3. The Nature of Product

3.1 Major products are as follows:

Technical Books. Currently SE-ED is the country's large technical book
publisher, and the market leader of books in such fields as computer,
electronics, engineering, children books, business management, and
self-development books.

Monthly Magazines. Currently SE-ED is the publisher of the science and
technology monthly magazines as follows :

-   Semiconductor Electronics Magazine,

-   Microcomputer Magazine,

-   Update Magazine,

-   Hobby Electronics Magazine,

-   Microcomputer User Magazine,

-   Industrial Technology Review Magazine and

-   Internet Magazine

Breakdown of the Company’s Channels of Distribution (For the past 3
years)

+--------------------------------+--------+--------+--------+--------+
| Channel of Distribution        | 2000   | 1999   | 1998   | 1997   |
+--------------------------------+--------+--------+--------+--------+
| Retail (through SE-ED Book     | 76 %   | 67 %   | 60 %   | 45 %   |
| Center)                        |        |        |        |        |
|                                | 16 %   | 20 %   | 27 %   | 36 %   |
| Wholesale                      |        |        |        |        |
|                                | 6 %    | 7 %    | 10 %   | 16 %   |
| Magazine advertising & sales   |        |        |        |        |
|                                | 2 %    | 6 %    | 3 %    | 3 %    |
| Others                         |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Total                          | 100 %  | 100 %  | 100 %  | 100 %  |
+--------------------------------+--------+--------+--------+--------+

SE-ED Book Center (SBC) is the company's retail business arm. SBC's are
medium-sized general bookshops located in leading shopping centers and
campuses . They project themselves as a center of "edutainment" books
and related media for working adults and their families. SBC commenced
its operation in 1991. As of December 2000, there are altogether 61
branches of SBC and 5 branches of network bookshops as follows:

+-----------------------------+----------------------------------------+
| B                           |                                        |
| angkok and nearly provinces |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Seacon    | Big-C Samutprakarn                     |
| Square                      |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Meenburi  | Big-C Houa Mark                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter           | Silom Complex                          |
| Sukaphibarn I               |                                        |
+-----------------------------+----------------------------------------+
| Lotus Fortune Town          | Fortune Town Shopping Arcade           |
+-----------------------------+----------------------------------------+
| Lotus Supercenter           | Imperial World Samrong                 |
| Srinakarin                  |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Ramintra  | Laksi Plaza (closed)                   |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Bangkae   | Tops Supermarket Campus walk(Kasetsart |
|                             | University)                            |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Rama IV   | Pantip Plaza                           |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Cheang    | Central City Bangna                    |
| Wattana                     |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Sukhumwit | Central Plaza Pinklao                  |
| 50                          |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter laksi     | Central Plaza Rama III                 |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Rama II   | Maboonkrong Center                     |
+-----------------------------+----------------------------------------+
| Carrefour Petchkasem        | IT Mall Ratchada                       |
+-----------------------------+----------------------------------------+
| Carrefour Ramintra          | Makro Narathivasrajanakarin Rd.        |
+-----------------------------+----------------------------------------+
| Carrefour Sukhaphibal III   | Seri Center                            |
+-----------------------------+----------------------------------------+
| Carrefour Cheang Wattana    | Siam Center                            |
+-----------------------------+----------------------------------------+
| Carrefour Rattanantibet     | Nation Tower                           |
+-----------------------------+----------------------------------------+
| Carrefour Rama IV           | Bangkok Techical Campus                |
+-----------------------------+----------------------------------------+
| The Mall Bangkapi           | Siam University                        |
+-----------------------------+----------------------------------------+
| The Mall Bangkae            | Ramkhamheang University                |
+-----------------------------+----------------------------------------+
| The Mall Ngamwongwan        | NIDA                                   |
+-----------------------------+----------------------------------------+
| Future Park Bangkae         |                                        |
+-----------------------------+----------------------------------------+
| Future Park Rangsit         |                                        |
+-----------------------------+----------------------------------------+
| Future Mart Jusco Rama III  |                                        |
+-----------------------------+----------------------------------------+
|                             |                                        |
+-----------------------------+----------------------------------------+
|                             |                                        |
+-----------------------------+----------------------------------------+
| Middle                      | Northeast                              |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Saraburi  | Lotus Supercenter Khornkan             |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Supanburi | Lotus Nakorn Ratchasima                |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Ayuddhaya | The Mall Nakorn Ratchasima             |
+-----------------------------+----------------------------------------+
| North                       | SE-ED NETWORK                          |
+-----------------------------+----------------------------------------+
| Lo                          | - Arch Holding (Burirum)               |
| tus Supercenter Pittsanulok |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Chiangmai | - KhonKan University                   |
+-----------------------------+----------------------------------------+
|  SE-ED NETWORK              | Sunkeang Srisaket                      |
+-----------------------------+----------------------------------------+
| - CM Book Center            | East                                   |
+-----------------------------+----------------------------------------+
| Srikairat Book Center       | Lotus Supercenter Pattaya              |
| Nakornsawan                 |                                        |
+-----------------------------+----------------------------------------+
| South                       | Robinson Department Store Chantaburi   |
+-----------------------------+----------------------------------------+
| Lotus Supercenter           | Lam-Thong RaYong                       |
| Nakornsritammarat           |                                        |
+-----------------------------+----------------------------------------+
| Lotus Supercenter Suratanee |                                        |
+-----------------------------+----------------------------------------+
| Diana Department Store      |                                        |
| Hat-Yai                     |                                        |
+-----------------------------+----------------------------------------+
| Big-C Hat-Yai               |                                        |
+-----------------------------+----------------------------------------+
| SE-ED NETWORK               |                                        |
+-----------------------------+----------------------------------------+
| - Lotus Phuket              |                                        |
+-----------------------------+----------------------------------------+

Furthermore the company operates the entire book selling space in 6
branches of Makro Office Center as follows:

Seacon Square (Jan. 1996) Rama III (Mar. 1997)

United Center (Mar. 1996) Tawanna (Sep. 1997)

RCA (Jul. 1996) Phaholyotin (Nov. 1997)

As for magazine distribution in Bangkok and nearby provinces, the
company seeks such service from multiple distributors in supplying those
booksellers in each area with these products.

As for distribution in other provinces, the company seeks service from
the up country distributor. This distributor shall ship the magazines to
their agent in each province and then the agent shall in turn, ship then
to those provincial booksellers.

3.2 Marketing & the State of Competition

Marketing Strategy In the past 27 years of business, the company has
been the pioneering publisher of self-development books. SE-ED has a
favorable image as the nation's leading publisher of technical book and
technology magazine.

Highlights in SE-ED's way of doing business can be summarized as
follows:

-   The company gives priority to the book creation and manuscript
    selection process to achieve the right customer appeal. This
    important step has made their publications stand the test of time
    and create long-term profit for the company.

-   The company is quality-conscious in manuscript selection, production
    accuracy, design work and printing. The company prides itself on
    adding Smyth-sewing binding for every published book to achieve that
    extra durability for every book manufactured by SE-ED. This feature
    lifts the company's product quality higher than the average one,
    giving the customer better value for money.

-   The company maintains good relation with leading foreign book
    publishers in USA, Japan, Canada, UK, Germany and Singapore. This
    makes the company gain access to a huge source of interesting
    manuscripts, which can be the essential material for long-term book
    publishing without any copyright complications.

-   The company's long history of doing business by adhering to quality,
    service and integrity for over 27 years has won long standing
    respect from authors, readers, advertisers and distributors, giving
    the company a favorable image in the publishing industry.

-   The company's products are targeted at educated working people with
    strong purchasing power and respond to their need of knowledge
    essential to improving their working performance. This also explains
    the ever-growing demand for SE-ED books. Key production material
    such as paper does not pose any real threat to this healthy market
    trend, because SE-ED is in a position to price their products to
    reflect their actual production costs at each print run.

-   The company is currently the market leader of computer books, with
    over 70%+ market share, and books on electronics, engineering,
    business management, and self-development.

-   Each monthly magazine currently published by SE-ED has proved to be
    a success story in its own right, and has become the leading
    publication in each field, with broad base of loyal readers and
    supporting advertisers contributing to strong advertisement earnings
    and continual growth potential, minimally affected by other non-book
    media.

-   The company focuses on improving and fine-tuning its current
    channels of distribution with a view to reaching the target
    customers better and lowering related loss.

Pricing The company is in a position to set the book's retail price to
reflect the actual production costs for each printrun, with minimal
effect from the paper price change.

Distribution and Channels of Distribution On distribution side, the
company does the distribution of their own products through bookshops in
Bangkok and in the provinces, and through SE-ED Book Center (SBC), their
own chain bookshops. Besides, the company operates all the book selling
space in Macro Office Centers and SE-ED Network Bookshops.

The Nature of the customer

1.  SE-ED Book Centers is the retail bookstores. They are the center of
    knowledge and entertainment for families, students and workers.

2.  The main customers of the company’s wholesale can be divided in two
    major groups. The first group consists of more than 700 bookshops,
    large and small, nationwide. The other consists of those from the
    computer and electronics industry who regularly place their
    advertisements in the company's monthly magazines. These customer
    are entirely not related to the company in any way and have no
    future obligations whatever with the company.

The State of Competition

Industry Overview and Competition

There was a slight slowdown in the company’s business in 1997 under the
influence of the country’s economic crisis. However, the company still
remained one of the country’s key players as a book publisher, book
wholesaler, and book retailer. The company’s magazine and related
advertising business was hardest hit by the said crisis, bringing down
its advertising revenue significantly. On the contrary, the company’s
SBC business kept expanding, mostly financed by its working capital. As
a whole, the company was not much affected by the prevailing negative
factor. The long term growth of the company’s book business still looks
healthy and stable.

Opportunity and Obstacle

The government has a policy in promoting higher education among the
people in order to better prepare them for global change. This policy
stimulates greater demand for new areas of knowledge, and in turn
triggers an increase in local demand for books. All these conducive
factors contribute much to the even brighter and more stable future for
book business as a whole, particularly technical book and magazine
publishing. As a major publisher and distributor of technical books,
well equipped with qualified book and magazine publishing personnel, the
company is in a strong position to respond to this encouraging market
trend, and to maintain stronger growth in its revenue.

Key Success Factors

The factors that contribute to the company’s current leading position
and the company’s more important role in future book business can be
summarized as follows:

-   Have a business policy conducive to national development Since its
    inception the company has all along adhered to its business in
    knowledge dissension, with a view to developing the full potential
    of Thai people in areas essential to national development. The
    company’s continued growth is in line with the national development,
    but fortunately not severely affected by the economic slump.
    Besides, the corporate image is clear, well-received, and trusted by
    every party concerned.

-   Have tools and business components essential for future success The
    followings are synergistic factors conducive to the company’s
    greater success:

1.  The company has its own mass media in science and technology area,
    and has access to other low-cost media owned by Nation Multimedia
    Group PCL, one of the company’s major shareholder.

2.  The company owns knowledge-based content which is derived from those
    books and magazines published by the company

3.  The company has its own channel of distribution and its own
    distribution system through its SBC network. Such retail network is
    very important because it is located in strategic areas nationwide.
    Moreover, the company’s distribution system is currently regarded as
    the best in this business.

-   The number and size of competitors Since the information business
    and publishing business still have bright prospects, it attracts a
    lot of new entrepreneurs to the scene, but safe to say, not much
    competition is evident. One of the reasons is that this business is
    a capital-intensive one. Another reason is that it demands a
    qualified personnel of specialized expertise to write these
    technical books.

-   Market share The company is still the market leader in the computer
    book category with 70% share. In addition, it is also the leader in
    electronics, engineering, and self-help category.

-   Barrier of Entry The current state of competition has witnessed a
    number of successful examples in the information and publishing
    business, indicating tremendous potential growth of this business.
    Consequently new players keep popping up on the scene, and there is
    considerable competition in certain areas. However, the area of
    knowledge dissemination business in which the company is operating
    has witnessed not so strong competition.

-   Substitute goods The rapid change in technology and business makes
    it essential for learning new things in order to stay competitive in
    the market. Although the communication technology may become more
    and more advance, book is still the only durable knowledge medium
    that can be enjoyed anywhere, anytime at relatively low cost.

-   Bargaining power of buyer/vendor The company has a policy in setting
    the retail price of its product in a cost-plus manner for each print
    run. On the customer’s side, they recognize the importance of
    learning and the need of adopting essential knowledge for keeping
    pace with the global change. Besides, the trend keeps rising for the
    average level of education among the people, and even more so in the
    future. As a result, the demand for more books shall grow in
    proportion with the average education of the people. The company’s
    book business is not subject to any bargaining power from the buyer.

3.3 Procurement of products and services

Rate of Production Utilization The company does not own a printing house
and relies on each editorial team to oversee the whole pre-press book
project before outsourcing the work to a selected printer. Hence the
actual rate of production utilization can be stepped up or down without
any waste rate.

Raw material and the Supplier Paper is the most important raw material
for production. The company 's whole demand for paper is met by local
suppliers. Typical types of paper needed in the publication of book and
magazine are mainly offset printing paper, newsprint, art paper and
art-card paper.

Supplier Relation and Possible Effect from Loss of Supplier Most of the
bulk paper is purchased from Fancy Paper, Lao Hua Chieng, 99 Group
Center. The purchase is a firm one with an average trade credit of
thirty days. The company has no special relation with any of them. The
company has no obligation to buy anything from them in the future. In
the event of their failure to supply the goods, the company is free to
commit a firm purchase from any other supplier.

Production and Technology The book and magazine production normally
starts with the meeting to plan and to procure suitable manuscripts for
production. The manuscript may be acquired either by means of the
author's own submission or by means of the company's commission for the
work to be done along the specifications laid by the company. Once the
manuscript is obtained, the editorial team shall judge the work based on
a number of criteria: contents, accuracy, and readability. Then the work
is passed along to the company's Publications Committee who have
expertise in particular subject to seek their marketing advice
concerning the product under consideration. After hearing them out, the
editorial staff adjust the work accordingly.

Concurrently the artist works on the book design. Once the final
manuscript is ready, the next step is making the artwork by computer.
The finished artwork will be verified and corrected until it is complete
and, hopefully, error-free.

For book production, the following steps are to be added : title
decision, pricing, and related marketing activities to create customer
appeal.

The final artwork (or the camera-ready copy) will be outsourced for
filming to obtain a sharp image on film. Then the film is outsourced
again for plate-making. The printing plates are then forwarded to the
printer for printing, folding and gathering. For book production,
generally a Smyth-sewing step is added to ensure extra durability of the
book. Particularly the book cover will be outsourced for UV vanishing.
Then the book cover and the printed signature will be bound at the
bindery. After binding, the book will be cut to standard size, packed,
and shipped to the warehouse. The company normally checks the quantity
as well as the quality of the finished product before shipping out for
distribution.

As far as technology applied in book and magazine production is
concerned, the company uses both Macintosh computer and personal
computer (PC) including related equipment. It appears that the PC price
tends to fall while its performance tends to rise. The editorial staff
consists of knowledgeable people who have expertise in the manuscript
production. There are both staff workers and freelance writers. In the
event of labour shortage, the company is still in a position to seek
replacements to ensure the production continuity.

Capability, necessity and costs in fine-tuning the machinery for
competition Since the company does not own a printing house, hence no
investment whatever related to book or magazine printing machinery. As a
result, there is no need for the company to do anything in this regard.
With local printers competing for printing jobs, the company is in a
vantage position in bargaining for the best printing service at fairly
low cost.

Environmental Effects The company's main production line is the
editorial staff. Consequently the production process mainly concerns the
preparation of manuscript on the premises. The process simply does not
cause any pollution and is not under supervision of any state agencies.

3.4 Undelivered Jobs

-None-