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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<B>As filed with the Securities and Exchange Commission on
May&nbsp;8, 2007</B>
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<B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
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<B>Washington, D.C. 20549</B>
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<B>Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT></B>
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    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
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<TR style="font-size: 10.0pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">(Mark One)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B><FONT face="helvetica,arial">REGISTRATION STATEMENT PURSUANT
    TO SECTION&nbsp;12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
    1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B><FONT face="helvetica,arial">or</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial"><FONT face="wingdings">&#254;</FONT></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B><FONT face="helvetica,arial">ANNUAL REPORT PURSUANT TO
    SECTION&nbsp;13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934<BR>
    For the fiscal year ended December&nbsp;31, 2006</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B><FONT face="helvetica,arial">or</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B><FONT face="helvetica,arial">TRANSITION REPORT PURSUANT TO
    SECTION&nbsp;13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B><FONT face="helvetica,arial">or</FONT></B></TD>
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<TR>
    <TD colspan="3">&nbsp;</TD>
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<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B><FONT face="helvetica,arial">SHELL COMPANY REPORT PURSUANT TO
    SECTION&nbsp;13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B><FONT face="helvetica,arial">For the transition period
    from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</FONT></B></TD>
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<B>Commission file number: 000-52060</B>
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<B>GMARKET INC.</B>
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<I>(Exact name of registrant as specified in its charter)</I>
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    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
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    <B><FONT face="helvetica,arial">N/A</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B><FONT face="helvetica,arial">The Republic of Korea</FONT></B></TD>
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    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">(Translation of
    registrant&#146;s name into English)</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I><FONT face="helvetica,arial">(Jurisdiction of incorporation
    or organization)</FONT></I></TD>
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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
8th Floor, LIG Tower, 649-11 Yeoksam-Dong, Gangnam-Gu, Seoul
135-912, Korea
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<I>(Address of principal executive offices)</I>
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<B>Securities registered or to be registered pursuant to
Section&nbsp;12(b) of the Act:</B>
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    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
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    <TD align="left" nowrap><B><FONT face="helvetica,arial">Title of Each Class</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Name of Each Exchange on Which Registered</FONT></B></TD>
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    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
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    <FONT face="helvetica,arial">Common stock, par value Won 100 per
    share*<BR>
    American depositary shares, each representing<BR>
    one share of common stock
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <FONT face="helvetica,arial">Nasdaq National Market
    </FONT></TD>
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    <TD width="99%"></TD>
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    <TD>*&nbsp;</TD>
    <TD align="left">
    Not for trading, but only in connection with the listing of
    American depositary shares on the Nasdaq National Market
    pursuant to the requirements of the Securities and Exchange
    Commission.</TD>
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<B>Securities registered or to be registered pursuant to
Section&nbsp;12(g) of the Act:&nbsp;None</B>
</DIV>

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<B>Securities for which there is a reporting obligation pursuant
to Section&nbsp;15(d) of the Act:&nbsp;None</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate the number of outstanding shares of each of the
issuer&#146;s classes of capital or common stock as of the close
of the last full fiscal year covered by this Annual Report:
Shares, par value Won 100:&nbsp;<B>49,506,210</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicated by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule&nbsp;405 of the Securities
Act. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#254;
</FONT>
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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports
pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange
Act of
1934. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark whether the registrant (1)&nbsp;has filed
all reports required to be filed by Section&nbsp;13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12&nbsp;months (or for such shorter period that the registrant
was required to file such reports) and (2)&nbsp;has been subject
to such filing requirements for the past
90&nbsp;days:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of &#147;accelerated filer and large
accelerated filer&#148; in
Rule&nbsp;<FONT style="white-space: nowrap">12b-2</FONT> of the
Exchange Act.
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Large Accelerated
filer&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated
filer&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated-filer &nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark which financial statement item the
registrant has elected to follow:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Item&nbsp;17&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;18&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in
Rule&nbsp;<FONT style="white-space: nowrap">12b-2</FONT> of the
Exchange
Act).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

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</DIV>

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<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<A name="tocpage"></A>
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<B>TABLE OF CONTENTS</B>
</DIV>
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<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#101'>CERTAIN
    DEFINED TERMS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
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<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#102'>FORWARD-LOOKING
    STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="6" align="center" valign="top">
    <B><FONT face="helvetica,arial">&nbsp;<A HREF='#103'>PART
    I</A></FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#104'>ITEM
    1.&nbsp;&nbsp;&nbsp;&nbsp;IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#108'>ITEM
    2.&nbsp;&nbsp;&nbsp;&nbsp;OFFER STATISTICS AND EXPECTED
    TIMETABLE</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#109'>ITEM
    3.&nbsp;&nbsp;&nbsp;&nbsp;KEY INFORMATION</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#110'>3.A.&nbsp;&nbsp;&nbsp;&nbsp;Selected
    Financial Data</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#111'>3.B.&nbsp;&nbsp;&nbsp;&nbsp;Capitalization
    and Indebtedness</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#112'>3.C.&nbsp;&nbsp;&nbsp;&nbsp;Reasons
    for the Offer and Use of Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#113'>3.D.&nbsp;&nbsp;&nbsp;&nbsp;Risk
    Factors</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#114'>ITEM
    4.&nbsp;&nbsp;&nbsp;&nbsp;INFORMATION ON THE COMPANY</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#115'>4.A.&nbsp;&nbsp;&nbsp;&nbsp;History
    and Development of the Company</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#116'>4.B.&nbsp;&nbsp;&nbsp;&nbsp;Business
    Overview</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#117'>4.C.&nbsp;&nbsp;&nbsp;&nbsp;Organizational
    Structure</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#118'>4.D.&nbsp;&nbsp;&nbsp;&nbsp;Property,
    Plants and Equipment</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#119'>ITEM
    5.&nbsp;&nbsp;&nbsp;&nbsp;OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#120'>5.A.&nbsp;&nbsp;&nbsp;&nbsp;Operating
    Results</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#121'>5.B.&nbsp;&nbsp;&nbsp;&nbsp;Liquidity
    and Capital Resources</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#122'>5.C.&nbsp;&nbsp;&nbsp;&nbsp;Research
    and Development, Patents and Licenses, etc.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#123'>5.D.&nbsp;&nbsp;&nbsp;&nbsp;Trend
    Information</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#124'>5.E.&nbsp;&nbsp;&nbsp;&nbsp;Off-Balance
    Sheet Arrangements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#125'>5.F.&nbsp;&nbsp;&nbsp;&nbsp;Tabular
    Disclosure of Contractual Obligations</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#126'>ITEM
    6.&nbsp;&nbsp;&nbsp;&nbsp;DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#127'>6.A.&nbsp;&nbsp;&nbsp;&nbsp;Directors
    and Senior Management</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#128'>6.B.&nbsp;&nbsp;&nbsp;&nbsp;Compensation</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#129'>6.C.&nbsp;&nbsp;&nbsp;&nbsp;Board
    Practices</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#130'>6.D.&nbsp;&nbsp;&nbsp;&nbsp;Employees</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#131'>6.E.&nbsp;&nbsp;&nbsp;&nbsp;Share
    Ownership</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#132'>ITEM
    7.&nbsp;&nbsp;&nbsp;&nbsp;MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#133'>7.A.&nbsp;&nbsp;&nbsp;&nbsp;Major
    Shareholders</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#134'>7.B.&nbsp;&nbsp;&nbsp;&nbsp;Related
    Party Transactions</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#135'>7.C.&nbsp;&nbsp;&nbsp;&nbsp;Interests
    of Experts and Counsel</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#136'>ITEM
    8.&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL INFORMATION</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#137'>8.A.&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
    Statements and Other Financial Information</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#138'>8.B.&nbsp;&nbsp;&nbsp;&nbsp;Significant
    Changes</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#139'>ITEM
    9.&nbsp;&nbsp;&nbsp;&nbsp;THE OFFER AND LISTING</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#140'>9.A.&nbsp;&nbsp;&nbsp;&nbsp;Offer
    and Listing Details</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#141'>9.B.&nbsp;&nbsp;&nbsp;&nbsp;Plan
    of Distribution</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#142'>9.C.&nbsp;&nbsp;&nbsp;&nbsp;Markets</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#143'>9.D.&nbsp;&nbsp;&nbsp;&nbsp;Selling
    Shareholders</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#144'>9.E.&nbsp;&nbsp;&nbsp;&nbsp;Dilution</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#145'>9.F.&nbsp;&nbsp;&nbsp;&nbsp;Expenses
    of the Issue</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#146'>ITEM
    10.&nbsp;&nbsp;&nbsp;ADDITIONAL INFORMATION</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#147'>10.A.&nbsp;&nbsp;&nbsp;&nbsp;Share
    Capital</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#148'>10.B.&nbsp;&nbsp;&nbsp;&nbsp;Articles
    of Incorporation</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#149'>10.C.&nbsp;&nbsp;&nbsp;&nbsp;Material
    Contracts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#150'>10.D.&nbsp;&nbsp;&nbsp;&nbsp;Exchange
    Controls</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#151'>10.E.&nbsp;&nbsp;&nbsp;&nbsp;Taxation</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#152'>10.F.&nbsp;&nbsp;&nbsp;&nbsp;Dividends
    and Paying Agents</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#153'>10.G.&nbsp;&nbsp;&nbsp;&nbsp;Statement
    by Experts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#154'>10.H.&nbsp;&nbsp;&nbsp;&nbsp;Documents
    on Display</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#155'>10.I.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsidiary
    Information</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#156'>ITEM
    11.&nbsp;&nbsp;&nbsp;QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#157'>11.A.&nbsp;&nbsp;&nbsp;&nbsp;Quantitative
    Information about Market Risk</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#158'>11.B.&nbsp;&nbsp;&nbsp;&nbsp;Qualitative
    Information about Market Risk</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#159'>11.C.&nbsp;&nbsp;&nbsp;&nbsp;Interim
    Periods</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#160'>ITEM
    12.&nbsp;&nbsp;&nbsp;DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#161'>12.A.&nbsp;&nbsp;&nbsp;&nbsp;Debt
    Securities</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#162'>12.B.&nbsp;&nbsp;&nbsp;&nbsp;Warrants
    and Rights</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#163'>12.C.&nbsp;&nbsp;&nbsp;&nbsp;Other
    Securities</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#164'>12.D.&nbsp;&nbsp;&nbsp;&nbsp;American
    Depositary Shares</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="6" align="center" valign="top">
    <B><FONT face="helvetica,arial">&nbsp;<A HREF='#165'>PART
    II</A></FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#166'>ITEM
    13.&nbsp;&nbsp;&nbsp;DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#167'>ITEM
    14.&nbsp;&nbsp;&nbsp;MATERIAL MODIFICATIONS TO THE RIGHTS OF
    SECURITY HOLDERS AND USE OF PROCEEDS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#168'>ITEM
    15.&nbsp;&nbsp;&nbsp;CONTROLS AND PROCEDURES</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#169'>ITEM 16.</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#170'>16.A.&nbsp;&nbsp;&nbsp;&nbsp;Audit
    Committee Financial Expert</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#171'>16.B.&nbsp;&nbsp;&nbsp;&nbsp;Code
    of Ethics</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#172'>16.C.&nbsp;&nbsp;&nbsp;&nbsp;Principal
    Accountant Fees and Services</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#173'>16.D.&nbsp;&nbsp;&nbsp;&nbsp;Exemptions
    from the Listing Standards for Audit Committee</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#174'>16.E.&nbsp;&nbsp;&nbsp;&nbsp;Purchases
    of Equity Securities by the Issuer and Affiliated Purchasers</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="6" align="center" valign="top">
    <B><FONT face="helvetica,arial">&nbsp;<A HREF='#175'>PART
    III</A></FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#176'>ITEM
    17.&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#177'>ITEM
    18.&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#178'>ITEM
    19.&nbsp;&nbsp;&nbsp;EXHIBITS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#179'>INDEX TO
    FINANCIAL STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial"><FONT face="wingdings">l</FONT></FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv1.txt">EX-1 ARTICLES OF INCORPORATION</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv4w1.txt">EX-4.1 LEASE AGREEMENT, DATED MARCH 2007</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv4w2.txt">EX-4.2 LEASE AGREEMENT, DATED SEPTEMBER 16, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv4w3.txt">EX-4.3 CO-LOCATION SERVICE AGREEMENT</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv4w4.txt">EX-4.4 STANDARD TERMS AND CONDITIONS FOR BUYERS, AMENDED AS OF SEPTEMBER 12, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv4w5.txt">EX-4.5 STANDARD TERMS AND CONDITIONS FOR SELLERS, AMENDED AS OF SEPTEMBER 12, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv11.txt">EX-11 FORM OF CODE OF ETHICS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv12w1.txt">EX-12.1 CERTIFICATION OF REGISTRANT'S CEO, AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv12w2.txt">EX-12.2 CERTIFICATION OF REGISTRANT'S CFO, AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv13w1.txt">EX-13.1 CERTIFICATION OF REGISTRANT'S CEO, AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h01145exv13w2.txt">EX-13.2 CERTIFICATION OF REGISTRANT'S CFO, AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<!-- /TOC -->
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='101'></A>
</DIV>

<!-- link1 "CERTAIN DEFINED TERMS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CERTAIN DEFINED TERMS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless the context otherwise requires, references in this annual
report to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    &#147;Government&#148; is to the government of The Republic of
    Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    &#147;Gmarket,&#148; &#147;the Company,&#148; &#147;we,&#148;
    &#147;us,&#148; &#147;our,&#148; or &#147;our company&#148; are
    to Gmarket Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    &#147;Korea&#148; or the &#147;Republic&#148; are to The
    Republic of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    &#147;US$,&#148; &#147;U.S.&nbsp;dollars,&#148; &#147;US
    dollars,&#148; or &#147;Dollars&#148; are to the currency of the
    United States; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    &#147;Won,&#148; &#147;Korean Won,&#148; or &#147;W,&#148; are
    to the currency of The Republic of Korea.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For your convenience, this annual report contains translations
of certain Won amounts into U.S.&nbsp;dollars at the noon buying
rate of the Federal Reserve Bank of New York for Won in effect
on December&nbsp;31, 2006, which was Won&nbsp;925.40 to US$1.00.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Discrepancies in tables between totals and sums of the amounts
listed are due to rounding.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='102'></A>
</DIV>

<!-- link1 "FORWARD-LOOKING STATEMENTS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FORWARD-LOOKING STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This annual report on
Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT> for the
year ended December&nbsp;31, 2006 contains &#147;forward-looking
statements,&#148; as defined in Section&nbsp;27A of the
U.S.&nbsp;Securities Act of 1933, as amended, and
Section&nbsp;21E of the U.S.&nbsp;Securities Exchange Act of
1934, as amended (&#147;Exchange Act&#148;). The forward-looking
statements are based on our current expectations, assumptions,
estimates and projections about our company and our industry,
and are subject to various risks and uncertainties. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as &#147;anticipate,&#148;
&#147;believe,&#148; &#147;considering,&#148;
&#147;depends,&#148; &#147;estimate,&#148; &#147;expect,&#148;
&#147;intend,&#148; &#147;plan,&#148; &#147;planning,&#148;
&#147;planned,&#148; &#147;project&#148; and similar
expressions, or that certain events, actions or results
&#147;will,&#148; &#147;may,&#148; &#147;might,&#148;
&#147;should&#148; or &#147;could&#148; occur, be taken or be
achieved.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Forward-looking statements include, but are not limited to, the
following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to anticipate and respond to various competitive
    factors affecting the retail industry, in particular the retail
    e-commerce industry in Korea, including new services that may be
    introduced, changes in consumer preferences and confidence
    levels, and discount pricing strategies by competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the effect that economic, political or social conditions in
    Korea have on the volume of transactions on our e-commerce
    marketplace and our results of operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our growth strategies;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to target, acquire and integrate the businesses of
    any acquired companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our future business development, results of operations and
    financial condition;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to attract and retain customers;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the expected growth of the Korean retail e-commerce industry,
    development of the widespread use of the Internet and
    development of e-commerce in Korea; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our ability to expand our network and system infrastructure to
    support increased traffic and expanded services.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We caution you not to place undue reliance on any
forward-looking statement which involves risks and
uncertainties. Although we believe that the assumptions on which
our forward-looking statements are based are reasonable, any of
those assumptions could prove to be inaccurate, and as a result,
the forward-looking statements based on those assumptions could
be incorrect. All forward-looking statements are our
management&#146;s current expectation of future events and are
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
subject to a number of factors that could cause actual results
to differ materially from those described in the forward-looking
statements. Risks and uncertainties associated with our business
include, but are not limited to, risks related to changes in the
regulatory environment; technology changes; potential litigation
and governmental actions; changes in the competitive
environment; political changes; and other risks and
uncertainties that are more fully described under the heading
&#147;Risk Factors&#148; in this annual report, and elsewhere in
this annual report. In light of these and other uncertainties,
you should not conclude that we will necessarily achieve any
plans and objectives or projected financial results referred to
in any of the forward-looking statements. We undertake no
obligation to update or revise any forward-looking statement to
reflect future events or circumstances.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='103'></A>
</DIV>

<!-- link1 "PART I" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART&nbsp;I</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='104'></A>
</DIV>

<!-- link1 "ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 1.</B></TD>
    <TD>
    <B>IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='108'></A>
</DIV>

<!-- link1 "ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 2.</B></TD>
    <TD>
    <B>OFFER STATISTICS AND EXPECTED TIMETABLE</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='109'></A>
</DIV>

<!-- link1 "ITEM 3.KEY INFORMATION" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 3.</B></TD>
    <TD>
    <B>KEY INFORMATION</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='110'></A>
</DIV>

<!-- link1 "3.A. Selected Financial Data" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.A.&nbsp;</B></TD>
    <TD>
    <B>Selected Financial Data</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You should read the selected financial data below in conjunction
with the financial statements and the related notes included
elsewhere in this annual report. The selected financial data as
of and for the years ended December&nbsp;31, 2004, 2005 and 2006
are derived from our audited financial statements and related
notes thereto included elsewhere in this annual report. The
selected financial data as of and for the years ended
December&nbsp;31, 2002 (unaudited) and 2003 (audited) are
derived from our annual financial statements and related notes
thereto not included herein. Our historical results do not
necessarily indicate results expected for any future periods.
Our financial statements are prepared in accordance with
U.S.&nbsp;GAAP.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">For the years ended December 31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>


<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in billions of Korean Won and millions of US dollars, except per share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Transaction fees</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">W</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2.48</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">W</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2.97</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">W</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">12.04</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">W</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">56.78</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">W</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">99.25</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">US$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">107.25</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Advertising and other</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.49</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.77</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2.10</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">13.56</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">54.88</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">59.31</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.97</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.74</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">14.14</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">70.34</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">154.13</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">166.56</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Costs and expenses:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cost of revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.22</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.06</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">8.42</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">36.69</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">78.95</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">85.32</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Sales and marketing</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.59</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.04</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.36</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24.80</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">46.43</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">50.17</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">General and
    administrative</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.25</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.31</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.91</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.29</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">14.57</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">15.75</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total costs and
    expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.06</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.41</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">15.69</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">66.78</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">139.95</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">151.24</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating Income
    (loss)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.09</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.67</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.55</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.56</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">14.18</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">15.32</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other income
    (expenses):</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Interest income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.01</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.01</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.13</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1.40</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.19</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.61</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Others, net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.39</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.10</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.02</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.20</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.22</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss) before income tax
    expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.69</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.76</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.44</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">4.96</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">19.57</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">21.15</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income tax benefits
    (expenses)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.13</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3.29</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3.55</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income (loss)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.69</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.76</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.44</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5.09</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">16.28</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">17.60</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">5
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">For the years ended December 31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in billions of Korean Won and millions of US dollars, except per share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Accretion of preferred
    shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.17</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Amount allocated to
    participating preferred shareholders</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.56</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.26</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.36</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income
    (loss)&nbsp;applicable to common shareholders</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(0.69</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.76</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1.44</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3.36</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">15.02</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">16.24</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Earning per share&#151;
    basic</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(29</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(73</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(60</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">124</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">371</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.40</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Earning per share&#151;
    diluted</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(29</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(73</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(60</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">108</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">345</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">0.37</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Weighted average number of
    shares&#151;
    basic<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">26,963,014</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">40,468,471</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">40,468,471</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Weighted average number of
    shares&#151;
    diluted<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">30,939,377</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">47,177,311</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">47,177,311</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Notes:</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December&nbsp;31, 2006 as quoted by the Federal Reserve Bank of
    New York.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    On June&nbsp;6, 2006, 12,576,500 of our preferred shares, which
    represents all of our issued and outstanding Series A
    convertible preferred shares, were converted to an equivalent
    amount of common shares.</TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">As of December 31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">(in billions of Won and in millions of US dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.04</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.90</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.75</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash on deposit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45.30</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134.40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145.23</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restricted cash
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.50</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.92</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.95</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.64</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.90</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">218.67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">236.30</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.69</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268.10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts payable to sellers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.72</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.15</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93.46</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103.60</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111.95</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.91</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28.63</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">110.92</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">139.84</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">151.11</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.85</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.49</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141.23</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152.62</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible redeemable preferred
    shares<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">convertible preferred
    shares<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholders&#146; equity
    (deficit)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.37</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106.87</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">115.48</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total liabilities, preferred shares
    and shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.69</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268.10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Notes:</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December&nbsp;31, 2006 as quoted by the Federal Reserve Bank of
    New York.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    On June&nbsp;6, 2006, 12,576,500 of our preferred shares, which
    represents all of our issued and outstanding Series&nbsp;A
    convertible preferred shares, were converted to an equivalent
    amount of common shares.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B><FONT face="helvetica,arial">As of and for the years ended December 31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating Data
    GMV<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.71</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">224.50</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,080.86</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,268.20</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">US$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,451.05</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Aggregate registered
    users<SUP style="font-size: 85%; vertical-align: text-top">(3)
    (000&#146;s)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">536.80</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">781.87</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,388.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,191.36</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,967.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average monthly unique
    visitors<SUP style="font-size: 85%; vertical-align: text-top">(4)
    (000&#146;s)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">356.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,256.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,859.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,368.25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,475.67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Notes:</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December&nbsp;31, 2006 as quoted by the Federal Reserve Bank of
    New York.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    In billions of Won and millions of Dollars. Gross Merchandise
    Value, or GMV, represents the aggregate value of all products
    sold on our website for the period. GMV is commonly used in the
    e-commerce industry to measure a company&#146;s operating
    performance as transaction fees depend in part on GMV.
    Therefore, we believe that for an e-commerce company such as
    ourselves, GMV provides additional information on the
    company&#146;s operating performance. However, GMV should not be
    construed as an alternative to operating income or any other
    measure of performance determined in accordance with U.S. GAAP.
    Other companies may determine GMV differently than we do.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Includes both buyers and sellers who have registered with us as
    of the end of the period.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Represents the average number of monthly unique visitors to our
    website during the period. Source: Metrix Corporation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Exchange Rates</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information concerning the noon
buying rate for the years 2002 through 2006 and for each of the
months in the six-month period ended April&nbsp;30, 2007,
expressed in Won per US dollar.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">At end of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Average</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">Period</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">rate<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">High</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Low</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Won per US$1.00)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2002
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1,186.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1,242.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1,332.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1,160.6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,192.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,183.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,262.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,146.0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,035.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,139.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,195.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,035.1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,010.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,023.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">997.0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">925.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">950.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">913.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,002.9</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">November, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">929.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">935.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">942.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">929.0</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">December, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">925.4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">925.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">931.6</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">913.7</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">January, 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">941.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">936.8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">942.2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">925.4</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">February, 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">942.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">936.9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">942.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">932.5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">March, 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">937.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">942.9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">949.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">937.2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">April, 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">931.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">930.7</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">937.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">926.1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Source: Federal Reserve Bank of New York.
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Note:</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The average rates for the annual periods were calculated based
    on the average noon buying rate on the last day of each month
    during the period. The average rates for the monthly periods
    were calculated based on the average noon buying rate of each
    day of the month.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='111'></A>
</DIV>

<!-- link1 "3.B. Capitalization and Indebtedness" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.B.&nbsp;</B></TD>
    <TD>
    <B>Capitalization and Indebtedness</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='112'></A>
</DIV>

<!-- link1 "3.C. Reasons for the Offer and Use of Proceeds" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.C.&nbsp;</B></TD>
    <TD>
    <B>Reasons for the Offer and Use of Proceeds</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='113'></A>
</DIV>

<!-- link1 "3.D. Risk Factors" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.D.&nbsp;</B></TD>
    <TD>
    <B>Risk Factors</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Risks Related to Our Business</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We operate in an extremely competitive industry, and we
may be unsuccessful in competing against current and future
competitors, which could have a negative impact on the level of
fees we can charge for our services.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The retail <FONT style="white-space: nowrap">e-commerce</FONT>
industry in Korea is extremely competitive, and we expect that
competition in this area will continue to increase. We compete
directly with Auction.co.kr, an
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
operated by Internet Auction Co., Ltd., which is a subsidiary of
eBay Inc. Our other competitors include Interpark Corporation,
our largest shareholder, d&#38;shop Co., Ltd., and other
<FONT style="white-space: nowrap">e-commerce</FONT> marketplaces
such as Mple Online, which is a subsidiary of CJ&nbsp;Home
Shopping and Daum Onket, which is a subsidiary of d&#38;shop
Co., Ltd. We also compete against GS Home Shopping, which
operates two online retail websites, CJ&nbsp;Home Shopping and
other online retail websites operated by some of the largest
department stores in Korea, such as Lotte.com, Shinsegae.com and
Hmall.com. We currently compete indirectly with Internet portals
in Korea, such as Naver.com and Nate.com. We may also face
increased competition from bigger and financially stronger
players resulting from industry consolidation. In addition, as
the barriers to entry for Internet-related businesses are
relatively low, potential new entrants into the
<FONT style="white-space: nowrap">e-commerce</FONT> industry
could include traditional and non-traditional retailers,
including Internet portals, telecom operators and cable service
providers. Further, we believe that the increased use of
emerging technologies, including mobile commerce, Internet
Protocol Television (IPTV), Digital Multimedia Broadcasting
(DMB), among others, may allow other competitors to indirectly
compete with <FONT style="white-space: nowrap">e-commerce</FONT>
marketplaces such as ourselves in the future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many of our competitors have longer operating histories, better
brand recognition and significantly greater financial resources
than we do. The management of some of these competitors may have
more experience in implementing their business plan and strategy
and may be more successful in increasing the number of buyers
and sellers on their websites, as well as increasing the gross
merchandise value of products sold on their websites. Also, we
expect existing and potential new competitors to pursue their
business plans aggressively, which is likely to have a negative
impact on the level of transaction and advertising fees we can
charge. We expect that our costs related to marketing and human
resources will increase as our competitors undertake marketing
campaigns to enhance their brand name and increase the volume of
business conducted through their websites.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We expect many of our competitors to expend financial and other
resources to improve their network and system infrastructure,
including website design and logistics network, in order to
compete more aggressively. Our inability to adequately address
these and other competitive pressures will likely have a
negative impact on the level of fees we can charge for our
services, including fees for our advertising services, as well
as increase the costs and expenses associated with growing our
user base, which is likely to have a material adverse effect on
our business, prospects, financial condition and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We incurred losses from our operations for the years ended
December&nbsp;31, 2002, 2003 and 2004, and achieved
profitability for the first time since our inception in the year
ended December&nbsp;31, 2005. For the year ended
December&nbsp;31, 2006, our income from operations increased by
298% compared to the previous year. Although we have experienced
significant growth in revenues over
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
the past several years, no assurance can be given that such
trend will continue at the recent pace, including as a result of
market saturation, maturity and other factors. Our future
profitability will depend upon our ability to successfully
implement our key strategic initiatives in a timely and cost
efficient manner. Also, our profitability will depend on many
other factors, many of which are beyond our control, including
the general macroeconomic conditions, consumer confidence,
consumer spending levels and the continued growth of the retail
e-commerce industry in Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We have a limited operating history and may be subject to
risks inherent in early stage companies, which may make it
difficult for you to evaluate our business and prospects.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have a limited operating history upon which you can evaluate
our business and prospects. We were incorporated in April 2000
and launched our
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
in May 2000. You must consider our business and prospects in
light of the risks and difficulties we face as an early stage
company with a limited operating history and should not rely on
our past results as an indication of our future performance. In
particular, our management may have less experience in
implementing our business plan and strategy compared to our more
well-established competitors, including our strategy to increase
our market share and build our brand name. In addition, we may
face challenges in planning and forecasting accurately as a
result of our limited historical data and inexperience in
implementing and evaluating our business strategies. Our
inability to successfully address these risks, difficulties and
challenges as a result of our inexperience and limited operating
history may have a negative impact on our ability to implement
our strategic initiatives, which may have a material adverse
effect on our business, prospects, financial condition and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Our inability to adequately address the operational,
network and system infrastructure and human resources challenges
of managing a rapidly growing business may have a negative
impact on our ability to implement our strategic
initiatives.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have experienced significant growth over the past several
years and expect our business to continue to grow if we are
successful in implementing our key strategic initiatives. The
growth of our business has required the significant attention of
our management and expenditure of other resources and will
likely continue to strain our operational, network and system
infrastructure and personnel. In order to properly manage this
planned growth, we must improve our operational systems, expand
our network and system infrastructure, retain and hire qualified
personnel and enhance the effectiveness of our operational
controls and procedures. Our inability to manage this planned
growth may prevent us from providing an attractive and reliable
website to consumers, efficiently processing sales transactions,
due to, for example, unplanned network and system shutdowns or
inadequate levels of customer service, which could negatively
impact our brand name and reputation and may result in us not
being able to attract and retain users. As a result, we may not
achieve our desired growth in user base and GMV, which could
have a material adverse effect on our business, prospects,
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>If we are unable to successfully implement some or all of
our major strategic initiatives in a timely manner, our ability
to maintain and improve our leading market position may be
negatively impacted.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our strategy is to improve our leading market position by
implementing certain key strategic initiatives, which include
the following:
</DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    continuing to build our brand and expand our user base;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    focusing on user loyalty and website enhancement;</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    continuing to expand product categories and introduce new
    service offerings; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    pursuing growth outside of Korea.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We cannot assure you that we will be successful in implementing
any or all of these key strategic initiatives. Some of these
strategies relate to new services or products for which there
are no established markets, or in which we lack experience and
expertise. No assurance can be given that any of our innovations
and service introductions will be successful. Consumer tastes
and preferences change rapidly and no assurance can be given
that we will be able to anticipate and address such changes so
that we can maintain and improve on our leading market position.
The success of our growth strategy abroad, whether through
acquisitions, investments, joint ventures or internal growth
will depend on the availability of suitable acquisition and
investment candidates, our ability to effectively attract and
reach agreement with acquisition candidates or joint venture
partners on commercially reasonable terms and the availability
of financing to complete such acquisitions, investments or joint
ventures, among other factors, as well as our ability to
successfully grow our business internally should no acquisition,
investments or joint venture opportunities become available.
Also, to date, we have not made any major investments or
acquisitions, and our management does not have experience
acquiring other companies and integrating the businesses and
personnel of such companies into our organization.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If we are unable to successfully implement some or all of our
key strategic initiatives in an effective and timely manner, our
ability to maintain and improve our leading market position may
be negatively impacted, which may have a material and adverse
effect on our business and prospects, competitiveness, leading
market position, brand name, financial condition and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>As the regulatory framework and laws governing the retail
<FONT style="white-space: nowrap">e-commerce</FONT> industry in
Korea are quickly evolving, we may not be able to comply with
new regulations or changes to the existing regulations on a
timely basis, which may harm our business and our
reputation.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As the retail e-commerce industry in Korea has grown
significantly over the past several years, the Korean government
has intensified its efforts to regulate the commercial
activities of e-commerce companies and other entities
participating in this industry, including us. These efforts
include enacting new regulations, making changes to the existing
laws and regulations, and monitoring and enforcing more
aggressively the compliance of these laws and regulations.
Although we continue to monitor these changes and take steps to
comply with current and new requirements, we cannot provide
assurances that we will be able to comply fully with all
requirements under current and new regulations on a timely
basis, which, in turn, may harm our business and our reputation.
In addition, we will incur additional costs associated with
complying with such current and emerging regulations, including
costs associated with establishing new policies and investing
more capital in new technologies and infrastructure. See
&#147;Laws and Regulations.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, as the e-commerce industry in Korea gains more
popularity and visibility among the general public, we believe
that various political organizations, non-governmental
organizations (NGOs) and special interest groups, among others,
may attempt to initiate reforms or additional guidelines that
make it more difficult for e-commerce marketplaces such as
ourselves to operate profitably in Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Security risks related to online purchases, including loss
or theft of important user information, hacking and credit card
fraud and possible violations of laws relating to the
maintenance and use of sensitive information and credit card and
payment services, or other misuse of our e-commerce platforms
may harm our business and our reputation.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are subject to regulations relating to privacy, maintenance
and use of confidential information of our users. Sales on our
website require the transmission and maintenance of sensitive
and confidential data, including national identification
numbers, bank and credit card information. Loss, hacking or
theft of sensitive data stored on our information technology
systems may occur. In
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
addition, due to the high volume of transactions that occur on
our website on a daily basis, it is impracticable for us to
monitor every transaction that takes place through the use of
our platforms. Notwithstanding the best efforts of our service
quality management team to monitor and minimize, to the extent
possible, potentially fraudulent credit card transactions or
other misuse occurring through our website, such transactions
and activities may occur undetected. Also, as we do not check or
obtain signatures for credit card purchases, we may be liable
for fraudulent credit card transactions. Any such occurrence
could harm our reputation, cause users to lose confidence in our
security systems and to not make purchases on our website and
also subject us to lawsuits, sanctions, fines or other
penalties. Depending on our agreements with various credit card
companies, we share a certain portion of any losses resulting
from fraudulent credit card purchases with the credit card
issuer.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>If we are unable to adapt or expand our existing
technology infrastructure to accommodate greater trading volume
and increased number of products available for sale, we may not
be able to achieve our growth objectives.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our network and system infrastructure, including our network and
systems hardware, software and communications systems, must
support significant amounts of data, information and transaction
volume generated by the high number of buyers, sellers and
products offered on our e-commerce marketplace. In addition, our
strategy contemplates significantly growing our business in the
future. Accordingly, we must upgrade and expand our
infrastructure to accommodate the increasing activity level on
our website. Failure to upgrade our network and system
infrastructure in a timely and efficient manner may result in
system disruptions, delays, downtime and loss of data. The
occurrence of any such event will likely damage our reputation
and brand name, as well as our ability to implement effectively
our growth strategies, in particular, our strategy to increase
our user base and GMV.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Interruptions or failures of our network and systems
infrastructure, including our communications systems, could lead
to significant downtimes, interruptions and loss of data, which
could damage our reputation and brand name and harm our
business, financial condition and results of operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our ability to provide a high-quality e-commerce marketplace
depends on the continuing, uninterrupted operation of our
network and systems infrastructure, including our hardware,
software and communications systems, especially given our
rapidly growing user base and transaction volume. We have from
time to time experienced disruptions in our systems for periods
ranging from a few minutes to a few hours as a result of human
and technical errors and systems overload from a significant
volume of transactions occurring over our network. No assurance
can be given that our procedures and network and system capacity
will be sufficient to prevent future slowdowns or disruptions,
or that our future growth will not necessitate future outlays to
further build-out our network and system capacity. Any such
failures, slowdowns or disruptions will likely have a material
adverse effect on our business, prospects, financial condition
and results of operations and will have a significant negative
effect on our reputation and may result in us losing users, who
may migrate to our competitors&#146; sites.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of our hardware, including computers, data servers and
other servers, are located at the Korea Internet Data Center, a
data center operated by Dacom Corporation, and the Korean
Internet Neutral Exchange, both located in Seoul, and certain
other equipment are located within our headquarters building.
Such infrastructure systems are vulnerable to damage or
interruption as a result of war, earthquakes, floods, fires,
power loss, telecommunications failures, human error and other
similar events. In addition, we maintain network connections
with certain of our registered sellers for the maintenance of
inventory and provision of customer support functions, and rely
on our network and communications infrastructure to communicate
with our delivery providers in order to provide a seamless and
efficient service to buyers and sellers. Also, we rely on the
efficient and
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
uninterrupted service of various third parties, including
telecommunications companies, credit agencies and credit card
issuers, among others. Any disruptions in the operations of
these third party providers due to failures in their technology
and network connections will negatively impact our ability to
provide our services.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The frequent recurrence and persistence of network
interruptions, slowdowns or loss of critical data would likely
have a long-term negative impact on our reputation and brand
name and is likely to have a negative impact on the growth of
our user base and GMV, which is likely to have a material
adverse effect on our business, prospects, financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We are dependent on certain key members of our senior
management team and the loss of such personnel may have a
material impact on our ability to achieve our business
objectives, including our ability to manage our rapid growth and
successfully implement our strategic initiatives.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our success depends heavily on retaining the services of certain
key members of our senior management team. If any one or more of
such executives leaves his position or is otherwise unable to
perform his duties for an extended period of time and we are
unable to find suitable replacement personnel in a timely and
cost efficient manner, our business may be disrupted and we may
not be able to achieve our business objectives, including our
ability to manage our rapid growth and successfully implement
our strategic initiatives. We believe that the loss of our
representative director and chief executive officer,
Mr.&nbsp;Young Bae Ku, who has been with us since our inception
and who has been instrumental in our ability to achieve
significant growth over the past several years, would have a
material adverse effect on our business. We do not have any
long-term employment agreements with any of our employees or
executive officers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We must also continue to seek ways to retain and motivate all of
our other employees through various means, including through
enhanced compensation packages. In addition, we will need to
hire more employees as we continue to implement our key strategy
of building on our leading market position and expanding our
business. Competition for qualified personnel in the areas in
which we compete remains intense and the pool of qualified
candidates is limited. Our inability to attract, hire and retain
qualified staff on a cost efficient basis may have a material
adverse effect on our business, prospects, financial condition,
results of operations and ability to successfully implement our
growth strategies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Investigation by the Korean National Tax Service of
certain sellers who list and sell products on our website may
decrease the volume of e-commerce transactions conducted on our
website.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Korean National Tax Service, or the NTS, has recently
conducted a tax investigation of certain
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
sellers, including some of those who sell on our website. At the
request of the NTS, we provided certain records relating to
sales transactions conducted on our website by these sellers.
Although the NTS has not begun, or announced an intent to begin,
any prosecution against us in connection with such
investigation, the NTS may at any time conduct new tax
investigations to ascertain whether e-commerce sellers,
including sellers who use our website, owe taxes, including
value-added taxes, with respect to the sales made on our website.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, pursuant to the amended Presidential Decree of the
Value Added Tax Act, which will become effective on July&nbsp;1,
2007, we will be required to take steps to facilitate the
collection of value-added taxes by the NTS from our sellers who
do not hold a tax ID. From July&nbsp;1, 2007, any of our sellers
may designate us as his or her tax agent, delegating to us the
handling of value-added tax matters such as tax ID registration,
tax filing and tax payments, among others; provided, that,
(i)&nbsp;such seller sells taxable products or services through
our website 10&nbsp;times or more for either the first half or
the second half of any calendar year (&#147;Taxable
Period&#148;), (ii)&nbsp;the value of such goods or services of
such seller for any Taxable Period is between
Won&nbsp;6&nbsp;million and Won&nbsp;12&nbsp;million and
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
(iii)&nbsp;such seller does not have a stand-alone store or a
registered tax ID. We will be required to provide a list of all
of our sellers that meet the foregoing three criteria to the
NTS. With respect to those sellers whose volume was more than
Won&nbsp;12&nbsp;million for any Taxable Period, we are required
to instruct such sellers to register for a tax ID with the
Government and instruct them to pay any value-added taxes owed
by them.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>If the Korea National Tax Office determines that we do not
qualify as a Tax-Benefit Business, we may not enjoy certain
statutory tax benefits and may be required to pay back-taxes and
statutory interest.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Special Tax Treatment Control Law of Korea, a
certified venture company may be entitled to a 50% reduction in
corporate income tax generated from a &#147;Tax-Benefit
Business,&#148; as defined in the Special Tax Treatment Control
Law, for the year in which it first generates taxable income and
for the subsequent three years (or five years for any designated
venture companies certified by the Government before
January&nbsp;1, 2004), if (a)&nbsp;the company is certified by
the Government as a &#147;designated venture company&#148;
within two years from its incorporation and continues to satisfy
certain requirements, and (b)&nbsp;such company&#146;s business
falls under one of the categories of &#147;Tax-Benefit
Businesses&#148; under the Special Tax Treatment Control Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We were certified by the Government as a &#147;designated
venture company&#148; in March 2001, and after the renewal of
certification, our certification is valid until June 2008. As
part of our annual tax return process with the Korea National
Tax Office, we reported our business classification in line with
our business registration statement, as an eligible business
falling under one of the categories of &#147;Tax Benefit
Business&#148; under the Special Treatment Control Law. To date,
we have not received any objections from the Korea National Tax
Office regarding our claim of such tax benefit. Notwithstanding
our continued belief that we qualified for such tax benefit and
the lack of objections from the Korea National Tax Office
regarding our prior tax returns thus far, in the event that the
Korea National Tax Office audits us and determines that we were,
in fact, not entitled to such tax benefit, we may be required to
pay back-taxes in the amount applicable to such claimed
deduction and statutory interest. See &#147;Laws and
Regulations&#151; Laws Relating to Tax Benefits.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>If we fail to adequately staff our accounting and finance
department with the appropriate complement of experienced
employees, we may be unable to improve our system of internal
controls over financial reporting so as to comply with the
ongoing reporting requirements applicable to a public company in
the United States.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have identified significant deficiencies (as defined under
Standards of the Public Company Accounting Oversight Board
(United States)) in our system of internal control over
financial reporting. Most of these deficiencies relate to the
resources we currently have in place to meet our accounting and
financial reporting requirements, which in turn contribute to
the existence of other deficiencies related to our internal
control over financial reporting including, but not limited to,
our ability to produce financial statements in a timely and
accurate manner in accordance with U.S. GAAP. In order to
address such deficiencies, we have hired additional finance and
accounting personnel and continue to evaluate the need to add
additional resources to assist us in the preparation of our
financial statements under U.S.&nbsp;GAAP and to assist us in
improving our system of internal control over financial
reporting. However, there can be no assurance that such efforts
will significantly further improve our system of internal
control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Beginning with the year ending December&nbsp;31, 2007.
Section&nbsp;404 of the Sarbanes-Oxley Act will require us to,
among other things, maintain an effective system of internal
control over financial reporting, and will require our
management to provide a certification on the effectiveness of
our internal control on an annual basis. In 2006, we continued
the preparation for compliance with Section&nbsp;404 of the
Sarbanes-Oxley Act, we may identify additional deficiencies in
our system of internal control over financial reporting, and, if
so, will take corrective actions accordingly for their
remediation. We cannot assure you that we will be able to
complete the documentation, testing and,
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
if appropriate, remediation work necessary to comply with
Section&nbsp;404 of the Sarbanes-Oxley Act, or that we or our
independent public accountants will not identify material
weaknesses in our internal control.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The listing or sale by our users of pirated, counterfeit
or other illegal items or the improper listing and sale of
regulated items may harm our reputation and subject us to
lawsuits.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have received in the past, and we may receive in the future,
communications alleging that certain items listed or sold by
sellers on our website infringe upon third-party copyrights,
trademarks and trade names, or other intellectual property
rights of others. Although we have sought and continue to seek
to prevent and eliminate the listings of such goods, no
assurance can be given that such goods will not be listed and
that if such goods are listed, we will not be held liable to
those parties claiming an infringement of their intellectual
property rights. Holders of intellectual property rights have
been active in defending their rights against
<FONT style="white-space: nowrap">e-commerce</FONT> companies,
and we expect such activity to increase in the future, including
lawsuits against companies thought to have violated or infringed
upon their intellectual property rights. If we are held liable
in any such litigation brought against us in the future, we may
be subject to substantial damages.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, illegal items such as drugs, weapons and other regulated
or prohibited items may be listed, displayed or sold on our
website notwithstanding our efforts to prevent such items from
being listed, sold or displayed. Similarly, we are aware that
adult materials that may be subject to regulation have been
listed and may have been viewed by users and visitors who are
minors notwithstanding our efforts to limit the viewing of such
adult materials to adult users only. Also, regulated items such
as adult, alcohol and tobacco products may be sold in violation
of applicable regulations, subjecting us to potential civil,
criminal and administrative actions. We have a service quality
management team which is responsible for monitoring reports of
listing, display and sales of pirated, counterfeited, prohibited
or regulated products. Our inability to prevent such items from
being listed, displayed or sold may subject us to lawsuits,
sanctions, fines or other penalties, which is likely to
adversely affect our business and harm our reputation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Increases in the amount of fees charged by delivery
companies, credit card fees charged by credit card issuers and
value-added tax levied by the Government may decrease the volume
of transactions which take place on our website and may
negatively impact our net income.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If delivery companies in Korea were to significantly raise
delivery rates for any reason, buyers may be less willing to
purchase goods over the Internet, choosing instead to make
purchases at department stores or other traditional retail
outlets, thus eliminating the need to pay a delivery charge. In
addition, because we do not pass on to the sellers the credit
card fees charged by credit card issuers, any increases in such
fees without a corresponding increase in our transaction fees
will have a negative impact on our net income. In addition, any
increases in value-added taxes levied by the Government could
decrease the volume of transactions on our website. Any such
developments may have a negative effect on our GMV, as well as
our ability to attract and retain users and is likely to have a
material adverse effect on our business, prospects, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Interpark Corporation, which operates a competing retail
e-commerce marketplace, is our largest shareholder and may,
together with its affiliates, exercise significant control over
us and may take actions which may be adverse to our
interests.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interpark Corporation, our largest shareholder, and its
affiliates own approximately 37.2% of our common shares. As
37.2% shareholders of our common shares, Interpark and its
affiliates may undertake various actions which may be adverse to
our interests or prevent us from taking actions beneficial to
our business. They may call for an extraordinary shareholders
meeting to approve certain actions which may be adverse to our
interests or to reject certain business decisions made
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
by us by vetoing, in a shareholders meeting, certain material or
extraordinary transactions which may benefit our business,
including among others:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the amendment to our articles of incorporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dismissal of our directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reduction of capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    merger or dissolution;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    transfer of all or substantial part of our business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acquisition of all or a part of the business of another company,
    which significantly affects our business; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    such other matters required to be adopted by a special
    resolution at the general shareholders meeting under the
    relevant laws and regulations or our articles of incorporation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, Mr.&nbsp;Ki Hyung Lee, the chairman and co-chief
executive officer of Interpark, and Mr.&nbsp;Sang Kyu Lee, the
co-chief executive officer of Interpark, currently serve as
members of our board of directors. Conflicts of interest could
arise between us and Interpark relating to the nature, quality
and pricing of goods and services provided to each other, any
payment of dividends by us to our shareholders and general
issues relating to achieving our strategic initiatives as well
as maintaining or increasing our profitability. Such conflicts
may be resolved in a manner unfavorable to us in part due to the
significant control which Interpark may exercise over us, and
may negatively impact our ability to implement our strategic
initiatives in a timely manner, our business, prospects,
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, Interpark operates a competing retail e-commerce
marketplace and Interpark or any of its subsidiaries and
affiliates may broaden their businesses and increase the range
of products and services that they offer, particularly into
businesses that compete directly with those which we operate,
which may negatively affect our business, prospects, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Our industry has historically experienced seasonality,
which we expect to continue and which could cause our operating
results to fluctuate.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the significant growth of our business in the past three
years, we are not yet able to ascertain with a degree of
certainty the impact of seasonality on our financial condition
and results of operations. We believe that as our growth rate
slows, the seasonality effects will become more apparent, and we
expect those effects to be similar to that of other retailers in
Korea, which generally have higher sales volume in the fourth
quarter of each year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Our success is tied to the continued use of the Internet
for shopping and the reliability and adequacy of the Internet
infrastructure in Korea. If consumers are unwilling to use the
Internet to purchase goods for any reason, we may not be able to
achieve our desired revenue growth.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business is substantially dependent upon the continued use
of the Internet as an effective medium of business and
communication by consumers. Our success will depend, in large
part, upon third parties maintaining the Internet infrastructure
to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet
access and services. Also, Internet use may not continue to
develop at historical rates and consumers may not continue to
use the Internet and other online services as a medium for
commerce. The demand for and acceptance of products sold over
the Internet are highly uncertain. Failures by some
<FONT style="white-space: nowrap">e-commerce</FONT> retailers to
meet consumer demands could result in consumer reluctance to use
the Internet as a means for commerce. The decreased use of the
Internet for any reason is likely to have a negative
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
impact on our GMV, which will have a material adverse effect on
our financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We incur increased costs as a result of being a public
company in the United States.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We incur legal, accounting and other expenses that we did not
incur prior to our listing on the Nasdaq, including costs
associated with our public company reporting requirements under
the Securities Exchange Act of 1934, as amended. We incur costs
associated with recently adopted corporate governance
requirements, including requirements under the Sarbanes-Oxley
Act as well as new rules implemented by the Securities and
Exchange Commission and the NASD, including, in particular, the
need to establish an enhanced system of internal control over
financial reporting. These rules and regulations increase our
legal, accounting and financial compliance costs and make
certain corporate activities more time-consuming and costly.
These new rules and regulations make it more difficult and more
expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. We cannot predict or
estimate the amount of additional costs we may incur or the
timing of such costs or the impact such costs may have on our
results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Risks Related to Intellectual Property</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We may be subject to intellectual property infringement
claims which may divert significant resources, require us to pay
monetary damages and prevent us from using certain technology
that we currently use in our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The <FONT style="white-space: nowrap">e-commerce</FONT> industry
requires the use of significant technology, requiring us to
either develop internally or obtain and license patents,
copyrights, trademarks, service marks, trade secrets and other
similar intellectual property rights from third parties. We may
be subject to claims with respect to intellectual property in
the future, which, whether such claims have merit or not, may
divert significant resources, both financial and managerial, to
defending such claims. If any such claims are determined against
us, we may be enjoined from using certain technologies, may be
required to pay monetary or civil damages and may be required to
pay royalty or other payments for the use of technology. No
assurance can be given that we could develop or obtain other
alternative technology, that we could obtain rights to continue
to use such technology or that the amounts required to be paid
in monetary or civil damages or in the form of higher royalty
payments will not have a material adverse effect on our
business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We rely on intellectual property right protection for our
trademarks, service marks and other intellectual property rights
and if such rights are not adequately protected, we may not be
able to successfully build our brand.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We seek to protect our intellectual property rights through the
use of patents, copyrights, trademarks, service marks, trade
secrets and other similar intellectual property protection and
we regard our ability to protect such rights as being critical
to our reputation, business and prospects. We have registered,
and have the exclusive right to use our domain names,
www.gmarket.co.kr and www.gmarket.com, and have secured the
rights to use 50&nbsp;other variations of our domain names for a
number of other markets, including Japan, China, Taiwan, India,
France, Italy and Mexico. We have also obtained eight business
model patents in Korea. Our efforts in protecting our
proprietary rights may not be effective in preventing others
from using and infringing upon our rights, which may harm our
reputation, business, financial condition and results of
operations. Monitoring unauthorized use of our proprietary
rights is difficult, time consuming and expensive. In addition,
if we discover a violation of any of our rights, we must seek to
enforce our rights in various tribunals and the courts, which
would be costly and divert management resources from our
business.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Korea Intellectual Property Office rejected our service mark
application for the exclusive use of our trade name in both
Korean and English language forms on the grounds that they are
simple and common marks, not eligible for registration as
service marks under the Korean Trademark Act. We are appealing
such finding with various authorities and may ultimately seek
redress in court. Although the final outcome is unclear at this
time, if our applications for the service marks are not
accepted, we may not have the exclusive right to such names
under the Korean Trademark Act. However, although no assurance
can be given that we will ultimately prevail on the merits,
pursuant to the Korean Unfair Competition Prevention and Trade
Secret Protection Act, we may be able to pursue an enjoinment
action against others who attempt to use our trade name in the
future on the grounds that our trade names are well-known to the
general public in Korea. Our inability to stop third parties
from using our brand names may hurt our reputation, impede our
ability to improve our brand name recognition and harm our
business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Risks Related to Doing Business in Korea</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Our business may be adversely affected by developments
affecting the Korean economy.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have historically generated all of our revenues from
operations in Korea. Our future performance will depend on
Korea&#146;s future economic growth. Adverse developments in
Korea&#146;s economy as a result of various factors, including
economic, political and social conditions in Korea, other
countries in Asia or the United States may have an adverse
effect on consumer spending which may not allow us to achieve
our desired revenue growth.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The economic indicators in the past few years have shown mixed
signs of recovery and uncertainty, and future recovery or growth
of the economy is subject to many factors beyond our control.
Factors that may impact the Korean economy include, among
others, the financial performance of Korean conglomerates, or
chaebols, and their suppliers, and their potential adverse
impact on the Korean economy, including as a result of recent
investigations relating to unlawful political contributions by
chaebols, loss of investor confidence arising from corporate
accounting irregularities and corporate governance issues at
certain chaebols, lower levels of consumer confidence and a
slowdown in consumer spending, an unanticipated deterioration of
consumer credit quality, deterioration of the financial health
and liquidity of Korean financial institutions and the financial
sector in general, adverse movements in interest rates, foreign
exchange rates and commodity prices, such as oil and other
natural resources, economic, political and social instability of
certain of Korea&#146;s largest trading partners, including, in
particular, China, the United States and Japan, or deterioration
in economic or diplomatic relations between Korea and its
trading partners or allies, including deterioration resulting
from trade disputes or disagreements in foreign policy, the
outbreak of the bird flu or other similar contagion or pandemic,
the occurrence of natural disasters, social and labor unrest and
political uncertainty or increasing strife among or within
political parties in Korea. Also, adverse geo-political
developments and the outbreak of armed conflict may have an
overall negative impact on the world&#146;s economy and on the
Korean economy. Any such developments will likely have a
material adverse effect on our business, prospects, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Increased tensions with North Korea could have an adverse
effect on us and the price of the&nbsp;ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Relations between Korea and North Korea have been tense over
most of Korea&#146;s history. The level of tension between Korea
and North Korea has fluctuated and may increase or change
abruptly as a result of current and future events, including
ongoing contacts at the highest levels of the governments of
Korea and North Korea and increased hostility between North
Korea and the United States. In December 2002, North Korea
removed the seals and surveillance equipment from its Yongbyon
nuclear power plant and evicted inspectors from the United
Nations International Atomic Energy Agency, and has reportedly
resumed activity at its Yongbyon power plant. In January 2003,
North Korea announced its intention to withdraw from the Nuclear
Non-Proliferation Treaty,
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
demanding that the United States sign a non-aggression pact as a
condition to North Korea dismantling its nuclear program. In
August 2003, representatives of Korea, the United States, North
Korea, China, Japan and Russia held multilateral talks in an
effort to resolve issues relating to the nuclear weapons program
of North Korea. In February 2005, North Korea announced that it
possessed nuclear weapons. In September 2005, North Korea agreed
to end its nuclear weapons program, and the six participating
nations signed a draft preliminary accord pursuant to which
North Korea agreed to dismantle its existing nuclear weapons,
abandon efforts to produce new future weapons and readmit
international inspectors to its nuclear facilities. In return,
the other five nations participating in the talks, China, Japan,
Korea, Russia and the United States, expressed willingness to
provide North Korea with energy assistance and other economic
support. The six parties agreed to hold further talks in
November 2005. However, one day after the joint statement was
released, North Korea announced that it would not dismantle its
nuclear weapons program unless the United States agreed to
provide civilian nuclear reactors in return, a demand that the
United States rejected.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2006, North Korea conducted several missile tests, which
increased tensions in the region and raised strong objections
from Japan and the United States. In response, the United
Nations Security Council passed a resolution condemning such
missile tests and banning any United Nations member state from
conducting transactions with North Korea in connection with
material or technology related to missile development or weapons
of mass destruction. On October&nbsp;9, 2006, North Korea
announced that it had successfully conducted a nuclear test,
which increased tensions in the region and raised strong
objections from Korea, the United States, Japan, China and other
nations worldwide. In response, the United Nations Security
Council passed a resolution which prohibits any United Nations
member state from conducting transactions with North Korea in
connection with any large-scale arms and material or technology
related to missile development or weapons of mass destruction,
providing luxury goods to North Korea, and imposes freezing of
assets and an international travel ban on persons associated
with North Korea&#146;s weapons programs, and calls upon all
United Nations member states to take cooperative action,
including through inspection of cargo to or from North Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February 2007, the six parties entered a new accord whereby
North Korea would begin to disable its nuclear facilities in
return for fuel oil and aid. We cannot assure you that these
recent events constitute a final agreement on North Korea&#146;s
nuclear program, including critical details such as
implementation, timing and verification, or that North Korea
will fulfill its obligations under such accord.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, in October 2004, the United States proposed plans
to withdraw approximately one-third of the 37,500 troops
currently stationed in Korea by the end of 2008. However,
details regarding the timing and other aspects of the proposed
reduction in U.S.&nbsp;troops are not yet finalized and talks
between the governments of the United States and Korea are
ongoing.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any further increase in tensions, resulting for example from a
break-down in contacts, test of long-range nuclear missiles,
coupled with continuing nuclear programs by North Korea or an
outbreak in military hostilities, could adversely affect our
business, prospects, financial condition and results of
operations and could lead to a decline in the market value of
our ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Fluctuations in the exchange rate between the Won and the
Dollar will affect our results of operations in Dollars and the
price of our ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Currently, all of our revenues and expenses are denominated in
Won. Fluctuations in the exchange rate between the Won and the
Dollar will affect our results of operations in Dollars and the
price of our ADSs. Fluctuations in the exchange rate between the
Won and the Dollar will also affect the amounts a registered
holder or beneficial owner of ADSs will receive from the
depositary in respect of dividends in Dollar terms, if any,
which will be paid in Won to the depositary and
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
converted by the depositary into Dollars. For historical
exchange rate information, see &#147;Exchange Rates.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Your ability to deposit or withdraw common shares
underlying the ADSs into and from the depositary facility may be
limited, which may adversely affect the value of your investment
in our ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the terms of our deposit agreement, holders of our common
shares may deposit such shares with the depositary&#146;s
custodian in Korea and obtain ADSs, and holders of our ADSs may
surrender the ADSs to the depositary and receive our common
shares. However, to the extent that a deposit of common shares
exceeds the number of common shares initially deposited by us
for the issuance of ADSs (including deposits in connection with
the initial offering and all subsequent offerings of ADSs and
stock dividends or other distributions relating to ADSs), such
common shares will not be accepted for deposit unless
(i)&nbsp;our consent with respect to such deposit has been
obtained or (ii)&nbsp;such consent is no longer required under
Korean laws and regulations or under the terms of the deposit
agreement. We have consented to any such deposit which exceeds
the number of common shares to be deposited by us as mentioned
above, so long as such deposit would not violate our articles of
incorporation or applicable Korean law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the terms of the deposit agreement, no consent is required
for the deposit of common shares obtained through a dividend,
free distribution, rights offering or reclassification of such
shares. In addition, we do not currently have any plans to list
our common shares on any stock exchange or organized trading
market in Korea, nor do we have any obligation to do so, and, as
a result, if a holder surrenders ADSs and withdraws common
shares, such holder may not be able to sell his shares, other
than in an off-market transaction.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Investors in our ADSs may not have preemptive rights and
may suffer dilution.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You may not be able to exercise preemptive rights or participate
in rights offerings and may experience dilution of your
holdings. The Korean Commercial Code and our articles of
incorporation require us to offer shareholders the right to
subscribe for new common shares in proportion to their existing
ownership percentages whenever new common shares are issued,
except under certain circumstances as provided in our articles
of incorporation. Under our articles of incorporation, we may
issue new shares up to 60% of our total outstanding shares
pursuant to a board resolution to persons other than existing
shareholders only:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we offer subscription for new shares or issue them to
    subscribers in accordance with the Securities and Exchange Act
    of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares by general public offering by a
    resolution of the board of directors in accordance with the
    Securities and Exchange Act of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we preferentially issue new shares to members of our employee
    stock ownership association in accordance with applicable laws
    and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares upon the exercise of stock options in
    accordance with applicable laws and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares pertaining to the issuance of any
    depository receipts;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares to entities other than our shareholders,
    such as domestic or foreign financial institutions or foreign
    investors, for the purposes of long-term development or funding
    necessity; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares in order to achieve a business purpose,
    including, but not limited to, introduction of new technology or
    improvement of our financial structure.</TD>
</TR>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accordingly, if we issue new shares to persons other than our
shareholders based on such exception, a holder of our ADSs will
experience dilution of such holdings. If none of the above
exceptions is available, we will be required to grant preemptive
rights when issuing additional common shares under Korean law.
However, under U.S.&nbsp;law, we would not be able to make those
rights available in the United States unless we register the
securities to which the rights relate or an exemption from the
registration requirements of the Securities Act is available.
Under the deposit agreement governing the ADSs, if we offer
rights to subscribe for additional common shares, the depositary
under the deposit agreement, after consultation with us, may
make such rights available to you or dispose of such rights on
behalf of you and make the net proceeds available to you or, if
the depositary is unable to take such actions, it may allow the
rights to lapse with no consideration to be received by you. The
depositary is generally not required to make available any
rights under any circumstances. We are under no obligation to
file a registration statement under the Securities Act to enable
you to exercise preemptive rights in respect of the common
shares underlying the ADSs, and we cannot assure you that any
registration statement would be filed or that an exemption from
the registration requirement under the Securities Act would be
available. Accordingly, you may not be entitled to exercise
preemptive rights and may thereby suffer dilution of your
interest in us.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the purchase of our common shares by Yahoo!
Korea from A.&nbsp;Bohl Praktijk B.V., a Dutch limited liability
company, or DutchCo, Yahoo! Korea entered into a shareholders
agreement with us, Interpark Corporation and DutchCo, which
provides for, among other things, preemptive rights to Yahoo!
Korea even in circumstances when certain other of our
shareholders would not be entitled to such rights. DutchCo is an
investment vehicle of Oak Investment Partners&nbsp;IX, LP and
its affiliated funds, which are managed by Oak
Associates&nbsp;IX, LLC, as the general partner of the funds.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The sale or availability for sale of substantial amounts
of our ADSs could adversely affect their market price.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interpark Corporation, and its affiliates own approximately
37.2% of our ADSs. Yahoo! Inc., and its affiliates own
approximately 10.1% of our ADSs. If any of our major
shareholders, including Interpark Corporation or Yahoo! Inc.,
and their respective affiliates, decides to sell substantial
amounts of our ADSs in the public market or if there is a
perception of their intent to sell the market price of our ADSs
could be materially and adversely affected and could materially
impair our future ability to raise capital through offerings of
our ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The public shareholders of our ADSs may have more
difficulty protecting their interests than they would as
shareholders of a corporation incorporated in the United
States.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our corporate affairs are governed by our articles of
incorporation and by the laws and regulations governing Korean
corporations. The rights and responsibilities of our
shareholders and members of our board of directors under Korean
law may be different from those that apply to shareholders and
directors of a corporation incorporated in the United States.
While the facts and circumstances of each case will differ, the
duty of care required of a director under Korean law may not be
the same as the fiduciary duty of a director of a corporation
incorporated in the United States. Although the concept of
&#147;business judgment rule&#148; exists in Korea, there is
insufficient case law or precedent to provide guidance to the
management and shareholders as to how it should be applied or
interpreted in a particular circumstance. Holders of our ADSs
may have more difficulty protecting their interests against
actions of our management, members of our board of directors or
controlling shareholder than they would as shareholders of a
corporation incorporated in the United States. In addition, the
standard of disclosure for Korean companies may be materially
less onerous than those applicable to companies incorporated in
the United States, making our public disclosure less timely or
less comprehensive than those made by companies incorporated in
the United States.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>As an ADS holder, you will not be treated as our
shareholder and you may not be able to exercise voting
rights.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder of ADSs, you will have rights as a holder of ADS.
Such rights will be determined only in accordance with the terms
of the deposit agreement which is governed by New York law and
are different than those of a holder of our common shares, which
are governed by our articles of incorporation and the Korean
Commercial Code. The depositary will be the shareholder of the
common shares underlying your ADSs and upon our request, the
depositary will notify you of shareholders&#146; meetings and
arrange to deliver our voting materials to you only when we
deliver them to the depositary with sufficient time for the
depositary to deliver them to you under the terms of the deposit
agreement. Upon receipt of the necessary voting materials, you
may instruct the depositary to vote the number of common shares
your ADSs represent and the depositary will endeavor to vote the
underlying common shares in accordance with the instruction. If
there is a delay, we cannot ensure that you will receive voting
materials or otherwise learn of an upcoming shareholders&#146;
meeting in time to ensure that you may instruct the depositary
to vote your shares. In addition, the depositary and its agents
are not responsible for failing to carry out voting instructions
or for the manner of carrying out voting instructions. As a
result, you may not be able to exercise your right to vote, and
you may lack recourse if your common shares are not voted as you
requested.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>You would not be able to exercise dissent and appraisal
rights unless you have withdrawn the underlying common shares
from the depositary facility and become our direct
shareholder.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In some limited circumstances, including the transfer of the
whole or any significant part of our business, our acquisition
of a part of the business of any other company having a material
effect on our business, our merger or consolidation with another
company, dissenting shareholders have the right to require us to
purchase their shares under Korean law. However, if you hold our
ADSs, you will not be able to exercise such dissent and
appraisal rights unless you have withdrawn the underlying common
shares from the depositary facility and become our direct
shareholder prior to the record date for the shareholders&#146;
meeting at which the relevant transaction is to be approved.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>We may amend the deposit agreement and the ADRs without
your consent for any reason and, if you disagree, your option
will be limited to selling the ADSs or withdrawing the
underlying common shares.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may agree with the depositary to amend the deposit agreement
and the ADRs, without your consent for any reason. If an
amendment adds or increases fees or charges (except for charges
incurred in connection with foreign exchange control
regulations, taxes and other governmental charges, delivery and
other similar expenses) or which shall otherwise materially
prejudice any substantial right of ADS holders, it will not
become effective for outstanding ADRs until 30&nbsp;days after
the depositary notifies ADS holders of the amendment. At the
time an amendment becomes effective, you are considered, by
continuing to hold your ADSs, to agree to the amendment and to
be bound by the ADRs and the deposit agreement as amended. If
you do not agree with an amendment to the deposit agreement or
the ADRs, your option is limited to selling the ADSs or
withdrawing the underlying common shares. No assurance can be
given that the sale of ADSs would be made at a price
satisfactory to you in such circumstances. In addition, as of
the date hereof, the common shares underlying the ADSs are not
listed on any stock exchange and we do not currently have any
plans to list our common shares on any stock exchange or
organized trading market, nor do we have any obligation to do
so. Your ability to sell the underlying common shares following
withdrawal and the liquidity of the common shares may therefore
be limited.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>You may be subject to Korean withholding tax.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will deduct Korean withholding tax from any dividends paid to
you at a rate of 27.5% (including resident surtax). If you are a
qualified resident in a country that has entered into a tax
treaty with Korea, you may qualify for a reduced rate of Korean
withholding tax with regard to any
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
dividends paid. For example, if you are a qualified resident of
the United States for purposes of the income tax treaty between
the United States and Korea, and you are the &#147;beneficial
owner&#148; of a dividend, generally, a reduced withholding tax
at the rate of 16.5% (including resident surtax) will apply,
which may be further reduced to 11.0% (including resident
surtax) if you meet certain other conditions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Korean tax law, as a general rule, in the absence of an
applicable tax treaty which exempts or reduces the rate of tax
on capital gains, capital gains earned by non-residents upon
transfer of our common shares are subject to Korean withholding
tax at the lesser of 11.0% (including resident surtax) of the
gross realization proceeds or, subject to production of
satisfactory evidence of acquisition cost and transfer expenses
of the ADSs, 27.5% of the net capital gains. As for the ADSs,
capital gains earned by a non-resident holder from the transfer
of ADSs outside Korea are not subject to Korean taxation,
irrespective of whether or not such holder has a permanent
establishment in Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>You may have difficulty bringing an original action or
enforcing any judgment obtained outside Korea against us, our
directors and executive officers.</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are organized under the laws of Korea, and the majority of
our directors and all of our executive officers reside in Korea.
Accordingly, all or a significant portion of our assets and the
assets of such persons are located outside of the United States.
As a result, it may not be possible for you to effect service of
process within the United States upon these persons or to
enforce against them or us court judgments obtained in the
United States that are predicated upon the civil liability
provisions of the federal securities laws of the United States
or of the securities laws of any state of the United States. We
have, however, irrevocably appointed an agent in New York to
receive service of process in any proceedings in the State of
New York relating to our ADSs. Notwithstanding the foregoing,
there is doubt as to the enforceability in Korea, either in
original actions or in actions for enforcement of judgments of
United States courts, of civil liabilities predicated on the
federal securities laws of the United States or the securities
laws of any state of the United States.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='114'></A>
</DIV>

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    <TD><B>ITEM&nbsp;4.</B></TD>
    <TD>
    <B>INFORMATION ON THE COMPANY</B></TD>
</TR>

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<A name='115'></A>
</DIV>

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    <TD><B>4.A.&nbsp;</B></TD>
    <TD>
    <B>History and Development of the Company</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We were incorporated as a company with limited liability under
Korean law on April&nbsp;4, 2000 under the legal name of
GOODSDAQ, Ltd., and the commercial service of providing an
e-commerce market place for sellers and buyers was launched. Our
legal name was changed to Gmarket Inc. on April&nbsp;10, 2004.
In December 2004, we received an equity investment from DutchCo
in exchange for preferred stock in our company. In June 2006,
Yahoo! Korea purchased 10% of our shares (currently 9.1%) from
DutchCo, and we were listed on Nasdaq with an initial public
offering price of US$15.25.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our principal corporate offices are located at 8th&nbsp;floor,
LIG Tower 649-11 Yeoksam-Dong, Gangnam-Gu, Seoul, Korea 135-912.
Our telephone number is (82-2) 6277-6700. Our agent for service
of process in the United States is CT Corporation System,
located at 111 8th Avenue, New York, New York 10011. CT
Corporation System&#146;s telephone number is
(206)&nbsp;894-8940.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Until the third quarter of 2003, we operated as an online
retailer, selling products from our inventory, and as an
e-commerce marketplace, where various sellers could list and
sell their products. In the third quarter of 2003, we began
transitioning exclusively to an e-commerce marketplace. By
December&nbsp;31, 2004, we sold all of our inventory and since
then, have been generating revenues exclusively from our
e-commerce marketplace.
</DIV>

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<A name='116'></A>
</DIV>

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</TR>

<TR valign="top">
    <TD><B>4.B.&nbsp;</B></TD>
    <TD>
    <B>Business Overview</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are a leading retail e-commerce marketplace in Korea offering
buyers a wide selection of products at competitive prices and
sellers a comprehensive and flexible sales solution. Our
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
is highly scalable and facilitates the sale of products in small
or large quantities to a large number of potential buyers in a
convenient, cost effective and secure manner. We derive our
revenues primarily from transaction fees on the sale of products
on our website as well as from advertising fees and others. Our
e-commerce marketplace is located at www.gmarket.co.kr.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe we have developed an established and well-known brand
name in Korea as evidenced by both our leading market position
and rapid growth. We believe we are a leading retail e-commerce
marketplace in Korea based on gross merchandise value, or GMV,
which represents the total value of all goods sold on an
e-commerce marketplace. Further, we believe we are currently a
leader in Korea in terms of monthly unique visitors among
e-commerce retailers. For the year ended December&nbsp;31, 2006,
we had GMV of Won 2.27 trillion (US$2.45&nbsp;billion) compared
to total online retail sales in Korea of Won 13.46 trillion
(US$14.55&nbsp;billion). From January&nbsp;1, 2004 through
December&nbsp;31, 2006, our GMV has grown 116% per year on a
compounded annual basis, reaching a GMV of Won
245.09&nbsp;billion (US$264.85&nbsp;million) for the month of
December 2006. From January&nbsp;1, 2004 through
December&nbsp;31, 2006, average monthly unique visitors to our
website has grown 37% per year on a compounded annual basis,
reaching approximately 18.4&nbsp;million monthly unique visitors
for the month of December 2006, and our registered users have
grown 82% per year on a compounded annual basis during the same
period, with over 10.9&nbsp;million registered users as of
December&nbsp;31, 2006. No assurance can be given, however, that
such market position and growth rate can be sustained. See
&#147;Risk Factors.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe our rapid growth is attributable to our ability to
facilitate interaction among a growing critical mass of buyers
and sellers. We believe sellers, whether they are small
businesses, online merchandisers, large manufacturers or
individuals, are attracted to our website for our cost
effective, end-to-end sales and marketing channel and access to
a broad audience of buyers. Sellers are offered flexible listing
options utilizing our five distinct trading platforms and other
extensive services, including our proprietary Gmarket Sales
Manager software program, or GSM program, training and customer
support and delivery services. We believe buyers are attracted
to our website as we provide an entertaining and secure shopping
environment with more than three million products currently
available for sale in 30 product categories at competitive
prices. Products listed for sale on our website include apparel,
beauty products, computers, electronics, furniture and jewelry
and most are coupled with comprehensive product information,
including pictures, product descriptions and customer reviews
and commentary. In addition, our payment and delivery tracking
systems provide buyers the assurance that their payment is
secure and that the product will be delivered in a timely manner.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our total revenues increased by 119.1% to Won
154.13&nbsp;billion (US$166.56&nbsp;million) in the year ended
December&nbsp;31, 2006 from Won 70.34&nbsp;billion in the year
ended December&nbsp;31, 2005. We recorded a net income of Won
16.28&nbsp;billion (US$17.59&nbsp;million) in the year ended
December&nbsp;31, 2006 compared to a net income of Won
5.09&nbsp;billion in 2005 and net losses of Won
1.44&nbsp;billion in 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Our Industry and Opportunity</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Korea is one of the most advanced countries in the world in
terms of the percentage of Internet users and broadband Internet
penetration rate. According to the Korea Network Information
Center, the number of Internet users in Korea reached
34.1&nbsp;million as of December&nbsp;31, 2006, or approximately
74.8% of Korea&#146;s total population aged six years or older.
In addition, in June 2006, Korea had one of the highest
broadband Internet penetration rates among the member countries
of the Organization for Economic Co-operation and Development,
with approximately 26.4 broadband
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
subscribers per 100 inhabitants. The popularity of the Internet
and high broadband Internet penetration rate have allowed
companies in Korea to generate revenues from a variety of
services over the Internet, including e-commerce, online
advertising, online gaming, video-on-demand and other multimedia
entertainment services. We believe factors contributing to the
commercialization of Internet services in Korea include the
following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    high computer penetration in the household, workplace and
    Internet cafes;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    high broadband Internet penetration rate, which permits richer
    user experience and provision of a broader range of services
    than is possible with slower, dial-up Internet connections;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    secure Internet environment, including telecommunications
    networks and systems, which helps promote consumers&#146;
    confidence in online transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    advanced electronic or other payment systems, including credit
    card, bank transfer and mobile banking systems; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the Korean government&#146;s continued focus and support to
    improve the Internet and communications infrastructure.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Internet has emerged as a popular medium for conducting
commercial transactions in Korea, in particular for retail
e-commerce transactions. The ability to reach a large number of
customers at a relatively low cost has made retail e-commerce an
attractive sales and marketing channel. According to the Korea
National Statistical Office, there were 4,531 online shopping
malls that constituted the retail e-commerce industry in Korea,
accounting for a total GMV of approximately Won 13.5 trillion
for the year ended December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The evolution of the retail e-commerce industry in Korea is
similar to that in the United States. The purchase and sale of
goods between and among consumers and retailers have, until
recently, been conducted at retail shops, department stores and
discount stores. For buyers, these forums generally require
face-to-face interactions and significant amount of time and
effort in researching product attributes, product availability
and prices. For sellers, such forums generally involve higher
real estate, labor and inventory costs, with potential sales
being limited by the number of outlets as well as hours of
operation. We believe the Internet offers the opportunity to
provide an alternative sales and marketing channel for sellers
to reach a large number of buyers at a relatively low cost and
without maintaining a physical store.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Our Website</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our website is located at www.gmarket.co.kr and is available 24
hours a day, seven days a week other than a few hours during the
week when our website is shut down for routine maintenance and
service. GMV for the three months ended March&nbsp;31, 2007 was
Won 722.98&nbsp;billion (US$781.27&nbsp;million). As of
March&nbsp;31, 2007, we had over 11.7&nbsp;million registered
users, having added over 780,000 new users during the last three
months ended March&nbsp;31, 2007. Our website is organized into
various product groupings and categories. Products listed for
sale are accompanied by photographs in multiple sizes, summary
descriptions, user ratings, customer comments and reviews,
together with discounts or other promotions offered on the
products, if any. Our website also has an easy-to-use search
engine, which allows customers to find specific products quickly
and easily.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our GSM program, which is available for download on our website
at no charge, is the backbone of our comprehensive sales
solutions. Using this proprietary software program, sellers can
conveniently manage the entire sales process online in one
central location, from listing products, monitoring inventory
levels, tracking delivery status and returned products, managing
customer contact/communication, requesting pick up from delivery
providers, among others. We believe one unique feature of the
GSM program is it allows sellers to upload listings for multiple
items with minimal effort, which saves a significant amount of
time. Additionally, sellers may change the
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
quantity and price of listed products quickly and easily, which
provides them the flexibility to adjust to changing market
conditions. For certain of our larger sellers, the GSM program
allows a direct link to their inventory management programs, so
that such sellers can more effectively monitor their inventory
levels as sales occur. Additionally, using the GSM program,
sellers can purchase keyword search terms and other premium
listing services. Sellers receive up-to-date news and
information from us on new services and product categories,
among others. Sellers can view frequently asked questions and
other helpful articles posted by us and others on the sales
process, including information on credit card payments and tax
statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We strongly encourage and facilitate the free flow and exchange
of information regarding goods, consumer trends and other
information which may be useful to buyers and sellers through
various bulletin boards and consumer comments sections available
on our website. We believe the active sharing of information and
experiences by users fosters a sense of community and
ultimately, customer loyalty. Sellers, buyers and other users
can post product reviews, rankings and commentary. We offer an
online magazine, &#147;Shopping Webzine,&#148; where our users
and other members of the Internet community can publish their
reviews regarding sellers and products, and contribute general
interest articles or other commentary regarding fashion and
other topics. We also offer a &#147;Shop Together&#148; feature,
whereby Gmarket registered users can recommend products to each
other. To encourage participation in the community, we provide
contributors with coupons and reward points, among other
benefits, to be used towards purchases.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Products Offered on Our Website</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The number of products listed on our website and product
groupings has grown significantly over the past several years.
Products are broadly organized into the following six product
groupings and 30 product categories:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Computers/ Electronics</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Fashion</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Child Care/ Food</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;computers/ games<BR>
    <BR>
    &#149;&nbsp;consumer electronics/ cooking appliances/ home
    electronics/ audio electronics<BR>
    <BR>
    &#149;&nbsp;large kitchen appliances/ televisions/ air
    conditioners<BR>
    <BR>
    &#149;&nbsp;mp3 players/ mobile phones/ digital cameras<BR>
    <BR>
    &#149;&nbsp;used/out-of-season products
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;women&#146;s clothing/
    undergarments<BR>
    <BR>
    &#149;&nbsp;men&#146;s clothing/ casual wear/ suits<BR>
    <BR>
    &#149;&nbsp;luxury goods/ brand name/ designer clothing<BR>
    <BR>
    &#149;&nbsp;shoes/ bags/ wallets/ belts<BR>
    <BR>
    &#149;&nbsp;jewelry/watches/ accessories
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;maternity/ baby care
    products/ baby carriages<BR>
    <BR>
    &#149;&nbsp;children&#146;s clothing/ shoes/ bags<BR>
    <BR>
    &#149;&nbsp;toys/ children&#146;s books/ educational kits<BR>
    &#149;&nbsp;fresh products/ prepared foods/ produce, fish and
    meat<BR>
    <BR>
    &#149;&nbsp;health foods/ processed foods/ groceries
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Beauty/ Sporting Goods/</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Automobile Accessories</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Furniture/ Health/ Living</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Travel/ Leisure</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;cosmetics/ beauty
    products/ weight management<BR>
    <BR>
    &#149;&nbsp;golf/ mountain hiking/ skiing/ fishing gear<BR>
    <BR>
    &#149;&nbsp;fitness/ leisure sports/ hobbies<BR>
    <BR>
    &#149;&nbsp;exercise apparel/ shoes<BR>
    <BR>
    &#149;&nbsp;automobile parts and accessories
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;home/ kitchen/ storage/
    bath<BR>
    <BR>
    &#149;&nbsp;office supplies/ office products/ industrial
    supplies<BR>
    <BR>
    &#149;&nbsp;health care/ pets/ musical instruments/ adult<BR>
    <BR>
    &#149;&nbsp;furniture/ do-it-yourself items<BR>
    <BR>
    &#149;&nbsp;bedroom furnishings/ home decorations
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">&#149;&nbsp;books/ music/ DVD<BR>
    <BR>
    &#149;&nbsp;flower/ hobby/ gifts/ special event items<BR>
    <BR>
    &#149;&nbsp;travel reservations/ leisure/ restaurant
    reservations/ concert tickets<BR>
    <BR>
    &#149;&nbsp;insurance/ used cars/ Digital Voucher Market<BR>
    <BR>
    &#149;&nbsp;eMart/ Interpark Mart
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We update our product groupings and categories from time to
time, in order to make the shopping experience more convenient
and efficient. Such groupings currently include &#147;new
listings,&#148; &#147;most popular items&#148; and
&#147;today&#146;s specials.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We recently introduced our Digital Voucher Market, which allows
service providers such as restaurants, beauty salons and health
clinics, among others, to list and sell their services on our
website in the form of digital vouchers to be redeemed by
purchasers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>The Registration Process, Product Listing and Sale</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The Registration Process</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All sellers must register with us while buyers may register or
log on as a guest. Individual buyers, whether they register or
log on as a guest, must provide their name and national
identification number, which identifies their age and sex. We
send the name and the national identification number to a third
party credit agency to confirm that the name and the national
identification number match and confirm that certain other
information provided matches the record on file for such person.
Business buyers must submit to us their trade name, the names of
their corporate representatives, their tax office registration
number, a copy of their bank account passbook and a copy of
their standard terms and conditions of sale. All users must
agree to our user agreement, which sets forth the terms and
conditions for the use of our website, including the timing and
method of payment, the types of goods that cannot be listed,
delivery terms and return policies. The agreement also requires
that users generally indemnify us for various matters, including
for claims, damages or liabilities brought by third parties
against us in connection with the listing and sales of goods on
our website.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2007, we had over 11.7&nbsp;million
registered users. We have a diverse base of registered sellers,
consisting of small retailers, large merchandisers, other
business sellers and individuals. We currently rank our
registered sellers on a monthly basis into four levels: power,
superior, normal and poor. Power and superior rankings are
posted on our website. A seller is assigned a ranking depending
on several factors such as the aggregate number of successful
sales the seller has recorded with us since registration and
during the immediately preceding month, the percentage of
returned goods for reasons attributable to the seller&#146;s
non-performance or error, cancelled auctions and the achievement
of minimum customer satisfaction levels.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although we do not rank our buyers, we reward our repeat buyers
by offering memberships in loyalty discount programs. We may
grant discount coupons to registered users who accumulate
loyalty points. We also offer to buyers membership to our
&#147;Zero Margin Club&#148; which entitles buyers to purchase
eligible products at a price less than that offered to
non-members as we forego up to 3% of our transaction fees.
Membership fees depend on the membership term.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Product Listing and Sale</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Products are listed for sale on our website using our GSM
program. The sellers choose from one of our 30 product
categories and various subcategories to list their products. The
sellers input information on the product, including textual
descriptions and photographs and often provide hyperlinks to
other websites. Sellers can elect to use one of our value-added
services, such as banner and keyword search advertising, Star
Shop or Seller&#146;s Shop, for an additional fee. See
&#147;&#151;Value-Added Services.&#148; If sellers have any
questions or technical issues, they are able to communicate with
us directly online, call our customer service department or send
us emails or instant messages. See &#147;&#151;Customer
Service.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We filter all listings through a database containing certain
words and phrases in order to prevent the listing of illegal or
prohibited products. Our filter is not completely successful and
certain of these items may be listed. We conduct random searches
to identify such listings, and any seller found to have listed
such products is prohibited from listing with us in the future.
See &#147;Risk
</DIV>

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Factors&#151;The listing or sale by our users of pirated,
counterfeit or illegal items or the improper listing and sale of
regulated items may harm our reputation and subject us to
lawsuits.&#148; We update our restricted word database from time
to time as the legal and regulatory environment and requirements
change. We conduct random checks of listed products to review
the product descriptions for accuracy and confirm that the
products themselves, or the sale of the products, do not violate
applicable laws and regulations, including trademark and
copyright laws.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Currently, our website offers five distinct trading platforms,
consisting of the following:
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    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Fixed Price. </I>Allows potential buyers to purchase listed
    products at a fixed price, without waiting to bid in an auction
    or negotiating with sellers.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Fixed Price with Options. </I>Similar to our fixed price
    trading platform except the sellers elect to link the product to
    one or more discount or donation features. Sellers may choose to
    include a discount feature to allow buyers to use online
    coupons, stamps or loyalty points to reduce the purchase price
    or to receive free delivery, among other features. If sellers
    have elected to link the product to a charity under our donation
    shopping program, a certain portion of the purchase price is
    donated to such charity.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Negotiation. </I>Buyers and sellers negotiate directly with
    each other online to reach an agreed upon price.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Group Buying. </I>Potential buyers can aggregate their
    purchases, which allows the group to achieve high volume sale
    discounts, while allowing sellers to sell a large quantity of
    goods in a single transaction. Recently, sellers have been using
    this trading platform as a marketing tool and have often sold
    items at the high volume discount rate to all the buyers who
    participate in the group buying effort, regardless of the
    quantity of goods purchased.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Auction. </I>Sellers set a minimum opening price for bids and
    the duration of the auction period. The highest bid above the
    minimum price at the end of the auction period &#147;wins&#148;
    the bid. We obtained a business model patent in Korea in
    February 2006 for a variant of the straight auction called
    &#147;random drawing auction.&#148; Under the random drawing
    auction format, buyers place bids within an acceptable range as
    specified by the seller, and the winning bid is selected by
    reference to how close the bid is to a specific value generated
    at random by our system.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe these trading platforms engage both sellers and
buyers in a trading experience that is more fulfilling and
personal than would be possible under a traditional buy-sell
transaction. We also believe certain categories of goods are
better suited for certain trading platforms than others, and as
a result, sellers have the flexibility of choosing the platform
that most fits their needs.
</DIV>

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<B>Payment Processing</B>
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Buyers can elect to make payment for their purchases with a
credit card or by direct electronic payment. In the case of
credit card payments, such transactions are processed through a
secured gateway. All payments are paid directly to us, which we
hold and distribute to the seller only upon confirmation that
the sale has been completed. As a result, buyers who shop on our
website are provided with the added security of knowing that
they will be able to receive a refund as payment is transferred
to the seller generally within seven to 30&nbsp;days following
delivery of the product to the buyer, depending on the
seller&#146;s ranking with us, with higher ranked sellers
generally receiving payments sooner.
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<B>Product Delivery</B>
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Most of our sellers arrange for delivery of a purchased item
with a delivery company chosen by them. For the benefit of those
sellers who may not otherwise receive volume discounts from
delivery
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companies, we have entered into contracts with two delivery
companies in order to provide lower delivery fees for such
sellers.
</DIV>

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Our GSM program is linked to the websites of certain delivery
companies, enabling sellers who ship products using such
companies to check delivery status in near real time. In
addition, our sellers usually choose delivery companies, whether
on their own or through us, that allow both buyers and sellers
to review and track the shipping and delivery status of items
through links provided on our website.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Nearly all of our users are located in Korea, which allows them
to take advantage of Korea&#146;s sophisticated payment and
delivery infrastructure. Most products are delivered within one
to two business days after they are purchased, with
international shipments taking longer. Our service quality
management division monitors transactions from time to time to
ensure delivery is conducted in a timely and efficient manner
and to address any recurring problems. See &#147;&#151;Customer
Service.&#148; Product returns are easily facilitated through
any delivery company or the post office, allowing buyers to
return unwanted or defective goods. Buyers can call the delivery
company or post office for pick up or request pick up directly
on our website for certain delivery companies. Many delivery
companies in Korea also maintain a webpage where buyers can make
pick up requests. In some cases, delivery companies at the time
of delivery include a return slip to facilitate easy returns. We
provide an automated tracking system, which records the delivery
date and facilitates the return process, as buyers have seven
days within delivery to decide whether or not they will keep the
product. As part of our effort to expand our business, we offer
delivery to destinations outside of Korea and have upgraded our
service to allow for delivery tracking of products outside of
Korea.
</DIV>

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<B>Value-Added Services</B>
</DIV>

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We believe we offer sellers a compelling value proposition by
offering extensive value-added services, including the following:
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    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Seller&#146;s Shop. </I>This service provides a variety of
    ready-to-use web pages that allows sellers to establish a
    low-cost and efficient online &#147;storefront&#148; within our
    website. These ready-to-use web pages can be easily modified,
    updated and personalized by sellers to create a unique shopping
    experience for their customers. Sellers can also enhance and add
    other features to their &#147;store,&#148; such as allowing
    buyers to send e-mails directly to the seller and offering
    coupons which may be used for purchases from the seller. We do
    not charge sellers any fee to use our Seller&#146;s Shop service.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Star Shop. </I>We believe products with well-known celebrity
    endorsements or advertisements tend to sell better than those
    without. Most smaller sellers, however, are unable to afford
    such celebrity endorsements or advertisements as part of their
    marketing campaigns as they are relatively expensive. We
    facilitate the pooling of various products from many sellers in
    one endorsement or advertisement, allowing participating sellers
    to share in the cost.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Donation Shopping. </I>For certain products offered by
    sellers an election is made to donate a portion of the sales
    proceeds to a specified charitable organization of our choosing.
    We often give these products priority placement on our website.
    We have found buyers are more likely to purchase a product
    listed as a donation shopping item.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Sales Promotion Service. </I>Our web and graphic designers
    are available to assist sellers in the sale and marketing
    process for a fee. We charge sellers for graphic and website
    design, photography and other artwork. For example, users of our
    Seller&#146;s Shop may engage our staff to assist them in making
    their basic online storefront more comprehensive and robust.</TD>
</TR>

</TABLE>

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<B>Pricing</B>
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Our primary sources of revenues consist of transaction fees,
standard and premium listing fees, and banner advertisement and
keyword search fees from our sellers, advertisement fees from
non-
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sellers and membership fees for our Zero Margin Club from
buyers. We do not currently charge any registration fees to
register as a user.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We do not charge listing fees, except with respect to group
buying and auction, among others. Our transaction fees are
generally between 6&nbsp;percent to 12&nbsp;percent of the sale
price, which is inclusive of any applicable value-added tax. We
do not pass through credit card commissions to sellers. Also,
the above transaction fees are effectively reduced by the use of
coupons by buyers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We set a minimum fee for keyword searches and certain banner
advertisements and sellers bid for the location, size, frequency
and duration of such keyword search terms and banner
advertisements, with the actual amount charged subject to the
highest bid received for a particular search term bid. Certain
banner advertisements are charged at fixed rates. Our fees for
promotional and advertising services and for value-added
services vary, depending on the service provided.
</DIV>

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<B>Customer Service</B>
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We believe proactive customer service is the most effective
means of achieving user satisfaction, and our success to date
has been due in part to our personalized customer service for
our users. Our customer service is divided into three distinct
functions:
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    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Customer service. </I>The primary contact point for buyers
    with questions, concerns or complaints about our website, our
    services or any seller&#146;s products or services. As of
    March&nbsp;31, 2007, 400 customer service professionals were
    employed by our outsourced call center to respond to our
    buyers&#146; questions or complaints from 9 a.m. to 6 p.m. on
    weekdays and from 9 a.m. to 1 p.m. on Saturdays. The number of
    call center professionals we retain at the call center may vary
    from time to time, based on the then-current customer service
    demands from our users. For example, as of December&nbsp;31,
    2006, we had over 450 customer service professionals at such
    call centers to address an increase in customer service demands.
    We analyze e-mails and calls to identify and address common
    problems so we can improve the overall quality of our services
    and the customer experience.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Seller service and training. </I>The primary contact point
    for sellers with questions or concerns about our services. We
    currently have over 30 professionals serving these functions.
    Upon registration, we assign a professional to each seller, who
    generally contacts that seller after the first listing or upon
    completion of the first sale. This person&#146;s primary role is
    to educate the seller about the Gmarket systems, the retail
    e-commerce process and to assist the seller in their sales,
    marketing and promotions programs and strategies to increase
    customer loyalty. We help sellers establish policies and
    procedures for managing customer questions, as well as assist
    them with questions about specific inquiries from their
    customers. Additionally, as many of our sellers are new to the
    retail e-commerce industry, we offer extensive training, support
    and consulting services as they establish an online retail
    presence with us. We operate and offer to newly registered
    sellers a training program held five days a week at our offices,
    where our staff of seven professionals gives instruction and
    training to help these sellers take full advantage of our
    services, all without charge.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Quality assurance and conflict management. </I>We mediate
    disputes between a seller and a buyer. We believe one of our
    fundamental roles is to facilitate communications between
    sellers and buyers not only in the buy-sell relationship, but
    also after the sale has taken place. We believe by quickly
    engaging ourselves as an intermediary between the seller and
    buyer, we have been able to, in most cases, effectively resolve
    disputes, improving buyer loyalty and enhancing our reputation
    among buyers and sellers.</TD>
</TR>

</TABLE>

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<B>Marketing and Sales</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on our analysis of our registered buyers as of
March&nbsp;31, 2007, approximately 54% of our registered buyers
are women and approximately 68% of our registered buyers are in
their 20s or
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30s. We believe shoppers in this market segment are generally
brand and quality conscious, while buying behaviors are driven
by value and savings. As we believe sellers are best positioned
to market their products effectively, we encourage sellers to
take the initiative in promoting their products and to organize
online and offline promotional events and sales events to
attract buyers and increase frequency and volume of purchases,
such as offering volume based coupons or free delivery. We also
assist in the sellers&#146; promotional efforts. For example, we
host from time to time, special promotional events where we
offer various value-added services to buyers, including coupons,
reduced delivery charges and prizes, to encourage shoppers to
make a purchase.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, we promote our website through various marketing
programs, including the following:
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    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Affiliate Programs. </I>We participate in promotion events
    jointly with various high-traffic websites in Korea, including
    most of the major Internet portals. We believe these
    relationships raise our brand awareness and help attract users
    to our website. We will continue to seek to expand our
    relationships with such parties in the future.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Online Advertising. </I>We purchase banner advertisements,
    keyword search advertisements and other forms of advertisements
    on various portals and other websites we believe are visited by
    Internet users who may be our potential users. Online
    advertisements generally provide a hyperlink that directs
    potential users to our website. We place online advertisements
    with many of the leading Internet portals in Korea, including
    Naver.com, Daum.net and Yahoo.co.kr.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Offline Advertising. </I>Our offline advertisements have
    included nationwide advertising campaigns, including billboard
    and television advertisements designed to increase public
    awareness of our brand and to attract new users to our website.
    Our expenditures for offline advertisements have steadily grown,
    and we expect this type of advertisement to take on an
    increasingly important role in developing our brand image in the
    future.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Partnership Marketing Programs. </I>We enter into
    co-marketing programs with various businesses in Korea. In 2006,
    we had co-marketing programs with (i)&nbsp;a number of major
    Korean Internet websites, including portal and game sites,
    (ii)&nbsp;one of the largest and most influential Korean talent
    agencies, (iii)&nbsp;media outlets such as broadcast television
    stations and daily sports newspapers and (iv)&nbsp;a major
    electronics manufacturer in connection with its talent search
    contest.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to enhance buyer loyalty and increase purchase
frequency and transaction volumes, we offer the following
loyalty programs:
</DIV>

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    <TD width="95%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Gmarket Mileage.</I> Registered buyers can earn Gmarket Miles
    by purchasing eligible products. Buyers can redeem Gmarket Miles
    in 10,000 mile increments for membership in our Zero Margin Club
    or for G Cash. Effective February 2006, we changed the terms of
    our mileage program so that all unused accumulated Gmarket Miles
    expire on the fifth anniversary after their issue date.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>G Cash.</I> G Cash is a form of electronic currency that may
    be used to pay for a variety of services on our website,
    including participation fees in random drawing auctions. Buyers
    may also elect to redeem G Cash into cash with one G Cash unit
    equal to one Won, in minimum denominations of Won 1,000.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Gmarket Stamp</I>s. Registered buyers may earn Gmarket Stamps
    through purchasing eligible products, writing product reviews
    and winning through random drawings, among others. These stamps
    may be accumulated and redeemed for Gmarket Coupons. Also, these
    stamps can be used to pay for the right to place a bid in random
    drawing auctions.</TD>
</TR>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Gmarket Coupons.</I> Registered buyers accumulate coupons by
    trading-in Gmarket Stamps and by visiting the Gmarket Coupon
    page where we distribute coupons both on a random basis and as
    an incentive to buyers to participate in certain promotional
    events.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our marketing functions are divided into two roles: one is to
recognize and anticipate consumer trends and to attract sellers
to our website, and the other is to manage our website and to
develop our e-commerce marketplace community. We had 115
full-time employees performing marketing functions as of
March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Technology and Systems</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have developed a scalable e-commerce marketplace based on a
proprietary exchange trading platform. Our back-end system,
including our GSM program servers and related software and
database management software, records and processes all sales
transactions. Our technology infrastructure is flexible and
enables us to deploy new services quickly and to support our
internal operations while also allowing us to respond quickly to
the changing needs of the rapidly developing e-commerce market.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Once a buyer purchases a product on our website, our back-end
system processes the payment and arranges for the delivery of
the product through a delivery company selected by the seller.
Our back-end system includes: payment systems, settlement
systems, delivery control systems, customer service systems and
content management systems. Because all of our trading formats
are processed through one back-end system, we are able to deploy
new services to our sellers and buyers quickly and with little
or no change to our existing technology architecture.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the month of March 2007, our technology systems:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    handled, on average, 21 giga bits per second of system outbound
    traffic;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    processed more than 90,000 web concurrent connections; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    processed more than 40&nbsp;million search inquiries per day.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our data security systems are multi-layered. All electronic
transmissions of confidential information are encrypted,
utilizing sockets layer technology. Customer data is stored in
databases which are only accessible to employees with special
clearance and protected by an access control program. We employ
various proprietary and third party software to protect
confidential information stored in our databases.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain of our hardware, including computers, data servers and
other servers, are located at the Korea Internet Data Center, a
data center operated by Dacom Corporation, and the Korean
Internet Neutral Exchange, both located in Seoul, and certain
other equipment are located within our headquarters building.
Although we currently archive our databases periodically and
store our backup data at the Korea Internet Data Center and
maintain back-up systems, including a new back-up center system
which we have implemented at another data center location
beginning on March&nbsp;17, 2006, no assurance can be given that
such backups will be adequate to protect the data and other
information stored on such primary and backup systems or that we
will be able to start our backup systems so as not to have a
material interruption of our service. In addition, we cannot
assure you that should damage occur to our systems at the Korea
Internet Data Center as a result of natural disaster, fire,
human error or otherwise that such back-up systems will be
adequate for us to continue our business operations without a
material delay or loss of data. See &#147;Risk Factors&#151;
Interruptions or failures of our network and system
infrastructure, including our communications systems, could lead
to significant downtimes, interruptions and loss of data, which
could damage our reputation and brand name and harm our
operating results.&#148; To address these capacity and volume
issues, we spent in the year ended December&nbsp;31, 2006,
approximately Won 13.46&nbsp;billion (US$14.55&nbsp;million) to
purchase new network and system equipment, including servers,
routers and other equipment.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">31
</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our key technology initiatives are to implement a technology
program that will:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    expand our capacity to support an even greater number of
    e-commerce trading formats and trading volumes as well as to
    accommodate any growth in our user base;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    enable our management to monitor, control and audit operations
    accurately and efficiently; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide redundancy for data, front-end and back-end systems in
    two locations with periodic backup policies, so as to protect
    customer data and to ensure the smooth and uninterrupted service
    capability in the case of technical, system or other breakdowns
    or in the event of natural disaster or other calamity.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Competition</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We compete directly with Auction.co.kr, an e-commerce
marketplace operated by Internet Auction Co., Ltd., which is a
subsidiary of eBay Inc. Our other competitors include Interpark
Corporation, our largest shareholder, d&#38;shop Co., Ltd., and
other e-commerce marketplaces such as Mple Online, which is a
subsidiary of CJ Home Shopping and Daum Onket, which is a
subsidiary of d&#38;shop Co., Ltd. We also compete against GS
Home Shopping, which operates two online retail websites, CJ
Home Shopping and other online retail websites operated by some
of the largest department stores in Korea, such as Lotte.com,
Shinsegae.com and Hmall.com. We currently compete indirectly
with Internet portals in Korea, such as Naver.com and Nate.com.
As we believe that our industry could further consolidate, we
may also face increased competition from bigger and financially
stronger players resulting from such consolidation. In addition,
as the barriers to entry for Internet-related businesses are
relatively low, potential new entrants into the e-commerce
industry could include traditional and non-traditional
retailers, including Internet portals, telecom operators and
cable service providers. Further, we believe that emerging
technologies, including mobile commerce, Internet Protocol
Television (IPTV), Digital Multimedia Broadcasting (DMB), among
others, may allow other competitors to indirectly compete with
e-commerce marketplaces such as ourselves in the future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We expect additional competition from other home-shopping
channels who may establish websites to market their products
online, and we expect that existing online retailers and
auction-based websites will compete with us more directly as
they transform their website to become more of an online
marketplace, such as ours, which offers a greater breadth of
products to attract more buyers and sellers. Increased
competition may reduce our operating margins as we expend more
of our resources to develop new services and offering and
increase our marketing and promotional efforts to maintain our
leading market position and to further strengthen our brand. See
&#147;Risk Factors&#151;We operate in an extremely competitive
industry, and we may be unsuccessful in competing against
current and future competitors, which could have a negative
impact on the level of fees we can charge for our services.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently expect that many more of the home-shopping channels
will establish websites to market their products online and we
expect that existing online retailers and auction-based websites
will compete with us more directly as they transform their
websites to become more of an online marketplace, such as ours,
which offers a greater breadth of products to attract more
buyers and sellers. Increased competition may reduce our
operating margins as we expend more of our resources to develop
new services and offerings and increase our marketing and
promotional efforts to maintain our market position and to
strengthen our brand. See &#147;Risk Factors&#151;We operate in
an extremely competitive industry, and we may be unsuccessful in
competing against current and future competitors, which could
have a negative impact on the level of fees we can change for
our services.&#148;
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">32
</FONT>
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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Intellectual Property</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe our intellectual property, particularly our
trademarks, service marks and patents, are important to our
present and future success. We rely on a combination of
intellectual property laws and contractual restrictions to
protect our proprietary rights, know-how, information and
technology. We have registered, and have the exclusive right to
use our domain names, www.gmarket.co.kr and www.gmarket.com, and
have secured the rights to use 50 other variations of our domain
names for a number of other markets, including Japan, China,
Taiwan, India, France, Italy and Mexico. We have also obtained
eight business model patents in Korea: (1)&nbsp;random drawing
auction system and method based on entrance fee profit model,
(2)&nbsp;online shopping and advertisement system and method
using drawing auction system for customer attraction,
(3)&nbsp;method and system for conducting exchange driven
Internet commercial transactions for goods by multiple buyers
and multiple sellers, (4)&nbsp;probability auction method and
system using computer communication network, (5)&nbsp;apparatus
and method for products information contents listing and trading
system on the e-marketplace, (6)&nbsp;system and method for
offering/operating seller&#146;s online shopping store in
e-marketplace, (7)&nbsp;system and method for responding with
customer, and recordable media thereof and (8)&nbsp;electronic
commerce service and method capable of intermediating star and
seller. In addition, we rely on several different types of
contractual arrangements, including agreements for
non-disclosure, non-competition and invention assignments, to
protect our proprietary rights in products and services,
including with our employees. Despite our efforts to protect our
proprietary information however, third parties may be able to
obtain and use our proprietary information without authorization
or to develop similar technology independently.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our website and certain of the back-end technology supporting
our e-commerce marketplace is dependent on technologies licensed
from third parties. As we continue to introduce new services
that incorporate new technologies and information, we may be
required to license additional technology and information from
others. Our employees are generally required to sign agreements
acknowledging that all inventions, trade secrets, works of
authorship, developments and other processes generated by them
are our property and are required to assign to us any ownership
rights they developed during their employment with us.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Seasonality</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the significant growth of our business in the past three
years, we are not yet able to ascertain with a level of
certainty the impact of seasonality on our financial condition
and results of operations. We believe that as our growth rate
slows down, the seasonality effects will become more apparent to
us, and we expect those effects to be similar to that of other
retailers in Korea, which generally have higher sales volume in
the fourth quarter of each year.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">33
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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Employees</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the number of our permanent
employees for each of our major departments and our total number
of employees as of December&nbsp;31, 2004 and 2005 and 2006, and
March&nbsp;31, 2007.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">As of December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2007</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Management and administration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Business planning*
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounting and finance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transaction support
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Service quality management
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">168</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">420</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    In March 2006, some of the personnel previously assigned to the
    management and administration department were transferred to a
    newly created business planning department.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2006, there were over 400 personnel at our
outsourced call center to handle our customer service functions.
We hire part-time employees and contractors from time to time on
an as-needed basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The steady increase in the number of employees is due to the
expansion of our business over the period. We have strived to
develop a culture that encourages creativity and individual
thought, and our compensation system matches our culture. We
also provide stock options to our management and certain
employees, pursuant to our stock option plan, which we believe
has the effect of more closely aligning the personal interests
of our employees to our overall financial performance. See
&#147;Share Ownership&#151;Stock Options.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe our relationship with our employees is good, we have
never experienced any major labor disputes. None of our
employees belongs to a labor union, and no collective bargaining
agreement governs our relationship with our employees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Facilities</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our corporate headquarters are located in approximately 4,282
square meters of office space located at LIG Tower, 649-11,
Yeoksam-Dong, Gangnam-Gu, Seoul 135-912 Korea under a lease
which expires on February&nbsp;29, 2008. We also lease
approximately 3,759 square meters of office space in Fine Tower,
Yeoksam-Dong, Gangnam-Gu, Seoul 135-935 Korea, under a lease
which expires on October&nbsp;20, 2008. Our servers and other
technology infrastructure are located in approximately 162
square meters of leased space located in the KIDC Building,
Nonhyun-Dong <FONT style="white-space: nowrap">261-1,</FONT>
Gangnam-Gu, Seoul, Korea, approximately 23 square meters of
leased space located in the KIDC Building, Seocho-Dong,
Seocho-Gu, Seoul, Korea, and approximately six square meters of
leased space located in KINX Building, Dogok-Dong, Gangnam-Gu,
Seoul, Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Legal Proceedings</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently are and expect to be subject to various legal and
governmental proceedings from time to time. However, other than
as described in this report, we believe there are no existing
claims or government proceedings which are likely to have a
material adverse effect on our business, financial condition or
results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Korea Intellectual Property Office rejected our service mark
application for the exclusive use of our trade name
&#147;Gmarket&#148; in the English and the Korean languages on
the grounds that it is
</DIV>

</FONT>

<FONT face="helvetica,arial">
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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
a simple and common mark, not eligible for registration as a
service mark under the Korean Trademark Act. We are appealing
such finding and have sought review of the rejection with the
Korean Intellectual Property Tribunal. We may ultimately seek
redress in court. Although the final outcome is unclear at this
time, if our application for the service mark is not accepted,
we may not have the exclusive right to use our name in Korea
under the Korean Trademark Act. However, although no assurance
can be given that we will ultimately prevail on the merits,
pursuant to the Korean Unfair Competition Prevention and Trade
Secret Protection Act, we may be able to pursue an enjoinment
action against others who attempt to use our trade name in the
future on the grounds that our trade name is well-known to the
general public in Korea. See &#147;Risk Factors&#151; We rely on
intellectual property right protection for our trademarks,
service marks and other intellectual property rights and if such
rights are not adequately protected, we may not be able to
successfully build our brand.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of a claim raised by one of our competitors, the
Korean Fair Trade Commission, or KFTC, requested certain
documents from us to ascertain whether the allegations of
anticompetitive behavior have any merit. As a result of such
request, we commenced an internal inquiry regarding the
allegations and provided all of the requested materials to the
KFTC. Based on the requested information from the KFTC and the
current status of the investigation, it is our understanding
that the claim currently involves a very small number of
sellers. In the event that the Company is found by the KFTC to
have conducted any such improper behavior, we believe that the
maximum potential penalty arising from this investigation is a
fine consisting of up to 3% of the Company&#146;s revenues
derived from the concerned transactions with these sellers. In
addition to or in lieu of any such fines, the KFTC may ask the
prosecutor&#146;s office to commence a criminal prosecution
against us and/or require us to publish an acknowledgment of
wrongdoing in a daily Korean newspaper.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Laws and Regulations</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Overview of Laws Relating to the Online Marketplace
Business</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal laws and regulations regulating e-commerce
marketplaces in Korea consist of the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Act on Consumer Protection in Electronic Commerce
    Transactions, Etc., or the
    <FONT style="white-space: nowrap">E-Commerce</FONT> Consumer
    Protection Act;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Telecommunications Business Act, as a value-added service
    provider;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Act on Promotion of Information and Communications Network
    Utilization and Information Protection, Etc., or the Information
    Communication Network Act; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Electronic Financial Transaction Act.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>E-Commerce Consumer Protection Act</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The E-Commerce Consumer Protection Act provides a general
framework for regulation of
<FONT style="white-space: nowrap">e-commerce</FONT> businesses,
and sets forth requirements for laws with the goal of providing
consumer protection for sale of goods and services by any means
not involving direct, face-to-face contact between a seller and
a buyer. This is referred to as &#147;distance selling.&#148;
Some examples of transactions which are subject to the
<FONT style="white-space: nowrap">E-Commerce</FONT> Consumer
Protection Act include transactions conducted through the
Internet, mail order, television, advertisements, newspaper,
magazine and catalogs and any other means of distance
communication.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the E-Commerce Consumer Protection Act, a business seeking
to engage in distance selling must comply with the following
legal requirements:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The distance selling trader must report, among others, its trade
    name, the name of the representative, its address, telephone
    number, <FONT style="white-space: nowrap">e-mail</FONT> address,
    Internet domain name, and the location of its server to the city
    (<I>si</I>&nbsp;) government, the county (<I>gun</I>) office, or
    the district</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">35
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    (<I>gu</I>) office. The
    <FONT style="white-space: nowrap">e-commerce</FONT> seller must
    report any changes in the report within 15&nbsp;days from the
    date the change occurred;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The distance selling trader must provide its customers with
    documents relating to basic descriptions of the transactions in
    advance, including documents stating (i)&nbsp;details of sellers
    and suppliers, (ii)&nbsp;name, type and details of the products
    being sold, (iii)&nbsp;price, payment time and method,
    (iv)&nbsp;time and method of delivery, (v)&nbsp;method of
    withdrawal of the order, deadline for termination of the
    contract and consequences of such termination,
    (vi)&nbsp;conditions and process regarding return, refund,
    exchange and guarantees, (vii)&nbsp;customer service policies
    relating to disputes with customers and (viii)&nbsp;standard
    terms and conditions for the transaction. Such documents may be
    replaced by an electronic message, if a consent from the
    customer is obtained;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The distance selling trader must notify minors (who are
    individuals under the age of 20) that such minor or his or her
    legal representative may rescind any contract between the
    distance selling trader and the minor, if the minor&#146;s legal
    representative does not consent to the contract;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The distance selling trader must take action to deliver to the
    consumer the product that the consumer ordered within seven days
    from the date of order. If the consumer pays all or part of the
    product&#146;s price in advance, the distance selling trader
    must take action to deliver the product within three business
    days from the date of payment. If the distance selling trader
    becomes aware of any problem in delivering the product ordered,
    it must promptly notify the consumer, and in case of advance
    payment, must refund, or take measures necessary to refund, the
    amount paid by the consumer within three business days from the
    date of payment;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Subject to certain exceptions, a consumer may cancel an order
    and/or return the goods ordered within seven days from the date
    of the contract for the purchase of goods, or seven days from
    the supply or commencement of supply of the goods, whichever is
    later. This period may be extended in certain circumstances,
    such as if certain information appearing in advertisements or
    the contract is inaccurate. The distance selling trader has the
    burden of proving that the damage of the goods purchased is
    attributable to the consumer; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Upon cancellation of the purchase and return of the goods by the
    consumer, the distance selling trader must in principle return
    the purchase price within three business days. If the goods are
    returned without cause, the consumer must bear the delivery
    expenses. If the cause of the return of goods is attributable to
    the distance selling trader, then the distance selling trader
    must bear the delivery expenses.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The E-Commerce Consumer Protection Act also regulates businesses
which are considered to be &#147;distance selling
intermediaries.&#148; These businesses facilitate the distance
selling by third parties by making available for use to such
third parties a website or other means of distance selling. The
Act does not specifically state that a distance selling
intermediary has reporting obligations applicable to a business
engaged in distance selling. However, most distance selling
intermediaries, including us, customarily file reports with the
local authorities as a distance selling trader.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the <FONT style="white-space: nowrap">E-Commerce</FONT>
Consumer Protection Act, unless a distance selling intermediary
expressly disclaims liability by notice or agreement regarding
sales of products, the distance selling intermediary bears joint
and several liability with such distance selling trader for
damages caused to such trader&#146;s customers for any damages
caused by willful misconduct or negligence.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">36
</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are also subject to the
<FONT style="white-space: nowrap">E-Commerce</FONT> Consumer
Protection Act as an e-commerce service provider. An
<FONT style="white-space: nowrap">e-commerce</FONT> service
provider has the following obligations:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The <FONT style="white-space: nowrap">e-commerce</FONT> service
    provider must establish and implement a procedure for customers
    to enable the customer to confirm or change the details of the
    transaction before the customers place an order or at the time
    the customers make payment;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    If payment is made by means of an electronic bank transfer, the
    <FONT style="white-space: nowrap">e-commerce</FONT> service
    provider must take necessary precautions for securing
    confidentiality of the relevant information. The
    <FONT style="white-space: nowrap">e-commerce</FONT> service
    provider must promptly notify the consumer of settlement of
    payment by <FONT style="white-space: nowrap">e-mail,</FONT>
    telephone, fax or mobile phone; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    An e-commerce service provider operating an online shopping mall
    must display on its homepage its trade name, name of its
    representative, its business address (where consumer complaints
    can be submitted and handled), its telephone number and
    <FONT style="white-space: nowrap">e-mail</FONT> address, its
    business registration number, and the terms and conditions of
    use of the online shopping mall, all of which information must
    be easily identifiable by consumers.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Amendment to the E-Commerce Consumer Protection Act</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The E-Commerce Consumer Protection Act was amended on
March&nbsp;31, 2005, and some provisions of the amended Act
became effective on April&nbsp;1, 2006. One of the provisions of
the amended Act, which became effective on April&nbsp;1, 2006,
introduced a system whereby the purchaser can choose, for any
purchases (other than credit card purchases) that exceed
Won&nbsp;100,000, to either pay such amounts with a third party
designated by a Presidential Decree, or in lieu thereof, the
purchaser may avail itself of insurance purchased by the
distance selling trader to protect against any loss of such
purchase price prior to such purchaser&#146;s receipt of the
purchased product or services. In order to qualify as a
designated third party under the presidential Decree of the
<FONT style="white-space: nowrap">E-Commerce</FONT> Consumer
Seller Protection Act to avail ourselves as such to the distance
selling traders, we deposited three&nbsp;billion Won
(US$3.09&nbsp;million) with Hana Bank in April 2006 to guarantee
the payment deposited by purchasers and became a designated
third party.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Another provision of the amended Act, which became effective on
April&nbsp;1, 2006, established an &#147;opt-out&#148; system,
or &#147;no-spam system,&#148; under which consumers can
expressly indicate their intent not to receive
<FONT style="white-space: nowrap">e-mails.</FONT> Distance
selling traders must check, subject to certain exceptions, at
least monthly (or once every three months in the case of
purchase solicitations transmitted by
<FONT style="white-space: nowrap">e-mail),</FONT> the telephone
number, fax number or
<FONT style="white-space: nowrap">e-mail</FONT> address of the
users who have chosen to &#147;opt-out&#148; to ensure that no
<FONT style="white-space: nowrap">e-mails</FONT> are sent to
such users. A distance selling trader which fails to comply with
the requirement of the amended Act will be subject to a fine of
five&nbsp;million Won.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Investigation of Breach</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Korean Fair Trade Commission, or the KFTC, the city
government or the provincial government may on its authority, or
upon petition, conduct investigations on violation of the
<FONT style="white-space: nowrap">E-Commerce</FONT> Consumer
Protection Act and, in case of any violation, order the
violating <FONT style="white-space: nowrap">e-commerce</FONT>
service provider to cease and desist, order compliance, or take
other corrective measures. If the
<FONT style="white-space: nowrap">e-commerce</FONT> service
provider repeats the breach or does not take the ordered
corrective measure, the KFTC may suspend part or all of the
<FONT style="white-space: nowrap">e-commerce</FONT> service
provider&#146;s business for up to one year or impose a penalty
for the breach up to the amount of the relevant sales volume.
Not responding to the correction order may also result in
imprisonment of up to three years or a penalty of up to
Won&nbsp;100&nbsp;million.
</DIV>

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Prohibited Actions</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The E-Commerce Consumer Protection Act prohibits
<FONT style="white-space: nowrap">e-commerce</FONT> service
providers and distance selling traders from:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    engaging in misrepresentation, overstatement or fraud in
    soliciting or dealing with consumers, revoking orders accepted,
    or preventing consumers from terminating a contract;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changing its address, telephone number, or Internet domain name,
    or closing down its website in order to prevent consumers from
    canceling their order;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    causing damage to the consumer by neglecting the workforce or
    systems responsible for handling consumer complaints;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    delivering products and demanding payment without an order from
    the consumer, or billing the consumer for a purchase not made;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    pressuring consumers to purchase products or services by
    telephone, fax, or electronic communication, despite the
    consumer having expressed his or her intention not to buy; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    using consumer information without permission or beyond the
    scope permitted, except in certain exceptional circumstances.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The failure to comply with such requirements could result in a
fine of up to Won&nbsp;10&nbsp;million and a correction order
from the KFTC.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Telecommunications Business Act</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Telecommunications Business Act classifies
telecommunications service providers into three categories: a
network service provider, a specific service provider and a
value-added service provider. As an operator of an online
marketplace, we are classified as a value-added service provider
under the Telecommunications Business Act. Value-added service
providers must file reports with the Ministry of Information and
Communication and must report any changes to the filed report in
advance. In particular, value-added service providers must
notify users of any suspension or closure of all or part of
their business and report such events to the Ministry of
Information and Communication at least 30&nbsp;days in advance.
The Ministry of Information and Communication may order business
closure or business suspension for up to one year, in the event
of a value-added service provider&#146;s breach of the
Telecommunications Business Act.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Information Communication Network Act</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Information Communication Network Act requires online
service providers to protect consumer information maintained by
such service providers. In addition, the Ministry of Information
and Communication&#146;s Rules for Private Information
Protection requires online service providers to formulate and
publish their private information protection policies on their
websites.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When gathering private information, online service providers
must disclose the purpose and use of the information gathered,
and in case such information is provided to a third party, the
name, business, contact information, purpose of providing such
information and its content to the user, and obtain the
user&#146;s consent to the foregoing. Also, the online service
provider may only gather the minimum necessary information
directly related to the service it provides. Any use or
disclosure of information to a third party beyond the scope
notified to the user or agreed in a contract with the user
requires the user&#146;s consent. Exceptions to the consent
requirement are (i)&nbsp;disclosure for settlement of service
charges, (ii)&nbsp;disclosure in a processed form (so that
individuals are not identified) for purposes of compiling
statistics, academic research or market research or
(iii)&nbsp;disclosure as required by applicable laws and
regulations. Using or receiving private information beyond the
scope notified to the user or as set forth in the contract or
providing private information
</DIV>

</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
to a third party may be punishable by imprisonment of up to five
years or a penalty of up to Won&nbsp;50&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, collecting private information on minors of less
than 14&nbsp;years of age or using such information beyond the
disclosed scope of use, or providing such information to a third
party requires the consent of the minor&#146;s legal
representative. Because we do not allow registration by minors
less than 14&nbsp;years of age, we do not collect and have no
private information on minors of less than 14&nbsp;years of age.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After the online service provider has achieved its purpose of
collecting or receiving private information, subject to the
Act&#146;s requirement for retention of certain information on
contracts, sales, consumer complaints, among others, the online
service provider must immediately destroy the private
information.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The sending of e-mail advertisements contrary to the
recipient&#146;s express refusal is prohibited. The subject line
of any <FONT style="white-space: nowrap">e-mail</FONT>
advertisements must contain the word &#147;advertisement&#148;
and a description of the main content, and the text of the body
must state how the recipient&#146;s
<FONT style="white-space: nowrap">e-mail</FONT> address was
obtained, together with the name and contact address of the
sender. The text of the advertisement must also show an easy way
to reject any further
<FONT style="white-space: nowrap">e-mails.</FONT> Violation of
this provision could result in a fine of up to
Won&nbsp;30&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A user may claim damages against an online service provider for
the harm suffered as a result of the online service
provider&#146;s breach of such Act. The online service provider
must prove that such harm was not due to the willful or
negligent act of the online service provider. In addition, to
the extent such information has become public, the online
service provider must remove or delete such information and
provide for the possibility of posting a counter argument.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The Electronic Financial Transaction Act</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;1, 2007, a new law titled the Electronic
Financial Transaction Act, or EFTA, became effective to regulate
electronic financial transactions. This law requires any person
wishing to engage in the business of electronic finance to
satisfy certain requirements and obtain a license from, or
register with, the Financial Supervisory Commission, or FSC,
depending on the type of services. Persons already engaged in
the business of electronic finance must obtain a license or
register with the FSC within three to six months from the
effective date of the EFTA, depending on the type of services in
which such person is engaged.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some of the services we provide to our customers, including the
provision of electronic means of advance payment and electronic
payment settlement, subject us to the purview of this Act and
require us to register with the FSC, by June&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Once we register with the FSC, we will become an
&#147;electronic financial service provider&#148; under such Act
and must comply with the requirements of such Act, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    maintaining separate accounts for each category of electronic
    financial services;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    meeting certain levels of security standards as prescribed by
    the FSC;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    maintaining records of electronic financial transactions up to
    five years;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    submitting reports on electronic financial transactions and
    management performance to the FSC; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    being subject to supervision by the Financial Supervisory
    Service.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The EFTA makes the electronic financial services provider
<I>prima facie</I> liable for the damages caused to a customer
who signed an electronic financial services use agreement with
the electronic financial services provider, if the password of
that customer is forged or altered, or if an accident occurs in
the course of transmitting or processing transaction
instructions by the electronic financial
</DIV>

</FONT>

<FONT face="helvetica,arial">
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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
services provider. The electronic financial service provider is
exempted from this liability if (i)&nbsp;the damage is
attributable to willful intent or gross misconduct of the
customer and the electronic financial services provider has
entered into an agreement whereby the customer agreed to assume
partial or full responsibility for such damages, or
(ii)&nbsp;the electronic financial service provider established,
and strictly maintained, security measures and otherwise
exercised reasonable care to prevent such accident. To meet
these statutory liabilities, and in accordance with the
standards set by the FSC, the electronic financial service
provider must subscribe for insurance, become a member of a
mutual relief association, or set aside a reserve.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Laws Relating to Intellectual Property or Prohibited
Items</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain laws relating to intellectual property rights, such as
the Copyright Act or the Trademark Act, regulate items being
sold on the online marketplace that infringe on third party
intellectual rights. For example, under the Copyright Act, a
person may demand suspension of reproduction or transmission of
his or her works without his or her permission and in such
circumstances, the online service provider must immediately
suspend the reproduction or transmission of such works and
notify the person of such remedial acts. The online service
provider may be entitled to certain limitation or exemption from
liability where the service provider, upon knowledge that the
reproduction or transmission of certain works infringes upon a
third party&#146;s copyright, has taken the above measures, such
as preventing or suspending such reproduction or transmission.
In addition, the online service provider may also be exempt or
limited from liability where the online service provider
attempted to prevent or suspend such reproduction or
transmission pursuant to its own discretion, provided that the
service provider was not able to do so because of technical
impossibility, in which case there may be no liability.
Furthermore, laws prohibiting the trading of certain items
(e.g., drugs or weapons) may apply to certain items being sold
on an online marketplace.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Laws Relating to Tax Benefits</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Special Tax Treatment Control Law of Korea, a
certified venture company may be entitled to a 50% reduction in
corporate income tax generated from a &#147;Tax-Benefit
Business,&#148; as defined in the Special Tax Treatment Control
Law, for the year in which it first generates taxable income and
for the subsequent three years (or five years for any designated
venture companies certified by the Government before
January&nbsp;1, 2004), if (a)&nbsp;the company is certified by
the Government as a &#147;designated venture company&#148;
within two years from its incorporation and continues to satisfy
certain requirements, and (b)&nbsp;such company&#146;s business
falls under one of the categories of &#147;Tax-Benefit
Businesses&#148; under the Special Tax Treatment Control Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We were certified by the Government as a &#147;designated
venture company&#148; in March 2001, and after the renewal of
certification, our certification is valid until June 2008. As
part of our annual tax return process with the Korea National
Tax Office, we reported our business classification in line with
our business registration statement, as an eligible business
falling under one of the categories of &#147;Tax Benefit
Business&#148; under the Special Treatment Control Law. To date,
we have not received any objections from the Korea National Tax
Office regarding our claim of such tax benefit. Notwithstanding
our continued belief that we qualified for such tax benefit and
the lack of objections from the Korea National Tax Office
regarding our prior tax returns thus far, in the event that the
Korea National Tax Office audits us and determines that we were,
in fact, not entitled to such tax benefit, we may be required to
pay back-taxes in the amount applicable to such claimed
deduction and statutory interest.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, pursuant to the Special Tax Treatment Control Law,
a company is generally eligible for a 40% (or 50% for certain
qualified expenditures) tax credit in the amount of the excess
of expenditures relating to technology development and human
resources in the relevant year subject to the tax credit over
the average of the expenditures relating to technology
development and human resources during the previous four-year
period. Small and medium-sized companies may elect to
</DIV>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
obtain tax credit in the amount which is either (i)&nbsp;50% of
the difference between (A)&nbsp;expenditures relating to
technology development and human resources in the relevant year
subject to the tax credit and (B)&nbsp;average of the
expenditures relating to technology development and human
resources for the previous four-year period or (ii)&nbsp;15% of
the expenditures relating to technology development and human
resources in the relevant year subject to the tax credit. Under
the Special Tax Treatment Control Law, the tax credit will be
granted for the fiscal year ended on or before December&nbsp;31,
2009, and it is uncertain whether the Korean government will
extend the period for such tax credit. We established a research
and development division in July 2002. We filed tax returns,
together with documents supporting our expenditures relating to
technology development and human resources, with the tax
authorities for fiscal years 2005 and 2006. If the Korea
National Tax Office determines that these expenditures are not
related to technology development and human resources subject to
the tax credit, we may not be entitled to the relevant tax
credit and may be required to pay back-taxes and statutory
interest.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='117'></A>
</DIV>

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<B>4.C.&nbsp;Organizational Structure</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='118'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>4.D.&nbsp;Property, Plants and Equipment</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2006, our property and equipment mainly
consisted of network servers and personal computers. As of
December&nbsp;31, 2006, the net book value of our property and
equipment was Won&nbsp;19.58&nbsp;billion
(US$21.16&nbsp;million). Because our main business is to provide
an <FONT style="white-space: nowrap">e-commerce</FONT>
marketplace, we do not own any factories or facilities that
manufacture products. There are no factories currently under
construction, and we have no plans to build any factories in the
future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our corporate headquarters are located in approximately 4,282
square meters of office space located at LIG Tower,
<FONT style="white-space: nowrap">649-11,</FONT> Yeoksam-Dong,
Gangnam-Gu, Seoul
<FONT style="white-space: nowrap">135-912</FONT> Korea under a
lease which expires on February&nbsp;29, 2008. We also lease
approximately 3,759 square meters of office space in Fine Tower,
Yeoksam-Dong, Gangnam-Gu, Seoul
<FONT style="white-space: nowrap">135-935</FONT> Korea, under a
lease which expires on October&nbsp;20, 2008. Our servers and
other technology infrastructure are located in approximately 162
square meters of leased space located in the KIDC Building,
Nonhyun-Dong&nbsp;<FONT style="white-space: nowrap">261-1,</FONT>
Gangnam-Gu, Seoul, Korea, approximately 23 square meters of
leased space located in the KIDC Building, Seocho-Dong,
Seocho-Gu, Seoul, Korea, and approximately six square meters of
leased space located in KINX Building, Dogok-Dong, Gangnam-Gu,
Seoul, Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='119'></A>
</DIV>

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<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 5.</B></TD>
    <TD>
    <B>OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You should read the following discussion together with our
financial statements and the related notes which appear
elsewhere in this report. The following discussion is based on
our financial statements, which have been prepared in accordance
with the U.S.&nbsp;generally accepted accounting principles, or
U.S.&nbsp;GAAP. Our historic performance may not be indicative
of our future results of operations and capital requirements and
resources.
</DIV>

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<A name='120'></A>
</DIV>

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<B>5.A.&nbsp;Operating Results</B>
</DIV>

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This section begins with an overview of the principal factors
and trends affecting our results of operations. The overview is
followed by a discussion of our accounting policies and
estimates that we believe are important to understanding the
assumptions and judgments reflected in our reported financial
results. We then present a detailed analysis of our results of
operations for the last three fiscal years.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are a leading retail
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
in Korea offering buyers a wide selection of products at
competitive prices and sellers a comprehensive and flexible
sales solution. Our
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
is highly scalable and facilitates the sale of products in small
or large quantities, to a large number of potential buyers in a
convenient, cost effective and secure manner. We believe we have
developed an established and well-known brand name in Korea as
evidenced by both our leading market position and rapid growth.
We believe we are a leading retail
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace
in Korea based on gross merchandise value, or GMV, which
represents the total value of all goods sold on an
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace.
Further, we believe we are currently a leader in Korea in terms
of monthly unique visitors among
<FONT style="white-space: nowrap">e-commerce</FONT> retailers.
Our <FONT style="white-space: nowrap">e-commerce</FONT>
marketplace is located at www.gmarket.co.kr.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Until the third quarter of 2003, we operated as an online
retailer, selling products from our inventory, and as an
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace,
where various sellers could list and sell their products. In the
third quarter of 2003, we began transitioning exclusively to an
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace.
By December&nbsp;31, 2004, we sold all of our inventory and
since then, have been generating revenues exclusively from our
<FONT style="white-space: nowrap">e-commerce</FONT> marketplace.
We currently derive substantially all of our revenues from
transaction fees on the sale of products on our website, as well
as standard and premium listing, banner advertisement and
keyword search fees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the past several years, we have experienced significant
growth in the number of registered users, the number of goods
sold on our website and GMV. This has resulted from a widening
acceptance of the use of the Internet to purchase goods in Korea
and Korea&#146;s improving Internet and delivery network
infrastructure, as well as due to our implementation of key
strategic initiatives and service developments to attract users
to our website. We believe that we are well positioned to take
advantage of the growth of the retail
<FONT style="white-space: nowrap">e-commerce</FONT> industry in
Korea, but face a number of challenges in growing our business.
We face potential resource constraints for senior management and
employees and continue to seek to hire talented personnel for
website design, information technology, management and other
areas. We also expect that competition will continue to increase
as the retail
<FONT style="white-space: nowrap">e-commerce</FONT> industry
continues to grow. We must develop and provide, on a timely
basis, services that gain market acceptance to continue to be
competitive. Our management continues to strive to introduce new
and innovative services on competitive terms in order to meet
such challenges. Also, we are seeking to continue to increase
our brand awareness through our online and offline marketing
strategies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We recorded total revenues of Won&nbsp;154.13&nbsp;billion
(US$166.56&nbsp;million) in the year ended December&nbsp;31,
2006 compared to total revenues of Won&nbsp;70.34&nbsp;billion
in 2005 and Won&nbsp;14.14&nbsp;billion in 2004. We recorded a
net income of Won&nbsp;16.28&nbsp;billion
(US$17.60&nbsp;million) in the year ended December&nbsp;31, 2006
compared to a net income of Won&nbsp;5.09&nbsp;billion in 2005
and net losses of Won&nbsp;1.44&nbsp;billion in 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Revenues</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We generate, and expect to continue to generate, most of our
revenues from transaction fees on the sale of products, which
represented 64.4%, 80.7% and 85.1% of our total revenues for the
years ended December&nbsp;31, 2006, 2005 and 2004, respectively.
Our advertising and other revenues, including standard and
premium listing, banner advertisement, keyword search fees,
non-seller advertisement, membership fees for our Zero Margin
Club and delivery services that we receive from buyers,
represented 35.6%, 19.3% and 14.9% of our total revenues for the
years ended December&nbsp;31, 2006, 2005 and 2004, respectively.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Cost of revenues</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our cost of revenues consists principally of the following:
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Credit card commissions and bank charges. Fees paid to credit
    card issuers and banks and other parties for banking and funds
    transfer services in connection with processing sales
    transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Click-through fees. Fees paid to Internet portals, other
    websites for referrals of buyers who make a purchase on our
    website and the referral fees paid to advertising agents; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Other costs. Other costs of revenues include:</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="6%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    <I>Network and systems maintenance fees.</I> Fees paid to
    leased-line providers for use of network bandwidth; fees paid to
    data center providers for data hosting and technology systems
    maintenance; and fees paid to security and firewall providers
    and fees paid to telecommunications providers for sending text
    messages to buyers&#146; mobile phones to confirm the purchase
    and shipment of products;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    <I>Salaries and other compensation expenses.</I> Salaries,
    employee benefits, severance benefits and stock-based
    compensation expenses attributable to sales transactions; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    <I>Miscellaneous costs.</I> Costs relating to sales
    transactions, including depreciation of our servers and other
    information technology systems used to process sales
    transactions, delivery services and donation shopping.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Sales and marketing expenses</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our sales and marketing expenses consist of both online and
offline advertising expenses, outsourced call center costs, and
other costs, including promotion costs and salaries and other
compensation expenses related to our marketing personnel.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>General and administrative expenses</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our general and administrative expenses consist of salaries and
other compensation expenses related to our administrative and
research and development personnel, and other costs, including
professional fees and building lease payments. Our general and
administrative expenses increased upon the completion of our
listing on the Nasdaq, in connection with our obligation to
comply with the reporting requirements under the Exchange Act as
well as other requirements under the Sarbanes-Oxley Act and
other costs associated with being a public company in the United
States. See &#147;Risk Factors&#151; We will incur increased
costs as a result of being a public company in the United
States.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Interest income</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We earn interest income from local financial institutions for
deposits of cash and cash equivalents, cash on deposit,
restricted cash, financial instruments and a held-to-maturity
corporate bond.
</DIV>

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<B>Income tax</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the year ended December&nbsp;31, 2005, we had operating
income and generated taxable income. As we had available
loss-carryforwards of Won&nbsp;3.19&nbsp;billion at
December&nbsp;31, 2004, such amounts were utilized in 2005 to
offset taxes we would otherwise have had to pay. In 2005, we
recorded income tax benefits of Won&nbsp;0.13&nbsp;billion due
to deferred income tax asset of Won&nbsp;0.25&nbsp;billion at
the year ended December&nbsp;31, 2005 and had available
investment tax credit carryforwards of
Won&nbsp;0.09&nbsp;billion at December&nbsp;31, 2005. For the
year ended December&nbsp;31, 2006, we had operating income and
generated taxable income. As we had utilized all available loss-
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
carryforwards in 2004 and 2005, we recorded income tax expenses
of Won&nbsp;3.29&nbsp;billion (US$3.55&nbsp;million) at
December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The statutory tax rate applicable to us was 29.7% in 2004 and
27.5% in 2005 and 2006. However, we believe that we are entitled
to a reduction in the statutory tax rate to 13.75%, as we
believe that we qualify under one of the categories of
businesses for the Tax-Benefit Businesses as defined under the
Special Tax Treatment Control Law and have filed our tax returns
for the 2006 fiscal year on such basis. See &#147;Laws and
Regulations&#151; Laws Relating to Tax Benefits.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Critical Accounting Policies and Estimates</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our discussion and analysis of our financial condition and
results of operations are based upon our financial statements,
which have been prepared in accordance with U.S.&nbsp;GAAP. The
preparation of these financial statements requires us to make
estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities, contingent liabilities, and
revenues and expenses during the reporting periods. We evaluate
our estimates on an ongoing basis based on historical experience
and other assumptions we believe are reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities.
The policies discussed below are considered by our management to
be critical because they are not only important to the portrayal
of our financial condition and results of operations but also
because application and interpretation of these policies require
both judgment and estimates of matters that are inherently
uncertain and unknown. As a result, actual results may differ
materially from our estimates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Revenue recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our revenues are derived from fees associated with successful
transactions on our website, standard and premium listings,
banner advertisement and keyword search, non-seller
advertisement, membership programs and delivery services.
Revenues from transaction fees are derived from commissions paid
by sellers. Revenues from advertising are derived from the sale
of online banners, premium listings and keyword searches to
sellers and sale of advertisements to non-sellers. Other
revenues are derived from membership program fees and delivery
service charges, among others.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Transaction fees</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our commission is calculated as a percentage of the GMV of each
transaction and we record revenues from transaction fees net of
our estimate of return allowances and sales incentives.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our standard transaction terms allow buyers to return goods to
sellers within a seven-day period from the delivery date. If
goods are returned during the return period, we generally refund
all of the purchase price. Accordingly, we record an estimated
reserve for refunds, based on our historical experience, as a
reduction of revenues from transaction fees. We have elected to
apply the above policy for our transaction fees using an analogy
to the guidance in SFAS&nbsp;No.&nbsp;48, <I>Revenue Recognition
When Right of Return Exists</I>. We satisfy the criteria in
SFAS&nbsp;No.&nbsp;48 as our commission fee is fixed at the
outset, the buyers and sellers of goods have economic substance
apart from us, we do not have any significant obligations for
future performance once the buyer&#146;s payment is confirmed
and we can reasonably estimate the amount of future refunds
based on our historical experience. As the buyer has only seven
days from delivery date to return goods, we are able to compare
our estimated refund returns to the actual amount of returns at
each period end.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Advertising and others</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Listing, advertising and membership fee revenues are recognized
ratably over the term of the listing period, advertising
contract term and membership period, respectively. In general,
listing periods range from one day to one month, advertising
contracts have a term of one day to one month and membership
periods are either three months or 12&nbsp;months.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Loyalty programs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Registered buyers may earn loyalty points, or miles, through
purchasing eligible products. Once a registered buyer has
accumulated more than 10,000&nbsp;miles, the buyer may convert
those miles into G&nbsp;Cash (which in turn is convertible into
cash). The mileage program reserve calculation incorporates
judgments and assumptions regarding expected customer earnings
and redemption patterns and is based on specific historical
experience.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2005, we began to offer to registered buyers discount
coupons and stamps. Buyers are not required to complete a
specific purchase transaction to earn a discount coupon. Rather,
discount coupons are offered to registered buyers and can be
used prior to their expiry date, to reduce the purchase price of
a product in a future purchase. In accordance with
EITF&nbsp;<FONT style="white-space: nowrap">01-09,</FONT> we
record the value of the coupon at the same time the coupon is
actually used in a purchase as a reduction of revenues from
transaction fees. Stamps are awarded to buyers after completion
of a purchase transaction and may be accumulated and redeemed
for discount coupons or used for other services. We charge
sellers for issuing stamps and recognize the revenues when
coupons, converted from stamps, are used for a purchase or when
stamps are used for other services.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for stock-based compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to January&nbsp;1, 2006, we accounted for stock-based
compensation in accordance with the provisions of
SFAS&nbsp;No.&nbsp;123, <I>Accounting for Stock Based
Compensation,</I> using the fair value method based on the
Black-Scholes Option Pricing (&#147;Black-Scholes&#148;) model.
Under the fair value method, stock-based compensation costs are
measured at the date of grant based on the fair value of the
award and recognized over the service period on a straight-line
basis. The determination of fair value of the award at the date
of grant using the Black-Scholes model requires estimates about
our expected dividend yield, expected risk free interest rate,
expected volatility, expected life and the fair value of our
common shares on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All stock options granted as of December&nbsp;31, 2006 were
granted prior to our initial public offering on the Nasdaq. We
have used an independent appraisal firm to assist us with the
valuation of our common shares and our stock options at each
date of grant. The determination of the fair value of our common
shares on each date of grant was a two step process: first, it
was necessary to calculate a deemed business enterprise value
for us, and second, it was necessary to calculate an estimated
fair value of our common shares on a non-marketable, minority
basis. The business enterprise value was determined based on an
income approach, using the discounted cash flow method and an
estimated weighted average cost of capital, utilizing a venture
capital rate of return. Then, for benchmarking purposes only,
implied revenue multiples were calculated based on the value
determined under the income approach, and compared to the
revenue multiples of comparable companies. The estimated fair
value of our common shares was calculated using an option
pricing model, using the business enterprise value, an estimated
volatility, a time to liquidation and a risk free interest rate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Determination of the fair value of our common shares involves
complex and subjective judgments regarding projected financial
and operating results, our unique business risks, the liquidity
of our shares and our operating history and prospects at the
time of grant. If we make different judgments or adopt different
assumptions, material differences could result in the timing and
amount of the share-based compensation expenses recorded because
the estimated fair value of the underlying shares for the
options granted would be different.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of January&nbsp;1, 2006, we adopted Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123(R),
<I>Share-Based Payment,</I> using the modified prospective
application transition method. Because the fair value
recognition provisions of SFAS&nbsp;No.&nbsp;123, <I>Stock-Based
Compensation,</I> and SFAS&nbsp;No.&nbsp;123(R) were materially
consistent under our equity plans, the adoption of
SFAS&nbsp;No.&nbsp;123(R) did not have a significant impact on
our financial position or our results of operations.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The adoption of SFAS&nbsp;123(R) resulted in a cumulative
benefit from accounting change of W19&nbsp;million, which
reflects the net cumulative impact of estimated future
forfeitures in the determination of period expense, rather than
recording forfeitures when they occur as previously permitted
under SFAS&nbsp;123.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Internal control over financial reporting</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have identified significant deficiencies (as defined under
Standards of the Public Company Accounting Oversight Board
(United States)) in our system of internal control over
financial reporting. Most of these deficiencies relate to the
resources we currently have in place to meet our accounting and
financial reporting requirements, which in turn contribute to
the existence of other deficiencies related to our internal
control over financial reporting including, but not limited to,
our ability to produce financial statements in a timely and
accurate manner in accordance with U.S.&nbsp;GAAP. In order to
address such deficiencies, we have hired additional finance and
accounting personnel and continue to evaluate the need to add
additional resources to assist us in the preparation of our
financial statements under U.S.&nbsp;GAAP and to assist us in
improving our system of internal control over financial
reporting. However, there can be no assurance that such efforts
will significantly further improve our system of internal
control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Beginning with the year ending December&nbsp;31, 2007.
Section&nbsp;404 of the Sarbanes-Oxley Act will require us to,
among other things, maintain an effective system of internal
control over financial reporting, and will require our
management to provide a certification on the effectiveness of
our internal control on an annual basis. In 2006, we continued
the preparation for compliance with Section&nbsp;404 of the
Sarbanes-Oxley Act, we may identify additional deficiencies in
our system of internal control over financial reporting, and, if
so, will take corrective actions accordingly for their
remediation. We cannot assure you that we will be able to
complete the documentation, testing and, if appropriate,
remediation work necessary to comply with Section&nbsp;404 of
the Sarbanes-Oxley Act, or that we or our independent public
accountants will not identify material weaknesses in our
internal control.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Recent accounting pronouncements</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2006, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued Financial Interpretation No.&nbsp;48,
&#147;Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No.&nbsp;109&#148;
(&#147;FIN&nbsp;48&#148;), which is a change in accounting for
income taxes. Among other provisions, FIN&nbsp;48 specifies how
tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires
certain disclosures of uncertain tax matters; specifies how
reserves for uncertain tax positions should be classified on the
balance sheet; and provides transition and interim-period
guidance. FIN&nbsp;48 is effective for fiscal years beginning
after December&nbsp;15, 2006 and as a result, is effective for
us from January&nbsp;1, 2007. The adoption of FIN&nbsp;48 did
not have a material impact on our financial position, results of
operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2006, the FASB issued Statement of Financial
Accounting Standards No.&nbsp;157 (&#147;SFAS&nbsp;157&#148;),
&#147;Fair Value Measurements,&#148; which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements. SFAS&nbsp;157
does not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various prior
accounting pronouncements. SFAS&nbsp;157 is effective for fiscal
years beginning after November&nbsp;15, 2007. Earlier adoption
is permitted, provided the company has not yet issued financial
statements, including for interim periods, for that fiscal year.
We are currently evaluating the impact of SFAS&nbsp;157, but do
not expect the adoption of SFAS&nbsp;157 to have a material
impact on our financial position, results of operations or cash
flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2006, the FASB issued SFAS&nbsp;No.&nbsp;158,
&#147;Employers&#146; Accounting for Defined Benefit Pension and
Other Postretirement Plans-An Amendment of FASB No.&nbsp;87, 88,
106 and 132(R)&#148; (&#147;SFAS&nbsp;158&#148;). SFAS&nbsp;158
requires that the funded status of defined benefit postretirement
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
plans be recognized on the company&#146;s balance sheet, and
changes in the funded status be reflected in comprehensive
income, effective fiscal years ending after December&nbsp;15,
2006. The standard also requires companies to measure the funded
status of the plan as of the date of its fiscal year-end,
effective for fiscal years ending after December&nbsp;15, 2008.
The adoption of SFAS&nbsp;158 will not have a material impact on
our financial position, results of operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Results of Operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business has grown rapidly since we commenced operations in
2000, particularly in the past three years. Our limited
operating history makes it difficult to predict future operating
results. We believe that period-to-period comparisons of
operating results should not be relied upon as indicative of
future performance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>2006 compared to 2005</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth selective line items and the
percentage of net sales that they represent for Gmarket for the
fiscal years 2006 and 2005.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Year ended</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Year ended</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Increase</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" align="center" nowrap><B><FONT face="helvetica,arial">(in billions of Korean Won)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70.34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(78.95</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36.69</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">115.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(46.43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(24.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5.29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">175.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating Income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.18</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.56</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">298.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Revenues. </I>Our total revenues increased by 119.1% to
Won&nbsp;154.13&nbsp;billion (US$166.56&nbsp;million) in the
year ended December&nbsp;31, 2006 from
Won&nbsp;70.34&nbsp;billion in the year ended December&nbsp;31,
2005. This increase was primarily due to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 74.8% increase in transaction fee revenues to
    Won&nbsp;99.25&nbsp;billion (US$107.25&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won&nbsp;56.78&nbsp;billion in
    the year ended December&nbsp;31, 2005, primarily due to a 109.9%
    increase in GMV to Won&nbsp;2,268.20&nbsp;billion
    (US$2,451.05&nbsp;million) for the year ended December&nbsp;31,
    2006 from Won&nbsp;1,080.86&nbsp;billion for the year ended
    December&nbsp;31, 2005; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 304.7% increase in advertising and other revenues to
    Won&nbsp;54.88&nbsp;billion (US$59.31&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won 13.56&nbsp;billion in the
    year ended December&nbsp;31, 2005, primarily as a result of an
    increase in revenues from standard and premium listing, banner
    advertisement, keyword search fees and non-seller advertisement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The portion of our total revenues attributable to advertising
and other revenues increased to 35.6% in the year ended
December&nbsp;31, 2006 from 19.3% in the year ended
December&nbsp;31, 2005, due to the addition of approximately
3.8&nbsp;million new sellers and buyers during 2006. We believe
as the number of high volume sellers increases, the increased
competition among sellers results in sellers increasing their
advertising expenditures to promote their products.
Additionally, as the number of unique visitors increased to
18.4&nbsp;million during the month of December 2006 from
14.2&nbsp;million during the month of December 2005, our website
became an increasingly attractive advertising forum for sellers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The deduction in our transaction fee revenues attributable to
Gmarket Miles was Won&nbsp;3.64&nbsp;billion
(US$3.93&nbsp;million) for the year ended December&nbsp;31,
2006, compared to Won&nbsp;2.11&nbsp;billion for the year ended
December&nbsp;31, 2005, and the deduction for discount coupons
and
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Gmarket Stamps was Won&nbsp;2.76&nbsp;billion
(US$2.98&nbsp;million) for the year ended December&nbsp;31,
2006. See &#147;&#151;Critical Accounting Policies.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cost of revenues. </I>Our cost of revenues, which represented
51.2% and 52.2% of total revenues for the year ended
December&nbsp;31, 2006 and 2005, respectively, increased by
115.2% to Won&nbsp;78.95&nbsp;billion (US$85.32&nbsp;million) in
the year ended December&nbsp;31, 2006 from
Won&nbsp;36.69&nbsp;billion in the year ended December&nbsp;31,
2005, primarily due to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 99.9% increase in credit card commissions and bank charges to
    Won 41.76&nbsp;billion (US$45.13&nbsp;million) in the year ended
    December&nbsp;31, 2006 from Won&nbsp;20.89&nbsp;billion in the
    year ended December&nbsp;31, 2005, reflecting the increase in
    GMV and number of transactions over the period;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 85.6% increase in click-through fees to
    Won&nbsp;18.62&nbsp;billion (US$20.12&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won&nbsp;10.03&nbsp;billion in
    the year ended December&nbsp;31, 2005, reflecting the increase
    in our marketing efforts to promote our website, and the
    products offered on our website; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 222.0% increase in other costs to Won&nbsp;18.57&nbsp;billion
    (US$20.08&nbsp;million) in the year ended December&nbsp;31, 2006
    from Won&nbsp;5.77&nbsp;billion in the year ended
    December&nbsp;31, 2005, primarily as a result of increases in
    network and systems maintenance fees, salaries and other
    compensation expenses, and depreciation expenses, due to the
    increase in GMV and expansion of our technology systems to
    accommodate the increased number of sellers, buyers and
    transactions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sales and marketing expenses. </I>Our sales and marketing
expenses, which represented 30.1% and 35.3% of total revenues in
the year ended December&nbsp;31, 2006 and 2005, respectively,
increased by 87.2% to Won&nbsp;46.43&nbsp;billion
(US$50.17&nbsp;million) in the year ended December&nbsp;31, 2006
from Won&nbsp;24.80&nbsp;billion in the year ended
December&nbsp;31, 2005, primarily resulting from:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 94.8% increase in advertising expense to
    Won&nbsp;27.35&nbsp;billion (US$29.56&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won&nbsp;14.04&nbsp;billion in
    the year ended December&nbsp;31, 2005, reflecting our expanded
    marketing efforts in 2006, including our online and offline
    advertisements;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 74.3% increase in call center expenses to
    Won&nbsp;11.87&nbsp;billion (US$12.82&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won&nbsp;6.81&nbsp;billion in
    the year ended December&nbsp;31, 2005, due to the increased head
    count at our outsourced call center;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 117.2% increase in promotion expense for sales to
    Won&nbsp;2.52&nbsp;billion (US$2.72&nbsp;million) in the year
    ended December&nbsp;31, 2006 from Won 1.16&nbsp;billion in the
    year ended December&nbsp;31, 2005, reflecting the increase in
    our name brand and image enhancement promotional activities; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 68.1% increase in other costs to Won&nbsp;4.69&nbsp;billion
    (US$5.07&nbsp;million) in the year ended December&nbsp;31, 2006
    from Won&nbsp;2.79&nbsp;billion in the year ended
    December&nbsp;31, 2005, primarily as a result of an increase of,
    and salaries and other compensation paid to, marketing employees.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>General and administrative expenses. </I>Our general and
administrative expenses, which represented 9.5% and 7.5% of
total revenues in the year ended December&nbsp;31, 2006 and
2005, respectively, increased by 175.4% to
Won&nbsp;14.57&nbsp;billion (US$15.75&nbsp;million) in the year
ended December&nbsp;31, 2006 from Won&nbsp;5.29&nbsp;billion in
the year ended December&nbsp;31, 2005. This increase was
primarily due to a 163.8% increase in salaries and other
compensation expenses to Won&nbsp;7.94&nbsp;billion
(US$8.58&nbsp;million) in the year ended December&nbsp;31, 2006
from Won&nbsp;3.01&nbsp;billion in the year ended
December&nbsp;31, 2005, due to an increase in administrative
employees (which include our research and development employees)
and as a result of our continuing focus on research and
development of software and technology.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">48
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Operating income. </I>As a result of the foregoing, we
recorded operating income of Won&nbsp;14.18&nbsp;billion
(US$15.32&nbsp;million) in the year ended December&nbsp;31,
2006, as compared to operating income of
Won&nbsp;3.56&nbsp;billion in the year ended December&nbsp;31,
2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other income (expense). </I>Our other income increased to
Won&nbsp;5.39&nbsp;billion (US$5.83&nbsp;million) in the year
ended December&nbsp;31, 2006 from Won&nbsp;1.40&nbsp;billion in
the year ended December&nbsp;31, 2005, primarily due to an
increase in interest income to Won&nbsp;5.19&nbsp;billion
(US$5.61&nbsp;million) in the year ended December&nbsp;31, 2006
from Won&nbsp;1.40&nbsp;billion in the year ended
December&nbsp;31, 2005, primarily as a result of an increase in
cash we held in respect of the amounts payable to sellers as our
GMV increased and the inclusion of net proceeds after the
issuance of American Depository Shares in July 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Income tax expenses. </I>For the year ended December&nbsp;31,
2006, we generated taxable income. As a result, we recorded
Won&nbsp;3.29&nbsp;billion (US$3.55&nbsp;million) of income tax
expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Net income. </I>As a result of the foregoing, we recorded a
net income of Won&nbsp;16.28&nbsp;billion
(US$17.60&nbsp;million) in the year ended December&nbsp;31, 2006
compared to a net income of Won&nbsp;5.09&nbsp;billion in the
year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>2005 compared to 2004</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth selective line items and the
percentage of net sales that they represent for Gmarket for the
fiscal years 2005 and 2004.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Year ended</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Year ended</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Percentage</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Revenues</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Increase</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" align="center" nowrap><B><FONT face="helvetica,arial">(in billions of Korean Won)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70.34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">397</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36.69</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8.42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">336</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(24.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">363</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5.29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.91</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">177</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating Income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.56</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Revenues. </I>Our total revenues increased by 397.5% to Won
70.34&nbsp;billion (US$72.40&nbsp;million) in the year ended
December&nbsp;31, 2005 from Won 14.14&nbsp;billion in the year
ended December&nbsp;31, 2004. This increase was primarily due to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 371.6% increase in transaction fee revenues to
    Won&nbsp;56.78&nbsp;billion (US$58.45&nbsp;million) in the year
    ended December&nbsp;31, 2005 from Won&nbsp;12.04&nbsp;billion in
    the year ended December&nbsp;31, 2004, primarily due to a 381.5%
    increase in GMV to Won&nbsp;1,080.86&nbsp;billion
    (US$1,112.68&nbsp;million) for the year ended December&nbsp;31,
    2005 from Won&nbsp;224.50&nbsp;billion for the year ended
    December&nbsp;31, 2004; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 545.7% increase in advertising and other revenues to
    Won&nbsp;13.56&nbsp;billion (US$13.95&nbsp;million) in the year
    ended December&nbsp;31, 2005 from Won 2.10&nbsp;billion in the
    year ended December&nbsp;31, 2004, primarily as a result of an
    increase in revenues from standard and premium listing, banner
    advertisement and keyword search fees.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The portion of our total revenues attributable to advertising
and other revenues increased to 19.3% in the year ended
December&nbsp;31, 2005 from 14.9% in the year ended
December&nbsp;31, 2004, due to the addition of approximately
7.2&nbsp;million new sellers and buyers during 2005. We believe
as the number of high volume sellers increases, the increased
competition among sellers results in sellers increasing their
advertising expenditures to promote their products.
Additionally, as the number of unique visitors to our website
increased to 14.2&nbsp;million during the month of December
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
2005 from 9.2&nbsp;million during the month of December 2004,
our website became an increasingly attractive advertising forum
for sellers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The deduction in our transaction fee revenues attributable to
Gmarket Miles was Won&nbsp;2.11&nbsp;billion
(US$2.17&nbsp;million) for the year ended December&nbsp;31,
2005, compared to Won&nbsp;0.27&nbsp;billion for the year ended
December&nbsp;31, 2004, and the deduction for discount coupons
and Gmarket Stamps was Won&nbsp;0.28&nbsp;billion
(US$0.29&nbsp;million) for the year ended December&nbsp;31,
2005. See &#147;&#151;Critical Accounting Policies.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cost of revenues. </I>Our cost of revenues, which represented
52.2% and 59.5% of total revenues for the year ended
December&nbsp;31, 2005 and 2004, respectively, increased by
335.7% to Won&nbsp;36.69&nbsp;billion (US$37.76&nbsp;million) in
the year ended December&nbsp;31, 2005 from
Won&nbsp;8.42&nbsp;billion in the year ended December&nbsp;31,
2004, primarily due to:
</DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 379.1% increase in credit card commissions and bank charges to
    Won&nbsp;20.89&nbsp;billion (US$21.50&nbsp;million) in the year
    ended December&nbsp;31, 2005 from Won&nbsp;4.36&nbsp;billion in
    the year ended December&nbsp;31, 2004, reflecting the increase
    in GMV and number of transactions over the period;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 347.8% increase in click-through fees to
    Won&nbsp;10.03&nbsp;billion (US$10.32&nbsp;million) in the year
    ended December&nbsp;31, 2005 from Won&nbsp;2.24&nbsp;billion in
    the year ended December&nbsp;31, 2004, reflecting the increase
    in our marketing efforts to promote our website, and the
    products offered on our website; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 217.0% increase in other costs to Won&nbsp;5.77&nbsp;billion
    (US$5.94&nbsp;million) in the year ended December&nbsp;31, 2005
    from Won&nbsp;1.82&nbsp;billion in the year ended
    December&nbsp;31, 2004, primarily as a result of increases in
    network and systems maintenance fees, salaries and other
    compensation expenses, and depreciation expenses, due to the
    increase in GMV and expansion of our technology systems to
    accommodate the increased number of sellers, buyers and
    transactions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sales and marketing expenses. </I>Our sales and marketing
expenses, which represented 35.3% and 37.9% of total revenues in
the year ended December&nbsp;31, 2005 and 2004, respectively,
increased by 362.7% to Won 24.80&nbsp;billion
(US$25.53&nbsp;million) in the year ended December&nbsp;31, 2005
from Won 5.36&nbsp;billion in the year ended December&nbsp;31,
2004, primarily resulting from:
</DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 410.5% increase in advertising expense to Won
    14.04&nbsp;billion (US$14.45&nbsp;million) in the year ended
    December&nbsp;31, 2005 from Won 2.75&nbsp;billion in the year
    ended December&nbsp;31, 2004, reflecting our expanded marketing
    efforts in 2005, including our online and offline advertisements;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 366.2% increase in call center expenses to Won
    6.62&nbsp;billion (US$6.81&nbsp;million) in the year ended
    December&nbsp;31, 2005 from Won 1.42&nbsp;billion in the year
    ended December&nbsp;31, 2004, due to the increased head count at
    our outsourced call center to 520 customer service professionals
    as of December&nbsp;31, 2005 from 140 as of December&nbsp;31,
    2004;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 3,767% increase in promotion expense for sales to Won
    1.16&nbsp;billion (US$1.19&nbsp;million) in the year ended
    December&nbsp;31, 2005 from Won 0.03&nbsp;billion in the year
    ended December&nbsp;31, 2004, reflecting the increase in our
    name brand and image enhancement promotional activities; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a 156.9% increase in other costs to Won 2.98&nbsp;billion
    (US$3.08&nbsp;million) in the year ended December&nbsp;31, 2005
    from Won 1.16&nbsp;billion in the year ended December&nbsp;31,
    2004, primarily as a result of an increase of, and salaries and
    other compensation paid to, marketing employees.</TD>
</TR>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>General and administrative expenses. </I>Our general and
administrative expenses, which represented 7.5% and 13.5% of
total revenues in the year ended December&nbsp;31, 2005 and
2004, respectively, increased by 177.0% to
Won&nbsp;5.29&nbsp;billion (US$5.44&nbsp;million) in the year
ended December&nbsp;31, 2005 from Won&nbsp;1.91&nbsp;billion in
the year ended December&nbsp;31, 2004. This increase was
primarily due to a 123.0% increase in salaries and other
compensation expenses to Won&nbsp;3.01&nbsp;billion
(US$3.10&nbsp;million) in the year ended December&nbsp;31, 2005
from Won&nbsp;1.35&nbsp;billion in the year ended
December&nbsp;31, 2004, due to an increase of, and salaries and
other compensation paid to, administrative employees (which
include our research and development employees) and as a result
of our continuing focus on research and development of software
and technology.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Operating income (loss). </I>As a result of the foregoing, we
recorded operating income of Won&nbsp;3.56&nbsp;billion
(US$3.67&nbsp;million) in the year ended December&nbsp;31, 2005,
as compared to operating loss of Won&nbsp;1.55&nbsp;billion in
the year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other income (expense). </I>Our other income increased to
Won&nbsp;1.40&nbsp;billion (US$1.43&nbsp;million) in the year
ended December&nbsp;31, 2005 from Won&nbsp;0.11&nbsp;billion in
the year ended December&nbsp;31, 2004, primarily due to an
increase in interest income to Won&nbsp;1.40&nbsp;billion
(US$1.43&nbsp;million) in the year ended December&nbsp;31, 2005
from Won&nbsp;0.13&nbsp;billion in the year ended
December&nbsp;31, 2004, primarily as a result of an increase in
cash we held in respect of the amounts payable to sellers as our
GMV increased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Income tax expenses. </I>In 2005, we generated taxable
income. However, as we had available loss-carryforwards of
Won&nbsp;3.19&nbsp;billion at December&nbsp;31, 2004, we
utilized such amounts in 2005, paid Won&nbsp;0.12&nbsp;billion
(US$0.12&nbsp;million) of current income taxes and recorded
income tax benefits of Won&nbsp;0.13&nbsp;billion
(US$0.14&nbsp;million) due to deferred income tax asset of
Won&nbsp;0.25&nbsp;billion (US$0.26&nbsp;million) at
December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Net income (loss). </I>As a result of the foregoing, we
recorded a net income of Won&nbsp;5.09&nbsp;billion
(US$5.24&nbsp;million) in the year ended December&nbsp;31, 2005
compared to a net loss of Won&nbsp;1.44&nbsp;billion in the year
ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Exchange Rates</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See &#147;Item&nbsp;3.A. Selected Financial Data&#151; Exchange
Rates.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='121'></A>
</DIV>

<!-- link1 "5.B. Liquidity and Capital Resources" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.B.&nbsp;</B></TD>
    <TD>
    <B>Liquidity and Capital Resources</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2006, we had a working capital, which is
the difference between total current assets less total current
liabilities, of Won&nbsp;78.8&nbsp;billion, including cash and
cash equivalents of Won&nbsp;34.9&nbsp;billion and cash on
deposit of Won&nbsp;134.4&nbsp;billion, compared to a working
capital deficit of Won&nbsp;7.86&nbsp;billion, including cash
and cash equivalents of Won&nbsp;36.90&nbsp;billion, as of
December&nbsp;31, 2005. We treat the amount payable from the
buyers to the sellers held during the period in transit, which
ranges from seven days to 30&nbsp;days, as working capital. The
increase in working capital as of December&nbsp;31, 2006 is
primarily attributable to the net proceeds of US$84&nbsp;million
from our initial public offering on June&nbsp;29, 2006. We added
these net proceeds to the balance sheet after the issuance of
American Depositary Shares to investors, the closing of which
took place on July&nbsp;5, 2006. As of December&nbsp;31, 2006,
we had no loans outstanding. We believe that our available cash
and cash flows generated from operations will be sufficient to
satisfy our working capital and capital expenditure requirements
for the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash from operating activities was Won 29.9&nbsp;billion in
2006 compared with Won 74.0&nbsp;billion in 2005, and Won
20.4&nbsp;billion in 2004. In 2006, net cash generated from
operating activities decreased primarily due to a decrease in
amount payable to sellers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash used in investing activities primarily consists of cash
on deposit, capital expenditures and restricted cash. Cash on
deposit is cash we hold in term deposit accounts with financial
institutions in Korea with terms of one year or less, although
we may withdraw funds from those
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
accounts on demand before maturity by forfeiting some of the
accrued interest. Capital expenditures relate to purchases of
computers and servers and other technology systems hardware and
software to accommodate the growth of our business. Restricted
cash is the security deposit we are required to maintain with
certain credit companies that process credit card payments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash used in investing activities in 2006 was
Won&nbsp;111.9&nbsp;billion compared with
Won&nbsp;56.7&nbsp;billion in 2005, and
Won&nbsp;9.0&nbsp;billion in 2004. Cash flows from investing
activities in 2006 includes increase in cash on deposit of
Won&nbsp;88.8&nbsp;billion, compared with
Won&nbsp;39.2&nbsp;billion in 2005, and
Won&nbsp;6.1&nbsp;billion in 2004. The increase in 2006 were due
primarily to net proceeds received from the initial public
offering. Capital expenditures for 2006 were
Won&nbsp;14.8&nbsp;billion compared with
Won&nbsp;7.3&nbsp;billion in 2005 and Won&nbsp;1.9&nbsp;billion
in 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash provided by financing activities increased to
Won&nbsp;80.1&nbsp;billion in 2006 compared with
Won&nbsp;0.5&nbsp;billion in 2005, primarily as a result of the
inclusion of net proceeds from the initial public offering
during 2006. Net cash provided by financing activities in 2004
was Won&nbsp;6.6&nbsp;billion, primarily due to receipt of
proceeds from an issuance of preferred shares, offset in part by
an early repayment of our bank loans.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently do not anticipate any potentially significant
refinancing requirements in 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Capital requirements and resources</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our capital expenditures are comprised primarily of purchases of
computers and servers and other technology related systems. We
do not own any real property. In each of the years ended
December&nbsp;31, 2006, 2005 and 2004, we spent
Won&nbsp;14.7&nbsp;billion, Won&nbsp;7.3&nbsp;billion and
Won&nbsp;1.9&nbsp;billion, respectively, on the purchase of
property and equipment. We expect to have capital expenditure
requirements for our ongoing expansion and development of our
business, including expenditures for expansion and upgrades of
our Internet servers and databases. We currently estimate our
capital expenditures for 2007 will total approximately
Won&nbsp;20.0&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='122'></A>
</DIV>

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    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.C.&nbsp;</B></TD>
    <TD>
    <B>Research and Development, Patents and Licenses, etc.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As an e-commerce marketplace, we believe the success of our
business depends, in large part, on the development and
introduction of new technologies and development initiatives
that meet the ever-changing needs of our buyers and sellers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our R&#38;D policy is focused on four key points:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Customize key technology solutions:</I> There are many
solutions used for multi-purposes in the Internet business
environment, such as search functionalities or VoIP
communication technologies. We are customizing these
technologies to meet the specific needs and demands of the
e-commerce industry.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Expand our platforms to the global level:</I> Our role is to
provide e-commerce platforms sought after by the marketplace. To
be established as a global player, our existing platforms should
be able to accommodate the needs of the global market as well as
the domestic market.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Utilize historical data more productively:</I> For the
benefit of both buyers and sellers, we are better utilizing our
historical data to create more relevant and accurate search
results and &#147;best sellers&#148; lists. Also, we are
carefully analyzing our buyers&#146; purchasing histories and
trends in order to create more useful &#147;recommended
products&#148; lists for our buyers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Facilitate user participation:</I> As user-generated contents
are emerging as a new trend, we are working on platforms that
facilitate active user participation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years 2006, 2005, and 2004, we spent approximately 2.93
Won, 1.41&nbsp;billion Won&nbsp;and 0.58&nbsp;billion Won,
respectively, on research and development activities.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='123'></A>
</DIV>

<!-- link1 "5.D. Trend Information" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.D.&nbsp;</B></TD>
    <TD>
    <B>Trend Information</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Trends, uncertainties and events which could have a material
impact on our sales, operating revenues and liquidity and
capital resources are discussed above in Item&nbsp;5.A.
&#147;&#151;Operating Results&#148; and Item&nbsp;5.B.
&#147;&#151;Liquidity and Capital Resources.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='124'></A>
</DIV>

<!-- link1 "5.E. Off-Balance Sheet Arrangements" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.E.&nbsp;</B></TD>
    <TD>
    <B>Off-Balance Sheet Arrangements</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures
or capital resources that is material to investors.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='125'></A>
</DIV>

<!-- link1 "5.F. Tabular Disclosure of Contractual Obligations" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.F.&nbsp;</B></TD>
    <TD>
    <B>Tabular Disclosure of Contractual Obligations</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes our contractual obligations as of
December&nbsp;31, 2006 and the effect these obligations are
expected to have on our liquidity and cash flows in future
periods.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">Payments due by period</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Less than</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">More than</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">1 year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">1-3 years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">3-5 years</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">5 years</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(In billions of Won)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Description of Contractual
    Obligations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">LIG Tower office
    lease<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1.69</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W1.45</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">W&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fine Tower office
    lease<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.71</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.78</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Notes:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Lease of 4,282 square meters of office space for our
    headquarters in Seoul, Korea, beginning in February 2006. The
    term of the lease is for one year from February&nbsp;27, 2006
    and the lease may be renewed for subsequent one-year terms. We
    renewed the lease on February&nbsp;28, 2007 which expires on
    February&nbsp;29, 2008. We paid a security deposit in connection
    with this lease in the amount of approximately
    Won&nbsp;0.81&nbsp;billion (US$0.88&nbsp;million).</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Lease of 3,759 square meters of office space in Seoul, Korea,
    beginning in October 2006 and ending in October 2008. We paid a
    security deposit in connection with this lease in the amount of
    approximately Won&nbsp;3.13&nbsp;billion (US$3.38&nbsp;million).</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='126'></A>
</DIV>

<!-- link1 "ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES" -->

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<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 6.</B></TD>
    <TD>
    <B>DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='127'></A>
</DIV>

<!-- link1 "6.A. Directors and Senior Management" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.A.&nbsp;</B></TD>
    <TD>
    <B>Directors and Senior Management</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Executive Officers and Directors</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information regarding our
executive officers and directors as of the date of this filing.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Executive Officers and Directors</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Age</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Position/Title</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Young Bae Ku
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Representative Director and Chief
    Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Duckjun (D.J.) Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Chief Financial Officer
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dae Sik Yang
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Chief Technology Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Kwang Jin Ryoo
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Vice President&#151;e-Market
    Operations
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul J. Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">General Counsel
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ki Hyung Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Non-Standing Director and Chairman
    of the Board of Directors
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sang Kyu Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Non-Standing Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">John E. Milburn
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Massoud Entekhabi
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director and Audit
    Committee Member
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hakkyun Kim
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director and Audit
    Committee Member
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Joon-Ho Hahm
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director and Audit
    Committee Member
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Seok-Heon Kim
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Greg Mrva
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Outside Director
    </FONT></TD>
</TR>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Standing directors are directors who work for us full-time and
hold executive officer positions with us. Non-standing directors
are directors who serve in their positions on a part-time basis.
There is no legal distinction between standing and non-standing
directors under the Korean Commercial Code.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Young Bae Ku </I></B>has served as our chief executive
officer and representative director since October 2001. Prior to
assuming such position, Mr.&nbsp;Ku was our director in charge
of business operations from March to October of 2001. Prior to
joining us in October 2000, Mr.&nbsp;Ku led the development of
Goodsdaq pilot service at Interpark Corporation from August 1999
to April 2000 and was responsible for business development in
the United States for Interpark Goodsdaq Corporation from April
to September 2000. Before joining Interpark Corporation,
Mr.&nbsp;Ku led field operations in oilfield services for
Schlumberger in the Middle East and India from March 1991 to
June 1999. Mr.&nbsp;Ku received a Bachelor&#146;s degree in
Petroleum and Mineral Engineering from Seoul National University.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Duckjun (D.J.) Lee </I></B>has served as our chief
financial officer since July 2005. Prior to joining our company,
Mr.&nbsp;Lee was an investment banker at Credit Suisse First
Boston, Seoul Branch, from August 2003 to July 2005, Citigroup
from May 2000 to December 2002 and Schroders from March 1997 to
April 2000. As an investment banker, Mr.&nbsp;Lee advised Korean
and multinational companies on cross-border mergers&nbsp;&#38;
acquisitions, corporate restructuring and capital markets
transactions across various industries, including technology,
telecommunications, consumer, industrial and financial services.
Mr.&nbsp;Lee received a Bachelor&#146;s degree in Business
Administration from Seoul National University and a Master of
Science in Accounting and Finance from the London School of
Economics and Political Science.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Dae Sik Yang </I></B>has served as our chief technology
officer since October 2000 and is currently the head of our
research and development center. Mr.&nbsp;Yang joined us in
February 2000 for the
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Goodsdaq pilot development project. Prior to that, he was a
software developer at Korea Securities Computer Corporation, or
KOSCOM, from August 1998 to February 2000. Mr.&nbsp;Yang was
involved from the beginning in the development of the e-commerce
platform currently being used by us, and has held supervisory
position. While at KOSCOM, Mr.&nbsp;Yang led the efforts to
develop information processing programs. Mr.&nbsp;Yang received
a Bachelor&#146;s degree in Computer Engineering from Seoul
National University.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Kwang Jin Ryoo </I></B>has been the vice president&#151;
e-Market Operations since January 2006, having joined us in
2000. From June 2004 until January 2006, Mr.&nbsp;Ryoo served as
division manager of our
<FONT style="white-space: nowrap">e-Market</FONT> business
division. Prior to assuming that position, Mr.&nbsp;Ryoo served
as assistant manager, deputy manager and general manager of
various marketing departments, including our electronics and
computers department,
<FONT style="white-space: nowrap">e-Market</FONT> business
division and <FONT style="white-space: nowrap">e-Market</FONT>
category management division. Prior to joining us, Mr.&nbsp;Ryoo
worked at Duzon Digitalware&nbsp;Co., Ltd. from March 1999 to
April 2000, where he was responsible for marketing and
conducting beta testing for newly developed software programs.
Mr.&nbsp;Ryoo received a Bachelor&#146;s degree in Law from
Kangnam University.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Paul J. Lee </I></B>has served as our general counsel
since February 2006. Prior to joining our company, Mr.&nbsp;Lee
was a foreign legal consultant at Kim&nbsp;&#38; Chang in Seoul
from August 2001 to December 2005, where his primary practice
areas included mergers and acquisitions and general corporate
matters. Previously, Mr.&nbsp;Lee worked at Squire
Sanders&nbsp;&#38; Dempsey LLP in Los Angeles from October 1999
to June 2001 as a corporate associate. Mr.&nbsp;Lee received a
Bachelor&#146;s degree in Political Science from Columbia
College and a Juris Doctor degree from the Columbia University
School of Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Ki Hyung Lee </I></B>has served as our director since
April 2000. Mr.&nbsp;Lee has been the Chairman of Interpark
Corporation, our largest shareholder, from October 1997.
Mr.&nbsp;Lee was responsible for establishing Interpark
Corporation in October 1997, one of the earliest e-commerce
business companies in Korea, which was begun as a business unit
within Dacom Corporation. Mr.&nbsp;Lee has led Interpark&#146;s
efforts to expand its online business to ticketing, tourism and
shopping. Mr.&nbsp;Lee also serves as a director of Korea
On-Line Shopping Association. Mr.&nbsp;Lee received a
Bachelor&#146;s degree in Astronomy from Seoul National
University in 1987.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Sang Kyu Lee </I></B>has served as our director since
April 2000. Mr.&nbsp;Lee was our former chief executive officer,
from April 2000 to September 2001. Mr.&nbsp;Lee is currently the
chief executive officer of Interpark Corporation, our largest
shareholder. Prior to becoming the chief executive officer of
Interpark, Mr.&nbsp;Lee served in various roles, including as
head of strategy, managing director and executive vice president
of Interpark. Mr.&nbsp;Lee received a Bachelor&#146;s degree in
International Economics from Seoul National University.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>John E. Milburn </I></B>has served as our director since
December 2004. Mr.&nbsp;Milburn has been the managing general
partner of Newton Technology Partners, a firm specializing in
technology investments in Korea, since January 2000. He is an
advisor to many companies in Korea and throughout the Asia
Pacific region, particularly telecommunications companies.
Mr.&nbsp;Milburn was vice president in charge of Internet
Technology and Business Development at Dacom Corporation from
December 1996 to September 2000. While at Dacom he was
responsible for developing the largest consumer and commercial
ISP in Asia. He was also instrumental in creating new
value-added services businesses, and was the founder of KIDC,
the highest traffic Internet data center in the world.
Mr.&nbsp;Milburn was nominated by A. Bohl Praktijk B.V. for his
current position with us. Mr.&nbsp;Milburn received a
Bachelor&#146;s degree in Nuclear Engineering from the
University of California at Berkeley, was a scientist with the
U.S. Department of Energy for 10&nbsp;years, and has lived and
worked in Korea since May 1991.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Massoud Entekhabi </I></B>has served as our director since
December 2005 and serves as the chairman of our audit committee.
Mr.&nbsp;Entekhabi is a managing director and founder of Zenith
Equity Partners, a private equity firm based in southern
California. Prior to founding Zenith Equity Partners,
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
from 2000 to 2003, Mr.&nbsp;Entekhabi was a general partner and
managing director of TL Ventures, a nationally focused venture
capital firm with over US$1.4&nbsp;billion under management.
From 1973 to 2000, Mr.&nbsp;Entekhabi was with Coopers &#38;
Lybrand LLP and PricewaterhouseCoopers LLP, where he held
various senior management positions and was a partner.
Mr.&nbsp;Entekhabi is Fellow of Institute of Chartered
Accountants in England &#38; Wales and is also a Certified
Public Accountant in the United States.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Hakkyun Kim </I></B>has served as our director and member
of our audit committee since December 2005. Mr.&nbsp;Kim is
currently an attorney at Pillsbury Winthrop Shaw Pittman LLP, a
major U.S.-based law firm, in their Washington, DC office, where
he focuses his practice on business and public policy matters
affecting clients from, or with interests in, Korea and Asia.
Previously, Mr.&nbsp;Kim worked at various other major
U.S.-based law firms, where he represented Korean companies in
connection with establishment of new operations in the U.S.,
including compliance with U.S. regulatory requirements. Prior to
practicing law, Mr.&nbsp;Kim served as an economist at The Bank
of Korea, the central bank of Korea, for over 10&nbsp;years,
where he worked in the areas of foreign asset management,
domestic open market operation and monetary policy decision
making. Mr.&nbsp;Kim received a Bachelor&#146;s degree in Law
and Economics from Seoul National University and a Juris Doctor
degree from the University of Minnesota Law School.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Joon-Ho Hahm </I></B>has served as our director and member
of our audit committee since December 2005. Mr.&nbsp;Hahm is an
Associate Professor of International Economics and Finance at
Yonsei University in Korea. Mr.&nbsp;Hahm&#146;s focus is on
financial markets and institutions, bank supervision, exchange
rates and interest rates, risk management, debt management and
consumption and savings. Mr.&nbsp;Hahm received a
Bachelor&#146;s degree in English Literature and Business
Administration from Seoul National University in 1986, a Master
of Business Administration from Columbia University in 1988 and
a Ph.D. in Finance and Economics from Columbia University in
1993. Mr.&nbsp;Hahm has served in a variety of consultative
roles for the Korean government and international organizations,
including the World Bank. Mr.&nbsp;Hahm is also serving as an
outside non-executive director of Prudential Asset Management
Co., Ltd. and a member of the Advisory Committee of Hana Bank.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Seok-Heon Kim </I></B>is the managing partner of
Cornerstone Equity Partners, a leading Korean private equity
firm specializing in buyout and significant control
transactions. Mr.&nbsp;Kim has over 15&nbsp;years of experience
that has covered private equity, investment banking, corporate
finance and corporate operations. Prior to Cornerstone, he held
an executive role at Korea Investment&nbsp;&#38; Securities
where he led the establishment of Cornerstone, a subsidiary of
Korea Investment Holdings which is a listed financial services
holding company. He has also served as the head of Korea for CVC
Asia Pacific Limited, head of M&#38;A for ABN AMRO Seoul, group
leader in Ernst&nbsp;&#38; Young Korea&#146;s M&#38;A practice,
and at LG Chem., Ltd. Mr.&nbsp;Kim holds a Bachelor&#146;s
degree in Public Law from the Seoul National University and a
Master of Business Administration degree from the University of
Washington.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Greg Mrva </I></B>joined Yahoo! Inc. in June 2005. In his
role as Vice President of Mergers and Acquisitions, he is a key
participant in the development of the Company&#146;s strategy
and in the identification and execution of new business
opportunities including investments, acquisitions, strategic
partnerships and joint ventures. Prior to joining Yahoo! Inc.,
Mr.&nbsp;Mrva was an investment professional with Texas Pacific
Group, a well-know private equity and investment firm, from 2003
to 2005. Prior to TPG, Mr.&nbsp;Mrva was Vice President of
Corporate Development at Mpath Interactive, an Internet media
and entertainment company, from 1999 to 2002. Mr.&nbsp;Mrva has
also worked for Montgomery Securities where he worked on private
equity investments in the technology and media sectors. He began
his career with Goldman Sachs in New York as a financial analyst
in the Mergers and Acquisitions group. Mr. Mrva graduated from
the University of Virginia with a Bachelor of Arts in History
and Economics with high distinction, and holds a Juris Doctor
degree magna cum laude from Harvard Law School.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='128'></A>
</DIV>

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    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.B.&nbsp;</B></TD>
    <TD>
    <B>Compensation</B></TD>
</TR>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Compensation of Directors and Officers</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently do not have any outstanding loans to our executive
officers. We currently do not have any guarantee obligations
with respect to any borrowings by any of our directors or
executive officers. The remuneration paid to our directors and
executive officers, in the aggregate, during the year ended
December&nbsp;31, 2006 totaled approximately
Won&nbsp;1.36&nbsp;billion, which excludes
Won&nbsp;0.14&nbsp;billion set aside or accrued to provide for
retirement benefits to five of our executive officers. The
accrued severance benefits for our executive officers as of
December&nbsp;31, 2006 and March&nbsp;31, 2007 were
Won&nbsp;168.9&nbsp;million and Won&nbsp;184.3&nbsp;million,
respectively. The annual maximum aggregate amount of
remuneration for directors is determined by a shareholder
resolution. We also reimburse our directors for expenses they
incur in performance of their services. In addition, we maintain
four cars for our executive officers primarily for business use,
but which can at times also be used for their personal use.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employees and directors with one year or more of service are
entitled to receive a lump-sum payment upon termination of their
employment with us based on the length of service and rate of
pay at the time of termination. Accrued severance benefits are
estimated assuming all eligible employees terminate their
employment at the balance sheet date. The annual severance
benefits expense charged to operations is calculated based upon
the net change in the accrued severance benefits payable at the
balance sheet date. We are required to pay 4.5% of each
employee&#146;s annual wages to the National Pension Service.
The total amount of contributions made to the Korea National
Pension Service in 2006, 2005 and 2004, was
Won&nbsp;353.3&nbsp;million, Won&nbsp;143.0&nbsp;million and
Won&nbsp;77.4&nbsp;million, respectively. The accrued severance
benefits as of December&nbsp;31, 2004, 2005 and 2006, were
Won&nbsp;465.3&nbsp;million, Won&nbsp;428.1&nbsp;million and
Won&nbsp;1,396.7&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We maintain a directors&#146; and officers&#146; liability
insurance policy covering certain potential liabilities of our
directors and officers.
</DIV>

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<A name='129'></A>
</DIV>

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    <TD><B>6.C.&nbsp;</B></TD>
    <TD>
    <B>Board Practices</B></TD>
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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has the ultimate responsibility for the
administration of our affairs. Our articles of incorporation, as
currently in effect, provide for a board of directors comprised
of standing directors and non-standing directors, including
outside directors. Non-standing directors have the same rights
and duties as those of standing directors, but are not executive
officers, or otherwise employed by us. Under our articles of
incorporation, directors serve a three-year term (in case of an
outside director, one-year term), but if the term ends prior to
the date of the ordinary general meeting of shareholders in the
last fiscal year of their term, the term will be extended until
the close of the ordinary general meeting of shareholders. The
three-year term of Mr.&nbsp;Young Bae Ku will end on
March&nbsp;29, 2010 and those of Messrs.&nbsp;Ki Hyung Lee and
Sang Kyu Lee will end on March&nbsp;28, 2009. The one-year terms
of Messrs.&nbsp;John E. Milburn, Massoud Entekhabi, Seok-Heon
Kim, Hakkyun Kim and Joon-Ho Hahm will end on March&nbsp;29,
2008. The three-year term of Mr.&nbsp;Greg Mrva will end on
December&nbsp;28, 2009. Our shareholders may remove directors
from office by a resolution at a general meeting of shareholders
adopted by the holders of at least two-thirds of the voting
shares present or represented at the meeting which also
represents at least one-third of our total voting shares then
issued and outstanding. Our articles of incorporation provide
for a board of directors of up to nine members, the majority of
whom must be outside directors. We currently have a total of
nine directors, five of whom are outside directors. In
connection with Yahoo! Korea&#146;s purchase of approximately
9.1% of our common shares from DutchCo, we increased the number
of our board of directors to nine directors to accommodate the
nomination of Greg Mrva by Yahoo! Korea to our board of
directors. We elect our directors at a general meeting of
shareholders with the approval of at least a majority of those
shares present or represented at such meeting which also
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
represents at least one-fourth of our total voting shares then
issued and outstanding. Our articles of incorporation do not
permit cumulative voting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board of directors elects one representative director from
its members. The representative director is authorized to
represent us and act on our behalf and has the authority to bind
us in all matters with third parties.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Meetings of the board of directors are convened by the
representative director or another director as determined by the
board of directors. The board of directors determines all
important matters relating to our business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Resolutions of the board are adopted in the presence of a
majority of the directors in office and by the affirmative vote
of a majority of the directors present. Under the Korean
Commercial Code and our articles of incorporation, any director
with a special interest in an agenda item presented for
resolution at a board meeting must abstain from voting on such
agenda item.
</DIV>

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<B>Committees of the Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to our articles of incorporation, as amended on
December&nbsp;2, 2005, we have established an audit committee.
In addition, the board of directors may establish under the
board of directors a committee (other than the audit committee)
consisting of at least two directors pursuant to our internal
regulations adopted by the board of directors and may delegate
certain authority of the board of directors, to the extent
permissible under applicable laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Audit Committee</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to our articles of incorporation, as amended on
December&nbsp;2, 2005, we have established our audit committee.
Under our articles of incorporation, the audit committee must
consist of three or more outside directors. Our articles of
incorporation also requires us to comply with the laws of the
relevant jurisdiction or the regulations and rules of the
relevant government supervisory authorities or the relevant
stock exchange, such as the Nasdaq Marketplace Rules, with
respect to authority and composition of the audit committee, if
we list or trade our stock on overseas stock exchanges.
Therefore, all of our audit committee members must satisfy
independence requirements under the Nasdaq Marketplace Rules.
Our audit committee consists of Massoud Entekhabi, Hakkyun Kim
and Joon-Ho Hahm, all of whom meet the independence requirements
of the Nasdaq Marketplace Rules. The audit committee is
responsible for overseeing our accounting and financial
reporting processes and the audits of the financial statements
of our company. The responsibilities of the audit committee
under the Korean Commercial Code and our articles of
incorporation include, among other things:
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    request for convening an extraordinary general meeting of
    shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    examine financial statements and other reports to be submitted
    by the board of directors to the general meeting of shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    review the administration by the board of directors of our
    affairs;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approve appointment, dismissal and supervision of our
    independent certified public accountants; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide report of appointment of independent certified public
    accountants to our shareholders at the general meeting of
    shareholders.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">58
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='130'></A>
</DIV>

<!-- link1 "6.D. Employees" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.D.&nbsp;</B></TD>
    <TD>
    <B>Employees</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the number of our permanent
employees for each of our major departments and our total number
of employees as of December&nbsp;31, 2004 and 2005 and 2006, and
March&nbsp;31, 2007.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">As of December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">As of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2007</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Management and administration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Business planning*
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounting and finance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transaction support
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Service quality management
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">168</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">420</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    In March 2006, some of the personnel previously assigned to the
    management and administration department were transferred to a
    newly created business planning department.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently have over 400 outsourced personnel to handle our
customer service functions. We hire part-time employees and
contractors from time to time on an as-needed basis. The steady
increase in the number of employees is due to the expansion of
our business over the period. We believe our relationship with
our employees is good, and we have never experienced any major
labor disputes. None of our employees belong to a labor union,
and no collective bargaining agreement governs our relationship
with our employees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='131'></A>
</DIV>

<!-- link1 "6.E. Share Ownership" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.E.&nbsp;</B></TD>
    <TD>
    <B>Share Ownership</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some of our directors and officers own our common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Stock Options</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe the use of stock options is an important element of
our strategy to maintain a highly motivated management team,
which aligns the interests of our management with those of our
shareholders. Under Korean law, we may grant stock options to
certain qualified executive officers and employees. Set forth
below are the details of our stock option plan as currently
implemented in our articles of incorporation:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Stock options may be granted to our executive officers and
    employees who have contributed or are qualified to contribute to
    our establishment, management and technical innovation.
    Notwithstanding the foregoing, no stock options may be granted
    to any executive officer or employee who is (i)&nbsp;our largest
    shareholder, (ii)&nbsp;a holder of 10% or more of our shares
    outstanding, (iii)&nbsp;certain specially related persons of a
    person set forth in (i)&nbsp;and (ii)&nbsp;above, (iv)&nbsp;a
    person who actually controls the company, including a person who
    has the power to appoint or dismiss executive officers or
    (v)&nbsp;a shareholder who would own 10% or more of our shares
    upon exercise of options granted under the stock option plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Stock options may be granted by a special resolution of
    shareholders up to the lesser of 30% of all issued and
    outstanding shares or the maximum rate permitted by applicable
    laws and regulations. Under our articles of incorporation, stock
    options may be granted by a board resolution to the extent
    permissible under applicable law. However, current Korean law
    does not permit companies not listed on the Korean Exchange
    (such as us) to grant stock options to their executive officers
    and employees by a board resolution.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Under our articles of incorporation, the number of executive
    officers and employees who may be granted stock options shall
    not exceed 90% of the total number of incumbent executive
    officers and employees, and the stock options granted to any
    single officer or employee shall not exceed 10% of the total
    number of issued and outstanding shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Under our articles of incorporation, in case (i)&nbsp;where the
    relevant officer or employee voluntarily retires or resigns
    after the stock option is granted to him or her, (ii)&nbsp;where
    the relevant officer or employee has intentionally or by
    negligence caused material damage to us or (iii)&nbsp;where any
    cause for cancellation provided under the contract granting the
    stock option has occurred, the granted stock option may be
    cancelled by a resolution of the board of directors. Where the
    relevant executive officer or employee voluntarily retires or
    resigns, stock options not exercised must be exercised within
    three months from the date of retirement or resignation.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Generally, under the Korean Commercial Code, stock options may
    begin to vest at the earliest after two years of continuous
    employment or service from the date of resolution of general
    meeting of shareholders granting such stock options. Under our
    articles of incorporation and applicable stock option agreements
    currently in effect, 50% of the stock options vest after two
    years from the date of resolution of general meeting of
    shareholders granting such stock options, the remaining 50% of
    the stock options vests monthly, in even increments, over the
    next 24&nbsp;months. Stock options expire on the seventh
    anniversary of the date such stock options first become
    exercisable.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Under the Korean Commercial Code, the minimum exercise price of
    stock options must not be less than either of the following:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="3%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(a)&nbsp;</TD>
    <TD align="left">
    if new shares will be issued at the time of exercise of the
    stock option, the higher of (i)&nbsp;the fair value of such
    shares as of the date of the grant of the stock options and
    (ii)&nbsp;par value of such shares; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(b)&nbsp;</TD>
    <TD align="left">
    if treasury shares will be transferred at the time of exercise
    of the stock option, the fair value of such treasury shares as
    of the date of the grant of the stock options.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below are descriptions of our grant of stock options
to our directors, executive officers and employees since our
inception, taking into account the 50-for-1 stock split
effective January&nbsp;5, 2006:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;30,
    2001, we granted stock options for 3,600,000 shares in the
    aggregate, with an exercise price of Won 100 per share, to 19
    executive officers and employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;25,
    2002, we granted stock options for 3,600,000 shares in the
    aggregate, with an exercise price of Won 100 per share, to 29
    executive officers and employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;14,
    2003, we granted stock options for 1,875,000 shares in the
    aggregate, with an exercise price of Won 140 per share, to 18
    executive officers and employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;31,
    2004, we granted stock options for 300,000 shares in the
    aggregate, with an exercise price of Won 140 per share, to six
    employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;22,
    2005, we granted stock options for 495,000 shares in the
    aggregate, with an exercise price of Won 640 per share, to 26
    employees.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">60
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on December&nbsp;2,
    2005, we granted stock options for 725,000 shares in the
    aggregate, with an exercise price of Won 4,000 per share, to one
    director, one executive officer and one employee.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;28,
    2006, we granted stock options for 490,000 shares in the
    aggregate, with an exercise price of Won 9,000 per share, to two
    directors, one executive officer and 111 employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    At the general meeting of shareholders held on March&nbsp;29,
    2007, we granted stock options for 430,000 shares in the
    aggregate, with an exercise price of Won 16,452 per share, to
    158 employees.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Taking into account the 50-for-1 stock split which became
effective January&nbsp;5, 2006, out of a total of 11,085,000
shares granted as stock options to officers and employees,
(i)&nbsp;1,573,000 stock options remain outstanding as of
December&nbsp;31, 2006, (ii)&nbsp;stock options for 2,662,000
shares have been cancelled due to the retirement of the stock
option holders or due to other reasons, (iii)&nbsp;stock options
for a total of 6,075,000 shares were exercised on July&nbsp;15,
2005, (iv)&nbsp;stock options for a total of 325,000 shares were
exercised on August&nbsp;4, 2005 and (v)&nbsp;stock options for
a total of 450,000 shares were exercised on April&nbsp;19, 2006.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">allocated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">allocated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">allocated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Number of shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">allocated (Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercised</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Price Won&nbsp;100)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Won&nbsp;140)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Won&nbsp;4,000)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Won&nbsp;9,000)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(on</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">July&nbsp;15,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Position</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise period</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Young Bae Ku
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">CEO and Representative Director
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">500,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">500,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Duckjun (D.J.) Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Chief Financial Officer
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">600,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom"><FONT face="helvetica,arial">December 2007&nbsp;&#150; December 2016</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Paul J. Lee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">General Counsel
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom"><FONT face="helvetica,arial">March 2008&nbsp;&#150; March 2017</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Chang Sun Jo
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Senior Vice President&nbsp;&#151;
    Marketing and Business Development
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">550,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dae Sik Yang
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Chief Technology Officer
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">750,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Kwang Jin Ryoo
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Vice President&nbsp;&#151; e-Market
    Operations
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">175,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">350,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Massoud Entekhabi
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Outside Director and Member of
    Audit Committee
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom"><FONT face="helvetica,arial">December 2007&nbsp;&#150; December 2016</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hakkyun Kim
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Outside Director and Member of
    Audit Committee
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom"><FONT face="helvetica,arial">March 2008&nbsp;&#150; March 2017</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Joon-Ho Hahm
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Outside Director and Member of
    Audit Committee
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom"><FONT face="helvetica,arial">March 2008&nbsp;&#150; March 2017</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='132'></A>
</DIV>

<!-- link1 "ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='133'></A>
</DIV>

<!-- link1 "7.A. Major Shareholders" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>7.A.&nbsp;Major Shareholders</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following sets forth information known to us with respect to
the beneficial ownership of our common shares as of
March&nbsp;31, 2007 by: taking into account the conversion of
all of our
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">61
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
outstanding Series&nbsp;A convertible preferred shares into the
same number of common shares on June&nbsp;6, 2006 and the
50-for-1 stock split which became effective January&nbsp;5,
2006, by:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each of our directors and executive officers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each person known to us to own beneficially more than 5.0% of
    our common shares.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. Except as indicated
below, the persons named in the table have the sole voting and
investment power with respect to all common shares shown as
beneficially owned by them. None of the stock options held by
such persons are exercisable within 60&nbsp;days of the date
hereof.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Shares beneficially owned as of March&nbsp;31, 2007</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">%</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Executive Officers and Directors:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ki Hyung
    Lee<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,615,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Young Bae
    Ku<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,743,550</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dae Sik
    Yang<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">601,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sang Kyu
    Lee<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Kwang Jin
    Ryoo<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,265</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Subtotal of Executive Officers and
    Directors as a group
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,532,615</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Principal Shareholders:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interpark
    Corporation<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,599,900</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Yahoo! Korea
    Corporation<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,505,650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Yahoo!
    Inc.<SUP style="font-size: 85%; vertical-align: text-top">(4)(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">516,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Techno Pacific Assets
    Limited<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">165,450</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">*</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Subtotal of Principal Shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,787,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,319,926</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff;">
<I>Notes:</I>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*</TD>
    <TD align="left">
    Less than 1%.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(1)</TD>
    <TD align="left">
    Mr.&nbsp;Ki Hyung Lee owns 20.8% of the issued and outstanding
    shares of Interpark Corporation, one of our principal
    shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)</TD>
    <TD align="left">
    The mailing address for this shareholder is: c/o Gmarket Inc.,
    8th Floor, LIG Tower, 649-11, Yeoksam-Dong, Gangnam-Gu, Seoul
    135-912, Korea.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)</TD>
    <TD align="left">
    The mailing address for Interpark Corporation is: 8th Floor, Nam
    Seoul Building, 1304-3, Seocho-Dong, Seocho-Gu,
    Seoul&nbsp;137-074, Korea.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)</TD>
    <TD align="left">
    Yahoo! Korea Corporation, a corporation organized and existing
    under the laws of Korea, is a wholly-owned subsidiary of Yahoo!
    Inc, a corporation organized and existing under the laws of the
    State of Delaware. The mailing address for Yahoo! Korea
    Corporation is: 144-19 JS Tower, Samseong-Dong, Gangnam-Gu,
    Seoul, Korea. The mailing address for Yahoo! Inc. is: 701 First
    Avenue, Sunnyvale, California 94089.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)</TD>
    <TD align="left">
    Yahoo! Inc. acquired 516,311 of our common shares in March 2007.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)</TD>
    <TD align="left">
    Techno Pacific Assets Limited, a British Virgin Islands entity,
    currently owns common shares which were converted from preferred
    shares on June&nbsp;6, 2006. Techno Pacific Assets Limited is
    wholly owned by Yoon Jung Choi, who is the wife of John E.
    Milburn, one of our directors. John E. Milburn is the sole
    director of Techno Pacific Assets Limited and acts as its
    managing director. The registered business address for Techno
    Pacific Assets Limited is c/o NTP Korea, 1st Fl. Samhwa Bldg.,
    144-17 Samsung-Dong, Gangnam-Gu, Seoul, Korea 135-090 and its
    mailing address is Techno Pacific Assets Limited, 555 Bryant
    Street&nbsp;#584, Palo Alto, CA 94301, U.S.A.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Strategic Investment</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Yahoo! Inc., a corporation organized and existing under the laws
of the State of Delaware, or Yahoo!, and DutchCo entered into an
agreement for the purchase by Yahoo! of 4,505,650 of our common
shares from DutchCo, for an aggregate purchase price of
US$60&nbsp;million. Yahoo! is a leading global Internet brand
and one of the most trafficked Internet destinations worldwide.
Yahoo! provides online products and services, and offers a full
range of tools and marketing solutions for
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">62
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
businesses to connect with Internet users around the world.
Yahoo! is headquartered in Sunnyvale, California.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Yahoo! assigned its rights under the purchase agreement to
Yahoo! Korea Corporation, a wholly-owned subsidiary of Yahoo!
that is a corporation organized and existing under the laws of
Korea, or Yahoo! Korea, and the transaction was consummated on
June&nbsp;12, 2006. As a result of the Yahoo! Korea investment,
Yahoo! Korea owns 4,505,650 of our common shares, which
represents approximately 9.1% of our total issued and
outstanding common shares as of December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with Yahoo! Korea&#146;s purchase of common shares
from DutchCo, we entered into a shareholders agreement and
registration rights agreement with Yahoo! Korea, DutchCo and
Interpark Corporation. These agreements provide for, among other
things, and subject to, in each case, certain conditions
(i)&nbsp;the ability of Interpark Corporation and Yahoo! Korea
to appoint members to our board of directors,
(ii)&nbsp;preemptive rights to Yahoo! Korea for future issuances
of our equity securities, subject to certain exceptions and
(iii)&nbsp;registration rights for Yahoo! Korea and DutchCo. As
DutchCo has since sold or distributed to its equity holders a
total of 7,576,531 common shares, it is therefore no longer our
shareholder and no longer has rights under the foregoing
agreements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='134'></A>
</DIV>

<!-- link1 "7.B. Related Party Transactions" -->

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.B.&nbsp;</B></TD>
    <TD>
    <B>Related Party Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We engage from time to time in various transactions with related
parties. We believe we have conducted our transactions with
related parties as we would in comparable arm&#146;s-length
transactions with a non-related party, on a basis substantially
as favorable to us as would be obtainable in such transactions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Relationship with Interpark Corporation</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As one of our sellers, Interpark lists products on our website,
including books, CDs, household products and travel/tour
packages. Also, our users may redeem Interpark-issued gift
certificates towards purchases on our website. Currently, the
sales of Interpark&#146;s products on our website, combined with
the value of the redeemed Interpark-issued gift certificates,
comprise less than 1% of our GMV.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the years ended December&nbsp;31, 2004, 2005 and 2006,
there were transactions with Interpark Corporation and its
subsidiaries as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">131</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">613</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,127</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">845</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leasehold and other deposits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">267</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">114</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts payable to sellers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">442</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable and accrued
    expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">143</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Ki Hyung Lee, the chairman and co-chief executive
officer of Interpark, and Mr.&nbsp;Sang Kyu Lee, the co-chief
executive officer of Interpark, currently serve as members of
our board of directors.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Relationship with Yahoo!</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In April 2007, we entered into an agreement with Overture Korea,
a Yahoo! company, in which Overture Korea&#146;s sponsored links
will appear on selected search results pages of our website.
Under the terms of the agreement, we will receive a designated
percentage of the total revenue received by Overture Korea from
its advertisers in connection with such sponsored links. The
initial term of the agreement will expire in March 2008 but is
renewable on an annual basis.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">63
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Relationship with BestBuyer Co., Ltd.</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
BestBuyer Co., Ltd., or BestBuyer, is an affiliate of our
largest shareholder, Interpark. We have entered into two
separate agreements with BestBuyer in January 2006 and October
2006, respectively. The first agreement is for the purchase of
banner advertisements on BestBuyer&#146;s website for two months
for an aggregate contract price of Won&nbsp;7&nbsp;million. The
second agreement is a co-promotion agreement pursuant to which
we pay BestBuyer a click-through fee, which is a fee we pay to
Internet portals and other websites, such as BestBuyer, for
referrals of buyers who make a purchase on our website. The
amount of click-through fee is computed as a percentage of the
total transaction value completed on our website by buyers
referred to our website from the BestBuyer website. The total
amount of click-through fee paid to BestBuyer for the year ended
December&nbsp;31, 2006 was Won&nbsp;506.7&nbsp;million. This
agreement is for a one year term that will expire in October
2007 but is renewable on an annual basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Loans to officers</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We do not have any loans, credits or guarantees outstanding to
or for the benefit of executive officers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='135'></A>
</DIV>

<!-- link1 "7.C. Interests of Experts and Counsel" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.C.&nbsp;</B></TD>
    <TD>
    <B>Interests of Experts and Counsel</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='136'></A>
</DIV>

<!-- link1 "ITEM 8.FINANCIAL INFORMATION" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 8.</B></TD>
    <TD>
    <B>FINANCIAL INFORMATION</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='137'></A>
</DIV>

<!-- link1 "8.A. Consolidated Statements and Other Financial Information" -->

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.A.&nbsp;</B></TD>
    <TD>
    <B>Consolidated Statements and Other Financial Information</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Statements</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All relevant financial statements are included in
&#147;Item&nbsp;18. Financial Statements.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='138'></A>
</DIV>

<!-- link1 "8.B. Significant Changes" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.B.&nbsp;</B></TD>
    <TD>
    <B>Significant Changes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No significant changes have occurred since the date of our
financial statements included in this annual report on
Form&nbsp;<FONT style="white-space: nowrap">20-F.</FONT> See
&#147;Item&nbsp;5.A. Operating Results&#151; Overview&#148; for
information on material trends affecting our business and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='139'></A>
</DIV>

<!-- link1 "ITEM 9.THE OFFER AND LISTING" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE OFFER AND
LISTING</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='140'></A>
</DIV>

<!-- link1 "9.A. Offer and Listing Details" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.A.&nbsp;</B></TD>
    <TD>
    <B>Offer and Listing Details</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Common Stock</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our common shares are not listed on any stock exchange or
organized trading market, including in Korea. There is no public
market for our common shares, although a small number of our
common shares are traded in off-market transactions involving
private sales primarily in Korea.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">64
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ADSs</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following our initial public offering on June&nbsp;29, 2006, the
ADSs have been issued by Citibank N.A. as depositary and are
listed on the Nasdaq Stock Market&#146;s National Market under
the symbol &#147;GMKT.&#148; Each ADS represents one share of
our common stock. As of December&nbsp;31, 2006, 10,733,884 ADSs
representing 10,733,884 shares of our common stock were
outstanding. The table below shows the high and low trading
prices on the Nasdaq for the outstanding ADSs since July&nbsp;1,
2006. Each ADS represents one share of our common stock.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">Price period</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">High</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Low</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(In US$)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Third Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.36</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">July
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">August
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.73</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.36</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">September
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.89</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.29</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.33</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">October
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.39</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.33</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">November
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.74</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.65</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">December
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.93</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.62</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">First Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">January
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">February
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21.85</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.09</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">March
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.89</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='141'></A>
</DIV>

<!-- link1 "9.B. Plan of Distribution" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.B.&nbsp;</B></TD>
    <TD>
    <B>Plan of Distribution</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='142'></A>
</DIV>

<!-- link1 "9.C. Markets" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.C.&nbsp;</B></TD>
    <TD>
    <B>Markets</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Item&nbsp;9.A. &#147;Offering and Listing Details.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='143'></A>
</DIV>

<!-- link1 "9.D. Selling Shareholders" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.D.&nbsp;</B></TD>
    <TD>
    <B>Selling Shareholders</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='144'></A>
</DIV>

<!-- link1 "9.E. Dilution" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.E.&nbsp;</B></TD>
    <TD>
    <B>Dilution</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='145'></A>
</DIV>

<!-- link1 "9.F. Expenses of the Issue" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.F.&nbsp;</B></TD>
    <TD>
    <B>Expenses of the Issue</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='146'></A>
</DIV>

<!-- link1 "ITEM 10.ADDITIONAL INFORMATION" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;10.</B></TD>
    <TD>
    <B>ADDITIONAL INFORMATION</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='147'></A>
</DIV>

<!-- link1 "10.A. Share Capital" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.A.&nbsp;</B></TD>
    <TD>
    <B>Share Capital</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Item&nbsp;10.B. &#147;Articles of Incorporation.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='148'></A>
</DIV>

<!-- link1 "10.B. Articles of Incorporation" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.B.&nbsp;</B></TD>
    <TD>
    <B>Articles of Incorporation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The section below provides summary information relating to the
material terms of our capital stock and our articles of
incorporation. It also includes a brief summary of certain
provisions of the Korean Commercial Code and related Korean law,
all as currently in effect.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">65
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>General</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our total authorized share capital is 200,000,000 shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the date hereof, our authorized share capital consists of
200,000,000 shares, each with a par value of Won 100. As of
December&nbsp;31, 2006, there are 49,506,210 common shares and
no preferred shares issued and outstanding. Each issued and
outstanding preferred share was converted into one common share
on June&nbsp;6, 2006. As of December 31, 2006, no preferred
shares are permitted to be issued under our articles of
incorporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following are summaries of material provisions of our
articles of incorporation, as well as the Korean Commercial Code
and relevant laws of Korea, all as currently in effect.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificates representing our common shares are issued in
registered form. We issue share certificates in denominations of
1, 5, 10, 50, 100, 500, 1,000 and 10,000 shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Common Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dividends</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We distribute dividends to our shareholders in proportion to the
number of shares owned by each shareholder. The common shares
represented by the ADSs have the same dividend rights as other
outstanding common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of our common shares are entitled to such dividends
as may be declared at our annual general meeting of
shareholders, subject to the Korean Commercial Code. If we
declare dividends at the annual general meeting of shareholders,
which is generally held within three months after the end of the
fiscal year, we will pay the annual dividend shortly after the
annual general meeting to the shareholders of record or
registered pledges as of the end of the preceding fiscal year.
We may distribute the annual dividend in cash or in shares.
However, any dividend of shares must be distributed at par
value, and dividends in shares may not exceed one-half of the
annual dividend. Our obligation to pay dividend expires if no
claim to dividend is made for five years from the payment date.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Korean Commercial Code, we may pay an annual dividend
only out of the excess of our net assets, on a non-consolidated
basis, over the sum of (1)&nbsp;our stated capital and
(2)&nbsp;the total amount of our capital surplus reserve and
legal reserve accumulated up to the end of the relevant dividend
period. In addition, we may not pay an annual dividend unless we
have set aside as legal reserve an amount equal to at least
10.0% of the cash portion of the annual dividend or until we
have accumulated a legal reserve of not less than one-half of
our stated capital. We may not use legal reserve to pay cash
dividends but may transfer amounts from legal reserve to capital
stock or use legal reserve to reduce an accumulated deficit.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Korean Commercial Code and our articles of
incorporation provide that, in addition to annual dividends, we
may pay interim dividends once during each fiscal year. Unlike
annual dividends, the decision to pay interim dividends can be
made by a resolution of the board of directors and is not
subject to shareholder approval. Any interim dividends must be
paid in cash to the shareholders of record as of June 30 of the
relevant fiscal year. Since our inception, we have not declared
or paid any dividends on our common shares. Any decision to pay
dividends in the future will be subject to a number of factors,
including cash requirements for future capital expenditures and
investments, and other factors our board of directors may deem
relevant. We have no intention to pay dividends in the near
future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Preferred Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;6, 2006, all of our outstanding preferred shares
were converted into common shares and certain provisions of our
articles of incorporation relating to preferred shares lost
their effect
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
pursuant to the amendment of our articles of incorporation.
Accordingly, there are currently no preferred shares outstanding.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Distribution of Free Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to paying dividends in shares out of our retained or
current earnings, we may also distribute to our shareholders an
amount transferred from our capital surplus or legal reserve to
our stated capital in the form of free shares. We must
distribute such free shares to all our shareholders in
proportion to their existing shareholdings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Preemptive Rights and Issuance of Additional Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may at times issue authorized but unissued shares, unless
otherwise provided in the Korean Commercial Code, on terms
determined by our board of directors. All our shareholders are
generally entitled to subscribe to any newly-issued shares in
proportion to their existing shareholdings. We must offer new
shares on uniform terms to all shareholders who have preemptive
rights and are listed on our shareholders&#146; registry as of
the relevant record date. Our board of directors may determine
how to distribute shares for which preemptive rights have not
been exercised or where fractions of shares occur.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We must give public notice of the preemptive rights regarding
new shares and their transferability at least two weeks before
the relevant record date.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under our articles of incorporation, we may issue new shares up
to 60% of our total outstanding shares pursuant to a board
resolution to persons other than existing shareholders only:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we offer subscription for new shares or issue them to
    subscribers in accordance with the Securities and Exchange Act
    of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares by general public offering by a
    resolution of the board of directors in accordance with the
    Securities and Exchange Act of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we preferentially issue new shares to members of our employee
    stock ownership association in accordance with applicable laws
    and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares upon the exercise of stock options in
    accordance with applicable laws and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares pertaining to the issuance of any
    depository receipts;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares to entities other than existing
    shareholders, such as domestic or foreign financial institutions
    or foreign investors, for the purposes of long-term development
    or funding necessity; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if we issue new shares in order to achieve a business purpose,
    including, but not limited to, introduction of new technology or
    improvement of our financial condition.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, under the Korean Commercial Code, we may issue new
shares pursuant to a board resolution to persons other than
existing shareholders to the extent that the purpose of such
issuance is to achieve a business purpose, including, but not
limited to, the introduction of new technology or the
improvement of our financial condition. In connection with the
purchase of our common shares by Yahoo! Korea from DutchCo,
Yahoo! Korea entered into a shareholders agreement with us,
Interpark Corporation and DutchCo, which provides for, among
other things, preemptive rights to Yahoo! Korea even in
circumstances when certain of our other shareholders would not
be entitled to such rights.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may issue convertible bonds or bonds with warrants, within
the limit of the Korean Commercial Code and our articles of
incorporation, to persons other than existing shareholders,
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
where such issuance is deemed necessary by us to achieve a
business purpose, including, but not limited to, the
introduction of new technology or the improvement of our
financial condition.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>General Meeting of Shareholders</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We generally hold the annual general meeting of shareholders
within three months after the end of each fiscal year. Subject
to a board resolution or court approval, we may hold an
extraordinary general meeting of shareholders:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    as necessary;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    at the request of holders of an aggregate of 3% or more of our
    outstanding common shares; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    at the request of our audit committee.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We must give our shareholders a written notice setting out the
date, place and agenda of the meeting at least two weeks prior
to the general meeting of shareholders. Our articles of
incorporation allow us to give such notice in the form of an
e-mail. The agenda of the general meeting of shareholders is
determined at the meeting of the board of directors. In
addition, a shareholder holding an aggregate of 3% or more of
the outstanding shares may propose an agenda for the general
meeting of shareholders, which should be made in writing at
least six weeks prior to the meeting. Shareholders not on the
shareholders&#146; registry as of the record date are not
entitled to receive notice of the general meeting of
shareholders or attend or vote at the meeting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our general meetings of shareholders are held in Seoul, Korea or
near Seoul as deemed necessary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Voting Rights</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of our shares are entitled to one vote for each share.
However, shares held by us (i.e., treasury shares) or by any
corporate entity in which we have, directly or indirectly,
greater than a 10% interest, do not have voting rights. Unless
our articles of incorporation explicitly state otherwise, the
Korean Commercial Code permits cumulative voting pursuant to
which each common share entitles the holder thereof to multiple
voting rights equal to the number of directors to be elected at
such time. A holder of shares may exercise all voting rights
with respect to his or her shares cumulatively to elect one
director. However, our articles of incorporation do not permit
cumulative voting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our shareholders may adopt resolutions at a general meeting by
an affirmative majority vote of the voting shares present or
represented at the meeting, where the affirmative votes also
represent at least one-fourth of our total voting shares then
issued and outstanding. However, under the Korean Commercial
Code and our articles of incorporation, the following matters
require approval by the holders of at least two-thirds of the
voting shares present or represented at the meeting, where the
affirmative votes also represent at least one-third of our total
voting shares then issued and outstanding:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    amending our articles of incorporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dismissing a director;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reducing our capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    effecting any dissolution, merger or consolidation of us;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    transferring all or substantial part of our business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acquiring the whole business of another company or a part of the
    business of any other company, which significantly affects our
    business;</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    lease of entire business, delegation of business operations, or
    the execution, modification or cancellation of agreements the
    profit/losses from which affect both parties;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    issuing new shares at a price below par value; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    other matters required to be adopted by a special resolution at
    the general shareholders meeting under the relevant laws and
    regulations.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shareholders may exercise their voting rights by proxy. Under
our articles of incorporation, the person exercising the proxy
does not have to be a shareholder. A person with a proxy must
present a document evidencing its power of attorney in order to
exercise voting rights.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of ADSs will exercise their voting rights through the
ADS depositary. Subject to the provisions of the deposit
agreement, holders of ADSs will be entitled to instruct the
depositary how to vote the common shares underlying their ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Rights of Dissenting Shareholders</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In some limited circumstances, including (i)&nbsp;the transfer
of all or any significant part of our business, (ii)&nbsp;our
merger or consolidation with another company, or
(iii)&nbsp;certain stock swap transaction with other venture
companies or major shareholders of other venture companies
pursuant to the Venture Business Promotion Act (to the extent we
continue to qualify as a venture company under such act),
dissenting shareholders have the right to require us to purchase
their shares. To exercise such right, shareholders must submit
to us a written notice of their intention to dissent before the
applicable general meeting of shareholders. Within 20&nbsp;days
(10&nbsp;days in the case of (iii)&nbsp;above) after the
relevant resolution is passed, the dissenting shareholders must
request us in writing to purchase their shares. We are obligated
to purchase the shares of dissenting shareholders within two
months after the expiration of the above 20-day or 10-day
period. The purchase price for the shares is required to be
determined through negotiations between the dissenting
shareholders and us. If an agreement on the purchase price for
the shares is not made within 30&nbsp;days from the date of our
receipt of the dissenting shareholders&#146; request, we or such
dissenting shareholder may request a court in Korea to determine
the purchase price. Under the Korean Commercial Code, the
purchase price will be determined at the amount that court
believes is the fair value of our shares. In calculating the
fair value of our shares, the court will consider our financial
condition and other circumstances. Holders of ADSs will not be
able to exercise dissenter&#146;s rights, unless they withdraw
the underlying common shares and become our direct shareholders.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Registry of Shareholders and Record Dates</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our transfer agent, Korea Securities Depository, maintains the
registry of our shareholders at its office in Seoul, Korea. It
records and registers transfers of our shares on the registry of
shareholders upon presentation of share certificates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The record date for annual dividends is December 31. For the
purpose of determining shareholders entitled to annual
dividends, the registry of shareholders is closed for the period
from January 1 to January 15 of the following year. Further, for
the purpose of determining shareholders entitled to any other
rights pertaining to the shares, we may, on at least two
weeks&#146; public notice, set a record date and/or close the
registry of shareholders for not more than three months. The
trading of shares and the delivery of share certificates may
continue while the registry of shareholders is closed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Annual Report</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At least one week before the annual general meeting of
shareholders, we must make our annual reports and audited
financial statements available for inspection at our principal
office and at all of our branch offices. In addition, copies of
annual reports, the audited non-consolidated financial
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
statements and any resolutions adopted at the general meeting of
shareholders will be available to our shareholders.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Transfer of Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Korean Commercial Code, the transfer of shares is
effected by the delivery of share certificates. However, to
assert shareholders&#146; rights against us, the transferee must
have his or her name, seal and address registered on our
shareholders registry, maintained by our transfer agent. A
non-Korean shareholder may file a sample signature in place of a
seal, unless he or she is a citizen of a country with a sealing
system similar to that of Korea. In addition, a non-resident
shareholder must appoint an agent in Korea authorized to receive
notices on his or her behalf and file his or her mailing address
in Korea. These requirements do not apply to holders of ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under current Korean regulations, Korean securities companies
and banks, including licensed branches of non-Korean securities
companies and banks, asset management companies, futures trade
companies, internationally recognized foreign custodians and the
Korea Securities Depository, may act as agents and provide
related services for foreign shareholders. Certain foreign
exchange controls and securities regulations apply to the
transfer of shares by non-residents or non-Koreans. See
&#147;Exchange Controls.&#148; Our transfer agent is Korea
Securities Depository, located at 34-6 Yoido-Dong,
Youngdeungpo-Gu, Seoul 150-948, Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Acquisition of Shares by Us</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may not acquire our own common shares except in limited
circumstances, such as (i)&nbsp;reduction of capital, (ii)
acquisition of our own common shares for the purpose of granting
stock options to our directors, executive officers and employees
and (iii)&nbsp;acquisition of our own shares for the purpose of
implementing stock swap arrangement with other venture companies
or major shareholders of other venture companies pursuant to the
Venture Business Promotion Act (but only to the extent we
qualify as a venture company under such act). Under the Korean
Commercial Code, except in the case of a capital reduction (in
which case we must retire the common shares immediately), we
must resell any common shares acquired by us to a third party
within a reasonable time. In addition, corporate entities in
which we own a 50% or greater equity interest may not acquire
our common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liquidation Rights</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of our liquidation, assets remaining after payment
of all debts, liquidation preferences to holders of preferred
shares, if any, liquidation expenses and taxes, will be
distributed among holders of our common shares in proportion to
their shareholdings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='149'></A>
</DIV>

<!-- link1 "10.C. Material Contracts" -->

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    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.C.&nbsp;</B></TD>
    <TD>
    <B>Material Contracts</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not entered into any material contracts other than in
the ordinary course of business and other than those described
in Item&nbsp;4 &#147;Information on the Company&#148; or
elsewhere in this annual report on
Form&nbsp;<FONT style="white-space: nowrap">20-F.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='150'></A>
</DIV>

<!-- link1 "10.D. Exchange Controls" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.D.&nbsp;</B></TD>
    <TD>
    <B>Exchange Controls</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The description of foreign exchange controls and securities
regulations provided below is applicable for a Korean company
that has not listed its shares on any stock exchange in Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Foreign Exchange Transaction Act and the Presidential Decree
and regulations under that Act and Decree, collectively referred
to as the Foreign Exchange Transaction Laws, regulate
investments in securities of Korean companies by persons who are
not residents of Korea (&#147;non-
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
residents&#148;) as defined by that Act and the issuance of
securities by Korean companies outside of Korea. Under the
Foreign Exchange Transaction Laws, non-residents may invest in
securities of Korean companies only to the extent specifically
allowed by these laws. The Financial Supervisory Commission of
Korea has also adopted, pursuant to its authority under the
Securities and Exchange Act of Korea, regulations that restrict
investment in securities of Korean companies by foreign
investors (as defined by the Securities and Exchange Act of
Korea) and regulate issuance of securities by Korean companies
outside of Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to certain limitations, the Ministry of Finance and
Economy (&#147;MOFE&#148;) has authority to take the following
actions under the Foreign Exchange Transaction Laws:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if the Government deems it necessary on account of war, armed
    conflict, natural disaster or grave and sudden and significant
    changes in domestic or foreign economic circumstances or similar
    events or circumstances, the MOFE may temporarily suspend
    performance under any or all foreign exchange transactions, in
    whole or in part, to which the Foreign Exchange Transaction Laws
    apply (including suspension of payment and receipt of foreign
    exchange) or impose an obligation to deposit, safe-keep or sell
    any means of payment to The Bank of Korea or certain other
    governmental agencies or financial institutions; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if the Government concludes that the international balance of
    payments and international financial markets are experiencing or
    are likely to experience significant disruption or that the
    movement of capital between Korea and other countries are likely
    to adversely affect the Won, exchange rate or other
    macroeconomic policies, the MOFE may take action to require any
    person who intends to effect or effects a capital transaction to
    deposit all or a portion of the means of payment acquired in
    such transactions with The Bank of Korea or certain other
    governmental agencies or financial institutions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Government Review of Issuances of ADSs</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order for us to issue ADSs in an amount exceeding
US$30&nbsp;million (aggregating any amount of foreign currency
loans borrowed and securities offerings issued outside Korea
during the one year period immediately preceding the date of the
submission of a report to MOFE), we are required to submit a
report to the MOFE with respect to the issuance of the ADSs
prior to such issuance. The MOFE may at its discretion direct us
to take necessary measures to avoid exchange rate fluctuation in
connection with its acceptance of report of the issuance of the
ADSs. In addition, we are also required to submit a report to
the MOFE upon receipt of the full proceeds from the offering of
the ADSs promptly after the issuance of the ADSs. No further
governmental approval is necessary for the offering and issuance
of the ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under current Korean laws and regulations, the depositary is
required to obtain our prior consent for any proposed deposit of
common shares if the number of shares to be deposited in such
proposed deposit exceeds the number of common shares initially
deposited by us for the issuance of ADSs (including deposits in
connection with the initial and all subsequent offerings of ADSs
and stock dividends or other distributions related to the ADSs).
We have consented to any such deposit which exceeds the number
of common shares to be deposited by us as mentioned above, so
long as such deposit would not violate our articles of
incorporation or Korean law. See &#147;Description of American
Depositary Shares.&#148; Therefore, a holder of ADSs who
surrenders ADSs and withdraws common shares may not be permitted
subsequently to deposit those common shares and obtain ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Reporting Requirements for Holders of Substantial
Interests</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to making an investment of 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 bank located in Korea (which may include a
non-Korean bank&#146;s Korean branch office) that is licensed
pursuant to the Foreign Exchange Transaction Act to engage in
foreign currency
</DIV>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
transactions (a &#147;foreign exchange bank&#148;) or the Korea
Trade Investment Promotion Agency (&#147;KOTRA&#148;).
Subsequent sales of such shares by foreign investors will also
require a prior report to such foreign exchange bank or the
KOTRA, as the case may be.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Restrictions Applicable to ADSs</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Once the report to the MOFE is filed in connection with the
issuance of ADSs, no Korean governmental approval is necessary
for the sale and purchase of ADSs in the secondary market
outside Korea or for the withdrawal of common shares underlying
ADSs and the delivery of common shares in Korea in connection
with the withdrawal inside Korea. Persons who have acquired
common shares as a result of the withdrawal of common shares
underlying the ADSs may exercise their preemptive rights for new
common shares, participate in free distributions and receive
dividends on common shares without any further governmental
approval.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Restrictions Applicable to Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificates evidencing common shares of Korean companies must
be kept in custody with an eligible custodian in Korea. Only
foreign exchange banks, securities companies (which may include
a non-Korean securities company&#146;s Korean branch office),
Korea Securities Depository, asset management companies, futures
trading companies and internationally recognized custodians, are
eligible to act as a custodian of shares for a non-resident or
foreign investor. A custodian acting for a non-resident or
foreign investor must deposit the shares with Korea Securities
Depository. However, a foreign investor may be exempted from
complying with this deposit requirement with the approval of the
Governor of the Financial Supervisory Service in circumstances
where compliance with that requirement is made impracticable,
including cases where such compliance would contravene the laws
of the home country of such foreign investor.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A foreign investor may appoint one or more standing proxies from
among Korea Securities Depository, foreign exchange banks,
securities companies (which may include Korean branch offices of
non-Korean securities companies), asset management companies,
futures trading companies and internationally recognized foreign
custodians, which have obtained a license to act as a standing
proxy to exercise shareholders&#146; rights or perform any
matters related thereto, if the foreign investor does not
perform these activities himself. However, a foreign investor
may be exempted from complying with these standing proxy rules
with the approval of the Governor of the Financial Supervisory
Service in circumstances where such compliance is made
impracticable, including cases where such compliance would
contravene the laws of the home country of such foreign investor.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A foreign investor may receive dividends on the shares and remit
the proceeds of the sale of the shares through a foreign
currency account and a Won account, which are opened at a
foreign exchange bank exclusively for stock investments by the
foreign investor, without being subject to any procedural
restrictions under the Foreign Exchange Transaction Laws. No
approval is required for remittance of foreign currency funds
into Korea or deposit of foreign currency funds in the foreign
currency account. Foreign currency funds may be transferred from
the foreign currency account to a Won account opened at a
securities company to place a deposit for, or settle the
purchase price of, a stock purchase transaction. Funds in the
foreign currency account may be remitted abroad without any
governmental approval.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends on shares are paid in Won. No governmental approval is
required for foreign investors to receive dividends on, or the
Won proceeds of the sale of, any such shares to be paid,
received and retained in Korea. Dividends paid on, and the Won
proceeds of the sale of, any such shares held by a non-resident
of Korea must be deposited in a Won account with a securities
company or the investor&#146;s Won account. A foreign investor
may transfer funds in its Won account to its foreign currency
account or withdraw such funds for local living expenses,
provided that any withdrawal of local living expenses in excess
of a certain amount is reported to the tax authorities by the
foreign exchange bank at which the Won account is maintained. A
foreign investor may also use
</DIV>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
funds in its Won account for future investment in shares or for
payment of the subscription price of new shares obtained through
the exercise of preemptive rights.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Securities companies and asset management companies are allowed
to open foreign currency accounts with foreign exchange banks
exclusively for accommodating foreign investors&#146; stock
investments in Korea. Through these accounts, these securities
companies and asset management companies may enter into foreign
exchange transactions on a limited basis, such as conversion of
foreign currency funds and Won funds, either as a counterparty
to or on behalf of foreign investors, without the investors
having to open their own accounts with foreign exchange banks.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='151'></A>
</DIV>

<!-- link1 "10.E. Taxation" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.E.&nbsp;</B></TD>
    <TD>
    <B>Taxation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following summary is based on the tax laws of the United
States and Korea as in effect on the date of this report, and is
subject to any change in United States or Korean law that may
come into effect after such date. We advise investors in ADSs to
consult their own tax advisors as to the United States, Korean
or other tax consequences of the purchase, ownership and
disposition of such securities, including, in particular, the
effect of any national, state or local tax laws.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>U.S. Federal Income Tax Considerations</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following discussion is a general summary of the material
U.S. federal income tax considerations relating to the purchase,
ownership and disposition of the ADSs or our common shares by
U.S. Holders (as defined below) that hold the ADSs or our common
shares represented by such ADSs as capital assets. This
discussion is based on the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;), Treasury regulations promulgated
thereunder, administrative and judicial interpretations thereof,
the Convention Between the United States of America and the
Republic of Korea for The Avoidance of Double Taxation, as
amended (the &#147;Tax Convention&#148;), all as in effect on
the date hereof and all of which are subject to change, possibly
with retroactive effect, or to different interpretation. This
discussion is for general information only and does not address
all of the tax considerations that may be relevant to specific
U.S. Holders in light of their particular circumstances or to
U.S. Holders subject to special treatment under U.S. federal
income tax law (such as banks, insurance companies, tax-exempt
entities, retirement plans, regulated investment companies,
partnerships, dealers in securities, brokers, real estate
investment trusts, certain former citizens or residents of the
United States, persons who have acquired the ADSs or our common
shares as part of a straddle, hedge, conversion transaction or
other integrated investment, persons that have a
&#147;functional currency&#148; other than the U.S. dollar or
persons that own (or are deemed to own) 10% or more (by voting
power) of our common shares). This discussion does not address
any U.S. state or local or non-U.S. tax considerations or any
U.S. federal estate, gift or alternative minimum tax
considerations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As used in this discussion, the term &#147;U.S. Holder&#148;
means a beneficial owner of the ADSs or our common shares that
is, for U.S. federal income tax purposes, (i)&nbsp;an individual
who is a citizen or resident of the United States, (ii)&nbsp;a
corporation created or organized in or under the laws of the
United States or of any state or political subdivision thereof
or therein, including the District of Columbia, (iii)&nbsp;an
estate the income of which is subject to U.S. federal income tax
regardless of the source thereof or (iv)&nbsp;a trust with
respect to which a court within the United States is able to
exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of its
substantial decisions, or certain electing trusts that were in
existence on August&nbsp;19, 1996 and were treated as domestic
trusts on that date.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a partnership, or any other entity treated as a partnership
for U.S. federal income tax purposes, holds the ADSs or our
common shares, the tax treatment of such partnership and its
partners will generally depend upon the status and activities of
the partnership and the partner. A holder that is treated as a
partnership for U.S. federal income tax purposes should consult
its own
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
tax adviser regarding the U.S. federal income tax consequences
to it and its partners of the purchase, ownership and
disposition of the ADSs or our common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISERS AS TO THE PARTICULAR TAX CONSIDERATIONS APPLICABLE TO
THEM RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
ADSs OR OUR COMMON SHARES, INCLUDING THE APPLICABILITY OF U.S.
FEDERAL, STATE AND LOCAL TAX LAWS OR NON-U.S. TAX LAWS.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Treatment of the ADSs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A U.S. Holder of the ADSs will be treated for U.S. federal
income tax purposes as the owner of such U.S. Holder&#146;s
proportionate interest in our common shares held by the
depositary (or its custodian) that are represented and evidenced
by such ADSs. Accordingly, any deposit or withdrawal of our
common shares by a U.S. Holder in exchange for ADSs will not
result in the realization of gain or loss to such U.S. Holder
for U.S. federal income tax purposes.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Distributions</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the discussion below under &#147;&#151;Passive
Foreign Investment Company Considerations,&#148; a U.S. Holder
that receives a distribution with respect to the ADSs or our
common shares will be required to include the amount of such
distribution in gross income as a dividend (without reduction
for any Korean or other non-U.S. tax withheld from such
distribution) to the extent of our current or accumulated
earnings and profits. To the extent the amount of such
distribution exceeds our current and accumulated earnings and
profits as so computed, it will be treated first as a
non-taxable return of capital to the extent of such U.S.
Holder&#146;s adjusted tax basis in the ADSs or our common
shares and, to the extent the amount of such distribution
exceeds such adjusted tax basis, will be treated as gain from
the sale or exchange of such ADSs or our common shares. We have
not maintained and do not plan to maintain calculations of
earnings and profits for U.S. federal income tax purposes. Each
U.S. Holder should consult its own tax adviser with respect to
the appropriate U.S. federal income tax treatment of any
distribution in respect of the ADSs or our common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The U.S. dollar value of any distribution on the ADSs or our
common shares made in Won should be calculated by reference to
the exchange rate in effect on the date of receipt of such
distribution by the depositary or the U.S. Holder, respectively,
regardless of whether the Won are in fact converted into U.S.
dollars. If the Won so received are converted into U.S. dollars
on the date of receipt, such U.S. Holder generally should not
recognize foreign currency gain or loss on such conversion. If
the Won so received are not converted into Dollars on the date
of receipt, such U.S.&nbsp;Holder will have a basis in the Won
equal to their Dollar value on the date of receipt. Any gain or
loss on a subsequent conversion or other disposition of the Won
generally will be treated as ordinary income or loss to such
U.S. Holder and generally will be income or loss from sources
within the United States for U.S. foreign tax credit purposes.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends paid on the ADSs or our common shares generally will
constitute income from sources outside the United States and
generally will be categorized as &#147;passive category
income&#148; or, in the case of some U.S. Holders, as
&#147;general category income&#148; for U.S. foreign tax credit
purposes. Such dividends will not be eligible for the
&#147;dividends received&#148; deduction generally allowed to
corporate shareholders with respect to dividends received from
U.S. corporations. In general, a U.S. Holder may be eligible to
elect to claim a U.S. foreign tax credit against its U.S.
federal income tax liability, subject to applicable limitations
and holding period requirements, for Korean tax withheld from
distributions received in respect of the ADSs or our common
shares. If Korean tax is withheld at a rate in excess of the
rate applicable to a U.S. Holder under the Tax Convention, the
U.S. Holder may not be entitled to a foreign tax credit for the
excess amount. See &#147;Taxation&#151;Korean Taxation.&#148; A
U.S. Holder that does not elect to claim a U.S. foreign tax
credit may instead claim a deduction for Korean tax withheld,
but only for a taxable year in which the U.S. Holder elects to
do so with respect
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
to all foreign income taxes paid or accrued in such taxable
year. The rules relating to U.S. foreign tax credits are very
complex, and each U.S. Holder should consult its own tax adviser
regarding the application of such rules.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends received by a non-corporate U.S. Holder (including an
individual) through taxable years beginning on or before
December&nbsp;31, 2010 from &#147;qualified foreign
corporations&#148; or in respect of stock of a non-U.S.
corporation (other than a passive foreign investment company
with respect to a U.S. Holder) that is readily tradable on an
established securities market in the United States generally
qualify for a 15% reduced maximum tax rate so long as certain
holding period requirements are met. Since the ADSs were listed
on the Nasdaq, unless we are treated as a passive foreign
investment company with respect to such U.S. Holder, dividends
received in respect of the ADSs will qualify for the reduced
rate. Dividends paid on our common shares not held through ADSs
should qualify for the reduced rate if we are treated as a
qualified foreign corporation. A non-U.S. corporation (other
than a passive foreign investment company with respect to such
U.S. Holder) generally will be considered to be a qualified
foreign corporation if it is eligible for the benefits of a
comprehensive income tax treaty with the United States which the
Secretary of the Treasury determines is satisfactory for
purposes of this provision and which includes an exchange of
information program. The Tax Convention as currently in effect
meets these requirements and we believe that we are currently
eligible for the benefit of the Tax Convention. However, the
U.S. Internal Revenue Service (the &#147;IRS&#148;) may disagree
with our conclusion, and, therefore, no assurance can be given
that we will be treated as a qualified foreign corporation for
such purpose. Accordingly, no assurance can be given that such
reduced rate will apply to dividends paid on our common shares
held by a U.S. Holder other than through ADSs. Special rules
apply for purposes of determining the recipient&#146;s
investment income (which limit deductions for investment
interest) and foreign income (which may affect the amount of
U.S. foreign tax credit) and to certain extraordinary dividends.
Each U.S. Holder that is a non-corporate taxpayer is urged to
consult its own tax adviser regarding the possible applicability
of the reduced rate and the related restrictions and special
rules.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Sale, Exchange or Other Disposition of the ADSs or our
Common Shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the discussion below under &#147;&#151;Passive
Foreign Investment Company Considerations,&#148; a U.S. Holder
generally will recognize capital gain or loss for U.S. federal
income tax purposes upon the sale, exchange or other disposition
of the ADSs or our common shares in an amount equal to the
difference, if any, between the amount realized on the sale,
exchange or other disposition and the U.S. Holder&#146;s
adjusted tax basis in the ADSs or our common shares. Such
capital gain or loss will be long-term capital gain (taxable at
a reduced rate for non-corporate U.S.&nbsp;Holders, including
individuals) or loss if, on the date of sale, exchange or other
disposition, the ADSs or our common shares were held by such
U.S. Holder for more than one year. Net long-term capital gains
of a non-corporate U.S. Holder (including individuals)
recognized in a tax year beginning on or before
December&nbsp;31, 2010, are generally taxed at a maximum U.S.
federal income tax rate of 15%. The deductibility of capital
losses is subject to limitations. Capital gain or loss from the
sale, exchange or other disposition will generally be sourced
within the United States for U.S. foreign tax credit purposes.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A U.S. Holder that receives Won (or other foreign currency) from
a sale, exchange or other disposition of our common shares
generally will realize an amount equal to the Dollars value of
the Won (or such other foreign currency) on the settlement date
of such sale or disposition if (i)&nbsp;such U.S. Holder is a
cash basis or electing accrual basis taxpayer and our common
shares are treated as being &#147;traded on an established
securities market&#148; for this purpose or (ii)&nbsp;such
settlement date is also the date of such sale or disposition. If
the Won (or such other foreign currency) so received are
converted into Dollars on the settlement date, such U.S. Holder
should not recognize foreign currency gain or loss on such
conversion. If the Won (or such other foreign currency) so
received are not converted into Dollars on the settlement date,
such U.S. Holder will have a basis in the Won (or such other
foreign currency) equal to their Dollars value on the settlement
date. Any gain or loss
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
on a subsequent conversion or other disposition of the Won (or
such other foreign currency) generally will be treated as
ordinary income or loss to such U.S. Holder and generally will
be income or loss from sources within the United States for U.S.
foreign tax credit purposes. A U.S. Holder should consult its
own tax adviser regarding the U.S. federal income tax
consequences of receiving Won (or other currency) from a sale,
exchange or other disposition of our common shares in cases not
described in this paragraph.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Passive Foreign Investment Company Considerations</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe that we were not in 2006, and we do not currently
expect to become, a passive foreign investment company
(&#147;PFIC&#148;) for U.S. federal income tax purposes.
However, because this determination is made annually at the end
of each taxable year and is dependent upon a number of factors,
some of which are beyond our control, including the value of our
assets and the amount and type of our income, there can be no
assurance that we will not become a PFIC or that the IRS will
agree with our conclusion regarding our PFIC status. If we are a
PFIC in any year, U.S. Holders could suffer adverse consequences
as discussed below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, a corporation organized outside the United States
will be treated as a PFIC for U.S. federal income tax purposes
in any taxable year in which either (i)&nbsp;at least 75% of its
gross income is &#147;passive income&#148; or (ii)&nbsp;on
average at least 50% of the value of its assets is attributable
to assets that produce passive income or are held for the
production of passive income. Passive income for this purpose
generally includes, among other things, dividends, interest,
royalties, rents and gains from commodities and securities
transactions. In determining whether a non-U.S. corporation is a
PFIC, a pro rata portion of the income and assets of each
corporation in which it owns, directly or indirectly, at least a
25% interest (by value) is taken into account.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If we are a PFIC in any year during which a U.S. Holder owns the
ADSs or our common shares, such U.S. Holder could be liable for
additional taxes and interest charges upon certain distributions
by us or upon a sale, exchange or other disposition of the ADSs
or our common shares at a gain, whether or not we continue to be
a PFIC. The tax will be determined by allocating such
distributions or gain ratably to each day of the U.S.
Holder&#146;s holding period. The amount allocated to the
current taxable year and any holding period of such U.S. Holder
prior to the first taxable year for which we are a PFIC will be
taxed as ordinary income (rather than capital gain) earned in
the current taxable year. The amount allocated to other taxable
years will be taxed at the highest marginal rates applicable to
ordinary income for such taxable years and, in addition, an
interest charge will be imposed on the amount of such taxes. In
addition, if we are a PFIC, a person who acquires the ADSs or
our common shares from a decedent will be denied the step-up of
the tax basis for U.S. federal income tax purposes to fair
market value at the date of such decedent&#146;s death, which
would otherwise be available with respect to a decedent dying in
any year other than 2010, and, instead, such person will have a
tax basis equal to the lower of such fair market value or such
decedent&#146;s tax basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above results may be eliminated if a
&#147;mark-to-market&#148; election is available and a
U.S.&nbsp;Holder validly makes such an election. If such
election is made, such U.S. Holder generally will be required to
take into account the difference, if any, between the fair
market value of and its adjusted tax basis in the ADSs or our
common shares at the end of each taxable year as ordinary income
or ordinary loss (to the extent of any net mark-to-market gains
previously included in income). In addition, any gain from a
sale, exchange or other disposition of the ADSs or our common
shares will be treated as ordinary income, and any loss will be
treated as ordinary loss (to the extent of any net
mark-to-market gains previously included in income). A
mark-to-market election is available to a U.S.&nbsp;Holder only
if the ADSs or our common shares are considered &#147;marketable
stock&#148; for these purposes. Generally, stock will be
considered marketable stock if it is &#147;regularly
traded&#148; on a &#147;qualified exchange&#148; within the
meaning of applicable U.S. Treasury regulations. A class of
stock is regularly traded during any calendar year during which
such class of stock is traded, other than in de minimis
quantities, on at least 15&nbsp;days during each calendar
quarter. The
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Nasdaq will constitute a qualified exchange, and a non-U.S.
securities exchange will constitute a qualified exchange if it
is regulated or supervised by a governmental authority of the
country in which the market is located and meets certain
trading, listing, financial disclosure and other requirements
set forth in the Treasury regulations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above results may also be eliminated if a U.S. Holder is
eligible for and timely makes a valid &#147;QEF election.&#148;
If a QEF election were made, such U.S. Holder generally would be
required to include in income on a current basis its pro rata
share of our ordinary income and net capital gains.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order for a U.S. Holder to be able to make a QEF election, we
would be required to provide such U.S. Holder with certain
information. As we do not expect to provide U.S. Holders with
the required information, U.S. Holders should assume that a QEF
election would be unavailable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prospective investors should consult their own tax advisers
regarding the U.S. federal income tax consequences of an
investment in a PFIC.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Backup Withholding Tax and Information Reporting
Requirements</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under certain circumstances, United States backup withholding
tax and/or information reporting may apply to U.S. Holders with
respect to payments made on or proceeds from the sale, exchange
or other disposition of the ADSs or our common shares, unless an
applicable exemption is satisfied.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Payments made within the United States, or by a U.S. payor or
U.S. middleman, of dividends on, and proceeds arising from
certain sales or other dispositions of, the ADSs or our common
shares generally will be subject to information reporting and
backup withholding tax if a U.S. Holder (a)&nbsp;fails to
furnish such U.S. Holder&#146;s correct U.S. taxpayer
identification number (generally on
Form&nbsp;<FONT style="white-space: nowrap">W-9),</FONT>
(b)&nbsp;furnishes an incorrect U.S. taxpayer identification
number, (c)&nbsp;is notified by the IRS that such U.S. Holder
has previously failed to properly report items subject to backup
withholding tax or (d)&nbsp;fails to certify under penalty of
perjury that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, U.S. Holders that
are corporations generally are excluded from these information
reporting and backup withholding tax rules. Any amounts withheld
under the backup withholding tax rules will be allowed as a
credit against a U.S. Holder&#146;s U.S. federal income tax
liability, if any, or will be refunded, if such U.S. Holder
furnishes required information to the IRS. Each U.S. Holder
should consult its own tax advisor regarding the information
reporting and backup withholding tax rules.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Reportable Transactions</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under United States Treasury regulations, U.S. Holders that
participate in &#147;reportable transactions&#148; (as defined
in the regulations) must attach to their federal income tax
returns a disclosure statement on Form&nbsp;8886. U.S. Holders
should consult their own tax advisers as to the possible
obligation to file Form&nbsp;8886 with respect to the sale,
exchange or other disposition of any Won received as a dividend
from the ADSs or our common shares or as proceeds from the sale
of our common shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Korean Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following summary of material Korean tax consequences to
owners of our ADSs and common shares applies to you so long as
you are not:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a resident of Korea;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a corporation organized under Korean law; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    engaged in a trade or business in Korea through a permanent
    establishment or a fixed base to which the relevant income is
    attributable or with which the relevant income is effectively
    connected.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The description of Korean tax considerations below are
applicable for a Korean corporation that has not listed its
shares on the Korea Exchange. 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 discussion is not exhaustive of all possible tax
considerations 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 common shares, including, in particular, 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.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dividends on the Common Shares or ADSs</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will deduct Korean withholding tax from dividends paid to you
at a rate of 27.5% (including resident surtax). If you are a
qualified resident in a country that has entered into a tax
treaty with Korea, you may qualify for a reduced rate of Korean
withholding tax. For example, if you are a qualified resident of
the United States for purposes of the income tax treaty between
the United States and Korea, and you are the &#147;beneficial
owner&#148; of a dividend, generally, a reduced withholding tax
at the rate of 16.5% (including resident surtax) will apply,
which may be further reduced to 11% (including resident surtax)
if you meet certain other conditions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to obtain the benefits of a reduced withholding tax
rate under the treaty, you must submit to us, prior to the
dividend payment date, such evidence of tax residence as may be
required by the Korean tax authorities. Evidence of tax
residence may be submitted to us through the depositary. In
addition, on or after July&nbsp;1, 2002, to obtain the benefit
of a tax exemption available under applicable tax treaties, you
should submit an application for exemption prior to the time of
the first dividend payment, together with a certificate of your
tax residence issued by a competent authority of your country of
tax residence. Excess taxes withheld are generally not
recoverable, even if you subsequently produce evidence that you
were entitled to have tax withheld at a lower rate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If we distribute to you free shares representing transfer of
certain capital reserves or asset revaluation reserves into
paid-in capital, that distribution may be regarded as dividend
and, as such, subject to Korean withholding tax.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Taxation of Capital Gains</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a general rule, in the absence of an applicable tax treaty
which exempts or reduces the rate of tax on capital gains,
capital gains earned by non-residents upon transfer of the
shares of our common stock are subject to Korean withholding tax
at the lesser of 11.0% (including resident surtax) of the gross
realization proceeds or, subject to production of satisfactory
evidence of acquisition cost and transfer expenses of the shares
of our common stock, 27.5% of the net capital gains.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As for the ADSs, there are uncertainties as to whether they
should be viewed as securities separate from our common shares
underlying such ADSs or as the underlying shares themselves for
capital gains tax purposes. In either case, however, you will be
eligible for exemptions for capital gains available under Korean
domestic law (in addition to the exemption afforded under income
tax treaties) if certain conditions are satisfied. According to
a ruling issued by the Korean taxation authorities, capital
gains earned by a non-resident holder from the transfer of ADSs
outside Korea are not subject to Korean taxation, irrespective
of whether or not such holder has a permanent establishment in
Korea. Under the Special Tax Treatment Control Law, capital
gains earned by a non-resident holder (whether or not such
holder has a permanent establishment in Korea) from the transfer
outside Korea of securities issued outside Korea by a Korean
company, which are denominated in foreign currency or satisfy
certain criteria established by the MOFE are exempt from Korean
taxation. The Korean tax authorities have issued a tax ruling
confirming that receipts (which would include the ADSs) are
deemed to be securities issued outside Korea by the issuer of the
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
underlying stock. Further, capital gains earned by a
non-resident from the transfer of shares issued by a Korean
company are also exempt from Korean taxation, if the shares are
listed or registered and sold through an overseas securities
exchange having functional similarity to the Korea Exchange
under the Securities and Futures Exchange Act of Korea (such as
the Nasdaq or the New York Stock Exchange).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you are subject to tax on capital gains with respect to the
sale of ADSs, or of common shares which you acquired as a result
of a withdrawal, your gain will be calculated based on your cost
of acquiring the ADSs representing such shares, although there
are no specific Korean tax provisions or rulings on this issue.
In the absence of the application of a tax treaty which exempts
or reduces the rate of tax on capital gains, the amount of
Korean tax imposed on your capital gains will be the lesser of
11.0% (including resident surtax) of the gross realization
proceeds or, subject to production of satisfactory evidence of
acquisition cost and transfer expenses of the ADSs, 27.5% of the
net capital gains. Under the Korea-United States Tax Treaty, a
U.S. resident is generally exempt from Korean taxation on gains
from the sale, exchange or other disposition of our common
shares or ADSs, subject to certain exceptions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you sell your common shares or ADSs, the purchaser or, in the
case of the sale of the common shares through a licensed
securities company in Korea, the licensed securities company, is
required to withhold Korean tax from the sales price in an
amount equal to 11.0% of the gross realization proceeds and to
make payment of such amounts to the Korean tax authority, unless
you establish your entitlement to an exemption or lower rate of
taxation under an applicable tax treaty or produce satisfactory
evidence of your acquisition and transfer costs for the common
shares or the ADSs. To obtain the benefit of an exemption or
reduced rate of tax pursuant to a tax treaty, you must submit to
the purchaser or the securities company (or through the
depositary), as the case may be, prior to or at the time of
payment, such evidence of your tax residence as the Korean tax
authorities may require in support of your claim for treaty
protection. In addition, Korean tax law requires a non-resident
seller to submit to the relevant tax office (through the payer
of the income, subject to certain exceptions) an application for
exemption by the 9th day of the month following the month in
which the first payment date falls, with a certificate of tax
residence of the seller issued by a competent authority of the
seller&#146;s residence country, to obtain the benefit of a tax
treaty exemption available under applicable tax treaties.
However, this requirement will not apply to exemptions under
Korean tax law. Excess taxes withheld are generally not
recoverable even if you subsequently produce evidence that you
were entitled to have taxes withheld at a lower rate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Inheritance Tax and Gift Tax</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you die while holding an ADS or transfer an ADS as a gift, it
is unclear whether you will be treated as the owner of the
common shares underlying the ADSs for Korean inheritance and
gift tax purposes. If you are treated as the owner of the common
shares, the heir or the donee (or in certain circumstances, you
as the donor) will be subject to Korean inheritance or gift tax
presently at the rate of 10.0% to 50.0%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you die while holding any of our common shares or donate a
common share, the heir or donee (or in certain circumstances,
you as the donor) will be subject to Korean inheritance or gift
tax at the same rate as indicated above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Securities Transaction Tax</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a general rule, the transfer of our common shares, subject to
certain exceptions, will be subject to a securities transaction
tax at the rate of 0.5% of the sale price of the shares of
common stock. As for the transfer of ADSs, although the MOFE
issued a ruling to treat the transfers of depositary shares the
same as the transfer of the underlying Korean shares for
securities transaction tax purposes, under Korean tax laws
transfers of depositary shares listed or registered on the New
York Stock Exchange, the Nasdaq National Market, or other
foreign exchanges designated by the
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
MOFE (which currently are the Tokyo Stock Exchange, London Stock
Exchange, Deutsche Boerse, and a stock exchange similar to the
foregoing on which trading is done by standardized procedure as
set forth in the Enforcement Regulation of the Securities and
Exchange Act of Korea) will be exempted from the securities
transaction tax.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Securities transaction tax, if applicable, must be paid in
principle by the transferor of the shares or the rights to
subscribe to such shares. When the transfer is effected through
a securities settlement company, the settlement company is
generally required to withhold and pay the tax to the tax
authority. When the transfer is made through a securities
company, the securities company is required to withhold and pay
the tax. Where the transfer is effected by a non-resident
without a permanent establishment in Korea, other than through a
securities settlement company or a securities company, the
transferee is required to withhold the securities transaction
tax.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Failing to report (or under-reporting) the securities
transaction tax will result in a penalty of 10% of the tax
amount due. The failure to pay the securities transaction tax
due will result in imposition of interest at 10.95% per annum on
the unpaid tax amount for the period from the day immediately
following the last day of tax payment period to the day of
issuance of tax notice. The penalty is imposed on the party
responsible for paying the securities transaction tax or, if the
securities transaction tax is to be withheld, the penalty is
imposed on the party that has the withholding obligation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='152'></A>
</DIV>

<!-- link1 "10.F. Dividends and Paying Agents" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.F.&nbsp;</B></TD>
    <TD>
    <B>Dividends and Paying Agents</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not paid any dividends on our share capital, including
our common shares, since our inception and any decision to pay
dividends in the future will be subject to a number of factors,
including our cash requirements for working capital, future
capital expenditures and investments, as well as other factors
our board of directors or shareholders, as the case may be, deem
relevant. We do not currently intend to pay any dividends in the
near future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='153'></A>
</DIV>

<!-- link1 "10.G. Statement by Experts" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.G.&nbsp;</B></TD>
    <TD>
    <B>Statement by Experts</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='154'></A>
</DIV>

<!-- link1 "10.H. Documents on Display" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.H.&nbsp;</B></TD>
    <TD>
    <B>Documents on Display</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have filed this annual report on
Form&nbsp;<FONT style="white-space: nowrap">20-F,</FONT>
including exhibits, with the Securities and Exchange Commission.
As allowed by the Securities and Exchange Commission, in
Item&nbsp;19 of this report, we incorporate by reference certain
information we filed with the Securities and Exchange
Commission. This means that we can disclose important
information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The
information incorporated by reference is considered to be part
of this annual report. You may inspect and copy this annual
report, including exhibits, and documents that are incorporated
by reference in this annual report at the Public Reference Room
maintained by the Securities and Exchange Commission at 100 F
Street, N.E., Washington, D.C. 20549. Please call the Securities
and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. Any
filings we make electronically will be available to the public
over the Internet at the website of the Securities and Exchange
Commission at http://www.sec.gov.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='155'></A>
</DIV>

<!-- link1 "10.I. Subsidiary Information" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.I.&nbsp;</B></TD>
    <TD>
    <B>Subsidiary Information</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='156'></A>
</DIV>

<!-- link1 "ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;11.</B></TD>
    <TD>
    <B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='157'></A>
</DIV>

<!-- link1 "11.A. Quantitative Information about Market Risk" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.A.&nbsp;</B></TD>
    <TD>
    <B>Quantitative Information about Market Risk</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Interest rate risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our exposure to interest rate risk relates to our cash holdings
and our cash management policy. The primary objective of our
cash management policy is to preserve principal while at the
same time maximizing yields without significantly increasing
risk. Our cash on-hand primarily consists of cash and cash
equivalents and cash on deposit. Although interest income on our
cash and cash equivalents and cash on deposit is subject to
interest rate fluctuations, we believe these fluctuations will
not have a material effect on our financial position due to the
short-term nature of these financial instruments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign currency risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As we currently conduct our business primarily in Won, we are
not affected by changes in foreign exchange rates. However, as
and to the extent we conduct business in currencies other than
the Won, our revenues and expenses will be exposed to foreign
currency risk. Changes in value of the Won against the
currencies in which we conduct business will result in increases
or decreases in our recorded revenues and expenses and may
impact our operating income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='158'></A>
</DIV>

<!-- link1 "11.B. Qualitative Information about Market Risk" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.B.&nbsp;</B></TD>
    <TD>
    <B>Qualitative Information about Market Risk</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Item&nbsp;11.A. &#147;Quantitative Information about Market
Risk.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='159'></A>
</DIV>

<!-- link1 "11.C. Interim Periods" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.C.&nbsp;</B></TD>
    <TD>
    <B>Interim Periods</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='160'></A>
</DIV>

<!-- link1 "ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM&nbsp;12.</B></TD>
    <TD>
    <B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='161'></A>
</DIV>

<!-- link1 "12.A. Debt Securities" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.A.&nbsp;</B></TD>
    <TD>
    <B>Debt Securities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='162'></A>
</DIV>

<!-- link1 "12.B. Warrants and Rights" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.B.&nbsp;</B></TD>
    <TD>
    <B>Warrants and Rights</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='163'></A>
</DIV>

<!-- link1 "12.C. Other Securities" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.C.&nbsp;</B></TD>
    <TD>
    <B>Other Securities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='164'></A>
</DIV>

<!-- link1 "12.D. American Depositary Shares" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.D.&nbsp;</B></TD>
    <TD>
    <B>American Depositary Shares</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Citibank, N.A. is our depositary for the American Depositary
Shares. Citibank&#146;s depositary offices are located at 388
Greenwich Street, New York, New York 10013. American Depositary
Shares are frequently referred to as &#147;ADSs&#148; and
represent ownership interests in securities that are on deposit
with the depositary. ADSs are normally represented by
certificates that are commonly known as &#147;American
Depositary Receipts&#148; or &#147;ADRs.&#148; The depositary
typically appoints a custodian to safekeep the securities on
deposit. In this case, the custodian is Korea Securities
Depository, located at 34-6, Yoido-Dong, Youngdeungpo-Gu, Seoul
150-948, Korea.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We appointed Citibank as depositary pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the
SEC under cover of a Registration Statement on
Form&nbsp;<FONT style="white-space: nowrap">F-6.</FONT> You may
obtain a copy of the deposit agreement from the SEC&#146;s
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549 and from the SEC&#146;s website (www.sec.gov). Please
refer to Registration Number 333-134949 when retrieving such
copy.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are providing you with a summary description of the material
terms of the ADSs and of your material rights as an owner of
ADSs. Please remember that summaries by their nature lack the
precision of the information summarized and that an ADS
holder&#146;s rights and obligations as an owner of ADSs will be
determined by reference to the terms of the deposit agreement
and not by this summary. We urge you to review the deposit
agreement in its entirety. Statements printed in italics in this
description are provided for your information and are not
contained in the deposit agreement or describe matters relating
to Korean law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each ADS represents the right to receive one common share on
deposit with the custodian. An ADS will also represent the right
to receive any other property received by the depositary or the
custodian on behalf of the owner of the ADS but that has not
been distributed to the owners of ADSs because of legal
restrictions or practical considerations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you become an owner of ADSs, you will become a party to the
deposit agreement and therefore will be bound to its terms and
to the terms of the ADR that represent your ADSs. The deposit
agreement and the ADR specify our rights and obligations as well
as your rights and obligations as owner of ADSs and those of the
depositary. As an ADS holder you appoint the depositary to act
on your behalf in certain circumstances. The deposit agreement
and the ADRs are governed by New York law. However, our
obligations to the holders of common shares will continue to be
governed by the laws of the Republic of Korea, which may be
different from the laws in the United States.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As an owner of ADSs, you may hold your ADSs either by means of
an ADR registered in your name, through a brokerage or
safekeeping account, or through an account established by the
depositary in your name reflecting the registration of
uncertificated ADSs directly on the books of the depositary
(commonly referred to as the &#147;direct registration
system&#148; or &#147;DRS&#148;). The direct registration system
reflects the uncertificated (book-entry) registration of
ownership of ADSs by the depositary. Under the direct
registration system, ownership of ADSs is evidenced by periodic
statements issued by the depositary to the ADS holders. The
direct registration system includes automated transfers between
the depositary and The Depository Trust&nbsp;Company
(&#147;DTC&#148;), the central book-entry clearing and
settlement system for equity securities in the United States. If
you decide to hold your ADSs through your brokerage or
safekeeping account, you must rely on the procedures of your
broker or bank to assert your rights as ADS owner. Banks and
brokers typically hold securities such as the ADSs through
clearing and settlement systems such as DTC. The procedures of
such clearing and settlement systems may limit your ability to
exercise your rights as an owner of ADSs. Please consult with
your broker or bank if you have any questions concerning these
limitations and procedures. This summary description assumes you
have opted to own the ADSs directly by means of an ADS
registered in your name and, as such, we will refer to you as
the &#147;holder.&#148; When we refer to &#147;you,&#148; we
assume the reader owns ADSs and will own ADSs at the relevant
time.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dividends and Distributions</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder, you generally have the right to receive the
distributions we make on the securities deposited with the
custodian. Your receipt of these distributions may be limited,
however, by practical considerations and legal limitations.
Holders will receive such distributions under the terms of the
deposit agreement in proportion to the number of ADSs held as of
a specified record date.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Distributions of Cash</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we make a cash distribution for the securities on
deposit with the custodian, we will deposit the funds with the
custodian. Upon receipt of confirmation of the deposit of the
requisite funds, the depositary will arrange for the funds to be
converted into U.S. dollars and for the distribution of the U.S.
dollars to the holders, subject to laws and regulations of the
Republic of Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The conversion into U.S. dollars will take place only if
practicable and if the U.S. dollars are transferable to the
United States. The amounts distributed to holders will be net of
the fees, expenses, taxes and governmental charges payable by
holders under the terms of the deposit agreement. In particular,
the depositary will deduct any withholding taxes that must be
paid before making a distribution. See &#147;Taxation&#151;
Korean Taxation.&#148; The depositary will apply the same method
for distributing the proceeds of the sale of any property (such
as undistributed rights) held by the custodian in respect of
securities on deposit.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Distributions of Shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we make a free distribution of common shares for the
securities on deposit with the custodian, we will deposit the
applicable number of common shares with the custodian. Upon
receipt of confirmation of such deposit, the depositary will
either distribute to holders new ADSs representing the common
shares deposited or modify the ADS-to-common shares ratio, in
which case each ADS you hold will represent rights and interests
in the additional common shares so deposited. Only whole new
ADSs will be distributed. Fractional entitlements will be sold
and the proceeds of such sale will be distributed as in the case
of a cash distribution.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The distribution of new ADSs or the modification of the
ADS-to-common shares ratio upon a distribution of common shares
will be made net of the fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit
agreement. In order to pay such taxes or governmental charges,
the depositary may sell all or a portion of the new common
shares so distributed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No such distribution of new ADSs will be made if it would
violate a law (i.e., the U.S.&nbsp;securities laws) or if it is
not operationally practicable. If the depositary does not
distribute new ADSs as described above, it may sell the common
shares received upon the terms described in the deposit
agreement and will distribute the proceeds of the sale as in the
case of a distribution of cash.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Distributions of Rights</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we intend to distribute rights to purchase additional
common shares, we will give prior notice to the depositary and
we will assist the depositary in determining whether it is
lawful and reasonably practicable to distribute rights to
purchase additional ADSs to holders.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will establish procedures to distribute rights to
purchase additional ADSs to holders and to enable such holders
to exercise such rights if it is lawful and reasonably
practicable to make the rights available to holders of ADSs, and
if we provide all of the documentation contemplated in the
deposit agreement (such as opinions to address the lawfulness of
the transaction). You may have to pay fees, expenses, taxes and
other governmental charges to subscribe for the new ADSs upon
the exercise of your rights. The depositary is not obligated to
establish procedures to facilitate the distribution and exercise
by holders of rights to purchase new other than in the form of
ADSs.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will not distribute the rights to you if:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we do not timely request that the rights be distributed to you
    or we request that the rights not be distributed to you;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we fail to deliver satisfactory documents to the depositary; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    it is not reasonably practicable to distribute the rights.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will sell the rights that are not exercised or
not distributed if such sale is lawful and reasonably
practicable. The proceeds of such sale will be distributed to
holders as in the case of a cash distribution. If the depositary
is unable to sell the rights, it will allow the rights to lapse.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Elective Distributions</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we intend to distribute a dividend payable at the
election of shareholders either in cash or in additional common
shares, we will give prior notice thereof to the depositary and
will indicate whether we wish the elective distribution to be
made available to you. In such case, we will assist the
depositary in determining whether such distribution is lawful
and reasonably practicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will make the election available to you only if
it is reasonably practical and if we have provided all of the
documentation contemplated in the deposit agreement. In such
case, the depositary will establish procedures to enable you to
elect to receive either cash or additional ADSs, in each case as
described in the deposit agreement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the election is not made available to you, you will receive
either cash or additional ADSs, depending on what a shareholder
in the Republic of Korea would receive upon failing to make an
election, as more fully described in the deposit agreement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Other Distributions</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we intend to distribute property other than cash,
common shares or rights to purchase additional common shares, we
will notify the depositary in advance and will indicate whether
we wish such distribution to be made to you. If so, we will
assist the depositary in determining whether such distribution
to holders is lawful and reasonably practicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If it is reasonably practicable to distribute such property to
you and if we provide all of the documentation contemplated in
the deposit agreement, the depositary will distribute the
property to the holders in a manner it deems practicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The distribution will be made net of fees, expenses, taxes and
governmental charges payable by holders under the terms of the
deposit agreement. In order to pay such taxes and governmental
charges, the depositary may sell all or a portion of the
property received.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will not distribute the property to you and will
sell the property if:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we do not request that the property be distributed to you or if
    we ask that the property not be distributed to you;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we do not deliver satisfactory documents to the depositary; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the depositary determines that all or a portion of the
    distribution to you is not reasonably practicable.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The proceeds of such a sale will be distributed to holders as in
the case of a cash distribution.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Redemption</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whenever we decide to redeem any of the securities on deposit
with the custodian, we will notify the depositary. If it is
reasonably practicable and if we provide all of the documentation
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
contemplated in the deposit agreement, the depositary will mail
a notice of the redemption to the holders.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The custodian will be instructed to surrender the shares being
redeemed against payment of the applicable redemption price. The
depositary will convert the redemption funds received into
U.S.&nbsp;dollars upon the terms of the deposit agreement and
will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the
depositary. You may have to pay fees, expenses, taxes and other
governmental charges upon the redemption of your ADSs. If less
than all ADSs are being redeemed, the ADSs to be retired will be
selected by lot or on a pro rata basis, as the depositary may
determine.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Changes Affecting Common Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The common shares held on deposit for your ADSs may change from
time to time. For example, there may be a change in nominal or
par value, a split-up, cancellation, consolidation or
reclassification of such common shares or a recapitalization,
reorganization, merger, consolidation or sale of assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any such change were to occur, your ADSs would, to the extent
permitted by law, represent the right to receive the property
received or exchanged in respect of the common shares held on
deposit. The depositary may in such circumstances deliver new
ADSs to you or call for the exchange of your existing ADSs for
new ADSs. If the depositary may not lawfully distribute such
property to you, the depositary may sell such property and
distribute the net proceeds to you as in the case of a cash
distribution.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Issuance of ADSs upon Deposit of Common Shares</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary may create ADSs on your behalf if you or your
broker deposit common shares with the custodian. The depositary
will deliver these ADSs to the person you indicate only after
you pay any applicable issuance fees and any charges and taxes
payable for the transfer of the common shares to the custodian.
Your ability to deposit common shares and receive ADSs may be
limited by U.S.&nbsp;and Korean legal considerations applicable
at the time of deposit. Under certain Korean laws and
regulations, the depositary is required to obtain our prior
consent for the deposit of common shares if the number of shares
to be deposited in such deposit exceeds the number of common
shares initially deposited by us for the issuance of ADSs
(including deposits in connection with the initial and all
subsequent offerings of ADSs and stock dividends or other
distributions related to the ADSs). We have consented to any
such deposit which exceeds the number of common shares deposited
by us as mentioned above, so long as the deposit does not
violate our articles of incorporation or Korean law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The issuance of ADSs may be delayed until the depositary or the
custodian receives confirmation that all required approvals or
our consent, if required, have been given and that the common
shares have been duly transferred to the custodian. The
depositary will only issue ADSs in whole numbers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When you make a deposit of common shares, you will be
responsible for transferring good and valid title to the
depositary. As such, you will be deemed to represent and warrant
that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the common shares are duly authorized, validly issued, fully
    paid, non-assessable and legally obtained;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    all preemptive (and similar) rights, if any, with respect to
    such common shares have been validly waived or exercised;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    you are duly authorized to deposit the common shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the common shares presented for deposit are free and clear of
    any lien, encumbrance, security interest, charge, mortgage or
    adverse claim, and are not, and the ADSs issuable</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    upon such deposit will not be, &#147;restricted securities&#148;
    (as defined in the deposit agreement); and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the common shares presented for deposit have not been stripped
    of any rights or entitlements.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any of the representations or warranties are incorrect in any
way, we and the depositary may, at your cost and expense, take
any and all actions necessary to correct the consequences of the
misrepresentations. Transfer, Combination and Split Up of ADRs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As an ADR holder, you will be entitled to transfer, combine or
split up your ADRs and the ADSs evidenced thereby. For transfers
of ADRs, you will have to surrender the ADRs to be transferred
to the depositary and also must:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    ensure that the surrendered ADR certificate is properly endorsed
    or otherwise in proper form for transfer;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide such proof of identity and genuineness of signatures as
    the depositary deems appropriate;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide any transfer stamps required by the State of New York or
    the United States; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    pay all applicable fees, charges, expenses, taxes and other
    government charges payable by ADR holders pursuant to the terms
    of the deposit agreement, upon the transfer of ADRs.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To have your ADRs either combined or split up, you must
surrender the ADRs in question to the depositary with your
request to have them combined or split up, and you must pay all
applicable fees, charges and expenses payable by ADR holders,
pursuant to the terms of the deposit agreement, upon a
combination or split up of ADRs. Withdrawal of Shares Upon
Cancellation of ADSs
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder, you will be entitled to present your ADSs to the
depositary for cancellation and then receive the corresponding
number of underlying common shares at the custodian&#146;s
offices. Your ability to withdraw the common shares may be
limited by U.S.&nbsp;and Korean legal considerations applicable
at the time of withdrawal. In order to withdraw the common
shares represented by your ADSs, you will be required to pay to
the depositary the fees for cancellation of ADSs and any charges
and taxes payable upon the transfer of the common shares being
withdrawn. You assume the risk for delivery of all funds and
securities upon withdrawal. Once canceled, the ADSs will not
have any rights under the deposit agreement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you hold ADSs registered in your name, the depositary may ask
you to provide proof of identity and genuineness of any
signature and such other documents as the depositary may deem
appropriate before it will cancel your ADSs. The withdrawal of
the common shares represented by your ADSs may be delayed until
the depositary receives satisfactory evidence of compliance with
all applicable laws and regulations. Please keep in mind that
the depositary will only accept ADSs for cancellation that
represent a whole number of securities on deposit.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You will have the right to withdraw the securities represented
by your ADSs at any time except for:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    temporary delays that may arise because (i)&nbsp;the transfer
    books for the common shares or ADSs are closed, or
    (ii)&nbsp;common shares are immobilized on account of a
    shareholders&#146; meeting or a payment of dividends;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    obligations to pay fees, taxes and similar charges; or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    restrictions imposed because of laws or regulations applicable
    to ADSs or the withdrawal of securities on deposit.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">86
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The deposit agreement may not be modified to impair your right
to withdraw the securities represented by your ADSs except to
comply with mandatory provisions of law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Voting Rights</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder, you generally have the right under the deposit
agreement to instruct the depositary to exercise the voting
rights for the common shares represented by your ADSs. The
voting rights of holders of common shares are described in
&#147;Articles of Incorporation&#151; Voting Rights.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At our request, the depositary will distribute to you any notice
of shareholders&#146; meeting received from us together with
information explaining how to instruct the depositary to
exercise the voting rights of the securities represented by ADSs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the depositary timely receives voting instructions from a
holder, it will endeavor to vote the securities represented by
the holder&#146;s ADSs in accordance with such voting
instructions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please note that the ability of the depositary to carry out
voting instructions may be limited by practical and legal
limitations and the terms of the securities on deposit. We
cannot assure you that you will receive voting materials in time
to enable you to return voting instructions to the depositary in
a timely manner. Securities for which no voting instructions
have been received will not be voted.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Fees and Charges</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder, you will be required to pay the following service
fees to the depositary:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Service</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Fees</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ADSs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.05 per ADS issued
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cancellation of ADSs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.05 per ADS canceled
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distribution of cash dividends or
    other cash distributions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.04 per ADS held as of
    the record date for the distribution
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distribution of ADSs pursuant to
    stock dividends, free stock distributions or exercise of rights
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.05 per ADS held
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distribution of securities other
    than ADSs or rights to purchase additional ADSs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.05 per share (or share
    equivalent) distributed
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Annual Depositary Services Fee
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">Up to US$0.04 per ADS held on the
    applicable record date(s) established by the depositary
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transfer of ADRs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">US$1.50 per certificate presented
    for transfer
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a holder you will also be responsible to pay certain fees and
expenses incurred by the depositary and certain taxes and
governmental charges such as:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fees for the transfer and registration of common shares charged
    by the registrar and transfer agent for the common shares in
    Korea (i.e., upon deposit and withdrawal of common shares);</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    expenses incurred for converting foreign currency into
    U.S.&nbsp;dollars;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    expenses for cable, telex and fax transmissions and for delivery
    of securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    taxes and duties upon the transfer of securities (i.e., when
    common shares are deposited or withdrawn from deposit); and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fees and expenses incurred in connection with the delivery or
    servicing of common shares on deposit.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
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</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have agreed to pay certain other charges and expenses of the
depositary. Note that the fees and charges you may be required
to pay may vary over time and may be changed by us and by the
depositary. You will receive prior notice of such changes. In
addition, we have agreed to a discounted fee arrangement or
waiver of fees with certain of our shareholders for their
initial deposit with the depositary of their common shares,
including any stock options, in each case held by such holder
immediately prior to the proposed offering and the issuance of
ADSs upon deposit therefor.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Amendments and Termination</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may agree with the depositary to modify the deposit agreement
at any time without your consent. We undertake to give holders
30&nbsp;days&#146; prior notice of any modifications that would
materially prejudice any of their substantial rights under the
deposit agreement. We will not consider to be materially
prejudicial to your substantial rights any modifications or
supplements that are reasonably necessary for the ADSs to be
registered under the Securities Act or to be eligible for
book-entry settlement, in each case without imposing or
increasing the fees and charges you are required to pay. In
addition, we may not be able to provide you with prior notice of
any modifications or supplements that are required to
accommodate compliance with applicable provisions of law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You will be bound by the modifications to the deposit agreement
if you continue to hold your ADSs after the modifications to the
deposit agreement become effective. The deposit agreement cannot
be amended to prevent you from withdrawing the common shares
represented by your ADSs (except as permitted by law).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have the right to direct the depositary to terminate the
deposit agreement. Similarly, the depositary may in certain
circumstances on its own initiative terminate the deposit
agreement. In either case, the depositary must give notice to
the holders at least 30&nbsp;days before termination.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon termination, the following will occur under the deposit
agreement:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    For a period of six months after termination, you will be able
    to request the cancellation of your ADSs and the withdrawal of
    the common shares represented by your ADSs and the delivery of
    all other property held by the depositary in respect of those
    common shares on the same terms as prior to the termination.
    During such six months&#146; period the depositary will continue
    to collect all distributions received on the common shares on
    deposit (i.e., dividends) but will not distribute any such
    property to you until you request the cancellation of your ADSs.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    After the expiration of such six-month period, the depositary
    may sell the securities held on deposit. The depositary will
    hold the proceeds from such sale and any other funds then held
    for the holders of ADSs in a non-interest bearing account. At
    that point, the depositary will have no further obligations to
    holders other than to account for the funds then held for the
    holders of ADSs still outstanding.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Books of Depositary</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will maintain records of holders at its
depositary office. You may inspect such records at such office
during regular business hours but solely for the purpose of
communicating with other holders in the interest of business
matters relating to the ADSs and the deposit agreement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will maintain in New York facilities to record
and process the issuance, cancellation, combination, split-up
and transfer of ADRs. These facilities may be closed from time
to time, to the extent not prohibited by law.
</DIV>

</FONT>

<FONT face="helvetica,arial">
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</FONT>

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Limitations on Obligations and Liabilities</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The deposit agreement limits our obligations and the
depositary&#146;s obligations to you. Please note the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary are obligated only to take the actions
    specifically stated in the deposit agreement without negligence
    or bad faith.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The depositary disclaims any liability for any failure to carry
    out voting instructions, for any manner in which a vote is cast
    or for the effect of any vote, provided it acts in good faith
    and in accordance with the terms of the deposit agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The depositary disclaims any liability for any failure to
    determine the lawfulness or practicality of any action, for the
    content of any document forwarded to you on our behalf or for
    the accuracy of any translation of such a document, for the
    investment risks associated with investing in common shares, for
    the validity or worth of the common shares, for any tax
    consequences that result from the ownership of ADSs, for the
    credit-worthiness of any third party, for allowing any rights to
    lapse under the terms of the deposit agreement, for the
    timeliness of any of our notices or for our failure to give
    notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary will not be obligated to perform any act
    that is inconsistent with the terms of the deposit agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary disclaim any liability if we are prevented
    or forbidden from acting on account of any law or regulation,
    any provision of our articles of incorporation, any provision of
    any securities on deposit or by reason of any act of God or war
    or other circumstances beyond our control.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary disclaim any liability by reason of any
    exercise of, or failure to exercise, any discretion provided for
    the deposit agreement or in our Articles of Incorporation or in
    any provisions of securities on deposit.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary further disclaim any liability for any
    action or inaction in reliance on the advice or information
    received from legal counsel, accountants, any person presenting
    common shares for deposit, any holder or authorized
    representatives thereof, or any other person believed by either
    of us in good faith to be competent to give such advice or
    information.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary also disclaim liability for the inability
    by a holder to benefit from any distribution, offering, right or
    other benefit which is made available to holders of common
    shares but is not, under the terms of the deposit agreement,
    made available to you.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary may rely without any liability upon any
    written notice, request or other document believed to be genuine
    and to have been signed or presented by the proper parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    We and the depositary also disclaim liability for any
    consequential or punitive damages for any breach of the terms of
    the deposit agreement.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Pre-Release Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In limited circumstances, subject to the provisions of the
deposit agreement, the depositary may issue ADSs before
receiving a deposit of the underlying shares. These transactions
are commonly referred to as &#147;pre-release
transactions.&#148; The depositary may also deliver shares upon
cancellation of pre-released ADSs, even if the ADSs are
cancelled before the pre-release transaction has been
consummated. A pre-release is consummated as soon as the
underlying shares are
</DIV>

</FONT>

<FONT face="helvetica,arial">
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</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
delivered to the depositary. The depositary may receive ADSs
instead of shares to consummate a pre-release transaction. The
depositary may pre-release ADSs only under the following
conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Before or at the time of the pre-release, the person to whom the
    pre-release is being made agrees in writing, among others:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="6%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    to represent that such person or its customer owns the shares or
    the ADSs to be delivered by such person under such pre-release
    transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    to indicate the depositary as owner of such shares or ADSs in
    its records and to hold such shares or ADSs in trust for the
    depositary until such shares or ADSs are delivered to the
    depositary or the custodian;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    to unconditionally guarantee to deliver to the depositary or the
    custodian, as applicable, such shares or ADSs; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;</TD>
    <TD align="left">
    to accept any additional restrictions or requirements that the
    depositary deems appropriate.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The pre-release must be fully collateralized with cash, U.S.
    government securities or other collateral that the depositary
    deems appropriate.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The depositary must be able to consummate the pre-release
    transaction on not more than five business days notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The depositary may require such other indemnities and set such
    other credit regulations as the depositary deems appropriate.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the number of ADSs and underlying shares involved
in the pre-release transactions at any one time generally may
not exceed thirty percent (30%) of the ADSs outstanding,
although the depositary may change or disregard such limit from
time to time as it deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Taxes</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You will be responsible for the taxes and other governmental
charges payable on the ADSs and the securities represented by
the ADSs. We, the depositary and the custodian may deduct from
any distribution the taxes and governmental charges payable by
holders and may sell any and all property on deposit to pay the
taxes and governmental charges payable by holders. You will be
liable for any deficiency if the sale proceeds do not cover the
taxes that are due.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary may refuse to issue ADSs, to deliver, transfer,
split and combine ADRs or to release securities on deposit until
all taxes and charges are paid by the applicable holder. The
depositary and the custodian may take reasonable administrative
actions to obtain tax refunds and reduced tax withholding for
any distributions on your behalf. However, you may be required
to provide to the depositary and to the custodian proof of
taxpayer status and residence and such other information as the
depositary and the custodian may require to fulfill legal
obligations. You are required to indemnify us, the depositary
and the custodian for any claims with respect to taxes based on
any tax benefit obtained for you.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Foreign Currency Conversion</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The depositary will arrange for the conversion of all foreign
currency received into Dollars if such conversion is practical,
and it will distribute the Dollars in accordance with the terms
of the deposit agreement. You may have to pay fees and expenses
incurred in converting foreign currency, such as fees and
expenses incurred in complying with currency exchange controls
and other governmental requirements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">90
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the conversion of foreign currency is not practical or
lawful, or if any required approvals are denied or not
obtainable at a reasonable cost or within a reasonable period,
the depositary may take the following actions in its discretion:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    convert the foreign currency to the extent practical and lawful
    and distribute Dollars to the holders for whom the conversion
    and distribution is lawful and practical;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    distribute the foreign currency to holders for whom the
    distribution is lawful and practical; and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    hold the foreign currency (without liability for interest) for
    the applicable holders</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='165'></A>
</DIV>

<!-- link1 "PART II" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='166'></A>
</DIV>

<!-- link1 "ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='167'></A>
</DIV>

<!-- link1 "ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD><B>ITEM 14.</B></TD>
    <TD>
    <B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
    USE OF PROCEEDS</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='168'></A>
</DIV>

<!-- link1 "ITEM 15. CONTROLS AND PROCEDURES" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Evaluation of Disclosure Controls and Procedures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our management, with the participation of our chief executive
officer and chief financial officer, conducted an evaluation of
our disclosure controls and procedures, as such term is defined
in Rule&nbsp;<FONT style="white-space: nowrap">13a-15(e)</FONT>
promulgated under the Securities Exchange Act of 1934, as
amended, as of December&nbsp;31, 2006. Our disclosure controls
and procedures are designed to ensure that the information we
are required to disclose in the reports that we file or submit
under the Securities Exchange Act of 1934 is (i)&nbsp;recorded,
processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission&#146;s rules
and forms and (ii)&nbsp;accumulated and communicated to our
management, including the chief executive officer and chief
financial officer, as the principal executive and financial
officers, respectively, to allow timely decisions regarding
required disclosures. Based on that evaluation, our chief
executive officer and chief financial officer concluded that our
disclosure controls and procedures were effective as of the end
of the period covered by this report.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Management&#146;s Report on Internal Control over Financial
Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable. The Company is not required to file
management&#146;s report on internal control over financial
reporting until December&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Remediation of Previously Identified Material Weaknesses</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the process of preparing the Registration Statement on
Form&nbsp;<FONT style="white-space: nowrap">F-1</FONT> for our
initial public offering in June 2006, our management identified
a material weakness in our internal control over financial
reporting. A material weakness is a control deficiency, or
combination of control deficiencies, that results in more than a
remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected.
We did not maintain a sufficient complement of personnel with
the appropriate level of accounting knowledge, experience and
training commensurate with our financial reporting requirements.
Specifically, we did not have accounting and finance personnel
with sufficient depth and skill to allow for the timely and
accurate preparation and maintenance of our financial records
and statements. This control deficiency could have resulted in a
misstatement of our account balances or disclosures that would
result in a material misstatement to our annual financial
statements that could not be prevented or detected.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">91
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2006, our management implemented a number of measures to
remediate the material weakness described above. These
remediation activities included improving our finance
organization by adding and redefining positions and functional
roles, hiring additional finance and accounting personnel with
appropriate levels of financial reporting expertise, ensuring
that finance and accounting personnel receive timely training
and ensuring that third-party advisory resources are utilized in
any areas of the reporting process where the Company&#146;s
current level of knowledge and expertise need to be supplemented.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2006, we have determined that the
remediation measures undertaken to establish an effectively
designed and operating process of internal control over
financial reporting have enabled management to conclude that the
material weakness identified in earlier 2006 has been remediated.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Changes in Internal Control over Financial Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Aside from the changes described above, there were no
significant changes to our internal control over financial
reporting during the period covered by this annual report that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='169'></A>
</DIV>

<!-- link1 "ITEM 16." -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 16.</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='170'></A>
</DIV>

<!-- link1 "16.A. Audit Committee Financial Expert" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>16.A. Audit Committee Financial Expert</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has determined that Mr.&nbsp;Massoud
Entekhabi, our outside director and the chairman of our Audit
Committee, is an &#147;audit committee financial expert,&#148;
as such term is defined by the regulations of the Securities and
Exchange Commission issued pursuant to Section&nbsp;407 of the
Sarbanes-Oxley Act. Mr.&nbsp;Massoud Entekhabi is an independent
director as such term is defined under Section&nbsp;301 of the
Sarbanes-Oxley Act.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='171'></A>
</DIV>

<!-- link1 "16.B. Code of Ethics" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>16.B. Code of Ethics</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has adopted a code of ethics that applies
to our chief executive officer, chief financial officer and
other senior officers of the Company. We have previously filed
our code of ethics as an exhibit to our registration statement
in connection with our initial public offering.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='172'></A>
</DIV>

<!-- link1 "16.C. Principal Accountant Fees and Services" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>16.C. Principal Accountant Fees and Services</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Samil PricewaterhouseCoopers has served as our independent
auditor for each of the fiscal years in the three-year period
ended December&nbsp;31, 2006. All engagements of the principal
accountants are pre-approved by our independent audit committee.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents the aggregate fees for professional
services and other services rendered by Samil
PricewaterhouseCoopers in 2006 and 2005
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">(in millions of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Korean Won)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Audit
    fees<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">442.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">287.5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Audit related fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tax
    fees<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">All other fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">476.3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">297.6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>(1)</TD>
    <TD align="left">
    Audit Fees consist of fees billed for the annual audit of the
    company&#146;s financial statements. They also include fees
    billed for other audit services, which are those services that
    only the independent auditor reasonably can provide, and include
    the provision of comfort letters and consents and the review of
    documents filed with the SEC and other capital markets or local
    financial reporting regulatory bodies. There were no billed
    audit fees unpaid as at year-end 2006.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">92
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>(2)</TD>
    <TD align="left">
    Tax Fees include fees billed for tax compliance services,
    including the preparation of original and amended tax returns
    and claims for refund; tax consultations, such as assistance and
    representation in connection with tax audits and appeals, tax
    advice related to mergers and acquisitions, transfer pricing,
    and requests for rulings or technical advice from taxing
    authorities; tax planning services; and expatriate tax
    compliance, consultation and planning services.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='173'></A>
</DIV>

<!-- link1 "16.D. Exemptions from the Listing Standards for Audit Committee" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.D.</B></TD>
    <TD>
    <B>Exemptions from the Listing Standards for Audit Committee</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='174'></A>
</DIV>

<!-- link1 "16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.E.</B></TD>
    <TD>
    <B>Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither we nor any &#147;affiliated purchaser,&#148; as defined
in
Rule&nbsp;<FONT style="white-space: nowrap">10b-18(a)(3)</FONT>
of the Exchange Act, purchased any of our equity securities
during the period covered by this annual report.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='175'></A>
</DIV>

<!-- link1 "PART III" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>PART&nbsp;III</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='176'></A>
</DIV>

<!-- link1 "ITEM 17. FINANCIAL STATEMENTS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 17. FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have responded to Item&nbsp;18 in lieu of responding to this
item.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='177'></A>
</DIV>

<!-- link1 "ITEM 18. FINANCIAL STATEMENTS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 18. FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following financial statements and related schedules,
together with the reports of independent accountants thereon,
are filed as part of this annual report:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Report of Independent Registered Public Accounting Firm
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Balance Sheets as of December&nbsp;31, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Statements of Operations for the years ended December&nbsp;31,
2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Statements of changes in Convertible Preferred Shares and
Shareholders&#146; Equity
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
for the years ended December&nbsp;31, 2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Statements of cash flows for the years ended December&nbsp;31,
2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Notes to the consolidated financial statements
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">93
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='178'></A>
</DIV>

<!-- link1 "ITEM 19. EXHIBITS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>ITEM 19. EXHIBITS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Articles of Incorporation of the
    Registrant, amended as of March&nbsp;29, 2007 (English
    Translation)
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Lease Agreement, dated March 2007,
    between Registrant and LIG Insurance Co., Ltd. (English
    Translation)
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Lease Agreement, dated
    September&nbsp;16, 2006 between Registrant and Jin-Ho Park
    (English Translation)
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Co-location Service Agreement with
    Korea Internet Data Center, dated as of August&nbsp;11, 2005 and
    amended as of March&nbsp;30, 2007 (English translation)
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">4</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Standard Terms and Conditions for
    Buyers, amended as of September&nbsp;12, 2006 (English
    Translation)
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">4.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">5</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Standard Terms and Conditions for
    Sellers, amended as of September&nbsp;12, 2006 (English
    Translation)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>

<TD align="right" valign="top" nowrap><FONT face="helvetica,arial">11&nbsp;</FONT></TD>
    <TD><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Form of Code of Ethics
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">12.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Certification of Registrant&#146;s
    Chief Executive Officer, as required by Section&nbsp;302 of the
    Sarbanes-Oxley Act of 2002
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">12.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Certification of Registrant&#146;s
    Chief Financial Officer, as required by Section&nbsp;302 of the
    Sarbanes-Oxley Act of 2002
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">13.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Certification of Registrant&#146;s
    Chief Executive Officer, as required by Section&nbsp;906 of the
    Sarbanes-Oxley Act of 2002
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap><FONT face="helvetica,arial">13.</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Certification of Registrant&#146;s
    Chief Financial Officer, as required by Section&nbsp;906 of the
    Sarbanes-Oxley Act of 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>(1)</TD>
    <TD align="left">
    Previously filed with the SEC as an exhibit to our registration
    statement on
    Form&nbsp;<FONT style="white-space: nowrap">F-1.</FONT></TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">94
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
To the board of directors and shareholders of <BR>
 GMARKET INC <BR>
 <BR>

</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, the accompanying balance sheets and the related
statements of operations, of changes in convertible preferred
shares and shareholders&#146; equity (deficit) and of cash flows
present fairly, in all material respects, the financial position
of GMARKET INC. at December&nbsp;31, 2006 and December&nbsp;31,
2005, and the results of its operations and its cash flows for
each of the three years in the period ended December&nbsp;31,
2006 in conformity with accounting principles generally accepted
in the United States of America. These financial statements are
the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements 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, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
/s/ Samil PricewaterhouseCoopers
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Seoul, Korea
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
May&nbsp;2, 2007
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">95
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>GMARKET INC.</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Balance Sheets</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>December&nbsp;31, 2005 and 2006</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won and in thousands</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">of Dollars, except share and per share data)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Unaudited</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Note&nbsp;3)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,930</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,746</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash on deposit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134,398</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145,233</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Restricted cash
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,100</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,916</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,244</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,827</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,554</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Held-to-maturity securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,322</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,517</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,119</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,531</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">218,674</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">236,302</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term financial instruments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,260</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,403</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Held-to-maturity securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,188</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,582</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,161</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">551</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,846</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,236</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,102</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,102</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Liabilities, convertible
    preferred shares and shareholders&#146; equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts payable to sellers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,458</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103,599</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,951</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,859</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,242</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,793</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred revenue and advances
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,532</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,817</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales incentive liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,263</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,608</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,141</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,165</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,854</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,406</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">110,925</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">139,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">151,108</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued severance benefits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,397</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,509</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,353</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141,232</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,617</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Commitments and contingencies:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;A convertible preferred
    shares; W100&nbsp;par value; 12,576,500&nbsp;shares authorized,
    issued and outstanding as of December, 31 2005; liquidation
    preference of W639&nbsp;per share as of December&nbsp;31, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,339</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shareholders&#146; equity (deficit)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Common shares; W100 par value;
    187,423,500 and 200,000,000 shares authorized; and 30,400,000
    and 49,506,210 shares issued and outstanding as of
    December&nbsp;31, 2005 and 2006, respectively.
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,040</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,951</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,350</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">518</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,445</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,414</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Loan to employees for stock purchase
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(389</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings(Accumulated
    deficit)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(803</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,474</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,721</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,366</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,870</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">115,485</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total liabilities, convertible
    preferred shares and shareholders&#146; equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,102</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,102</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these financial
statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>GMARKET INC.</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Operations</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>For the Years Ended December&nbsp;31, 2004, 2005 and 2006</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won and in thousands</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">of Dollars, except share and per share data)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Unaudited</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Note&nbsp;3)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transaction fees
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,034</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56,779</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">107,253</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising and others
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,103</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,556</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,881</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,305</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,137</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,335</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,133</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">166,558</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Costs and expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,417</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,686</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,954</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,319</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,354</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,803</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,427</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,169</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,912</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,286</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,577</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,752</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total costs and expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,683</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,775</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">139,958</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">151,240</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,546</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,560</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,175</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,318</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other income (expense)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,393</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,189</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,607</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Others, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">218</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) before income tax
    expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,953</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,566</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,143</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax expenses (benefits)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(133</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,289</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,554</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,589</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion of preferred shares to
    redemption price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts allocated to participating
    preferred shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,565</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,260</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,361</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss) applicable to
    common shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,356</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,017</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,228</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss) per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151; Basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">124</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.40</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151; Diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">108</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">345</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.37</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average number of common
    shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151; Basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,963,014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,468,471</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,468,471</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151; Diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,939,377</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,177,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,177,311</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these financial
statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<!-- LANDSCAPE -->
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>GMARKET INC.</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Changes in Convertible Preferred Shares and
Shareholders&#146; Equity (Deficit)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>For the Years Ended December&nbsp;31, 2004, 2005 and 2006</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">&nbsp;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Convertible</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">&nbsp;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Redeemable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Convertible Preferred</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Loan to</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">&nbsp;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Preferred Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Common Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Additional</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Employees</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shareholders&#146;</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In
millions of Won</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Paid-in</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">For Stock</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Accumulated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Equity</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">except
number of shares)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Capital</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Purchase</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Deficit</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Deficit)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">225</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(142</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,284</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,801</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of preferred shares, net
    of W733&nbsp;million of issuance costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,576,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Stock-based compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net loss
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,576,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">341</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(142</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,724</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,125</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Loan to employees for stock purchase
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of common shares from
    exercise of stock options
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,400,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">640</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">55</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">695</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Stock-based compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to redemption price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">165</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification due to
    cancellation of redemption feature
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,576,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,339</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,576,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,339</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2005</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,576,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,339</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,400,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,040</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">518</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(389</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(803</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,366</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of common stock
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,079,710</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">608</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,611</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercise of stock options
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">450,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Stock-based compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">831</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">831</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification to equity due to
    cancellation of redemption feature
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,576,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,339</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,576,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,339</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of loan to employees for
    stock purchase
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2006</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,506,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,951</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,445</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,474</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,870</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these financial
statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>GMARKET INC.</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statements of Cash Flows</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>For the Years Ended December&nbsp;31, 2004, 2005 and 2006</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3" align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won and in thousands of Dollars)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Unaudited</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Note&nbsp;3)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from operating
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,589</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Adjustments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">264</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,196</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,616</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Stock-based compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">850</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">918</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision for bad debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">306</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision for severance benefits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">522</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,039</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,123</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative effect of changes in
    accounting principle, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(767</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(829</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision for loyalty program
    reserve
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,114</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,916</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Others, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">134</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">145</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Changes in operating assets and
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,608</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,189</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,792</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,226</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts payable to sellers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,135</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,958</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,290</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,383</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,059</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred revenue and advances
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">640</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,352</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,461</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,096</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,328</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,515</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(76</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">589</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,196</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,635</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,848</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Payment of severance benefits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(559</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(76</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash provided by operating
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,401</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,015</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,885</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,294</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from investing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Increase in cash on deposit, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(88,827</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(95,988</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Increase in restricted cash, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,210</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(600</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,300</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,647</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Increase in long-term financial
    instruments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of held-to-maturity
    securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchase of property and equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,902</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14,749</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15,938</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Decrease (increase)&nbsp;in other
    current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Decrease (increase)&nbsp;in other
    assets, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">378</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(418</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,960</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,278</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash used in investing
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,954</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(56,662</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(111,909</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(120,930</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash flows from financing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of preferred shares, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,174</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of common shares, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">695</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,668</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,090</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Decrease (increase)&nbsp;in loan to
    employees for stock purchase
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">420</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of borrowings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net cash provided by financing
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,607</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">448</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,056</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,510</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net increase (decrease) in cash and
    cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,054</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,968</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,126</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash
    equivalents</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Beginning of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,043</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,872</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">End of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,930</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,746</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Supplemental cash flow
    disclosures</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash paid for interest
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash paid for income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">543</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">587</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Non-cash investing and financing
    activities:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of
    held-to-maturity bond to current held-to-maturity bond
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,322</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Conversion of preferred stock to
    common stock
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,359</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these financial
statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Description of Business</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are a retail e-commerce marketplace in Korea offering buyers
a wide selection of products at competitive prices and sellers a
comprehensive, end-to-end sales solution. Our e-commerce
marketplace facilitates the purchase and sale of small and large
volumes of products among a large number of buyers and sellers
in a convenient, cost effective and secure manner. We derive our
revenues from transaction fees on the sale of products completed
on our website, advertising service and membership fees. Our
e-commerce marketplace is located at www.gmarket.co.kr.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Significant Accounting Policies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Use of estimates</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the amounts reported in the accompanying financial
statements and related disclosures. Although these estimates are
based on management&#146;s best knowledge of current events and
actions that the Company may undertake in the future, actual
results may differ from these estimates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Revenue recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our net revenues are derived from fees associated with our
transaction, advertising services and membership programs.
Revenues from transaction fees are derived from commissions paid
by sellers trading on our e-commerce marketplace, net of sales
incentives. Revenues from advertising are derived from the sale
of online banners, premium listing and keyword searches to
sellers, and sale of advertisement to non sellers. Other
revenues are derived from the sale of membership programs and
delivery services. Our revenues are recorded net of value added
tax.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Transaction fees</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our e-commerce customers are sellers of merchandise from whom we
receive commissions based on the gross merchandise value of each
successfully executed transaction. In addition to providing a
marketplace, we also facilitate the collection of cash from
buyers and the remittance of that cash, net of our commission to
our customer, the seller. The Company is not the primary obligor
to the transaction between the seller and the buyer as the title
to the goods passes directly from the seller to the buyer and
the Company does not bear the risk of credit loss other than its
own commission. Therefore, commissions earned by the Company are
recorded as revenues, on a net basis, upon the completion of our
services. Our standard market terms allow for the return of
goods to the seller from the buyer within a seven day period
from delivery date under certain circumstances after which we
refund amounts collected to the buyer. We record a reserve for
estimated refunds based on our historical experience as a
reduction of revenues from transaction fees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As our service transactions have a refundable provision
available to the buyer, we have elected to apply the above
policy for our transaction fees using an analogy to the guidance
in Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;48 <I>Revenue Recognition When Right
of Return Exists</I>. We satisfy the criteria in SFAS&nbsp;48
as, our commission fee is fixed at the outset, the buyers and
sellers of goods have economic substance apart from us, we do
not have any significant obligations for future performance once
the buyer&#146;s payment is confirmed and we can reasonably
estimate the amount of future refunds based on our specific
historical experience. As the buyer has only seven days from
delivery date to return the goods purchased, we are able to
compare our estimated refund returns for a period to the actual
amount of returns for such period due to this short return
period.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Advertising and other</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company recognizes advertising and membership program
revenues ratably over the term of the contract or subscription
period. The duration of the banner and premium listing
advertising has
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
ranged from one day to one month, and the duration of membership
program is either three months or 12&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company provides an integrated delivery services both for
domestic and international buyers which involved the Company
contracting with couriers to provide such product delivery
services. The Company applied the guidance provided in EIFT
No.&nbsp;99&#151;19, <I>Reporting Revenue Gross as a Principal
versus Net as an Agent</I> in recognizing revenue for these
delivery services. Shipping and handling fees directly related
to this delivery service revenue is classified as cost of goods
sold, all other such shipping and handling fees are classified
as sales and marketing costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Mileage program</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Registered buyers may earn mileage through purchasing eligible
products. Once a registered buyer has accumulated more than
10,000 miles, that buyer may convert those miles into G Cash
(which in turn is convertible into Cash). The mileage program
reserve calculation incorporates judgments and assumptions
regarding expected customer earnings and redemption patterns and
is based on specific historical experience.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in mileage program reserves for the years ended
December&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">411</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,980</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision for mileage program
    reserves
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,114</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,640</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Redemptions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(545</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,055</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">411</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,565</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Discount coupons and stamps</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2005, we began to offer to registered buyers discount
coupons and stamps. Buyers are not required to complete a
specific purchase transaction to earn a discount coupon. Rather,
discount coupons are offered to registered buyers and can be
used prior to their expiry date, to reduce the purchase price of
a product in a future purchase. In accordance with EITF 01-09,
we record the value of the coupon at the same time the coupon is
actually used in a purchase as a reduction of revenues from
transaction fees. Stamps are awarded to buyers after completion
of a purchase transaction and may be accumulated and redeemed
for discount coupons or used for other services. We charge
sellers for issuing stamps and recognize the revenue when
coupons, converted from stamps, are used for a purchase or when
stamps are used for other services.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in discount coupons and stamps reserves for the years
ended December 31, 2005 and 2006 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">308</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,637</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Utilization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,877</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,043</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cost of revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of revenues consists of credit card fees and charges from
bank and other institutions, click through fees that we pay to
portals and search engines, network and systems maintenance fees,
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-6
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
salaries and other benefits relating to transactions,
depreciation and amortization pertaining to our e-commerce
platform and the purchase price of products sold by us until
2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cash and cash equivalents</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash equivalents consist of highly liquid investments with an
original maturity date of three months or less. Cash equivalents
include demand deposit and investments in money market mutual
funds.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cash on deposit and long-term financial instruments</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash on deposit includes time deposits, with maturities greater
than three months but one year or less. Long-term financial
instruments include deposits, with maturities greater than one
year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Restricted cash</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restricted cash consists of certain cash on deposit pledged as
collateral to credit card companies to secure transactions. As
the credit card company renews pledges every year, the
restricted cash amounts for the credit card companies are
classified as current assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Fair value of financial instruments</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our carrying amounts of cash and cash equivalents, cash on
deposit, accounts receivable, accounts payable and amounts
payable to sellers approximate fair value because of the short
maturity of these instruments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Concentrations of credit risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our cash and cash equivalents and accounts receivable are
potentially subject to concentration of credit risk. Cash and
cash equivalents are placed with financial institutions which
management believes are of high credit quality.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounts receivable balances consist of amounts owing to us by
buyers of merchandise on our website and our advertising
customers, payment for which is settled through credit cards and
electronic bank transfers. The credit card companies are
responsible for remitting to us the transaction amount after
deducting their fixed service fees ranging between approximately
2.4% and 3%. We maintain an allowance for doubtful accounts
based upon our actual experience.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Held-to-maturity securities</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Held-to-maturity securities, which are expected to be held to
maturity with the positive intent and ability to hold to
maturity, are carried at amortized cost and are reduced to net
realizable value by a charge to earnings for other than
temporary declines in fair value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Property and equipment</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property and equipment consist of furniture and fixtures,
leasehold improvements, computers and equipment and software.
Property and equipment are stated at historical cost less
accumulated depreciation and amortization. Depreciation and
amortization is computed using the straight-line method over the
estimated useful lives of the assets from three to five years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Intangible assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intangible assets consist of patent, website development cost,
and others, including domain name registration rights.
Intangible assets are stated at historical cost less accumulated
amortization,
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-7
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
which is computed using the straight-line method over three
years of estimated useful life. Amortization of intangible
assets for the years ended December&nbsp;31, 2004, 2005 and 2006
were W2&nbsp;million, W10&nbsp;million and W23&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for the impairment of long-lived assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company reviews long-lived assets for impairment whenever
events or changes in circumstance indicate the carrying amount
may not be recoverable. Recoverability is measured by comparison
of its carrying amount to future net cash flow the assets are
expected to generate. During 2004, 2005 and 2006, no amount was
recorded as impairment loss in respect of long-lived assets. If
such assets are considered to be impaired, the impaired amount
is measured as the amount by which the carrying amount of the
asset exceeds the present value of the future net cash flows
generated by the respective long-lived assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Amounts payable to sellers</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our contractual terms with sellers require us to remit the
proceeds from each transaction (net of commission) to the seller
between seven and 30&nbsp;days after the completion of the
transaction. This time generally allows the Company to process
all credits and other adjustments to the selling price with the
buyer. These amounts are presented as amounts payable to sellers
in these financial statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Sales and marketing</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales and marketing expenses are comprised primarily of
advertising, promotions and fees paid to a third-party service
provider that operates the Company&#146;s call center, all of
which are expensed as incurred. Expenses incurred by the
marketing department relating to marketing and promotion are
recorded as sales and marketing expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company expenses advertising costs as incurred. Advertising
expense was approximately W2,753&nbsp;million,
W14,037&nbsp;million and W27,350&nbsp;million for the years
ended December&nbsp;31, 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Research and development costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s research and development costs, which are
personnel expenses in connection with research and development
activities, are expensed as incurred and included in general and
administrative expenses. The Company has expensed
W409&nbsp;million, W475&nbsp;million and W2,934&nbsp;million for
the years ended December 31, 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Internal-use website development cost</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We apply the provisions of EITF 00-2, <I>Accounting for Web Site
Development Costs.</I> Our policy is to expense the costs
incurred in the preliminary project and post implementation
stage of the development effort and the subsequent costs
associated with maintaining our website. We capitalize costs
associated with the application development stage of the
project. However, during the years ended December&nbsp;31, 2004,
2005 and 2006, we did not make significant enhancements to our
website that required capitalization under our policy.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accrued severance benefits</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employees and directors with one year or more of service are
entitled to receive a lump-sum payment upon termination of their
employment with the Company based on the length of service and
rate of pay at the time of termination. The annual severance
benefits expense charged to operations is calculated based upon
the net change in the accrued severance benefits payable at the
balance
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
sheet date based on the guidance of
EITF&nbsp;<FONT style="white-space: nowrap">88-1,</FONT>
<I>Determination of Vested Benefit Obligation for a Defined
Benefit Pension Plan</I>.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is required to pay 4.5% of each employee&#146;s
annual wages to the National Pension Service. The total amount
of contributions made to the National Pension Service in 2004,
2005 and 2006 were W77&nbsp;million, W143&nbsp;million and
W353&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for stock-based compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company accounts for stock-based employee compensation
arrangements in accordance with the provisions of
SFAS&nbsp;No.&nbsp;123(R), <I>Accounting for Stock Based
Compensation,</I> using the fair value method. Under this
method, compensation cost for stock option grants are measured
at the grant date based on the fair value of the award and
recognized over the service period, which is usually the vesting
period, using the straight line method. As stock-based
compensation expense recognized in the 2006 statement of
operations is based on awards that are ultimately expected to
vest, it has been reduced for estimated forfeitures.
FAS&nbsp;123(R) requires forfeitures to be estimated at the time
of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company uses the Black-Scholes model to determine the fair
value of equity-based awards at the date of grant and recognizes
compensation cost as if all awards are expected to vest,
recognizing forfeitures based on when they are expected to occur
as at the grant date. Refer to note&nbsp;14 for details of our
assumptions used in calculating the fair value of our stock
options.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Prior Period Pro Forma Presentation</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the modified prospective application method, results for
prior periods have not been restated to reflect the effects of
implementing SFAS&nbsp;No.&nbsp;123(R) that was adopted as at
January&nbsp;1, 2006. The following pro forma information, as
required by SFAS&nbsp;No.&nbsp;148, <I>Accounting for
Stock-Based Compensation Transition and Disclosure, an Amendment
of FASB Statement No.&nbsp;123</I> is presented for comparative
purposes and illustrates the pro forma effect on net income and
earnings per share for the period presented as if we had applied
the fair value recognition provisions of SFAS&nbsp;No.&nbsp;123
to stock-based employee compensation prior to January&nbsp;1,
2006:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">As reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma effects of retroactive
    application
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,105</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to preferred shares to
    redemption price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amount allocated to participating
    preferred shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,571</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma net income applicable to
    common shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,369</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Earnings per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">As reported:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">124</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">108</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">109</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-9
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign currency transactions</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net gains and losses resulting from foreign exchanges
transactions are included in gains (losses)&nbsp;on foreign
currency in the statements of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Income taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company accounts for income taxes under the provisions of
SFAS&nbsp;No.&nbsp;109, <I>Accounting for Income Taxes</I>.
Under SFAS&nbsp;No.&nbsp;109, income taxes are accounted for
under the asset and liability method. Deferred taxes are
determined based upon differences between the financial
reporting and tax bases of assets and liabilities at expected
enacted statutory tax rates for the years in which the
differences are expected to reverse.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A valuation allowance is provided on net deferred tax assets to
the extent that it is more likely than not that such deferred
tax assets will not be realized. The total income tax provision
includes current tax expenses under applicable tax regulations
and the change in the balance of deferred tax assets and
liabilities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Earning per share</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic earning per share is computed by dividing net income
(loss) attributable to common shareholders by the weighted
average number of common shares outstanding for all periods.
Diluted earning per share is computed by dividing net income
(loss)&nbsp;attributable to shareholders by the weighted average
number of shares outstanding, increased by common share
equivalents. Common share equivalents are calculated using the
treasury stock method and represent incremental shares issuable
upon exercise of the Company&#146;s outstanding stock options.
However, common share equivalents are not included in the
denominator of the diluted earnings per share calculation when
inclusion of such shares would be anti-dilutive.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Recently Issued Accounting Pronouncements</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2006, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued Financial Interpretation No.&nbsp;48,
&#147;Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No.&nbsp;109&#148;
(&#147;FIN&nbsp;48&#148;), which is a change in accounting for
income taxes. Among other provisions, FIN&nbsp;48 specifies how
tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires
certain disclosures of uncertain tax matters; specifies how
reserves for uncertain tax positions should be classified on the
balance sheet; and provides transition and interim-period
guidance. FIN&nbsp;48 is effective for fiscal years beginning
after December&nbsp;15, 2006 and as a result, is effective for
us from January&nbsp;1, 2007. The adoption of FIN&nbsp;48 did
not have a material impact on our financial position, results of
operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2006, the FASB issued Statement of Financial
Accounting Standards No.&nbsp;157 (&#147;SFAS&nbsp;157&#148;),
&#147;Fair Value Measurements,&#148; which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements. SFAS&nbsp;157
does not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various prior
accounting pronouncements. SFAS&nbsp;157 is effective for fiscal
years beginning after November&nbsp;15, 2007. Earlier adoption
is permitted, provided the company has not yet issued financial
statements, including for interim periods, for that fiscal year.
We are currently evaluating the impact of SFAS&nbsp;157, but do
not expect the adoption of SFAS&nbsp;157 to have a material
impact on our financial position, results of operations or cash
flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2006, the FASB issued SFAS&nbsp;No.&nbsp;158,
&#147;Employers&#146; Accounting for Defined Benefit Pension and
Other Postretirement Plans-An Amendment of FASB No.&nbsp;87, 88,
106 and 132(R)&#148; (&#147;SFAS&nbsp;158&#148;). SFAS&nbsp;158
requires that the funded status of defined benefit postretirement
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-10
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
plans be recognized on the company&#146;s balance sheet, and
changes in the funded status be reflected in comprehensive
income, effective fiscal years ending after December&nbsp;15,
2006. The standard also requires companies to measure the funded
status of the plan as of the date of its fiscal year-end,
effective for fiscal years ending after December 15, 2008. The
adoption of SFAS&nbsp;158 does not have a material impact on our
financial position, results of operations or cash flows.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Convenience Translation into United States Dollar Amounts
    (Unaudited)</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company reports its financial statements using the Korean
Won. The Dollar amounts disclosed in the accompanying financial
statements are presented solely for the convenience of the
reader, and have been converted at the rate of W925.4 to one
Dollar, which is the noon buying rate of the U.S.&nbsp;Federal
Reserve Bank of New York in effect on December&nbsp;31, 2006.
Such translations should not be construed as representations
that the Won amounts represent, have been, or could be,
converted into, Dollars at that or any other rate.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Restricted Cash</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amount of restricted cash, which consists of certain cash on
deposit pledged as collateral to credit card companies, was
W2,100&nbsp;million, and W6,400&nbsp;million as of
December&nbsp;31, 2005 and 2006, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Long-term Financial Instruments</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s long-term financial instruments consisted of
long-term deposits of W5,000&nbsp;million which mature on
November&nbsp;28, 2008 as of December&nbsp;31, 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Held-to-maturity Securities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s held-to-maturity securities consisted of
investments in corporate bonds, which were recorded at cost
approximating their fair value. There were no unrecognized
holding gains or losses as of December&nbsp;31, 2005 and 2006.
Interest rate for the Company&#146;s investments is 4.8% per
annum with the maturity date of September&nbsp;28, 2007. As of
December&nbsp;31, 2006, the Company&#146;s held-to-maturity
securities were reclassified from non-current to current because
of the maturity date of September&nbsp;28, 2007.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Allowance for Doubtful Accounts</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the allowance for doubtful accounts for the years
ended December 31, 2004, 2005 and 2006 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">271</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">153</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision for allowances
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reversal
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(123</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Write-offs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">153</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">333</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Property and Equipment, Net</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property and equipment as of December&nbsp;31, 2005 and 2006
consist of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">583</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,907</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Servers and equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,042</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchased computer software
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,985</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,579</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,528</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: accumulated depreciation and
    amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,642</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,946</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,188</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,582</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Depreciation and amortization of property and equipment for the
years ended December&nbsp;31, 2004, 2005 and 2006 were
W262&nbsp;million, W1,186&nbsp;million and W3,324&nbsp;million,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Accrued Severance Benefits</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in accrued severance benefits for the years ended
December&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at beginning of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">222</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">428</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provisions for severance benefits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">277</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">522</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,039</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Severance payments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(559</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance at end of year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,397</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.&nbsp;</B></TD>
    <TD>
    <B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has a lease contract with LIG insurance of 4,282
square meters of office space for our headquarters in Seoul,
Korea, beginning in February 2006. The term of the lease is for
one year from February&nbsp;27, 2006 and the lease may be
renewed for subsequent one-year terms. We renewed the lease on
February&nbsp;28, 2007 which expires on February&nbsp;29, 2008.
We paid a security deposit in connection with this lease in the
amount of approximately Won 0.81&nbsp;billion
(US$0.88&nbsp;million). The lease payment due by
December&nbsp;31, 2007 is Won 1.45&nbsp;billion
(US$1.57&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has a lease contract with Fine Tower of 3,759 square
meters of office space in Seoul, Korea, beginning in October
2006 and ending in October 2008. We paid a security deposit in
connection with this lease in the amount of approximately Won
3.13&nbsp;billion (US$3.38&nbsp;million). The lease payment due
by December&nbsp;31, 2007 is Won 0.93&nbsp;billion
(US$1.01&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has contracts with third parties to outsource the
management of its servers and network. The contracts are renewed
annually. The Company recorded expense of W151&nbsp;million,
W2,859&nbsp;million and W3,270&nbsp;million under the contracts
for the years ended December&nbsp;31, 2004, 2005 and 2006,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has a contract with a third party to outsource its
call center services. The contract is renewed annually. The
Company recorded expense of W1,419&nbsp;million,
W6,625&nbsp;million and W11,642&nbsp;million under the contract
for the years ended December&nbsp;31, 2004, 2005 and 2006,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.&nbsp;</B></TD>
    <TD>
    <B>Stock Split</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;2, 2005, the Company&#146;s shareholders
approved a 50-for-1 stock split, which became effective on
January&nbsp;5, 2006. Holders of the Company&#146;s common
shares and preferred shares as of record date of
December&nbsp;2, 2005 received 29,792,000 and 12,324,970
additional
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-12
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
shares, respectively. Basic and diluted earnings per share were
W371 and W345 per share, respectively, for the year ended
December&nbsp;31, 2006. These financial statements retroactively
reflect the impact of the stock split.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.&nbsp;</B></TD>
    <TD>
    <B>Convertible Preferred Shares</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;30, 2004, the Company issued 12,576,500 shares
of Series&nbsp;A convertible redeemable preferred shares (the
&#147;Preferred Shares&#148;) with a par value of W100 per share
for total proceeds of W7,907&nbsp;million, less issuance costs
of W733&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The issue price of the Preferred Shares was denominated in
United States Dollars at $0.60 per share. Based on the exchange
rate between the Dollars and the Won on the date the transaction
was completed (US $1&nbsp;= W1,040.40), the Company received
W629 per share or total gross proceeds of W7,907&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;2, 2005, the Company&#146;s shareholders
approved a 50-for 1 stock split, which became effective on
January&nbsp;5, 2006. As a result of the stock split, the total
outstanding Preferred Shares became 12,576,500 shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;19, 2006, all of the Preferred Shares was converted
to Common Shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal terms and conditions of the Preferred Shares were
as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Voting rights</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each holder of outstanding Preferred Shares shall be entitled to
the number of votes equal to the number of Preferred Shares, at
each annual or extraordinary general meeting of shareholders of
the Company with respect to any and all matters presented to the
shareholders of the Company for their action or consideration.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Liquidation preference</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any Junior Securities,
the holders of Preferred Shares shall be entitled to be paid out
of the remaining assets of the Company legally available for
distribution with respect to each Preferred Share an amount in
cash equal to the sum of Korean Won W639, plus any accrued but
unpaid dividends thereon, in each case as adjusted for any stock
dividends, combinations or splits or similar events with respect
to such shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Conversion</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Outstanding Preferred Shares may be converted at any time from
the issue date to the twentieth anniversary of the issue date,
at the option of the holder thereof, into fully paid and
non-assessable common shares. The number of common shares to be
delivered will be the number of Preferred Shares multiplied by
the original issue price divided by the conversion price,
rounding the resulting number down to the nearest whole number
of conversion shares. The conversion price means the price per
conversion share at which conversion shares will be delivered
upon conversion, which is stated in Korean Won W639, plus any
accrued but unpaid dividends thereon, in each case as adjusted
for any stock dividends, combinations or splits or similar
events with respect to such shares. If any Preferred Shares have
not been converted into common shares as of the date one
business day prior to the pricing of the qualified IPO, such
Preferred Shares shall be automatically converted to common
shares without any further action by, consent of or notice from,
the respective holders of such Preferred Shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
According to the Shareholders Agreement by and among the Company
and the Shareholders, each holder of Preferred Shares shall be
obliged to request the Company to convert, and the
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-13
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Company shall convert, each share of Preferred Shares into
common share at the then-applicable conversion price immediately
prior to the first sale in a qualified public offering.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Dividend</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When declared at the general meeting of shareholders or by the
Board, the holders of outstanding Preferred Shares shall be
entitled to receive, out of the assets of the Company which are,
by law, available for such payment, non-cumulative dividends,
payable at a rate per annum equal to 0.001% of the par value per
Preferred Share, as adjusted for any stock dividends,
combinations or splits or similar events with respect to the
shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Preferred Shares participate in earnings with common shares
equally after allocation of preferred dividends (when declared).
No dividends have been declared for Preferred Shares or common
shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Redemption</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At any time on or after the fifth anniversary of the issue date
and on or before the twentieth anniversary of the issue date and
upon notice by the holders of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the then outstanding Preferred Shares, the Company shall
redeem the specified number of Preferred Shares. The price
payable for each redeemed share of Preferred Shares shall be the
sum Korean Won W639, plus any accrued but unpaid dividends
thereon, in each case as adjusted for any stock dividends,
combinations or splits or similar events with respect to such
shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;2, 2005, the holders of outstanding Preferred
Shares elected to delete the redemption provisions of the
Preferred Shares by amending the articles of incorporation.
However, in accordance with EITF&nbsp;D-98, <I>Classification
and Measurement of Redeemable Securities</I> and
Rule&nbsp;<FONT style="white-space: nowrap">5-02.28</FONT> of
Regulation&nbsp;<FONT style="white-space: nowrap">S-X,</FONT>
the preferred shares still had redemption characteristics that
were not solely within the control of the Company as at
December&nbsp;31, 2005 and therefore they remained as temporary
equity as at this date.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Accretion of Beneficial Conversion Feature
(&#147;BCF&#148;)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A beneficial conversion feature (&#147;BCF&#148;) is measured at
the date of issuance when a share of preferred stock is
convertible into common stock and the fair market value of the
underlying common stock at the date of issuance is in excess of
the preferred share purchase price. At the date of issuance of
the Preferred Shares in December 2004, the fair market value of
the underlying common stock at the date of issuance was less
than the conversion price and therefore, the Company did not
record a BCF.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>13.</B></TD>
    <TD>
    <B>Common Shares</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each share of common stock has the right to one vote. The
holders of common shares are also entitled to receive dividends
whenever funds are legally available and when declared by the
Board of Directors, subject to prior rights of holders of all
classes of stock outstanding having priority rights as to
dividends. No dividends have been declared or paid on any of the
Company&#146;s outstanding common shares.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>14.</B></TD>
    <TD>
    <B>Stock Option Grants</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company may grant to its officers and employees stock
options to purchase the stocks of the Company up to the lesser
of 30% of all shares issued and outstanding or the rate
permitted by applicable laws and regulations, by a special
resolution at a general meeting of shareholders pursuant to its
articles of incorporation and applicable laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Options granted before 2005 vest over a two year period from
grant date and expire after nine years. Options granted during
2005 and 2006 vest 50% after two years with the remaining 50%
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
vesting monthly in equal increments over the following
24&nbsp;months and expire between nine and eleven years after
grant date. Vesting of options is contingent on the employee
remaining in employment during the vesting period. We record
compensation expense based on the grant date fair value using
the Black-Scholes model and the straight-line amortization
method. To determine the fair value of equity-based awards at
the date of grant, we utilized the following weighted average
assumptions for grants in 2004, 2005 and 2006.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected volatility
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted-average volatility
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected dividends
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected term(in years)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Risk free interest rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.05</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.06%- 4.43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004, 2005 and 2006, the
Company recorded W116&nbsp;million, W122&nbsp;million and
W850&nbsp;million, respectively, as stock-based compensation
expense.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of option activity under the Plan as of
December&nbsp;31, 2006, and changes during the year then ended
is presented below
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Remaining</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Aggregate</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Contractual</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Intrinsic</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Term</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Value(million)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Outstanding at January&nbsp;1, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,625,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,997</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">490,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Forfeited
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,552</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercised
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">450,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">127</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Outstanding at December&nbsp;31,
    2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,573,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,623</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,765</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Vested at December&nbsp;31, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expected to vest at
    December&nbsp;31, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,314,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,460</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,412</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercisable at December&nbsp;31,
    2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The weighted-average grant-date fair value of options granted
during the years 2004, 2005, and 2006 was W174, W2,317, and
W4,200, respectively. The total intrinsic value of options
exercised during the years ended December&nbsp;31, 2005, and
2006, was W21,184&nbsp;million, and W3,858&nbsp;million,
respectively. There were no options exercised during the year
ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2006, there was W2,831&nbsp;million of
total unrecognized compensation cost related to nonvested
share-based compensation arrangements granted under the Plan.
That cost is expected to be recognized over a weighted-average
period of 2.8&nbsp;years. The total fair value of shares vested
during the years ended December&nbsp;31, 2004, 2005, and 2006,
was W116&nbsp;million, W162&nbsp;million, and W44&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash amounting to W57&nbsp;million was received in respect of
stock options exercised during 2006.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>15.</B></TD>
    <TD>
    <B>Income Taxes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income tax expense for the years ended December&nbsp;31, 2004,
2005 and 2006 consist of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,056</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(767</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total income tax expenses (benefits)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(133</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,289</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tax effects of temporary differences that give rise to
significant portions of the deferred income tax assets and
deferred income tax liabilities as of December&nbsp;31, 2004,
2005 and 2006 are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current deferred income tax
    assets (liabilities)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">373</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(103</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(415</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(798</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Loyalty program reserves
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">909</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">176</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">445</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">213</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">660</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less : Valuation allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(445</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current deferred income tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">213</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">660</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Non-current deferred income tax
    assets (liabilities)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provisions for severance benefits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net operating loss carryforwards
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">878</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">130</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">361</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less : Valuation allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(973</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Non-current deferred income tax
    assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">361</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company had available loss carryforwards of
W3,191&nbsp;million at December&nbsp;31, 2004, which were
utilized during 2005, and available investment tax credit
carryforwards of W89&nbsp;million at December&nbsp;31, 2005
which were utilized in 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Realization of the future tax benefits related to the deferred
tax assets is dependent on many factors, including the
Company&#146;s ability to generate taxable income within the
period during the temporary differences reverse.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the Company&#146;s historical book and tax losses,
management determined that it was more likely than not, that the
Company would not realize its deferred tax assets at
December&nbsp;31, 2003 and 2004 and recorded a valuation
allowance of W1,100&nbsp;million and W1,418&nbsp;million,
respectively. However, in 2005 and 2006, the Company generated
sufficient taxable profits during the year, such that, based on
its assessment of the other factors listed above, management
determined that it is more likely than not that the Company will
realize its deferred tax assets in the future and, accordingly,
has not recorded a valuation allowance at December&nbsp;31, 2005
and 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The statutory income tax rate applicable to the Company was
27.5% in 2005 and 2006.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As an eligible venture company under the Special Tax Treatment
Control Law of Korea, the Company is entitled to a reduced tax
rate of 13.75% for taxable income directly generated from
operation, which is 50% of the statutory tax rate and effective
until 2009. Before 2005, the Company did not file for the 50%
tax exemption and thus, deferred tax assets were calculated
using the statutory rate of 27.5%. However, the Company filed
for tax exemption as an eligible venture company due to its
increased taxable income. Accordingly, deferred income taxes as
of December&nbsp;31, 2005 and 2006 were calculated using the
reduced rate of 13.75% for the temporary differences entitled
for the 50% tax exemption.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of income tax expense at the Korean statutory
income tax rate to actual income tax expense is as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tax expense at Korean statutory tax
    rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(428</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,362</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,381</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax exemption
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,129</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax credits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(313</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(164</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in deferred income tax
    assets due to initial application of income tax exemption
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">622</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Expense not deductible for tax
    purpose
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">82</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">221</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in statutory tax rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in valuation allowances
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">318</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,418</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total income tax expense (benefits)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(133</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,289</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.</B></TD>
    <TD>
    <B>Earning Per Share</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of basic and diluted earnings per share are as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won except number of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">common shares and per share amount)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Basic earnings per
    shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to redemption price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts allocated to participating
    preferred shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,565</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,260</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income applicable to common
    shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,356</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,017</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average common shares
    outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,963,014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,468,471</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic earnings per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">124</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">371</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Diluted earnings per
    shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to redemption price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts allocated to participating
    preferred shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,565</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income applicable to common
    shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,356</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,277</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won except number of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B><FONT face="helvetica,arial">common shares and per share amount)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average common shares
    outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,963,014</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,468,471</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assumed exercise of stock option
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,976,363</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">851,293</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assumed convert of convertible
    preferred shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;<DIV style="font-size: 1pt; border-bottom: 1px solid #000000">&nbsp;</DIV> 30,939,377</FONT></TD>
    <TD>&nbsp;</TD>

    <TD colspan="3" align="right" valign="bottom"><FONT face="helvetica,arial">5,857,548<DIV style="font-size: 1pt; border-bottom: 1px solid #000000">&nbsp;</DIV> 47,177,311</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Adjusted weighted average
    shares-diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">108</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">345</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Diluted earnings per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 725,000 stock options granted in 2005 and outstanding at
December&nbsp;31, 2005 and 2006 and convertible preferred shares
outstanding at December&nbsp;31, 2004 and 2005 are excluded from
the Company&#146;s calculation of earnings per share as their
effects are anti-dilutive.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>17.</B></TD>
    <TD>
    <B>Related Party Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We had loans to executive officers and employees for housing
amounting to W62&nbsp;million as of December&nbsp;31, 2005, and
to employees for housing amounting to W15&nbsp;million, at an
annual interest rate of 5% for 1&nbsp;year or 2&nbsp;years which
are recorded as other current assets or other assets in these
financial statements. As of December&nbsp;31, 2005, the Company
had non-interest bearing loans to directors, executive officers
and employees for stock purchases amounting to
W389&nbsp;million, which were fully repaid during 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interpark Corporation and Yahoo! Korea are major shareholders
and related parties of the Company. The Company considers
Interpark Corporation and its subsidiaries and Yahoo! Korea to
be related parties.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the years ended December&nbsp;31, 2005 and 2006, there
were transactions with the Company&#146;s related parties as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">(In millions of Won)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">W</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">210</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchase
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,048</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,109</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,652</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leasehold and other deposits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">267</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">114</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts payable to sellers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">442</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable and accrued
    expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">97</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">365</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">457</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-18
</FONT>
</BODY>
</HTML>
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{"company-data": {"conformed-name": "Gmarket Inc.", "cik": "0001365241", "assigned-sic": "7389", "irs-number": "000000000", "state-of-incorporation": "M5", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "000-52060", "film-number": "07826005"}, "business-address": {"street1": "8TH FLOOR, LIG TOWER, 649-11", "street2": "YEOKSAM-DONG, GANGNAM-GU", "city": "SEOUL", "state": "M5", "zip": "135-912", "phone": "822-1566-5701"}, "mail-address": {"street1": "8TH FLOOR, LIG TOWER, 649-11", "street2": "YEOKSAM-DONG, GANGNAM-GU", "city": "SEOUL", "state": "M5", "zip": "135-912"}}
GMARKET INC.
Table of Contents
As filed with the Securities and Exchange Commission on
May 8, 2007
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
20-F
(Mark One)
o
REGISTRATION STATEMENT PURSUANT
    TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
    1934
or
þ
ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
For the fiscal year ended December 31, 2006
or
o
TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
or
o
SHELL COMPANY REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
For the transition period
    from                             to
Commission file number: 000-52060
GMARKET INC.
(Exact name of registrant as specified in its charter)
N/A
The Republic of Korea
(Translation of
    registrant's name into English)
(Jurisdiction of incorporation
    or organization)
8th Floor, LIG Tower, 649-11 Yeoksam-Dong, Gangnam-Gu, Seoul
135-912, Korea
(Address of principal executive offices)
Securities registered or to be registered pursuant to
Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common stock, par value Won 100 per
    share*
American depositary shares, each representing
one share of common stock
Nasdaq National Market
*
Not for trading, but only in connection with the listing of
    American depositary shares on the Nasdaq National Market
    pursuant to the requirements of the Securities and Exchange
    Commission.
Securities registered or to be registered pursuant to
Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close
of the last full fiscal year covered by this Annual Report:
Shares, par value Won 100:
49,506,210
Indicated by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act.      Yes
o
No
þ
If this report is an annual 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
o
No
þ
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
þ
No
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of "accelerated filer and large
accelerated filer" in
Rule
12b-2
of the
Exchange Act.
Large Accelerated
filer
o
Accelerated
filer
o
Non-accelerated-filer
þ
Indicate by check mark which financial statement item the
registrant has elected to follow:
Item 17
o
Item 18
þ
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
o
No
þ
Table of Contents
TABLE OF CONTENTS
CERTAIN
    DEFINED TERMS
3
FORWARD-LOOKING
    STATEMENTS
3
PART
    I
ITEM
    1.    IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS
5
ITEM
    2.    OFFER STATISTICS AND EXPECTED
    TIMETABLE
5
ITEM
    3.    KEY INFORMATION
5
3.A.    Selected
    Financial Data
5
3.B.    Capitalization
    and Indebtedness
8
3.C.    Reasons
    for the Offer and Use of Proceeds
8
3.D.    Risk
    Factors
8
ITEM
    4.    INFORMATION ON THE COMPANY
22
4.A.    History
    and Development of the Company
22
4.B.    Business
    Overview
23
4.C.    Organizational
    Structure
41
4.D.    Property,
    Plants and Equipment
41
ITEM
    5.    OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS
41
5.A.    Operating
    Results
41
5.B.    Liquidity
    and Capital Resources
51
5.C.    Research
    and Development, Patents and Licenses, etc.
52
5.D.    Trend
    Information
53
5.E.    Off-Balance
    Sheet Arrangements
53
5.F.    Tabular
    Disclosure of Contractual Obligations
53
ITEM
    6.    DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES
54
6.A.    Directors
    and Senior Management
54
6.B.    Compensation
57
6.C.    Board
    Practices
57
6.D.    Employees
59
6.E.    Share
    Ownership
59
ITEM
    7.    MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS
61
7.A.    Major
    Shareholders
61
7.B.    Related
    Party Transactions
63
7.C.    Interests
    of Experts and Counsel
64
ITEM
    8.    FINANCIAL INFORMATION
64
8.A.    Consolidated
    Statements and Other Financial Information
64
8.B.    Significant
    Changes
64
ITEM
    9.    THE OFFER AND LISTING
64
9.A.    Offer
    and Listing Details
64
9.B.    Plan
    of Distribution
65
9.C.    Markets
65
9.D.    Selling
    Shareholders
65
9.E.    Dilution
65
9.F.    Expenses
    of the Issue
65
1
Table of Contents
ITEM
    10.   ADDITIONAL INFORMATION
65
10.A.    Share
    Capital
65
10.B.    Articles
    of Incorporation
65
10.C.    Material
    Contracts
70
10.D.    Exchange
    Controls
70
10.E.    Taxation
73
10.F.    Dividends
    and Paying Agents
80
10.G.    Statement
    by Experts
80
10.H.    Documents
    on Display
80
10.I.     Subsidiary
    Information
81
ITEM
    11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK
81
11.A.    Quantitative
    Information about Market Risk
81
11.B.    Qualitative
    Information about Market Risk
81
11.C.    Interim
    Periods
81
ITEM
    12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES
81
12.A.    Debt
    Securities
81
12.B.    Warrants
    and Rights
81
12.C.    Other
    Securities
81
12.D.    American
    Depositary Shares
81
PART
    II
ITEM
    13.   DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES
91
ITEM
    14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF
    SECURITY HOLDERS AND USE OF PROCEEDS
91
ITEM
    15.   CONTROLS AND PROCEDURES
91
ITEM 16.
92
16.A.    Audit
    Committee Financial Expert
92
16.B.    Code
    of Ethics
92
16.C.    Principal
    Accountant Fees and Services
92
16.D.    Exemptions
    from the Listing Standards for Audit Committee
93
16.E.    Purchases
    of Equity Securities by the Issuer and Affiliated Purchasers
93
PART
    III
ITEM
    17.   FINANCIAL STATEMENTS
93
ITEM
    18.   FINANCIAL STATEMENTS
93
ITEM
    19.   EXHIBITS
94
INDEX TO
    FINANCIAL STATEMENTS
l
EX-1 ARTICLES OF INCORPORATION
EX-4.1 LEASE AGREEMENT, DATED MARCH 2007
EX-4.2 LEASE AGREEMENT, DATED SEPTEMBER 16, 2006
EX-4.3 CO-LOCATION SERVICE AGREEMENT
EX-4.4 STANDARD TERMS AND CONDITIONS FOR BUYERS, AMENDED AS OF SEPTEMBER 12, 2006
EX-4.5 STANDARD TERMS AND CONDITIONS FOR SELLERS, AMENDED AS OF SEPTEMBER 12, 2006
EX-11 FORM OF CODE OF ETHICS
EX-12.1 CERTIFICATION OF REGISTRANT'S CEO, AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EX-12.2 CERTIFICATION OF REGISTRANT'S CFO, AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EX-13.1 CERTIFICATION OF REGISTRANT'S CEO, AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EX-13.2 CERTIFICATION OF REGISTRANT'S CFO, AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
2
Table of Contents
CERTAIN DEFINED TERMS
Unless the context otherwise requires, references in this annual
report to:
•
"Government" is to the government of The Republic of
    Korea;
•
"Gmarket," "the Company," "we,"
    "us," "our," or "our company" are
    to Gmarket Inc.;
•
"Korea" or the "Republic" are to The
    Republic of Korea;
•
"US$," "U.S. dollars," "US
    dollars," or "Dollars" are to the currency of the
    United States; and
•
"Won," "Korean Won," or "W," are
    to the currency of The Republic of Korea.
For your convenience, this annual report contains translations
of certain Won amounts into U.S. dollars at the noon buying
rate of the Federal Reserve Bank of New York for Won in effect
on December 31, 2006, which was Won 925.40 to US$1.00.
Discrepancies in tables between totals and sums of the amounts
listed are due to rounding.
FORWARD-LOOKING STATEMENTS
This annual report on
Form
20-F
for the
year ended December 31, 2006 contains "forward-looking
statements," as defined in Section 27A of the
U.S. Securities Act of 1933, as amended, and
Section 21E of the U.S. Securities Exchange Act of
1934, as amended ("Exchange Act"). The forward-looking
statements are based on our current expectations, assumptions,
estimates and projections about our company and our industry,
and are subject to various risks and uncertainties. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "anticipate,"
"believe," "considering,"
"depends," "estimate," "expect,"
"intend," "plan," "planning,"
"planned," "project" and similar
expressions, or that certain events, actions or results
"will," "may," "might,"
"should" or "could" occur, be taken or be
achieved.
Forward-looking statements include, but are not limited to, the
following:
•
our ability to anticipate and respond to various competitive
    factors affecting the retail industry, in particular the retail
    e-commerce industry in Korea, including new services that may be
    introduced, changes in consumer preferences and confidence
    levels, and discount pricing strategies by competitors;
•
the effect that economic, political or social conditions in
    Korea have on the volume of transactions on our e-commerce
    marketplace and our results of operations;
•
our growth strategies;
•
our ability to target, acquire and integrate the businesses of
    any acquired companies;
•
our future business development, results of operations and
    financial condition;
•
our ability to attract and retain customers;
•
the expected growth of the Korean retail e-commerce industry,
    development of the widespread use of the Internet and
    development of e-commerce in Korea; and
•
our ability to expand our network and system infrastructure to
    support increased traffic and expanded services.
We caution you not to place undue reliance on any
forward-looking statement which involves risks and
uncertainties. Although we believe that the assumptions on which
our forward-looking statements are based are reasonable, any of
those assumptions could prove to be inaccurate, and as a result,
the forward-looking statements based on those assumptions could
be incorrect. All forward-looking statements are our
management's current expectation of future events and are
3
Table of Contents
subject to a number of factors that could cause actual results
to differ materially from those described in the forward-looking
statements. Risks and uncertainties associated with our business
include, but are not limited to, risks related to changes in the
regulatory environment; technology changes; potential litigation
and governmental actions; changes in the competitive
environment; political changes; and other risks and
uncertainties that are more fully described under the heading
"Risk Factors" in this annual report, and elsewhere in
this annual report. In light of these and other uncertainties,
you should not conclude that we will necessarily achieve any
plans and objectives or projected financial results referred to
in any of the forward-looking statements. We undertake no
obligation to update or revise any forward-looking statement to
reflect future events or circumstances.
4
Table of Contents
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.
KEY INFORMATION
3.A.
Selected Financial Data
You should read the selected financial data below in conjunction
with the financial statements and the related notes included
elsewhere in this annual report. The selected financial data as
of and for the years ended December 31, 2004, 2005 and 2006
are derived from our audited financial statements and related
notes thereto included elsewhere in this annual report. The
selected financial data as of and for the years ended
December 31, 2002 (unaudited) and 2003 (audited) are
derived from our annual financial statements and related notes
thereto not included herein. Our historical results do not
necessarily indicate results expected for any future periods.
Our financial statements are prepared in accordance with
U.S. GAAP.
For the years ended December 31,
2002
2003
2004
2005
2006
2006
(1)
(Unaudited)
(in billions of Korean Won and millions of US dollars, except per share data)
Revenues:
Transaction fees
W
2.48
W
2.97
W
12.04
W
56.78
W
99.25
US$
107.25
Advertising and other
1.49
0.77
2.10
13.56
54.88
59.31
Total revenues
3.97
3.74
14.14
70.34
154.13
166.56
Costs and expenses:
Cost of revenues
3.22
3.06
8.42
36.69
78.95
85.32
Sales and marketing
0.59
1.04
5.36
24.80
46.43
50.17
General and
    administrative
1.25
1.31
1.91
5.29
14.57
15.75
Total costs and
    expenses
5.06
5.41
15.69
66.78
139.95
151.24
Operating Income
    (loss)
(1.09
)
(1.67
)
(1.55
)
3.56
14.18
15.32
Other income
    (expenses):
Interest income
0.01
0.01
0.13
1.40
5.19
5.61
Others, net
0.39
(0.10
)
(0.02
)
—
0.20
0.22
Income (loss) before income tax
    expenses
(0.69
)
(1.76
)
(1.44
)
4.96
19.57
21.15
Income tax benefits
    (expenses)
—
—
—
0.13
(3.29
)
(3.55
)
Net income (loss)
(0.69
)
(1.76
)
(1.44
)
5.09
16.28
17.60
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For the years ended December 31,
2002
2003
2004
2005
2006
2006
(1)
(Unaudited)
(in billions of Korean Won and millions of US dollars, except per share data)
Accretion of preferred
    shares
—
—
—
(0.17
)
—
—
Amount allocated to
    participating preferred shareholders
—
—
—
(1.56
)
(1.26
)
(1.36
)
Net income
    (loss) applicable to common shareholders
(0.69
)
(1.76
)
(1.44
)
3.36
15.02
16.24
Earning per share—
    basic
(29
)
(73
)
(60
)
124
371
0.40
Earning per share—
    diluted
(29
)
(73
)
(60
)
108
345
0.37
Weighted average number of
    shares—
    basic
(2)
24,000,000
24,000,000
24,000,000
26,963,014
40,468,471
40,468,471
Weighted average number of
    shares—
    diluted
(2)
24,000,000
24,000,000
24,000,000
30,939,377
47,177,311
47,177,311
Notes:
(1)
The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December 31, 2006 as quoted by the Federal Reserve Bank of
    New York.
(2)
On June 6, 2006, 12,576,500 of our preferred shares, which
    represents all of our issued and outstanding Series A
    convertible preferred shares, were converted to an equivalent
    amount of common shares.
As of December 31,
2002
2003
2004
2005
2006
2006
(1)
(Unaudited)
(in billions of Won and in millions of US dollars)
Assets
Cash and cash equivalents
W
0.93
W
1.04
W
19.10
W
36.90
W
34.93
US$
37.75
Cash on deposit
—
—
6.10
45.30
134.40
145.23
Restricted cash
—
0.10
1.50
2.10
6.40
6.92
Total current assets
2.95
2.64
30.90
103.06
218.67
236.30
Total assets
3.65
3.69
33.14
121.06
248.10
268.10
Amounts payable to sellers
2.72
4.02
24.15
93.46
103.60
111.95
Total current liabilities
3.13
4.91
28.63
110.92
139.84
151.11
Total liabilities
3.85
5.49
29.10
111.35
141.23
152.62
Convertible redeemable preferred
    shares
(2)
—
—
7.17
—
—
—
convertible preferred
    shares
(2)
—
—
—
7.34
—
—
Total shareholders' equity
    (deficit)
(0.20
)
(1.80
)
(3.13
)
2.37
106.87
115.48
Total liabilities, preferred shares
    and shareholders' equity
3.65
3.69
33.14
121.06
248.10
268.10
Notes:
(1)
The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December 31, 2006 as quoted by the Federal Reserve Bank of
    New York.
(2)
On June 6, 2006, 12,576,500 of our preferred shares, which
    represents all of our issued and outstanding Series A
    convertible preferred shares, were converted to an equivalent
    amount of common shares.
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As of and for the years ended December 31,
2002
2003
2004
2005
2006
2006
(1)
Operating Data
    GMV
(2)
W
15.71
W
65.13
W
224.50
W
1,080.86
W
2,268.20
US$
2,451.05
Aggregate registered
    users
(3)
    (000's)
536.80
781.87
2,388.02
7,191.36
10,967.00
—
Average monthly unique
    visitors
(4)
    (000's)
356.24
1,256.75
4,859.00
12,368.25
16,475.67
—
Notes:
(1)
The Won amounts are expressed in Dollars at the rate of Won
    925.4 to US$1.00, the noon buying rate in effect as of
    December 31, 2006 as quoted by the Federal Reserve Bank of
    New York.
(2)
In billions of Won and millions of Dollars. Gross Merchandise
    Value, or GMV, represents the aggregate value of all products
    sold on our website for the period. GMV is commonly used in the
    e-commerce industry to measure a company's operating
    performance as transaction fees depend in part on GMV.
    Therefore, we believe that for an e-commerce company such as
    ourselves, GMV provides additional information on the
    company's operating performance. However, GMV should not be
    construed as an alternative to operating income or any other
    measure of performance determined in accordance with U.S. GAAP.
    Other companies may determine GMV differently than we do.
(3)
Includes both buyers and sellers who have registered with us as
    of the end of the period.
(4)
Represents the average number of monthly unique visitors to our
    website during the period. Source: Metrix Corporation.
Exchange Rates
The following table sets forth information concerning the noon
buying rate for the years 2002 through 2006 and for each of the
months in the six-month period ended April 30, 2007,
expressed in Won per US dollar.
At end of
Average
Period
period
rate
(1)
High
Low
(Won per US$1.00)
2002
W1,186.3
W1,242.0
W1,332.0
W1,160.6
2003
1,192.0
1,183.0
1,262.0
1,146.0
2004
1,035.1
1,139.3
1,195.1
1,035.1
2005
1,010.0
1,023.2
1,059.8
997.0
2006
925.4
950.1
913.7
1,002.9
November, 2006
929.0
935.4
942.1
929.0
December, 2006
925.4
925.0
931.6
913.7
January, 2007
941.0
936.8
942.2
925.4
February, 2007
942.3
936.9
942.3
932.5
March, 2007
937.0
942.9
949.1
937.2
April, 2007
931.0
930.7
937.0
926.1
Source: Federal Reserve Bank of New York.
Note:
(1)
The average rates for the annual periods were calculated based
    on the average noon buying rate on the last day of each month
    during the period. The average rates for the monthly periods
    were calculated based on the average noon buying rate of each
    day of the month.
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3.B.
Capitalization and Indebtedness
Not applicable.
3.C.
Reasons for the Offer and Use of Proceeds
Not applicable.
3.D.
Risk Factors
Risks Related to Our Business
We operate in an extremely competitive industry, and we
may be unsuccessful in competing against current and future
competitors, which could have a negative impact on the level of
fees we can charge for our services.
The retail
e-commerce
industry in Korea is extremely competitive, and we expect that
competition in this area will continue to increase. We compete
directly with Auction.co.kr, an
e-commerce
marketplace
operated by Internet Auction Co., Ltd., which is a subsidiary of
eBay Inc. Our other competitors include Interpark Corporation,
our largest shareholder, d&shop Co., Ltd., and other
e-commerce
marketplaces
such as Mple Online, which is a subsidiary of CJ Home
Shopping and Daum Onket, which is a subsidiary of d&shop
Co., Ltd. We also compete against GS Home Shopping, which
operates two online retail websites, CJ Home Shopping and
other online retail websites operated by some of the largest
department stores in Korea, such as Lotte.com, Shinsegae.com and
Hmall.com. We currently compete indirectly with Internet portals
in Korea, such as Naver.com and Nate.com. We may also face
increased competition from bigger and financially stronger
players resulting from industry consolidation. In addition, as
the barriers to entry for Internet-related businesses are
relatively low, potential new entrants into the
e-commerce
industry
could include traditional and non-traditional retailers,
including Internet portals, telecom operators and cable service
providers. Further, we believe that the increased use of
emerging technologies, including mobile commerce, Internet
Protocol Television (IPTV), Digital Multimedia Broadcasting
(DMB), among others, may allow other competitors to indirectly
compete with
e-commerce
marketplaces such as ourselves in the future.
Many of our competitors have longer operating histories, better
brand recognition and significantly greater financial resources
than we do. The management of some of these competitors may have
more experience in implementing their business plan and strategy
and may be more successful in increasing the number of buyers
and sellers on their websites, as well as increasing the gross
merchandise value of products sold on their websites. Also, we
expect existing and potential new competitors to pursue their
business plans aggressively, which is likely to have a negative
impact on the level of transaction and advertising fees we can
charge. We expect that our costs related to marketing and human
resources will increase as our competitors undertake marketing
campaigns to enhance their brand name and increase the volume of
business conducted through their websites.
We expect many of our competitors to expend financial and other
resources to improve their network and system infrastructure,
including website design and logistics network, in order to
compete more aggressively. Our inability to adequately address
these and other competitive pressures will likely have a
negative impact on the level of fees we can charge for our
services, including fees for our advertising services, as well
as increase the costs and expenses associated with growing our
user base, which is likely to have a material adverse effect on
our business, prospects, financial condition and results of
operations.
We incurred losses from our operations for the years ended
December 31, 2002, 2003 and 2004, and achieved
profitability for the first time since our inception in the year
ended December 31, 2005. For the year ended
December 31, 2006, our income from operations increased by
298% compared to the previous year. Although we have experienced
significant growth in revenues over
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the past several years, no assurance can be given that such
trend will continue at the recent pace, including as a result of
market saturation, maturity and other factors. Our future
profitability will depend upon our ability to successfully
implement our key strategic initiatives in a timely and cost
efficient manner. Also, our profitability will depend on many
other factors, many of which are beyond our control, including
the general macroeconomic conditions, consumer confidence,
consumer spending levels and the continued growth of the retail
e-commerce industry in Korea.
We have a limited operating history and may be subject to
risks inherent in early stage companies, which may make it
difficult for you to evaluate our business and prospects.
We have a limited operating history upon which you can evaluate
our business and prospects. We were incorporated in April 2000
and launched our
e-commerce
marketplace
in May 2000. You must consider our business and prospects in
light of the risks and difficulties we face as an early stage
company with a limited operating history and should not rely on
our past results as an indication of our future performance. In
particular, our management may have less experience in
implementing our business plan and strategy compared to our more
well-established competitors, including our strategy to increase
our market share and build our brand name. In addition, we may
face challenges in planning and forecasting accurately as a
result of our limited historical data and inexperience in
implementing and evaluating our business strategies. Our
inability to successfully address these risks, difficulties and
challenges as a result of our inexperience and limited operating
history may have a negative impact on our ability to implement
our strategic initiatives, which may have a material adverse
effect on our business, prospects, financial condition and
results of operations.
Our inability to adequately address the operational,
network and system infrastructure and human resources challenges
of managing a rapidly growing business may have a negative
impact on our ability to implement our strategic
initiatives.
We have experienced significant growth over the past several
years and expect our business to continue to grow if we are
successful in implementing our key strategic initiatives. The
growth of our business has required the significant attention of
our management and expenditure of other resources and will
likely continue to strain our operational, network and system
infrastructure and personnel. In order to properly manage this
planned growth, we must improve our operational systems, expand
our network and system infrastructure, retain and hire qualified
personnel and enhance the effectiveness of our operational
controls and procedures. Our inability to manage this planned
growth may prevent us from providing an attractive and reliable
website to consumers, efficiently processing sales transactions,
due to, for example, unplanned network and system shutdowns or
inadequate levels of customer service, which could negatively
impact our brand name and reputation and may result in us not
being able to attract and retain users. As a result, we may not
achieve our desired growth in user base and GMV, which could
have a material adverse effect on our business, prospects,
financial condition and results of operations.
If we are unable to successfully implement some or all of
our major strategic initiatives in a timely manner, our ability
to maintain and improve our leading market position may be
negatively impacted.
Our strategy is to improve our leading market position by
implementing certain key strategic initiatives, which include
the following:
•
continuing to build our brand and expand our user base;
•
focusing on user loyalty and website enhancement;
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Table of Contents
•
continuing to expand product categories and introduce new
    service offerings; and
•
pursuing growth outside of Korea.
We cannot assure you that we will be successful in implementing
any or all of these key strategic initiatives. Some of these
strategies relate to new services or products for which there
are no established markets, or in which we lack experience and
expertise. No assurance can be given that any of our innovations
and service introductions will be successful. Consumer tastes
and preferences change rapidly and no assurance can be given
that we will be able to anticipate and address such changes so
that we can maintain and improve on our leading market position.
The success of our growth strategy abroad, whether through
acquisitions, investments, joint ventures or internal growth
will depend on the availability of suitable acquisition and
investment candidates, our ability to effectively attract and
reach agreement with acquisition candidates or joint venture
partners on commercially reasonable terms and the availability
of financing to complete such acquisitions, investments or joint
ventures, among other factors, as well as our ability to
successfully grow our business internally should no acquisition,
investments or joint venture opportunities become available.
Also, to date, we have not made any major investments or
acquisitions, and our management does not have experience
acquiring other companies and integrating the businesses and
personnel of such companies into our organization.
If we are unable to successfully implement some or all of our
key strategic initiatives in an effective and timely manner, our
ability to maintain and improve our leading market position may
be negatively impacted, which may have a material and adverse
effect on our business and prospects, competitiveness, leading
market position, brand name, financial condition and results of
operations.
As the regulatory framework and laws governing the retail
e-commerce
industry in
Korea are quickly evolving, we may not be able to comply with
new regulations or changes to the existing regulations on a
timely basis, which may harm our business and our
reputation.
As the retail e-commerce industry in Korea has grown
significantly over the past several years, the Korean government
has intensified its efforts to regulate the commercial
activities of e-commerce companies and other entities
participating in this industry, including us. These efforts
include enacting new regulations, making changes to the existing
laws and regulations, and monitoring and enforcing more
aggressively the compliance of these laws and regulations.
Although we continue to monitor these changes and take steps to
comply with current and new requirements, we cannot provide
assurances that we will be able to comply fully with all
requirements under current and new regulations on a timely
basis, which, in turn, may harm our business and our reputation.
In addition, we will incur additional costs associated with
complying with such current and emerging regulations, including
costs associated with establishing new policies and investing
more capital in new technologies and infrastructure. See
"Laws and Regulations."
Furthermore, as the e-commerce industry in Korea gains more
popularity and visibility among the general public, we believe
that various political organizations, non-governmental
organizations (NGOs) and special interest groups, among others,
may attempt to initiate reforms or additional guidelines that
make it more difficult for e-commerce marketplaces such as
ourselves to operate profitably in Korea.
Security risks related to online purchases, including loss
or theft of important user information, hacking and credit card
fraud and possible violations of laws relating to the
maintenance and use of sensitive information and credit card and
payment services, or other misuse of our e-commerce platforms
may harm our business and our reputation.
We are subject to regulations relating to privacy, maintenance
and use of confidential information of our users. Sales on our
website require the transmission and maintenance of sensitive
and confidential data, including national identification
numbers, bank and credit card information. Loss, hacking or
theft of sensitive data stored on our information technology
systems may occur. In
10
Table of Contents
addition, due to the high volume of transactions that occur on
our website on a daily basis, it is impracticable for us to
monitor every transaction that takes place through the use of
our platforms. Notwithstanding the best efforts of our service
quality management team to monitor and minimize, to the extent
possible, potentially fraudulent credit card transactions or
other misuse occurring through our website, such transactions
and activities may occur undetected. Also, as we do not check or
obtain signatures for credit card purchases, we may be liable
for fraudulent credit card transactions. Any such occurrence
could harm our reputation, cause users to lose confidence in our
security systems and to not make purchases on our website and
also subject us to lawsuits, sanctions, fines or other
penalties. Depending on our agreements with various credit card
companies, we share a certain portion of any losses resulting
from fraudulent credit card purchases with the credit card
issuer.
If we are unable to adapt or expand our existing
technology infrastructure to accommodate greater trading volume
and increased number of products available for sale, we may not
be able to achieve our growth objectives.
Our network and system infrastructure, including our network and
systems hardware, software and communications systems, must
support significant amounts of data, information and transaction
volume generated by the high number of buyers, sellers and
products offered on our e-commerce marketplace. In addition, our
strategy contemplates significantly growing our business in the
future. Accordingly, we must upgrade and expand our
infrastructure to accommodate the increasing activity level on
our website. Failure to upgrade our network and system
infrastructure in a timely and efficient manner may result in
system disruptions, delays, downtime and loss of data. The
occurrence of any such event will likely damage our reputation
and brand name, as well as our ability to implement effectively
our growth strategies, in particular, our strategy to increase
our user base and GMV.
Interruptions or failures of our network and systems
infrastructure, including our communications systems, could lead
to significant downtimes, interruptions and loss of data, which
could damage our reputation and brand name and harm our
business, financial condition and results of operations.
Our ability to provide a high-quality e-commerce marketplace
depends on the continuing, uninterrupted operation of our
network and systems infrastructure, including our hardware,
software and communications systems, especially given our
rapidly growing user base and transaction volume. We have from
time to time experienced disruptions in our systems for periods
ranging from a few minutes to a few hours as a result of human
and technical errors and systems overload from a significant
volume of transactions occurring over our network. No assurance
can be given that our procedures and network and system capacity
will be sufficient to prevent future slowdowns or disruptions,
or that our future growth will not necessitate future outlays to
further build-out our network and system capacity. Any such
failures, slowdowns or disruptions will likely have a material
adverse effect on our business, prospects, financial condition
and results of operations and will have a significant negative
effect on our reputation and may result in us losing users, who
may migrate to our competitors' sites.
Certain of our hardware, including computers, data servers and
other servers, are located at the Korea Internet Data Center, a
data center operated by Dacom Corporation, and the Korean
Internet Neutral Exchange, both located in Seoul, and certain
other equipment are located within our headquarters building.
Such infrastructure systems are vulnerable to damage or
interruption as a result of war, earthquakes, floods, fires,
power loss, telecommunications failures, human error and other
similar events. In addition, we maintain network connections
with certain of our registered sellers for the maintenance of
inventory and provision of customer support functions, and rely
on our network and communications infrastructure to communicate
with our delivery providers in order to provide a seamless and
efficient service to buyers and sellers. Also, we rely on the
efficient and
11
Table of Contents
uninterrupted service of various third parties, including
telecommunications companies, credit agencies and credit card
issuers, among others. Any disruptions in the operations of
these third party providers due to failures in their technology
and network connections will negatively impact our ability to
provide our services.
The frequent recurrence and persistence of network
interruptions, slowdowns or loss of critical data would likely
have a long-term negative impact on our reputation and brand
name and is likely to have a negative impact on the growth of
our user base and GMV, which is likely to have a material
adverse effect on our business, prospects, financial condition
and results of operations.
We are dependent on certain key members of our senior
management team and the loss of such personnel may have a
material impact on our ability to achieve our business
objectives, including our ability to manage our rapid growth and
successfully implement our strategic initiatives.
Our success depends heavily on retaining the services of certain
key members of our senior management team. If any one or more of
such executives leaves his position or is otherwise unable to
perform his duties for an extended period of time and we are
unable to find suitable replacement personnel in a timely and
cost efficient manner, our business may be disrupted and we may
not be able to achieve our business objectives, including our
ability to manage our rapid growth and successfully implement
our strategic initiatives. We believe that the loss of our
representative director and chief executive officer,
Mr. Young Bae Ku, who has been with us since our inception
and who has been instrumental in our ability to achieve
significant growth over the past several years, would have a
material adverse effect on our business. We do not have any
long-term employment agreements with any of our employees or
executive officers.
We must also continue to seek ways to retain and motivate all of
our other employees through various means, including through
enhanced compensation packages. In addition, we will need to
hire more employees as we continue to implement our key strategy
of building on our leading market position and expanding our
business. Competition for qualified personnel in the areas in
which we compete remains intense and the pool of qualified
candidates is limited. Our inability to attract, hire and retain
qualified staff on a cost efficient basis may have a material
adverse effect on our business, prospects, financial condition,
results of operations and ability to successfully implement our
growth strategies.
Investigation by the Korean National Tax Service of
certain sellers who list and sell products on our website may
decrease the volume of e-commerce transactions conducted on our
website.
The Korean National Tax Service, or the NTS, has recently
conducted a tax investigation of certain
e-commerce
marketplace
sellers, including some of those who sell on our website. At the
request of the NTS, we provided certain records relating to
sales transactions conducted on our website by these sellers.
Although the NTS has not begun, or announced an intent to begin,
any prosecution against us in connection with such
investigation, the NTS may at any time conduct new tax
investigations to ascertain whether e-commerce sellers,
including sellers who use our website, owe taxes, including
value-added taxes, with respect to the sales made on our website.
In addition, pursuant to the amended Presidential Decree of the
Value Added Tax Act, which will become effective on July 1,
2007, we will be required to take steps to facilitate the
collection of value-added taxes by the NTS from our sellers who
do not hold a tax ID. From July 1, 2007, any of our sellers
may designate us as his or her tax agent, delegating to us the
handling of value-added tax matters such as tax ID registration,
tax filing and tax payments, among others; provided, that,
(i) such seller sells taxable products or services through
our website 10 times or more for either the first half or
the second half of any calendar year ("Taxable
Period"), (ii) the value of such goods or services of
such seller for any Taxable Period is between
Won 6 million and Won 12 million and
12
Table of Contents
(iii) such seller does not have a stand-alone store or a
registered tax ID. We will be required to provide a list of all
of our sellers that meet the foregoing three criteria to the
NTS. With respect to those sellers whose volume was more than
Won 12 million for any Taxable Period, we are required
to instruct such sellers to register for a tax ID with the
Government and instruct them to pay any value-added taxes owed
by them.
If the Korea National Tax Office determines that we do not
qualify as a Tax-Benefit Business, we may not enjoy certain
statutory tax benefits and may be required to pay back-taxes and
statutory interest.
Under the Special Tax Treatment Control Law of Korea, a
certified venture company may be entitled to a 50% reduction in
corporate income tax generated from a "Tax-Benefit
Business," as defined in the Special Tax Treatment Control
Law, for the year in which it first generates taxable income and
for the subsequent three years (or five years for any designated
venture companies certified by the Government before
January 1, 2004), if (a) the company is certified by
the Government as a "designated venture company"
within two years from its incorporation and continues to satisfy
certain requirements, and (b) such company's business
falls under one of the categories of "Tax-Benefit
Businesses" under the Special Tax Treatment Control Law.
We were certified by the Government as a "designated
venture company" in March 2001, and after the renewal of
certification, our certification is valid until June 2008. As
part of our annual tax return process with the Korea National
Tax Office, we reported our business classification in line with
our business registration statement, as an eligible business
falling under one of the categories of "Tax Benefit
Business" under the Special Treatment Control Law. To date,
we have not received any objections from the Korea National Tax
Office regarding our claim of such tax benefit. Notwithstanding
our continued belief that we qualified for such tax benefit and
the lack of objections from the Korea National Tax Office
regarding our prior tax returns thus far, in the event that the
Korea National Tax Office audits us and determines that we were,
in fact, not entitled to such tax benefit, we may be required to
pay back-taxes in the amount applicable to such claimed
deduction and statutory interest. See "Laws and
Regulations— Laws Relating to Tax Benefits."
If we fail to adequately staff our accounting and finance
department with the appropriate complement of experienced
employees, we may be unable to improve our system of internal
controls over financial reporting so as to comply with the
ongoing reporting requirements applicable to a public company in
the United States.
We have identified significant deficiencies (as defined under
Standards of the Public Company Accounting Oversight Board
(United States)) in our system of internal control over
financial reporting. Most of these deficiencies relate to the
resources we currently have in place to meet our accounting and
financial reporting requirements, which in turn contribute to
the existence of other deficiencies related to our internal
control over financial reporting including, but not limited to,
our ability to produce financial statements in a timely and
accurate manner in accordance with U.S. GAAP. In order to
address such deficiencies, we have hired additional finance and
accounting personnel and continue to evaluate the need to add
additional resources to assist us in the preparation of our
financial statements under U.S. GAAP and to assist us in
improving our system of internal control over financial
reporting. However, there can be no assurance that such efforts
will significantly further improve our system of internal
control over financial reporting.
Beginning with the year ending December 31, 2007.
Section 404 of the Sarbanes-Oxley Act will require us to,
among other things, maintain an effective system of internal
control over financial reporting, and will require our
management to provide a certification on the effectiveness of
our internal control on an annual basis. In 2006, we continued
the preparation for compliance with Section 404 of the
Sarbanes-Oxley Act, we may identify additional deficiencies in
our system of internal control over financial reporting, and, if
so, will take corrective actions accordingly for their
remediation. We cannot assure you that we will be able to
complete the documentation, testing and,
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if appropriate, remediation work necessary to comply with
Section 404 of the Sarbanes-Oxley Act, or that we or our
independent public accountants will not identify material
weaknesses in our internal control.
The listing or sale by our users of pirated, counterfeit
or other illegal items or the improper listing and sale of
regulated items may harm our reputation and subject us to
lawsuits.
We have received in the past, and we may receive in the future,
communications alleging that certain items listed or sold by
sellers on our website infringe upon third-party copyrights,
trademarks and trade names, or other intellectual property
rights of others. Although we have sought and continue to seek
to prevent and eliminate the listings of such goods, no
assurance can be given that such goods will not be listed and
that if such goods are listed, we will not be held liable to
those parties claiming an infringement of their intellectual
property rights. Holders of intellectual property rights have
been active in defending their rights against
e-commerce
companies,
and we expect such activity to increase in the future, including
lawsuits against companies thought to have violated or infringed
upon their intellectual property rights. If we are held liable
in any such litigation brought against us in the future, we may
be subject to substantial damages.
Also, illegal items such as drugs, weapons and other regulated
or prohibited items may be listed, displayed or sold on our
website notwithstanding our efforts to prevent such items from
being listed, sold or displayed. Similarly, we are aware that
adult materials that may be subject to regulation have been
listed and may have been viewed by users and visitors who are
minors notwithstanding our efforts to limit the viewing of such
adult materials to adult users only. Also, regulated items such
as adult, alcohol and tobacco products may be sold in violation
of applicable regulations, subjecting us to potential civil,
criminal and administrative actions. We have a service quality
management team which is responsible for monitoring reports of
listing, display and sales of pirated, counterfeited, prohibited
or regulated products. Our inability to prevent such items from
being listed, displayed or sold may subject us to lawsuits,
sanctions, fines or other penalties, which is likely to
adversely affect our business and harm our reputation.
Increases in the amount of fees charged by delivery
companies, credit card fees charged by credit card issuers and
value-added tax levied by the Government may decrease the volume
of transactions which take place on our website and may
negatively impact our net income.
If delivery companies in Korea were to significantly raise
delivery rates for any reason, buyers may be less willing to
purchase goods over the Internet, choosing instead to make
purchases at department stores or other traditional retail
outlets, thus eliminating the need to pay a delivery charge. In
addition, because we do not pass on to the sellers the credit
card fees charged by credit card issuers, any increases in such
fees without a corresponding increase in our transaction fees
will have a negative impact on our net income. In addition, any
increases in value-added taxes levied by the Government could
decrease the volume of transactions on our website. Any such
developments may have a negative effect on our GMV, as well as
our ability to attract and retain users and is likely to have a
material adverse effect on our business, prospects, financial
condition and results of operations.
Interpark Corporation, which operates a competing retail
e-commerce marketplace, is our largest shareholder and may,
together with its affiliates, exercise significant control over
us and may take actions which may be adverse to our
interests.
Interpark Corporation, our largest shareholder, and its
affiliates own approximately 37.2% of our common shares. As
37.2% shareholders of our common shares, Interpark and its
affiliates may undertake various actions which may be adverse to
our interests or prevent us from taking actions beneficial to
our business. They may call for an extraordinary shareholders
meeting to approve certain actions which may be adverse to our
interests or to reject certain business decisions made
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by us by vetoing, in a shareholders meeting, certain material or
extraordinary transactions which may benefit our business,
including among others:
•
the amendment to our articles of incorporation;
•
dismissal of our directors;
•
reduction of capital;
•
merger or dissolution;
•
transfer of all or substantial part of our business;
•
acquisition of all or a part of the business of another company,
    which significantly affects our business; or
•
such other matters required to be adopted by a special
    resolution at the general shareholders meeting under the
    relevant laws and regulations or our articles of incorporation.
In addition, Mr. Ki Hyung Lee, the chairman and co-chief
executive officer of Interpark, and Mr. Sang Kyu Lee, the
co-chief executive officer of Interpark, currently serve as
members of our board of directors. Conflicts of interest could
arise between us and Interpark relating to the nature, quality
and pricing of goods and services provided to each other, any
payment of dividends by us to our shareholders and general
issues relating to achieving our strategic initiatives as well
as maintaining or increasing our profitability. Such conflicts
may be resolved in a manner unfavorable to us in part due to the
significant control which Interpark may exercise over us, and
may negatively impact our ability to implement our strategic
initiatives in a timely manner, our business, prospects,
financial condition and results of operations.
Furthermore, Interpark operates a competing retail e-commerce
marketplace and Interpark or any of its subsidiaries and
affiliates may broaden their businesses and increase the range
of products and services that they offer, particularly into
businesses that compete directly with those which we operate,
which may negatively affect our business, prospects, financial
condition and results of operations.
Our industry has historically experienced seasonality,
which we expect to continue and which could cause our operating
results to fluctuate.
Due to the significant growth of our business in the past three
years, we are not yet able to ascertain with a degree of
certainty the impact of seasonality on our financial condition
and results of operations. We believe that as our growth rate
slows, the seasonality effects will become more apparent, and we
expect those effects to be similar to that of other retailers in
Korea, which generally have higher sales volume in the fourth
quarter of each year.
Our success is tied to the continued use of the Internet
for shopping and the reliability and adequacy of the Internet
infrastructure in Korea. If consumers are unwilling to use the
Internet to purchase goods for any reason, we may not be able to
achieve our desired revenue growth.
Our business is substantially dependent upon the continued use
of the Internet as an effective medium of business and
communication by consumers. Our success will depend, in large
part, upon third parties maintaining the Internet infrastructure
to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet
access and services. Also, Internet use may not continue to
develop at historical rates and consumers may not continue to
use the Internet and other online services as a medium for
commerce. The demand for and acceptance of products sold over
the Internet are highly uncertain. Failures by some
e-commerce
retailers to
meet consumer demands could result in consumer reluctance to use
the Internet as a means for commerce. The decreased use of the
Internet for any reason is likely to have a negative
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impact on our GMV, which will have a material adverse effect on
our financial condition and results of operations.
We incur increased costs as a result of being a public
company in the United States.
We incur legal, accounting and other expenses that we did not
incur prior to our listing on the Nasdaq, including costs
associated with our public company reporting requirements under
the Securities Exchange Act of 1934, as amended. We incur costs
associated with recently adopted corporate governance
requirements, including requirements under the Sarbanes-Oxley
Act as well as new rules implemented by the Securities and
Exchange Commission and the NASD, including, in particular, the
need to establish an enhanced system of internal control over
financial reporting. These rules and regulations increase our
legal, accounting and financial compliance costs and make
certain corporate activities more time-consuming and costly.
These new rules and regulations make it more difficult and more
expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. We cannot predict or
estimate the amount of additional costs we may incur or the
timing of such costs or the impact such costs may have on our
results of operations.
Risks Related to Intellectual Property
We may be subject to intellectual property infringement
claims which may divert significant resources, require us to pay
monetary damages and prevent us from using certain technology
that we currently use in our business.
The
e-commerce
industry
requires the use of significant technology, requiring us to
either develop internally or obtain and license patents,
copyrights, trademarks, service marks, trade secrets and other
similar intellectual property rights from third parties. We may
be subject to claims with respect to intellectual property in
the future, which, whether such claims have merit or not, may
divert significant resources, both financial and managerial, to
defending such claims. If any such claims are determined against
us, we may be enjoined from using certain technologies, may be
required to pay monetary or civil damages and may be required to
pay royalty or other payments for the use of technology. No
assurance can be given that we could develop or obtain other
alternative technology, that we could obtain rights to continue
to use such technology or that the amounts required to be paid
in monetary or civil damages or in the form of higher royalty
payments will not have a material adverse effect on our
business, financial condition and results of operations.
We rely on intellectual property right protection for our
trademarks, service marks and other intellectual property rights
and if such rights are not adequately protected, we may not be
able to successfully build our brand.
We seek to protect our intellectual property rights through the
use of patents, copyrights, trademarks, service marks, trade
secrets and other similar intellectual property protection and
we regard our ability to protect such rights as being critical
to our reputation, business and prospects. We have registered,
and have the exclusive right to use our domain names,
www.gmarket.co.kr and www.gmarket.com, and have secured the
rights to use 50 other variations of our domain names for a
number of other markets, including Japan, China, Taiwan, India,
France, Italy and Mexico. We have also obtained eight business
model patents in Korea. Our efforts in protecting our
proprietary rights may not be effective in preventing others
from using and infringing upon our rights, which may harm our
reputation, business, financial condition and results of
operations. Monitoring unauthorized use of our proprietary
rights is difficult, time consuming and expensive. In addition,
if we discover a violation of any of our rights, we must seek to
enforce our rights in various tribunals and the courts, which
would be costly and divert management resources from our
business.
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The Korea Intellectual Property Office rejected our service mark
application for the exclusive use of our trade name in both
Korean and English language forms on the grounds that they are
simple and common marks, not eligible for registration as
service marks under the Korean Trademark Act. We are appealing
such finding with various authorities and may ultimately seek
redress in court. Although the final outcome is unclear at this
time, if our applications for the service marks are not
accepted, we may not have the exclusive right to such names
under the Korean Trademark Act. However, although no assurance
can be given that we will ultimately prevail on the merits,
pursuant to the Korean Unfair Competition Prevention and Trade
Secret Protection Act, we may be able to pursue an enjoinment
action against others who attempt to use our trade name in the
future on the grounds that our trade names are well-known to the
general public in Korea. Our inability to stop third parties
from using our brand names may hurt our reputation, impede our
ability to improve our brand name recognition and harm our
business.
Risks Related to Doing Business in Korea
Our business may be adversely affected by developments
affecting the Korean economy.
We have historically generated all of our revenues from
operations in Korea. Our future performance will depend on
Korea's future economic growth. Adverse developments in
Korea's economy as a result of various factors, including
economic, political and social conditions in Korea, other
countries in Asia or the United States may have an adverse
effect on consumer spending which may not allow us to achieve
our desired revenue growth.
The economic indicators in the past few years have shown mixed
signs of recovery and uncertainty, and future recovery or growth
of the economy is subject to many factors beyond our control.
Factors that may impact the Korean economy include, among
others, the financial performance of Korean conglomerates, or
chaebols, and their suppliers, and their potential adverse
impact on the Korean economy, including as a result of recent
investigations relating to unlawful political contributions by
chaebols, loss of investor confidence arising from corporate
accounting irregularities and corporate governance issues at
certain chaebols, lower levels of consumer confidence and a
slowdown in consumer spending, an unanticipated deterioration of
consumer credit quality, deterioration of the financial health
and liquidity of Korean financial institutions and the financial
sector in general, adverse movements in interest rates, foreign
exchange rates and commodity prices, such as oil and other
natural resources, economic, political and social instability of
certain of Korea's largest trading partners, including, in
particular, China, the United States and Japan, or deterioration
in economic or diplomatic relations between Korea and its
trading partners or allies, including deterioration resulting
from trade disputes or disagreements in foreign policy, the
outbreak of the bird flu or other similar contagion or pandemic,
the occurrence of natural disasters, social and labor unrest and
political uncertainty or increasing strife among or within
political parties in Korea. Also, adverse geo-political
developments and the outbreak of armed conflict may have an
overall negative impact on the world's economy and on the
Korean economy. Any such developments will likely have a
material adverse effect on our business, prospects, financial
condition and results of operations.
Increased tensions with North Korea could have an adverse
effect on us and the price of the ADSs.
Relations between Korea and North Korea have been tense over
most of Korea's history. The level of tension between Korea
and North Korea has fluctuated and may increase or change
abruptly as a result of current and future events, including
ongoing contacts at the highest levels of the governments of
Korea and North Korea and increased hostility between North
Korea and the United States. In December 2002, North Korea
removed the seals and surveillance equipment from its Yongbyon
nuclear power plant and evicted inspectors from the United
Nations International Atomic Energy Agency, and has reportedly
resumed activity at its Yongbyon power plant. In January 2003,
North Korea announced its intention to withdraw from the Nuclear
Non-Proliferation Treaty,
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demanding that the United States sign a non-aggression pact as a
condition to North Korea dismantling its nuclear program. In
August 2003, representatives of Korea, the United States, North
Korea, China, Japan and Russia held multilateral talks in an
effort to resolve issues relating to the nuclear weapons program
of North Korea. In February 2005, North Korea announced that it
possessed nuclear weapons. In September 2005, North Korea agreed
to end its nuclear weapons program, and the six participating
nations signed a draft preliminary accord pursuant to which
North Korea agreed to dismantle its existing nuclear weapons,
abandon efforts to produce new future weapons and readmit
international inspectors to its nuclear facilities. In return,
the other five nations participating in the talks, China, Japan,
Korea, Russia and the United States, expressed willingness to
provide North Korea with energy assistance and other economic
support. The six parties agreed to hold further talks in
November 2005. However, one day after the joint statement was
released, North Korea announced that it would not dismantle its
nuclear weapons program unless the United States agreed to
provide civilian nuclear reactors in return, a demand that the
United States rejected.
In July 2006, North Korea conducted several missile tests, which
increased tensions in the region and raised strong objections
from Japan and the United States. In response, the United
Nations Security Council passed a resolution condemning such
missile tests and banning any United Nations member state from
conducting transactions with North Korea in connection with
material or technology related to missile development or weapons
of mass destruction. On October 9, 2006, North Korea
announced that it had successfully conducted a nuclear test,
which increased tensions in the region and raised strong
objections from Korea, the United States, Japan, China and other
nations worldwide. In response, the United Nations Security
Council passed a resolution which prohibits any United Nations
member state from conducting transactions with North Korea in
connection with any large-scale arms and material or technology
related to missile development or weapons of mass destruction,
providing luxury goods to North Korea, and imposes freezing of
assets and an international travel ban on persons associated
with North Korea's weapons programs, and calls upon all
United Nations member states to take cooperative action,
including through inspection of cargo to or from North Korea.
In February 2007, the six parties entered a new accord whereby
North Korea would begin to disable its nuclear facilities in
return for fuel oil and aid. We cannot assure you that these
recent events constitute a final agreement on North Korea's
nuclear program, including critical details such as
implementation, timing and verification, or that North Korea
will fulfill its obligations under such accord.
In addition, in October 2004, the United States proposed plans
to withdraw approximately one-third of the 37,500 troops
currently stationed in Korea by the end of 2008. However,
details regarding the timing and other aspects of the proposed
reduction in U.S. troops are not yet finalized and talks
between the governments of the United States and Korea are
ongoing.
Any further increase in tensions, resulting for example from a
break-down in contacts, test of long-range nuclear missiles,
coupled with continuing nuclear programs by North Korea or an
outbreak in military hostilities, could adversely affect our
business, prospects, financial condition and results of
operations and could lead to a decline in the market value of
our ADSs.
Fluctuations in the exchange rate between the Won and the
Dollar will affect our results of operations in Dollars and the
price of our ADSs.
Currently, all of our revenues and expenses are denominated in
Won. Fluctuations in the exchange rate between the Won and the
Dollar will affect our results of operations in Dollars and the
price of our ADSs. Fluctuations in the exchange rate between the
Won and the Dollar will also affect the amounts a registered
holder or beneficial owner of ADSs will receive from the
depositary in respect of dividends in Dollar terms, if any,
which will be paid in Won to the depositary and
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converted by the depositary into Dollars. For historical
exchange rate information, see "Exchange Rates."
Your ability to deposit or withdraw common shares
underlying the ADSs into and from the depositary facility may be
limited, which may adversely affect the value of your investment
in our ADSs.
Under the terms of our deposit agreement, holders of our common
shares may deposit such shares with the depositary's
custodian in Korea and obtain ADSs, and holders of our ADSs may
surrender the ADSs to the depositary and receive our common
shares. However, to the extent that a deposit of common shares
exceeds the number of common shares initially deposited by us
for the issuance of ADSs (including deposits in connection with
the initial offering and all subsequent offerings of ADSs and
stock dividends or other distributions relating to ADSs), such
common shares will not be accepted for deposit unless
(i) our consent with respect to such deposit has been
obtained or (ii) such consent is no longer required under
Korean laws and regulations or under the terms of the deposit
agreement. We have consented to any such deposit which exceeds
the number of common shares to be deposited by us as mentioned
above, so long as such deposit would not violate our articles of
incorporation or applicable Korean law.
Under the terms of the deposit agreement, no consent is required
for the deposit of common shares obtained through a dividend,
free distribution, rights offering or reclassification of such
shares. In addition, we do not currently have any plans to list
our common shares on any stock exchange or organized trading
market in Korea, nor do we have any obligation to do so, and, as
a result, if a holder surrenders ADSs and withdraws common
shares, such holder may not be able to sell his shares, other
than in an off-market transaction.
Investors in our ADSs may not have preemptive rights and
may suffer dilution.
You may not be able to exercise preemptive rights or participate
in rights offerings and may experience dilution of your
holdings. The Korean Commercial Code and our articles of
incorporation require us to offer shareholders the right to
subscribe for new common shares in proportion to their existing
ownership percentages whenever new common shares are issued,
except under certain circumstances as provided in our articles
of incorporation. Under our articles of incorporation, we may
issue new shares up to 60% of our total outstanding shares
pursuant to a board resolution to persons other than existing
shareholders only:
•
if we offer subscription for new shares or issue them to
    subscribers in accordance with the Securities and Exchange Act
    of Korea;
•
if we issue new shares by general public offering by a
    resolution of the board of directors in accordance with the
    Securities and Exchange Act of Korea;
•
if we preferentially issue new shares to members of our employee
    stock ownership association in accordance with applicable laws
    and regulations;
•
if we issue new shares upon the exercise of stock options in
    accordance with applicable laws and regulations;
•
if we issue new shares pertaining to the issuance of any
    depository receipts;
•
if we issue new shares to entities other than our shareholders,
    such as domestic or foreign financial institutions or foreign
    investors, for the purposes of long-term development or funding
    necessity; or
•
if we issue new shares in order to achieve a business purpose,
    including, but not limited to, introduction of new technology or
    improvement of our financial structure.
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Accordingly, if we issue new shares to persons other than our
shareholders based on such exception, a holder of our ADSs will
experience dilution of such holdings. If none of the above
exceptions is available, we will be required to grant preemptive
rights when issuing additional common shares under Korean law.
However, under U.S. law, we would not be able to make those
rights available in the United States unless we register the
securities to which the rights relate or an exemption from the
registration requirements of the Securities Act is available.
Under the deposit agreement governing the ADSs, if we offer
rights to subscribe for additional common shares, the depositary
under the deposit agreement, after consultation with us, may
make such rights available to you or dispose of such rights on
behalf of you and make the net proceeds available to you or, if
the depositary is unable to take such actions, it may allow the
rights to lapse with no consideration to be received by you. The
depositary is generally not required to make available any
rights under any circumstances. We are under no obligation to
file a registration statement under the Securities Act to enable
you to exercise preemptive rights in respect of the common
shares underlying the ADSs, and we cannot assure you that any
registration statement would be filed or that an exemption from
the registration requirement under the Securities Act would be
available. Accordingly, you may not be entitled to exercise
preemptive rights and may thereby suffer dilution of your
interest in us.
In connection with the purchase of our common shares by Yahoo!
Korea from A. Bohl Praktijk B.V., a Dutch limited liability
company, or DutchCo, Yahoo! Korea entered into a shareholders
agreement with us, Interpark Corporation and DutchCo, which
provides for, among other things, preemptive rights to Yahoo!
Korea even in circumstances when certain other of our
shareholders would not be entitled to such rights. DutchCo is an
investment vehicle of Oak Investment Partners IX, LP and
its affiliated funds, which are managed by Oak
Associates IX, LLC, as the general partner of the funds.
The sale or availability for sale of substantial amounts
of our ADSs could adversely affect their market price.
Interpark Corporation, and its affiliates own approximately
37.2% of our ADSs. Yahoo! Inc., and its affiliates own
approximately 10.1% of our ADSs. If any of our major
shareholders, including Interpark Corporation or Yahoo! Inc.,
and their respective affiliates, decides to sell substantial
amounts of our ADSs in the public market or if there is a
perception of their intent to sell the market price of our ADSs
could be materially and adversely affected and could materially
impair our future ability to raise capital through offerings of
our ADSs.
The public shareholders of our ADSs may have more
difficulty protecting their interests than they would as
shareholders of a corporation incorporated in the United
States.
Our corporate affairs are governed by our articles of
incorporation and by the laws and regulations governing Korean
corporations. The rights and responsibilities of our
shareholders and members of our board of directors under Korean
law may be different from those that apply to shareholders and
directors of a corporation incorporated in the United States.
While the facts and circumstances of each case will differ, the
duty of care required of a director under Korean law may not be
the same as the fiduciary duty of a director of a corporation
incorporated in the United States. Although the concept of
"business judgment rule" exists in Korea, there is
insufficient case law or precedent to provide guidance to the
management and shareholders as to how it should be applied or
interpreted in a particular circumstance. Holders of our ADSs
may have more difficulty protecting their interests against
actions of our management, members of our board of directors or
controlling shareholder than they would as shareholders of a
corporation incorporated in the United States. In addition, the
standard of disclosure for Korean companies may be materially
less onerous than those applicable to companies incorporated in
the United States, making our public disclosure less timely or
less comprehensive than those made by companies incorporated in
the United States.
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As an ADS holder, you will not be treated as our
shareholder and you may not be able to exercise voting
rights.
As a holder of ADSs, you will have rights as a holder of ADS.
Such rights will be determined only in accordance with the terms
of the deposit agreement which is governed by New York law and
are different than those of a holder of our common shares, which
are governed by our articles of incorporation and the Korean
Commercial Code. The depositary will be the shareholder of the
common shares underlying your ADSs and upon our request, the
depositary will notify you of shareholders' meetings and
arrange to deliver our voting materials to you only when we
deliver them to the depositary with sufficient time for the
depositary to deliver them to you under the terms of the deposit
agreement. Upon receipt of the necessary voting materials, you
may instruct the depositary to vote the number of common shares
your ADSs represent and the depositary will endeavor to vote the
underlying common shares in accordance with the instruction. If
there is a delay, we cannot ensure that you will receive voting
materials or otherwise learn of an upcoming shareholders'
meeting in time to ensure that you may instruct the depositary
to vote your shares. In addition, the depositary and its agents
are not responsible for failing to carry out voting instructions
or for the manner of carrying out voting instructions. As a
result, you may not be able to exercise your right to vote, and
you may lack recourse if your common shares are not voted as you
requested.
You would not be able to exercise dissent and appraisal
rights unless you have withdrawn the underlying common shares
from the depositary facility and become our direct
shareholder.
In some limited circumstances, including the transfer of the
whole or any significant part of our business, our acquisition
of a part of the business of any other company having a material
effect on our business, our merger or consolidation with another
company, dissenting shareholders have the right to require us to
purchase their shares under Korean law. However, if you hold our
ADSs, you will not be able to exercise such dissent and
appraisal rights unless you have withdrawn the underlying common
shares from the depositary facility and become our direct
shareholder prior to the record date for the shareholders'
meeting at which the relevant transaction is to be approved.
We may amend the deposit agreement and the ADRs without
your consent for any reason and, if you disagree, your option
will be limited to selling the ADSs or withdrawing the
underlying common shares.
We may agree with the depositary to amend the deposit agreement
and the ADRs, without your consent for any reason. If an
amendment adds or increases fees or charges (except for charges
incurred in connection with foreign exchange control
regulations, taxes and other governmental charges, delivery and
other similar expenses) or which shall otherwise materially
prejudice any substantial right of ADS holders, it will not
become effective for outstanding ADRs until 30 days after
the depositary notifies ADS holders of the amendment. At the
time an amendment becomes effective, you are considered, by
continuing to hold your ADSs, to agree to the amendment and to
be bound by the ADRs and the deposit agreement as amended. If
you do not agree with an amendment to the deposit agreement or
the ADRs, your option is limited to selling the ADSs or
withdrawing the underlying common shares. No assurance can be
given that the sale of ADSs would be made at a price
satisfactory to you in such circumstances. In addition, as of
the date hereof, the common shares underlying the ADSs are not
listed on any stock exchange and we do not currently have any
plans to list our common shares on any stock exchange or
organized trading market, nor do we have any obligation to do
so. Your ability to sell the underlying common shares following
withdrawal and the liquidity of the common shares may therefore
be limited.
You may be subject to Korean withholding tax.
We will deduct Korean withholding tax from any dividends paid to
you at a rate of 27.5% (including resident surtax). If you are a
qualified resident in a country that has entered into a tax
treaty with Korea, you may qualify for a reduced rate of Korean
withholding tax with regard to any
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dividends paid. For example, if you are a qualified resident of
the United States for purposes of the income tax treaty between
the United States and Korea, and you are the "beneficial
owner" of a dividend, generally, a reduced withholding tax
at the rate of 16.5% (including resident surtax) will apply,
which may be further reduced to 11.0% (including resident
surtax) if you meet certain other conditions.
Under Korean tax law, as a general rule, in the absence of an
applicable tax treaty which exempts or reduces the rate of tax
on capital gains, capital gains earned by non-residents upon
transfer of our common shares are subject to Korean withholding
tax at the lesser of 11.0% (including resident surtax) of the
gross realization proceeds or, subject to production of
satisfactory evidence of acquisition cost and transfer expenses
of the ADSs, 27.5% of the net capital gains. As for the ADSs,
capital gains earned by a non-resident holder from the transfer
of ADSs outside Korea are not subject to Korean taxation,
irrespective of whether or not such holder has a permanent
establishment in Korea.
You may have difficulty bringing an original action or
enforcing any judgment obtained outside Korea against us, our
directors and executive officers.
We are organized under the laws of Korea, and the majority of
our directors and all of our executive officers reside in Korea.
Accordingly, all or a significant portion of our assets and the
assets of such persons are located outside of the United States.
As a result, it may not be possible for you to effect service of
process within the United States upon these persons or to
enforce against them or us court judgments obtained in the
United States that are predicated upon the civil liability
provisions of the federal securities laws of the United States
or of the securities laws of any state of the United States. We
have, however, irrevocably appointed an agent in New York to
receive service of process in any proceedings in the State of
New York relating to our ADSs. Notwithstanding the foregoing,
there is doubt as to the enforceability in Korea, either in
original actions or in actions for enforcement of judgments of
United States courts, of civil liabilities predicated on the
federal securities laws of the United States or the securities
laws of any state of the United States.
ITEM 4.
INFORMATION ON THE COMPANY
4.A.
History and Development of the Company
We were incorporated as a company with limited liability under
Korean law on April 4, 2000 under the legal name of
GOODSDAQ, Ltd., and the commercial service of providing an
e-commerce market place for sellers and buyers was launched. Our
legal name was changed to Gmarket Inc. on April 10, 2004.
In December 2004, we received an equity investment from DutchCo
in exchange for preferred stock in our company. In June 2006,
Yahoo! Korea purchased 10% of our shares (currently 9.1%) from
DutchCo, and we were listed on Nasdaq with an initial public
offering price of US$15.25.
Our principal corporate offices are located at 8th floor,
LIG Tower 649-11 Yeoksam-Dong, Gangnam-Gu, Seoul, Korea 135-912.
Our telephone number is (82-2) 6277-6700. Our agent for service
of process in the United States is CT Corporation System,
located at 111 8th Avenue, New York, New York 10011. CT
Corporation System's telephone number is
(206) 894-8940.
Until the third quarter of 2003, we operated as an online
retailer, selling products from our inventory, and as an
e-commerce marketplace, where various sellers could list and
sell their products. In the third quarter of 2003, we began
transitioning exclusively to an e-commerce marketplace. By
December 31, 2004, we sold all of our inventory and since
then, have been generating revenues exclusively from our
e-commerce marketplace.
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4.B.
Business Overview
We are a leading retail e-commerce marketplace in Korea offering
buyers a wide selection of products at competitive prices and
sellers a comprehensive and flexible sales solution. Our
e-commerce
marketplace
is highly scalable and facilitates the sale of products in small
or large quantities to a large number of potential buyers in a
convenient, cost effective and secure manner. We derive our
revenues primarily from transaction fees on the sale of products
on our website as well as from advertising fees and others. Our
e-commerce marketplace is located at www.gmarket.co.kr.
We believe we have developed an established and well-known brand
name in Korea as evidenced by both our leading market position
and rapid growth. We believe we are a leading retail e-commerce
marketplace in Korea based on gross merchandise value, or GMV,
which represents the total value of all goods sold on an
e-commerce marketplace. Further, we believe we are currently a
leader in Korea in terms of monthly unique visitors among
e-commerce retailers. For the year ended December 31, 2006,
we had GMV of Won 2.27 trillion (US$2.45 billion) compared
to total online retail sales in Korea of Won 13.46 trillion
(US$14.55 billion). From January 1, 2004 through
December 31, 2006, our GMV has grown 116% per year on a
compounded annual basis, reaching a GMV of Won
245.09 billion (US$264.85 million) for the month of
December 2006. From January 1, 2004 through
December 31, 2006, average monthly unique visitors to our
website has grown 37% per year on a compounded annual basis,
reaching approximately 18.4 million monthly unique visitors
for the month of December 2006, and our registered users have
grown 82% per year on a compounded annual basis during the same
period, with over 10.9 million registered users as of
December 31, 2006. No assurance can be given, however, that
such market position and growth rate can be sustained. See
"Risk Factors."
We believe our rapid growth is attributable to our ability to
facilitate interaction among a growing critical mass of buyers
and sellers. We believe sellers, whether they are small
businesses, online merchandisers, large manufacturers or
individuals, are attracted to our website for our cost
effective, end-to-end sales and marketing channel and access to
a broad audience of buyers. Sellers are offered flexible listing
options utilizing our five distinct trading platforms and other
extensive services, including our proprietary Gmarket Sales
Manager software program, or GSM program, training and customer
support and delivery services. We believe buyers are attracted
to our website as we provide an entertaining and secure shopping
environment with more than three million products currently
available for sale in 30 product categories at competitive
prices. Products listed for sale on our website include apparel,
beauty products, computers, electronics, furniture and jewelry
and most are coupled with comprehensive product information,
including pictures, product descriptions and customer reviews
and commentary. In addition, our payment and delivery tracking
systems provide buyers the assurance that their payment is
secure and that the product will be delivered in a timely manner.
Our total revenues increased by 119.1% to Won
154.13 billion (US$166.56 million) in the year ended
December 31, 2006 from Won 70.34 billion in the year
ended December 31, 2005. We recorded a net income of Won
16.28 billion (US$17.59 million) in the year ended
December 31, 2006 compared to a net income of Won
5.09 billion in 2005 and net losses of Won
1.44 billion in 2004.
Our Industry and Opportunity
Korea is one of the most advanced countries in the world in
terms of the percentage of Internet users and broadband Internet
penetration rate. According to the Korea Network Information
Center, the number of Internet users in Korea reached
34.1 million as of December 31, 2006, or approximately
74.8% of Korea's total population aged six years or older.
In addition, in June 2006, Korea had one of the highest
broadband Internet penetration rates among the member countries
of the Organization for Economic Co-operation and Development,
with approximately 26.4 broadband
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subscribers per 100 inhabitants. The popularity of the Internet
and high broadband Internet penetration rate have allowed
companies in Korea to generate revenues from a variety of
services over the Internet, including e-commerce, online
advertising, online gaming, video-on-demand and other multimedia
entertainment services. We believe factors contributing to the
commercialization of Internet services in Korea include the
following:
•
high computer penetration in the household, workplace and
    Internet cafes;
•
high broadband Internet penetration rate, which permits richer
    user experience and provision of a broader range of services
    than is possible with slower, dial-up Internet connections;
•
secure Internet environment, including telecommunications
    networks and systems, which helps promote consumers'
    confidence in online transactions;
•
advanced electronic or other payment systems, including credit
    card, bank transfer and mobile banking systems; and
•
the Korean government's continued focus and support to
    improve the Internet and communications infrastructure.
The Internet has emerged as a popular medium for conducting
commercial transactions in Korea, in particular for retail
e-commerce transactions. The ability to reach a large number of
customers at a relatively low cost has made retail e-commerce an
attractive sales and marketing channel. According to the Korea
National Statistical Office, there were 4,531 online shopping
malls that constituted the retail e-commerce industry in Korea,
accounting for a total GMV of approximately Won 13.5 trillion
for the year ended December 31, 2006.
The evolution of the retail e-commerce industry in Korea is
similar to that in the United States. The purchase and sale of
goods between and among consumers and retailers have, until
recently, been conducted at retail shops, department stores and
discount stores. For buyers, these forums generally require
face-to-face interactions and significant amount of time and
effort in researching product attributes, product availability
and prices. For sellers, such forums generally involve higher
real estate, labor and inventory costs, with potential sales
being limited by the number of outlets as well as hours of
operation. We believe the Internet offers the opportunity to
provide an alternative sales and marketing channel for sellers
to reach a large number of buyers at a relatively low cost and
without maintaining a physical store.
Our Website
Our website is located at www.gmarket.co.kr and is available 24
hours a day, seven days a week other than a few hours during the
week when our website is shut down for routine maintenance and
service. GMV for the three months ended March 31, 2007 was
Won 722.98 billion (US$781.27 million). As of
March 31, 2007, we had over 11.7 million registered
users, having added over 780,000 new users during the last three
months ended March 31, 2007. Our website is organized into
various product groupings and categories. Products listed for
sale are accompanied by photographs in multiple sizes, summary
descriptions, user ratings, customer comments and reviews,
together with discounts or other promotions offered on the
products, if any. Our website also has an easy-to-use search
engine, which allows customers to find specific products quickly
and easily.
Our GSM program, which is available for download on our website
at no charge, is the backbone of our comprehensive sales
solutions. Using this proprietary software program, sellers can
conveniently manage the entire sales process online in one
central location, from listing products, monitoring inventory
levels, tracking delivery status and returned products, managing
customer contact/communication, requesting pick up from delivery
providers, among others. We believe one unique feature of the
GSM program is it allows sellers to upload listings for multiple
items with minimal effort, which saves a significant amount of
time. Additionally, sellers may change the
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quantity and price of listed products quickly and easily, which
provides them the flexibility to adjust to changing market
conditions. For certain of our larger sellers, the GSM program
allows a direct link to their inventory management programs, so
that such sellers can more effectively monitor their inventory
levels as sales occur. Additionally, using the GSM program,
sellers can purchase keyword search terms and other premium
listing services. Sellers receive up-to-date news and
information from us on new services and product categories,
among others. Sellers can view frequently asked questions and
other helpful articles posted by us and others on the sales
process, including information on credit card payments and tax
statements.
We strongly encourage and facilitate the free flow and exchange
of information regarding goods, consumer trends and other
information which may be useful to buyers and sellers through
various bulletin boards and consumer comments sections available
on our website. We believe the active sharing of information and
experiences by users fosters a sense of community and
ultimately, customer loyalty. Sellers, buyers and other users
can post product reviews, rankings and commentary. We offer an
online magazine, "Shopping Webzine," where our users
and other members of the Internet community can publish their
reviews regarding sellers and products, and contribute general
interest articles or other commentary regarding fashion and
other topics. We also offer a "Shop Together" feature,
whereby Gmarket registered users can recommend products to each
other. To encourage participation in the community, we provide
contributors with coupons and reward points, among other
benefits, to be used towards purchases.
Products Offered on Our Website
The number of products listed on our website and product
groupings has grown significantly over the past several years.
Products are broadly organized into the following six product
groupings and 30 product categories:
Computers/ Electronics
Fashion
Child Care/ Food
• computers/ games
• consumer electronics/ cooking appliances/ home
    electronics/ audio electronics
• large kitchen appliances/ televisions/ air
    conditioners
• mp3 players/ mobile phones/ digital cameras
• used/out-of-season products
• women's clothing/
    undergarments
• men's clothing/ casual wear/ suits
• luxury goods/ brand name/ designer clothing
• shoes/ bags/ wallets/ belts
• jewelry/watches/ accessories
• maternity/ baby care
    products/ baby carriages
• children's clothing/ shoes/ bags
• toys/ children's books/ educational kits
• fresh products/ prepared foods/ produce, fish and
    meat
• health foods/ processed foods/ groceries
Beauty/ Sporting Goods/
Automobile Accessories
Furniture/ Health/ Living
Travel/ Leisure
• cosmetics/ beauty
    products/ weight management
• golf/ mountain hiking/ skiing/ fishing gear
• fitness/ leisure sports/ hobbies
• exercise apparel/ shoes
• automobile parts and accessories
• home/ kitchen/ storage/
    bath
• office supplies/ office products/ industrial
    supplies
• health care/ pets/ musical instruments/ adult
• furniture/ do-it-yourself items
• bedroom furnishings/ home decorations
• books/ music/ DVD
• flower/ hobby/ gifts/ special event items
• travel reservations/ leisure/ restaurant
    reservations/ concert tickets
• insurance/ used cars/ Digital Voucher Market
• eMart/ Interpark Mart
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We update our product groupings and categories from time to
time, in order to make the shopping experience more convenient
and efficient. Such groupings currently include "new
listings," "most popular items" and
"today's specials."
We recently introduced our Digital Voucher Market, which allows
service providers such as restaurants, beauty salons and health
clinics, among others, to list and sell their services on our
website in the form of digital vouchers to be redeemed by
purchasers.
The Registration Process, Product Listing and Sale
The Registration Process
All sellers must register with us while buyers may register or
log on as a guest. Individual buyers, whether they register or
log on as a guest, must provide their name and national
identification number, which identifies their age and sex. We
send the name and the national identification number to a third
party credit agency to confirm that the name and the national
identification number match and confirm that certain other
information provided matches the record on file for such person.
Business buyers must submit to us their trade name, the names of
their corporate representatives, their tax office registration
number, a copy of their bank account passbook and a copy of
their standard terms and conditions of sale. All users must
agree to our user agreement, which sets forth the terms and
conditions for the use of our website, including the timing and
method of payment, the types of goods that cannot be listed,
delivery terms and return policies. The agreement also requires
that users generally indemnify us for various matters, including
for claims, damages or liabilities brought by third parties
against us in connection with the listing and sales of goods on
our website.
As of March 31, 2007, we had over 11.7 million
registered users. We have a diverse base of registered sellers,
consisting of small retailers, large merchandisers, other
business sellers and individuals. We currently rank our
registered sellers on a monthly basis into four levels: power,
superior, normal and poor. Power and superior rankings are
posted on our website. A seller is assigned a ranking depending
on several factors such as the aggregate number of successful
sales the seller has recorded with us since registration and
during the immediately preceding month, the percentage of
returned goods for reasons attributable to the seller's
non-performance or error, cancelled auctions and the achievement
of minimum customer satisfaction levels.
Although we do not rank our buyers, we reward our repeat buyers
by offering memberships in loyalty discount programs. We may
grant discount coupons to registered users who accumulate
loyalty points. We also offer to buyers membership to our
"Zero Margin Club" which entitles buyers to purchase
eligible products at a price less than that offered to
non-members as we forego up to 3% of our transaction fees.
Membership fees depend on the membership term.
Product Listing and Sale
Products are listed for sale on our website using our GSM
program. The sellers choose from one of our 30 product
categories and various subcategories to list their products. The
sellers input information on the product, including textual
descriptions and photographs and often provide hyperlinks to
other websites. Sellers can elect to use one of our value-added
services, such as banner and keyword search advertising, Star
Shop or Seller's Shop, for an additional fee. See
"—Value-Added Services." If sellers have any
questions or technical issues, they are able to communicate with
us directly online, call our customer service department or send
us emails or instant messages. See "—Customer
Service."
We filter all listings through a database containing certain
words and phrases in order to prevent the listing of illegal or
prohibited products. Our filter is not completely successful and
certain of these items may be listed. We conduct random searches
to identify such listings, and any seller found to have listed
such products is prohibited from listing with us in the future.
See "Risk
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Factors—The listing or sale by our users of pirated,
counterfeit or illegal items or the improper listing and sale of
regulated items may harm our reputation and subject us to
lawsuits." We update our restricted word database from time
to time as the legal and regulatory environment and requirements
change. We conduct random checks of listed products to review
the product descriptions for accuracy and confirm that the
products themselves, or the sale of the products, do not violate
applicable laws and regulations, including trademark and
copyright laws.
Currently, our website offers five distinct trading platforms,
consisting of the following:
•
Fixed Price.
Allows potential buyers to purchase listed
    products at a fixed price, without waiting to bid in an auction
    or negotiating with sellers.
•
Fixed Price with Options.
Similar to our fixed price
    trading platform except the sellers elect to link the product to
    one or more discount or donation features. Sellers may choose to
    include a discount feature to allow buyers to use online
    coupons, stamps or loyalty points to reduce the purchase price
    or to receive free delivery, among other features. If sellers
    have elected to link the product to a charity under our donation
    shopping program, a certain portion of the purchase price is
    donated to such charity.
•
Negotiation.
Buyers and sellers negotiate directly with
    each other online to reach an agreed upon price.
•
Group Buying.
Potential buyers can aggregate their
    purchases, which allows the group to achieve high volume sale
    discounts, while allowing sellers to sell a large quantity of
    goods in a single transaction. Recently, sellers have been using
    this trading platform as a marketing tool and have often sold
    items at the high volume discount rate to all the buyers who
    participate in the group buying effort, regardless of the
    quantity of goods purchased.
•
Auction.
Sellers set a minimum opening price for bids and
    the duration of the auction period. The highest bid above the
    minimum price at the end of the auction period "wins"
    the bid. We obtained a business model patent in Korea in
    February 2006 for a variant of the straight auction called
    "random drawing auction." Under the random drawing
    auction format, buyers place bids within an acceptable range as
    specified by the seller, and the winning bid is selected by
    reference to how close the bid is to a specific value generated
    at random by our system.
We believe these trading platforms engage both sellers and
buyers in a trading experience that is more fulfilling and
personal than would be possible under a traditional buy-sell
transaction. We also believe certain categories of goods are
better suited for certain trading platforms than others, and as
a result, sellers have the flexibility of choosing the platform
that most fits their needs.
Payment Processing
Buyers can elect to make payment for their purchases with a
credit card or by direct electronic payment. In the case of
credit card payments, such transactions are processed through a
secured gateway. All payments are paid directly to us, which we
hold and distribute to the seller only upon confirmation that
the sale has been completed. As a result, buyers who shop on our
website are provided with the added security of knowing that
they will be able to receive a refund as payment is transferred
to the seller generally within seven to 30 days following
delivery of the product to the buyer, depending on the
seller's ranking with us, with higher ranked sellers
generally receiving payments sooner.
Product Delivery
Most of our sellers arrange for delivery of a purchased item
with a delivery company chosen by them. For the benefit of those
sellers who may not otherwise receive volume discounts from
delivery
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companies, we have entered into contracts with two delivery
companies in order to provide lower delivery fees for such
sellers.
Our GSM program is linked to the websites of certain delivery
companies, enabling sellers who ship products using such
companies to check delivery status in near real time. In
addition, our sellers usually choose delivery companies, whether
on their own or through us, that allow both buyers and sellers
to review and track the shipping and delivery status of items
through links provided on our website.
Nearly all of our users are located in Korea, which allows them
to take advantage of Korea's sophisticated payment and
delivery infrastructure. Most products are delivered within one
to two business days after they are purchased, with
international shipments taking longer. Our service quality
management division monitors transactions from time to time to
ensure delivery is conducted in a timely and efficient manner
and to address any recurring problems. See "—Customer
Service." Product returns are easily facilitated through
any delivery company or the post office, allowing buyers to
return unwanted or defective goods. Buyers can call the delivery
company or post office for pick up or request pick up directly
on our website for certain delivery companies. Many delivery
companies in Korea also maintain a webpage where buyers can make
pick up requests. In some cases, delivery companies at the time
of delivery include a return slip to facilitate easy returns. We
provide an automated tracking system, which records the delivery
date and facilitates the return process, as buyers have seven
days within delivery to decide whether or not they will keep the
product. As part of our effort to expand our business, we offer
delivery to destinations outside of Korea and have upgraded our
service to allow for delivery tracking of products outside of
Korea.
Value-Added Services
We believe we offer sellers a compelling value proposition by
offering extensive value-added services, including the following:
•
Seller's Shop.
This service provides a variety of
    ready-to-use web pages that allows sellers to establish a
    low-cost and efficient online "storefront" within our
    website. These ready-to-use web pages can be easily modified,
    updated and personalized by sellers to create a unique shopping
    experience for their customers. Sellers can also enhance and add
    other features to their "store," such as allowing
    buyers to send e-mails directly to the seller and offering
    coupons which may be used for purchases from the seller. We do
    not charge sellers any fee to use our Seller's Shop service.
•
Star Shop.
We believe products with well-known celebrity
    endorsements or advertisements tend to sell better than those
    without. Most smaller sellers, however, are unable to afford
    such celebrity endorsements or advertisements as part of their
    marketing campaigns as they are relatively expensive. We
    facilitate the pooling of various products from many sellers in
    one endorsement or advertisement, allowing participating sellers
    to share in the cost.
•
Donation Shopping.
For certain products offered by
    sellers an election is made to donate a portion of the sales
    proceeds to a specified charitable organization of our choosing.
    We often give these products priority placement on our website.
    We have found buyers are more likely to purchase a product
    listed as a donation shopping item.
•
Sales Promotion Service.
Our web and graphic designers
    are available to assist sellers in the sale and marketing
    process for a fee. We charge sellers for graphic and website
    design, photography and other artwork. For example, users of our
    Seller's Shop may engage our staff to assist them in making
    their basic online storefront more comprehensive and robust.
Pricing
Our primary sources of revenues consist of transaction fees,
standard and premium listing fees, and banner advertisement and
keyword search fees from our sellers, advertisement fees from
non-
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sellers and membership fees for our Zero Margin Club from
buyers. We do not currently charge any registration fees to
register as a user.
We do not charge listing fees, except with respect to group
buying and auction, among others. Our transaction fees are
generally between 6 percent to 12 percent of the sale
price, which is inclusive of any applicable value-added tax. We
do not pass through credit card commissions to sellers. Also,
the above transaction fees are effectively reduced by the use of
coupons by buyers.
We set a minimum fee for keyword searches and certain banner
advertisements and sellers bid for the location, size, frequency
and duration of such keyword search terms and banner
advertisements, with the actual amount charged subject to the
highest bid received for a particular search term bid. Certain
banner advertisements are charged at fixed rates. Our fees for
promotional and advertising services and for value-added
services vary, depending on the service provided.
Customer Service
We believe proactive customer service is the most effective
means of achieving user satisfaction, and our success to date
has been due in part to our personalized customer service for
our users. Our customer service is divided into three distinct
functions:
•
Customer service.
The primary contact point for buyers
    with questions, concerns or complaints about our website, our
    services or any seller's products or services. As of
    March 31, 2007, 400 customer service professionals were
    employed by our outsourced call center to respond to our
    buyers' questions or complaints from 9 a.m. to 6 p.m. on
    weekdays and from 9 a.m. to 1 p.m. on Saturdays. The number of
    call center professionals we retain at the call center may vary
    from time to time, based on the then-current customer service
    demands from our users. For example, as of December 31,
    2006, we had over 450 customer service professionals at such
    call centers to address an increase in customer service demands.
    We analyze e-mails and calls to identify and address common
    problems so we can improve the overall quality of our services
    and the customer experience.
•
Seller service and training.
The primary contact point
    for sellers with questions or concerns about our services. We
    currently have over 30 professionals serving these functions.
    Upon registration, we assign a professional to each seller, who
    generally contacts that seller after the first listing or upon
    completion of the first sale. This person's primary role is
    to educate the seller about the Gmarket systems, the retail
    e-commerce process and to assist the seller in their sales,
    marketing and promotions programs and strategies to increase
    customer loyalty. We help sellers establish policies and
    procedures for managing customer questions, as well as assist
    them with questions about specific inquiries from their
    customers. Additionally, as many of our sellers are new to the
    retail e-commerce industry, we offer extensive training, support
    and consulting services as they establish an online retail
    presence with us. We operate and offer to newly registered
    sellers a training program held five days a week at our offices,
    where our staff of seven professionals gives instruction and
    training to help these sellers take full advantage of our
    services, all without charge.
•
Quality assurance and conflict management.
We mediate
    disputes between a seller and a buyer. We believe one of our
    fundamental roles is to facilitate communications between
    sellers and buyers not only in the buy-sell relationship, but
    also after the sale has taken place. We believe by quickly
    engaging ourselves as an intermediary between the seller and
    buyer, we have been able to, in most cases, effectively resolve
    disputes, improving buyer loyalty and enhancing our reputation
    among buyers and sellers.
Marketing and Sales
Based on our analysis of our registered buyers as of
March 31, 2007, approximately 54% of our registered buyers
are women and approximately 68% of our registered buyers are in
their 20s or
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30s. We believe shoppers in this market segment are generally
brand and quality conscious, while buying behaviors are driven
by value and savings. As we believe sellers are best positioned
to market their products effectively, we encourage sellers to
take the initiative in promoting their products and to organize
online and offline promotional events and sales events to
attract buyers and increase frequency and volume of purchases,
such as offering volume based coupons or free delivery. We also
assist in the sellers' promotional efforts. For example, we
host from time to time, special promotional events where we
offer various value-added services to buyers, including coupons,
reduced delivery charges and prizes, to encourage shoppers to
make a purchase.
In addition, we promote our website through various marketing
programs, including the following:
•
Affiliate Programs.
We participate in promotion events
    jointly with various high-traffic websites in Korea, including
    most of the major Internet portals. We believe these
    relationships raise our brand awareness and help attract users
    to our website. We will continue to seek to expand our
    relationships with such parties in the future.
•
Online Advertising.
We purchase banner advertisements,
    keyword search advertisements and other forms of advertisements
    on various portals and other websites we believe are visited by
    Internet users who may be our potential users. Online
    advertisements generally provide a hyperlink that directs
    potential users to our website. We place online advertisements
    with many of the leading Internet portals in Korea, including
    Naver.com, Daum.net and Yahoo.co.kr.
•
Offline Advertising.
Our offline advertisements have
    included nationwide advertising campaigns, including billboard
    and television advertisements designed to increase public
    awareness of our brand and to attract new users to our website.
    Our expenditures for offline advertisements have steadily grown,
    and we expect this type of advertisement to take on an
    increasingly important role in developing our brand image in the
    future.
•
Partnership Marketing Programs.
We enter into
    co-marketing programs with various businesses in Korea. In 2006,
    we had co-marketing programs with (i) a number of major
    Korean Internet websites, including portal and game sites,
    (ii) one of the largest and most influential Korean talent
    agencies, (iii) media outlets such as broadcast television
    stations and daily sports newspapers and (iv) a major
    electronics manufacturer in connection with its talent search
    contest.
In order to enhance buyer loyalty and increase purchase
frequency and transaction volumes, we offer the following
loyalty programs:
•
Gmarket Mileage.
Registered buyers can earn Gmarket Miles
    by purchasing eligible products. Buyers can redeem Gmarket Miles
    in 10,000 mile increments for membership in our Zero Margin Club
    or for G Cash. Effective February 2006, we changed the terms of
    our mileage program so that all unused accumulated Gmarket Miles
    expire on the fifth anniversary after their issue date.
•
G Cash.
G Cash is a form of electronic currency that may
    be used to pay for a variety of services on our website,
    including participation fees in random drawing auctions. Buyers
    may also elect to redeem G Cash into cash with one G Cash unit
    equal to one Won, in minimum denominations of Won 1,000.
•
Gmarket Stamp
s. Registered buyers may earn Gmarket Stamps
    through purchasing eligible products, writing product reviews
    and winning through random drawings, among others. These stamps
    may be accumulated and redeemed for Gmarket Coupons. Also, these
    stamps can be used to pay for the right to place a bid in random
    drawing auctions.
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•
Gmarket Coupons.
Registered buyers accumulate coupons by
    trading-in Gmarket Stamps and by visiting the Gmarket Coupon
    page where we distribute coupons both on a random basis and as
    an incentive to buyers to participate in certain promotional
    events.
Our marketing functions are divided into two roles: one is to
recognize and anticipate consumer trends and to attract sellers
to our website, and the other is to manage our website and to
develop our e-commerce marketplace community. We had 115
full-time employees performing marketing functions as of
March 31, 2007.
Technology and Systems
We have developed a scalable e-commerce marketplace based on a
proprietary exchange trading platform. Our back-end system,
including our GSM program servers and related software and
database management software, records and processes all sales
transactions. Our technology infrastructure is flexible and
enables us to deploy new services quickly and to support our
internal operations while also allowing us to respond quickly to
the changing needs of the rapidly developing e-commerce market.
Once a buyer purchases a product on our website, our back-end
system processes the payment and arranges for the delivery of
the product through a delivery company selected by the seller.
Our back-end system includes: payment systems, settlement
systems, delivery control systems, customer service systems and
content management systems. Because all of our trading formats
are processed through one back-end system, we are able to deploy
new services to our sellers and buyers quickly and with little
or no change to our existing technology architecture.
During the month of March 2007, our technology systems:
•
handled, on average, 21 giga bits per second of system outbound
    traffic;
•
processed more than 90,000 web concurrent connections; and
•
processed more than 40 million search inquiries per day.
Our data security systems are multi-layered. All electronic
transmissions of confidential information are encrypted,
utilizing sockets layer technology. Customer data is stored in
databases which are only accessible to employees with special
clearance and protected by an access control program. We employ
various proprietary and third party software to protect
confidential information stored in our databases.
Certain of our hardware, including computers, data servers and
other servers, are located at the Korea Internet Data Center, a
data center operated by Dacom Corporation, and the Korean
Internet Neutral Exchange, both located in Seoul, and certain
other equipment are located within our headquarters building.
Although we currently archive our databases periodically and
store our backup data at the Korea Internet Data Center and
maintain back-up systems, including a new back-up center system
which we have implemented at another data center location
beginning on March 17, 2006, no assurance can be given that
such backups will be adequate to protect the data and other
information stored on such primary and backup systems or that we
will be able to start our backup systems so as not to have a
material interruption of our service. In addition, we cannot
assure you that should damage occur to our systems at the Korea
Internet Data Center as a result of natural disaster, fire,
human error or otherwise that such back-up systems will be
adequate for us to continue our business operations without a
material delay or loss of data. See "Risk Factors—
Interruptions or failures of our network and system
infrastructure, including our communications systems, could lead
to significant downtimes, interruptions and loss of data, which
could damage our reputation and brand name and harm our
operating results." To address these capacity and volume
issues, we spent in the year ended December 31, 2006,
approximately Won 13.46 billion (US$14.55 million) to
purchase new network and system equipment, including servers,
routers and other equipment.
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Our key technology initiatives are to implement a technology
program that will:
•
expand our capacity to support an even greater number of
    e-commerce trading formats and trading volumes as well as to
    accommodate any growth in our user base;
•
enable our management to monitor, control and audit operations
    accurately and efficiently; and
•
provide redundancy for data, front-end and back-end systems in
    two locations with periodic backup policies, so as to protect
    customer data and to ensure the smooth and uninterrupted service
    capability in the case of technical, system or other breakdowns
    or in the event of natural disaster or other calamity.
Competition
We compete directly with Auction.co.kr, an e-commerce
marketplace operated by Internet Auction Co., Ltd., which is a
subsidiary of eBay Inc. Our other competitors include Interpark
Corporation, our largest shareholder, d&shop Co., Ltd., and
other e-commerce marketplaces such as Mple Online, which is a
subsidiary of CJ Home Shopping and Daum Onket, which is a
subsidiary of d&shop Co., Ltd. We also compete against GS
Home Shopping, which operates two online retail websites, CJ
Home Shopping and other online retail websites operated by some
of the largest department stores in Korea, such as Lotte.com,
Shinsegae.com and Hmall.com. We currently compete indirectly
with Internet portals in Korea, such as Naver.com and Nate.com.
As we believe that our industry could further consolidate, we
may also face increased competition from bigger and financially
stronger players resulting from such consolidation. In addition,
as the barriers to entry for Internet-related businesses are
relatively low, potential new entrants into the e-commerce
industry could include traditional and non-traditional
retailers, including Internet portals, telecom operators and
cable service providers. Further, we believe that emerging
technologies, including mobile commerce, Internet Protocol
Television (IPTV), Digital Multimedia Broadcasting (DMB), among
others, may allow other competitors to indirectly compete with
e-commerce marketplaces such as ourselves in the future.
We expect additional competition from other home-shopping
channels who may establish websites to market their products
online, and we expect that existing online retailers and
auction-based websites will compete with us more directly as
they transform their website to become more of an online
marketplace, such as ours, which offers a greater breadth of
products to attract more buyers and sellers. Increased
competition may reduce our operating margins as we expend more
of our resources to develop new services and offering and
increase our marketing and promotional efforts to maintain our
leading market position and to further strengthen our brand. See
"Risk Factors—We operate in an extremely competitive
industry, and we may be unsuccessful in competing against
current and future competitors, which could have a negative
impact on the level of fees we can charge for our services."
We currently expect that many more of the home-shopping channels
will establish websites to market their products online and we
expect that existing online retailers and auction-based websites
will compete with us more directly as they transform their
websites to become more of an online marketplace, such as ours,
which offers a greater breadth of products to attract more
buyers and sellers. Increased competition may reduce our
operating margins as we expend more of our resources to develop
new services and offerings and increase our marketing and
promotional efforts to maintain our market position and to
strengthen our brand. See "Risk Factors—We operate in
an extremely competitive industry, and we may be unsuccessful in
competing against current and future competitors, which could
have a negative impact on the level of fees we can change for
our services."
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Intellectual Property
We believe our intellectual property, particularly our
trademarks, service marks and patents, are important to our
present and future success. We rely on a combination of
intellectual property laws and contractual restrictions to
protect our proprietary rights, know-how, information and
technology. We have registered, and have the exclusive right to
use our domain names, www.gmarket.co.kr and www.gmarket.com, and
have secured the rights to use 50 other variations of our domain
names for a number of other markets, including Japan, China,
Taiwan, India, France, Italy and Mexico. We have also obtained
eight business model patents in Korea: (1) random drawing
auction system and method based on entrance fee profit model,
(2) online shopping and advertisement system and method
using drawing auction system for customer attraction,
(3) method and system for conducting exchange driven
Internet commercial transactions for goods by multiple buyers
and multiple sellers, (4) probability auction method and
system using computer communication network, (5) apparatus
and method for products information contents listing and trading
system on the e-marketplace, (6) system and method for
offering/operating seller's online shopping store in
e-marketplace, (7) system and method for responding with
customer, and recordable media thereof and (8) electronic
commerce service and method capable of intermediating star and
seller. In addition, we rely on several different types of
contractual arrangements, including agreements for
non-disclosure, non-competition and invention assignments, to
protect our proprietary rights in products and services,
including with our employees. Despite our efforts to protect our
proprietary information however, third parties may be able to
obtain and use our proprietary information without authorization
or to develop similar technology independently.
Our website and certain of the back-end technology supporting
our e-commerce marketplace is dependent on technologies licensed
from third parties. As we continue to introduce new services
that incorporate new technologies and information, we may be
required to license additional technology and information from
others. Our employees are generally required to sign agreements
acknowledging that all inventions, trade secrets, works of
authorship, developments and other processes generated by them
are our property and are required to assign to us any ownership
rights they developed during their employment with us.
Seasonality
Due to the significant growth of our business in the past three
years, we are not yet able to ascertain with a level of
certainty the impact of seasonality on our financial condition
and results of operations. We believe that as our growth rate
slows down, the seasonality effects will become more apparent to
us, and we expect those effects to be similar to that of other
retailers in Korea, which generally have higher sales volume in
the fourth quarter of each year.
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Employees
The following table sets forth the number of our permanent
employees for each of our major departments and our total number
of employees as of December 31, 2004 and 2005 and 2006, and
March 31, 2007.
As of December 31,
As of
March 31,
2004
2005
2006
2007
Management and administration
9
16
16
18
Business planning*
—
—
37
47
Accounting and finance
13
13
21
23
Research and development
18
34
65
75
Sales and marketing
17
39
51
67
Transaction support
29
41
109
111
Service quality management
17
25
75
79
Total
103
168
374
420
*
In March 2006, some of the personnel previously assigned to the
    management and administration department were transferred to a
    newly created business planning department.
As of March 31, 2006, there were over 400 personnel at our
outsourced call center to handle our customer service functions.
We hire part-time employees and contractors from time to time on
an as-needed basis.
The steady increase in the number of employees is due to the
expansion of our business over the period. We have strived to
develop a culture that encourages creativity and individual
thought, and our compensation system matches our culture. We
also provide stock options to our management and certain
employees, pursuant to our stock option plan, which we believe
has the effect of more closely aligning the personal interests
of our employees to our overall financial performance. See
"Share Ownership—Stock Options."
We believe our relationship with our employees is good, we have
never experienced any major labor disputes. None of our
employees belongs to a labor union, and no collective bargaining
agreement governs our relationship with our employees.
Facilities
Our corporate headquarters are located in approximately 4,282
square meters of office space located at LIG Tower, 649-11,
Yeoksam-Dong, Gangnam-Gu, Seoul 135-912 Korea under a lease
which expires on February 29, 2008. We also lease
approximately 3,759 square meters of office space in Fine Tower,
Yeoksam-Dong, Gangnam-Gu, Seoul 135-935 Korea, under a lease
which expires on October 20, 2008. Our servers and other
technology infrastructure are located in approximately 162
square meters of leased space located in the KIDC Building,
Nonhyun-Dong
261-1,
Gangnam-Gu, Seoul, Korea, approximately 23 square meters of
leased space located in the KIDC Building, Seocho-Dong,
Seocho-Gu, Seoul, Korea, and approximately six square meters of
leased space located in KINX Building, Dogok-Dong, Gangnam-Gu,
Seoul, Korea.
Legal Proceedings
We currently are and expect to be subject to various legal and
governmental proceedings from time to time. However, other than
as described in this report, we believe there are no existing
claims or government proceedings which are likely to have a
material adverse effect on our business, financial condition or
results of operations.
The Korea Intellectual Property Office rejected our service mark
application for the exclusive use of our trade name
"Gmarket" in the English and the Korean languages on
the grounds that it is
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a simple and common mark, not eligible for registration as a
service mark under the Korean Trademark Act. We are appealing
such finding and have sought review of the rejection with the
Korean Intellectual Property Tribunal. We may ultimately seek
redress in court. Although the final outcome is unclear at this
time, if our application for the service mark is not accepted,
we may not have the exclusive right to use our name in Korea
under the Korean Trademark Act. However, although no assurance
can be given that we will ultimately prevail on the merits,
pursuant to the Korean Unfair Competition Prevention and Trade
Secret Protection Act, we may be able to pursue an enjoinment
action against others who attempt to use our trade name in the
future on the grounds that our trade name is well-known to the
general public in Korea. See "Risk Factors— We rely on
intellectual property right protection for our trademarks,
service marks and other intellectual property rights and if such
rights are not adequately protected, we may not be able to
successfully build our brand."
As a result of a claim raised by one of our competitors, the
Korean Fair Trade Commission, or KFTC, requested certain
documents from us to ascertain whether the allegations of
anticompetitive behavior have any merit. As a result of such
request, we commenced an internal inquiry regarding the
allegations and provided all of the requested materials to the
KFTC. Based on the requested information from the KFTC and the
current status of the investigation, it is our understanding
that the claim currently involves a very small number of
sellers. In the event that the Company is found by the KFTC to
have conducted any such improper behavior, we believe that the
maximum potential penalty arising from this investigation is a
fine consisting of up to 3% of the Company's revenues
derived from the concerned transactions with these sellers. In
addition to or in lieu of any such fines, the KFTC may ask the
prosecutor's office to commence a criminal prosecution
against us and/or require us to publish an acknowledgment of
wrongdoing in a daily Korean newspaper.
Laws and Regulations
Overview of Laws Relating to the Online Marketplace
Business
The principal laws and regulations regulating e-commerce
marketplaces in Korea consist of the following:
•
The Act on Consumer Protection in Electronic Commerce
    Transactions, Etc., or the
E-Commerce
Consumer
    Protection Act;
•
The Telecommunications Business Act, as a value-added service
    provider;
•
Act on Promotion of Information and Communications Network
    Utilization and Information Protection, Etc., or the Information
    Communication Network Act; and
•
The Electronic Financial Transaction Act.
E-Commerce Consumer Protection Act
The E-Commerce Consumer Protection Act provides a general
framework for regulation of
e-commerce
businesses,
and sets forth requirements for laws with the goal of providing
consumer protection for sale of goods and services by any means
not involving direct, face-to-face contact between a seller and
a buyer. This is referred to as "distance selling."
Some examples of transactions which are subject to the
E-Commerce
Consumer
Protection Act include transactions conducted through the
Internet, mail order, television, advertisements, newspaper,
magazine and catalogs and any other means of distance
communication.
Under the E-Commerce Consumer Protection Act, a business seeking
to engage in distance selling must comply with the following
legal requirements:
•
The distance selling trader must report, among others, its trade
    name, the name of the representative, its address, telephone
    number,
e-mail
address,
    Internet domain name, and the location of its server to the city
    (
si
) government, the county (
gun
) office, or
    the district
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(
gu
) office. The
e-commerce
seller must
    report any changes in the report within 15 days from the
    date the change occurred;
•
The distance selling trader must provide its customers with
    documents relating to basic descriptions of the transactions in
    advance, including documents stating (i) details of sellers
    and suppliers, (ii) name, type and details of the products
    being sold, (iii) price, payment time and method,
    (iv) time and method of delivery, (v) method of
    withdrawal of the order, deadline for termination of the
    contract and consequences of such termination,
    (vi) conditions and process regarding return, refund,
    exchange and guarantees, (vii) customer service policies
    relating to disputes with customers and (viii) standard
    terms and conditions for the transaction. Such documents may be
    replaced by an electronic message, if a consent from the
    customer is obtained;
•
The distance selling trader must notify minors (who are
    individuals under the age of 20) that such minor or his or her
    legal representative may rescind any contract between the
    distance selling trader and the minor, if the minor's legal
    representative does not consent to the contract;
•
The distance selling trader must take action to deliver to the
    consumer the product that the consumer ordered within seven days
    from the date of order. If the consumer pays all or part of the
    product's price in advance, the distance selling trader
    must take action to deliver the product within three business
    days from the date of payment. If the distance selling trader
    becomes aware of any problem in delivering the product ordered,
    it must promptly notify the consumer, and in case of advance
    payment, must refund, or take measures necessary to refund, the
    amount paid by the consumer within three business days from the
    date of payment;
•
Subject to certain exceptions, a consumer may cancel an order
    and/or return the goods ordered within seven days from the date
    of the contract for the purchase of goods, or seven days from
    the supply or commencement of supply of the goods, whichever is
    later. This period may be extended in certain circumstances,
    such as if certain information appearing in advertisements or
    the contract is inaccurate. The distance selling trader has the
    burden of proving that the damage of the goods purchased is
    attributable to the consumer; and
•
Upon cancellation of the purchase and return of the goods by the
    consumer, the distance selling trader must in principle return
    the purchase price within three business days. If the goods are
    returned without cause, the consumer must bear the delivery
    expenses. If the cause of the return of goods is attributable to
    the distance selling trader, then the distance selling trader
    must bear the delivery expenses.
The E-Commerce Consumer Protection Act also regulates businesses
which are considered to be "distance selling
intermediaries." These businesses facilitate the distance
selling by third parties by making available for use to such
third parties a website or other means of distance selling. The
Act does not specifically state that a distance selling
intermediary has reporting obligations applicable to a business
engaged in distance selling. However, most distance selling
intermediaries, including us, customarily file reports with the
local authorities as a distance selling trader.
Under the
E-Commerce
Consumer Protection Act, unless a distance selling intermediary
expressly disclaims liability by notice or agreement regarding
sales of products, the distance selling intermediary bears joint
and several liability with such distance selling trader for
damages caused to such trader's customers for any damages
caused by willful misconduct or negligence.
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We are also subject to the
E-Commerce
Consumer
Protection Act as an e-commerce service provider. An
e-commerce
service
provider has the following obligations:
•
The
e-commerce
service
    provider must establish and implement a procedure for customers
    to enable the customer to confirm or change the details of the
    transaction before the customers place an order or at the time
    the customers make payment;
•
If payment is made by means of an electronic bank transfer, the
e-commerce
service
    provider must take necessary precautions for securing
    confidentiality of the relevant information. The
e-commerce
service
    provider must promptly notify the consumer of settlement of
    payment by
e-mail,
telephone, fax or mobile phone; and
•
An e-commerce service provider operating an online shopping mall
    must display on its homepage its trade name, name of its
    representative, its business address (where consumer complaints
    can be submitted and handled), its telephone number and
e-mail
address, its
    business registration number, and the terms and conditions of
    use of the online shopping mall, all of which information must
    be easily identifiable by consumers.
Amendment to the E-Commerce Consumer Protection Act
The E-Commerce Consumer Protection Act was amended on
March 31, 2005, and some provisions of the amended Act
became effective on April 1, 2006. One of the provisions of
the amended Act, which became effective on April 1, 2006,
introduced a system whereby the purchaser can choose, for any
purchases (other than credit card purchases) that exceed
Won 100,000, to either pay such amounts with a third party
designated by a Presidential Decree, or in lieu thereof, the
purchaser may avail itself of insurance purchased by the
distance selling trader to protect against any loss of such
purchase price prior to such purchaser's receipt of the
purchased product or services. In order to qualify as a
designated third party under the presidential Decree of the
E-Commerce
Consumer
Seller Protection Act to avail ourselves as such to the distance
selling traders, we deposited three billion Won
(US$3.09 million) with Hana Bank in April 2006 to guarantee
the payment deposited by purchasers and became a designated
third party.
Another provision of the amended Act, which became effective on
April 1, 2006, established an "opt-out" system,
or "no-spam system," under which consumers can
expressly indicate their intent not to receive
e-mails.
Distance
selling traders must check, subject to certain exceptions, at
least monthly (or once every three months in the case of
purchase solicitations transmitted by
e-mail),
the telephone
number, fax number or
e-mail
address of the
users who have chosen to "opt-out" to ensure that no
e-mails
are sent to
such users. A distance selling trader which fails to comply with
the requirement of the amended Act will be subject to a fine of
five million Won.
Investigation of Breach
The Korean Fair Trade Commission, or the KFTC, the city
government or the provincial government may on its authority, or
upon petition, conduct investigations on violation of the
E-Commerce
Consumer
Protection Act and, in case of any violation, order the
violating
e-commerce
service provider to cease and desist, order compliance, or take
other corrective measures. If the
e-commerce
service
provider repeats the breach or does not take the ordered
corrective measure, the KFTC may suspend part or all of the
e-commerce
service
provider's business for up to one year or impose a penalty
for the breach up to the amount of the relevant sales volume.
Not responding to the correction order may also result in
imprisonment of up to three years or a penalty of up to
Won 100 million.
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Prohibited Actions
The E-Commerce Consumer Protection Act prohibits
e-commerce
service
providers and distance selling traders from:
•
engaging in misrepresentation, overstatement or fraud in
    soliciting or dealing with consumers, revoking orders accepted,
    or preventing consumers from terminating a contract;
•
changing its address, telephone number, or Internet domain name,
    or closing down its website in order to prevent consumers from
    canceling their order;
•
causing damage to the consumer by neglecting the workforce or
    systems responsible for handling consumer complaints;
•
delivering products and demanding payment without an order from
    the consumer, or billing the consumer for a purchase not made;
•
pressuring consumers to purchase products or services by
    telephone, fax, or electronic communication, despite the
    consumer having expressed his or her intention not to buy; and
•
using consumer information without permission or beyond the
    scope permitted, except in certain exceptional circumstances.
The failure to comply with such requirements could result in a
fine of up to Won 10 million and a correction order
from the KFTC.
Telecommunications Business Act
The Telecommunications Business Act classifies
telecommunications service providers into three categories: a
network service provider, a specific service provider and a
value-added service provider. As an operator of an online
marketplace, we are classified as a value-added service provider
under the Telecommunications Business Act. Value-added service
providers must file reports with the Ministry of Information and
Communication and must report any changes to the filed report in
advance. In particular, value-added service providers must
notify users of any suspension or closure of all or part of
their business and report such events to the Ministry of
Information and Communication at least 30 days in advance.
The Ministry of Information and Communication may order business
closure or business suspension for up to one year, in the event
of a value-added service provider's breach of the
Telecommunications Business Act.
Information Communication Network Act
The Information Communication Network Act requires online
service providers to protect consumer information maintained by
such service providers. In addition, the Ministry of Information
and Communication's Rules for Private Information
Protection requires online service providers to formulate and
publish their private information protection policies on their
websites.
When gathering private information, online service providers
must disclose the purpose and use of the information gathered,
and in case such information is provided to a third party, the
name, business, contact information, purpose of providing such
information and its content to the user, and obtain the
user's consent to the foregoing. Also, the online service
provider may only gather the minimum necessary information
directly related to the service it provides. Any use or
disclosure of information to a third party beyond the scope
notified to the user or agreed in a contract with the user
requires the user's consent. Exceptions to the consent
requirement are (i) disclosure for settlement of service
charges, (ii) disclosure in a processed form (so that
individuals are not identified) for purposes of compiling
statistics, academic research or market research or
(iii) disclosure as required by applicable laws and
regulations. Using or receiving private information beyond the
scope notified to the user or as set forth in the contract or
providing private information
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to a third party may be punishable by imprisonment of up to five
years or a penalty of up to Won 50 million.
Furthermore, collecting private information on minors of less
than 14 years of age or using such information beyond the
disclosed scope of use, or providing such information to a third
party requires the consent of the minor's legal
representative. Because we do not allow registration by minors
less than 14 years of age, we do not collect and have no
private information on minors of less than 14 years of age.
After the online service provider has achieved its purpose of
collecting or receiving private information, subject to the
Act's requirement for retention of certain information on
contracts, sales, consumer complaints, among others, the online
service provider must immediately destroy the private
information.
The sending of e-mail advertisements contrary to the
recipient's express refusal is prohibited. The subject line
of any
e-mail
advertisements must contain the word "advertisement"
and a description of the main content, and the text of the body
must state how the recipient's
e-mail
address was
obtained, together with the name and contact address of the
sender. The text of the advertisement must also show an easy way
to reject any further
e-mails.
Violation of
this provision could result in a fine of up to
Won 30 million.
A user may claim damages against an online service provider for
the harm suffered as a result of the online service
provider's breach of such Act. The online service provider
must prove that such harm was not due to the willful or
negligent act of the online service provider. In addition, to
the extent such information has become public, the online
service provider must remove or delete such information and
provide for the possibility of posting a counter argument.
The Electronic Financial Transaction Act
On January 1, 2007, a new law titled the Electronic
Financial Transaction Act, or EFTA, became effective to regulate
electronic financial transactions. This law requires any person
wishing to engage in the business of electronic finance to
satisfy certain requirements and obtain a license from, or
register with, the Financial Supervisory Commission, or FSC,
depending on the type of services. Persons already engaged in
the business of electronic finance must obtain a license or
register with the FSC within three to six months from the
effective date of the EFTA, depending on the type of services in
which such person is engaged.
Some of the services we provide to our customers, including the
provision of electronic means of advance payment and electronic
payment settlement, subject us to the purview of this Act and
require us to register with the FSC, by June 30, 2007.
Once we register with the FSC, we will become an
"electronic financial service provider" under such Act
and must comply with the requirements of such Act, including:
•
maintaining separate accounts for each category of electronic
    financial services;
•
meeting certain levels of security standards as prescribed by
    the FSC;
•
maintaining records of electronic financial transactions up to
    five years;
•
submitting reports on electronic financial transactions and
    management performance to the FSC; and
•
being subject to supervision by the Financial Supervisory
    Service.
The EFTA makes the electronic financial services provider
prima facie
liable for the damages caused to a customer
who signed an electronic financial services use agreement with
the electronic financial services provider, if the password of
that customer is forged or altered, or if an accident occurs in
the course of transmitting or processing transaction
instructions by the electronic financial
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services provider. The electronic financial service provider is
exempted from this liability if (i) the damage is
attributable to willful intent or gross misconduct of the
customer and the electronic financial services provider has
entered into an agreement whereby the customer agreed to assume
partial or full responsibility for such damages, or
(ii) the electronic financial service provider established,
and strictly maintained, security measures and otherwise
exercised reasonable care to prevent such accident. To meet
these statutory liabilities, and in accordance with the
standards set by the FSC, the electronic financial service
provider must subscribe for insurance, become a member of a
mutual relief association, or set aside a reserve.
Laws Relating to Intellectual Property or Prohibited
Items
Certain laws relating to intellectual property rights, such as
the Copyright Act or the Trademark Act, regulate items being
sold on the online marketplace that infringe on third party
intellectual rights. For example, under the Copyright Act, a
person may demand suspension of reproduction or transmission of
his or her works without his or her permission and in such
circumstances, the online service provider must immediately
suspend the reproduction or transmission of such works and
notify the person of such remedial acts. The online service
provider may be entitled to certain limitation or exemption from
liability where the service provider, upon knowledge that the
reproduction or transmission of certain works infringes upon a
third party's copyright, has taken the above measures, such
as preventing or suspending such reproduction or transmission.
In addition, the online service provider may also be exempt or
limited from liability where the online service provider
attempted to prevent or suspend such reproduction or
transmission pursuant to its own discretion, provided that the
service provider was not able to do so because of technical
impossibility, in which case there may be no liability.
Furthermore, laws prohibiting the trading of certain items
(e.g., drugs or weapons) may apply to certain items being sold
on an online marketplace.
Laws Relating to Tax Benefits
Under the Special Tax Treatment Control Law of Korea, a
certified venture company may be entitled to a 50% reduction in
corporate income tax generated from a "Tax-Benefit
Business," as defined in the Special Tax Treatment Control
Law, for the year in which it first generates taxable income and
for the subsequent three years (or five years for any designated
venture companies certified by the Government before
January 1, 2004), if (a) the company is certified by
the Government as a "designated venture company"
within two years from its incorporation and continues to satisfy
certain requirements, and (b) such company's business
falls under one of the categories of "Tax-Benefit
Businesses" under the Special Tax Treatment Control Law.
We were certified by the Government as a "designated
venture company" in March 2001, and after the renewal of
certification, our certification is valid until June 2008. As
part of our annual tax return process with the Korea National
Tax Office, we reported our business classification in line with
our business registration statement, as an eligible business
falling under one of the categories of "Tax Benefit
Business" under the Special Treatment Control Law. To date,
we have not received any objections from the Korea National Tax
Office regarding our claim of such tax benefit. Notwithstanding
our continued belief that we qualified for such tax benefit and
the lack of objections from the Korea National Tax Office
regarding our prior tax returns thus far, in the event that the
Korea National Tax Office audits us and determines that we were,
in fact, not entitled to such tax benefit, we may be required to
pay back-taxes in the amount applicable to such claimed
deduction and statutory interest.
In addition, pursuant to the Special Tax Treatment Control Law,
a company is generally eligible for a 40% (or 50% for certain
qualified expenditures) tax credit in the amount of the excess
of expenditures relating to technology development and human
resources in the relevant year subject to the tax credit over
the average of the expenditures relating to technology
development and human resources during the previous four-year
period. Small and medium-sized companies may elect to
40
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obtain tax credit in the amount which is either (i) 50% of
the difference between (A) expenditures relating to
technology development and human resources in the relevant year
subject to the tax credit and (B) average of the
expenditures relating to technology development and human
resources for the previous four-year period or (ii) 15% of
the expenditures relating to technology development and human
resources in the relevant year subject to the tax credit. Under
the Special Tax Treatment Control Law, the tax credit will be
granted for the fiscal year ended on or before December 31,
2009, and it is uncertain whether the Korean government will
extend the period for such tax credit. We established a research
and development division in July 2002. We filed tax returns,
together with documents supporting our expenditures relating to
technology development and human resources, with the tax
authorities for fiscal years 2005 and 2006. If the Korea
National Tax Office determines that these expenditures are not
related to technology development and human resources subject to
the tax credit, we may not be entitled to the relevant tax
credit and may be required to pay back-taxes and statutory
interest.
4.C. Organizational Structure
Not applicable.
4.D. Property, Plants and Equipment
As of December 31, 2006, our property and equipment mainly
consisted of network servers and personal computers. As of
December 31, 2006, the net book value of our property and
equipment was Won 19.58 billion
(US$21.16 million). Because our main business is to provide
an
e-commerce
marketplace, we do not own any factories or facilities that
manufacture products. There are no factories currently under
construction, and we have no plans to build any factories in the
future.
Our corporate headquarters are located in approximately 4,282
square meters of office space located at LIG Tower,
649-11,
Yeoksam-Dong,
Gangnam-Gu, Seoul
135-912
Korea under a
lease which expires on February 29, 2008. We also lease
approximately 3,759 square meters of office space in Fine Tower,
Yeoksam-Dong, Gangnam-Gu, Seoul
135-935
Korea, under a
lease which expires on October 20, 2008. Our servers and
other technology infrastructure are located in approximately 162
square meters of leased space located in the KIDC Building,
Nonhyun-Dong
261-1,
Gangnam-Gu, Seoul, Korea, approximately 23 square meters of
leased space located in the KIDC Building, Seocho-Dong,
Seocho-Gu, Seoul, Korea, and approximately six square meters of
leased space located in KINX Building, Dogok-Dong, Gangnam-Gu,
Seoul, Korea.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion together with our
financial statements and the related notes which appear
elsewhere in this report. The following discussion is based on
our financial statements, which have been prepared in accordance
with the U.S. generally accepted accounting principles, or
U.S. GAAP. Our historic performance may not be indicative
of our future results of operations and capital requirements and
resources.
5.A. Operating Results
This section begins with an overview of the principal factors
and trends affecting our results of operations. The overview is
followed by a discussion of our accounting policies and
estimates that we believe are important to understanding the
assumptions and judgments reflected in our reported financial
results. We then present a detailed analysis of our results of
operations for the last three fiscal years.
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Overview
We are a leading retail
e-commerce
marketplace
in Korea offering buyers a wide selection of products at
competitive prices and sellers a comprehensive and flexible
sales solution. Our
e-commerce
marketplace
is highly scalable and facilitates the sale of products in small
or large quantities, to a large number of potential buyers in a
convenient, cost effective and secure manner. We believe we have
developed an established and well-known brand name in Korea as
evidenced by both our leading market position and rapid growth.
We believe we are a leading retail
e-commerce
marketplace
in Korea based on gross merchandise value, or GMV, which
represents the total value of all goods sold on an
e-commerce
marketplace.
Further, we believe we are currently a leader in Korea in terms
of monthly unique visitors among
e-commerce
retailers.
Our
e-commerce
marketplace is located at www.gmarket.co.kr.
Until the third quarter of 2003, we operated as an online
retailer, selling products from our inventory, and as an
e-commerce
marketplace,
where various sellers could list and sell their products. In the
third quarter of 2003, we began transitioning exclusively to an
e-commerce
marketplace.
By December 31, 2004, we sold all of our inventory and
since then, have been generating revenues exclusively from our
e-commerce
marketplace.
We currently derive substantially all of our revenues from
transaction fees on the sale of products on our website, as well
as standard and premium listing, banner advertisement and
keyword search fees.
In the past several years, we have experienced significant
growth in the number of registered users, the number of goods
sold on our website and GMV. This has resulted from a widening
acceptance of the use of the Internet to purchase goods in Korea
and Korea's improving Internet and delivery network
infrastructure, as well as due to our implementation of key
strategic initiatives and service developments to attract users
to our website. We believe that we are well positioned to take
advantage of the growth of the retail
e-commerce
industry in
Korea, but face a number of challenges in growing our business.
We face potential resource constraints for senior management and
employees and continue to seek to hire talented personnel for
website design, information technology, management and other
areas. We also expect that competition will continue to increase
as the retail
e-commerce
industry
continues to grow. We must develop and provide, on a timely
basis, services that gain market acceptance to continue to be
competitive. Our management continues to strive to introduce new
and innovative services on competitive terms in order to meet
such challenges. Also, we are seeking to continue to increase
our brand awareness through our online and offline marketing
strategies.
We recorded total revenues of Won 154.13 billion
(US$166.56 million) in the year ended December 31,
2006 compared to total revenues of Won 70.34 billion
in 2005 and Won 14.14 billion in 2004. We recorded a
net income of Won 16.28 billion
(US$17.60 million) in the year ended December 31, 2006
compared to a net income of Won 5.09 billion in 2005
and net losses of Won 1.44 billion in 2004.
Revenues
We generate, and expect to continue to generate, most of our
revenues from transaction fees on the sale of products, which
represented 64.4%, 80.7% and 85.1% of our total revenues for the
years ended December 31, 2006, 2005 and 2004, respectively.
Our advertising and other revenues, including standard and
premium listing, banner advertisement, keyword search fees,
non-seller advertisement, membership fees for our Zero Margin
Club and delivery services that we receive from buyers,
represented 35.6%, 19.3% and 14.9% of our total revenues for the
years ended December 31, 2006, 2005 and 2004, respectively.
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Cost of revenues
Our cost of revenues consists principally of the following:
•
Credit card commissions and bank charges. Fees paid to credit
    card issuers and banks and other parties for banking and funds
    transfer services in connection with processing sales
    transactions;
•
Click-through fees. Fees paid to Internet portals, other
    websites for referrals of buyers who make a purchase on our
    website and the referral fees paid to advertising agents; and
•
Other costs. Other costs of revenues include:
—
Network and systems maintenance fees.
Fees paid to
    leased-line providers for use of network bandwidth; fees paid to
    data center providers for data hosting and technology systems
    maintenance; and fees paid to security and firewall providers
    and fees paid to telecommunications providers for sending text
    messages to buyers' mobile phones to confirm the purchase
    and shipment of products;
—
Salaries and other compensation expenses.
Salaries,
    employee benefits, severance benefits and stock-based
    compensation expenses attributable to sales transactions; and
—
Miscellaneous costs.
Costs relating to sales
    transactions, including depreciation of our servers and other
    information technology systems used to process sales
    transactions, delivery services and donation shopping.
Sales and marketing expenses
Our sales and marketing expenses consist of both online and
offline advertising expenses, outsourced call center costs, and
other costs, including promotion costs and salaries and other
compensation expenses related to our marketing personnel.
General and administrative expenses
Our general and administrative expenses consist of salaries and
other compensation expenses related to our administrative and
research and development personnel, and other costs, including
professional fees and building lease payments. Our general and
administrative expenses increased upon the completion of our
listing on the Nasdaq, in connection with our obligation to
comply with the reporting requirements under the Exchange Act as
well as other requirements under the Sarbanes-Oxley Act and
other costs associated with being a public company in the United
States. See "Risk Factors— We will incur increased
costs as a result of being a public company in the United
States."
Interest income
We earn interest income from local financial institutions for
deposits of cash and cash equivalents, cash on deposit,
restricted cash, financial instruments and a held-to-maturity
corporate bond.
Income tax
For the year ended December 31, 2005, we had operating
income and generated taxable income. As we had available
loss-carryforwards of Won 3.19 billion at
December 31, 2004, such amounts were utilized in 2005 to
offset taxes we would otherwise have had to pay. In 2005, we
recorded income tax benefits of Won 0.13 billion due
to deferred income tax asset of Won 0.25 billion at
the year ended December 31, 2005 and had available
investment tax credit carryforwards of
Won 0.09 billion at December 31, 2005. For the
year ended December 31, 2006, we had operating income and
generated taxable income. As we had utilized all available loss-
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carryforwards in 2004 and 2005, we recorded income tax expenses
of Won 3.29 billion (US$3.55 million) at
December 31, 2006.
The statutory tax rate applicable to us was 29.7% in 2004 and
27.5% in 2005 and 2006. However, we believe that we are entitled
to a reduction in the statutory tax rate to 13.75%, as we
believe that we qualify under one of the categories of
businesses for the Tax-Benefit Businesses as defined under the
Special Tax Treatment Control Law and have filed our tax returns
for the 2006 fiscal year on such basis. See "Laws and
Regulations— Laws Relating to Tax Benefits."
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and
results of operations are based upon our financial statements,
which have been prepared in accordance with U.S. GAAP. The
preparation of these financial statements requires us to make
estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities, contingent liabilities, and
revenues and expenses during the reporting periods. We evaluate
our estimates on an ongoing basis based on historical experience
and other assumptions we believe are reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities.
The policies discussed below are considered by our management to
be critical because they are not only important to the portrayal
of our financial condition and results of operations but also
because application and interpretation of these policies require
both judgment and estimates of matters that are inherently
uncertain and unknown. As a result, actual results may differ
materially from our estimates.
Revenue recognition
Our revenues are derived from fees associated with successful
transactions on our website, standard and premium listings,
banner advertisement and keyword search, non-seller
advertisement, membership programs and delivery services.
Revenues from transaction fees are derived from commissions paid
by sellers. Revenues from advertising are derived from the sale
of online banners, premium listings and keyword searches to
sellers and sale of advertisements to non-sellers. Other
revenues are derived from membership program fees and delivery
service charges, among others.
Transaction fees
Our commission is calculated as a percentage of the GMV of each
transaction and we record revenues from transaction fees net of
our estimate of return allowances and sales incentives.
Our standard transaction terms allow buyers to return goods to
sellers within a seven-day period from the delivery date. If
goods are returned during the return period, we generally refund
all of the purchase price. Accordingly, we record an estimated
reserve for refunds, based on our historical experience, as a
reduction of revenues from transaction fees. We have elected to
apply the above policy for our transaction fees using an analogy
to the guidance in SFAS No. 48,
Revenue Recognition
When Right of Return Exists
. We satisfy the criteria in
SFAS No. 48 as our commission fee is fixed at the
outset, the buyers and sellers of goods have economic substance
apart from us, we do not have any significant obligations for
future performance once the buyer's payment is confirmed
and we can reasonably estimate the amount of future refunds
based on our historical experience. As the buyer has only seven
days from delivery date to return goods, we are able to compare
our estimated refund returns to the actual amount of returns at
each period end.
Advertising and others
Listing, advertising and membership fee revenues are recognized
ratably over the term of the listing period, advertising
contract term and membership period, respectively. In general,
listing periods range from one day to one month, advertising
contracts have a term of one day to one month and membership
periods are either three months or 12 months.
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Loyalty programs
Registered buyers may earn loyalty points, or miles, through
purchasing eligible products. Once a registered buyer has
accumulated more than 10,000 miles, the buyer may convert
those miles into G Cash (which in turn is convertible into
cash). The mileage program reserve calculation incorporates
judgments and assumptions regarding expected customer earnings
and redemption patterns and is based on specific historical
experience.
During 2005, we began to offer to registered buyers discount
coupons and stamps. Buyers are not required to complete a
specific purchase transaction to earn a discount coupon. Rather,
discount coupons are offered to registered buyers and can be
used prior to their expiry date, to reduce the purchase price of
a product in a future purchase. In accordance with
EITF
01-09,
we
record the value of the coupon at the same time the coupon is
actually used in a purchase as a reduction of revenues from
transaction fees. Stamps are awarded to buyers after completion
of a purchase transaction and may be accumulated and redeemed
for discount coupons or used for other services. We charge
sellers for issuing stamps and recognize the revenues when
coupons, converted from stamps, are used for a purchase or when
stamps are used for other services.
Accounting for stock-based compensation
Prior to January 1, 2006, we accounted for stock-based
compensation in accordance with the provisions of
SFAS No. 123,
Accounting for Stock Based
Compensation,
using the fair value method based on the
Black-Scholes Option Pricing ("Black-Scholes") model.
Under the fair value method, stock-based compensation costs are
measured at the date of grant based on the fair value of the
award and recognized over the service period on a straight-line
basis. The determination of fair value of the award at the date
of grant using the Black-Scholes model requires estimates about
our expected dividend yield, expected risk free interest rate,
expected volatility, expected life and the fair value of our
common shares on the date of grant.
All stock options granted as of December 31, 2006 were
granted prior to our initial public offering on the Nasdaq. We
have used an independent appraisal firm to assist us with the
valuation of our common shares and our stock options at each
date of grant. The determination of the fair value of our common
shares on each date of grant was a two step process: first, it
was necessary to calculate a deemed business enterprise value
for us, and second, it was necessary to calculate an estimated
fair value of our common shares on a non-marketable, minority
basis. The business enterprise value was determined based on an
income approach, using the discounted cash flow method and an
estimated weighted average cost of capital, utilizing a venture
capital rate of return. Then, for benchmarking purposes only,
implied revenue multiples were calculated based on the value
determined under the income approach, and compared to the
revenue multiples of comparable companies. The estimated fair
value of our common shares was calculated using an option
pricing model, using the business enterprise value, an estimated
volatility, a time to liquidation and a risk free interest rate.
Determination of the fair value of our common shares involves
complex and subjective judgments regarding projected financial
and operating results, our unique business risks, the liquidity
of our shares and our operating history and prospects at the
time of grant. If we make different judgments or adopt different
assumptions, material differences could result in the timing and
amount of the share-based compensation expenses recorded because
the estimated fair value of the underlying shares for the
options granted would be different.
As of January 1, 2006, we adopted Statement of Financial
Accounting Standards ("SFAS") No. 123(R),
Share-Based Payment,
using the modified prospective
application transition method. Because the fair value
recognition provisions of SFAS No. 123,
Stock-Based
Compensation,
and SFAS No. 123(R) were materially
consistent under our equity plans, the adoption of
SFAS No. 123(R) did not have a significant impact on
our financial position or our results of operations.
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The adoption of SFAS 123(R) resulted in a cumulative
benefit from accounting change of W19 million, which
reflects the net cumulative impact of estimated future
forfeitures in the determination of period expense, rather than
recording forfeitures when they occur as previously permitted
under SFAS 123.
Internal control over financial reporting
We have identified significant deficiencies (as defined under
Standards of the Public Company Accounting Oversight Board
(United States)) in our system of internal control over
financial reporting. Most of these deficiencies relate to the
resources we currently have in place to meet our accounting and
financial reporting requirements, which in turn contribute to
the existence of other deficiencies related to our internal
control over financial reporting including, but not limited to,
our ability to produce financial statements in a timely and
accurate manner in accordance with U.S. GAAP. In order to
address such deficiencies, we have hired additional finance and
accounting personnel and continue to evaluate the need to add
additional resources to assist us in the preparation of our
financial statements under U.S. GAAP and to assist us in
improving our system of internal control over financial
reporting. However, there can be no assurance that such efforts
will significantly further improve our system of internal
control over financial reporting.
Beginning with the year ending December 31, 2007.
Section 404 of the Sarbanes-Oxley Act will require us to,
among other things, maintain an effective system of internal
control over financial reporting, and will require our
management to provide a certification on the effectiveness of
our internal control on an annual basis. In 2006, we continued
the preparation for compliance with Section 404 of the
Sarbanes-Oxley Act, we may identify additional deficiencies in
our system of internal control over financial reporting, and, if
so, will take corrective actions accordingly for their
remediation. We cannot assure you that we will be able to
complete the documentation, testing and, if appropriate,
remediation work necessary to comply with Section 404 of
the Sarbanes-Oxley Act, or that we or our independent public
accountants will not identify material weaknesses in our
internal control.
Recent accounting pronouncements
In July 2006, the Financial Accounting Standards Board
("FASB") issued Financial Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109"
("FIN 48"), which is a change in accounting for
income taxes. Among other provisions, FIN 48 specifies how
tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires
certain disclosures of uncertain tax matters; specifies how
reserves for uncertain tax positions should be classified on the
balance sheet; and provides transition and interim-period
guidance. FIN 48 is effective for fiscal years beginning
after December 15, 2006 and as a result, is effective for
us from January 1, 2007. The adoption of FIN 48 did
not have a material impact on our financial position, results of
operations or cash flows.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157 ("SFAS 157"),
"Fair Value Measurements," which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements. SFAS 157
does not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various prior
accounting pronouncements. SFAS 157 is effective for fiscal
years beginning after November 15, 2007. Earlier adoption
is permitted, provided the company has not yet issued financial
statements, including for interim periods, for that fiscal year.
We are currently evaluating the impact of SFAS 157, but do
not expect the adoption of SFAS 157 to have a material
impact on our financial position, results of operations or cash
flows.
In September 2006, the FASB issued SFAS No. 158,
"Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plans-An Amendment of FASB No. 87, 88,
106 and 132(R)" ("SFAS 158"). SFAS 158
requires that the funded status of defined benefit postretirement
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plans be recognized on the company's balance sheet, and
changes in the funded status be reflected in comprehensive
income, effective fiscal years ending after December 15,
2006. The standard also requires companies to measure the funded
status of the plan as of the date of its fiscal year-end,
effective for fiscal years ending after December 15, 2008.
The adoption of SFAS 158 will not have a material impact on
our financial position, results of operations or cash flows.
Results of Operations
Our business has grown rapidly since we commenced operations in
2000, particularly in the past three years. Our limited
operating history makes it difficult to predict future operating
results. We believe that period-to-period comparisons of
operating results should not be relied upon as indicative of
future performance.
2006 compared to 2005
The following table sets forth selective line items and the
percentage of net sales that they represent for Gmarket for the
fiscal years 2006 and 2005.
Year ended
Year ended
December 31,
Percentage of
December 31,
Percentage of
Percentage
2006
Revenues
2005
Revenues
Increase
(in billions of Korean Won)
Total revenues
154.13
100.0
%
70.34
100.0
%
119.1
%
Cost of revenues
(78.95
)
51.2
%
(36.69
)
52.2
%
115.2
%
Sales and marketing
(46.43
)
30.1
%
(24.80
)
35.2
%
87.2
%
General and administrative
(14.57
)
9.5
%
(5.29
)
7.5
%
175.6
%
Operating Income
14.18
9.2
%
3.56
5.1
%
298.2
%
Revenues.
Our total revenues increased by 119.1% to
Won 154.13 billion (US$166.56 million) in the
year ended December 31, 2006 from
Won 70.34 billion in the year ended December 31,
2005. This increase was primarily due to:
•
a 74.8% increase in transaction fee revenues to
    Won 99.25 billion (US$107.25 million) in the year
    ended December 31, 2006 from Won 56.78 billion in
    the year ended December 31, 2005, primarily due to a 109.9%
    increase in GMV to Won 2,268.20 billion
    (US$2,451.05 million) for the year ended December 31,
    2006 from Won 1,080.86 billion for the year ended
    December 31, 2005; and
•
a 304.7% increase in advertising and other revenues to
    Won 54.88 billion (US$59.31 million) in the year
    ended December 31, 2006 from Won 13.56 billion in the
    year ended December 31, 2005, primarily as a result of an
    increase in revenues from standard and premium listing, banner
    advertisement, keyword search fees and non-seller advertisement.
The portion of our total revenues attributable to advertising
and other revenues increased to 35.6% in the year ended
December 31, 2006 from 19.3% in the year ended
December 31, 2005, due to the addition of approximately
3.8 million new sellers and buyers during 2006. We believe
as the number of high volume sellers increases, the increased
competition among sellers results in sellers increasing their
advertising expenditures to promote their products.
Additionally, as the number of unique visitors increased to
18.4 million during the month of December 2006 from
14.2 million during the month of December 2005, our website
became an increasingly attractive advertising forum for sellers.
The deduction in our transaction fee revenues attributable to
Gmarket Miles was Won 3.64 billion
(US$3.93 million) for the year ended December 31,
2006, compared to Won 2.11 billion for the year ended
December 31, 2005, and the deduction for discount coupons
and
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Gmarket Stamps was Won 2.76 billion
(US$2.98 million) for the year ended December 31,
2006. See "—Critical Accounting Policies."
Cost of revenues.
Our cost of revenues, which represented
51.2% and 52.2% of total revenues for the year ended
December 31, 2006 and 2005, respectively, increased by
115.2% to Won 78.95 billion (US$85.32 million) in
the year ended December 31, 2006 from
Won 36.69 billion in the year ended December 31,
2005, primarily due to:
•
a 99.9% increase in credit card commissions and bank charges to
    Won 41.76 billion (US$45.13 million) in the year ended
    December 31, 2006 from Won 20.89 billion in the
    year ended December 31, 2005, reflecting the increase in
    GMV and number of transactions over the period;
•
a 85.6% increase in click-through fees to
    Won 18.62 billion (US$20.12 million) in the year
    ended December 31, 2006 from Won 10.03 billion in
    the year ended December 31, 2005, reflecting the increase
    in our marketing efforts to promote our website, and the
    products offered on our website; and
•
a 222.0% increase in other costs to Won 18.57 billion
    (US$20.08 million) in the year ended December 31, 2006
    from Won 5.77 billion in the year ended
    December 31, 2005, primarily as a result of increases in
    network and systems maintenance fees, salaries and other
    compensation expenses, and depreciation expenses, due to the
    increase in GMV and expansion of our technology systems to
    accommodate the increased number of sellers, buyers and
    transactions.
Sales and marketing expenses.
Our sales and marketing
expenses, which represented 30.1% and 35.3% of total revenues in
the year ended December 31, 2006 and 2005, respectively,
increased by 87.2% to Won 46.43 billion
(US$50.17 million) in the year ended December 31, 2006
from Won 24.80 billion in the year ended
December 31, 2005, primarily resulting from:
•
a 94.8% increase in advertising expense to
    Won 27.35 billion (US$29.56 million) in the year
    ended December 31, 2006 from Won 14.04 billion in
    the year ended December 31, 2005, reflecting our expanded
    marketing efforts in 2006, including our online and offline
    advertisements;
•
a 74.3% increase in call center expenses to
    Won 11.87 billion (US$12.82 million) in the year
    ended December 31, 2006 from Won 6.81 billion in
    the year ended December 31, 2005, due to the increased head
    count at our outsourced call center;
•
a 117.2% increase in promotion expense for sales to
    Won 2.52 billion (US$2.72 million) in the year
    ended December 31, 2006 from Won 1.16 billion in the
    year ended December 31, 2005, reflecting the increase in
    our name brand and image enhancement promotional activities; and
•
a 68.1% increase in other costs to Won 4.69 billion
    (US$5.07 million) in the year ended December 31, 2006
    from Won 2.79 billion in the year ended
    December 31, 2005, primarily as a result of an increase of,
    and salaries and other compensation paid to, marketing employees.
General and administrative expenses.
Our general and
administrative expenses, which represented 9.5% and 7.5% of
total revenues in the year ended December 31, 2006 and
2005, respectively, increased by 175.4% to
Won 14.57 billion (US$15.75 million) in the year
ended December 31, 2006 from Won 5.29 billion in
the year ended December 31, 2005. This increase was
primarily due to a 163.8% increase in salaries and other
compensation expenses to Won 7.94 billion
(US$8.58 million) in the year ended December 31, 2006
from Won 3.01 billion in the year ended
December 31, 2005, due to an increase in administrative
employees (which include our research and development employees)
and as a result of our continuing focus on research and
development of software and technology.
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Operating income.
As a result of the foregoing, we
recorded operating income of Won 14.18 billion
(US$15.32 million) in the year ended December 31,
2006, as compared to operating income of
Won 3.56 billion in the year ended December 31,
2005.
Other income (expense).
Our other income increased to
Won 5.39 billion (US$5.83 million) in the year
ended December 31, 2006 from Won 1.40 billion in
the year ended December 31, 2005, primarily due to an
increase in interest income to Won 5.19 billion
(US$5.61 million) in the year ended December 31, 2006
from Won 1.40 billion in the year ended
December 31, 2005, primarily as a result of an increase in
cash we held in respect of the amounts payable to sellers as our
GMV increased and the inclusion of net proceeds after the
issuance of American Depository Shares in July 2006.
Income tax expenses.
For the year ended December 31,
2006, we generated taxable income. As a result, we recorded
Won 3.29 billion (US$3.55 million) of income tax
expenses.
Net income.
As a result of the foregoing, we recorded a
net income of Won 16.28 billion
(US$17.60 million) in the year ended December 31, 2006
compared to a net income of Won 5.09 billion in the
year ended December 31, 2005.
2005 compared to 2004
The following table sets forth selective line items and the
percentage of net sales that they represent for Gmarket for the
fiscal years 2005 and 2004.
Year ended
Year ended
December 31,
Percentage of
December 31,
Percentage of
Percentage
2005
Revenues
2004
Revenues
Increase
(in billions of Korean Won)
Total revenues
70.34
100.0
%
14.14
100.0
%
397
%
Cost of revenues
(36.69
)
52.2
%
(8.42
)
59.5
%
336
%
Sales and marketing
(24.80
)
35.2
%
(5.36
)
37.9
%
363
%
General and administrative
(5.29
)
7.5
%
(1.91
)
13.5
%
177
%
Operating Income (loss)
3.56
5.1
%
(1.55
)
—
—
Revenues.
Our total revenues increased by 397.5% to Won
70.34 billion (US$72.40 million) in the year ended
December 31, 2005 from Won 14.14 billion in the year
ended December 31, 2004. This increase was primarily due to:
•
a 371.6% increase in transaction fee revenues to
    Won 56.78 billion (US$58.45 million) in the year
    ended December 31, 2005 from Won 12.04 billion in
    the year ended December 31, 2004, primarily due to a 381.5%
    increase in GMV to Won 1,080.86 billion
    (US$1,112.68 million) for the year ended December 31,
    2005 from Won 224.50 billion for the year ended
    December 31, 2004; and
•
a 545.7% increase in advertising and other revenues to
    Won 13.56 billion (US$13.95 million) in the year
    ended December 31, 2005 from Won 2.10 billion in the
    year ended December 31, 2004, primarily as a result of an
    increase in revenues from standard and premium listing, banner
    advertisement and keyword search fees.
The portion of our total revenues attributable to advertising
and other revenues increased to 19.3% in the year ended
December 31, 2005 from 14.9% in the year ended
December 31, 2004, due to the addition of approximately
7.2 million new sellers and buyers during 2005. We believe
as the number of high volume sellers increases, the increased
competition among sellers results in sellers increasing their
advertising expenditures to promote their products.
Additionally, as the number of unique visitors to our website
increased to 14.2 million during the month of December
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2005 from 9.2 million during the month of December 2004,
our website became an increasingly attractive advertising forum
for sellers.
The deduction in our transaction fee revenues attributable to
Gmarket Miles was Won 2.11 billion
(US$2.17 million) for the year ended December 31,
2005, compared to Won 0.27 billion for the year ended
December 31, 2004, and the deduction for discount coupons
and Gmarket Stamps was Won 0.28 billion
(US$0.29 million) for the year ended December 31,
2005. See "—Critical Accounting Policies."
Cost of revenues.
Our cost of revenues, which represented
52.2% and 59.5% of total revenues for the year ended
December 31, 2005 and 2004, respectively, increased by
335.7% to Won 36.69 billion (US$37.76 million) in
the year ended December 31, 2005 from
Won 8.42 billion in the year ended December 31,
2004, primarily due to:
•
a 379.1% increase in credit card commissions and bank charges to
    Won 20.89 billion (US$21.50 million) in the year
    ended December 31, 2005 from Won 4.36 billion in
    the year ended December 31, 2004, reflecting the increase
    in GMV and number of transactions over the period;
•
a 347.8% increase in click-through fees to
    Won 10.03 billion (US$10.32 million) in the year
    ended December 31, 2005 from Won 2.24 billion in
    the year ended December 31, 2004, reflecting the increase
    in our marketing efforts to promote our website, and the
    products offered on our website; and
•
a 217.0% increase in other costs to Won 5.77 billion
    (US$5.94 million) in the year ended December 31, 2005
    from Won 1.82 billion in the year ended
    December 31, 2004, primarily as a result of increases in
    network and systems maintenance fees, salaries and other
    compensation expenses, and depreciation expenses, due to the
    increase in GMV and expansion of our technology systems to
    accommodate the increased number of sellers, buyers and
    transactions.
Sales and marketing expenses.
Our sales and marketing
expenses, which represented 35.3% and 37.9% of total revenues in
the year ended December 31, 2005 and 2004, respectively,
increased by 362.7% to Won 24.80 billion
(US$25.53 million) in the year ended December 31, 2005
from Won 5.36 billion in the year ended December 31,
2004, primarily resulting from:
•
a 410.5% increase in advertising expense to Won
    14.04 billion (US$14.45 million) in the year ended
    December 31, 2005 from Won 2.75 billion in the year
    ended December 31, 2004, reflecting our expanded marketing
    efforts in 2005, including our online and offline advertisements;
•
a 366.2% increase in call center expenses to Won
    6.62 billion (US$6.81 million) in the year ended
    December 31, 2005 from Won 1.42 billion in the year
    ended December 31, 2004, due to the increased head count at
    our outsourced call center to 520 customer service professionals
    as of December 31, 2005 from 140 as of December 31,
    2004;
•
a 3,767% increase in promotion expense for sales to Won
    1.16 billion (US$1.19 million) in the year ended
    December 31, 2005 from Won 0.03 billion in the year
    ended December 31, 2004, reflecting the increase in our
    name brand and image enhancement promotional activities; and
•
a 156.9% increase in other costs to Won 2.98 billion
    (US$3.08 million) in the year ended December 31, 2005
    from Won 1.16 billion in the year ended December 31,
    2004, primarily as a result of an increase of, and salaries and
    other compensation paid to, marketing employees.
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General and administrative expenses.
Our general and
administrative expenses, which represented 7.5% and 13.5% of
total revenues in the year ended December 31, 2005 and
2004, respectively, increased by 177.0% to
Won 5.29 billion (US$5.44 million) in the year
ended December 31, 2005 from Won 1.91 billion in
the year ended December 31, 2004. This increase was
primarily due to a 123.0% increase in salaries and other
compensation expenses to Won 3.01 billion
(US$3.10 million) in the year ended December 31, 2005
from Won 1.35 billion in the year ended
December 31, 2004, due to an increase of, and salaries and
other compensation paid to, administrative employees (which
include our research and development employees) and as a result
of our continuing focus on research and development of software
and technology.
Operating income (loss).
As a result of the foregoing, we
recorded operating income of Won 3.56 billion
(US$3.67 million) in the year ended December 31, 2005,
as compared to operating loss of Won 1.55 billion in
the year ended December 31, 2004.
Other income (expense).
Our other income increased to
Won 1.40 billion (US$1.43 million) in the year
ended December 31, 2005 from Won 0.11 billion in
the year ended December 31, 2004, primarily due to an
increase in interest income to Won 1.40 billion
(US$1.43 million) in the year ended December 31, 2005
from Won 0.13 billion in the year ended
December 31, 2004, primarily as a result of an increase in
cash we held in respect of the amounts payable to sellers as our
GMV increased.
Income tax expenses.
In 2005, we generated taxable
income. However, as we had available loss-carryforwards of
Won 3.19 billion at December 31, 2004, we
utilized such amounts in 2005, paid Won 0.12 billion
(US$0.12 million) of current income taxes and recorded
income tax benefits of Won 0.13 billion
(US$0.14 million) due to deferred income tax asset of
Won 0.25 billion (US$0.26 million) at
December 31, 2005.
Net income (loss).
As a result of the foregoing, we
recorded a net income of Won 5.09 billion
(US$5.24 million) in the year ended December 31, 2005
compared to a net loss of Won 1.44 billion in the year
ended December 31, 2004.
Exchange Rates
See "Item 3.A. Selected Financial Data— Exchange
Rates."
5.B.
Liquidity and Capital Resources
As of December 31, 2006, we had a working capital, which is
the difference between total current assets less total current
liabilities, of Won 78.8 billion, including cash and
cash equivalents of Won 34.9 billion and cash on
deposit of Won 134.4 billion, compared to a working
capital deficit of Won 7.86 billion, including cash
and cash equivalents of Won 36.90 billion, as of
December 31, 2005. We treat the amount payable from the
buyers to the sellers held during the period in transit, which
ranges from seven days to 30 days, as working capital. The
increase in working capital as of December 31, 2006 is
primarily attributable to the net proceeds of US$84 million
from our initial public offering on June 29, 2006. We added
these net proceeds to the balance sheet after the issuance of
American Depositary Shares to investors, the closing of which
took place on July 5, 2006. As of December 31, 2006,
we had no loans outstanding. We believe that our available cash
and cash flows generated from operations will be sufficient to
satisfy our working capital and capital expenditure requirements
for the foreseeable future.
Net cash from operating activities was Won 29.9 billion in
2006 compared with Won 74.0 billion in 2005, and Won
20.4 billion in 2004. In 2006, net cash generated from
operating activities decreased primarily due to a decrease in
amount payable to sellers.
Net cash used in investing activities primarily consists of cash
on deposit, capital expenditures and restricted cash. Cash on
deposit is cash we hold in term deposit accounts with financial
institutions in Korea with terms of one year or less, although
we may withdraw funds from those
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Table of Contents
accounts on demand before maturity by forfeiting some of the
accrued interest. Capital expenditures relate to purchases of
computers and servers and other technology systems hardware and
software to accommodate the growth of our business. Restricted
cash is the security deposit we are required to maintain with
certain credit companies that process credit card payments.
Net cash used in investing activities in 2006 was
Won 111.9 billion compared with
Won 56.7 billion in 2005, and
Won 9.0 billion in 2004. Cash flows from investing
activities in 2006 includes increase in cash on deposit of
Won 88.8 billion, compared with
Won 39.2 billion in 2005, and
Won 6.1 billion in 2004. The increase in 2006 were due
primarily to net proceeds received from the initial public
offering. Capital expenditures for 2006 were
Won 14.8 billion compared with
Won 7.3 billion in 2005 and Won 1.9 billion
in 2004.
Net cash provided by financing activities increased to
Won 80.1 billion in 2006 compared with
Won 0.5 billion in 2005, primarily as a result of the
inclusion of net proceeds from the initial public offering
during 2006. Net cash provided by financing activities in 2004
was Won 6.6 billion, primarily due to receipt of
proceeds from an issuance of preferred shares, offset in part by
an early repayment of our bank loans.
We currently do not anticipate any potentially significant
refinancing requirements in 2007.
Capital requirements and resources
Our capital expenditures are comprised primarily of purchases of
computers and servers and other technology related systems. We
do not own any real property. In each of the years ended
December 31, 2006, 2005 and 2004, we spent
Won 14.7 billion, Won 7.3 billion and
Won 1.9 billion, respectively, on the purchase of
property and equipment. We expect to have capital expenditure
requirements for our ongoing expansion and development of our
business, including expenditures for expansion and upgrades of
our Internet servers and databases. We currently estimate our
capital expenditures for 2007 will total approximately
Won 20.0 billion.
5.C.
Research and Development, Patents and Licenses, etc.
As an e-commerce marketplace, we believe the success of our
business depends, in large part, on the development and
introduction of new technologies and development initiatives
that meet the ever-changing needs of our buyers and sellers.
Our R&D policy is focused on four key points:
Customize key technology solutions:
There are many
solutions used for multi-purposes in the Internet business
environment, such as search functionalities or VoIP
communication technologies. We are customizing these
technologies to meet the specific needs and demands of the
e-commerce industry.
Expand our platforms to the global level:
Our role is to
provide e-commerce platforms sought after by the marketplace. To
be established as a global player, our existing platforms should
be able to accommodate the needs of the global market as well as
the domestic market.
Utilize historical data more productively:
For the
benefit of both buyers and sellers, we are better utilizing our
historical data to create more relevant and accurate search
results and "best sellers" lists. Also, we are
carefully analyzing our buyers' purchasing histories and
trends in order to create more useful "recommended
products" lists for our buyers.
Facilitate user participation:
As user-generated contents
are emerging as a new trend, we are working on platforms that
facilitate active user participation.
For the years 2006, 2005, and 2004, we spent approximately 2.93
Won, 1.41 billion Won and 0.58 billion Won,
respectively, on research and development activities.
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5.D.
Trend Information
Trends, uncertainties and events which could have a material
impact on our sales, operating revenues and liquidity and
capital resources are discussed above in Item 5.A.
"—Operating Results" and Item 5.B.
"—Liquidity and Capital Resources."
5.E.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures
or capital resources that is material to investors.
5.F.
Tabular Disclosure of Contractual Obligations
The following table summarizes our contractual obligations as of
December 31, 2006 and the effect these obligations are
expected to have on our liquidity and cash flows in future
periods.
Payments due by period
Less than
More than
Total
1 year
1-3 years
3-5 years
5 years
(In billions of Won)
Description of Contractual
    Obligations
LIG Tower office
    lease
(1)
W1.69
W1.45
W0.24
W—
W—
Fine Tower office
    lease
(2)
1.71
0.93
0.78
—
—
Notes:
(1)
Lease of 4,282 square meters of office space for our
    headquarters in Seoul, Korea, beginning in February 2006. The
    term of the lease is for one year from February 27, 2006
    and the lease may be renewed for subsequent one-year terms. We
    renewed the lease on February 28, 2007 which expires on
    February 29, 2008. We paid a security deposit in connection
    with this lease in the amount of approximately
    Won 0.81 billion (US$0.88 million).
(2)
Lease of 3,759 square meters of office space in Seoul, Korea,
    beginning in October 2006 and ending in October 2008. We paid a
    security deposit in connection with this lease in the amount of
    approximately Won 3.13 billion (US$3.38 million).
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ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A.
Directors and Senior Management
Executive Officers and Directors
The following table sets forth information regarding our
executive officers and directors as of the date of this filing.
Executive Officers and Directors
Age
Position/Title
Young Bae Ku
41
Representative Director and Chief
    Executive Officer
Duckjun (D.J.) Lee
41
Chief Financial Officer
Dae Sik Yang
36
Chief Technology Officer
Kwang Jin Ryoo
34
Vice President—e-Market
    Operations
Paul J. Lee
34
General Counsel
Ki Hyung Lee
44
Non-Standing Director and Chairman
    of the Board of Directors
Sang Kyu Lee
40
Non-Standing Director
John E. Milburn
45
Outside Director
Massoud Entekhabi
52
Outside Director and Audit
    Committee Member
Hakkyun Kim
44
Outside Director and Audit
    Committee Member
Joon-Ho Hahm
43
Outside Director and Audit
    Committee Member
Seok-Heon Kim
44
Outside Director
Greg Mrva
37
Outside Director
Standing directors are directors who work for us full-time and
hold executive officer positions with us. Non-standing directors
are directors who serve in their positions on a part-time basis.
There is no legal distinction between standing and non-standing
directors under the Korean Commercial Code.
Young Bae Ku
has served as our chief executive
officer and representative director since October 2001. Prior to
assuming such position, Mr. Ku was our director in charge
of business operations from March to October of 2001. Prior to
joining us in October 2000, Mr. Ku led the development of
Goodsdaq pilot service at Interpark Corporation from August 1999
to April 2000 and was responsible for business development in
the United States for Interpark Goodsdaq Corporation from April
to September 2000. Before joining Interpark Corporation,
Mr. Ku led field operations in oilfield services for
Schlumberger in the Middle East and India from March 1991 to
June 1999. Mr. Ku received a Bachelor's degree in
Petroleum and Mineral Engineering from Seoul National University.
Duckjun (D.J.) Lee
has served as our chief
financial officer since July 2005. Prior to joining our company,
Mr. Lee was an investment banker at Credit Suisse First
Boston, Seoul Branch, from August 2003 to July 2005, Citigroup
from May 2000 to December 2002 and Schroders from March 1997 to
April 2000. As an investment banker, Mr. Lee advised Korean
and multinational companies on cross-border mergers &
acquisitions, corporate restructuring and capital markets
transactions across various industries, including technology,
telecommunications, consumer, industrial and financial services.
Mr. Lee received a Bachelor's degree in Business
Administration from Seoul National University and a Master of
Science in Accounting and Finance from the London School of
Economics and Political Science.
Dae Sik Yang
has served as our chief technology
officer since October 2000 and is currently the head of our
research and development center. Mr. Yang joined us in
February 2000 for the
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Goodsdaq pilot development project. Prior to that, he was a
software developer at Korea Securities Computer Corporation, or
KOSCOM, from August 1998 to February 2000. Mr. Yang was
involved from the beginning in the development of the e-commerce
platform currently being used by us, and has held supervisory
position. While at KOSCOM, Mr. Yang led the efforts to
develop information processing programs. Mr. Yang received
a Bachelor's degree in Computer Engineering from Seoul
National University.
Kwang Jin Ryoo
has been the vice president—
e-Market Operations since January 2006, having joined us in
2000. From June 2004 until January 2006, Mr. Ryoo served as
division manager of our
e-Market
business
division. Prior to assuming that position, Mr. Ryoo served
as assistant manager, deputy manager and general manager of
various marketing departments, including our electronics and
computers department,
e-Market
business
division and
e-Market
category management division. Prior to joining us, Mr. Ryoo
worked at Duzon Digitalware Co., Ltd. from March 1999 to
April 2000, where he was responsible for marketing and
conducting beta testing for newly developed software programs.
Mr. Ryoo received a Bachelor's degree in Law from
Kangnam University.
Paul J. Lee
has served as our general counsel
since February 2006. Prior to joining our company, Mr. Lee
was a foreign legal consultant at Kim & Chang in Seoul
from August 2001 to December 2005, where his primary practice
areas included mergers and acquisitions and general corporate
matters. Previously, Mr. Lee worked at Squire
Sanders & Dempsey LLP in Los Angeles from October 1999
to June 2001 as a corporate associate. Mr. Lee received a
Bachelor's degree in Political Science from Columbia
College and a Juris Doctor degree from the Columbia University
School of Law.
Ki Hyung Lee
has served as our director since
April 2000. Mr. Lee has been the Chairman of Interpark
Corporation, our largest shareholder, from October 1997.
Mr. Lee was responsible for establishing Interpark
Corporation in October 1997, one of the earliest e-commerce
business companies in Korea, which was begun as a business unit
within Dacom Corporation. Mr. Lee has led Interpark's
efforts to expand its online business to ticketing, tourism and
shopping. Mr. Lee also serves as a director of Korea
On-Line Shopping Association. Mr. Lee received a
Bachelor's degree in Astronomy from Seoul National
University in 1987.
Sang Kyu Lee
has served as our director since
April 2000. Mr. Lee was our former chief executive officer,
from April 2000 to September 2001. Mr. Lee is currently the
chief executive officer of Interpark Corporation, our largest
shareholder. Prior to becoming the chief executive officer of
Interpark, Mr. Lee served in various roles, including as
head of strategy, managing director and executive vice president
of Interpark. Mr. Lee received a Bachelor's degree in
International Economics from Seoul National University.
John E. Milburn
has served as our director since
December 2004. Mr. Milburn has been the managing general
partner of Newton Technology Partners, a firm specializing in
technology investments in Korea, since January 2000. He is an
advisor to many companies in Korea and throughout the Asia
Pacific region, particularly telecommunications companies.
Mr. Milburn was vice president in charge of Internet
Technology and Business Development at Dacom Corporation from
December 1996 to September 2000. While at Dacom he was
responsible for developing the largest consumer and commercial
ISP in Asia. He was also instrumental in creating new
value-added services businesses, and was the founder of KIDC,
the highest traffic Internet data center in the world.
Mr. Milburn was nominated by A. Bohl Praktijk B.V. for his
current position with us. Mr. Milburn received a
Bachelor's degree in Nuclear Engineering from the
University of California at Berkeley, was a scientist with the
U.S. Department of Energy for 10 years, and has lived and
worked in Korea since May 1991.
Massoud Entekhabi
has served as our director since
December 2005 and serves as the chairman of our audit committee.
Mr. Entekhabi is a managing director and founder of Zenith
Equity Partners, a private equity firm based in southern
California. Prior to founding Zenith Equity Partners,
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from 2000 to 2003, Mr. Entekhabi was a general partner and
managing director of TL Ventures, a nationally focused venture
capital firm with over US$1.4 billion under management.
From 1973 to 2000, Mr. Entekhabi was with Coopers &
Lybrand LLP and PricewaterhouseCoopers LLP, where he held
various senior management positions and was a partner.
Mr. Entekhabi is Fellow of Institute of Chartered
Accountants in England & Wales and is also a Certified
Public Accountant in the United States.
Hakkyun Kim
has served as our director and member
of our audit committee since December 2005. Mr. Kim is
currently an attorney at Pillsbury Winthrop Shaw Pittman LLP, a
major U.S.-based law firm, in their Washington, DC office, where
he focuses his practice on business and public policy matters
affecting clients from, or with interests in, Korea and Asia.
Previously, Mr. Kim worked at various other major
U.S.-based law firms, where he represented Korean companies in
connection with establishment of new operations in the U.S.,
including compliance with U.S. regulatory requirements. Prior to
practicing law, Mr. Kim served as an economist at The Bank
of Korea, the central bank of Korea, for over 10 years,
where he worked in the areas of foreign asset management,
domestic open market operation and monetary policy decision
making. Mr. Kim received a Bachelor's degree in Law
and Economics from Seoul National University and a Juris Doctor
degree from the University of Minnesota Law School.
Joon-Ho Hahm
has served as our director and member
of our audit committee since December 2005. Mr. Hahm is an
Associate Professor of International Economics and Finance at
Yonsei University in Korea. Mr. Hahm's focus is on
financial markets and institutions, bank supervision, exchange
rates and interest rates, risk management, debt management and
consumption and savings. Mr. Hahm received a
Bachelor's degree in English Literature and Business
Administration from Seoul National University in 1986, a Master
of Business Administration from Columbia University in 1988 and
a Ph.D. in Finance and Economics from Columbia University in
1993. Mr. Hahm has served in a variety of consultative
roles for the Korean government and international organizations,
including the World Bank. Mr. Hahm is also serving as an
outside non-executive director of Prudential Asset Management
Co., Ltd. and a member of the Advisory Committee of Hana Bank.
Seok-Heon Kim
is the managing partner of
Cornerstone Equity Partners, a leading Korean private equity
firm specializing in buyout and significant control
transactions. Mr. Kim has over 15 years of experience
that has covered private equity, investment banking, corporate
finance and corporate operations. Prior to Cornerstone, he held
an executive role at Korea Investment & Securities
where he led the establishment of Cornerstone, a subsidiary of
Korea Investment Holdings which is a listed financial services
holding company. He has also served as the head of Korea for CVC
Asia Pacific Limited, head of M&A for ABN AMRO Seoul, group
leader in Ernst & Young Korea's M&A practice,
and at LG Chem., Ltd. Mr. Kim holds a Bachelor's
degree in Public Law from the Seoul National University and a
Master of Business Administration degree from the University of
Washington.
Greg Mrva
joined Yahoo! Inc. in June 2005. In his
role as Vice President of Mergers and Acquisitions, he is a key
participant in the development of the Company's strategy
and in the identification and execution of new business
opportunities including investments, acquisitions, strategic
partnerships and joint ventures. Prior to joining Yahoo! Inc.,
Mr. Mrva was an investment professional with Texas Pacific
Group, a well-know private equity and investment firm, from 2003
to 2005. Prior to TPG, Mr. Mrva was Vice President of
Corporate Development at Mpath Interactive, an Internet media
and entertainment company, from 1999 to 2002. Mr. Mrva has
also worked for Montgomery Securities where he worked on private
equity investments in the technology and media sectors. He began
his career with Goldman Sachs in New York as a financial analyst
in the Mergers and Acquisitions group. Mr. Mrva graduated from
the University of Virginia with a Bachelor of Arts in History
and Economics with high distinction, and holds a Juris Doctor
degree magna cum laude from Harvard Law School.
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6.B.
Compensation
Compensation of Directors and Officers
We currently do not have any outstanding loans to our executive
officers. We currently do not have any guarantee obligations
with respect to any borrowings by any of our directors or
executive officers. The remuneration paid to our directors and
executive officers, in the aggregate, during the year ended
December 31, 2006 totaled approximately
Won 1.36 billion, which excludes
Won 0.14 billion set aside or accrued to provide for
retirement benefits to five of our executive officers. The
accrued severance benefits for our executive officers as of
December 31, 2006 and March 31, 2007 were
Won 168.9 million and Won 184.3 million,
respectively. The annual maximum aggregate amount of
remuneration for directors is determined by a shareholder
resolution. We also reimburse our directors for expenses they
incur in performance of their services. In addition, we maintain
four cars for our executive officers primarily for business use,
but which can at times also be used for their personal use.
Employees and directors with one year or more of service are
entitled to receive a lump-sum payment upon termination of their
employment with us based on the length of service and rate of
pay at the time of termination. Accrued severance benefits are
estimated assuming all eligible employees terminate their
employment at the balance sheet date. The annual severance
benefits expense charged to operations is calculated based upon
the net change in the accrued severance benefits payable at the
balance sheet date. We are required to pay 4.5% of each
employee's annual wages to the National Pension Service.
The total amount of contributions made to the Korea National
Pension Service in 2006, 2005 and 2004, was
Won 353.3 million, Won 143.0 million and
Won 77.4 million, respectively. The accrued severance
benefits as of December 31, 2004, 2005 and 2006, were
Won 465.3 million, Won 428.1 million and
Won 1,396.7 million, respectively.
We maintain a directors' and officers' liability
insurance policy covering certain potential liabilities of our
directors and officers.
6.C.
Board Practices
Board of Directors
Our board of directors has the ultimate responsibility for the
administration of our affairs. Our articles of incorporation, as
currently in effect, provide for a board of directors comprised
of standing directors and non-standing directors, including
outside directors. Non-standing directors have the same rights
and duties as those of standing directors, but are not executive
officers, or otherwise employed by us. Under our articles of
incorporation, directors serve a three-year term (in case of an
outside director, one-year term), but if the term ends prior to
the date of the ordinary general meeting of shareholders in the
last fiscal year of their term, the term will be extended until
the close of the ordinary general meeting of shareholders. The
three-year term of Mr. Young Bae Ku will end on
March 29, 2010 and those of Messrs. Ki Hyung Lee and
Sang Kyu Lee will end on March 28, 2009. The one-year terms
of Messrs. John E. Milburn, Massoud Entekhabi, Seok-Heon
Kim, Hakkyun Kim and Joon-Ho Hahm will end on March 29,
2008. The three-year term of Mr. Greg Mrva will end on
December 28, 2009. Our shareholders may remove directors
from office by a resolution at a general meeting of shareholders
adopted by the holders of at least two-thirds of the voting
shares present or represented at the meeting which also
represents at least one-third of our total voting shares then
issued and outstanding. Our articles of incorporation provide
for a board of directors of up to nine members, the majority of
whom must be outside directors. We currently have a total of
nine directors, five of whom are outside directors. In
connection with Yahoo! Korea's purchase of approximately
9.1% of our common shares from DutchCo, we increased the number
of our board of directors to nine directors to accommodate the
nomination of Greg Mrva by Yahoo! Korea to our board of
directors. We elect our directors at a general meeting of
shareholders with the approval of at least a majority of those
shares present or represented at such meeting which also
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represents at least one-fourth of our total voting shares then
issued and outstanding. Our articles of incorporation do not
permit cumulative voting.
The board of directors elects one representative director from
its members. The representative director is authorized to
represent us and act on our behalf and has the authority to bind
us in all matters with third parties.
Meetings of the board of directors are convened by the
representative director or another director as determined by the
board of directors. The board of directors determines all
important matters relating to our business.
Resolutions of the board are adopted in the presence of a
majority of the directors in office and by the affirmative vote
of a majority of the directors present. Under the Korean
Commercial Code and our articles of incorporation, any director
with a special interest in an agenda item presented for
resolution at a board meeting must abstain from voting on such
agenda item.
Committees of the Board of Directors
Pursuant to our articles of incorporation, as amended on
December 2, 2005, we have established an audit committee.
In addition, the board of directors may establish under the
board of directors a committee (other than the audit committee)
consisting of at least two directors pursuant to our internal
regulations adopted by the board of directors and may delegate
certain authority of the board of directors, to the extent
permissible under applicable laws and regulations.
Audit Committee
Pursuant to our articles of incorporation, as amended on
December 2, 2005, we have established our audit committee.
Under our articles of incorporation, the audit committee must
consist of three or more outside directors. Our articles of
incorporation also requires us to comply with the laws of the
relevant jurisdiction or the regulations and rules of the
relevant government supervisory authorities or the relevant
stock exchange, such as the Nasdaq Marketplace Rules, with
respect to authority and composition of the audit committee, if
we list or trade our stock on overseas stock exchanges.
Therefore, all of our audit committee members must satisfy
independence requirements under the Nasdaq Marketplace Rules.
Our audit committee consists of Massoud Entekhabi, Hakkyun Kim
and Joon-Ho Hahm, all of whom meet the independence requirements
of the Nasdaq Marketplace Rules. The audit committee is
responsible for overseeing our accounting and financial
reporting processes and the audits of the financial statements
of our company. The responsibilities of the audit committee
under the Korean Commercial Code and our articles of
incorporation include, among other things:
•
request for convening an extraordinary general meeting of
    shareholders;
•
examine financial statements and other reports to be submitted
    by the board of directors to the general meeting of shareholders;
•
review the administration by the board of directors of our
    affairs;
•
approve appointment, dismissal and supervision of our
    independent certified public accountants; and
•
provide report of appointment of independent certified public
    accountants to our shareholders at the general meeting of
    shareholders.
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6.D.
Employees
The following table sets forth the number of our permanent
employees for each of our major departments and our total number
of employees as of December 31, 2004 and 2005 and 2006, and
March 31, 2007.
As of December 31,
As of
March 31,
2004
2005
2006
2007
Management and administration
9
16
16
18
Business planning*
—
—
37
47
Accounting and finance
13
13
21
23
Research and development
18
34
65
75
Sales and marketing
17
39
51
67
Transaction support
29
41
109
111
Service quality management
17
25
75
79
Total
103
168
374
420
*
In March 2006, some of the personnel previously assigned to the
    management and administration department were transferred to a
    newly created business planning department.
We currently have over 400 outsourced personnel to handle our
customer service functions. We hire part-time employees and
contractors from time to time on an as-needed basis. The steady
increase in the number of employees is due to the expansion of
our business over the period. We believe our relationship with
our employees is good, and we have never experienced any major
labor disputes. None of our employees belong to a labor union,
and no collective bargaining agreement governs our relationship
with our employees.
6.E.
Share Ownership
Some of our directors and officers own our common shares.
Stock Options
We believe the use of stock options is an important element of
our strategy to maintain a highly motivated management team,
which aligns the interests of our management with those of our
shareholders. Under Korean law, we may grant stock options to
certain qualified executive officers and employees. Set forth
below are the details of our stock option plan as currently
implemented in our articles of incorporation:
•
Stock options may be granted to our executive officers and
    employees who have contributed or are qualified to contribute to
    our establishment, management and technical innovation.
    Notwithstanding the foregoing, no stock options may be granted
    to any executive officer or employee who is (i) our largest
    shareholder, (ii) a holder of 10% or more of our shares
    outstanding, (iii) certain specially related persons of a
    person set forth in (i) and (ii) above, (iv) a
    person who actually controls the company, including a person who
    has the power to appoint or dismiss executive officers or
    (v) a shareholder who would own 10% or more of our shares
    upon exercise of options granted under the stock option plan.
•
Stock options may be granted by a special resolution of
    shareholders up to the lesser of 30% of all issued and
    outstanding shares or the maximum rate permitted by applicable
    laws and regulations. Under our articles of incorporation, stock
    options may be granted by a board resolution to the extent
    permissible under applicable law. However, current Korean law
    does not permit companies not listed on the Korean Exchange
    (such as us) to grant stock options to their executive officers
    and employees by a board resolution.
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•
Under our articles of incorporation, the number of executive
    officers and employees who may be granted stock options shall
    not exceed 90% of the total number of incumbent executive
    officers and employees, and the stock options granted to any
    single officer or employee shall not exceed 10% of the total
    number of issued and outstanding shares.
•
Under our articles of incorporation, in case (i) where the
    relevant officer or employee voluntarily retires or resigns
    after the stock option is granted to him or her, (ii) where
    the relevant officer or employee has intentionally or by
    negligence caused material damage to us or (iii) where any
    cause for cancellation provided under the contract granting the
    stock option has occurred, the granted stock option may be
    cancelled by a resolution of the board of directors. Where the
    relevant executive officer or employee voluntarily retires or
    resigns, stock options not exercised must be exercised within
    three months from the date of retirement or resignation.
•
Generally, under the Korean Commercial Code, stock options may
    begin to vest at the earliest after two years of continuous
    employment or service from the date of resolution of general
    meeting of shareholders granting such stock options. Under our
    articles of incorporation and applicable stock option agreements
    currently in effect, 50% of the stock options vest after two
    years from the date of resolution of general meeting of
    shareholders granting such stock options, the remaining 50% of
    the stock options vests monthly, in even increments, over the
    next 24 months. Stock options expire on the seventh
    anniversary of the date such stock options first become
    exercisable.
•
Under the Korean Commercial Code, the minimum exercise price of
    stock options must not be less than either of the following:
(a)
if new shares will be issued at the time of exercise of the
    stock option, the higher of (i) the fair value of such
    shares as of the date of the grant of the stock options and
    (ii) par value of such shares; or
(b)
if treasury shares will be transferred at the time of exercise
    of the stock option, the fair value of such treasury shares as
    of the date of the grant of the stock options.
Set forth below are descriptions of our grant of stock options
to our directors, executive officers and employees since our
inception, taking into account the 50-for-1 stock split
effective January 5, 2006:
•
At the general meeting of shareholders held on March 30,
    2001, we granted stock options for 3,600,000 shares in the
    aggregate, with an exercise price of Won 100 per share, to 19
    executive officers and employees.
•
At the general meeting of shareholders held on March 25,
    2002, we granted stock options for 3,600,000 shares in the
    aggregate, with an exercise price of Won 100 per share, to 29
    executive officers and employees.
•
At the general meeting of shareholders held on March 14,
    2003, we granted stock options for 1,875,000 shares in the
    aggregate, with an exercise price of Won 140 per share, to 18
    executive officers and employees.
•
At the general meeting of shareholders held on March 31,
    2004, we granted stock options for 300,000 shares in the
    aggregate, with an exercise price of Won 140 per share, to six
    employees.
•
At the general meeting of shareholders held on March 22,
    2005, we granted stock options for 495,000 shares in the
    aggregate, with an exercise price of Won 640 per share, to 26
    employees.
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•
At the general meeting of shareholders held on December 2,
    2005, we granted stock options for 725,000 shares in the
    aggregate, with an exercise price of Won 4,000 per share, to one
    director, one executive officer and one employee.
•
At the general meeting of shareholders held on March 28,
    2006, we granted stock options for 490,000 shares in the
    aggregate, with an exercise price of Won 9,000 per share, to two
    directors, one executive officer and 111 employees.
•
At the general meeting of shareholders held on March 29,
    2007, we granted stock options for 430,000 shares in the
    aggregate, with an exercise price of Won 16,452 per share, to
    158 employees.
Taking into account the 50-for-1 stock split which became
effective January 5, 2006, out of a total of 11,085,000
shares granted as stock options to officers and employees,
(i) 1,573,000 stock options remain outstanding as of
December 31, 2006, (ii) stock options for 2,662,000
shares have been cancelled due to the retirement of the stock
option holders or due to other reasons, (iii) stock options
for a total of 6,075,000 shares were exercised on July 15,
2005, (iv) stock options for a total of 325,000 shares were
exercised on August 4, 2005 and (v) stock options for
a total of 450,000 shares were exercised on April 19, 2006.
Number of
Number of
Number of
shares
shares
shares
allocated
allocated
allocated
Number of
Number of shares
(Exercise
(Exercise
(Exercise
shares
allocated (Exercise
Price
Price
Price
exercised
Price Won 100)
Won 140)
Won 4,000)
Won 9,000)
(on
July 15,
Name
Position
2001
2002
2003
2005
2006
2005)
Exercise period
Young Bae Ku
CEO and Representative Director
500,000
1,000,000
500,000
—
2,000,000
Duckjun (D.J.) Lee
Chief Financial Officer
600,000
December 2007 – December 2016
Paul J. Lee
General Counsel
—
—
—
—
65,000
—
March 2008 – March 2017
Chang Sun Jo
Senior Vice President —
    Marketing and Business Development
—
350,000
200,000
—
550,000
—
Dae Sik Yang
Chief Technology Officer
250,000
350,000
150,000
—
750,000
—
Kwang Jin Ryoo
Vice President — e-Market
    Operations
175,000
125,000
50,000
—
350,000
—
Massoud Entekhabi
Outside Director and Member of
    Audit Committee
—
—
—
100,000
—
December 2007 – December 2016
Hakkyun Kim
Outside Director and Member of
    Audit Committee
—
—
—
—
37,500
—
March 2008 – March 2017
Joon-Ho Hahm
Outside Director and Member of
    Audit Committee
—
—
—
—
37,500
—
March 2008 – March 2017
ITEM 7.      MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
The following sets forth information known to us with respect to
the beneficial ownership of our common shares as of
March 31, 2007 by: taking into account the conversion of
all of our
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outstanding Series A convertible preferred shares into the
same number of common shares on June 6, 2006 and the
50-for-1 stock split which became effective January 5,
2006, by:
•
each of our directors and executive officers; and
•
each person known to us to own beneficially more than 5.0% of
    our common shares.
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. Except as indicated
below, the persons named in the table have the sole voting and
investment power with respect to all common shares shown as
beneficially owned by them. None of the stock options held by
such persons are exercisable within 60 days of the date
hereof.
Shares beneficially owned as of March 31, 2007
Number
%
Executive Officers and Directors:
Ki Hyung
    Lee
(1)(2)
3,615,500
7.3
%
Young Bae
    Ku
(2)
2,743,550
5.5
%
Dae Sik
    Yang
(2)
601,300
1.2
%
Sang Kyu
    Lee
(2)
200,000
*
Kwang Jin
    Ryoo
(2)
372,265
*
Subtotal of Executive Officers and
    Directors as a group
7,532,615
15.2
%
Principal Shareholders:
Interpark
    Corporation
(3)
14,599,900
29.5
%
Yahoo! Korea
    Corporation
(4)
4,505,650
9.1
%
Yahoo!
    Inc.
(4)(5)
516,311
1.0
%
Techno Pacific Assets
    Limited
(6)
165,450
*
Subtotal of Principal Shareholders
19,787,311
39.9
%
Total
27,319,926
55.1
%
Notes:
*
Less than 1%.
(1)
Mr. Ki Hyung Lee owns 20.8% of the issued and outstanding
    shares of Interpark Corporation, one of our principal
    shareholders.
(2)
The mailing address for this shareholder is: c/o Gmarket Inc.,
    8th Floor, LIG Tower, 649-11, Yeoksam-Dong, Gangnam-Gu, Seoul
    135-912, Korea.
(3)
The mailing address for Interpark Corporation is: 8th Floor, Nam
    Seoul Building, 1304-3, Seocho-Dong, Seocho-Gu,
    Seoul 137-074, Korea.
(4)
Yahoo! Korea Corporation, a corporation organized and existing
    under the laws of Korea, is a wholly-owned subsidiary of Yahoo!
    Inc, a corporation organized and existing under the laws of the
    State of Delaware. The mailing address for Yahoo! Korea
    Corporation is: 144-19 JS Tower, Samseong-Dong, Gangnam-Gu,
    Seoul, Korea. The mailing address for Yahoo! Inc. is: 701 First
    Avenue, Sunnyvale, California 94089.
(5)
Yahoo! Inc. acquired 516,311 of our common shares in March 2007.
(6)
Techno Pacific Assets Limited, a British Virgin Islands entity,
    currently owns common shares which were converted from preferred
    shares on June 6, 2006. Techno Pacific Assets Limited is
    wholly owned by Yoon Jung Choi, who is the wife of John E.
    Milburn, one of our directors. John E. Milburn is the sole
    director of Techno Pacific Assets Limited and acts as its
    managing director. The registered business address for Techno
    Pacific Assets Limited is c/o NTP Korea, 1st Fl. Samhwa Bldg.,
    144-17 Samsung-Dong, Gangnam-Gu, Seoul, Korea 135-090 and its
    mailing address is Techno Pacific Assets Limited, 555 Bryant
    Street #584, Palo Alto, CA 94301, U.S.A.
Strategic Investment
Yahoo! Inc., a corporation organized and existing under the laws
of the State of Delaware, or Yahoo!, and DutchCo entered into an
agreement for the purchase by Yahoo! of 4,505,650 of our common
shares from DutchCo, for an aggregate purchase price of
US$60 million. Yahoo! is a leading global Internet brand
and one of the most trafficked Internet destinations worldwide.
Yahoo! provides online products and services, and offers a full
range of tools and marketing solutions for
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businesses to connect with Internet users around the world.
Yahoo! is headquartered in Sunnyvale, California.
Yahoo! assigned its rights under the purchase agreement to
Yahoo! Korea Corporation, a wholly-owned subsidiary of Yahoo!
that is a corporation organized and existing under the laws of
Korea, or Yahoo! Korea, and the transaction was consummated on
June 12, 2006. As a result of the Yahoo! Korea investment,
Yahoo! Korea owns 4,505,650 of our common shares, which
represents approximately 9.1% of our total issued and
outstanding common shares as of December 31, 2006.
In connection with Yahoo! Korea's purchase of common shares
from DutchCo, we entered into a shareholders agreement and
registration rights agreement with Yahoo! Korea, DutchCo and
Interpark Corporation. These agreements provide for, among other
things, and subject to, in each case, certain conditions
(i) the ability of Interpark Corporation and Yahoo! Korea
to appoint members to our board of directors,
(ii) preemptive rights to Yahoo! Korea for future issuances
of our equity securities, subject to certain exceptions and
(iii) registration rights for Yahoo! Korea and DutchCo. As
DutchCo has since sold or distributed to its equity holders a
total of 7,576,531 common shares, it is therefore no longer our
shareholder and no longer has rights under the foregoing
agreements.
7.B.
Related Party Transactions
We engage from time to time in various transactions with related
parties. We believe we have conducted our transactions with
related parties as we would in comparable arm's-length
transactions with a non-related party, on a basis substantially
as favorable to us as would be obtainable in such transactions.
Relationship with Interpark Corporation
As one of our sellers, Interpark lists products on our website,
including books, CDs, household products and travel/tour
packages. Also, our users may redeem Interpark-issued gift
certificates towards purchases on our website. Currently, the
sales of Interpark's products on our website, combined with
the value of the redeemed Interpark-issued gift certificates,
comprise less than 1% of our GMV.
During the years ended December 31, 2004, 2005 and 2006,
there were transactions with Interpark Corporation and its
subsidiaries as follows:
(In millions of Won)
2004
2005
2006
Revenues
W
429
W
22
W
131
Operating expenses
613
1,127
845
Accounts receivable
85
1
42
Leasehold and other deposits
—
267
114
Amounts payable to sellers
442
43
335
Accounts payable and accrued
    expenses
62
143
56
Mr. Ki Hyung Lee, the chairman and co-chief executive
officer of Interpark, and Mr. Sang Kyu Lee, the co-chief
executive officer of Interpark, currently serve as members of
our board of directors.
Relationship with Yahoo!
In April 2007, we entered into an agreement with Overture Korea,
a Yahoo! company, in which Overture Korea's sponsored links
will appear on selected search results pages of our website.
Under the terms of the agreement, we will receive a designated
percentage of the total revenue received by Overture Korea from
its advertisers in connection with such sponsored links. The
initial term of the agreement will expire in March 2008 but is
renewable on an annual basis.
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Relationship with BestBuyer Co., Ltd.
BestBuyer Co., Ltd., or BestBuyer, is an affiliate of our
largest shareholder, Interpark. We have entered into two
separate agreements with BestBuyer in January 2006 and October
2006, respectively. The first agreement is for the purchase of
banner advertisements on BestBuyer's website for two months
for an aggregate contract price of Won 7 million. The
second agreement is a co-promotion agreement pursuant to which
we pay BestBuyer a click-through fee, which is a fee we pay to
Internet portals and other websites, such as BestBuyer, for
referrals of buyers who make a purchase on our website. The
amount of click-through fee is computed as a percentage of the
total transaction value completed on our website by buyers
referred to our website from the BestBuyer website. The total
amount of click-through fee paid to BestBuyer for the year ended
December 31, 2006 was Won 506.7 million. This
agreement is for a one year term that will expire in October
2007 but is renewable on an annual basis.
Loans to officers
We do not have any loans, credits or guarantees outstanding to
or for the benefit of executive officers.
7.C.
Interests of Experts and Counsel
Not applicable
ITEM 8.
FINANCIAL INFORMATION
8.A.
Consolidated Statements and Other Financial Information
Financial Statements
All relevant financial statements are included in
"Item 18. Financial Statements."
8.B.
Significant Changes
No significant changes have occurred since the date of our
financial statements included in this annual report on
Form
20-F.
See
"Item 5.A. Operating Results— Overview" for
information on material trends affecting our business and
results of operations.
ITEM 9.      THE OFFER AND
LISTING
9.A.
Offer and Listing Details
Common Stock
Our common shares are not listed on any stock exchange or
organized trading market, including in Korea. There is no public
market for our common shares, although a small number of our
common shares are traded in off-market transactions involving
private sales primarily in Korea.
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ADSs
Following our initial public offering on June 29, 2006, the
ADSs have been issued by Citibank N.A. as depositary and are
listed on the Nasdaq Stock Market's National Market under
the symbol "GMKT." Each ADS represents one share of
our common stock. As of December 31, 2006, 10,733,884 ADSs
representing 10,733,884 shares of our common stock were
outstanding. The table below shows the high and low trading
prices on the Nasdaq for the outstanding ADSs since July 1,
2006. Each ADS represents one share of our common stock.
Price period
High
Low
(In US$)
2006
Third Quarter
16.93
12.36
July
16.93
14.53
August
14.73
12.36
September
14.89
13.29
Fourth Quarter
25.93
14.33
October
17.39
14.33
November
24.74
16.65
December
25.93
19.62
2007
First Quarter
26.05
15.10
January
26.05
21.02
February
21.85
19.09
March
19.89
15.10
9.B.
Plan of Distribution
Not applicable.
9.C.
Markets
See Item 9.A. "Offering and Listing Details."
9.D.
Selling Shareholders
Not applicable.
9.E.
Dilution
Not applicable.
9.F.
Expenses of the Issue
Not applicable.
ITEM 10.
ADDITIONAL INFORMATION
10.A.
Share Capital
See Item 10.B. "Articles of Incorporation."
10.B.
Articles of Incorporation
The section below provides summary information relating to the
material terms of our capital stock and our articles of
incorporation. It also includes a brief summary of certain
provisions of the Korean Commercial Code and related Korean law,
all as currently in effect.
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General
Our total authorized share capital is 200,000,000 shares.
As of the date hereof, our authorized share capital consists of
200,000,000 shares, each with a par value of Won 100. As of
December 31, 2006, there are 49,506,210 common shares and
no preferred shares issued and outstanding. Each issued and
outstanding preferred share was converted into one common share
on June 6, 2006. As of December 31, 2006, no preferred
shares are permitted to be issued under our articles of
incorporation.
The following are summaries of material provisions of our
articles of incorporation, as well as the Korean Commercial Code
and relevant laws of Korea, all as currently in effect.
Certificates representing our common shares are issued in
registered form. We issue share certificates in denominations of
1, 5, 10, 50, 100, 500, 1,000 and 10,000 shares.
Common Shares
Dividends
We distribute dividends to our shareholders in proportion to the
number of shares owned by each shareholder. The common shares
represented by the ADSs have the same dividend rights as other
outstanding common shares.
The holders of our common shares are entitled to such dividends
as may be declared at our annual general meeting of
shareholders, subject to the Korean Commercial Code. If we
declare dividends at the annual general meeting of shareholders,
which is generally held within three months after the end of the
fiscal year, we will pay the annual dividend shortly after the
annual general meeting to the shareholders of record or
registered pledges as of the end of the preceding fiscal year.
We may distribute the annual dividend in cash or in shares.
However, any dividend of shares must be distributed at par
value, and dividends in shares may not exceed one-half of the
annual dividend. Our obligation to pay dividend expires if no
claim to dividend is made for five years from the payment date.
Under the Korean Commercial Code, we may pay an annual dividend
only out of the excess of our net assets, on a non-consolidated
basis, over the sum of (1) our stated capital and
(2) the total amount of our capital surplus reserve and
legal reserve accumulated up to the end of the relevant dividend
period. In addition, we may not pay an annual dividend unless we
have set aside as legal reserve an amount equal to at least
10.0% of the cash portion of the annual dividend or until we
have accumulated a legal reserve of not less than one-half of
our stated capital. We may not use legal reserve to pay cash
dividends but may transfer amounts from legal reserve to capital
stock or use legal reserve to reduce an accumulated deficit.
In addition, the Korean Commercial Code and our articles of
incorporation provide that, in addition to annual dividends, we
may pay interim dividends once during each fiscal year. Unlike
annual dividends, the decision to pay interim dividends can be
made by a resolution of the board of directors and is not
subject to shareholder approval. Any interim dividends must be
paid in cash to the shareholders of record as of June 30 of the
relevant fiscal year. Since our inception, we have not declared
or paid any dividends on our common shares. Any decision to pay
dividends in the future will be subject to a number of factors,
including cash requirements for future capital expenditures and
investments, and other factors our board of directors may deem
relevant. We have no intention to pay dividends in the near
future.
Preferred Shares
On June 6, 2006, all of our outstanding preferred shares
were converted into common shares and certain provisions of our
articles of incorporation relating to preferred shares lost
their effect
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pursuant to the amendment of our articles of incorporation.
Accordingly, there are currently no preferred shares outstanding.
Distribution of Free Shares
In addition to paying dividends in shares out of our retained or
current earnings, we may also distribute to our shareholders an
amount transferred from our capital surplus or legal reserve to
our stated capital in the form of free shares. We must
distribute such free shares to all our shareholders in
proportion to their existing shareholdings.
Preemptive Rights and Issuance of Additional Shares
We may at times issue authorized but unissued shares, unless
otherwise provided in the Korean Commercial Code, on terms
determined by our board of directors. All our shareholders are
generally entitled to subscribe to any newly-issued shares in
proportion to their existing shareholdings. We must offer new
shares on uniform terms to all shareholders who have preemptive
rights and are listed on our shareholders' registry as of
the relevant record date. Our board of directors may determine
how to distribute shares for which preemptive rights have not
been exercised or where fractions of shares occur.
We must give public notice of the preemptive rights regarding
new shares and their transferability at least two weeks before
the relevant record date.
Under our articles of incorporation, we may issue new shares up
to 60% of our total outstanding shares pursuant to a board
resolution to persons other than existing shareholders only:
•
if we offer subscription for new shares or issue them to
    subscribers in accordance with the Securities and Exchange Act
    of Korea;
•
if we issue new shares by general public offering by a
    resolution of the board of directors in accordance with the
    Securities and Exchange Act of Korea;
•
if we preferentially issue new shares to members of our employee
    stock ownership association in accordance with applicable laws
    and regulations;
•
if we issue new shares upon the exercise of stock options in
    accordance with applicable laws and regulations;
•
if we issue new shares pertaining to the issuance of any
    depository receipts;
•
if we issue new shares to entities other than existing
    shareholders, such as domestic or foreign financial institutions
    or foreign investors, for the purposes of long-term development
    or funding necessity; or
•
if we issue new shares in order to achieve a business purpose,
    including, but not limited to, introduction of new technology or
    improvement of our financial condition.
In addition, under the Korean Commercial Code, we may issue new
shares pursuant to a board resolution to persons other than
existing shareholders to the extent that the purpose of such
issuance is to achieve a business purpose, including, but not
limited to, the introduction of new technology or the
improvement of our financial condition. In connection with the
purchase of our common shares by Yahoo! Korea from DutchCo,
Yahoo! Korea entered into a shareholders agreement with us,
Interpark Corporation and DutchCo, which provides for, among
other things, preemptive rights to Yahoo! Korea even in
circumstances when certain of our other shareholders would not
be entitled to such rights.
We may issue convertible bonds or bonds with warrants, within
the limit of the Korean Commercial Code and our articles of
incorporation, to persons other than existing shareholders,
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where such issuance is deemed necessary by us to achieve a
business purpose, including, but not limited to, the
introduction of new technology or the improvement of our
financial condition.
General Meeting of Shareholders
We generally hold the annual general meeting of shareholders
within three months after the end of each fiscal year. Subject
to a board resolution or court approval, we may hold an
extraordinary general meeting of shareholders:
•
as necessary;
•
at the request of holders of an aggregate of 3% or more of our
    outstanding common shares; or
•
at the request of our audit committee.
We must give our shareholders a written notice setting out the
date, place and agenda of the meeting at least two weeks prior
to the general meeting of shareholders. Our articles of
incorporation allow us to give such notice in the form of an
e-mail. The agenda of the general meeting of shareholders is
determined at the meeting of the board of directors. In
addition, a shareholder holding an aggregate of 3% or more of
the outstanding shares may propose an agenda for the general
meeting of shareholders, which should be made in writing at
least six weeks prior to the meeting. Shareholders not on the
shareholders' registry as of the record date are not
entitled to receive notice of the general meeting of
shareholders or attend or vote at the meeting.
Our general meetings of shareholders are held in Seoul, Korea or
near Seoul as deemed necessary.
Voting Rights
Holders of our shares are entitled to one vote for each share.
However, shares held by us (i.e., treasury shares) or by any
corporate entity in which we have, directly or indirectly,
greater than a 10% interest, do not have voting rights. Unless
our articles of incorporation explicitly state otherwise, the
Korean Commercial Code permits cumulative voting pursuant to
which each common share entitles the holder thereof to multiple
voting rights equal to the number of directors to be elected at
such time. A holder of shares may exercise all voting rights
with respect to his or her shares cumulatively to elect one
director. However, our articles of incorporation do not permit
cumulative voting.
Our shareholders may adopt resolutions at a general meeting by
an affirmative majority vote of the voting shares present or
represented at the meeting, where the affirmative votes also
represent at least one-fourth of our total voting shares then
issued and outstanding. However, under the Korean Commercial
Code and our articles of incorporation, the following matters
require approval by the holders of at least two-thirds of the
voting shares present or represented at the meeting, where the
affirmative votes also represent at least one-third of our total
voting shares then issued and outstanding:
•
amending our articles of incorporation;
•
dismissing a director;
•
reducing our capital;
•
effecting any dissolution, merger or consolidation of us;
•
transferring all or substantial part of our business;
•
acquiring the whole business of another company or a part of the
    business of any other company, which significantly affects our
    business;
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•
lease of entire business, delegation of business operations, or
    the execution, modification or cancellation of agreements the
    profit/losses from which affect both parties;
•
issuing new shares at a price below par value; or
•
other matters required to be adopted by a special resolution at
    the general shareholders meeting under the relevant laws and
    regulations.
Shareholders may exercise their voting rights by proxy. Under
our articles of incorporation, the person exercising the proxy
does not have to be a shareholder. A person with a proxy must
present a document evidencing its power of attorney in order to
exercise voting rights.
Holders of ADSs will exercise their voting rights through the
ADS depositary. Subject to the provisions of the deposit
agreement, holders of ADSs will be entitled to instruct the
depositary how to vote the common shares underlying their ADSs.
Rights of Dissenting Shareholders
In some limited circumstances, including (i) the transfer
of all or any significant part of our business, (ii) our
merger or consolidation with another company, or
(iii) certain stock swap transaction with other venture
companies or major shareholders of other venture companies
pursuant to the Venture Business Promotion Act (to the extent we
continue to qualify as a venture company under such act),
dissenting shareholders have the right to require us to purchase
their shares. To exercise such right, shareholders must submit
to us a written notice of their intention to dissent before the
applicable general meeting of shareholders. Within 20 days
(10 days in the case of (iii) above) after the
relevant resolution is passed, the dissenting shareholders must
request us in writing to purchase their shares. We are obligated
to purchase the shares of dissenting shareholders within two
months after the expiration of the above 20-day or 10-day
period. The purchase price for the shares is required to be
determined through negotiations between the dissenting
shareholders and us. If an agreement on the purchase price for
the shares is not made within 30 days from the date of our
receipt of the dissenting shareholders' request, we or such
dissenting shareholder may request a court in Korea to determine
the purchase price. Under the Korean Commercial Code, the
purchase price will be determined at the amount that court
believes is the fair value of our shares. In calculating the
fair value of our shares, the court will consider our financial
condition and other circumstances. Holders of ADSs will not be
able to exercise dissenter's rights, unless they withdraw
the underlying common shares and become our direct shareholders.
Registry of Shareholders and Record Dates
Our transfer agent, Korea Securities Depository, maintains the
registry of our shareholders at its office in Seoul, Korea. It
records and registers transfers of our shares on the registry of
shareholders upon presentation of share certificates.
The record date for annual dividends is December 31. For the
purpose of determining shareholders entitled to annual
dividends, the registry of shareholders is closed for the period
from January 1 to January 15 of the following year. Further, for
the purpose of determining shareholders entitled to any other
rights pertaining to the shares, we may, on at least two
weeks' public notice, set a record date and/or close the
registry of shareholders for not more than three months. The
trading of shares and the delivery of share certificates may
continue while the registry of shareholders is closed.
Annual Report
At least one week before the annual general meeting of
shareholders, we must make our annual reports and audited
financial statements available for inspection at our principal
office and at all of our branch offices. In addition, copies of
annual reports, the audited non-consolidated financial
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statements and any resolutions adopted at the general meeting of
shareholders will be available to our shareholders.
Transfer of Shares
Under the Korean Commercial Code, the transfer of shares is
effected by the delivery of share certificates. However, to
assert shareholders' rights against us, the transferee must
have his or her name, seal and address registered on our
shareholders registry, maintained by our transfer agent. A
non-Korean shareholder may file a sample signature in place of a
seal, unless he or she is a citizen of a country with a sealing
system similar to that of Korea. In addition, a non-resident
shareholder must appoint an agent in Korea authorized to receive
notices on his or her behalf and file his or her mailing address
in Korea. These requirements do not apply to holders of ADSs.
Under current Korean regulations, Korean securities companies
and banks, including licensed branches of non-Korean securities
companies and banks, asset management companies, futures trade
companies, internationally recognized foreign custodians and the
Korea Securities Depository, may act as agents and provide
related services for foreign shareholders. Certain foreign
exchange controls and securities regulations apply to the
transfer of shares by non-residents or non-Koreans. See
"Exchange Controls." Our transfer agent is Korea
Securities Depository, located at 34-6 Yoido-Dong,
Youngdeungpo-Gu, Seoul 150-948, Korea.
Acquisition of Shares by Us
We may not acquire our own common shares except in limited
circumstances, such as (i) reduction of capital, (ii)
acquisition of our own common shares for the purpose of granting
stock options to our directors, executive officers and employees
and (iii) acquisition of our own shares for the purpose of
implementing stock swap arrangement with other venture companies
or major shareholders of other venture companies pursuant to the
Venture Business Promotion Act (but only to the extent we
qualify as a venture company under such act). Under the Korean
Commercial Code, except in the case of a capital reduction (in
which case we must retire the common shares immediately), we
must resell any common shares acquired by us to a third party
within a reasonable time. In addition, corporate entities in
which we own a 50% or greater equity interest may not acquire
our common shares.
Liquidation Rights
In the event of our liquidation, assets remaining after payment
of all debts, liquidation preferences to holders of preferred
shares, if any, liquidation expenses and taxes, will be
distributed among holders of our common shares in proportion to
their shareholdings.
10.C.
Material Contracts
We have not entered into any material contracts other than in
the ordinary course of business and other than those described
in Item 4 "Information on the Company" or
elsewhere in this annual report on
Form
20-F.
10.D.
Exchange Controls
The description of foreign exchange controls and securities
regulations provided below is applicable for a Korean company
that has not listed its shares on any stock exchange in Korea.
General
The Foreign Exchange Transaction Act and the Presidential Decree
and regulations under that Act and Decree, collectively referred
to as the Foreign Exchange Transaction Laws, regulate
investments in securities of Korean companies by persons who are
not residents of Korea ("non-
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residents") as defined by that Act and the issuance of
securities by Korean companies outside of Korea. Under the
Foreign Exchange Transaction Laws, non-residents may invest in
securities of Korean companies only to the extent specifically
allowed by these laws. The Financial Supervisory Commission of
Korea has also adopted, pursuant to its authority under the
Securities and Exchange Act of Korea, regulations that restrict
investment in securities of Korean companies by foreign
investors (as defined by the Securities and Exchange Act of
Korea) and regulate issuance of securities by Korean companies
outside of Korea.
Subject to certain limitations, the Ministry of Finance and
Economy ("MOFE") has authority to take the following
actions under the Foreign Exchange Transaction Laws:
•
if the Government deems it necessary on account of war, armed
    conflict, natural disaster or grave and sudden and significant
    changes in domestic or foreign economic circumstances or similar
    events or circumstances, the MOFE may temporarily suspend
    performance under any or all foreign exchange transactions, in
    whole or in part, to which the Foreign Exchange Transaction Laws
    apply (including suspension of payment and receipt of foreign
    exchange) or impose an obligation to deposit, safe-keep or sell
    any means of payment to The Bank of Korea or certain other
    governmental agencies or financial institutions; and
•
if the Government concludes that the international balance of
    payments and international financial markets are experiencing or
    are likely to experience significant disruption or that the
    movement of capital between Korea and other countries are likely
    to adversely affect the Won, exchange rate or other
    macroeconomic policies, the MOFE may take action to require any
    person who intends to effect or effects a capital transaction to
    deposit all or a portion of the means of payment acquired in
    such transactions with The Bank of Korea or certain other
    governmental agencies or financial institutions.
Government Review of Issuances of ADSs
In order for us to issue ADSs in an amount exceeding
US$30 million (aggregating any amount of foreign currency
loans borrowed and securities offerings issued outside Korea
during the one year period immediately preceding the date of the
submission of a report to MOFE), we are required to submit a
report to the MOFE with respect to the issuance of the ADSs
prior to such issuance. The MOFE may at its discretion direct us
to take necessary measures to avoid exchange rate fluctuation in
connection with its acceptance of report of the issuance of the
ADSs. In addition, we are also required to submit a report to
the MOFE upon receipt of the full proceeds from the offering of
the ADSs promptly after the issuance of the ADSs. No further
governmental approval is necessary for the offering and issuance
of the ADSs.
Under current Korean laws and regulations, the depositary is
required to obtain our prior consent for any proposed deposit of
common shares if the number of shares to be deposited in such
proposed deposit exceeds the number of common shares initially
deposited by us for the issuance of ADSs (including deposits in
connection with the initial and all subsequent offerings of ADSs
and stock dividends or other distributions related to the ADSs).
We have consented to any such deposit which exceeds the number
of common shares to be deposited by us as mentioned above, so
long as such deposit would not violate our articles of
incorporation or Korean law. See "Description of American
Depositary Shares." Therefore, a holder of ADSs who
surrenders ADSs and withdraws common shares may not be permitted
subsequently to deposit those common shares and obtain ADSs.
Reporting Requirements for Holders of Substantial
Interests
Prior to making an investment of 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 bank located in Korea (which may include a
non-Korean bank's Korean branch office) that is licensed
pursuant to the Foreign Exchange Transaction Act to engage in
foreign currency
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transactions (a "foreign exchange bank") or the Korea
Trade Investment Promotion Agency ("KOTRA").
Subsequent sales of such shares by foreign investors will also
require a prior report to such foreign exchange bank or the
KOTRA, as the case may be.
Restrictions Applicable to ADSs
Once the report to the MOFE is filed in connection with the
issuance of ADSs, no Korean governmental approval is necessary
for the sale and purchase of ADSs in the secondary market
outside Korea or for the withdrawal of common shares underlying
ADSs and the delivery of common shares in Korea in connection
with the withdrawal inside Korea. Persons who have acquired
common shares as a result of the withdrawal of common shares
underlying the ADSs may exercise their preemptive rights for new
common shares, participate in free distributions and receive
dividends on common shares without any further governmental
approval.
Restrictions Applicable to Shares
Certificates evidencing common shares of Korean companies must
be kept in custody with an eligible custodian in Korea. Only
foreign exchange banks, securities companies (which may include
a non-Korean securities company's Korean branch office),
Korea Securities Depository, asset management companies, futures
trading companies and internationally recognized custodians, are
eligible to act as a custodian of shares for a non-resident or
foreign investor. A custodian acting for a non-resident or
foreign investor must deposit the shares with Korea Securities
Depository. However, a foreign investor may be exempted from
complying with this deposit requirement with the approval of the
Governor of the Financial Supervisory Service in circumstances
where compliance with that requirement is made impracticable,
including cases where such compliance would contravene the laws
of the home country of such foreign investor.
A foreign investor may appoint one or more standing proxies from
among Korea Securities Depository, foreign exchange banks,
securities companies (which may include Korean branch offices of
non-Korean securities companies), asset management companies,
futures trading companies and internationally recognized foreign
custodians, which have obtained a license to act as a standing
proxy to exercise shareholders' rights or perform any
matters related thereto, if the foreign investor does not
perform these activities himself. However, a foreign investor
may be exempted from complying with these standing proxy rules
with the approval of the Governor of the Financial Supervisory
Service in circumstances where such compliance is made
impracticable, including cases where such compliance would
contravene the laws of the home country of such foreign investor.
A foreign investor may receive dividends on the shares and remit
the proceeds of the sale of the shares through a foreign
currency account and a Won account, which are opened at a
foreign exchange bank exclusively for stock investments by the
foreign investor, without being subject to any procedural
restrictions under the Foreign Exchange Transaction Laws. No
approval is required for remittance of foreign currency funds
into Korea or deposit of foreign currency funds in the foreign
currency account. Foreign currency funds may be transferred from
the foreign currency account to a Won account opened at a
securities company to place a deposit for, or settle the
purchase price of, a stock purchase transaction. Funds in the
foreign currency account may be remitted abroad without any
governmental approval.
Dividends on shares are paid in Won. No governmental approval is
required for foreign investors to receive dividends on, or the
Won proceeds of the sale of, any such shares to be paid,
received and retained in Korea. Dividends paid on, and the Won
proceeds of the sale of, any such shares held by a non-resident
of Korea must be deposited in a Won account with a securities
company or the investor's Won account. A foreign investor
may transfer funds in its Won account to its foreign currency
account or withdraw such funds for local living expenses,
provided that any withdrawal of local living expenses in excess
of a certain amount is reported to the tax authorities by the
foreign exchange bank at which the Won account is maintained. A
foreign investor may also use
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funds in its Won account for future investment in shares or for
payment of the subscription price of new shares obtained through
the exercise of preemptive rights.
Securities companies and asset management companies are allowed
to open foreign currency accounts with foreign exchange banks
exclusively for accommodating foreign investors' stock
investments in Korea. Through these accounts, these securities
companies and asset management companies may enter into foreign
exchange transactions on a limited basis, such as conversion of
foreign currency funds and Won funds, either as a counterparty
to or on behalf of foreign investors, without the investors
having to open their own accounts with foreign exchange banks.
10.E.
Taxation
The following summary is based on the tax laws of the United
States and Korea as in effect on the date of this report, and is
subject to any change in United States or Korean law that may
come into effect after such date. We advise investors in ADSs to
consult their own tax advisors as to the United States, Korean
or other tax consequences of the purchase, ownership and
disposition of such securities, including, in particular, the
effect of any national, state or local tax laws.
U.S. Federal Income Tax Considerations
The following discussion is a general summary of the material
U.S. federal income tax considerations relating to the purchase,
ownership and disposition of the ADSs or our common shares by
U.S. Holders (as defined below) that hold the ADSs or our common
shares represented by such ADSs as capital assets. This
discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations promulgated
thereunder, administrative and judicial interpretations thereof,
the Convention Between the United States of America and the
Republic of Korea for The Avoidance of Double Taxation, as
amended (the "Tax Convention"), all as in effect on
the date hereof and all of which are subject to change, possibly
with retroactive effect, or to different interpretation. This
discussion is for general information only and does not address
all of the tax considerations that may be relevant to specific
U.S. Holders in light of their particular circumstances or to
U.S. Holders subject to special treatment under U.S. federal
income tax law (such as banks, insurance companies, tax-exempt
entities, retirement plans, regulated investment companies,
partnerships, dealers in securities, brokers, real estate
investment trusts, certain former citizens or residents of the
United States, persons who have acquired the ADSs or our common
shares as part of a straddle, hedge, conversion transaction or
other integrated investment, persons that have a
"functional currency" other than the U.S. dollar or
persons that own (or are deemed to own) 10% or more (by voting
power) of our common shares). This discussion does not address
any U.S. state or local or non-U.S. tax considerations or any
U.S. federal estate, gift or alternative minimum tax
considerations.
As used in this discussion, the term "U.S. Holder"
means a beneficial owner of the ADSs or our common shares that
is, for U.S. federal income tax purposes, (i) an individual
who is a citizen or resident of the United States, (ii) a
corporation created or organized in or under the laws of the
United States or of any state or political subdivision thereof
or therein, including the District of Columbia, (iii) an
estate the income of which is subject to U.S. federal income tax
regardless of the source thereof or (iv) a trust with
respect to which a court within the United States is able to
exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of its
substantial decisions, or certain electing trusts that were in
existence on August 19, 1996 and were treated as domestic
trusts on that date.
If a partnership, or any other entity treated as a partnership
for U.S. federal income tax purposes, holds the ADSs or our
common shares, the tax treatment of such partnership and its
partners will generally depend upon the status and activities of
the partnership and the partner. A holder that is treated as a
partnership for U.S. federal income tax purposes should consult
its own
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tax adviser regarding the U.S. federal income tax consequences
to it and its partners of the purchase, ownership and
disposition of the ADSs or our common shares.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISERS AS TO THE PARTICULAR TAX CONSIDERATIONS APPLICABLE TO
THEM RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
ADSs OR OUR COMMON SHARES, INCLUDING THE APPLICABILITY OF U.S.
FEDERAL, STATE AND LOCAL TAX LAWS OR NON-U.S. TAX LAWS.
Treatment of the ADSs
A U.S. Holder of the ADSs will be treated for U.S. federal
income tax purposes as the owner of such U.S. Holder's
proportionate interest in our common shares held by the
depositary (or its custodian) that are represented and evidenced
by such ADSs. Accordingly, any deposit or withdrawal of our
common shares by a U.S. Holder in exchange for ADSs will not
result in the realization of gain or loss to such U.S. Holder
for U.S. federal income tax purposes.
Distributions
Subject to the discussion below under "—Passive
Foreign Investment Company Considerations," a U.S. Holder
that receives a distribution with respect to the ADSs or our
common shares will be required to include the amount of such
distribution in gross income as a dividend (without reduction
for any Korean or other non-U.S. tax withheld from such
distribution) to the extent of our current or accumulated
earnings and profits. To the extent the amount of such
distribution exceeds our current and accumulated earnings and
profits as so computed, it will be treated first as a
non-taxable return of capital to the extent of such U.S.
Holder's adjusted tax basis in the ADSs or our common
shares and, to the extent the amount of such distribution
exceeds such adjusted tax basis, will be treated as gain from
the sale or exchange of such ADSs or our common shares. We have
not maintained and do not plan to maintain calculations of
earnings and profits for U.S. federal income tax purposes. Each
U.S. Holder should consult its own tax adviser with respect to
the appropriate U.S. federal income tax treatment of any
distribution in respect of the ADSs or our common shares.
The U.S. dollar value of any distribution on the ADSs or our
common shares made in Won should be calculated by reference to
the exchange rate in effect on the date of receipt of such
distribution by the depositary or the U.S. Holder, respectively,
regardless of whether the Won are in fact converted into U.S.
dollars. If the Won so received are converted into U.S. dollars
on the date of receipt, such U.S. Holder generally should not
recognize foreign currency gain or loss on such conversion. If
the Won so received are not converted into Dollars on the date
of receipt, such U.S. Holder will have a basis in the Won
equal to their Dollar value on the date of receipt. Any gain or
loss on a subsequent conversion or other disposition of the Won
generally will be treated as ordinary income or loss to such
U.S. Holder and generally will be income or loss from sources
within the United States for U.S. foreign tax credit purposes.
Dividends paid on the ADSs or our common shares generally will
constitute income from sources outside the United States and
generally will be categorized as "passive category
income" or, in the case of some U.S. Holders, as
"general category income" for U.S. foreign tax credit
purposes. Such dividends will not be eligible for the
"dividends received" deduction generally allowed to
corporate shareholders with respect to dividends received from
U.S. corporations. In general, a U.S. Holder may be eligible to
elect to claim a U.S. foreign tax credit against its U.S.
federal income tax liability, subject to applicable limitations
and holding period requirements, for Korean tax withheld from
distributions received in respect of the ADSs or our common
shares. If Korean tax is withheld at a rate in excess of the
rate applicable to a U.S. Holder under the Tax Convention, the
U.S. Holder may not be entitled to a foreign tax credit for the
excess amount. See "Taxation—Korean Taxation." A
U.S. Holder that does not elect to claim a U.S. foreign tax
credit may instead claim a deduction for Korean tax withheld,
but only for a taxable year in which the U.S. Holder elects to
do so with respect
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to all foreign income taxes paid or accrued in such taxable
year. The rules relating to U.S. foreign tax credits are very
complex, and each U.S. Holder should consult its own tax adviser
regarding the application of such rules.
Dividends received by a non-corporate U.S. Holder (including an
individual) through taxable years beginning on or before
December 31, 2010 from "qualified foreign
corporations" or in respect of stock of a non-U.S.
corporation (other than a passive foreign investment company
with respect to a U.S. Holder) that is readily tradable on an
established securities market in the United States generally
qualify for a 15% reduced maximum tax rate so long as certain
holding period requirements are met. Since the ADSs were listed
on the Nasdaq, unless we are treated as a passive foreign
investment company with respect to such U.S. Holder, dividends
received in respect of the ADSs will qualify for the reduced
rate. Dividends paid on our common shares not held through ADSs
should qualify for the reduced rate if we are treated as a
qualified foreign corporation. A non-U.S. corporation (other
than a passive foreign investment company with respect to such
U.S. Holder) generally will be considered to be a qualified
foreign corporation if it is eligible for the benefits of a
comprehensive income tax treaty with the United States which the
Secretary of the Treasury determines is satisfactory for
purposes of this provision and which includes an exchange of
information program. The Tax Convention as currently in effect
meets these requirements and we believe that we are currently
eligible for the benefit of the Tax Convention. However, the
U.S. Internal Revenue Service (the "IRS") may disagree
with our conclusion, and, therefore, no assurance can be given
that we will be treated as a qualified foreign corporation for
such purpose. Accordingly, no assurance can be given that such
reduced rate will apply to dividends paid on our common shares
held by a U.S. Holder other than through ADSs. Special rules
apply for purposes of determining the recipient's
investment income (which limit deductions for investment
interest) and foreign income (which may affect the amount of
U.S. foreign tax credit) and to certain extraordinary dividends.
Each U.S. Holder that is a non-corporate taxpayer is urged to
consult its own tax adviser regarding the possible applicability
of the reduced rate and the related restrictions and special
rules.
Sale, Exchange or Other Disposition of the ADSs or our
Common Shares
Subject to the discussion below under "—Passive
Foreign Investment Company Considerations," a U.S. Holder
generally will recognize capital gain or loss for U.S. federal
income tax purposes upon the sale, exchange or other disposition
of the ADSs or our common shares in an amount equal to the
difference, if any, between the amount realized on the sale,
exchange or other disposition and the U.S. Holder's
adjusted tax basis in the ADSs or our common shares. Such
capital gain or loss will be long-term capital gain (taxable at
a reduced rate for non-corporate U.S. Holders, including
individuals) or loss if, on the date of sale, exchange or other
disposition, the ADSs or our common shares were held by such
U.S. Holder for more than one year. Net long-term capital gains
of a non-corporate U.S. Holder (including individuals)
recognized in a tax year beginning on or before
December 31, 2010, are generally taxed at a maximum U.S.
federal income tax rate of 15%. The deductibility of capital
losses is subject to limitations. Capital gain or loss from the
sale, exchange or other disposition will generally be sourced
within the United States for U.S. foreign tax credit purposes.
A U.S. Holder that receives Won (or other foreign currency) from
a sale, exchange or other disposition of our common shares
generally will realize an amount equal to the Dollars value of
the Won (or such other foreign currency) on the settlement date
of such sale or disposition if (i) such U.S. Holder is a
cash basis or electing accrual basis taxpayer and our common
shares are treated as being "traded on an established
securities market" for this purpose or (ii) such
settlement date is also the date of such sale or disposition. If
the Won (or such other foreign currency) so received are
converted into Dollars on the settlement date, such U.S. Holder
should not recognize foreign currency gain or loss on such
conversion. If the Won (or such other foreign currency) so
received are not converted into Dollars on the settlement date,
such U.S. Holder will have a basis in the Won (or such other
foreign currency) equal to their Dollars value on the settlement
date. Any gain or loss
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on a subsequent conversion or other disposition of the Won (or
such other foreign currency) generally will be treated as
ordinary income or loss to such U.S. Holder and generally will
be income or loss from sources within the United States for U.S.
foreign tax credit purposes. A U.S. Holder should consult its
own tax adviser regarding the U.S. federal income tax
consequences of receiving Won (or other currency) from a sale,
exchange or other disposition of our common shares in cases not
described in this paragraph.
Passive Foreign Investment Company Considerations
We believe that we were not in 2006, and we do not currently
expect to become, a passive foreign investment company
("PFIC") for U.S. federal income tax purposes.
However, because this determination is made annually at the end
of each taxable year and is dependent upon a number of factors,
some of which are beyond our control, including the value of our
assets and the amount and type of our income, there can be no
assurance that we will not become a PFIC or that the IRS will
agree with our conclusion regarding our PFIC status. If we are a
PFIC in any year, U.S. Holders could suffer adverse consequences
as discussed below.
In general, a corporation organized outside the United States
will be treated as a PFIC for U.S. federal income tax purposes
in any taxable year in which either (i) at least 75% of its
gross income is "passive income" or (ii) on
average at least 50% of the value of its assets is attributable
to assets that produce passive income or are held for the
production of passive income. Passive income for this purpose
generally includes, among other things, dividends, interest,
royalties, rents and gains from commodities and securities
transactions. In determining whether a non-U.S. corporation is a
PFIC, a pro rata portion of the income and assets of each
corporation in which it owns, directly or indirectly, at least a
25% interest (by value) is taken into account.
If we are a PFIC in any year during which a U.S. Holder owns the
ADSs or our common shares, such U.S. Holder could be liable for
additional taxes and interest charges upon certain distributions
by us or upon a sale, exchange or other disposition of the ADSs
or our common shares at a gain, whether or not we continue to be
a PFIC. The tax will be determined by allocating such
distributions or gain ratably to each day of the U.S.
Holder's holding period. The amount allocated to the
current taxable year and any holding period of such U.S. Holder
prior to the first taxable year for which we are a PFIC will be
taxed as ordinary income (rather than capital gain) earned in
the current taxable year. The amount allocated to other taxable
years will be taxed at the highest marginal rates applicable to
ordinary income for such taxable years and, in addition, an
interest charge will be imposed on the amount of such taxes. In
addition, if we are a PFIC, a person who acquires the ADSs or
our common shares from a decedent will be denied the step-up of
the tax basis for U.S. federal income tax purposes to fair
market value at the date of such decedent's death, which
would otherwise be available with respect to a decedent dying in
any year other than 2010, and, instead, such person will have a
tax basis equal to the lower of such fair market value or such
decedent's tax basis.
The above results may be eliminated if a
"mark-to-market" election is available and a
U.S. Holder validly makes such an election. If such
election is made, such U.S. Holder generally will be required to
take into account the difference, if any, between the fair
market value of and its adjusted tax basis in the ADSs or our
common shares at the end of each taxable year as ordinary income
or ordinary loss (to the extent of any net mark-to-market gains
previously included in income). In addition, any gain from a
sale, exchange or other disposition of the ADSs or our common
shares will be treated as ordinary income, and any loss will be
treated as ordinary loss (to the extent of any net
mark-to-market gains previously included in income). A
mark-to-market election is available to a U.S. Holder only
if the ADSs or our common shares are considered "marketable
stock" for these purposes. Generally, stock will be
considered marketable stock if it is "regularly
traded" on a "qualified exchange" within the
meaning of applicable U.S. Treasury regulations. A class of
stock is regularly traded during any calendar year during which
such class of stock is traded, other than in de minimis
quantities, on at least 15 days during each calendar
quarter. The
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Nasdaq will constitute a qualified exchange, and a non-U.S.
securities exchange will constitute a qualified exchange if it
is regulated or supervised by a governmental authority of the
country in which the market is located and meets certain
trading, listing, financial disclosure and other requirements
set forth in the Treasury regulations.
The above results may also be eliminated if a U.S. Holder is
eligible for and timely makes a valid "QEF election."
If a QEF election were made, such U.S. Holder generally would be
required to include in income on a current basis its pro rata
share of our ordinary income and net capital gains.
In order for a U.S. Holder to be able to make a QEF election, we
would be required to provide such U.S. Holder with certain
information. As we do not expect to provide U.S. Holders with
the required information, U.S. Holders should assume that a QEF
election would be unavailable.
Prospective investors should consult their own tax advisers
regarding the U.S. federal income tax consequences of an
investment in a PFIC.
Backup Withholding Tax and Information Reporting
Requirements
Under certain circumstances, United States backup withholding
tax and/or information reporting may apply to U.S. Holders with
respect to payments made on or proceeds from the sale, exchange
or other disposition of the ADSs or our common shares, unless an
applicable exemption is satisfied.
Payments made within the United States, or by a U.S. payor or
U.S. middleman, of dividends on, and proceeds arising from
certain sales or other dispositions of, the ADSs or our common
shares generally will be subject to information reporting and
backup withholding tax if a U.S. Holder (a) fails to
furnish such U.S. Holder's correct U.S. taxpayer
identification number (generally on
Form
W-9),
(b) furnishes an incorrect U.S. taxpayer identification
number, (c) is notified by the IRS that such U.S. Holder
has previously failed to properly report items subject to backup
withholding tax or (d) fails to certify under penalty of
perjury that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, U.S. Holders that
are corporations generally are excluded from these information
reporting and backup withholding tax rules. Any amounts withheld
under the backup withholding tax rules will be allowed as a
credit against a U.S. Holder's U.S. federal income tax
liability, if any, or will be refunded, if such U.S. Holder
furnishes required information to the IRS. Each U.S. Holder
should consult its own tax advisor regarding the information
reporting and backup withholding tax rules.
Reportable Transactions
Under United States Treasury regulations, U.S. Holders that
participate in "reportable transactions" (as defined
in the regulations) must attach to their federal income tax
returns a disclosure statement on Form 8886. U.S. Holders
should consult their own tax advisers as to the possible
obligation to file Form 8886 with respect to the sale,
exchange or other disposition of any Won received as a dividend
from the ADSs or our common shares or as proceeds from the sale
of our common shares.
Korean Taxation
The following summary of material Korean tax consequences to
owners of our ADSs and common shares applies to you so long as
you are not:
•
a resident of Korea;
•
a corporation organized under Korean law; or
•
engaged in a trade or business in Korea through a permanent
    establishment or a fixed base to which the relevant income is
    attributable or with which the relevant income is effectively
    connected.
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The description of Korean tax considerations below are
applicable for a Korean corporation that has not listed its
shares on the Korea Exchange. 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 discussion is not exhaustive of all possible tax
considerations 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 common shares, including, in particular, 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.
Dividends on the Common Shares or ADSs
We will deduct Korean withholding tax from dividends paid to you
at a rate of 27.5% (including resident surtax). If you are a
qualified resident in a country that has entered into a tax
treaty with Korea, you may qualify for a reduced rate of Korean
withholding tax. For example, if you are a qualified resident of
the United States for purposes of the income tax treaty between
the United States and Korea, and you are the "beneficial
owner" of a dividend, generally, a reduced withholding tax
at the rate of 16.5% (including resident surtax) will apply,
which may be further reduced to 11% (including resident surtax)
if you meet certain other conditions.
In order to obtain the benefits of a reduced withholding tax
rate under the treaty, you must submit to us, prior to the
dividend payment date, such evidence of tax residence as may be
required by the Korean tax authorities. Evidence of tax
residence may be submitted to us through the depositary. In
addition, on or after July 1, 2002, to obtain the benefit
of a tax exemption available under applicable tax treaties, you
should submit an application for exemption prior to the time of
the first dividend payment, together with a certificate of your
tax residence issued by a competent authority of your country of
tax residence. Excess taxes withheld are generally not
recoverable, even if you subsequently produce evidence that you
were entitled to have tax withheld at a lower rate.
If we distribute to you free shares representing transfer of
certain capital reserves or asset revaluation reserves into
paid-in capital, that distribution may be regarded as dividend
and, as such, subject to Korean withholding tax.
Taxation of Capital Gains
As a general rule, in the absence of an applicable tax treaty
which exempts or reduces the rate of tax on capital gains,
capital gains earned by non-residents upon transfer of the
shares of our common stock are subject to Korean withholding tax
at the lesser of 11.0% (including resident surtax) of the gross
realization proceeds or, subject to production of satisfactory
evidence of acquisition cost and transfer expenses of the shares
of our common stock, 27.5% of the net capital gains.
As for the ADSs, there are uncertainties as to whether they
should be viewed as securities separate from our common shares
underlying such ADSs or as the underlying shares themselves for
capital gains tax purposes. In either case, however, you will be
eligible for exemptions for capital gains available under Korean
domestic law (in addition to the exemption afforded under income
tax treaties) if certain conditions are satisfied. According to
a ruling issued by the Korean taxation authorities, capital
gains earned by a non-resident holder from the transfer of ADSs
outside Korea are not subject to Korean taxation, irrespective
of whether or not such holder has a permanent establishment in
Korea. Under the Special Tax Treatment Control Law, capital
gains earned by a non-resident holder (whether or not such
holder has a permanent establishment in Korea) from the transfer
outside Korea of securities issued outside Korea by a Korean
company, which are denominated in foreign currency or satisfy
certain criteria established by the MOFE are exempt from Korean
taxation. The Korean tax authorities have issued a tax ruling
confirming that receipts (which would include the ADSs) are
deemed to be securities issued outside Korea by the issuer of the
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underlying stock. Further, capital gains earned by a
non-resident from the transfer of shares issued by a Korean
company are also exempt from Korean taxation, if the shares are
listed or registered and sold through an overseas securities
exchange having functional similarity to the Korea Exchange
under the Securities and Futures Exchange Act of Korea (such as
the Nasdaq or the New York Stock Exchange).
If you are subject to tax on capital gains with respect to the
sale of ADSs, or of common shares which you acquired as a result
of a withdrawal, your gain will be calculated based on your cost
of acquiring the ADSs representing such shares, although there
are no specific Korean tax provisions or rulings on this issue.
In the absence of the application of a tax treaty which exempts
or reduces the rate of tax on capital gains, the amount of
Korean tax imposed on your capital gains will be the lesser of
11.0% (including resident surtax) of the gross realization
proceeds or, subject to production of satisfactory evidence of
acquisition cost and transfer expenses of the ADSs, 27.5% of the
net capital gains. Under the Korea-United States Tax Treaty, a
U.S. resident is generally exempt from Korean taxation on gains
from the sale, exchange or other disposition of our common
shares or ADSs, subject to certain exceptions.
If you sell your common shares or ADSs, the purchaser or, in the
case of the sale of the common shares through a licensed
securities company in Korea, the licensed securities company, is
required to withhold Korean tax from the sales price in an
amount equal to 11.0% of the gross realization proceeds and to
make payment of such amounts to the Korean tax authority, unless
you establish your entitlement to an exemption or lower rate of
taxation under an applicable tax treaty or produce satisfactory
evidence of your acquisition and transfer costs for the common
shares or the ADSs. To obtain the benefit of an exemption or
reduced rate of tax pursuant to a tax treaty, you must submit to
the purchaser or the securities company (or through the
depositary), as the case may be, prior to or at the time of
payment, such evidence of your tax residence as the Korean tax
authorities may require in support of your claim for treaty
protection. In addition, Korean tax law requires a non-resident
seller to submit to the relevant tax office (through the payer
of the income, subject to certain exceptions) an application for
exemption by the 9th day of the month following the month in
which the first payment date falls, with a certificate of tax
residence of the seller issued by a competent authority of the
seller's residence country, to obtain the benefit of a tax
treaty exemption available under applicable tax treaties.
However, this requirement will not apply to exemptions under
Korean tax law. Excess taxes withheld are generally not
recoverable even if you subsequently produce evidence that you
were entitled to have taxes withheld at a lower rate.
Inheritance Tax and Gift Tax
If you die while holding an ADS or transfer an ADS as a gift, it
is unclear whether you will be treated as the owner of the
common shares underlying the ADSs for Korean inheritance and
gift tax purposes. If you are treated as the owner of the common
shares, the heir or the donee (or in certain circumstances, you
as the donor) will be subject to Korean inheritance or gift tax
presently at the rate of 10.0% to 50.0%.
If you die while holding any of our common shares or donate a
common share, the heir or donee (or in certain circumstances,
you as the donor) will be subject to Korean inheritance or gift
tax at the same rate as indicated above.
Securities Transaction Tax
As a general rule, the transfer of our common shares, subject to
certain exceptions, will be subject to a securities transaction
tax at the rate of 0.5% of the sale price of the shares of
common stock. As for the transfer of ADSs, although the MOFE
issued a ruling to treat the transfers of depositary shares the
same as the transfer of the underlying Korean shares for
securities transaction tax purposes, under Korean tax laws
transfers of depositary shares listed or registered on the New
York Stock Exchange, the Nasdaq National Market, or other
foreign exchanges designated by the
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MOFE (which currently are the Tokyo Stock Exchange, London Stock
Exchange, Deutsche Boerse, and a stock exchange similar to the
foregoing on which trading is done by standardized procedure as
set forth in the Enforcement Regulation of the Securities and
Exchange Act of Korea) will be exempted from the securities
transaction tax.
Securities transaction tax, if applicable, must be paid in
principle by the transferor of the shares or the rights to
subscribe to such shares. When the transfer is effected through
a securities settlement company, the settlement company is
generally required to withhold and pay the tax to the tax
authority. When the transfer is made through a securities
company, the securities company is required to withhold and pay
the tax. Where the transfer is effected by a non-resident
without a permanent establishment in Korea, other than through a
securities settlement company or a securities company, the
transferee is required to withhold the securities transaction
tax.
Failing to report (or under-reporting) the securities
transaction tax will result in a penalty of 10% of the tax
amount due. The failure to pay the securities transaction tax
due will result in imposition of interest at 10.95% per annum on
the unpaid tax amount for the period from the day immediately
following the last day of tax payment period to the day of
issuance of tax notice. The penalty is imposed on the party
responsible for paying the securities transaction tax or, if the
securities transaction tax is to be withheld, the penalty is
imposed on the party that has the withholding obligation.
10.F.
Dividends and Paying Agents
We have not paid any dividends on our share capital, including
our common shares, since our inception and any decision to pay
dividends in the future will be subject to a number of factors,
including our cash requirements for working capital, future
capital expenditures and investments, as well as other factors
our board of directors or shareholders, as the case may be, deem
relevant. We do not currently intend to pay any dividends in the
near future.
10.G.
Statement by Experts
Not applicable.
10.H.
Documents on Display
We have filed this annual report on
Form
20-F,
including exhibits, with the Securities and Exchange Commission.
As allowed by the Securities and Exchange Commission, in
Item 19 of this report, we incorporate by reference certain
information we filed with the Securities and Exchange
Commission. This means that we can disclose important
information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The
information incorporated by reference is considered to be part
of this annual report. You may inspect and copy this annual
report, including exhibits, and documents that are incorporated
by reference in this annual report at the Public Reference Room
maintained by the Securities and Exchange Commission at 100 F
Street, N.E., Washington, D.C. 20549. Please call the Securities
and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. Any
filings we make electronically will be available to the public
over the Internet at the website of the Securities and Exchange
Commission at http://www.sec.gov.
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10.I.
Subsidiary Information
Not applicable.
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
11.A.
Quantitative Information about Market Risk
Interest rate risk
Our exposure to interest rate risk relates to our cash holdings
and our cash management policy. The primary objective of our
cash management policy is to preserve principal while at the
same time maximizing yields without significantly increasing
risk. Our cash on-hand primarily consists of cash and cash
equivalents and cash on deposit. Although interest income on our
cash and cash equivalents and cash on deposit is subject to
interest rate fluctuations, we believe these fluctuations will
not have a material effect on our financial position due to the
short-term nature of these financial instruments.
Foreign currency risk
As we currently conduct our business primarily in Won, we are
not affected by changes in foreign exchange rates. However, as
and to the extent we conduct business in currencies other than
the Won, our revenues and expenses will be exposed to foreign
currency risk. Changes in value of the Won against the
currencies in which we conduct business will result in increases
or decreases in our recorded revenues and expenses and may
impact our operating income.
11.B.
Qualitative Information about Market Risk
See Item 11.A. "Quantitative Information about Market
Risk."
11.C.
Interim Periods
Not applicable.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A.
Debt Securities
Not applicable.
12.B.
Warrants and Rights
Not applicable.
12.C.
Other Securities
Not applicable.
12.D.
American Depositary Shares
Citibank, N.A. is our depositary for the American Depositary
Shares. Citibank's depositary offices are located at 388
Greenwich Street, New York, New York 10013. American Depositary
Shares are frequently referred to as "ADSs" and
represent ownership interests in securities that are on deposit
with the depositary. ADSs are normally represented by
certificates that are commonly known as "American
Depositary Receipts" or "ADRs." The depositary
typically appoints a custodian to safekeep the securities on
deposit. In this case, the custodian is Korea Securities
Depository, located at 34-6, Yoido-Dong, Youngdeungpo-Gu, Seoul
150-948, Korea.
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We appointed Citibank as depositary pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the
SEC under cover of a Registration Statement on
Form
F-6.
You may
obtain a copy of the deposit agreement from the SEC's
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549 and from the SEC's website (www.sec.gov). Please
refer to Registration Number 333-134949 when retrieving such
copy.
We are providing you with a summary description of the material
terms of the ADSs and of your material rights as an owner of
ADSs. Please remember that summaries by their nature lack the
precision of the information summarized and that an ADS
holder's rights and obligations as an owner of ADSs will be
determined by reference to the terms of the deposit agreement
and not by this summary. We urge you to review the deposit
agreement in its entirety. Statements printed in italics in this
description are provided for your information and are not
contained in the deposit agreement or describe matters relating
to Korean law.
Each ADS represents the right to receive one common share on
deposit with the custodian. An ADS will also represent the right
to receive any other property received by the depositary or the
custodian on behalf of the owner of the ADS but that has not
been distributed to the owners of ADSs because of legal
restrictions or practical considerations.
If you become an owner of ADSs, you will become a party to the
deposit agreement and therefore will be bound to its terms and
to the terms of the ADR that represent your ADSs. The deposit
agreement and the ADR specify our rights and obligations as well
as your rights and obligations as owner of ADSs and those of the
depositary. As an ADS holder you appoint the depositary to act
on your behalf in certain circumstances. The deposit agreement
and the ADRs are governed by New York law. However, our
obligations to the holders of common shares will continue to be
governed by the laws of the Republic of Korea, which may be
different from the laws in the United States.
As an owner of ADSs, you may hold your ADSs either by means of
an ADR registered in your name, through a brokerage or
safekeeping account, or through an account established by the
depositary in your name reflecting the registration of
uncertificated ADSs directly on the books of the depositary
(commonly referred to as the "direct registration
system" or "DRS"). The direct registration system
reflects the uncertificated (book-entry) registration of
ownership of ADSs by the depositary. Under the direct
registration system, ownership of ADSs is evidenced by periodic
statements issued by the depositary to the ADS holders. The
direct registration system includes automated transfers between
the depositary and The Depository Trust Company
("DTC"), the central book-entry clearing and
settlement system for equity securities in the United States. If
you decide to hold your ADSs through your brokerage or
safekeeping account, you must rely on the procedures of your
broker or bank to assert your rights as ADS owner. Banks and
brokers typically hold securities such as the ADSs through
clearing and settlement systems such as DTC. The procedures of
such clearing and settlement systems may limit your ability to
exercise your rights as an owner of ADSs. Please consult with
your broker or bank if you have any questions concerning these
limitations and procedures. This summary description assumes you
have opted to own the ADSs directly by means of an ADS
registered in your name and, as such, we will refer to you as
the "holder." When we refer to "you," we
assume the reader owns ADSs and will own ADSs at the relevant
time.
Dividends and Distributions
As a holder, you generally have the right to receive the
distributions we make on the securities deposited with the
custodian. Your receipt of these distributions may be limited,
however, by practical considerations and legal limitations.
Holders will receive such distributions under the terms of the
deposit agreement in proportion to the number of ADSs held as of
a specified record date.
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Distributions of Cash
Whenever we make a cash distribution for the securities on
deposit with the custodian, we will deposit the funds with the
custodian. Upon receipt of confirmation of the deposit of the
requisite funds, the depositary will arrange for the funds to be
converted into U.S. dollars and for the distribution of the U.S.
dollars to the holders, subject to laws and regulations of the
Republic of Korea.
The conversion into U.S. dollars will take place only if
practicable and if the U.S. dollars are transferable to the
United States. The amounts distributed to holders will be net of
the fees, expenses, taxes and governmental charges payable by
holders under the terms of the deposit agreement. In particular,
the depositary will deduct any withholding taxes that must be
paid before making a distribution. See "Taxation—
Korean Taxation." The depositary will apply the same method
for distributing the proceeds of the sale of any property (such
as undistributed rights) held by the custodian in respect of
securities on deposit.
Distributions of Shares
Whenever we make a free distribution of common shares for the
securities on deposit with the custodian, we will deposit the
applicable number of common shares with the custodian. Upon
receipt of confirmation of such deposit, the depositary will
either distribute to holders new ADSs representing the common
shares deposited or modify the ADS-to-common shares ratio, in
which case each ADS you hold will represent rights and interests
in the additional common shares so deposited. Only whole new
ADSs will be distributed. Fractional entitlements will be sold
and the proceeds of such sale will be distributed as in the case
of a cash distribution.
The distribution of new ADSs or the modification of the
ADS-to-common shares ratio upon a distribution of common shares
will be made net of the fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit
agreement. In order to pay such taxes or governmental charges,
the depositary may sell all or a portion of the new common
shares so distributed.
No such distribution of new ADSs will be made if it would
violate a law (i.e., the U.S. securities laws) or if it is
not operationally practicable. If the depositary does not
distribute new ADSs as described above, it may sell the common
shares received upon the terms described in the deposit
agreement and will distribute the proceeds of the sale as in the
case of a distribution of cash.
Distributions of Rights
Whenever we intend to distribute rights to purchase additional
common shares, we will give prior notice to the depositary and
we will assist the depositary in determining whether it is
lawful and reasonably practicable to distribute rights to
purchase additional ADSs to holders.
The depositary will establish procedures to distribute rights to
purchase additional ADSs to holders and to enable such holders
to exercise such rights if it is lawful and reasonably
practicable to make the rights available to holders of ADSs, and
if we provide all of the documentation contemplated in the
deposit agreement (such as opinions to address the lawfulness of
the transaction). You may have to pay fees, expenses, taxes and
other governmental charges to subscribe for the new ADSs upon
the exercise of your rights. The depositary is not obligated to
establish procedures to facilitate the distribution and exercise
by holders of rights to purchase new other than in the form of
ADSs.
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The depositary will not distribute the rights to you if:
•
we do not timely request that the rights be distributed to you
    or we request that the rights not be distributed to you;
•
we fail to deliver satisfactory documents to the depositary; or
•
it is not reasonably practicable to distribute the rights.
The depositary will sell the rights that are not exercised or
not distributed if such sale is lawful and reasonably
practicable. The proceeds of such sale will be distributed to
holders as in the case of a cash distribution. If the depositary
is unable to sell the rights, it will allow the rights to lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the
election of shareholders either in cash or in additional common
shares, we will give prior notice thereof to the depositary and
will indicate whether we wish the elective distribution to be
made available to you. In such case, we will assist the
depositary in determining whether such distribution is lawful
and reasonably practicable.
The depositary will make the election available to you only if
it is reasonably practical and if we have provided all of the
documentation contemplated in the deposit agreement. In such
case, the depositary will establish procedures to enable you to
elect to receive either cash or additional ADSs, in each case as
described in the deposit agreement.
If the election is not made available to you, you will receive
either cash or additional ADSs, depending on what a shareholder
in the Republic of Korea would receive upon failing to make an
election, as more fully described in the deposit agreement.
Other Distributions
Whenever we intend to distribute property other than cash,
common shares or rights to purchase additional common shares, we
will notify the depositary in advance and will indicate whether
we wish such distribution to be made to you. If so, we will
assist the depositary in determining whether such distribution
to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute such property to
you and if we provide all of the documentation contemplated in
the deposit agreement, the depositary will distribute the
property to the holders in a manner it deems practicable.
The distribution will be made net of fees, expenses, taxes and
governmental charges payable by holders under the terms of the
deposit agreement. In order to pay such taxes and governmental
charges, the depositary may sell all or a portion of the
property received.
The depositary will not distribute the property to you and will
sell the property if:
•
we do not request that the property be distributed to you or if
    we ask that the property not be distributed to you;
•
we do not deliver satisfactory documents to the depositary; or
•
the depositary determines that all or a portion of the
    distribution to you is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in
the case of a cash distribution.
Redemption
Whenever we decide to redeem any of the securities on deposit
with the custodian, we will notify the depositary. If it is
reasonably practicable and if we provide all of the documentation
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contemplated in the deposit agreement, the depositary will mail
a notice of the redemption to the holders.
The custodian will be instructed to surrender the shares being
redeemed against payment of the applicable redemption price. The
depositary will convert the redemption funds received into
U.S. dollars upon the terms of the deposit agreement and
will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the
depositary. You may have to pay fees, expenses, taxes and other
governmental charges upon the redemption of your ADSs. If less
than all ADSs are being redeemed, the ADSs to be retired will be
selected by lot or on a pro rata basis, as the depositary may
determine.
Changes Affecting Common Shares
The common shares held on deposit for your ADSs may change from
time to time. For example, there may be a change in nominal or
par value, a split-up, cancellation, consolidation or
reclassification of such common shares or a recapitalization,
reorganization, merger, consolidation or sale of assets.
If any such change were to occur, your ADSs would, to the extent
permitted by law, represent the right to receive the property
received or exchanged in respect of the common shares held on
deposit. The depositary may in such circumstances deliver new
ADSs to you or call for the exchange of your existing ADSs for
new ADSs. If the depositary may not lawfully distribute such
property to you, the depositary may sell such property and
distribute the net proceeds to you as in the case of a cash
distribution.
Issuance of ADSs upon Deposit of Common Shares
The depositary may create ADSs on your behalf if you or your
broker deposit common shares with the custodian. The depositary
will deliver these ADSs to the person you indicate only after
you pay any applicable issuance fees and any charges and taxes
payable for the transfer of the common shares to the custodian.
Your ability to deposit common shares and receive ADSs may be
limited by U.S. and Korean legal considerations applicable
at the time of deposit. Under certain Korean laws and
regulations, the depositary is required to obtain our prior
consent for the deposit of common shares if the number of shares
to be deposited in such deposit exceeds the number of common
shares initially deposited by us for the issuance of ADSs
(including deposits in connection with the initial and all
subsequent offerings of ADSs and stock dividends or other
distributions related to the ADSs). We have consented to any
such deposit which exceeds the number of common shares deposited
by us as mentioned above, so long as the deposit does not
violate our articles of incorporation or Korean law.
The issuance of ADSs may be delayed until the depositary or the
custodian receives confirmation that all required approvals or
our consent, if required, have been given and that the common
shares have been duly transferred to the custodian. The
depositary will only issue ADSs in whole numbers.
When you make a deposit of common shares, you will be
responsible for transferring good and valid title to the
depositary. As such, you will be deemed to represent and warrant
that:
•
the common shares are duly authorized, validly issued, fully
    paid, non-assessable and legally obtained;
•
all preemptive (and similar) rights, if any, with respect to
    such common shares have been validly waived or exercised;
•
you are duly authorized to deposit the common shares;
•
the common shares presented for deposit are free and clear of
    any lien, encumbrance, security interest, charge, mortgage or
    adverse claim, and are not, and the ADSs issuable
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upon such deposit will not be, "restricted securities"
    (as defined in the deposit agreement); and
•
the common shares presented for deposit have not been stripped
    of any rights or entitlements.
If any of the representations or warranties are incorrect in any
way, we and the depositary may, at your cost and expense, take
any and all actions necessary to correct the consequences of the
misrepresentations. Transfer, Combination and Split Up of ADRs.
As an ADR holder, you will be entitled to transfer, combine or
split up your ADRs and the ADSs evidenced thereby. For transfers
of ADRs, you will have to surrender the ADRs to be transferred
to the depositary and also must:
•
ensure that the surrendered ADR certificate is properly endorsed
    or otherwise in proper form for transfer;
•
provide such proof of identity and genuineness of signatures as
    the depositary deems appropriate;
•
provide any transfer stamps required by the State of New York or
    the United States; and
•
pay all applicable fees, charges, expenses, taxes and other
    government charges payable by ADR holders pursuant to the terms
    of the deposit agreement, upon the transfer of ADRs.
To have your ADRs either combined or split up, you must
surrender the ADRs in question to the depositary with your
request to have them combined or split up, and you must pay all
applicable fees, charges and expenses payable by ADR holders,
pursuant to the terms of the deposit agreement, upon a
combination or split up of ADRs. Withdrawal of Shares Upon
Cancellation of ADSs
As a holder, you will be entitled to present your ADSs to the
depositary for cancellation and then receive the corresponding
number of underlying common shares at the custodian's
offices. Your ability to withdraw the common shares may be
limited by U.S. and Korean legal considerations applicable
at the time of withdrawal. In order to withdraw the common
shares represented by your ADSs, you will be required to pay to
the depositary the fees for cancellation of ADSs and any charges
and taxes payable upon the transfer of the common shares being
withdrawn. You assume the risk for delivery of all funds and
securities upon withdrawal. Once canceled, the ADSs will not
have any rights under the deposit agreement.
If you hold ADSs registered in your name, the depositary may ask
you to provide proof of identity and genuineness of any
signature and such other documents as the depositary may deem
appropriate before it will cancel your ADSs. The withdrawal of
the common shares represented by your ADSs may be delayed until
the depositary receives satisfactory evidence of compliance with
all applicable laws and regulations. Please keep in mind that
the depositary will only accept ADSs for cancellation that
represent a whole number of securities on deposit.
You will have the right to withdraw the securities represented
by your ADSs at any time except for:
•
temporary delays that may arise because (i) the transfer
    books for the common shares or ADSs are closed, or
    (ii) common shares are immobilized on account of a
    shareholders' meeting or a payment of dividends;
•
obligations to pay fees, taxes and similar charges; or
•
restrictions imposed because of laws or regulations applicable
    to ADSs or the withdrawal of securities on deposit.
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The deposit agreement may not be modified to impair your right
to withdraw the securities represented by your ADSs except to
comply with mandatory provisions of law.
Voting Rights
As a holder, you generally have the right under the deposit
agreement to instruct the depositary to exercise the voting
rights for the common shares represented by your ADSs. The
voting rights of holders of common shares are described in
"Articles of Incorporation— Voting Rights."
At our request, the depositary will distribute to you any notice
of shareholders' meeting received from us together with
information explaining how to instruct the depositary to
exercise the voting rights of the securities represented by ADSs.
If the depositary timely receives voting instructions from a
holder, it will endeavor to vote the securities represented by
the holder's ADSs in accordance with such voting
instructions.
Please note that the ability of the depositary to carry out
voting instructions may be limited by practical and legal
limitations and the terms of the securities on deposit. We
cannot assure you that you will receive voting materials in time
to enable you to return voting instructions to the depositary in
a timely manner. Securities for which no voting instructions
have been received will not be voted.
Fees and Charges
As a holder, you will be required to pay the following service
fees to the depositary:
Service
Fees
Issuance of ADSs
Up to US$0.05 per ADS issued
Cancellation of ADSs
Up to US$0.05 per ADS canceled
Distribution of cash dividends or
    other cash distributions
Up to US$0.04 per ADS held as of
    the record date for the distribution
Distribution of ADSs pursuant to
    stock dividends, free stock distributions or exercise of rights
Up to US$0.05 per ADS held
Distribution of securities other
    than ADSs or rights to purchase additional ADSs
Up to US$0.05 per share (or share
    equivalent) distributed
Annual Depositary Services Fee
Up to US$0.04 per ADS held on the
    applicable record date(s) established by the depositary
Transfer of ADRs
US$1.50 per certificate presented
    for transfer
As a holder you will also be responsible to pay certain fees and
expenses incurred by the depositary and certain taxes and
governmental charges such as:
•
fees for the transfer and registration of common shares charged
    by the registrar and transfer agent for the common shares in
    Korea (i.e., upon deposit and withdrawal of common shares);
•
expenses incurred for converting foreign currency into
    U.S. dollars;
•
expenses for cable, telex and fax transmissions and for delivery
    of securities;
•
taxes and duties upon the transfer of securities (i.e., when
    common shares are deposited or withdrawn from deposit); and
•
fees and expenses incurred in connection with the delivery or
    servicing of common shares on deposit.
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We have agreed to pay certain other charges and expenses of the
depositary. Note that the fees and charges you may be required
to pay may vary over time and may be changed by us and by the
depositary. You will receive prior notice of such changes. In
addition, we have agreed to a discounted fee arrangement or
waiver of fees with certain of our shareholders for their
initial deposit with the depositary of their common shares,
including any stock options, in each case held by such holder
immediately prior to the proposed offering and the issuance of
ADSs upon deposit therefor.
Amendments and Termination
We may agree with the depositary to modify the deposit agreement
at any time without your consent. We undertake to give holders
30 days' prior notice of any modifications that would
materially prejudice any of their substantial rights under the
deposit agreement. We will not consider to be materially
prejudicial to your substantial rights any modifications or
supplements that are reasonably necessary for the ADSs to be
registered under the Securities Act or to be eligible for
book-entry settlement, in each case without imposing or
increasing the fees and charges you are required to pay. In
addition, we may not be able to provide you with prior notice of
any modifications or supplements that are required to
accommodate compliance with applicable provisions of law.
You will be bound by the modifications to the deposit agreement
if you continue to hold your ADSs after the modifications to the
deposit agreement become effective. The deposit agreement cannot
be amended to prevent you from withdrawing the common shares
represented by your ADSs (except as permitted by law).
We have the right to direct the depositary to terminate the
deposit agreement. Similarly, the depositary may in certain
circumstances on its own initiative terminate the deposit
agreement. In either case, the depositary must give notice to
the holders at least 30 days before termination.
Upon termination, the following will occur under the deposit
agreement:
•
For a period of six months after termination, you will be able
    to request the cancellation of your ADSs and the withdrawal of
    the common shares represented by your ADSs and the delivery of
    all other property held by the depositary in respect of those
    common shares on the same terms as prior to the termination.
    During such six months' period the depositary will continue
    to collect all distributions received on the common shares on
    deposit (i.e., dividends) but will not distribute any such
    property to you until you request the cancellation of your ADSs.
•
After the expiration of such six-month period, the depositary
    may sell the securities held on deposit. The depositary will
    hold the proceeds from such sale and any other funds then held
    for the holders of ADSs in a non-interest bearing account. At
    that point, the depositary will have no further obligations to
    holders other than to account for the funds then held for the
    holders of ADSs still outstanding.
Books of Depositary
The depositary will maintain records of holders at its
depositary office. You may inspect such records at such office
during regular business hours but solely for the purpose of
communicating with other holders in the interest of business
matters relating to the ADSs and the deposit agreement.
The depositary will maintain in New York facilities to record
and process the issuance, cancellation, combination, split-up
and transfer of ADRs. These facilities may be closed from time
to time, to the extent not prohibited by law.
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Limitations on Obligations and Liabilities
The deposit agreement limits our obligations and the
depositary's obligations to you. Please note the following:
•
We and the depositary are obligated only to take the actions
    specifically stated in the deposit agreement without negligence
    or bad faith.
•
The depositary disclaims any liability for any failure to carry
    out voting instructions, for any manner in which a vote is cast
    or for the effect of any vote, provided it acts in good faith
    and in accordance with the terms of the deposit agreement.
•
The depositary disclaims any liability for any failure to
    determine the lawfulness or practicality of any action, for the
    content of any document forwarded to you on our behalf or for
    the accuracy of any translation of such a document, for the
    investment risks associated with investing in common shares, for
    the validity or worth of the common shares, for any tax
    consequences that result from the ownership of ADSs, for the
    credit-worthiness of any third party, for allowing any rights to
    lapse under the terms of the deposit agreement, for the
    timeliness of any of our notices or for our failure to give
    notice.
•
We and the depositary will not be obligated to perform any act
    that is inconsistent with the terms of the deposit agreement.
•
We and the depositary disclaim any liability if we are prevented
    or forbidden from acting on account of any law or regulation,
    any provision of our articles of incorporation, any provision of
    any securities on deposit or by reason of any act of God or war
    or other circumstances beyond our control.
•
We and the depositary disclaim any liability by reason of any
    exercise of, or failure to exercise, any discretion provided for
    the deposit agreement or in our Articles of Incorporation or in
    any provisions of securities on deposit.
•
We and the depositary further disclaim any liability for any
    action or inaction in reliance on the advice or information
    received from legal counsel, accountants, any person presenting
    common shares for deposit, any holder or authorized
    representatives thereof, or any other person believed by either
    of us in good faith to be competent to give such advice or
    information.
•
We and the depositary also disclaim liability for the inability
    by a holder to benefit from any distribution, offering, right or
    other benefit which is made available to holders of common
    shares but is not, under the terms of the deposit agreement,
    made available to you.
•
We and the depositary may rely without any liability upon any
    written notice, request or other document believed to be genuine
    and to have been signed or presented by the proper parties.
•
We and the depositary also disclaim liability for any
    consequential or punitive damages for any breach of the terms of
    the deposit agreement.
Pre-Release Transactions
In limited circumstances, subject to the provisions of the
deposit agreement, the depositary may issue ADSs before
receiving a deposit of the underlying shares. These transactions
are commonly referred to as "pre-release
transactions." The depositary may also deliver shares upon
cancellation of pre-released ADSs, even if the ADSs are
cancelled before the pre-release transaction has been
consummated. A pre-release is consummated as soon as the
underlying shares are
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delivered to the depositary. The depositary may receive ADSs
instead of shares to consummate a pre-release transaction. The
depositary may pre-release ADSs only under the following
conditions:
•
Before or at the time of the pre-release, the person to whom the
    pre-release is being made agrees in writing, among others:
—
to represent that such person or its customer owns the shares or
    the ADSs to be delivered by such person under such pre-release
    transaction;
—
to indicate the depositary as owner of such shares or ADSs in
    its records and to hold such shares or ADSs in trust for the
    depositary until such shares or ADSs are delivered to the
    depositary or the custodian;
—
to unconditionally guarantee to deliver to the depositary or the
    custodian, as applicable, such shares or ADSs; and
—
to accept any additional restrictions or requirements that the
    depositary deems appropriate.
•
The pre-release must be fully collateralized with cash, U.S.
    government securities or other collateral that the depositary
    deems appropriate.
•
The depositary must be able to consummate the pre-release
    transaction on not more than five business days notice.
•
The depositary may require such other indemnities and set such
    other credit regulations as the depositary deems appropriate.
In addition, the number of ADSs and underlying shares involved
in the pre-release transactions at any one time generally may
not exceed thirty percent (30%) of the ADSs outstanding,
although the depositary may change or disregard such limit from
time to time as it deems appropriate.
Taxes
You will be responsible for the taxes and other governmental
charges payable on the ADSs and the securities represented by
the ADSs. We, the depositary and the custodian may deduct from
any distribution the taxes and governmental charges payable by
holders and may sell any and all property on deposit to pay the
taxes and governmental charges payable by holders. You will be
liable for any deficiency if the sale proceeds do not cover the
taxes that are due.
The depositary may refuse to issue ADSs, to deliver, transfer,
split and combine ADRs or to release securities on deposit until
all taxes and charges are paid by the applicable holder. The
depositary and the custodian may take reasonable administrative
actions to obtain tax refunds and reduced tax withholding for
any distributions on your behalf. However, you may be required
to provide to the depositary and to the custodian proof of
taxpayer status and residence and such other information as the
depositary and the custodian may require to fulfill legal
obligations. You are required to indemnify us, the depositary
and the custodian for any claims with respect to taxes based on
any tax benefit obtained for you.
Foreign Currency Conversion
The depositary will arrange for the conversion of all foreign
currency received into Dollars if such conversion is practical,
and it will distribute the Dollars in accordance with the terms
of the deposit agreement. You may have to pay fees and expenses
incurred in converting foreign currency, such as fees and
expenses incurred in complying with currency exchange controls
and other governmental requirements.
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If the conversion of foreign currency is not practical or
lawful, or if any required approvals are denied or not
obtainable at a reasonable cost or within a reasonable period,
the depositary may take the following actions in its discretion:
•
convert the foreign currency to the extent practical and lawful
    and distribute Dollars to the holders for whom the conversion
    and distribution is lawful and practical;
•
distribute the foreign currency to holders for whom the
    distribution is lawful and practical; and
•
hold the foreign currency (without liability for interest) for
    the applicable holders
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
    USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive
officer and chief financial officer, conducted an evaluation of
our disclosure controls and procedures, as such term is defined
in Rule
13a-15(e)
promulgated under the Securities Exchange Act of 1934, as
amended, as of December 31, 2006. Our disclosure controls
and procedures are designed to ensure that the information we
are required to disclose in the reports that we file or submit
under the Securities Exchange Act of 1934 is (i) recorded,
processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules
and forms and (ii) accumulated and communicated to our
management, including the chief executive officer and chief
financial officer, as the principal executive and financial
officers, respectively, to allow timely decisions regarding
required disclosures. Based on that evaluation, our chief
executive officer and chief financial officer concluded that our
disclosure controls and procedures were effective as of the end
of the period covered by this report.
Management's Report on Internal Control over Financial
Reporting
Not applicable. The Company is not required to file
management's report on internal control over financial
reporting until December 31, 2007.
Remediation of Previously Identified Material Weaknesses
During the process of preparing the Registration Statement on
Form
F-1
for our
initial public offering in June 2006, our management identified
a material weakness in our internal control over financial
reporting. A material weakness is a control deficiency, or
combination of control deficiencies, that results in more than a
remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected.
We did not maintain a sufficient complement of personnel with
the appropriate level of accounting knowledge, experience and
training commensurate with our financial reporting requirements.
Specifically, we did not have accounting and finance personnel
with sufficient depth and skill to allow for the timely and
accurate preparation and maintenance of our financial records
and statements. This control deficiency could have resulted in a
misstatement of our account balances or disclosures that would
result in a material misstatement to our annual financial
statements that could not be prevented or detected.
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In 2006, our management implemented a number of measures to
remediate the material weakness described above. These
remediation activities included improving our finance
organization by adding and redefining positions and functional
roles, hiring additional finance and accounting personnel with
appropriate levels of financial reporting expertise, ensuring
that finance and accounting personnel receive timely training
and ensuring that third-party advisory resources are utilized in
any areas of the reporting process where the Company's
current level of knowledge and expertise need to be supplemented.
As of December 31, 2006, we have determined that the
remediation measures undertaken to establish an effectively
designed and operating process of internal control over
financial reporting have enabled management to conclude that the
material weakness identified in earlier 2006 has been remediated.
Changes in Internal Control over Financial Reporting
Aside from the changes described above, there were no
significant changes to our internal control over financial
reporting during the period covered by this annual report that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 16.
16.A. Audit Committee Financial Expert
Our board of directors has determined that Mr. Massoud
Entekhabi, our outside director and the chairman of our Audit
Committee, is an "audit committee financial expert,"
as such term is defined by the regulations of the Securities and
Exchange Commission issued pursuant to Section 407 of the
Sarbanes-Oxley Act. Mr. Massoud Entekhabi is an independent
director as such term is defined under Section 301 of the
Sarbanes-Oxley Act.
16.B. Code of Ethics
Our board of directors has adopted a code of ethics that applies
to our chief executive officer, chief financial officer and
other senior officers of the Company. We have previously filed
our code of ethics as an exhibit to our registration statement
in connection with our initial public offering.
16.C. Principal Accountant Fees and Services
Samil PricewaterhouseCoopers has served as our independent
auditor for each of the fiscal years in the three-year period
ended December 31, 2006. All engagements of the principal
accountants are pre-approved by our independent audit committee.
The following table presents the aggregate fees for professional
services and other services rendered by Samil
PricewaterhouseCoopers in 2006 and 2005
2006
2005
(in millions of
Korean Won)
Audit
    fees
(1)
442.3
287.5
Audit related fees
—
—
Tax
    fees
(2)
34.0
10.1
All other fees
—
—
Total
476.3
297.6
(1)
Audit Fees consist of fees billed for the annual audit of the
    company's financial statements. They also include fees
    billed for other audit services, which are those services that
    only the independent auditor reasonably can provide, and include
    the provision of comfort letters and consents and the review of
    documents filed with the SEC and other capital markets or local
    financial reporting regulatory bodies. There were no billed
    audit fees unpaid as at year-end 2006.
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(2)
Tax Fees include fees billed for tax compliance services,
    including the preparation of original and amended tax returns
    and claims for refund; tax consultations, such as assistance and
    representation in connection with tax audits and appeals, tax
    advice related to mergers and acquisitions, transfer pricing,
    and requests for rulings or technical advice from taxing
    authorities; tax planning services; and expatriate tax
    compliance, consultation and planning services.
16.D.
Exemptions from the Listing Standards for Audit Committee
Not applicable.
16.E.
Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers
Neither we nor any "affiliated purchaser," as defined
in
Rule
10b-18(a)(3)
of the Exchange Act, purchased any of our equity securities
during the period covered by this annual report.
PART III
ITEM 17. FINANCIAL STATEMENTS
We have responded to Item 18 in lieu of responding to this
item.
ITEM 18. FINANCIAL STATEMENTS
The following financial statements and related schedules,
together with the reports of independent accountants thereon,
are filed as part of this annual report:
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2005 and 2006
Statements of Operations for the years ended December 31,
2004, 2005 and 2006
Statements of changes in Convertible Preferred Shares and
Shareholders' Equity
for the years ended December 31, 2004, 2005 and 2006
Statements of cash flows for the years ended December 31,
2004, 2005 and 2006
Notes to the consolidated financial statements
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ITEM 19. EXHIBITS
1
Articles of Incorporation of the
    Registrant, amended as of March 29, 2007 (English
    Translation)
4.
1
Lease Agreement, dated March 2007,
    between Registrant and LIG Insurance Co., Ltd. (English
    Translation)
4.
2
Lease Agreement, dated
    September 16, 2006 between Registrant and Jin-Ho Park
    (English Translation)
4.
3
Co-location Service Agreement with
    Korea Internet Data Center, dated as of August 11, 2005 and
    amended as of March 30, 2007 (English translation)
4.
4
Standard Terms and Conditions for
    Buyers, amended as of September 12, 2006 (English
    Translation)
4.
5
Standard Terms and Conditions for
    Sellers, amended as of September 12, 2006 (English
    Translation)
11
(1)
Form of Code of Ethics
12.
1
Certification of Registrant's
    Chief Executive Officer, as required by Section 302 of the
    Sarbanes-Oxley Act of 2002
12.
2
Certification of Registrant's
    Chief Financial Officer, as required by Section 302 of the
    Sarbanes-Oxley Act of 2002
13.
1
Certification of Registrant's
    Chief Executive Officer, as required by Section 906 of the
    Sarbanes-Oxley Act of 2002
13.
2
Certification of Registrant's
    Chief Financial Officer, as required by Section 906 of the
    Sarbanes-Oxley Act of 2002
(1)
Previously filed with the SEC as an exhibit to our registration
    statement on
    Form
F-1.
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Report of Independent Registered Public Accounting Firm
To the board of directors and shareholders of
GMARKET INC
In our opinion, the accompanying balance sheets and the related
statements of operations, of changes in convertible preferred
shares and shareholders' equity (deficit) and of cash flows
present fairly, in all material respects, the financial position
of GMARKET INC. at December 31, 2006 and December 31,
2005, and the results of its operations and its cash flows for
each of the three years in the period ended December 31,
2006 in conformity with accounting principles generally accepted
in the United States of America. 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. We conducted our audits of these
statements 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, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
/s/ Samil PricewaterhouseCoopers
Seoul, Korea
May 2, 2007
95
Table of Contents
GMARKET INC.
Balance Sheets
December 31, 2005 and 2006
(In millions of Won and in thousands
of Dollars, except share and per share data)
2005
2006
2006
Unaudited
(Note 3)
Assets
Current assets
Cash and cash equivalents
W
36,898
W
34,930
$
37,746
Cash on deposit
45,300
134,398
145,233
Restricted cash
2,100
6,400
6,916
Accounts receivable, net
16,244
33,827
36,554
Held-to-maturity securities
—
4,000
4,322
Other current assets
2,517
5,119
5,531
Total current assets
103,059
218,674
236,302
Long-term financial instruments
5,260
5,000
5,403
Held-to-maturity securities
4,000
—
—
Property and equipment, net
8,188
19,582
21,161
Other assets
551
4,846
5,236
Total assets
W
121,058
W
248,102
$
268,102
Liabilities, convertible
    preferred shares and shareholders' equity
Current liabilities
Amounts payable to sellers
W
93,458
W
103,599
$
111,951
Accounts payable
10,859
19,242
20,793
Deferred revenue and advances
2,180
3,532
3,817
Sales incentive liabilities
2,263
6,608
7,141
Other current liabilities
2,165
6,854
7,406
Total current liabilities
110,925
139,835
151,108
Accrued severance benefits
428
1,397
1,509
Total liabilities
111,353
141,232
152,617
Commitments and contingencies:
—
—
—
Series A convertible preferred
    shares; W100 par value; 12,576,500 shares authorized,
    issued and outstanding as of December, 31 2005; liquidation
    preference of W639 per share as of December 31, 2005
7,339
—
—
Shareholders' equity (deficit)
Common shares; W100 par value;
    187,423,500 and 200,000,000 shares authorized; and 30,400,000
    and 49,506,210 shares issued and outstanding as of
    December 31, 2005 and 2006, respectively.
3,040
4,951
5,350
Additional paid-in capital
518
86,445
93,414
Loan to employees for stock purchase
(389
)
—
—
Retained earnings(Accumulated
    deficit)
(803
)
15,474
16,721
Total shareholders' equity
2,366
106,870
115,485
Total liabilities, convertible
    preferred shares and shareholders' equity
W
121,058
W
248,102
$
268,102
The accompanying notes are an integral part of these financial
statements.
F-1
Table of Contents
GMARKET INC.
Statements of Operations
For the Years Ended December 31, 2004, 2005 and 2006
(In millions of Won and in thousands
of Dollars, except share and per share data)
2004
2005
2006
2006
Unaudited
(Note 3)
Revenues
Transaction fees
W
12,034
W
56,779
W
99,252
$
107,253
Advertising and others
2,103
13,556
54,881
59,305
Total revenues
14,137
70,335
154,133
166,558
Costs and expenses
Cost of revenues
8,417
36,686
78,954
85,319
Sales and marketing
5,354
24,803
46,427
50,169
General and administrative
1,912
5,286
14,577
15,752
Total costs and expense
15,683
66,775
139,958
151,240
Operating income (loss)
(1,546
)
3,560
14,175
15,318
Other income (expense)
Interest income
125
1,393
5,189
5,607
Interest expense
(19
)
—
—
—
Others, net
—
—
202
218
Income (loss) before income tax
    expenses
(1,440
)
4,953
19,566
21,143
Income tax expenses (benefits)
—
(133
)
3,289
3,554
Net income (loss)
W
(1,440
)
W
5,086
W
16,277
$
17,589
Accretion of preferred shares to
    redemption price
—
(165
)
—
—
Amounts allocated to participating
    preferred shareholders
—
(1,565
)
(1,260
)
(1,361
)
Net income (loss) applicable to
    common shareholders
W
(1,440
)
W
3,356
W
15,017
$
16,228
Net income (loss) per share
— Basic
W
(60
)
W
124
W
371
$
0.40
— Diluted
(60
)
108
345
$
0.37
Weighted average number of common
    shares
— Basic
24,000,000
26,963,014
40,468,471
40,468,471
— Diluted
24,000,000
30,939,377
47,177,311
47,177,311
The accompanying notes are an integral part of these financial
statements.
F-2
Table of Contents
GMARKET INC.
Statements of Changes in Convertible Preferred Shares and
Shareholders' Equity (Deficit)
For the Years Ended December 31, 2004, 2005 and 2006
Convertible
Redeemable
Convertible Preferred
Loan to
Total
Preferred Shares
Shares
Common Shares
Additional
Employees
Shareholders'
(In
millions of Won
Paid-in
For Stock
Accumulated
Equity
except
number of shares)
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Purchase
Deficit
(Deficit)
Balance at December 31,
    2003
—
W
—
—
W
—
24,000,000
W
2,400
W
225
W
(142
)
W
(4,284
)
W
(1,801
)
Issuance of preferred shares, net
    of W733 million of issuance costs
12,576,000
7,174
—
—
—
—
—
—
—
—
Stock-based compensation expense
—
—
—
—
—
—
116
—
—
116
Net loss
—
—
—
—
—
—
—
—
(1,440
)
(1,440
)
Balance at December 31,
    2004
12,576,500
W
7,174
—
W
—
24,000,000
W
2,400
W
341
W
(142
)
W
(5,724
)
W
(3,125
)
Loan to employees for stock purchase
—
—
—
—
—
—
—
(247
)
—
(247
)
Issuance of common shares from
    exercise of stock options
—
—
—
—
6,400,000
640
55
—
—
695
Stock-based compensation expense
—
—
—
—
—
—
122
—
—
122
Accretion to redemption price
—
165
—
—
—
—
—
—
(165
)
(165
)
Reclassification due to
    cancellation of redemption feature
(12,576,500
)
(7,339
)
12,576,500
7,339
—
—
—
—
—
—
Net income
—
—
—
—
—
—
—
—
5,086
5,086
Balance at December 31,
    2005
—
W
—
12,576,500
W
7,339
30,400,000
W
3,040
W
518
W
(389
)
W
(803
)
W
2,366
Issuance of common stock
—
—
—
—
6,079,710
608
79,003
—
—
79,611
Exercise of stock options
—
—
—
—
450,000
45
12
—
—
57
Stock-based compensation expense
—
—
—
—
—
—
831
—
—
831
Reclassification to equity due to
    cancellation of redemption feature
—
—
(12,576,500
)
(7,339
)
12,576,500
1,258
6,081
—
—
7,339
Net income
—
—
—
—
—
—
—
—
16,277
16,277
Repayment of loan to employees for
    stock purchase
—
—
—
—
—
—
—
389
—
389
Balance at December 31,
    2006
—
W
—
—
W
—
49,506,210
W
4,951
W
86,445
W
—
W
15,474
W
106,870
The accompanying notes are an integral part of these financial
statements.
F-3
Table of Contents
GMARKET INC.
Statements of Cash Flows
For the Years Ended December 31, 2004, 2005 and 2006
(In millions of Won and in thousands of Dollars)
2004
2005
2006
2006
Unaudited
(Note 3)
Cash flows from operating
    activities
Net income (loss)
W
(1,440
)
W
5,086
W
16,277
$
17,589
Adjustments
Depreciation and amortization
264
1,196
3,347
3,616
Stock-based compensation expense
116
122
850
918
Provision for bad debt
(112
)
(35
)
283
306
Provision for severance benefits
277
522
1,039
1,123
Cumulative effect of changes in
    accounting principle, net
—
—
(19
)
(21
)
Deferred tax assets
—
(254
)
(767
)
(829
)
Provision for loyalty program
    reserve
273
2,114
6,400
6,916
Others, net
—
2
134
145
Changes in operating assets and
    liabilities
Accounts receivable
(2,608
)
(12,189
)
(17,792
)
(19,226
)
Amounts payable to sellers
20,135
69,307
10,141
10,958
Accounts payable
2,290
8,174
8,383
9,059
Deferred revenue and advances
640
1,505
1,352
1,461
Other current assets
11
(2,096
)
(2,328
)
(2,515
)
Other assets
—
(76
)
21
22
Other current liabilities
589
1,196
2,635
2,848
Payment of severance benefits
(34
)
(559
)
(71
)
(76
)
Net cash provided by operating
    activities
20,401
74,015
29,885
32,294
Cash flows from investing
    activities
Increase in cash on deposit, net
(6,100
)
(39,200
)
(88,827
)
(95,988
)
Increase in restricted cash, net
(1,210
)
(600
)
(4,300
)
(4,647
)
Increase in long-term financial
    instruments
(120
)
(5,120
)
(120
)
(130
)
Acquisition of held-to-maturity
    securities
—
(4,000
)
—
—
Purchase of property and equipment
(1,902
)
(7,309
)
(14,749
)
(15,938
)
Decrease (increase) in other
    current assets
—
(15
)
47
51
Decrease (increase) in other
    assets, net
378
(418
)
(3,960
)
(4,278
)
Net cash used in investing
    activities
(8,954
)
(56,662
)
(111,909
)
(120,930
)
Cash flows from financing
    activities
Issuance of preferred shares, net
7,174
—
—
—
Issuance of common shares, net
—
695
79,668
86,090
Decrease (increase) in loan to
    employees for stock purchase
—
(247
)
388
420
Repayment of borrowings
(567
)
—
—
—
Net cash provided by financing
    activities
6,607
448
80,056
86,510
Net increase (decrease) in cash and
    cash equivalents
18,054
17,801
(1,968
)
(2,126
)
Cash and cash
    equivalents
Beginning of year
1,043
19,097
36,898
39,872
End of year
W
19,097
W
36,898
W
34,930
$
37,746
Supplemental cash flow
    disclosures
Cash paid for interest
W
20
W
—
W
—
$
—
Cash paid for income taxes
W
—
W
87
W
543
$
587
Non-cash investing and financing
    activities:
Reclassification of
    held-to-maturity bond to current held-to-maturity bond
W
—
W
—
W
4,000
$
4,322
Conversion of preferred stock to
    common stock
W
—
W
—
W
1,258
$
1,359
The accompanying notes are an integral part of these financial
statements.
F-4
Table of Contents
1.
Description of Business
We are a retail e-commerce marketplace in Korea offering buyers
a wide selection of products at competitive prices and sellers a
comprehensive, end-to-end sales solution. Our e-commerce
marketplace facilitates the purchase and sale of small and large
volumes of products among a large number of buyers and sellers
in a convenient, cost effective and secure manner. We derive our
revenues from transaction fees on the sale of products completed
on our website, advertising service and membership fees. Our
e-commerce marketplace is located at www.gmarket.co.kr.
2.
Significant Accounting Policies
Use of estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the amounts reported in the accompanying financial
statements and related disclosures. 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 differ from these estimates.
Revenue recognition
Our net revenues are derived from fees associated with our
transaction, advertising services and membership programs.
Revenues from transaction fees are derived from commissions paid
by sellers trading on our e-commerce marketplace, net of sales
incentives. Revenues from advertising are derived from the sale
of online banners, premium listing and keyword searches to
sellers, and sale of advertisement to non sellers. Other
revenues are derived from the sale of membership programs and
delivery services. Our revenues are recorded net of value added
tax.
Transaction fees
Our e-commerce customers are sellers of merchandise from whom we
receive commissions based on the gross merchandise value of each
successfully executed transaction. In addition to providing a
marketplace, we also facilitate the collection of cash from
buyers and the remittance of that cash, net of our commission to
our customer, the seller. The Company is not the primary obligor
to the transaction between the seller and the buyer as the title
to the goods passes directly from the seller to the buyer and
the Company does not bear the risk of credit loss other than its
own commission. Therefore, commissions earned by the Company are
recorded as revenues, on a net basis, upon the completion of our
services. Our standard market terms allow for the return of
goods to the seller from the buyer within a seven day period
from delivery date under certain circumstances after which we
refund amounts collected to the buyer. We record a reserve for
estimated refunds based on our historical experience as a
reduction of revenues from transaction fees.
As our service transactions have a refundable provision
available to the buyer, we have elected to apply the above
policy for our transaction fees using an analogy to the guidance
in Statement of Financial Accounting Standards
("SFAS") No. 48
Revenue Recognition When Right
of Return Exists
. We satisfy the criteria in SFAS 48
as, our commission fee is fixed at the outset, the buyers and
sellers of goods have economic substance apart from us, we do
not have any significant obligations for future performance once
the buyer's payment is confirmed and we can reasonably
estimate the amount of future refunds based on our specific
historical experience. As the buyer has only seven days from
delivery date to return the goods purchased, we are able to
compare our estimated refund returns for a period to the actual
amount of returns for such period due to this short return
period.
Advertising and other
The Company recognizes advertising and membership program
revenues ratably over the term of the contract or subscription
period. The duration of the banner and premium listing
advertising has
F-5
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ranged from one day to one month, and the duration of membership
program is either three months or 12 months.
The Company provides an integrated delivery services both for
domestic and international buyers which involved the Company
contracting with couriers to provide such product delivery
services. The Company applied the guidance provided in EIFT
No. 99—19,
Reporting Revenue Gross as a Principal
versus Net as an Agent
in recognizing revenue for these
delivery services. Shipping and handling fees directly related
to this delivery service revenue is classified as cost of goods
sold, all other such shipping and handling fees are classified
as sales and marketing costs.
Mileage program
Registered buyers may earn mileage through purchasing eligible
products. Once a registered buyer has accumulated more than
10,000 miles, that buyer may convert those miles into G Cash
(which in turn is convertible into Cash). The mileage program
reserve calculation incorporates judgments and assumptions
regarding expected customer earnings and redemption patterns and
is based on specific historical experience.
Changes in mileage program reserves for the years ended
December 31, 2004, 2005 and 2006 are as follows:
(In millions of Won)
2004
2005
2006
Balance at beginning of year
W
185
W
411
W
1,980
Provision for mileage program
    reserves
273
2,114
3,640
Redemptions
(47
)
(545
)
(2,055
)
Balance at end of year
W
411
W
1,980
W
3,565
Discount coupons and stamps
During 2005, we began to offer to registered buyers discount
coupons and stamps. Buyers are not required to complete a
specific purchase transaction to earn a discount coupon. Rather,
discount coupons are offered to registered buyers and can be
used prior to their expiry date, to reduce the purchase price of
a product in a future purchase. In accordance with EITF 01-09,
we record the value of the coupon at the same time the coupon is
actually used in a purchase as a reduction of revenues from
transaction fees. Stamps are awarded to buyers after completion
of a purchase transaction and may be accumulated and redeemed
for discount coupons or used for other services. We charge
sellers for issuing stamps and recognize the revenue when
coupons, converted from stamps, are used for a purchase or when
stamps are used for other services.
Changes in discount coupons and stamps reserves for the years
ended December 31, 2005 and 2006 are as follows:
(In millions of Won)
2005
2006
Balance at beginning of year
W
—
W
283
Issuance
308
6,637
Utilization
(25
)
(3,877
)
Balance at end of year
W
283
W
3,043
Cost of revenues
Cost of revenues consists of credit card fees and charges from
bank and other institutions, click through fees that we pay to
portals and search engines, network and systems maintenance fees,
F-6
Table of Contents
salaries and other benefits relating to transactions,
depreciation and amortization pertaining to our e-commerce
platform and the purchase price of products sold by us until
2004.
Cash and cash equivalents
Cash equivalents consist of highly liquid investments with an
original maturity date of three months or less. Cash equivalents
include demand deposit and investments in money market mutual
funds.
Cash on deposit and long-term financial instruments
Cash on deposit includes time deposits, with maturities greater
than three months but one year or less. Long-term financial
instruments include deposits, with maturities greater than one
year.
Restricted cash
Restricted cash consists of certain cash on deposit pledged as
collateral to credit card companies to secure transactions. As
the credit card company renews pledges every year, the
restricted cash amounts for the credit card companies are
classified as current assets.
Fair value of financial instruments
Our carrying amounts of cash and cash equivalents, cash on
deposit, accounts receivable, accounts payable and amounts
payable to sellers approximate fair value because of the short
maturity of these instruments.
Concentrations of credit risk
Our cash and cash equivalents and accounts receivable are
potentially subject to concentration of credit risk. Cash and
cash equivalents are placed with financial institutions which
management believes are of high credit quality.
Accounts receivable balances consist of amounts owing to us by
buyers of merchandise on our website and our advertising
customers, payment for which is settled through credit cards and
electronic bank transfers. The credit card companies are
responsible for remitting to us the transaction amount after
deducting their fixed service fees ranging between approximately
2.4% and 3%. We maintain an allowance for doubtful accounts
based upon our actual experience.
Held-to-maturity securities
Held-to-maturity securities, which are expected to be held to
maturity with the positive intent and ability to hold to
maturity, are carried at amortized cost and are reduced to net
realizable value by a charge to earnings for other than
temporary declines in fair value.
Property and equipment
Property and equipment consist of furniture and fixtures,
leasehold improvements, computers and equipment and software.
Property and equipment are stated at historical cost less
accumulated depreciation and amortization. Depreciation and
amortization is computed using the straight-line method over the
estimated useful lives of the assets from three to five years.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are expensed as incurred.
Intangible assets
Intangible assets consist of patent, website development cost,
and others, including domain name registration rights.
Intangible assets are stated at historical cost less accumulated
amortization,
F-7
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which is computed using the straight-line method over three
years of estimated useful life. Amortization of intangible
assets for the years ended December 31, 2004, 2005 and 2006
were W2 million, W10 million and W23 million,
respectively.
Accounting for the impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever
events or changes in circumstance indicate the carrying amount
may not be recoverable. Recoverability is measured by comparison
of its carrying amount to future net cash flow the assets are
expected to generate. During 2004, 2005 and 2006, no amount was
recorded as impairment loss in respect of long-lived assets. If
such assets are considered to be impaired, the impaired amount
is measured as the amount by which the carrying amount of the
asset exceeds the present value of the future net cash flows
generated by the respective long-lived assets.
Amounts payable to sellers
Our contractual terms with sellers require us to remit the
proceeds from each transaction (net of commission) to the seller
between seven and 30 days after the completion of the
transaction. This time generally allows the Company to process
all credits and other adjustments to the selling price with the
buyer. These amounts are presented as amounts payable to sellers
in these financial statements.
Sales and marketing
Sales and marketing expenses are comprised primarily of
advertising, promotions and fees paid to a third-party service
provider that operates the Company's call center, all of
which are expensed as incurred. Expenses incurred by the
marketing department relating to marketing and promotion are
recorded as sales and marketing expenses.
The Company expenses advertising costs as incurred. Advertising
expense was approximately W2,753 million,
W14,037 million and W27,350 million for the years
ended December 31, 2004, 2005 and 2006, respectively.
Research and development costs
The Company's research and development costs, which are
personnel expenses in connection with research and development
activities, are expensed as incurred and included in general and
administrative expenses. The Company has expensed
W409 million, W475 million and W2,934 million for
the years ended December 31, 2004, 2005 and 2006, respectively.
Internal-use website development cost
We apply the provisions of EITF 00-2,
Accounting for Web Site
Development Costs.
Our policy is to expense the costs
incurred in the preliminary project and post implementation
stage of the development effort and the subsequent costs
associated with maintaining our website. We capitalize costs
associated with the application development stage of the
project. However, during the years ended December 31, 2004,
2005 and 2006, we did not make significant enhancements to our
website that required capitalization under our policy.
Accrued severance benefits
Employees and directors with one year or more of service are
entitled to receive a lump-sum payment upon termination of their
employment with the Company based on the length of service and
rate of pay at the time of termination. The annual severance
benefits expense charged to operations is calculated based upon
the net change in the accrued severance benefits payable at the
balance
F-8
Table of Contents
sheet date based on the guidance of
EITF
88-1,
Determination of Vested Benefit Obligation for a Defined
Benefit Pension Plan
.
The Company is required to pay 4.5% of each employee's
annual wages to the National Pension Service. The total amount
of contributions made to the National Pension Service in 2004,
2005 and 2006 were W77 million, W143 million and
W353 million, respectively.
Accounting for stock-based compensation
The Company accounts for stock-based employee compensation
arrangements in accordance with the provisions of
SFAS No. 123(R),
Accounting for Stock Based
Compensation,
using the fair value method. Under this
method, compensation cost for stock option grants are measured
at the grant date based on the fair value of the award and
recognized over the service period, which is usually the vesting
period, using the straight line method. As stock-based
compensation expense recognized in the 2006 statement of
operations is based on awards that are ultimately expected to
vest, it has been reduced for estimated forfeitures.
FAS 123(R) requires forfeitures to be estimated at the time
of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.
The Company uses the Black-Scholes model to determine the fair
value of equity-based awards at the date of grant and recognizes
compensation cost as if all awards are expected to vest,
recognizing forfeitures based on when they are expected to occur
as at the grant date. Refer to note 14 for details of our
assumptions used in calculating the fair value of our stock
options.
Prior Period Pro Forma Presentation
Under the modified prospective application method, results for
prior periods have not been restated to reflect the effects of
implementing SFAS No. 123(R) that was adopted as at
January 1, 2006. The following pro forma information, as
required by SFAS No. 148,
Accounting for
Stock-Based Compensation Transition and Disclosure, an Amendment
of FASB Statement No. 123
is presented for comparative
purposes and illustrates the pro forma effect on net income and
earnings per share for the period presented as if we had applied
the fair value recognition provisions of SFAS No. 123
to stock-based employee compensation prior to January 1,
2006:
(In millions of Won)
2005
Net income:
As reported
5,086
Pro forma effects of retroactive
    application
19
Pro forma income
5,105
Accretion to preferred shares to
    redemption price
(165
)
Amount allocated to participating
    preferred shareholders
(1,571
)
Pro forma net income applicable to
    common shareholders
3,369
Earnings per share:
As reported:
Basic
124
Diluted
108
Pro forma:
Basic
125
Diluted
109
F-9
Table of Contents
Foreign currency transactions
Net gains and losses resulting from foreign exchanges
transactions are included in gains (losses) on foreign
currency in the statements of operations.
Income taxes
The Company accounts for income taxes under the provisions of
SFAS No. 109,
Accounting for Income Taxes
.
Under SFAS No. 109, income taxes are accounted for
under the asset and liability method. Deferred taxes are
determined based upon differences between the financial
reporting and tax bases of assets and liabilities at expected
enacted statutory tax rates for the years in which the
differences are expected to reverse.
A valuation allowance is provided on net deferred tax assets to
the extent that it is more likely than not that such deferred
tax assets will not be realized. The total income tax provision
includes current tax expenses under applicable tax regulations
and the change in the balance of deferred tax assets and
liabilities.
Earning per share
Basic earning per share is computed by dividing net income
(loss) attributable to common shareholders by the weighted
average number of common shares outstanding for all periods.
Diluted earning per share is computed by dividing net income
(loss) attributable to shareholders by the weighted average
number of shares outstanding, increased by common share
equivalents. Common share equivalents are calculated using the
treasury stock method and represent incremental shares issuable
upon exercise of the Company's outstanding stock options.
However, common share equivalents are not included in the
denominator of the diluted earnings per share calculation when
inclusion of such shares would be anti-dilutive.
Recently Issued Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board
("FASB") issued Financial Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109"
("FIN 48"), which is a change in accounting for
income taxes. Among other provisions, FIN 48 specifies how
tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires
certain disclosures of uncertain tax matters; specifies how
reserves for uncertain tax positions should be classified on the
balance sheet; and provides transition and interim-period
guidance. FIN 48 is effective for fiscal years beginning
after December 15, 2006 and as a result, is effective for
us from January 1, 2007. The adoption of FIN 48 did
not have a material impact on our financial position, results of
operations or cash flows.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157 ("SFAS 157"),
"Fair Value Measurements," which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements. SFAS 157
does not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various prior
accounting pronouncements. SFAS 157 is effective for fiscal
years beginning after November 15, 2007. Earlier adoption
is permitted, provided the company has not yet issued financial
statements, including for interim periods, for that fiscal year.
We are currently evaluating the impact of SFAS 157, but do
not expect the adoption of SFAS 157 to have a material
impact on our financial position, results of operations or cash
flows.
In September 2006, the FASB issued SFAS No. 158,
"Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plans-An Amendment of FASB No. 87, 88,
106 and 132(R)" ("SFAS 158"). SFAS 158
requires that the funded status of defined benefit postretirement
F-10
Table of Contents
plans be recognized on the company's balance sheet, and
changes in the funded status be reflected in comprehensive
income, effective fiscal years ending after December 15,
2006. The standard also requires companies to measure the funded
status of the plan as of the date of its fiscal year-end,
effective for fiscal years ending after December 15, 2008. The
adoption of SFAS 158 does not have a material impact on our
financial position, results of operations or cash flows.
3.
Convenience Translation into United States Dollar Amounts
    (Unaudited)
The Company reports its financial statements using the Korean
Won. The Dollar amounts disclosed in the accompanying financial
statements are presented solely for the convenience of the
reader, and have been converted at the rate of W925.4 to one
Dollar, which is the noon buying rate of the U.S. Federal
Reserve Bank of New York in effect on December 31, 2006.
Such translations should not be construed as representations
that the Won amounts represent, have been, or could be,
converted into, Dollars at that or any other rate.
4.
Restricted Cash
The amount of restricted cash, which consists of certain cash on
deposit pledged as collateral to credit card companies, was
W2,100 million, and W6,400 million as of
December 31, 2005 and 2006, respectively.
5.
Long-term Financial Instruments
The Company's long-term financial instruments consisted of
long-term deposits of W5,000 million which mature on
November 28, 2008 as of December 31, 2006.
6.
Held-to-maturity Securities
The Company's held-to-maturity securities consisted of
investments in corporate bonds, which were recorded at cost
approximating their fair value. There were no unrecognized
holding gains or losses as of December 31, 2005 and 2006.
Interest rate for the Company's investments is 4.8% per
annum with the maturity date of September 28, 2007. As of
December 31, 2006, the Company's held-to-maturity
securities were reclassified from non-current to current because
of the maturity date of September 28, 2007.
7.
Allowance for Doubtful Accounts
Changes in the allowance for doubtful accounts for the years
ended December 31, 2004, 2005 and 2006 are as follows:
(In millions of Won)
2004
2005
2006
Balance at beginning of year
W
271
W
153
W
118
Provision for allowances
11
8
215
Reversal
(123
)
(43
)
—
Write-offs
(6
)
—
—
Balance at end of year
W
153
W
118
W
333
F-11
Table of Contents
8.
Property and Equipment, Net
Property and equipment as of December 31, 2005 and 2006
consist of the following:
(In millions of Won)
2005
2006
Furniture and fixtures
W
583
W
1,907
Servers and equipment
7,262
18,042
Purchased computer software
1,985
4,579
9,830
24,528
Less: accumulated depreciation and
    amortization
(1,642
)
(4,946
)
W
8,188
W
19,582
Depreciation and amortization of property and equipment for the
years ended December 31, 2004, 2005 and 2006 were
W262 million, W1,186 million and W3,324 million,
respectively.
9.
Accrued Severance Benefits
Changes in accrued severance benefits for the years ended
December 31, 2004, 2005 and 2006 are as follows:
(In millions of Won)
2004
2005
2006
Balance at beginning of year
W
222
W
465
W
428
Provisions for severance benefits
277
522
1,039
Severance payments
(34
)
(559
)
(70
)
Balance at end of year
W
465
W
428
W
1,397
10.
Commitments and Contingencies
The Company has a lease contract with LIG insurance of 4,282
square meters of office space for our headquarters in Seoul,
Korea, beginning in February 2006. The term of the lease is for
one year from February 27, 2006 and the lease may be
renewed for subsequent one-year terms. We renewed the lease on
February 28, 2007 which expires on February 29, 2008.
We paid a security deposit in connection with this lease in the
amount of approximately Won 0.81 billion
(US$0.88 million). The lease payment due by
December 31, 2007 is Won 1.45 billion
(US$1.57 million).
The Company has a lease contract with Fine Tower of 3,759 square
meters of office space in Seoul, Korea, beginning in October
2006 and ending in October 2008. We paid a security deposit in
connection with this lease in the amount of approximately Won
3.13 billion (US$3.38 million). The lease payment due
by December 31, 2007 is Won 0.93 billion
(US$1.01 million).
The Company has contracts with third parties to outsource the
management of its servers and network. The contracts are renewed
annually. The Company recorded expense of W151 million,
W2,859 million and W3,270 million under the contracts
for the years ended December 31, 2004, 2005 and 2006,
respectively.
The Company has a contract with a third party to outsource its
call center services. The contract is renewed annually. The
Company recorded expense of W1,419 million,
W6,625 million and W11,642 million under the contract
for the years ended December 31, 2004, 2005 and 2006,
respectively.
11.
Stock Split
On December 2, 2005, the Company's shareholders
approved a 50-for-1 stock split, which became effective on
January 5, 2006. Holders of the Company's common
shares and preferred shares as of record date of
December 2, 2005 received 29,792,000 and 12,324,970
additional
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Table of Contents
shares, respectively. Basic and diluted earnings per share were
W371 and W345 per share, respectively, for the year ended
December 31, 2006. These financial statements retroactively
reflect the impact of the stock split.
12.
Convertible Preferred Shares
On December 30, 2004, the Company issued 12,576,500 shares
of Series A convertible redeemable preferred shares (the
"Preferred Shares") with a par value of W100 per share
for total proceeds of W7,907 million, less issuance costs
of W733 million.
The issue price of the Preferred Shares was denominated in
United States Dollars at $0.60 per share. Based on the exchange
rate between the Dollars and the Won on the date the transaction
was completed (US $1 = W1,040.40), the Company received
W629 per share or total gross proceeds of W7,907 million.
On December 2, 2005, the Company's shareholders
approved a 50-for 1 stock split, which became effective on
January 5, 2006. As a result of the stock split, the total
outstanding Preferred Shares became 12,576,500 shares.
On June 19, 2006, all of the Preferred Shares was converted
to Common Shares.
The principal terms and conditions of the Preferred Shares were
as follows:
Voting rights
Each holder of outstanding Preferred Shares shall be entitled to
the number of votes equal to the number of Preferred Shares, at
each annual or extraordinary general meeting of shareholders of
the Company with respect to any and all matters presented to the
shareholders of the Company for their action or consideration.
Liquidation preference
Upon liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any Junior Securities,
the holders of Preferred Shares shall be entitled to be paid out
of the remaining assets of the Company legally available for
distribution with respect to each Preferred Share an amount in
cash equal to the sum of Korean Won W639, plus any accrued but
unpaid dividends thereon, in each case as adjusted for any stock
dividends, combinations or splits or similar events with respect
to such shares.
Conversion
Outstanding Preferred Shares may be converted at any time from
the issue date to the twentieth anniversary of the issue date,
at the option of the holder thereof, into fully paid and
non-assessable common shares. The number of common shares to be
delivered will be the number of Preferred Shares multiplied by
the original issue price divided by the conversion price,
rounding the resulting number down to the nearest whole number
of conversion shares. The conversion price means the price per
conversion share at which conversion shares will be delivered
upon conversion, which is stated in Korean Won W639, plus any
accrued but unpaid dividends thereon, in each case as adjusted
for any stock dividends, combinations or splits or similar
events with respect to such shares. If any Preferred Shares have
not been converted into common shares as of the date one
business day prior to the pricing of the qualified IPO, such
Preferred Shares shall be automatically converted to common
shares without any further action by, consent of or notice from,
the respective holders of such Preferred Shares.
According to the Shareholders Agreement by and among the Company
and the Shareholders, each holder of Preferred Shares shall be
obliged to request the Company to convert, and the
F-13
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Company shall convert, each share of Preferred Shares into
common share at the then-applicable conversion price immediately
prior to the first sale in a qualified public offering.
Dividend
When declared at the general meeting of shareholders or by the
Board, the holders of outstanding Preferred Shares shall be
entitled to receive, out of the assets of the Company which are,
by law, available for such payment, non-cumulative dividends,
payable at a rate per annum equal to 0.001% of the par value per
Preferred Share, as adjusted for any stock dividends,
combinations or splits or similar events with respect to the
shares.
Preferred Shares participate in earnings with common shares
equally after allocation of preferred dividends (when declared).
No dividends have been declared for Preferred Shares or common
shares.
Redemption
At any time on or after the fifth anniversary of the issue date
and on or before the twentieth anniversary of the issue date and
upon notice by the holders of at least
66
2
/
3
%
of the then outstanding Preferred Shares, the Company shall
redeem the specified number of Preferred Shares. The price
payable for each redeemed share of Preferred Shares shall be the
sum Korean Won W639, plus any accrued but unpaid dividends
thereon, in each case as adjusted for any stock dividends,
combinations or splits or similar events with respect to such
shares.
On December 2, 2005, the holders of outstanding Preferred
Shares elected to delete the redemption provisions of the
Preferred Shares by amending the articles of incorporation.
However, in accordance with EITF D-98,
Classification
and Measurement of Redeemable Securities
and
Rule
5-02.28
of
Regulation
S-X,
the preferred shares still had redemption characteristics that
were not solely within the control of the Company as at
December 31, 2005 and therefore they remained as temporary
equity as at this date.
Accretion of Beneficial Conversion Feature
("BCF")
A beneficial conversion feature ("BCF") is measured at
the date of issuance when a share of preferred stock is
convertible into common stock and the fair market value of the
underlying common stock at the date of issuance is in excess of
the preferred share purchase price. At the date of issuance of
the Preferred Shares in December 2004, the fair market value of
the underlying common stock at the date of issuance was less
than the conversion price and therefore, the Company did not
record a BCF.
13.
Common Shares
Each share of common stock has the right to one vote. The
holders of common shares are also entitled to receive dividends
whenever funds are legally available and when declared by the
Board of Directors, subject to prior rights of holders of all
classes of stock outstanding having priority rights as to
dividends. No dividends have been declared or paid on any of the
Company's outstanding common shares.
14.
Stock Option Grants
The Company may grant to its officers and employees stock
options to purchase the stocks of the Company up to the lesser
of 30% of all shares issued and outstanding or the rate
permitted by applicable laws and regulations, by a special
resolution at a general meeting of shareholders pursuant to its
articles of incorporation and applicable laws and regulations.
Options granted before 2005 vest over a two year period from
grant date and expire after nine years. Options granted during
2005 and 2006 vest 50% after two years with the remaining 50%
F-14
Table of Contents
vesting monthly in equal increments over the following
24 months and expire between nine and eleven years after
grant date. Vesting of options is contingent on the employee
remaining in employment during the vesting period. We record
compensation expense based on the grant date fair value using
the Black-Scholes model and the straight-line amortization
method. To determine the fair value of equity-based awards at
the date of grant, we utilized the following weighted average
assumptions for grants in 2004, 2005 and 2006.
2004
2005
2006
Expected volatility
70
%
70
%
70
%
Weighted-average volatility
70
%
70
%
70
%
Expected dividends
0
%
0
%
0
%
Expected term(in years)
3
3
3
Risk free interest rate
2.05
%
4.06%- 4.43
%
4.79
%
For the years ended December 31, 2004, 2005 and 2006, the
Company recorded W116 million, W122 million and
W850 million, respectively, as stock-based compensation
expense.
A summary of option activity under the Plan as of
December 31, 2006, and changes during the year then ended
is presented below
Weighted
Weighted
Average
Average
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Shares
Price
Term
Value(million)
Outstanding at January 1, 2006
1,625,000
W
1,997
Granted
490,000
9,000
Forfeited
92,000
3,552
Exercised
450,000
127
Outstanding at December 31,
    2006
1,573,000
4,623
8.0
27,765
Vested at December 31, 2006
—
—
—
—
Expected to vest at
    December 31, 2006
1,314,307
4,460
8.0
23,412
Exercisable at December 31,
    2006
—
W
—
—
—
The weighted-average grant-date fair value of options granted
during the years 2004, 2005, and 2006 was W174, W2,317, and
W4,200, respectively. The total intrinsic value of options
exercised during the years ended December 31, 2005, and
2006, was W21,184 million, and W3,858 million,
respectively. There were no options exercised during the year
ended December 31, 2004.
As of December 31, 2006, there was W2,831 million of
total unrecognized compensation cost related to nonvested
share-based compensation arrangements granted under the Plan.
That cost is expected to be recognized over a weighted-average
period of 2.8 years. The total fair value of shares vested
during the years ended December 31, 2004, 2005, and 2006,
was W116 million, W162 million, and W44 million,
respectively.
Cash amounting to W57 million was received in respect of
stock options exercised during 2006.
F-15
Table of Contents
15.
Income Taxes
Income tax expense for the years ended December 31, 2004,
2005 and 2006 consist of the following:
(In millions of Won)
2004
2005
2006
Current income taxes
W
—
W
121
W
4,056
Deferred income taxes
—
(254
)
(767
)
Total income tax expenses (benefits)
W
—
W
(133
)
W
3,289
The tax effects of temporary differences that give rise to
significant portions of the deferred income tax assets and
deferred income tax liabilities as of December 31, 2004,
2005 and 2006 are as follows:
(In millions of Won)
2004
2005
2006
Current deferred income tax
    assets (liabilities)
Accrued expenses
W
312
W
141
W
373
Accrued income
(103
)
(415
)
(798
)
Loyalty program reserves
116
311
909
Other
120
176
176
445
213
660
Less : Valuation allowance
(445
)
—
—
Current deferred income tax assets
W
—
W
213
W
660
(In millions of Won)
2004
2005
2006
Non-current deferred income tax
    assets (liabilities)
Provisions for severance benefits
W
87
W
27
W
231
Net operating loss carryforwards
878
—
—
Other
8
14
130
973
41
361
Less : Valuation allowance
(973
)
—
—
Non-current deferred income tax
    assets
W
—
W
41
W
361
The Company had available loss carryforwards of
W3,191 million at December 31, 2004, which were
utilized during 2005, and available investment tax credit
carryforwards of W89 million at December 31, 2005
which were utilized in 2006.
Realization of the future tax benefits related to the deferred
tax assets is dependent on many factors, including the
Company's ability to generate taxable income within the
period during the temporary differences reverse.
Based on the Company's historical book and tax losses,
management determined that it was more likely than not, that the
Company would not realize its deferred tax assets at
December 31, 2003 and 2004 and recorded a valuation
allowance of W1,100 million and W1,418 million,
respectively. However, in 2005 and 2006, the Company generated
sufficient taxable profits during the year, such that, based on
its assessment of the other factors listed above, management
determined that it is more likely than not that the Company will
realize its deferred tax assets in the future and, accordingly,
has not recorded a valuation allowance at December 31, 2005
and 2006.
The statutory income tax rate applicable to the Company was
27.5% in 2005 and 2006.
F-16
Table of Contents
As an eligible venture company under the Special Tax Treatment
Control Law of Korea, the Company is entitled to a reduced tax
rate of 13.75% for taxable income directly generated from
operation, which is 50% of the statutory tax rate and effective
until 2009. Before 2005, the Company did not file for the 50%
tax exemption and thus, deferred tax assets were calculated
using the statutory rate of 27.5%. However, the Company filed
for tax exemption as an eligible venture company due to its
increased taxable income. Accordingly, deferred income taxes as
of December 31, 2005 and 2006 were calculated using the
reduced rate of 13.75% for the temporary differences entitled
for the 50% tax exemption.
A reconciliation of income tax expense at the Korean statutory
income tax rate to actual income tax expense is as follows:
(In millions of Won)
2004
2005
2006
Tax expense at Korean statutory tax
    rate
W
(428
)
W
1,362
W
5,381
Income tax exemption
—
(464
)
(2,129
)
Income tax credits
—
(313
)
(164
)
Change in deferred income tax
    assets due to initial application of income tax exemption
—
622
—
Expense not deductible for tax
    purpose
75
82
221
Change in statutory tax rate
35
—
(3
)
Change in valuation allowances
318
(1,418
)
—
Other
—
(4
)
(17
)
Total income tax expense (benefits)
W
—
W
(133
)
W
3,289
16.
Earning Per Share
The components of basic and diluted earnings per share are as
follows:
(In millions of Won except number of
common shares and per share amount)
2004
2005
2006
Basic earnings per
    shares
Net income
W
(1,440
)
W
5,086
W
16,277
Accretion to redemption price
—
(165
)
—
Amounts allocated to participating
    preferred shareholders
—
(1,565
)
(1,260
)
Net income applicable to common
    shareholders
(1,440
)
3,356
15,017
Weighted average common shares
    outstanding
24,000,000
26,963,014
40,468,471
Basic earnings per share
W
(60
)
W
124
W
371
Diluted earnings per
    shares
Net income
W
5,086
W
16,277
Accretion to redemption price
(165
)
—
Amounts allocated to participating
    preferred shareholders
(1,565
)
—
Net income applicable to common
    shareholders
3,356
16,277
F-17
Table of Contents
(In millions of Won except number of
common shares and per share amount)
2004
2005
2006
Weighted average common shares
    outstanding
26,963,014
40,468,471
Assumed exercise of stock option
3,976,363
851,293
Assumed convert of convertible
    preferred shares
—
30,939,377
5,857,548
47,177,311
Adjusted weighted average
    shares-diluted
W
108
W
345
Diluted earnings per share
The 725,000 stock options granted in 2005 and outstanding at
December 31, 2005 and 2006 and convertible preferred shares
outstanding at December 31, 2004 and 2005 are excluded from
the Company's calculation of earnings per share as their
effects are anti-dilutive.
17.
Related Party Transactions
We had loans to executive officers and employees for housing
amounting to W62 million as of December 31, 2005, and
to employees for housing amounting to W15 million, at an
annual interest rate of 5% for 1 year or 2 years which
are recorded as other current assets or other assets in these
financial statements. As of December 31, 2005, the Company
had non-interest bearing loans to directors, executive officers
and employees for stock purchases amounting to
W389 million, which were fully repaid during 2006.
Interpark Corporation and Yahoo! Korea are major shareholders
and related parties of the Company. The Company considers
Interpark Corporation and its subsidiaries and Yahoo! Korea to
be related parties.
During the years ended December 31, 2005 and 2006, there
were transactions with the Company's related parties as
follows:
(In millions of Won)
2004
2005
2006
Revenues
W
429
W
23
W
210
Purchase
1
—
—
Operating expenses
1,048
3,109
3,652
Accounts receivable
85
1
42
Leasehold and other deposits
—
267
114
Amounts payable to sellers
442
43
335
Accounts payable and accrued
    expenses
97
365
457
F-18