Filed by Automated Filing Services Inc. (604) 609-0244 - Meridian Co., Ltd.

[ ] 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

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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

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

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

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.

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

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

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

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

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

All references to "Korea" herein are references to The Republic of Korea. All references to "Meridian," the "Company", "we," "us" or "our" herein are references to Meridian Co., Ltd. All references to the "Government" are references to the government of Korea. All references to the "shares" are references to the Company's issued common shares of par value Won 100 (US $0.10 at December 31, 2005 and US $0.10 at June 18, 2006).

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, 2003, 2004 and 2005. 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. 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, 2005, which was Won 1,010 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 August 16, 2006 the noon buying rate was Won 964.9 to US$1.00.

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, 2005 2004 and 2003 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, 2005, 2004, 2003, 2002 and 2001 are derived from the audited consolidated financial statements of Meridian, which have been audited by Choi, Kim and Park LLP, independent accountants (for the fiscal year ended December 31, 2005), by ShinHan Accounting Corporation, independent accountants (fiscal years ended December 31, 2004 and 2003), and by SamDuk Accounting Corporation, independent accountants(fiscal years ended December 31, 2002 and 2001).

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.

MERIDIAN CO., LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in Korean won)
For the years ended December 31, 2005, 2004, 2003 ,2002 and 2001

							2005 (in
	2001	2002	2003	2004	2005		USD)

Sales	6,950,483,154	4,373,897,866	3,441,119,294	2,204,234,179	1,434,519,243	$	1,420,316
Cost of sales	3,256,231,284	2,379,436,814	1,490,837,684	1,214,803,149	1,099,194,829		1,088,312
Gross profit	3,694,251,870	1,994,461,052	1,950,281,610	989,431,030	335,324,414		332,004
Operating expenses	5,250,941,100	3,892,035,837	3,460,603,690	2,461,664,811	2,293,172,188		2,270,468
Operating loss	-1,556,689,230	-1,897,574,785	-1,510,322,080	-1,472,233,781	-1,957,847,774		-1,938,464
Other income (expense)	-973,039,338	-1,710,582,785	-641,349,994	-584,913,576	-1,424,510,457		-1,410,406
Minority interest in net loss of consolidated
affiliates	25,362,828	0	0	-1,319,035	-32,951,097		-32,625
Income tax expense	0	0	0	0	0		0
Extraordinary items	-48,010,932	0	0	0	0
Comprehensive loss	-2,574,617,436	-3,608,157,570	-2,151,672,074	-2,055,828,322	-3,349,407,134	$	-3,316,245

Weighted average number of common shares	15,703,850	16,472,700	18,094,211	22,199,701	31,603,847		31,603,847

Basic and diluted loss per common share	-158	-219	-119	-93	-106	$	-0.105

CONDENSED CONSOLIDATED BALANCE SHEETS (in Korean won)
As of December 31, 2005, 2004, 2003, 2002, and 2001

	2001	2002	2003	2004	2005		2005 (in USD)

Cash and cash equivalents	136,086,374	159,825,975	37,292,198	42,131,238	22,967,573	$	22,740
Accounts receivable	2,276,152,481	1,315,325,521	548,485,869	586,411,194	368,228,192		364,583
Inventories	1,536,544,973	872,074,684	838,660,330	695,996,105	488,455,654		483,619
Other	1,390,300,235	390,455,377	38,011,479	188,614,870	1,749,446		1,732

Total current assets	5,339,084,063	2,737,681,558	1,462,449,876	1,513,153,407	881,400,865		872,674
Investments and other assets	560,886,790	236,392,746	168,381,226	160,639,557	49,430,432		48,941
Property, plant and equipment - net	1,882,278,553	1,793,937,704	1,542,335,583	1,491,667,506	23,804,073		23,569
Intangible assets	1,205,449	2,684,178	2,017,238	1,470,612	1,206,846		1,195

TOTAL ASSETS	7,783,454,855	4,770,696,185	3,175,183,923	3,166,931,082	955,842,216	$	946,378

Trade accounts payable and current debt	4,725,211,848	5,965,714,385	4,000,839,391	3,297,536,934	3,669,846,158	$	3,633,511
Long-term borrowings	3,321,985,374	1,732,840,047	3,774,904,609	4,591,176,207	5,072,442,624		5,022,220
Minority interest	8,527,386	-	0	19,936,965
Shareholders' equity	-272,269,754	-2,927,858,246	-4,600,560,077	-4,741,719,024	-7,786,446,566		-7,709,353

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY	7,783,454,855	4,770,696,185	3,175,183,923	3,166,931,082	955,842,216	$	946,378

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.

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

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

In February 2004, the Company received approval for a debt rescheduling plan for a total of 4,697,927,000 Won ($4,651,413) from the Chooncheon District Court, Korea, whereby a group of creditors of the Company and a representative of the Company agreed to reschedule the payments on 4,697,927,000 Won ($4,651,413) of the Company's debt.

In January 2005, Woori Bank exercised its security right on the apartment owned by the Company. The total amount of 42,836,799 Won obtained from disposition of the property was paid to Woori Bank: 30,271,035 Won for debt principal, 12,565,764 Won for debt interest and other expense for the disposition. After the disposition of this property, total amount in the debt rescheduling plan except 1,186,813 Won of accounts payable due to parties other than financial institutions was 3,480,843,000 Won.

In December 2005, Chohung Bank (Chohung Bank has been merged in Shinhan Bank as of April 1, 2006) exercised its security right on the land and building of the Company which it obtained before the execution of the debt rescheduling plan. From 883,307,581 Won ($874,561) obtained from disposition of the land and building, 423,186,652 Won was paid to pre-emptive creditors including accrued wages, and 460,120,929 Won was paid to Chochung Bank for the debt interest. The principal debt of 1,074,454,603 Won to Chohung Bank has been included in the debt rescheduling plan.

After the disposition of the land and building, total amount in the debt rescheduling plan except 1,186,813 Won of accounts payable due to parties other than financial institutions was 4,555,298,225 Won.

The total amount of debt including principals and interests in the rescheduling plan is summarized below:

Note: 1,186,813 Won of accounts payable due to parties other than financial institutions will be repaid over 3 years from January 2005 to December 2007 and will be exempt from paying any interest. The Company, however, has not paid 261,378,503 Won of accounts payable due to parties other than financial institutions which were due on December 31 2005.

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

The Company anticipates that losses may continue
For the year ended December 31, 2005 the Company had a net loss of 3,349,407,134 won ($3,316,245) and an accumulated deficit of 15,125,695,937 won ($14,975,937). The Company recognizes the possibility of incurring losses for the foreseeable future. The extent of future losses will depend, in part, on the amount of growth in revenues from the Company's products. The Company expects that operating costs will

increase during the next several years, especially in the areas of sales and marketing, product development and general and administrative expenses as it pursues its business strategy. Thus, the Company will need to generate increased revenues faster than the rate of growth in costs to achieve profitability. To the extent that increases in its operating expenses precede or are not subsequently followed by corresponding increases in revenues, or if it is unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition would be materially and adversely affected. There can be no assurance that the Company will sustain profitability or that its operating losses will not increase in the future.

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

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

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

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

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

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

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

Adequate Labor and Dependence Upon Key personnel; No Employment Agreements
The Company will depend upon recruiting and maintaining qualified personnel to staff its operations. The Company believes that such personnel are currently available at reasonable salaries and wages. There can be no assurance, however, that such personnel will always be available in the future. The continuing development of the Company's products has been almost entirely dependent on the skills of management

and certain key employees of the Company with which the Company has no employment agreements. Loss of the services of any of this management team and key employees could have a material adverse effect upon the Company.

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

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:

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:

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

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

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

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

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

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

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:

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. 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.

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

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

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

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

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

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

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

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

Pursuant to an Agreement and Plan of Reorganization (the Merger Agreement) dated February 6, 2001, The Company acquired all the outstanding shares of common stock of By George Holding, Corp. (By George), a Georgia corporation, from the shareholders thereof in an

exchange of an aggregate of 68,142 shares (equivalent to 1,703,550 post split shares) of common stock of the Company and other consideration of payments of certain fees and expenses. Immediately following the Acquisition, ABR Meridian (Georgia) Inc. (Subco), a Georgia corporation and a wholly-owned subsidiary of the Company, merged with By George (the Merger) in a transaction in which the Subco became the surviving corporation.

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

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

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

In February 2004, the Company received an approval for a debt rescheduling plan for a total of 4,697,927,000 Won ($4,651,413) from Chooncheon District Court, Korea. The adjusted period of payment is generally 7 years after 3 years of grace period.

B. Business Overview
Meridian is an established leader in the research, development, manufacturing, and marketing of integrative medical devices in the healthcare industry. Integrative medicine combines both Western and Eastern expertise in order to obtain the highest quality and standard. The Company has grown substantially and has established subsidiaries in China and Los Angeles and in 2004 signed an exclusive distribution agreement with a corporation in Vancouver, B.C., Canada. With over 27 million dollars in revenue to date, Meridian continues to expand and secure its position as a global leader of integrative medical devices.

With a dynamic research and development team, Meridian is at the forefront in the development of cutting edge medical technologies. The Company presently holds a total of 10 registered and pending patents, 2 utility model rights, 5 design rights and 10 trademarks and has received 4 FDA approvals for their medical devices. In order to distribute worldwide, Meridian has also gained 3 SDA approvals in China and 3 FIP approvals in South America. Successfully marketed in Korea, USA and China, Meridian continues to provide its superior product line to a growing number of clients worldwide. Meridian has over 1500 clients, which include physicians, hospitals, healthcare professionals, medical device manufacturers, and health and fitness centers.

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

The Company believes that blending together a combination of intrinsic medical knowledge with superior software and technology it can create high quality physiological monitoring applications that capitalize on the growing wellness market.

Meridian’s strength lies in the unique knowledge base and skills of our team who possess medical backgrounds, software engineering skills, and a sincere passion for preventative medicine that can improve the quality of one’s life.

During 2002, the Company completed the development of the Composition Corpulence Curer as an aid in the reduction of body fat.

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

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

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

As of December 31, 2005, the Company achieved more than $2.2 Million in sales to the U.S. market through its Los Angeles subsidiary and expects a further significant increase in sales to the United States in the next year.

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

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

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

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

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

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.

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

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

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.

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

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

It uses 2 multi-beam and 2 enhanced probes which irradiate a powerful cold red laser (635 – 680nm/ 30mW) on adipose (fat cell)

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

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

This product's target market includes anti-aging and wellness clinics, fitness centers, health spas etc. This product obtained the manufacturing approval in Korea in February 2004.

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

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

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

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

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

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

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

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

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

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

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

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

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

SOON WOON JANG, Director. (appointed as a director on March, 2006)
Mr. Jang graduated from Korea University in South Korea with Agriculture as his major. From 1988 to 19892 he was the Business Manager for Hyundai Department Store, subsidiary of KeumKang Development Industrial Co., Ltd. He established Samgong Distribution Co., Ltd., wholesale distributor, and had been a CEO of Samgong until 2003. From 2001 he has been a vice president of Korea E-commerce Association. On March 31, 2006, he was appointed a Director of Meridian.

SUNGPIL HONG, (Director resigned on March, 2006)
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 March 2006, he was the Senior Manager for Meridian. On March 29, 2003, he was appointed a Director of Meridian.

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

The Company signed the lease contract for its new factory in Seoul (3F, Poonglim Tech-One B/D, 273-10, Seongsu-dong 2ga, Seongdong-gu, Seoul, Korea). The Company's products are assembled from purchased and manufactured components at its factory Virtually all of the components making up the Company's products are readily available from outside domestic suppliers. Some of the components have been designed by the Company and/or are custom manufactured to its specifications.

In January 2005, the apartment owned by the Company was disposed to repay its debt to Woori Bank.

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

Year comparisons between 2005, 2004, and 2003
For the year ended December 31, 2005, the Company achieved sales revenues of 1,434,519,243 Won ($1,420,316) resulting in a gross margin of 335,324,414 Won ($ 332,004) compared with sales revenues of 2,204,234,179 Won that resulted in a gross margin of 989,431,030 Won for the year ended December 31, 2004 and sales revenues of 3,441,119,294 Won that resulted in a gross margin of 1,950,281,610 Won for the year ended December 31, 2003. Continues decline of sales revenue is due to the transition of the Company's target market and its products. Sales of the Company’s new products, LipoLaser and DPA was 56% of the total sales revenues in 2005 compared with 18% in 2004 and 6% in 2003. The Company's operating loss increased to 1,957,847,774 Won ($1,410,406) in 2005 from a loss of 1,472,233,781 Won in 2004 and from a loss of 1,510,322,080 Won in 2003. The increase in the operating loss in 2005 from 2004 and 2003 was due primarily to reduction in sales revenues and gross margin rate and relatively high operating expenses compared to the sales. Total selling, general and administrative expenses decreased only by 6.8% from 2004, in spite of the decreased sales revenue by 35%, was mainly due to bad debt expenses of 360,003,247 Won ($356,439) which was 0 Won in 2004. The Company spent 115,193,034 Won ($114,052) on research and development for the year ended December 31, 2005 as compared to 183,567,322 Won in 2004 and 57,378,180 Won in the year 2003. In the same period, working capital decreased to 2,788,445,239 Won ($2,760,837) in deficit in 2005 from working capital of 1,784,383,527 Won in deficit in 2004 and 2,538,389,515 Won in deficit in 2003.

The Company's sources of liquidity have historically been cash from operations, capital working lines of credit, debt and equity financing. The Company has generated revenues since 1998 but expanding the operations of the Company has required significant amounts of cash in excess of cash generated from operations. Therefore, the Company has continued to seek additional debt and equity financing opportunities. The Company's land and buildings were pledged as collateral for the Company's short-term and long-term borrowings. At December 31, 2004, the Company has a working capital deficiency of 2,788,445,239 Won ($2,760,837) (December 31, 2004 working capital deficit of 1,784,383,527 Won ( $1,766,716)).

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. In 2005, the Company spent 115,193,034 Won ($114,052) on research and development. The research and development expenses include labors (19,913,480 Won), mold development (8,000,000 Won), depreciation (15,586,817) and others. The research and development expenses were mostly spent for the LipoLaser development and enhancement.

Proprietary Technology and Other Intellectual Properties
The Company has 10 registered and pending patents, 2 utility model rights, 5 design rights and 10 trademarks at the Korea Industrial Property Office. The Company also has 1 pending patent under the Patent Cooperation Treaty. 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.

TECHNOLOGY DESCRIPTION	REGISTRATION NUMBER	DATE OF REGISTRATION

(PATENTS)
Diagnostic device using the electric features of the human body	130791	November - 97
Medicament energy information Transferring system	171667	October - 98
Automatic detection of meridians by probe device	210233	April - 99
Electrode clamp device for home 99 treatment	236276	September - 99
Electrode ring device for home 99 treatment	236277	September - 99
Pulse formation analysis device	0368021	December - 02
Laser beam irradiation device	0457964	January - 03
Lipolytic low laser device (pending)	2005-17330	March – 05
Remote Bio-monitoring system (pending) 2005-45139	2005-45139	May - 05
Adipose Resolve Apparatus for Low-Power LASER (pending)	2006-155778	March – 06
Adipose Resolve Apparatus for Low-Power LASER (pending)	PCT – KR20061000694	May – 06

(UTILITY MODEL)
Acupoint measuring device with pressure control	144725	February - 99
Acupoint measuring device with Pressure display	169502	November - 99

(DESIGN)
Diagnostic probe	165377	June - 95

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.

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

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.

**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. On October 31, 2005, all employees other than Mr. Myeong, Hyeon Sung, CEO, were terminated and rehired on November 1, 2005. As a result, accrued severance benefits as of December 31, 2005 is 50,530,967 Won which represents the retirement allowance for the CEO. See “Accrued severance benefits” in Note 1.

*Hyeon Seong Myeong was granted options for 4,130 shares of the Company's common stock at the price of $0.88 in February 2000 and for 2,218 shares at the price of 680 Won (approximately $0.67) in March 2001. Sang Yeul Park was granted options for 3,097 shares at the price of 1,000 Won in February 2000 and for 1,849 shares at the price of 680 Won in March 2001.

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

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

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

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

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.

The following table sets forth certain information regarding the beneficial ownership of the common stock of the Company as of December 31, 2005, 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:

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

On June 20, 2005, the Company issued 2,400,000 shares of common stock (par value won 100) in exchange for investor relations, marketing, and business management consulting services with the fair value to the Company of won 483,936,000. The shares issued were valued at the trading price of the company's common stock as of the date of authorization for the issuance.

A. MAJOR SHAREHOLDERS The following table sets forth information with respect to the beneficial ownership of our shares as of December 31, 2005 and June 30, 2006), by each person known to us to own beneficially more than five percent (5%) of our shares.

Name and address	Amount Stock	Percentage of Class	Percentage of Class	Number of
	Beneficially Owned	of Dec.31, 2005	of June 30,2006	Stock Option Held

Terasource Funds
including:
Terasource Kosdaq Venture Investment
(2,066,700 common shares);.	5,470,600 common shares	17.43%	17.43%	Nil
Terasource Venture Investment Capital
(403,900 common shares);
Terasource Venture Capital Fund 2
(1,070,270 common shares);
Terasource Venture Capital Fund 3
(1,551,350 common shares);
Terasource Venture Capital Fund 4
(378,380 common shares)
8FR Dongshin Bldg. 141-30
Samseong-dong, Kangnam-gu Seoul, Korea


The Hong Group of Companies
including:
Serome Investment Co. Ltd. (1,085,675shares),
151-7 Samseong-Dong ;	3,325,900 common shares	10.59%	10.59%	Nil
Kangnam-Gu Seoul Korea
Mok-Won Assets Management Co. Ltd
(1,375,000 shares),2004 Ho, Anam tower 702-10
Yuksam-dong Kangnam-ku, Seoul, Korea;
Bio & Medical Research Co. Ltd. (524,425 shares),
702-10 Yuksam-dong, Kangnam-ku, Seoul, Korea;
Ki-tae Hong (127,800 shares) and Hye-sook Lee
(213,000 shares)151-7 Samseong-Dong, Kangnam-Gu,
Seoul, Korea

Hsiu Chen Cheng.	1,850,000 common shares	5.89%	5.89%	Nil
12F, No. 388 Chun Shan E. Rd.,
Taipei, Taiwan

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 or on behalf of that shareholder and all other similarly situated shareholders to recover damages or for other relief in cases of the resolution of conflicts in any manner prejudicial to the Company.

The transactions between the Company and its subsidiaries are disclosed in the Note 14 to the consolidated financial statements.

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

Legal Proceedings
On February 27, 2004, the Company received approval for a debt rescheduling plan for a total of 4,697,927,000 Won ($4,651,413) from the Chooncheon District Court, Korea, whereby a group of creditors of the Company and a representative of the Company agreed to reschedule the payments on 4,697,927,000 Won ($4,651,413) of the Company's debt. An application for the rescheduling plan was subsequently filed with Chooncheon District Court and approved by the court on the same day.

Dividend Policy
We intend to retain any earnings for use in our business. We do not intend to pay dividends on our shares for the foreseeable future. Dividends, if any, on the outstanding shares are recommended by the board of directors and must be approved at our annual general meeting of shareholders. This meeting is generally held in March each year, and the dividend in respect of the preceding year is generally paid shortly thereafter. The declaration of dividends is subject to the discretion of the shareholders, and consequently, no assurance can be given to the amount of dividends per share or that any such dividends will be declared. Future cash dividends, if any, will also depend upon our future

operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors as may deem relevant. Loan agreements and contractual arrangements entered into by Meridian may also restrict distributions of dividends.

B. Significant Changes
At an extraordinary general meeting of shareholders of the Company, on April 27, 2004, it was approved that the par value of the common stock of the Company be reduced from 200 Korean Won per share (equivalent to US$0.20 per share) to 100 Korean Won per share (equivalent to US$0.10 per share). The new par value was registered with the Korean registrar of companies on June 1, 2004 and will be effective as of July 1, 2004.

The Company received funds of US$530,000.00 from investors through an equity financing whereby, on June 8, 2004 the Company issued 3,312,500 shares of common stock ($ 0.16 per share). Share issue costs of $ 26,500 were paid in connection with the financing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dividend to be declared in Won
The Company currently is not in the position to pay dividends on its shares for the foreseeable future. However, if the Company declares cash

dividends, such dividends will be declared in Won. In order for the Company to pay such dividends outside Korea, such dividends will be converted into Dollars and remitted to the shareholders, subject to certain conditions. The Company will convert dividend amount in foreign currency and remit them to shareholders abroad. No governmental approval is required for foreign investors to receive dividends. However, in order for the Company to convert the Won amount in foreign currency and to remit such amount abroad, relevant documents must be submitted to the foreign exchange bank to verify (i) that the amount being paid conforms to the amount required to be paid and (ii) whether all necessary legal procedures have been completed.

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

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

Distribution of free shares representing a transfer of certain capital reserves or asset revaluation reserves into paid-in capital may be treated as dividends subject to Korean tax. However, stock splits, if any, will not be treated as dividends.

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

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

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

total issued and outstanding shares at any time during the five years before the year within which the transfer occurs and the non-resident holder did not sell such shares through a securities broker in Korea.

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

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

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

Market Risk Disclosure
Market risk generally represents the risk that losses may occur in the value of financial instruments as a result of movements in market rates of

interest and foreign exchange. The Company's primary market risk exposures are fluctuations in exchange rates, interest rates and equity prices. The Company is exposed to foreign exchange risk related to export sales denominated in foreign currency. All of the Company's export sales are denominated in U.S. Dollars, regardless of the currencies of the countries/regions in which the purchasers are located. For the year ended December 31, 2005, the Company had an aggregate 610,103,000 Won export sales, accounting for 43% 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, 2005, 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, 2005, the Company estimates that the payment receivable from its overseas customers will decrease by approximately 61,010,300 Won in 2005. The Company is exposed to interest rate risk due to significant amounts of short-term and long-term debt. Upward fluctuations in interest rates increase the cost of additional debt. However, as of December 31, 2005, 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.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
The Company currently has the default tax payment of 303,958,480 Won ($300,940) and interest payment of 271,168,545 Won ($268,483) to the federal tax office.

The details of the debt restructuring of the Company, which is disclosed in Item 8. and Note 1 to the consolidated financial statements in this report, were reported in the form 6-K filed on March 28, 2004.

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

ITEM 15. Controls and Procedures
Based on their evaluation as of December 31, 2005, the principal executive officers and directors of the Company have concluded that the disclosure controls and procedures of the Company as defined in 240.13a -15(c) and 240.15d -15(c) of the Securities Exchange Act of 1934 (the Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission's rules and forms.

There were no significant changes in internal controls or in other factors of the Company that could significantly affect these controls subsequent to the date of their evaluation and up to the filing date of this Annual Report on Form 20-F. There were no significant deficiencies or material weaknesses, and therefore no corrective actions were taken or may occur and not be detected.

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

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

Item 16C. Principal Accountant Fees and Services
(a)Audit Fees: For the fiscal year 2004, The Company was charged 29,828,199 Won ( $29,532) by the former auditors for the audit of the Company's annual financial statements or services normally provided in connection with statutory and regulatory filings for the fiscal year 2004.

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

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

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

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

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

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

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

We have audited the accompanying consolidated balance sheet of Meridian Co., LTD., and subsidiaries (the “Company”) as of December 31, 2005, and the related consolidated statements of operations and comprehensive loss, shareholders’ deficiency, and cash flows for the year ended December 31, 2005. Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Meridian Co., LTD. and subsidiaries as of December 31, 2005, and the results of their operations and cash flows for the year ended December 31, 2005, 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's significant operating losses and working capital deficit raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of M eridian Co., Ltd. and its subsidiary at December 31, 2004 and 2003, and the consolidated results of their operations, the changes in shar eholder’s equity and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. gener ally accepted accounting principles.

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

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

The Company has observed SEC regulations and U.S generally accepted accounting principles in the process of issuance of shares. How ever, as discussed in Note 15 to the consolidated financial statements, accounting principles. generally accepted in Korea vary in this res pect from U.S. generally accepted accounting principles.

Except for the 12,485,069 common shares issued through S-8 registrations, for acquisition of By George Holdings. and the October 21, 2004 shares for debt, which have not been included in the Korean Commercial Registration Office due to the different share issuance re quirements between the US and Korean Commercial Laws.

As discussed in Note 27 to the consolidated financial statements, after the issuance of our report on such consolidated financial stateme nts, management discovered certain errors in cash flows statement and revenue recognition policy in the note 2. As a result of correctin g action by managements, the Company revised cash flow statement and accounting policy for revenue recognition. There were no inco me effects in the consolidated financial statements as a result of the adjustments to correct these errors.

/s/ SHINHAN ACCOUNTING CORPORATION
Certified Public Accountant
Republic of Korea
May 13, 2005, except for Note 25 and 27, as to which the date is June 20, 2005 and Sep 16, 2005, respectively

Meridian Co., Ltd.
Consolidated Balance Sheets
As of December 31, 2004 and 2005
(in Korean Won)

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

(Continued)
Meridian Co., Ltd.
Consolidated Balance Sheets
As of December 31, 2004 and 2005
(in Korean Won)

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

Meridian Co., Ltd.
Consolidated Statements of Operations
For the Years Ended December 31, 2003, 2004 and 2005
(in Korean Won)

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

Meridian Co., Ltd.
Consolidated Statement of Changes in Shareholders' Deficiency
For the Years Ended December 31, 2003, 2004 and 2005
(in Korean Won)

									Accumulated
	Common Stock Issued				Additional				Other
					Paid-in		Accumulated		Comprehensive
	Shares		Amount		Capital		Deficit		Income (Loss)		Total

Balance at December 31, 2002	17,182,583		3,436,516,600		982,908,797		-7,256,492,304		-31,974,847		-2,869,041,754
Issuance of common shares	1,968,901		393,780,200								393,780,200
Net income (loss)							-2,151,672,074				-2,151,672,074
Other comprehensive income (loss)
Foreign currency translation gain (loss)									26,373,551		26,373,551


Balance at December 31, 2003	19,151,484		3,830,296,800		982,908,797		-9,408,164,378		-5,601,296		-4,600,560,077
Reduction of capital stock			-1,915,148,400		1,915,148,400						-
Issuance of common shares	10,842,500		1,084,250,000		826,853,065						1,911,103,065
Net income (loss)							-2,055,828,322				-2,055,828,322
Other comprehensive income (loss)
Foreign currency translation gain (loss)									3,566,310		3,566,310


Balance at December 31, 2004	29,993,984		2,999,398,400		3,724,910,262		-11,463,992,700		-2,034,986		-4,741,719,024
Issuance of common shares	2,400,000		240,000,000		243,936,000						483,936,000
Return to treasury of shares of common stock	-1,000,000		-100,000,000		-70,656,000
Capital transaction by an equity method investee					31,710,324
Net income (loss)							-3,349,407,134				-3,349,407,134
Losses in excess of minority interests							-44,687,166
Other comprehensive income (loss)
Foreign currency translation gain (loss)									4,376,434		4,376,434

Balance at December 31, 2005	31,393,984		3,139,398,400		3,929,900,586		-14,858,087,000		2,341,448		-7,786,446,566




Balance at December 31, 2004	29,993,984	$	2,969,701	$	3,688,030	$	-11,350,488	$	-2,015	$	-4,694,772
Issuance of common shares	2,400,000		237,624		241,521						479,145
Return to treasury of shares of common stock	-1,000,000		-99,010		-69,956
Capital transaction by an equity method investee					31,396
Net income (loss)							-3,316,245				-3,316,245
Losses in excess of minority interests							-44,245
Other comprehensive income (loss)
Foreign currency translation gain (loss)									4,333		4,333

Balance at December 31, 2005	31,393,984	$	3,108,315	$	3,890,991	$	-14,710,978	$	2,318	$	-7,709,354

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

Meridian Co., Ltd.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2003, 2004 and 2005
(in Korean Won)

					(Note 3)
	2003	2004	2005		2005(in USD)
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income (loss)	-2,151,672,074	-2,055,828,322	-3,349,407,134	$	(3,316,245	)
Add (deduct) items not using (providing) cash
Depreciation	153,923,984	61,790,155	25,150,457		24,901
Provision for severance benefits	75,101,496	51,222,136	4,900,000		4,851
Provision for doubtful accounts	1,464,577,793	-16,629,671	541,642,061		536,279
Inventory write-down due to decline in market value	4,992,000	98,491,235	374,812,608		371,102
Amortization of intangible assets	546,626	546,626	263,766		261
Loss on disposal of property, plant and equipment	-	-	502,195,617		497,223
Equity in loss(gain) of investee	25,910,007	2,002,543	-14,071,478		-13,932
Service fee paid with issuance of stock	-	563,164,800	483,936,000		479,145
Cancellation of service fee paid with issuance of stock	-	-	-170,656,000		-168,966
Other	-	51,011,409	-30,392,479		-30,092
Changes in operating assets and liabilities, and other
Decrease (increase) in accounts receivable - trade	-301,663,358	-41,181,993	-167,706,466		-166,046
Decrease (increase) in accounts receivable - other	-1,362,740	-7,443,975	-11,706,247		-11,590
Decrease (increase) in inventory	-10,754,100	44,172,990	-167,272,157		-165,616
Decrease (increase) in other current assets	10,636,649	-150,603,391	186,865,424		185,015
Increase (decrease) in accounts payable - trade	36,902,587	93,059,052	75,200,190		74,456
Increase (decrease) in accounts payable - other	282,868,152	199,035,446	72,520,041		71,802
Increase (decrease) in other current liabilities	-166,687,764	158,039,246	756,994,548		749,500
Retirement and severance payment	-73,901,562	-38,261,718	-228,746,293		-226,481
Other	96,376,231	11,124,550	6,978,190		6,909
Sub-total	1,597,466,001	1,079,539,440	2,240,907,782		2,218,721

	-554,206,073	-976,288,882	-1,108,499,352		-1,097,524

CASH FLOWS FROM INVESTING ACTIVITIES :
Decrease in short-term financial instruments	222,500,000	-	-		-
Decrease in short-term loans	23,500,000	28,783,968	-		-
Decrease in long-term financial instruments	-	-	41,084,873		40678
Proceeds from sales of investment securities	2,612,000	-	-		-
Proceeds from sales of property, plant and equipment	28,171,609	3,442,824	946,751,152		937377
Increase in short-term loans	-384,608,871	-1,453,654	-144,046,346		-142620
Acquisition of property, plant and equipment	-11,084,762	-14,564,902	-6,233,793		-6172
Cash held by former subsidiaries	6,461,718	-	-		-
Changes in investments and other assets	26,295,681	-1,492,414	86,050,836		85199

	-86,152,625	14,715,822	923,606,722		914,462


CASH FLOWS FROM FINANCING ACTIVITIES :
Proceeds from issuance of common stocks	393,780,200	607,804,000	-		-
Proceeds from issuance of short-term borrowings	1,414,254,438	756,898,530	196,000,000		194059
Repayment of short-term borrowings	-849,898,501	-398,290,430	-		-
Repayment of current portion of long-term debt	-142,068,662	-	-		-
Repayment of long-term borrowings	-291,062,577	-	-30,271,035		-29971

	525,004,898	966,412,100	165,728,965		164,088


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT	-115,353,800	4,839,040	-19,163,665		-18,974

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR	152,645,998	37,292,198	42,131,238		41,714

CASH AND CASH EQUIVALENTS AT END OF THE YEAR	37,292,198	42,131,238	22,967,573	$	22,740

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

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

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

For the fiscal year ended December 31, 2005, the Company incurred a net loss of (WON) 3,349,407 thousand ((WON) 2,055,828 thousand for 2004 and (WON) 2,151,672 thousand for 2003) and net negative cash flow from operating activities of (WON) 1,108,499 thousand ((WON) 976,289 thousand for 2004 and (WON) 554,206 thousand for 2003). On August 4, 2003, the Company's banking privileges were suspended on its accounts of credit/bill by the KFTC (Korea Financial Telecommunications & Clearings Institute), which was established as a non-profit organization to build up and operate the Financial Information Network Systems (FINS) by integrating the Korea Clearing & Credit Reporting Center in charge of check clearing systems and the Korea Bank Giro Center in charge of bank giro systems.

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

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

The Company, however, has not paid 261,378,503 Won of accounts payable due to parties other than financial institutions and 271,168,545 Won of interest payment to financial institutions which were due on December 31 2005.

In January 2005, Woori Bank exercised its security right on the apartment owned by the Company. The total amount of (Won) 42,836,799 obtained from disposition of the property was paid to Woori Bank: (Won) 30,271,035 for debt principal, (Won) 12,565,764 for debt interest and other expense for the disposition.

In December 2005, Chohung Bank (Chohung Bank has been merged in Shinhan Bank as of April 1, 2006) exercised its security right on the land and building of the Company which it obtained before the execution of the debt rescheduling plan. Of the (Won) 883,307,581 obtained from disposition of the land and building, (Won) 423,186,652 was paid to pre-emptive creditors and (Won) 460,120,929 was paid to Chochung Bank for the debt interest. The principal debt of (Won) 1,074,454,603 to Chohung Bank has been included in the debt rescheduling plan.

The total amount of debt including principals and interests in the rescheduling plan is summarized below:

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

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

The Company had realized that the growth of its revenue would be difficult in its existing market and planned to develop new markets with new products. In February 2004, the Company received approval for a debt rescheduling plan and as a result, the Company was able secure fund by raising capital to develop new product. In October 2005, the Company introduced its new product, LipoLaser, in the market.

It has been only few months after it was introduced, but LipoLaser is already gaining its reputation in domestic market and attracting attention from many countries. LipoLaser is in the process for FDA clearance and expected to be cleared in the 4th quarter of 2006. The Company already started to sell LipoLaser in North American market through IRB (Institutional Review Board).

Digital Pulse Analyzer (DPA) was developed in 2002, but it was first recognized in the North American market from 2004. In 2004 and 2005, the Company sold average 200 units of DPA annually in US market and started to sell in domestic market in 2006.

With its new products, LipoLaser, and DPA, the Company targets (Won) 5,000,000,000 in Sales and (Won) 2,000,000,000 in net profit from the second half of 2006, and this will release the Company from cash flow pressure from 2007.

Despite the continuous decline in sales, the Company has been changing its business strategy. In the first half of 2006, sales of LipoLaser and DPA contribute more than 90% of the total sales revenue. However, since the size of new product sales is not large enough and the Company still lacks the experience on the new markets, there is no assurance that the Company will achieve its goal.

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

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

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated.

The consolidated financial statements include the accounts of the Company and its subsidiaries. The following table reflects the Company's ownership percentages and acquisition dates of its consolidated subsidiaries as at December 31, 2003, 2004 and 2005:

On February 15, 2005, in the increase of capital of Meridian America Medicals, Inc, the Company waived its right to take over the new stock. As a result of this transaction, the Company’s ownership was decreased from 95.06% to 75.76% .

On September 29, 2005, the Company acquired 100.00% of the share ownership in Rapha & Health Co., Ltd for (WON) 50,000,000 in cash.

On June 7 2006, Rapha & Health Co., Ltd changed its company name to, Meitian Co.

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

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

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

The Company generates revenue principally through the sale of alternative medical equipment products & merchandises. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss have been transferred to the customer, the sales price is fixed or determinable, and collectibility is probable.

Revenue from sales of products is recognized when the products are received by customers based on the free-on board destination sales term. With regards to sales of alternative medical equipment products, The Company’s policy is not to accept product returns unless the products are defective. The conditions of acceptance are governed by the terms of the contract or customer arrangement and those not meeting the predetermined specification are not recorded as revenue.

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

Long-term financial instruments are time deposits handled by financial institutions, which are restricted for withdrawals. The time deposit as of December 31, 2004 and 2005 is (WON) 40,454 thousand and nil, respectively. In addition, the Company has special deposit for the security of its checking account which is not being used as of December 31, 2005.

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

Under the Korean Value-Added Tax ("VAT") law, the Company pays a 10% VAT on each purchase of VAT-taxable goods or services("input tax") and collects VAT from its customers equal to 10% of revenue("output tax"). The net amount is recorded as prepaid VAT, if the input tax is greater than the output tax, or VAT payable if the output tax is greater than the input tax.

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling cost. The cost of inventories is determined on the average cost method.

Investments in affiliated companies owned 20% or more or over which the Company has significant management control are stated at an

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

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

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash. The Company maintains cash accounts at seven financial institutions. The Company periodically evaluates the credit worthiness of financial institutions, and maintains cash accounts only in large high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. The Company believes that credit risk associated with cash is remote. There are certain amounts included in cash which are restricted in use for pledging to Hongchun Tax Collector’s Office as of December 31, 2005

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

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

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

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

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

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

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

On October 31, 2005, all employees other than Mr. Myeong, Hyeon Sung, CEO, were terminated and rehired on November 1, 2005. As a result,

accrued severance benefits as of December 31, 2005 is (WON)50,530,967 which represents the retirement allowance for the CEO.

The Company includes shipping and handling costs in selling, general and administrative costs. Shipping and handling costs for the years ended December 31, 2003, 2004 and 2005, amounted to (WON) 9,754 thousand, (WON) 12,870 thousand and (WON) 12,180 thousand, respectively.

Certain costs incurred in connection with the purchase of equipment and facilities used in the Company’s research and development activities are capitalized into property, plant and equipment, to the extent that they have alternative future uses. However, all other research and development costs are expensed as incurred. The Company has expensed (WON) 57,378 thousand, (WON) 183,567 thousand and (WON) 100,202 thousand during the years ended December 31, 2003, 2004 and 2005, respectively.

The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2003, 2004 and 2005 are (WON) 53,042thousand, (WON) 30,749 thousand and (WON) 40,266 thousand, respectively.

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

Other comprehensive income refers to revenues, expenses, gains and losses that, under accounting principles generally accepted in the United States of America are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity. The Company’s other comprehensive income is primarily comprised of foreign currency translation gain (loss).

The Company applies FASB No. 52, Foreign Currency Translation, for translating foreign currency into Korean WON in our consolidation of the financial statements. Upon consolidation of the Company’s foreign subsidiaries into the Company’s consolidated financial statements, any balances with the subsidiaries denominated in the foreign currency are translated at the exchange rate at year end. The financial statements of Meridian America Medical Inc. (‘MAMI”) have been translated based upon US Dollar as the functional currency. MAMI’s assets and liabilities were translated using the exchange rate at year end and income and expense items were translated at the average exchange rate for the year. The resulting translation adjustment was included in other comprehensive income (loss).

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

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

Outstanding stock options are not included in the calculation of diluted loss per share as their effect would be anti-dilutive.

The Company applies the intrinsic value-based method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to

Employees,” and related interpretations, in accounting for its fixed stock option plan. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS 123 "Accounting for Stock-Based Compensation" established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS 123, the Company elected to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirement of SFAS 123.

The Company has adopted the disclosure-only provisions of SFAS 123. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date consistent with the provisions of SFAS123, the Company's net loss and loss per share for 2004 would have been increased to the pro forma amounts indicated below (in Korean WON):

The fair value of stock options granted were estimated on the dates of grant using the Black-Scholes option pricing model with the following assumptions: dividend yield and expected volatility of nil for all years, risk-free interest rate of 5.64% to 9% and expected lives of 4 years. The weighted average fair value per stock option granted during 2000 and 2001 was (WON) 295 and (WON) 607 respectively.

In December 2004, the FASB issued Statement No. 123R (SFAS 123R) – “Share-Based Payment”, which replaces SFAS 123 and APB 25 and requires the Company to measure compensation cost for all share-based payments at fair value. The Company plans to adopt SFAS 123R from January 1, 2006.

In November 2004, the FASB issued SFAS No. 151 “Inventory Costs - An Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company is currently evaluating the effect that the adoption of SFAS 151 will have on its results of operations and financial condition but does not expect it to have a material impact.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes” (“SFAS 154”), and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements” (“FASB 3”). The new statement changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

The Company operates primarily in Korea and its financial accounting records are maintained in Korean WON. These translations should not be construed as a representation that the Korean WON amounts shown could be converted, realized or settled in US dollars at this or any other rate. The US dollar amounts are provided herein as supplemental information solely for the convenience of the reader. Korean WON amounts are expressed in US dollars at the rate of (WON) 1,010.0: US$1, the US Federal Reserve Bank of New York noon buying exchange rate in effect on December 31, 2005. The US dollar amounts are unaudited and are not presented in accordance with generally accepted accounting principles in either Korea or the United States of America.

Short-term loans receivable as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

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

The following table presents accounts receivable as at December 31, 2004 and 2005 (in thousands of Korean WON):

Inventories are comprised of the following as at December 31, 2004 and 2005 (in thousands of Korean WON):

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

Other current assets as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

The Company accounts for investments in which it exerts significant influence over using the equity method. The Company’ ownerships as of December 31, 2004 and 2005 are as follows:

On November 10, 2001, the Company acquired 45% of the share ownership in Beijing Meridian Medicals Equipment Co., Ltd. ("Beijing Meridian") for (WON) 76,955,623 in cash. The changes of ownership percentage occurred in 2003 and 2002 when Beijing Meridian increased its issued capital stock. The carrying amounts of investments as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

Property, plant and equipment are comprised of the following at December 31, 2004 and 2005 (in thousands of Korean WON):

Depreciation expenses for the years ended December 31, 2003, 2004 and 2005 are (WON) 153,924 thousand, (WON) 61,790 thousand and (WON) 25,150 thousand.

In December 2005, Chohung Bank (Chohung Bank has been merged in Shinhan Bank as of April 1, 2006) exercised its security right on the land and building of the Company which it obtained before the execution of the debt rescheduling plan. Of the (Won) 883,307,581 obtained from disposition of the land and building, (Won) 423,186,652 was paid to pre-emptive creditors and (Won) 460,120,929 was paid to Chochung Bank for the debt interest. The principal debt of 1,074,454,603 Won to Chohung Bank has been included in the debt rescheduling plan.

Intangible assets are comprised of the following at December 31, 2005 and 2004 (in thousands of Korean WON):

Amortization expenses for the years ended December 31, 2003, 2004 and 2005 are (WON) 547 thousand, (WON) 547 thousand and (WON) 264 thousand.

Details of Company’s short-term borrowings as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

Details of Company’s long-term borrowings as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

Creditor	Annual	Final maturity	2004	2005
	interest rate

Chohung Bank (Note a)	3.5 %	December 31, 2013	96,741	1,074,455
Korea Technology Credit	3.5 %	December 31, 2013	1,151,884	1,151,884
Guarantee Fund
Korea Foreign Exchange	3.5 %	December 31, 2013	125,831	125,831
Bank
Woori Bank	3.5 %	December 31, 2013	391,787	361,516
Small Business	3.5 %	December 31, 2013	300,000	300,000
Corporation
Shinhan Bank	3.5 %	December 31, 2013	41,612	41,612
SMI [ ] ABS Specialty	3.5 %	December 31, 2013	1,000,000	1,000,000
Co., Ltd. (Note b)
Rainbow Specialty Sec	3.5 %	December 31, 2013	500,000	500,000
Co., Ltd. (Note b)

Less portion due within			( 96,741)	-
one year
Long-term portion			3,511,114	4,555,298

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

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

The repayment schedule for long-term debts as of December 31, 2005 is as follows (in thousands of Korean WON):

Changes in accrued severance benefits for the years ended December 31, 2004 and 2005 are summarized as follows (in Korean WON):

The Company’s capital stock consists entirely of common stock with a par value of (WON) 100 and the number of authorized, issued and outstanding shares as of December 31, 2004 and 2005 are as follows (in Korean WON):

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

On June 20, 2005, the Company issued 2,400,000 shares of common stock (par value WON 100) in exchange for investor relations and marketing services with the fair value to the Company of WON 483,936,000. The shares issued were valued at the trading price of the company's common stock as of the date of authorization for the issuance.

The Company has legally issued its shares and complied with the filing requirements pursuant to the SEC regulations. Except for the 13,885,159 common shares issued through S-8 registrations, for acquisition of By George Holdings. and the October 21, 2004 shares for debt, which have not been included in the Korean Commercial Registration Office due to the different share issuance requirements between the US and Korean Commercial Laws. The numbers of outstanding shares and capital stock as of December 31, 2005 in SEC and in Korean Commercial Registration Office are as follows (in thousands of Korean WON, except for number of outstanding shares):

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

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

Details of selling, general and administrative expenses for the years ended December 31, 2004 and 2005 are as follows (in Korean WON):

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

The Company is subject to corporate income tax and resident surtax normally at an aggregate rate of 14.3% on taxable income up to (WON) 100,000,000 and 27.5% on taxable income over that amount. However, there were no income taxes-current because the Company had net losses for income tax purposes for the years ending December 31, 2003, 2004 and 2005.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets (liabilities) as of December 31, 2004 and 2005 are as follows (in thousands of Korean WON):

As of December 31, 2005, the Company has net operating loss carryforwards for income tax purposes, tax credit carryforwards and deductible accumulated temporary differences as showed above table. Realization of the future tax benefits related to the deferred tax asset is dependent on many factors, including the Company’s ability to generate taxable income within the period during which the temporary differences reserves, the outlook for the Korean economic environment and the overall future industry outlook. Management periodically considers these factors in reaching its conclusion and has determined that valuation allowance was required as of December 31, 2005 and 2004. Therefore, the management concluded that 100% of valuation allowance is recorded in the Company’s financial statements with the reason for the remote possibility to generate future taxable income within the period during which the all temporary differences reserve due to the continuing loss from its inception.

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

Stock options granted under the Stock Option Plan will have a minimum exercise price equal to the arithmetic mean of (i) the weighted average of the daily market prices for the two-month period prior to the date of grant, (ii) the weighted average of the daily market prices for the one-month period prior to such date, (iii) the weighted average of the daily market prices for the one-week period prior to such date. When new

shares are issued upon the exercise of the stock options, the option exercise price shall not be less than the greater of the market price of shares valued as of the date of the grant or the par value of the shares concerned.

Details of stock option rights granted by the Company as of December 31, 2005, are presented below (in Korean WON):

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

Diluted earnings (loss) per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during the period. The Company has potentially dilutive common shares as of December 31 2004 and 2005, however there were no dilutive effects as of December 31, 2003, 2004 and 2005. Therefore, earnings per share is the same as diluted earnings per share.

Earnings (loss) per share for the years ended December 31, 2003, 2004 and 2005 are calculated as follows (in thousands of Korean WON, except for per share amount and number of shares):

Significant transactions and account balances which occurred in the normal course of business with related companies, Beijing Meridian Medicals Equipment Co., Ltd and Meridian Asia Co., Ltd. as of and for the years ended December 31, 2004 and 2005 are summarized as follows (in thousands of Korean WON):

Significant non-cash investing and financing activities for the year ended December 31, 2005 are summarized as follows (in thousands of Korean WON):

Interest and income taxes paid and received in cash for the years ended December 31, 2003, 2004 and 2005 are as follows (in thousands of Korean WON):

In 2005, the Company operated in a one industry segment, the development and manufacture of alternative medical equipments. The Company's identifiable assets are located in one geographic area, the Republic of Korea (also known as South Korea). Sales revenue is attributable to geographic locations based on the location of the customer, as follows (in thousands of Korean WON):

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

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

By: /s/ Hyeon Seong Myeong
Name: Myeong, Hyeon Seong
Title: President, CEO, Director
Date: August 18 , 2006

	AT DECEMBER 31		ANNUAL	ANNUAL
YEAR	(Dec. 30 in 2005)	ANNUAL AVERAGE RATE PER $1.00 US	HIGH	LOW
2001	1314	1293.4	1369	1234.0
2002	1186	1242.1	1332	1160.6
2003	1192	1193.0	1262	1146.0
2004	1035.1	1139.3	1195.1	1035.1
2005	1010	1023.8	1059.8	997

							(in Korean Won)
	2007	2008	2009	2010	2011	2012	2013	Total
Principal	650,756,889	650,756,889	650,756,889	650,756,889	650,756,889	650,756,889	650,756,891	4,555,298,225
Interest	159,435,438	136,658,947	113,882,456	91,105,965	68,329,473	45,552,982	22,776,491	637,741,752
Total	810,192,327	787,415,836	764,639,345	741,862,854	719,086,362	696,309,871	673,533,382	5,193,039,977

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

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

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

	NAME OF EACH EXCHANGE
TITLE OF EACH CLASS	ON WHICH REGISTERED

-	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.

-	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)

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

Electrode for self-treatment	228575	September – 98
Electrode for self-treatment	228576	September - 98
Electrode holder for laser treatment	0302314	June - 02
Electrode for laser treatment	0302315	June - 02

(TRADEMARK)
BRIEF	345494	August - 96
BRD	409677	July - 98
Lapex	500915	September - 01
Biomeridian	0522196	June - 02
Pulsecare	0538120	December - 02
Mcview	0531965	October - 02
McPulse (pending)	2002-29908	June - 02
Hemoscope (pending)	2001-38478	August - 01
Pulseview (pending)	2001-21430	May - 01
Pulsetron (pending)	2001-21431	May - 01

REGION	REGULATION	PRODUCTS APPROVED

Korea	KFDA	Meridian-II, ABR-2000, Lapex–2000, Digital Pulse Analyzer, Venus 21C , LipoLaser
China	SDA	Meridian-II, ABR – 2000, Lapex-2000
U.S.A	FDA	Meridian-II, Lapex-2000, ABR-2000, Digital Pulse Analyzer
South America	FIP	Meridian-II, ABR - 2000, Lapex-2000
International	ISO13485:2003	Quality Assurance System for DPA and Laser Therapy Device

	Payments due (by period)
		Less than			more than
Contractual Obligations	Total	one year	1-3 years	3-5 years	5 years
Long-term debt obligations *	(won) 3,055,298,225		872,942,350	872,942,350	1,309,413,525
Debentures	(won) 1,500,000,000	-	428,571,428	428,571,428	642,857,144
Long-term accounts payable	(won) 466,613,432	-	466,613,432	-	-
Accrued severance benefits	(won) 50,530,967	50,530,967* *	unknown* *	unknown**	unknown* *

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

Myeong, Hyeon-Seong	2001	45,500	Nil	Nil	Stock Option
(Director,	2002	47,541	Nil	Nil	Nil
President, CEO)	2003	49,329	Nil	Nil	Nil
	2004	51,342	Nil	NIl	Nil
	2005	58,217

Park, In Beom	2005	19,196	Nil	Nil	Nil
(Director, General Manager)

Hong, Sung Phil	2003	39,262	Nil	Nil	Nil
(Director and Vice President	2004	40,865	Nil	Nil	Nil
of Sales, resigned on March,06)	2005	23,168

Min, Jae -Ki	2002	Nil	Nil	Nil	Nil
(Statutory Auditor)	2003	Nil	Nil	Nil	Nil
	2004	Nil	Nil	Nil	Nil
	2005	Nil	Nil	Nil	Nil

Department	Team Name	Number of Staff

Administration Department	The ministry of Finance and Economy	2
Business Headquarters	Sales Department	4
	Customer Support Team	2
	Business administration team	1
Research Institute		2
Production Department	Manufacturing Technical Team	2
	Purchasing Team	1
	Quality Guarantee Team	1
Total		15

-	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.

	Useful lives (years)
Buildings	40
Machinery and equipment	4
Tools	4
Furniture and fixtures	4
Vehicles	4

		Interest
	Maturity year		2004		2005
		rate
Sales Agent	-	-	43,387		212,329
Others	2005	0%	39,245		145,500
			82,632		357,829
Allowance for doubtful accounts			(26,970	)	(339,760	)
Net			55,662		18,069

Account	2004		2005
Trade	1,002,250		1,190,382
Others	71,912		83,618

Sub total	1,074,162		1,274,000
Allowance for doubtful accounts	(543,412	)	(923,841	)
Accounts Receivable, net	530,750		350,159

	2004	2005
Merchandise	297,888	156,131
Finished goods	105,395	84,488
Work-in-process	125,293	184,437
Raw material	167,420	63,399
	695,996	488,455

Name and address of beneficial owner	Amount Stock	Percentage of	Percentage of
and position with the company	Beneficially Owned	Class as of Dec.31,2005	Class as of June 30, 2006


Myeong, Hyeong-seong.	971,500 common shares	3.09%	3.09%
(President, CEO and Director)
#997-4 Daechi-dong
Gangnam-gu, Seoul, Korea

Hong, Sung Phil.	80,450 common shares	0.26%	0.26%
(Director resigned on March,
2006)
4274 Kum Kwang-dong,
Jungwon-gu
SungNam city, KyungKi-do,
Korea

In Beom Park	Nil	Nil	Nil
(Director)
#603 605, JungSan town,
Ilsan-dong,
Ilsan-gu, Goyang-city,
KyungKi-do, Korea

Soon Woong Jang	Nil	Nil	Nil
(Director)
687-6 Sangoan-ri, Hongchun-eup,
Hongchun- kun, Kangwon-do,
Korea

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


All officers and Directors as a
Group	1,051,950	3.35%	3.35%

-	dealers in securities or currencies;
-	financial institutions;
-	tax-exempt entities;
-	banks;
-	life insurance companies;
-	raders 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.

				(Note 3)
ASSETS	2004	2005		2005 (in USD)

Current assets :
Cash and cash equivalents (Note 2)	42,131,238	22,967,573	$	22,740
Trade accounts and notes receivable - less allowance for doubtful accounts	525,980,674	333,683,893		330,380
of won 476,269,309 in 2004 and won 856,697,814(USD 848,216) in 2005 (Notes 5 and 20)
Short-term loans receivable - less allowance for doubtful accounts	55,661,875	18,069,407		17,891
of won 26,969,688 in 2004 and won 339,760,052(USD 336,396) in 2005 (Notes 4 and 20)
Other accounts receivable - less allowance for doubtful accounts	4,768,645	16,474,892		16,312
of won 67,143,325 in 2004 and won 67,143,325(USD 66,479) in 2005 (Note 5)
Inventories (Note 6)	695,996,105	488,455,654		483,619
Other current assets (Note 7)	188,614,870	1,749,446		1,732

Total current assets	1,513,153,407	881,400,865		872,674

Investments and other assets
Investments (Note 8)	13,400,744	29,327,328		29,037
Long-term and restricted bank deposits	41,084,873	-		-
Security deposits	106,153,940	20,103,104		19,904
				-
Total investments and other assets	160,639,557	49,430,432		48,941

Property, plant and equipment (Notes 2 and 9)
Land	928,107,490	-		-
Buildings	688,533,484	-		-
Furniture and fixture	793,821,678	795,798,438		787,919
Others	157,588,521	156,645,554		155,095
	2,568,051,173	952,443,992		943,014
Less accumulated depreciation	-1,076,383,667	-928,639,919		919,445

Property, plant and equipment, net	1,491,667,506	23,804,073		23,568

Intangible assets
Patents and trademarks (Note 10)	1,470,612	1,206,846		1,195


TOTAL ASSETS	3,166,931,082	955,842,216	$	946,378

				(Note 3)
LIABILITIES AND SHAREHOLDERS' DEFICIENCY	2004	2005		2005 (in USD

Current liabilities
Accounts payable - trade	207,983,876	283,184,066		280,380
Short-term borrowings (Note 11)	1,092,929,813	311,216,000		308,135
Accounts payable - other	1,091,521,244	1,164,041,285		1,152,516
Current portion of long-term accounts payable	557,282,037	919,649,439		910,544
Other current liabilities	347,819,964	958,521,286		949,031
Deferred warranty revenue	-	33,234,082		32,905

Total current liabilities	3,297,536,934	3,669,846,158		3,633,511

Long-term accounts payable	935,287,781	466,613,432		461,993
Long-term borrowings (Note 12)	3,511,114,657	4,555,298,225		4,510,196
Accrued severence benefits, net (Note 13)	144,773,769	50,530,967		50,031

Total liabilities	7,888,713,141	8,742,288,782		8,655,731

Commitments and contingencies	-	-		-

Minority interest	19,936,965	-		-

Shareholders' deficiency (Notes 14 and 15)
Common stock - par value 100 (won) per share; authorized 50,000 thousand shares;	2,999,398,400	3,139,398,400		3,108,315
issued and outstanding 29,994 thousand shares and 31,394 thousand shares
at December 31, 2004 and December 31,2005, respectively
Additional paid-in capital	3,724,910,262	3,929,900,586		3,890,991
Appropriation for business rationalization (Note 15)	267,608,937	267,608,937		264,959
Accumulated deficit	-11,731,601,637	-15,125,695,937		-14,975,937
Accumulated other comprehensive income (loss)	-2,034,986	2,341,448		2,318
				-

Total shareholders' deficiency	-4,741,719,024	-7,786,446,566		-7,709,353

TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIENCY	3,166,931,082	955,842,216	$	946,378

Creditor		Amount of debt rescheduled
Woori Bank		391,787
SMI [ ] ABS Specialty Co., Ltd		1,000,000
Rainbow Specialty Securitization Co., Ltd		500,000
Korea Technology Credit Guarantee Fund		1,151,884
Small Business Corporation		300,000
Korea Foreign Exchange Bank		125,831
Shinhan Bank		41,612
Other		1,186,813

Total		4,697,927

Subsidiary	Primary Business	Acquisition	Percentage ownership
		Date	2003	2004	2005
Meridian America Medicals, Inc.	wholesaler, retailer of medical equipment	March 4, 2002	100.00%	95.06%	75.76%






Rapha & Health Co., Ltd	"	September 29, 2005	-	-	100.00%

	2005
Net income (loss)
As reported	(-) 3,349,407,134
Pro forma	(-) 3,290,788,638
Basic earnings (loss) per share
As reported	(-) 106
Pro forma	(-) 104

	2004		2005
Beijing Meridian Medicals Equipment Co.,Ltd.	25.00%		25.00%

Patents and trademarks	2004		2005
Acquisition cost	5,466		5,466
Less accumulated amortization	(3,996	)	(4,259	)
Intangible assets, net	1,470		1,207

		Rescheduled		Original
	Amount	Interest rate	Maturity	Interest rate	Maturity


1^stdebentures	1,000,000	3.5%	December	12.15%	January 31,
			31, 2013		2003

2^nddebentures	500,000	3.5%	December	13.92%	August 14,
			31, 2013		2004
	1,500,000

	2004		2005
Estimated severance liability at beginning of year	265,480,042		278,440,460
Provision	51,222,136		36,400,932
Payments	(38,261,718	)	(260,247,225	)
Transferred on disposal of subsidiary	-		-
Transfer to National Pension Fund	(20,607,547	)	(4,063,200	)
			-
Less current portion	(113,059,144	)	-
Net balance at end of year	144,773,769		50,530,967

	2004	2005
Authorized shares	50,000 thousand	50,000 thousand
Issued and outstanding shares	29,994 thousand	31,394 thousand
Par value	100	100

	SEC	Korean Commercial
		Registration Office
Number of outstanding shares	31,393,984	17,508,825
Capital Stock	3,139,398	1,750,883

	2004	2005
Salaries	552,666,633	515,207,598
Provision for retirement and severance benefits	33,175,384	28,682,927
Other employee benefits	74,597,350	53,946,138
Travel	9,947,114	7,663,750
Entertainment	3,845,815	4,504,538
Advertising	30,749,116	40,266,019

Research and development	183,567,322	100,201,919
Communications	21,964,125	16,847,049
Commissions and fees	1,170,015,502	869,622,033
Insurance	9,104,835	9,953,765
Transportation	66,733,649	39,313,102
Depreciation	21,991,546	8,740,599
Amortization	546,626	263,766
Taxes and dues	41,528,220	16,399,062
Bad debt expenses	-	360,003,247
Rent	83,108,735	114,345,745
Miscellaneous	158,122,839	107,210,931

Total	2,461,664,811	2,293,172,188

	2004		2005
Temporary differences	1,088,245		1,231,487
Tax credit carry forwards	1,971,580		2,317,463
Net loss carry forwards for tax purpose	315,212		131,448
Total deferred income tax assets (liabilities)	3,375,037		3,680,398
Less – Valuation allowance for deferred tax assets	(3,375,037	)	(3,680,398	)

Net deferred tax assets (liabilities)	-		-

	Type of
Grant	Options	Exercise	Fair	Service	Exercisable
	Stock
Date	Outstanding	Price	Value	Period	Period
	Options
	Issuance of			February,	February,
February	common			2000	2003
	206,475	500	295
23, 2000	stock			to January,	to January,
				2003	2007


	Issuance of			March,	March,
March	common			2001	2004
	147,875	340	607
19, 2001	stock			to February,	to February,
				2004	2008
	354,350

	Transaction or
Related party		2004	2005	Description
	Account balance
Beijing Meridian	Account receivable			Sales of product
Medical Equipment	– trade	27,817	-
Co., Ltd.	Short-term loans	37,791	-	Loan


Meridian Asia	Sales	346	-	Sales of product
Co.,Ltd.

Short-term borrowings transferred to long-term borrowings	977,713
Current portion of long-term debt transferred to long-term borrowings	96,741
Long-term accounts payable transferred to current portion of long-term debt	221,373

	2004	2005
Export
U.S.A	707,917	576,699
South Asia	-	-
China	29,153	6,458
Other	946	26,946
	738,016	610,103

Domestic Sales	1,466,218	824,416
	2,204,234	1,434,519