expenses. . . .     8,482     8,709

                         $ 46,455  $123,414
</TABLE>


6. INVESTMENTS

Investments  as  of  December 31,  2002  and 2001, which are accounted for under
equity  method,  are  as  follows  (in  U.S.dollars) :



<TABLE>
<CAPTION>

                                      Ownership
                                      Percentage                          December 31,
                                      ----------                         -------------
                                  Dec. 31,          Dec. 31,
                                    2002             2001                 2002          2001
                                 ----------        --------             ---------     ---------
<S>                              <C>               <C>                 <C>            <C>
Beijing Meridian Medicals           33.3%             45.0%            $  45,293      $   41.216
    Equipment Co., Ltd.
Meridian Asia Co., Ltd.             49.0              49.0                     -               -
True World Co., Ltd.                47.9              47.9                     -               -
</TABLE>

On November 10, 2001, the Company acquired 45% of the share ownership in Beijing
Meridian  Medicals  Equipment Co., Ltd. ("Beijing Meridian") for $59,981 (by the
spot exchange rate of Won 1,283 to $1) in cash. During the 2002 fiscal year, the

                                       55
<PAGE>

Company's  interest  in Beijing Meridian was diluted as a result of the investee
issuing  additional  stock  to  other  parties.

The Company lost the ability to exercise control over Meridian Asia Co., Ltd and
True  World  Co.,  Ltd.  ("True World")  effective  on  December  31, 2001. As a
consequence,  the  equity  method  has  been  applied  to  the investments since
January 1, 2002 and losses in excess of  the initial investment in the investees

have  not  been  recognized,  as  is  appropriate  under  the  equity  method.

As  True  World  ceased  operations  in  early  2003,  the  accompanying  2002
consolidated  financial  statements reflect an extraordinary gain on disposal of
$ 615,293  relating  to  the  Company's investment in True World at December 31,
2002

7.     PLEDGED ASSETS

As  of  December  31, 2002,  the  Company's  land  and buildings were pledged as
collateral  for  the  Company's  lines o f credit totaling $874,989 with ChoHung
Bank  and  Woori  Bank

8.     SHORT-TERM BORROWINGS

Short-term borrowings denominated in Korean won as of December 31, 2002 and 2001
are as follows (in U.S. dollars):
<TABLE>
<CAPTION>
                                       Annual      Final             December 31,
                                      Interest    Maturity
Lender                                 rate (%)    Date           2001          2000
                                     ----------  ----------      ------         -----
<S>                                <C>         <C>            <C>         <C>

ChoHung Bank                        7.0 - 7.1  Aug.28.2003    $1,055,168   $1,040,142
Shinhan Bank                             10.0  Aug.17.2003        84,281       70,774
Woori Bank                              12.97  May 15.2003       201,941      159,968
Korea Exchange Bank                       8.0  Sep.05.2003       168,591      190,331
Small/Medium Ind. Bank                    8.0  Aug.20.2003             -       20,556
Medison Co., Ltd.                           -  Dec 31.2003         1,025          926
Other                               8.0 -12.0  Jan 2. 2003       160,239      104,876
                                                        -----------        ----------
                                                      $  1,671,246       $  1,587,573
                                                    --------------     --------------
</table>

Korea Technology Credit Guarantee Fund has provided a guarantee in the amount of
$214,954  to  secure  repayment  of  short-term  borrowings  of  the  Company.

                                       56
<PAGE>

9. LONG-TERM BORROWINGS

Long-term  borrowings denominated in Korean won as of December 31, 2002 and 2001
are  as  follows  (in U.S. dollars):


<TABLE>
<CAPTION>
                                    Final      Annual      December 31,
                                                          ==============
                                   Maturity   Interest
Lender                               Year      rate(%)         2002          2001
                                                                          ----------
<S>                                <C>       <C>          <C>             <C>

ChoHung Bank. . . . . . . . . . .  03 to 06      4-6.25   $    927,666      $1,029,928
Woori Bank                            08           6.0          32,327          29,692
Small and Med. Industry Promotion     04           6.25        247,431         247,431
Shinhan Bank                          02           4.0         252,887          30,453
Daewoo Capital Co., Ltd               03             -               -           8,088
                                                              --------      ----------
                                                               1,212,880     1,345,592
Less portion due within one year                                (433,760)     (251,535)
                                                                 --------    ----------
Long-term portion                                              $ 779,120    $ 1,094,057
</TABLE>


As at December 31, 2002, the Company was provided payment guarantees of $766,661
($1,032,356 for 2001 and $1,070,245 for 2000) and $656,234($555,006 for 2001 and
$654,301 for 2000)  by  Korea  Technology Credit Guarantee Fund and Medison Co.,
Ltd.,  respectively,  in  relation  to  the  above  long-term  borrowings.

As  of  December  31,  2002,  $163,930  of  short-term investments and $6,322 of
long-term  bank  deposits  are subject to withdrawal restrictions in relation to
short-term  and  long-term  bank  borrowings.

The future scheduled maturities of long-term borrowings at December 31, 2001 are
as follows:

<TABLE>
<CAPTION>



YEARS ENDING
December 31           In U.S. dollars
<S>                   <C>
2003 . . . . . . . .       $   433,460
2004 . . . . . . . .           496,569
2005 . . . . . . . .           259,698
2006 . . . . . . . .            14,398
2007 and thereafter.             8,455
                              ---------
                            $1,212,880
</TABLE>

                                       57
<PAGE>

10. DEBENTURES

The  Company  issued  two  series of non-guaranteed corporate bonds for the year
ended  December  31, 2001.  Details of debentures as of December 31, 2002 are as
follows  (in U.S. dollars):

<TABLE>
<CAPTION>

                                           Annual                    December, 31
                                          Interest              =====================
                         Maturity            Rate                 2002          2001
                    =================   ============          ==========   ===========
<S>                   <C>                <C>                 <C>           <C>
1st. . . . . . . . .  January 31, 2003    12.15 %               $842,957      $761,325
2nd. . . . . . . . .  August 14, 2004     13.92 %                421,479       380,662
                                                                --------      --------
                                                               1,263,233     1,136,448
Less discounts on bonds                                            1,203         5,539
                                                             -----------      --------
                                                               1,263,233     1,136,448
Less current portion                                             842,957             -
                                                             -----------      --------
                                                                $420,276    $1,136,448
                                                             ===========      ========
</TABLE>


Subsequent  to  year-end,  the Company renegotiated the maturity date of the 1st
series  of  non  guaranteed  debentures.  The  revised  arrangement requires the
Company  to  repay $84,296 on a monthly basis from July 31, 2003 to November 30,
2003  with  a  final  payment  of  $421,477  due  on  December  31,  2003

11.     LONG-TERM ACCOUNTS PAYABLE-OTHER

A number of external research institutes owned by the Korean government, who are
interested  in  the  Company's research and development projects, furnish grants
for  the  projects  by  providing  the  Company  with  certain  initial lump sum
payments.  The  total  grant  recognized  as  sales in 2000 was $127,496 and the
related  costs  incurred  by the Company in 2000, which are included in research
and  development  expenses,  were $ 417,983. There were no grants or expenses in
2002  and  2001.

                                       58
<PAGE>

The  contracts  between  the  Company  and  each of these parties provides that,
depending  on  the contract, 50 to 70% of the initial payment, which the Company
recognizes as income upon completion of the projects, is retained by the Company
regardless  of the result of the research and development projects. However, the
Company  is  required to repay, over a 3 to 5 year period, the remainder only if
the  results  are  successful.  Accordingly, the Company accrues such amounts as
long-term  accounts  payable-other.

                                       58
<PAGE>

Details of long-term accounts payable-other as of December 31, 2002 and 2001 are
as  follows  (in U.S. dollars)  :

<TABLE>
<CAPTION>

                                            Final          December 31,
                                                         --------------
                                           Maturity
                                             Year          2002          2001
                                         -------------    ------        ------
<S>                                       <C>         <C>             <C>
Korea Institute of Industrial Technology
Evaluation and Planning. . . . . . . . .       2005   $      55,816   $72,312
Wonkwang University Research Institute .       2004          25,957    35,165
Small and Medium Business Administration       2004          23,974    21,652
                                                           --------   --------
                                                            105,746   129,129
Less current portion due within one year                    (48,963)  (38,922)
                                                           --------   --------
Long-term portion. . . . . . . . . . . .                  $  56,784  $  90,207
</TABLE>

The  above  long-term accounts payable-other have no interest terms but have not
been  discounted  at  present  value  as  the  difference between book value and
present  value  is  not  material.  The  current portion is included in accounts
payable-other.

The  future scheduled maturities of long-term accounts payable-other at December
31,  2002  are  as  follows:
<TABLE>
<CAPTION>

Years ending
December 31               In U.S. dollars
<S>                   <C>

2003 . . . . . . . .  $         48,863
2004 . . . . . . . .            43,095
2005 . . . . . . . .            10,502
2006 . . . . . . . .             3,186
                             ----------
                               105,746
                             -----------
</TABLE>

                                       59
<PAGE>
12.     RETIREMENT AND SEVERANCE INDEMNITIES

Employees  with  more than one year of service are entitled to receive severance
indemnities,  based  on  length  of service and rate of pay, upon termination of
their  employment.

Although the term Pension is used in the National Pension Law (Law) and National
Pension  Fund  (NPF), a  Korean  Pension is a one-time lump sum payment upon the
termination  of  an  employment,  rather  than  a series of payments in annuity.

The  Company's  estimated  liability  under  the plan, equal to the amount which
would  be  payable if all employees were to terminate at the balance sheet date,
has  been  accrued. The following is the formula used to determine the amount of
the  benefit  payable:

Amount  payable = (Certain percentage,  as  provided by the Law, of the person's
latest  annual  salary  or  wage)  x   (Number  of  years  employed)

The  application  of  the Law is the same for both retirements and layoffs. That
is, there is no difference between retirement benefits and severance benefits in
Korea.

The  Company  transferred a portion of its accrued severance indemnities in cash
to  the  National Pension Fund as provided by the National Pension Law of Korea.
The  amount  transferred will reduce the retirement and severance benefit amount
payable  to  the  employees  when  they  leave the Company and is reflected as a
direct  deduction  from  the  retirement and severance benefits liability in the
accompanying  consolidated  financial  statements.  However, the requirement for
transfer  to  NPF  was  repealed  in  April  2000.

Changes in retirement and severance indemnities for the years ended December 31,
2002,  2001  and  2000  are  as  follows  (in  U.S.  dollars):

<TABLE>
<CAPTION>

                                       Year ended December 31,
                                     ----------------------------
                                    2002              2001            2000
                          -------------------------
<S>                       <C>                        <C>        <C>
  Beginning balance. . .          $317,285          $238,067        $198,926
  Provision. . . . . . .            89,912           120,972         113,777
  Payments . . . . . . .          (190,294)          (31,961)        (47,415)
  Belonged to former . .           (12,245)                -               -
  subsidiaries
  Translation adjustment            27,995            (9,793)        (27,221)
                             --------------         ---------        ---------
  Ending balance . . . .           232,653           317,285         238,067
  Transferred to NPF . .            18,440            25,368          27,615
                             --------------         ---------        ---------
                                   214,213          $291,917         $210,452
 Less current portion. .            75,304            44,216           39,060
                             --------------         ---------        ---------
  Net. . . . . . . . . .  $        138,909           $247,701        $171,392
</TABLE>

Current  portion  of  retirement  and severance indemnities is included in other
current  liabilities

                                       60
<PAGE>

13.     SHARE CAPITAL

(a)     On  September 27, 1999, the Company amended its authorized capital stock
from  11,000,000 shares to 50,000,000 shares, and issued 5,000,000 shares at par
value  ($0.17  per  share)  for  cash  on  October  1,  1999.
(b)     On  December  29,  1999,  the Company converted its convertible bonds to
common  stock  and  issued  1,346,325 shares of common stock at $0.58 (par value
$0.17  at  the  spot  exchange  rate).
(c)     On  March  2,  2000,  the  Company issued 750,000 shares of common stock
(par  value  $0.18  at  the  spot  exchange  rate)  at $0.89 per share for cash.
(d)     On  February  6,  2001, the Company acquired a 100% equity interest in a
U.S.  corporation  named By George Holding, Corp. and issued 1,703,550 shares of
common  stock  in  consideration  of  the  acquisition.  (Refer  to  Note  19)
(e)     In  accordance  with  a  resolution of the shareholders' on February 15,
2001,  the  Company  split  its  common  stock  on  a  ten-for-one  basis.  The
shareholders'  also  authorized  a  splitting of the Company's common stock on a
five-for-two  basis  on  March  19,  2001.  All  references  in the consolidated
financial  statements  to  number  of shares, per share amounts and stock option
data  have  been  adjusted  to  give  effect  to  these  stock  splits.
(f)     On  July 22,  2002,  the Company issued 1,282,708 shares of common stock
(par value 0.17 at the spot exchange rate) in exchange of investor relations and
marketing  services  with  the  fair  value  of  $300,000.

14.     APPROPRIATION FOR BUSINESS RATIONALIZATION

The Company has appropriated $ 220,927 ($ 224,659 for 2001) of retained earnings
for  future  investment  and  business rationalization.  The appropriation was a
legal  requirement in Korea until 2001 when the applicable statute was repealed.
There  are  presently  no  restrictions  on  the  use  of  the  appropriation.

                                       61
<PAGE>

15.     COMMITMENTS AND CONTINGENCIES

As  of  December  31,  2002  and  2001,  the  Company is contingently liable for
promissory  notes  of  $222,606  and $911,643  sold  to banks with recourse. The
Company's  management  believes  that,  based  upon  its past history of similar
transactions,  the  possibility of the issuers' defaults on the notes is remote.


16.     RELATED PARTY TRANSACTIONS

The  Company's  transactions  and  account balances with related parties for the
years  ended  December  31,  2002  and  2001  are  summarized  as  follows
(in U.S. dollars):

<TABLE>
<CAPTION>
                                                       Year ended December 31,
                                                   ------------------------------
                                                       2002              2001
                                                   ------------      ------------
     <S>                                             <C>                 <C>
              Transactions
     Sales to:
           True World Co., Ltd                       $62,995                    -
     Purchases from:
          True World Co., Ltd                            362                    -
     Account Balances
       Accounts receivable-trade:
     Beijing Meridian Medicals                        26,967                    -
     Short-term loans:
     Beijing Meridian Medicals                             -              $28,771
     Short-term borrowings:
     Beijing Meridian Medicals                        31,856                    -
</table>

In  connection  with  the  related  party transactions, unearned gross profit in
inventory  is  eliminated  for  equity-accounted  investees.

                                       62
<PAGE>

17.     INCOME TAXES

The  Company  is subject to corporate income tax and resident surtax normally at
an  aggregate  rate  of  16.5% on taxable income up to W100,000,000 and 29.7% on
taxable  income  over  that  amount.

At December 31, 2002, the Company had technology and human resources development
tax  credit carryforwards of $238,743($179,025 in 2001). It is expected that the
Company  could  not  realize  a  tax  benefit from such tax credit carryforwards
before  their  expiration  in  2008  (2007 for 2001).  A  valuation allowance of
$1,423,967  ($816,816 in 2001)  has  been  recognized to offset the deferred tax
assets  related  to  these  tax  credit  carryforwards  and  other  temporary
differences.  Deferred  income  taxes  reflect  the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and  the  amounts  used for income tax purpose. Significant
components  of  the  Company's deferred tax assets as of December 31, 2002, 2001
and  2000  are  as  follows:

<TABLE>
<CAPTION>

                                           2002        2001        2000
                                        ----------  ----------  ----------

<S>                                     <C>         <C>         <C>
Deferred tax assets
Accruals and reserves. . . . . . . . .$ 1,185,224 $   637,791   $ 166,881
Technology and human resources. . . .     238,743     179,025     145,038
development tax credit carry forwards.
                                        ----------  ----------  ----------
Total deferred tax asset(liability). .  1,423,967     816,816     261,919
Valuation allowance for deferred
Tax asset. . . . . . . . . . . . . . . (1,426,967)   (816,816)   (261,919)
                                        ----------  ----------  ----------
Net deferred tax asset(liability). . .          -           -           -
                                        ----------  ----------  ----------
</TABLE>

Reconciliation  between  the  income  tax  expense  (benefit) computed using the
Korean  statutory  income  tax  rate and the Company's actual income tax expense
(benefit)  for  the  fiscal  years  ended December 31, 2002, 2001 and 2000 is as
follows:

<TABLE>
<CAPTION>

                                                           2002        2001        2000
                                                        ----------  ----------  ----------
<S>                                                     <C>         <C>         <C>
Income tax recovery at statutory rate. . . . . . . . .  $(862,820)  $(577,774)  $(212,990)

Reduction of income tax benefit due to lower tax rate
 on first W100,000,000
                                                           10,628      10,206      11,579
Temporary differences - primarily non-deductible
expenses under Korean Tax Law
                                                          457,563    (557,214)    (25,759)
Permanent differences - expenses (primarily
 entertainment and others) in excess of tax deductible
limitation
                                                          115,599      35,473     (33,479)
Others - net
                                                          886,181     529,778     206,096
Changes in valuation allowances
                                                         (607,151)   (554,897)       (854)
                                                        ----------  ----------  ----------
Income tax expense
                                                                -   $       -    $ 11,551
</TABLE>

                                       63
<PAGE>

18. STOCK OPTIONS

Under the Company's Articles of Incorporation, the Company may grant options for
the purchase of shares to certain qualified officers and employees. 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.

The  specific  terms  and  conditions  of  stock options granted under the Stock
Option  Plan  shall  be  approved  at a duly convened shareholders' meeting. The
maximum aggregate number of shares available for issuance under the Stock Option
Plan may not exceed 50% of the total number of shares outstanding. Stock options
may not be granted to all officers and employees


at  the  same  time.  Any  single  officer  or employee may not be granted stock
options  for  shares  exceeding  10%  of  shares  issued  and  outstanding.

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

A  summary  of  the  status  of the Company's two fixed stock option plans as of
December  31,  2002  is  presented  below :

<TABLE>
<CAPTION>



Grant Date    Options     Exercise Price (by the Spot   Fair Value per Share   Vesting Period
            Outstanding          Exchange rate)          of Options Granted
            ------------  ----------------------------  ---------------------
<S>              <C>           <C>                            <C>              <C>

Feb. 23, .                                                                     Feb. 2003 to
 2000. . .       322,625        W1000 ($0.88)           $       0.26           Feb. 2007

Mar. 19,                                                                       Mar.2004 to
 2001. . .       258,825        W680 ($0.52)            $       0.47           Mar. 2008
               ----------
                 581,450
               ----------
</TABLE>

As  at  December  31,  2002  no stock options were exercisable. The Company will
disclose  the  pro forma impact on operations, comprehensive income and earnings
per  share  beginning  in  the  2003 fiscal year when the stock options begin to
become exercisable. The fair value of stock options granted was 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 and 2000 was
$0.47  and  $  0.26,  respectively.

                                       64
<PAGE>

19.     ACQUISITION

During  the  fiscal years ended December 31, 2000 and 2001, the Company acquired
three  subsidiaries  and  an investment in a third corporation. The Company paid
cash  of $ 389,792 in consideration for these investments. The acquisitions were
accounted  for  using the purchase method and the purchase price was assigned to
assets  acquired  and  liabilities  assumed  based

on  their  estimated  fair  values  on  the  date of acquisition.  The excess of
consideration  paid  over  net  assets  acquired  was accounted for as goodwill.

The subsidiaries were consolidated from the date of acquisition through December
31,  2001,  at which time effective control over the subsidiaries was lost.  See
Note  2(b)  and  Note 6.

The estimated fair value of net assets acquired and of goodwill are as follows:

<TABLE>
<CAPTION>


                   2002      2001                2000
                   ----      ----------------------------------------    ----
                  Meridian    Beijing     Pusan      Chunee     TRUE
                  America     Meridian   Meridian     Soft      World    Total
                   ---------  ---------  --------
<S>                <C>        <C>        <C>       <C>       <C>       <C>
Net assets. .   $  50,219  $  33,665    $ 53,547   $ 99,073   $199,024  $351,644
Goodwill* . . .         -     26,316           -     23,256     14,892    38,148
                ---------  ---------    --------   --------   --------   -------
Acquisition
price              50,279  $  59,981     $53,547   $122,329   $213,916  $389,792

</TABLE>

     *The  purchased  goodwill,  amounting  to $30,020, was written off in 2001

Goodwill was amortized from the dates of acquisition through December 31, 2001,
at which time the Company adopted SFAS 142.  The balance of unamortized goodwill
of $ 30,020 was determined to be impaired and was charged to operations during
the fiscal year ended December 31, 2001.

                                       65
<PAGE>

On  February  6,  2001  the  Company  completed the acquisition of a 100% equity
interest  in  a  U.S.  corporation,  By  George Holding, Corp.  ("By George") in
consideration  for  1,703,550 common shares issued from treasury.  By George was
an  inactive corporation that had no assets or liabilities.  The acquisition was
accounted  for  as  a  capital transaction in substance but had no impact on the
Company's  consolidated  financial  statements other than to reduce the reported
loss  per  shares  for  the  fiscal  year  ended  December  31,  2001 to $ 0.01.

20. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair  value  of  financial  instruments  as of December 31, 2002 and 2001 are as
follows  (in U.S.dollars) :

<TABLE>
<CAPTION>


                                                  Dec. 31, 2002          Dec. 31, 2001
                                                  =============          =============

                                               Carrying      Fair       Carrying      Fair
                                                amount       value       amount       value
                                              ----------     ------     ---------    ------
<S>                            <C>                      <C>          <C>         <C>
Financial assets :
  Cash and cash equivalents .  $               128,674  $   128,674  $  105,216  $   105,216
  Short-term investments. . .                  189,760      189,760     841,476      841,476
  Accounts receivable-trade .                1,058,953    1,058,953   1,789,821    1,789,821
- Accounts receivable-other .                   15,326       15,326      20,231       20,231
  Short-term loans. . . . . .                   62,810       62,810      89,798       89,798
  Investments . . . . . . . .                   45,293
    Non-marketable securities  -                            (note a)     41,216    (note a)
  Long-term bank deposits . .                   11,633       11,633      80,929      80,929
  Long-term loans . . . . . .                        -            -     220,672     220,672
   Guaranty deposits                           113,391      113,391      90,836      90,836
                                              ----------              ---------
                                           $ 1,645,840              $ 3,250,195
                                            ----------              -------------

Financial liabilities :
Accounts payable
- trade and other . . . . . .  $             1,649,778  $ 1,649,778  $1,601,844  $ 1,601,844
  Short-term borrowings . . .                1,671,246    1,671,246   1,587,573    1,587,573
  Long-term borrowings
    including current portion                1,055,838    2,055,838   1,345,592    1,345,592
  Debentures. . . . . . . . .                  420,276      420,276   1,136,448    1,136,448
  Long-term accounts payable.                   56,784       56,784      90,207       90,207
                                            ----------               ----------
                               $             5,853,922              $ 5,761,664
</TABLE>

                                       66
<PAGE>

(note a) Fair value of these investments was not available as they are not
publicly traded. Accordingly it is not practicable to determine the fair value
of such securities.

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

21.     STATEMENTS OF CASH FLOWS

(a)  Non-cash investing and financing transactions

For  the  year  ended  December  31,  2000,  the  Company  received  non-cash
contributions  from  its  minority  investors,  which  was  primarily  inventory
amounting  to  $46,815.

(b)  Interest and income taxes paid and received
Interest and income taxes paid and received in cash for the years ended December
31,  2002,  2001  and  2000  are  as  follows  (in  U.S.  dollars) :
<TABLE>
<CAPTION>


                                  Year ended December 31,
                                  =======================

                                  2002       2001      2000
                                 -----       -----     -----
<S>                             <C>        <C>       <C>
Interest paid for the year . .  $386,839   $333,084  $340,930
Income taxes paid for the year   (14,095)    36,571   186,148
Interest received. . . . . . .    32,149     38,641    41,173
</TABLE>

22.     SEGMENT INFORMATION

                                       67
<PAGE>

The  Company  operates  in  a  single reportable operating segment, that is, the
development  and  manufacture  of  alternative  medicine  equipment.  The single
reportable  operating  segment  derives  its  revenue  from  the  sale  of  its
alternative  medicine  equipment,  software  and  other  related products. As at
December  31,  2002,  substantially  all  of the assets related to the Company's
operations  were  located  in  Korea.  Net revenue is attributable to geographic
locations  based  on  the  location  of  the  customer,  as  follows:

<TABLE>
<CAPTION>

                                December 31,
                    -------------------------------
                     2002        2001        2000
                  ----------    ------      -------
<S>               <C>         <C>         <C>
Export
   U.S.A.. . . .  $  360,449  $  139,693  $  129,151
   Canada. . . .           -     135,794           -
   South America           -      57,119     111,216
   South Asia. .           -      26,291      68,597
   China . . . .       2,330      90,710     332,466
   Japan . . . .           -           -           -
                                December 31,
                    -------------------------------
                     2002        2001        2000
                  ----------    ------      -------
<S>               <C>         <C>         <C>
   Other . . . .      22,829      53,407       2,476
                     388,435     533,014     643,906
                  ----------  ----------  ----------

Domestic Sales .   3,133,222   4,756,547   4,660,134

                  $3,521,657  $5,289,561  $5,304,040
</TABLE>

23.     NEW TECHNICAL PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS 143 addresses financial accounting requirements for
retirement obligations associated with tangible long-lived assets. We do not
expect the provisions of SFAS 143 to have a material impact on the Company's
consolidated financial statements. The Company will adopt the provisions of SFAS
143 as of January 1, 2003.

In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities."  SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities, except those
incurred in connection with a purchase business combination.  The standard
requires that a liability for costs associated with an exit or disposal activity
be recognized and measured initially at its fair value in the period in which
the liability is incurred.  The provisions of this standard are effective for

                                       68
<PAGE>

exit or disposal activities initiated after December 31, 2002.  SFAS 146 will
impact the Company's financial statements if and when future restructuring
activities occur.

In  December  2002  the  FASB  issued  SFAS No.  148 "Accounting for Stock-Based
Compensation - Transition  and  Disclosure"  to  provide  alterative methods for
voluntary  transition  to  the  fair  value  based  method  of  accounting  for
stock-based  compensation.  SFAS  148  also  amends the disclosure provisions of
SFAS No.  123  "Accounting  for  Stock-Based  Compensation" to require prominent
disclosure  about  the  effects on reported net income of an entity's accounting
policy decisions with respect to stock-based employee compensation.  SFAS 148 is
effective for fiscal years ending after December 15, 2002.  SFAS 148 will impact
the  Company's financial statements when the Company awards stock-based employee
compensation  and  as  past awards begin to vest in fiscal 2003 and later fiscal
years.

The  Company  is  currently  evaluating  the  impact  of these pronouncements to
determine  the  effect,  if  any,  they  may  have on the consolidated financial
position  and  results  of  operations.

24.     UNCERTAINTIES IN BUSINESS ENVIRONMENT

The  Asia  Pacific  region,  including  Korea, has been experiencing significant
economic  difficulties.  The  operations  of  the  Company,  and  those of other
companies  in  Korea  have  been significantly affected, and will continue to be
affected for the foreseeable future, by the general unstable economic conditions
in  the  country  and in the Asia Pacific region. It is currently uncertain what
the  resulting effect will be on the future operations and financial position of
the  Company  and  its  subsidiaries. The ultimate outcome of this matter cannot
presently be determined. Therefore, the consolidated financial statements do not
include  any  adjustments  that  might  result  from  those  uncertainties.

Item 19. Exhibits
None

                                       69
<PAGE>

SIGNATURES

The  registrant  hereby  certifiers  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.


                              Meridian  Co.,  Ltd



                        By:          /s/  Hyeon-seong  Myeong
                              --------------------------------
                                 Name:  Hyeon-seong  Myeong
                                 Title  :  President,  CEO

Date: June 30, 2003

Certifications

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER
PURSUANT TO
18 W.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I,  Myeong, Hyeon-seong, certify, that:

1. I  have  reviewed  this  annual  report  on  Form 20-F of Meridian Co. Ltd. ;

2. Based  on  my  knowledge,  this  annual  report  does  not contain any untrue
statement of a material  fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in this annual report;

4. The  registrant's  other  certifying  officers  and  I  are  responsible  for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

a.     designed  such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
b.     evaluated  the  effectiveness of the registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and
c.     presented  in  this annual report our conclusions about the effectiveness
of  the  disclosure  controls  and  procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a.     all  significant  deficiencies  in  the  design  or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and
b.     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

                                       70
<PAGE>

6. The  registrant's  other  certifying  officers  and  I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



                        By:          /s/  Hyeon-seong  Myeong
                              --------------------------------
                                 Name:  Hyeon-seong  Myeong
                                 Title  :  President,  CEO

Date:     June 30, 2003

I, Sang-yeul Park, certify, that:

1. I have reviewed this annual report on Form 20-F of Meridian Co. Ltd. ;

2. Based  on  my  knowledge,  this  annual  report  does  not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in this annual report;

                                       71
<PAGE>

4. The  registrant's  other  certifying  officers  and  I  are  responsible  for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

d.     designed  such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
e.     evaluated  the  effectiveness of the registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date"); and
f.     presented  in  this annual report our conclusions about the effectiveness
of  the  disclosure  controls  and  procedures based on our evaluation as of the
Evaluation  Date;

                                       71
<PAGE>

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

c.     all  significant  deficiencies  in  the  design  or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and
d.     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and  I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


                        By:          /s/ Sang-yeul Park
                              --------------------------------
                                 Name:  Sang-yeul Park
                                 Title:  :  Director

Date:     June 30, 2003