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Vanex Co Ltd · F-1/A · On 12/24/03

Filed On 12/24/03 6:58pm ET · SEC File 333-107121 · Accession Number 1212785-3-3

  As Of               Filer                 Filing     As/For/On Docs:Pgs

12/26/03  Vanex Co Ltd                      F-1/A      12/24/03    3:77

Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer · Form F-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: F-1/A       Pre-Effective Amendment to Registration Statement     72    358K 
                          of a Foreign Private Issuer                            
 2: EX-5.1      Opinion Letter Regarding Stock Issuances               3     11K 
 3: EX-23.2     Consent of Independent Certified Public                2      6K 
                          Accountants

F-1/A · Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Calculation of Registration Fee Exhibits and Financial Statement Schedules Offering, The Plan of Distribution Risk Factors Selling Shareholders Table of Contents The offering UNDERTAKINGS The undersigned registrant hereby undertakes: VANEX Co., Ltd
1	1st Page
"	VANEX Co., Ltd
2	Calculation of Registration Fee
4	Table of Contents
7	The offering
9	Risk Factors
16	Selling Shareholders
17	Plan of Distribution
68	Item 8. Exhibits and Financial Statement Schedules
"	Item 9. UNDERTAKINGS The undersigned registrant hereby undertakes:

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 2003

REGISTRATION NO. 333-107121

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------

AMENDMENT NO. 1 TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

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

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REPUBLIC OF KOREA 7373 Not Applicable

(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)

165-8, LG PALACE 5TH FLOOR, DONGKYO-DONG, MAPO-GU
SEOUL, KOREA
TELEPHONE 011-82-2-6399-6300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

PENN CAPITAL CANADA LTD.
16th FLOOR, 543 GRANVILLE STREET, VANCOUVER, BRITISH COLUMBIA V6C 1X8 CANADA
Telephone (604) 647-0044 Fax (604) 633-9440
(Name, address, including zip code, and telephone number, including area code,
of agent of service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE(1) FEE

Common Shares, par value
0.0762 per share 6,445,450 shares $ 0.10 $ 644,545.00 $ 52.14

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933.

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

There are no pre-existing contractual agreements for any person to purchase the
shares. We have made no selling arrangements for the sale of the securities
offered in this prospectus.

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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

DECEMBER 24, 2003

SUBJECT TO COMPLETION

PROSPECTUS

[GRAPHIC OMITED]

VANEX CO., LTD.

6,445,450 SHARES OF COMMON STOCK TO BE SOLD BY SELLING SHAREHOLDERS

The Company is not offering shares for sale to the public, no new shares are to
be issued from treasury and no proceeds from the anticipated sale of shares will
accrue to the benefit of the Company.

INVESTING IN OUR COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 9.

The selling shareholders of Vanex Co., Ltd. listed on page 16 under the caption
"Selling Shareholders" may offer and sell up to an aggregate of 6,445,450 shares
of our common stock, held by them, under this prospectus. The selling
shareholders will offer and sell the shares at a price of $0.10 per share until
such time as our common stock may be listed on the OTC Bulletin Board and
thereafter at prevailing market prices or privately at negotiated prices. We
will not receive any of the proceeds of this offering.
Our common stock is not listed on a national securities exchange or the Nasdaq
Stock Market. We intend to apply to have our common stock included for
quotation on the OTC Bulletin Board maintained by NASD.
An investment in the common stock offered under this prospectus involves a high
degree of risk, and we urge you to carefully review this prospectus with
particular attention to the section entitled "RISK FACTORS" BEGINNING ON PAGE 9.
----------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.

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TABLE OF CONTENTS

PAGE

PROSPECTUS SUMMARY 6
RISK FACTORS 9
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 15
USE OF PROCEEDS 15
DETERMINATION OF OFFERING PRICE 15
DIVIDEND POLICY 15
DILUTION 16
SELLING SHAREHOLDERS 16
PLAN OF DISTRIBUTION 17
EXCHANGE RATES 18
CAPITALIZATION 19
SELECTED FINANCIAL AND OTHER DATA 20
OPERATING AND FINANCIAL REVIEW AND PROSPECTS 22
BUSINESS 29
MANAGEMENT 34
PRINCIPAL SHAREHOLDERS 37
DESCRIPTION OF SHARE CAPITAL 37
SHARES ELIGIBLE FOR FUTURE SALE 40
TAX CONSIDERATIONS 42
UNDERWRITING 46
LEGAL MATTERS 46
EXPERTS 46
INFORMATION AVAILABLE TO THE PUBLIC 47
INDEX TO FINANCIAL STATEMENTS 48

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PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding us and our common shares being sold in this offering and
our historical financial statements included elsewhere in this prospectus. The
following information should be read in conjunction with the more detailed
information and the Financial Statements (including the Notes thereto) contained
elsewhere in this prospectus. This summary does not contain all of the
information you should consider before buying shares in the offering. You should
read the entire prospectus carefully.

VANEX CO., LTD.

OVERVIEW

We are a provider of multi media systems integration (system building) and
associated services to the broadcast industry in Korea. "System integration
(system building)" is a process of linking and testing of system components to
merge their functional and technical characteristics into a comprehensive,
interoperable system. Broadcasting companies, including internet broadcasting
companies, use lots of electric equipments from different makers to produce and
air programs. Integration of these equipments allows all these different
equipments to work as one system and also allows comprehensive control of the
whole system.

VANEX (Value Added Networking Experts) specializes in broadcast system
integration services, ranging from equipment needs analysis, purchase
recommendations, equipment installation, set up and programming to complete
system design. Vanex's Services include consulting for broadcasting system
integration; project design and engineering; equipment or product procurement;
project management; documentation; after-services and long-term support; and
training of clients.

We also provide facilities-based data communications services to customers in
Korea, including the Korean Digital Broadcasting Ltd. Our goal is to enable
broadcasters to integrate and streamline their existing operations, to minimize
time to market as businesses absorb new digital broadcast technologies, and to
include flexibility as systems expand to exploit new opportunities with a
seamless growth in their use of technology. To date, VANEX has constructed the
baseband area (a telecommunication system in which information is carried in
digital form; the baseband area includes central monitoring room, input/output
link room, server room, editing room, etc.) of digital satellite system for
Korea Digital Broadcasting Ltd. (KDB), a Cable TV system, a Dolby system, a
digital outdoor broadcasting vehicle for Korea Broadcasting System (KBS, a
national broadcaster owned by Korean government), a retransmit system for Korea
Digital Broadcasting Ltd. and a subway broadcast system.

The Company has targeted prospective alliance partners within its domestic
community and is investigating potential alliances in the international
communities. We have formed a strong customer relationship with Korean Digital
Broadcasting Ltd. (KDB) and jointly developed a Dolby system and a retransmit
system. Approximately 91% of the Company's revenue in 2001 was from Korea
Digital Broadcasting Ltd. The percentage of revenue attributable to Korea
Digital Broadcasting Ltd. decreased in 2002 but Korea Digital Broadcasting Ltd.
was still the largest customer in 2002, representing 38.86% of the total
revenue. Areas of planned cooperation with KDB include preparing for the
commencement of the digitalization of cable television (CATV). We intend to
become a leading supplier of system integration services for the broadcasting
industry.

VANEX was incorporated on February 21, 2001 under the law of the Republic of
Korea for the purpose of providing multi media system integration services.
Major shareholders of the Company include Kyu Tae Park, the company's President
and CEO, and Delaware Media Inc., a Hong Kong based company, who own 25.3% and
20.1% of our shares, respectively.

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STRATEGY
Our objective is to capitalize on the latent demand for the delivery of fast,
efficient systems integration and system integration solutions, which adapt
existing systems to support new initiatives. Our strategy has the following key
elements:
- Design, construct, and integrate digital system for digital broadcasting;
- Centralize transmission areas in master control rooms that adjust and control
broadcasting signals;
- Build brand awareness;
- Increase revenues from broadcasting clients, independent production, intra
company broadcasting services and e-commerce newspapers;
- Develop digital archiving;
- Maintain technological leadership;
- Expand strategic relationships; and
- Capitalize on synergies between VANEX and our data communications services.

CONTACT INFORMATION
Our principal executive offices are located at LG Palace 5F Dongkyo-Dong
Mapo-Gu, Seoul, Korea. Our telephone number in Korea is 82 02 6399 6300.
Investor inquiries should be directed to Mr. Kyu Tae Park.

THE OFFERING

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Common Shares offered by shareholders of VANEX 6,445,450 Shares
Common Shares outstanding immediately prior to this offering 12,723,300 Shares
Common Shares to be outstanding after this offering 12,723,300 Shares

PROCEEDS OF THIS OFFERING
There will be no proceeds pursuant to this offering made available to the
Company.

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SUMMARY FINANCIAL AND OTHER DATA

The summary financial and other data set forth below should be read in
conjunction with the financial statements of VANEX including the notes thereto,
and ''Operating and Financial Review and Prospects '' included in this
prospectus. The statement of operations data set forth below for year ended
December 2002 and the ten months from inception February 21, 2001 to December
31, 2001 and the balance sheet data as of December 31, 2002 and 2001 are derived
from the December 31, 2002 audited financial statements of VANEX included
elsewhere in this prospectus, which have been audited by Shinhan Accounting
Corporation in Korea (members of the Korean Institute of Certified Public
Accountants). Our financial statements are prepared in accordance with
accounting principles generally accepted in the United States.

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FOR THE YEAR ENDED DECEMBER 31, 2002
AND TEN MONTHS FROM FEBRUARY 21, 2001 (INCEPTION) TO DECEMBER 31, 2001
(AMOUNTS IN U.S. DOLLARS EXCEPT NUMBER OF SHARES AND PER SHARE DATA)
STATEMENTS OF OPERATIONS DATA:

2002 2001

Revenues:
System integration sales $ 5,268,892 $9,761,958

Cost of providing system integration, including salaries 5,023,220 9,371,203

Gross profit 245,672 390,755

Selling, general and administrative 574,181 297,998

Operating income (328,504) 92,757

Other income (deductions):
Interest income 10,251 38,520
Other, net (131,274) 15,217

Income (loss) before income taxes (470,034) 146,494
Income tax expense (recovery) (21,203) 21,203
Net Income (loss) (448,831) 125,291
Comprehensive income (loss) $ (439,233) $ 107,683

Weighted average number of shares outstanding 12,290,550 7,961,650
Basic and diluted loss per share of common stock $ (0.04) $ 0.02

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AS OF DECEMBER 31, 2002 AND 2001
(AMOUNTS IN U.S. DOLLARS)
BALANCE SHEET DATA:

2002 2001

Cash and cash equivalents $ 31,907 $ 586,047
Working capital (658,138) 809,504
Total assets 2,905,416 1,904,717
Long-term debt, excluding current portion 607,298 604,492
Stockholders' equity:
Common stock 100($0.0762) par value, 971,268 765,565
Total stockholders' equity $ 810,213 873,203

RISK FACTORS

Prior to making an investment decision, prospective investors should carefully
consider all of the information herein, including the following factors. An
investment in this offering involves risk.

OUR COMMON STOCK HAS NO PRIOR MARKET AND PRICES MAY DECLINE AFTER THE OFFERING.
The value and transferability of our common stock is currently affected by the
fact that there is no market for the stock. No assurance can be given that a
market for our common stock will develop or that it will be quoted on the over-
the-counter Bulletin Board maintained by the NASD.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY.
VANEX was incorporated on February 21, 2001 under the law of Republic of Korea
and commenced multi media systems integration and associated services as an
independent company at that time. Consequently we have a limited operating
history upon which you can evaluate our business.

OUR HISTORY SHOWS LOSSES.
Our operation resulted in losses of $448,831 in 2002. We might experience losses
again in the future, which will affect the investment value of the Company and
profits of our shareholders. We have funded these losses by issuing new shares
and by increasing other accrued liabilities. We may be unable to raise such
funds in the future. This would impair the Company's ability to continue its
current operations.

In order to maintain our competitive position and continue to meet the
increasing demands for service quality, hardware availability and competitive
pricing, we expect to incur substantial costs and significant capital
expenditures to expand our business in the future. Historically, we have relied
on equity and debt financings to fund our operations. A significant drop in the
market demand for our product and services could require us to seek additional
sources of financing to satisfy our working capital and capital expenditure
requirements.

We may need to raise additional funds in order to acquire complementary
businesses or to take advantage of unanticipated opportunities. In addition, we
may need to raise additional funds to develop new products or otherwise respond
to changing business conditions or unanticipated competitive pressures or
technological or marketing hurdles. We cannot assure that we will be able to
raise such funds on favorable terms. In the event that we are unable to obtain
such additional funds on acceptable terms, we may determine not to enter into
various expansion opportunities.

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OUR RELIANCE UPON A SMALL NUMBER OF CUSTOMERS MIGHT AFFECT OUR REVENUE AND
RESULTS OF OPERATIONS.
We rely on a small number of customers for our revenue. The revenue from Korea
Digital Broadcasting Ltd. and TechData Co., Ltd. occupied 99.5% of our total
revenue in 2001. In 2002, approximately 66% of our revenue was from Korea
Digital Broadcasting Ltd. and ComTech Korea. In 2001 and 2002, approximately 91%
and 38.86% of our revenue was attributable to Korea Digital Broadcasting Ltd.
Korea Digital Broadcasting is still our largest customer, and as of the end of
September 2003, approximately 89% of revenue came from Korea Digital
Broadcasting Ltd. Our reliance on the small number of customers, and especially
Korea Digital Broadcasting Ltd., will have serious impact on our decisions,
revenue and results of operations. Their own managerial or financial problems
will affect our operations.

GROWTH OF OUR BUSINESS DEPENDS ON A CERTAIN CLIENT INDUSTRY
Our ability to generate revenues to ensure our profitability and growth depends
on the demand created by the broadcasting industry, which is our primary target
market. The general trend, growth rate and financial performance of the
broadcasting industry are expected to have a great impact on our business. The
broadcasting industry worldwide is going through the process of total
digitalization. The Electronics and Telecommunications Research Institute of
Korea forecasts the Korean digital broadcasting industry will expand and
contribute to the Korean national production economy to the amount of $94
billion and the employment of 210,000 people by 2006. As Vanex is providing its
system integration service and software to digital broadcasting companies, a
downturn of the broadcasting industry or the digital broadcasting sector will
have negative impact on the revenue of Vanex.

WE MAY NOT BE ABLE TO ESTABLISH OR MAINTAIN ACCEPTABLE RELATIONSHIPS WITH
HARDWARE EQUIPMENT SUPPLIERS.
Our success depends, in part, on our ability to gain access to equipment
suppliers. We might not be able to establish relationships with adequate
equipment suppliers or maintain our relationships with our current suppliers of
equipment. Even if we are able to establish and maintain those relationships, we
might not be able to do so on terms favorable enough to us to enable us to
become profitable. If the relationship between us and our suppliers, or our
system operator clients, is impaired, it could have a material adverse effect on
our business, financial condition and results of operations.

WE DEPEND ON SUPPLIERS AND COULD BE AFFECTED BY CHANGES IN SUPPLIERS OR DELAYS
IN DELIVERY OF THEIR PRODUCTS AND SERVICES.
We are dependent on third party suppliers of hardware components and software.
Although we attempt to maintain a minimum of two vendors for each required
product, some components used by us in providing our multi media systems
integration and data communications services may not be compatible with the
products of certain vendors. A failure by a supplier to deliver quality products
on a timely basis, or the inability to develop alternative sources if required,
could result in delays, which could have a material adverse effect on us. Our
remedies against suppliers who fail to deliver products on a timely basis are
limited by contractual liability limitations contained in supply agreements and
purchase orders and, in many cases, by practical considerations relating to our
desire to maintain good relationships with the suppliers. To date, we have not
had any supplier end their business relationship with us. The key hardware
components supplied to us by third parties are readily available from many
sources in the market, and we have alternative suppliers available for all key
components.

CUSTOMER ACCEPTANCE OF OUTSOURCED SYSTEM INTEGRATION SERVICES DEPENDS IN PART ON
THE REDUCED COST OF OUR SERVICES, WHICH WE CANNOT ASSURE. OUR BUSINESS MODEL IS
BASED ON BUSINESS ACCEPTANCE OF OUR SERVICES, WHICH REMAINS UNPROVEN.
A key component of our strategy is to provide to clients a more professional,
turnkey service than can be provided by in-house IT departments. We believe
that, in addition to providing high quality, low cost hardware, we must also
provide high-quality, integrated multimedia software in a manner that end users
find useful and compelling. Our ability to provide such product and service is

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dependent on our ability to motivate equipment suppliers to provide price breaks
and on the development and maintenance of the superior competence of our
technical staff. In addition, the market for out sourced high-quality multi
media systems integration and associated services to the broadcast industry has
only recently begun to develop and is rapidly evolving, and there is significant
competition among service providers. If the market fails to develop or develops
more slowly than expected, or if competition increases, or if our service
offerings do not achieve or sustain market acceptance, our business, financial
condition and results of operations will be materially adversely affected.

WE DEPEND ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR SERVICES.
Competition for qualified employees and personnel in our services industry is
intense and there are a limited number of people with knowledge of and
experience in this industry, particularly in Korea. Our success depends to a
significant degree upon our ability to attract and retain qualified management,
technical, marketing and sales personnel and upon the continued contributions of
such management and personnel. In particular, our success is highly dependent
upon the abilities of our senior executive management.

None of Mr. Kyu Tae Park, Mr, Hong Cho, Mr. Jae Soo Kim, Mr. Woong Kim (all
directors of the Company) nor Chang Seop Song or Seong Min Cha (management team)
has signed employment agreements with the Company pursuant to which they would
agree to remain with VANEX. The loss of the services of any one of them could
have a material adverse effect on our business, financial condition and results
of operations. We do not maintain ''key man'' insurance for any of our executive
officers.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, TRADE SECRETS AND
KNOW-HOW WHICH WOULD REMOVE A BARRIER TO COMPETITION AND MAY DIRECTLY AFFECT THE
AMOUNT OF REVENUE IT GENERATES.
The Company depends on its intellectual property and is dependent on its ability
to maintain the confidentiality of its technology. Since the Company does not
hold any patents, copyrights or trademarks, it might not be able to maintain the
confidentiality of any of its proprietary technologies, know-how or trade
secrets, or that others will not independently develop substantially equivalent
technology. The failure or inability to protect these rights will affect our
competitiveness. If our products and services are not competitive, it is likely
that we will lose customers and business, our revenues will decline.

INSTABILITY IN FOREIGN MARKETS COULD HINDER OUR GROWTH.
Our growth strategy is to provide increased system integration services and
related software to foreign customers and to domestic customers present in
international market. Accordingly, we will be increasingly subject to the risks
generally associated with marketing products or services abroad, such as:
.. changes in regulatory requirements;
.. potentially adverse tax consequences;
.. difficulties and costs of staffing and managing foreign operations;
.. political and economic instability;
.. costs associated with complying with a variety of complex foreign laws,
tariffs and other trade barriers; and
.. fluctuation in currency exchange rates.

WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT FUTURE STRATEGIC RELATIONSHIPS.
We may pursue additional strategic relationships to develop our business. Any
such future strategic relationships would be accompanied by certain common risks
associated with these types of relationships, such as:
.. Integrating the operations and personnel of the companies;
.. The potential disruption of our ongoing business; and
.. Maintaining uniform standards, controls, procedures and policies and the
impairment of relationships with employees and customers as a result of changes
in management.

WE FACE A HIGH LEVEL OF COMPETITION IN OFFERING MULTI MEDIA SYSTEMS INTEGRATION
AND ASSOCIATED SERVICES TO THE BROADCAST INDUSTRY.

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The market for multi media systems integration and associated services in Korea
is very competitive. We anticipate that competition will continue to intensify.
The tremendous growth and potential size of the broadcast market has attracted
many new start-ups as well as established businesses from different industries.
Our current and prospective competitors include: i. Sunkyung C&C, ii. Samsung
SDS iii. Media Consultants System Integrators, iv. Liberty Livewire Corporation,
v. Digital Generation Systems, Inc. (for more complete understanding of these
competitors, please see Competition on page 33)

However, some of these competitors have significantly greater market presence,
brand recognition and financial, technical and personnel resources than us.
As a result of the increase in the number of competitors, we currently encounter
and expect to continue to encounter significant pricing pressure and other
competition in the future. Advances in technology as well as changes in the
marketplace and the regulatory environment are constantly occurring, and we
cannot predict the effect that ongoing or future developments may have on us or
on the pricing of our products and services.
Increased price or other competition could result in erosion of our market share
and decrease in revenues.

TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS COULD RENDER OUR SERVICE
OFFERINGS OBSOLETE.
The market for our multi media systems integration and associated services, as
well as for our proprietary software, is characterized by rapidly changing
technology, evolving industry standards, changes in customer needs and frequent
new product and service introductions.
Our future success will depend, in part, on our ability to effectively use and
develop leading technologies and technical expertise.
We cannot assure that we will be successful in responding to changing technology
or market trends. In addition, services or technologies developed by others may
render our services or technologies uncompetitive or obsolete. Furthermore,
changes to our services in response to market demand may require the adoption of
new technologies that could likewise render many of our assets technologically
uncompetitive or obsolete. Even if we do successfully respond to technological
advances and emerging industry standards, the integration of new technology may
require substantial time and expense, and we cannot assure that we will succeed
in adapting our network infrastructure in a timely and cost-effective manner.

OUR EXECUTIVE OFFICERS AND DIRECTORS AND THEIR AFFILIATES OWN A LARGE PERCENTAGE
OF OUR COMMON STOCK AND HAVE THE ABILITY TO MAKE DECISIONS THAT COULD ADVERSELY
AFFECT OUR STOCK PRICE.
Our directors and executive officers currently beneficially own 3,372,300 shares
of common stock representing approximately 26.5% of the outstanding shares of
common stock. Consequently, management is in a position to exert significant
influence over material matters relating to our business, including decisions
regarding:
- the election of our board of directors;
- the acquisition or disposition of assets (in the ordinary course of our
business or otherwise);
- future issuances of common stock or other securities; and
- the declaration and payment of dividends on the common stock

LIMITED LIABILITY OF OUR EXECUTIVE OFFICERS AND DIRECTORS MAY DISCOURAGE
SHAREHOLDERS FROM BRINGING A LAWSUIT AGAINST THEM.
Our Articles of Incorporation and Bylaws contain provisions that limit the
liability of directors for monetary damages and provide for indemnification of
officers and directors. These provisions may discourage shareholders from
bringing a lawsuit against officers and directors for breaches of fiduciary duty
and may also reduce the likelihood of derivative litigation against officers and
directors even though such action, if successful, might otherwise have benefited
the shareholders. In addition, a shareholder's investment in Vanex may be
adversely affected to the extent that costs of settlement and damage awards
against officers or directors are paid by us pursuant to the indemnification
provisions of the bylaw. The impact on a shareholder's investment in terms of
the cost of defending a lawsuit may deter the shareholder from bringing suit
against any of our officers or directors. We have been advised that the SEC
takes the position that these Article and Bylaw provisions do not affect the
liability of any director under applicable federal and state securities laws.

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SINCE WE ARE A KOREAN COMPANY AND ALL OF OUR ASSETS AND KEY PERSONNEL ARE
LOCATED IN KOREA, YOU MAY NOT BE ABLE TO ENFORCE ANY UNITED STATES JUDGMENT FOR
CLAIMS YOU MAY BRING AGAINST US, OUR ASSETS, OUR KEY PERSONNEL OR THE EXPERTS
NAMED IN THIS PROSPECTUS.
We have been organized under the laws of the Republic of Korea. All of our
assets are located outside the United States. In addition, a majority of the
members of our board of directors and our officers and the experts named in this
prospectus are residents of countries other than the United States. As a result,
it may be impossible for you to effect service of process within the United
States upon us or these persons or to enforce against us or these persons any
judgments in civil and commercial matters, including judgments under United
States federal securities laws. In addition, a Korean court may not permit you
to bring an original action in Korea or to enforce in Korea a judgment of a U.S.
court based upon civil liability provisions of U.S. federal securities laws.

THERE ARE UNIQUE ECONOMIC AND POLITICAL RISKS ASSOCIATED WITH INVESTING IN
COMPANIES FROM KOREA.
Since early 1997, a number of developments have adversely affected the Korean
economy. Some of Korea's recent financial and economic difficulties have
included:

.. Exchange rate fluctuations;
.. Interest rate fluctuations;
.. Reduced credit from foreign banks;
.. Reduced liquidity in the economy;
.. Volatile stock prices;
.. Reductions in Korea's foreign currency reserves; and
.. Higher unemployment.

A 47.5% depreciation in the value of the Won relative to the Dollar during the
second half of 1997 led to sharply higher domestic interest rates. Domestic
interest rates in Korea, however, declined significantly in the fourth quarter
of 1998 and are currently below interest rates which prevailed in Korea before
late 1997. If interest rates rise in the future, the debt service costs of
Korean borrowers (including VANEX) would increase, which may have an adverse
effect on our liquidity and our ability to fund our expected capital
expenditures.
According to the Bank of Korea, Korea's gross domestic product decreased by
3.2% in 1998, which reflects the severe financial crisis that most Asian nations
were facing at that time. Although the Korean economy has shown signs of
recovery, as evidenced by subsequent data and forecasts of the International
Monetary Fund and Korea Development Institute, no assurance can be given as to
the extent of the economy's improvement or of the continuance of this
improvement. Future deterioration of economic conditions in Korea may have an
adverse impact on the demand for our products and on our financial condition and
results of our operations.

Beginning in mid-1997, the economic difficulties experienced by certain
Southeast Asian countries, such as Indonesia, Thailand and Malaysia, exacerbated
Korea's economic difficulties. More recently, the continuing weakness of the
Japanese economy and the volatility of the Japanese yen against the dollar have
increased economic volatility in Asia in general and may hinder Korea's ability
to recover from its economic difficulties. Future adverse developments in
Southeast Asia, Japan and elsewhere could worsen Korea's economic difficulties
by affecting, among other things, Korean financial institutions that have lent
to borrowers in such countries, Korean exporters that export to such countries,
and Korean companies and financial institutions that rely on credit from
Japanese lenders. Any of these developments could adversely affect demand for
our products.

OWNERSHIP OF SHARES MAY BE SUBJECT TO CERTAIN RESTRICTIONS UNDER KOREAN LAW.
Prior to making an investment in 10% or more of the outstanding shares of a
Korean company, foreign investors are generally required, under the Foreign
Investment Promotion Law of Korea, to submit a report to a Korean bank, pursuant
to a delegation by the Ministry of Commerce, Industry and Energy of Korea.
Failure to comply with this reporting requirement may result in the imposition
of criminal sanctions. Subsequent sales by such investor of its shares in such
company will also require a prior report to such bank.

WE MAY NOT BE ABLE TO CONVERT AND REMIT DIVIDENDS IN DOLLARS IF THE GOVERNMENT
IMPOSES CERTAIN EMERGENCY MEASURES.
We do not intend to pay dividends on our shares in the foreseeable future.
However, if we declare cash dividends, such dividends will be declared in Won.
In order for us to pay such dividends outside Korea, such dividends will be
converted into Dollars and remitted to the shareholders, subject to certain
conditions.

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Fluctuations in the exchange rate between the Won and the Dollar will affect,
among other things, the amounts a holder of our shares will receive as
dividends. Under Korean law, if the Government deems that certain emergency
circumstances including, but not limited to, sudden fluctuations in interest
rates or exchange rates, extreme difficulty in stabilizing the balance of
payments or a substantial disturbance in the Korean financial and capital
markets, are possible to occur, it may impose any necessary restrictions such as
requiring foreign investors to obtain prior approval from the Ministry of
Finance and Economy for the acquisition of Korean securities or for the
repatriation of interest, dividends or sales proceeds arising from Korean
securities or from disposition of such securities, including our shares. We
cannot give any assurance that we can secure such prior approval from the
Ministry of Finance and Economy for our payment of dividends to the foreign
investors in the future when the Government deems that there are emergency
circumstances in the Korean financial markets.

OUR ABILITY TO RAISE MONEY IN EQUITY OFFERINGS MAY BE CONSTRAINED BY THE NEED TO
REGISTER THOSE OFFERINGS WITH THE SEC.
The Commercial Code of Korea and our Articles of Incorporation require us, with
certain exceptions, to offer shareholders the right to subscribe for new shares
in proportion to their existing ownership percentage whenever new shares are
issued. We cannot exclude U.S. holders of shares from these offers, and must
thus register those offers with the Securities and Exchange Commission. If we
cannot, or choose not to, register these offerings, we will be unable to
consummate them, which will restrict the range of capital-raising options
available to us.

EXCHANGE RATE FLUCTUATIONS MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
In the second half of 1997, the value of the Won relative to the Dollar
depreciated at an accelerated rate. The noon buying rate as of December 31, 1997
was Won 1,695.0 to US$1.00 compared to Won 890.0 to US$1.00 on June 30, 1997.
This represented depreciation in the value of the Won relative to the Dollar of
approximately 47.5%. As a result of such sharp depreciation, the Government was
forced to effectively suspend its efforts to support the value of the Won, and
on December 16, 1997, the Government allowed the Won to float freely. Such
depreciation of the Won relative to the Dollar increased the cost of imported
goods and services and the Won revenue needed by Korean companies to service
foreign currency denominated debt. Since then, however, the Won has appreciated
relative to the Dollar and other major foreign currencies. Substantially all of
our cash flow is denominated in Won. We are exposed to foreign exchange risk
related to foreign exchange payments. Anticipated foreign exchange payments,
principally in Dollars, relate primarily to net settlements paid for certain
equipment purchased from foreign suppliers. As dividends on our shares, if any,
will be declared in Won and converted into Dollars, any depreciation in the
value of the Won relative to the Dollar will reduce the value of the dividends
received by holders of our shares in the United States.

SHAREHOLDERS MAY BE SUBJECT TO KOREAN CAPITAL GAINS TAX.
Under Korean tax law, holders of our shares in the United States will generally
be subject to Korean withholding taxes on the capital gains in respect of those
shares unless exempted by a relevant tax treaty. Capital gains are currently
subject to taxation at a rate equal to the lesser of 27.5% of the gains and 11%
of the gross sales proceeds. Korean tax law provides that, in case of
transfer of Korean shares, the Korean securities broker-dealer brokering such
transfer or, if there is no such securities broker-dealer, the purchaser
is required to withhold the relevant Korean capital gains taxes. Because no
Korean securities broker-dealer will be acting as withholding agent for
capital gains resulting from a transfer of our shares, purchasers will be
required to collect and pay
taxes on those capital gains unless they can demonstrate that the sellers are
residents of countries having a tax treaty with Korea exempting those capital
gains from taxation. Purchasers of our shares will not be able to identify the
country of residence of the previous owner of the purchased shares and will
therefore be liable for the payment of Korean taxes on the capital gains, if
any, resulting from their transactions. There is currently no practical means
for Korean tax authorities or purchasers of our shares to determine the amount
of capital gains, if any, resulting from purchases of our shares.
Korea's Ministry of Finance and Economy has announced that it will propose that
the National Assembly amend the tax laws to exempt from taxation capital gains
earned by non-residents from the sale of our shares. We cannot provide any
assurance that the tax law will be so amended or that any resulting exemption
will apply to transactions which took place prior to the date of the amendment.
See ''Korea Taxation -Taxation of Capital Gains.''

NEW INVESTORS MAY INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
The public trading price may be substantially higher than the net tangible book
value of the outstanding shares. Purchasers of our shares will therefore
experience immediate and substantial dilution in net tangible book value per
share. In the future, we also may issue additional stock or warrants to purchase
our common stock in connection with our efforts to expand the distribution of
our services. Purchasers of our shares could face additional dilution from these
possible future transactions.

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THE MARKET PRICE AND TRADING VOLUME OF OUR STOCK MAY BE VOLATILE.
The market price and trading volume of our shares may be highly volatile.
Factors such as variations in our revenue, earnings and cash flow and
announcements of new service offerings, technological innovations, strategic
alliances and/or acquisitions involving our competitors or price reductions by
us, our competitors or providers of alternative services could cause the market
price of our shares to fluctuate substantially. In addition, stocks quoted on
the Over the Counter Bulletin Board recently have experienced significant price
and volume fluctuations that particularly have affected technology-based
companies and resulted in changes in the market prices of the stocks of many
companies that have not been directly related to the operating performance of
those companies. Such broad market fluctuations will adversely affect the market
price of our shares.

FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend to identify
forward-looking statements in this prospectus using words such as "anticipates",
"will", "believes", "plans", "expects", "future", "intends" or similar
expressions. These statements are based on our beliefs as well as assumptions we
made using information currently available to us. Because these statements
reflect our current views concerning future events, these statements involve
risks, uncertainties and assumptions. Actual future results may differ
significantly from the results discussed in the forward-looking statements.
Some, but not all, of the factors that may cause these differences include those
discussed in the Risk Factors section. You should not place undue reliance on
these forward-looking statements.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the VANEX common stock
by the selling shareholders. There will be nil ($0.00) net proceeds to the
Company from this offering of our shares. The 6,445,450 shares are being offered
for sale to the public by existing Company shareholders. Any proceeds from such
sales will belong directly to those selling shareholders.

DETERMINATION OF OFFERING PRICE

This prospectus is solely for the purpose of allowing certain of our
shareholders to sell their stock. The selling shareholders may sell their shares
when the registration statement becomes effective, or they may elect to sell
some or all of their shares at a later date while the registration statement is
effective.
The offering price of the common stock being offered by the shareholders has
been determined arbitrarily and has no relationship to any established criteria
of value, such as book value or earnings per share. Additionally, because we
have no significant operating history the price of the common stock is not based
on past earnings, nor is the price of the common stock indicative of the current
market value for the assets owned by us. We make no representations as to any
objectively reasonable value of the common stock. Since we have not retained an
underwriter for purposes of this offering, the offering price has not been
subject to evaluation by any third party as would be the case in an underwritten
offering. Prices for the shares of our common stock after this offering will be
determined in the available market and may be influenced by many factors,
including the depth and liquidity of the market for our common stock, the
industry we operate in as a whole, and general economic and market conditions.

DIVIDEND POLICY

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

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DILUTION

The shares offered for sale by the selling shareholders are already issued and
outstanding and, therefore, do not contribute to dilution.

SELLING SHAREHOLDERS

The following table sets forth the names of the selling shareholders, the number
of shares of common stock beneficially owned by the selling shareholders prior
to the offering, the number of shares of common stock that may be offered for
sale pursuant to this prospectus by such selling shareholders, the number of
shares of common stock beneficially owned by the selling shareholders after the
offering, and the percentage ownership after the offering. The offered shares
of common stock may be offered from time to time by each of the selling
shareholders named below. (See "Plan of Distribution"). None of the selling
shareholders under this prospectus is an affiliate to the Company. None of them
is an officer, director or 10% or more shareholder of the Company and none of
the selling shareholders is related to another by blood or business. However,
the selling shareholders are under no obligation to sell all or any portion of
the shares of common stock offered. Neither are the selling shareholders
obligated to sell such shares of common stock immediately under this prospectus.
Particular selling shareholders may not have a present intention of selling
their shares and may offer less than the number of shares indicated. Because
the selling shareholders may sell all or part of the shares of common stock
offered hereby, the following table assumes that all shares offered under this
prospectus have been sold by the selling shareholders.

[Enlarge/Download Table]

NAME & ADDRESS NUMBER OF SHARES PERCENTAGE NUMBER NUMBER OF PERCENTAGE OF
BENEFICIALLY OF THE CLASS OF SHARES THE CLASS
OWNED PRIOR TO BENEFICIALLY SHARES BENEFICIALLY BENEFICIALLY
THE OFFERING OWNED OFFERED OWNED AFTER OWNED AFTER
PRIOR TO THE TO THE THE OFFERING*
OFFERING OFFERING*

Kim, Hoon Sang. . . . . . . . . 1,181,850 9.29% 1,181,850 0 0%
207-1190 Pipeline Rd.
Coquitlam, BC V5B 7TP Canada
Choi, Sun Ju. . . . . . . . . . 1,020,700 8.02% 1,020,700 0 0%
108-601 Ssangyong Apt.,
Sungdong-Gu, Sung-su,
1Ga 2 Dong,Seoul, Korea

Hyun, Hye Sook. . . . . . . . . 1,020,700 8.02% 1,020,700 0 0%
199 KyeSang-Dong,Daegu,Korea

Oh, Seung Hee . . . . . . . . . 1,017,850 8.00% 1,017,850 0 0%
202 Daedong Bld. 1537-2
Seocho dong Seocho gu
Seoul, Korea

Kim, Jae Hyun . . . . . . . . . 604,350 4.75% 604,350 0 0%
#909-3983 East Kent Ave. North
Vancouver, BC V5S4R2 Canada

Yun, Seok Jae . . . . . . . . . 533,500 4.19% 533,500 0 0%
A-501,Chunghak Apt.,62-6, Non
hyun-Dong,Kangnam,Seoul,Korea

Beck, Nam Chul. . . . . . . . . 533,250 4.19% 533,250 0 0%
906-204,Joongsan Maeul,1566-
2,Ilsan-Dong,Ilsan,Koyang,Korea

Hyun, Su Hye. . . . . . . . . . 533,250 4.19% 533,250 0 0%
210-801,Daewoo Apt.,535, Yatap
-Dong,Boondang,Sungnam,Korea

TOTAL . . . . . . . . . . . . . 6,445,450 50.65 6,445,450 0 0%

* Assumes the sale of all offered shares of common stock under this offering.

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PLAN OF DISTRIBUTION

The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions:

1. On such public markets or exchanges as the common stock may from time to time
be trading;
2. In privately negotiated transactions;
3. Through the writing of options on the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.

The sales price to the public is fixed at $0.10 per share until such time as the
shares of our common stock become traded on the Over-The-Counter Bulletin Board
maintained by NASD or another exchange. Although we intend to apply for trading
of our common stock on the Over-The-Counter Bulletin Board, public trading of
our common stock may never materialize. If our common stock becomes traded on
the Over-The-Counter Bulletin Board or another exchange, then the sales price to
the public will vary according to the selling decisions of each selling
shareholder and the market for our stock at the time of resale. In these
circumstances, the sales price to the public may be:

1. The market price of our common stock prevailing at the time of sale;
2. A price related to such prevailing market price of our common stock; or
3. Such other price as the selling shareholders determine from time to time.

The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144. The selling shareholders may also sell their shares
directly to market makers acting as principals or brokers or dealers, who may
act as agent or acquire the common stock as a principal. Any broker or dealer
participating in such transactions as agent may receive a commission from the
selling shareholders, or, if they act as agent for the purchaser of such common
stock, from such purchaser. The selling shareholders will likely pay the usual
and customary brokerage fees for such services. Brokers or dealers may agree
with the selling shareholders to sell a specified number of shares at a
stipulated price per share and, to the extent such broker or dealer is unable to
do so acting as agent for the selling shareholders, to purchase, as principal,
any unsold shares at the price required to fulfill the respective broker's or
dealer's commitment to the selling shareholders. Brokers or dealers who acquire
shares as principals may thereafter resell such shares from time to time in
transactions in a market or on an exchange, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such re-sales may pay or receive commissions to
or from the purchasers of such shares. These transactions may involve cross and
block transactions that may involve sales to and through other brokers or
dealers. If applicable, the selling shareholders may distribute shares to one or
more of their partners who are unaffiliated with us. Such partners may, in turn,
distribute such shares as described above. We can provide no assurance that all
or any of the common stock offered will be sold by the selling shareholders.

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We are bearing all costs relating to the registration of the common stock,
estimated to be $42,550.00. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.

The following table sets forth the estimated expenses, other than the
underwriting discounts and commission, payable by the Registrant in connection
with the offering described in the Registration Statement
(all amounts are estimated except the SEC registration fee):

[Download Table]

ITEM AMOUNT ($)
--------------

SEC Registration Fee US$50.00
--------------------- --------------
EDGAR Filing Expenses $ 2,000.00
--------------------- --------------
Transfer Agent Fees $ 1,500.00
--------------------- --------------
Legal Fees $ 18,000.00
--------------------- --------------
Accounting Fees $ 15,000.00
--------------------- --------------
Printing Costs $ 3,000.00
--------------------- --------------
Miscellaneous $ 3,000.00
--------------------- --------------
TOTAL US$42,550.00
--------------------- --------------

The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in the offer and sale of the
common stock. In particular, during such times as the selling shareholders may
be deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered, such
copies of this prospectus, as amended from time to time, as may be required by
such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any person
to purchase any of our securities other than as permitted under the Securities
Exchange Act.

There is no assurance that any of the selling shareholders will sell any or all
of the shares offered by them.
Under the securities laws of certain states, the shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is met.
The offer and sale of the common stock offered under this prospectus will
commence after the registration statement that includes this prospectus becomes
effective. There are no pre-existing contractual agreements for any person to
purchase the shares.

EXCHANGE RATES

Fluctuation in the exchange rate between the Won and the Dollar will affect the
amount of Dollars received in respect of cash dividends or other distributions
paid in Won by us, and the Won proceeds received from any sales of, our shares.

The following table sets forth, for the periods and dates indicated, certain
information concerning the noon buying rate. No representation is made that the
Korean Won amounts referred to herein could have been or could be converted into
US dollars at any particular rate, or at all. On December 19, 2003 the noon
buying rate was W1,194 to US$1.00.

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[Download Table]

YEARS ENDED DECEMBER 31 (WON PER US$1.00)

YEAR END AVERAGE RATE(1) HIGH LOW

1998 1,206.00 1,367.30 1,812.00 1,196.00
1999 1,136.00 1,188.20 1,243.00 1,125.00
2000 1,267.00 1,140.00 1,267.00 1,106.00
2001 1,313.50 1,293.40 1,369.00 1,234.00
2002 1,186.30 1,242.10 1,332.00 1,161.00
<FN>

(1) The average of the noon buying rates on the last date of each month (or a
portion thereof) during the period.

[Download Table]

FOR EACH OF LAST SIX MONTH (WON PER US$1.00)

High Low

June 2003 1,203.00 1,185.00
July 2003 1,192.00 1,176.30
August 2003 1,187.90 1,168.00
September 2003 1,178.00 1,150.00
October 2003 1,190.00 1,146.00
November 2003 1,207.00 1,181.00

CAPITALIZATION & INDEBTEDNESS

The following table sets forth our capitalization as of December 31, 2002. Our
capitalization is presented on an actual basis. You should read this table in
conjunction with "Operating and Financial Review and Prospects'' and "Results of
Operation" and our financial statements and the notes thereto, included
elsewhere in this prospectus.

[Enlarge/Download Table]

AS OF DECEMBER 31, 2002 AS ADJUSTED (AMOUNTS IN U.S. DOLLARS)

Cash and cash equivalents $ 31,907
Short-term debt obligations 1,487,905
Long-term debt, less current portion 607,298
Stockholders' equity:
Common stock: $0.0762 par value;
100,000,000 authorized; 12,723,300 shares issued and outstanding on an actual basis, 971,268
Additional paid-in capital 170,540
Loans to employees to acquire common stock 0
Accumulated deficits (323,540)
Accumulated other comprehensive income (loss) (8,055)
Total stockholders' equity $ 810,213

The Company's indebtedness as of June 30, 2003 is as follows:

[Enlarge/Download Table]

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Long-Term Loan Status
(As of June 30, 2003)

Source Date of Maturity Interest Rate Term Principle
Advancement
-------------

Kuk-Min Korea December December 3.75 % Flexible $ 329,431
Bank Technology 11, 2001 10, 2006 interest rate,
Credit 2 years
Guarantee interest
Fund payments
(KORTEC) and 3 years
installment
repayments
----------------------------
Kuk-Min KORTEC January15, January 14, 3.75 % Flexible $ 280,100
Bank 2002 2007 interest rate,
2 years
interest
payments
and 3 years
installment
repayments
----------------------------
HaNa Bank Office December December 6.30 % Fixed $ 334,448
building 28, 2001 27, 2003 interest rate,
secured (Extended by long-term
the bank to collateral
the end of
December
2004)
-------------
HaNa Bank KORTEC June 28, June 15, 4.08 % Fixed $ 571,906
2003 2008 interest rate,
2 years
interest
payments
and 3 years
installment
repayments
----------------------------
Total $1,515,885
--------- ----------

KORTEC sources are the loans from a government program, 'Information Technology
Promotion Fund', which offers loans to companies with distinguished
technologies. The terms of the loans are that companies make interest payments
only every three-month for the first two years, and repay principle amounts with
interests every six month for the next three years. No collateral or security
has been pledged for these loans. KORTEC provided a guarantee to the lenders to
facilitate VANEX receiving the loans. Since KORTEC sources are a government
program, no fees have been paid for the guarantee.

SELECTED FINANCIAL AND OTHER DATA

The selected financial and other data set forth below should be read in
conjunction with the financial statements of VANEX Co., Ltd., including the
notes thereto, and "Operating and Financial Review and Prospects'' and "Plan of
Operation" included in this prospectus. The statement of operations data set
forth below for the year ended December 31, 2002 and the ten months ended
December 31, 2001 and the balance sheet data as of December 31, 2002 and 2001
are derived from the audited financial statements of VANEX included elsewhere in
this prospectus, which have been audited by Shinhan Accounting Corporation in
Korea (members of the Korean Institute of Certified Public Accountants). Our
financial statements are prepared in accordance with accounting principals
generally accepted in the United States.

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[Download Table]

2002 2001

Revenues:
System integration sales. . . . . . . . . . . . . . . . . $ 5,268,892 $9,761,958

Cost of providing system integration, including salaries. 5,023,220 9,371,203

Gross profit. . . . . . . . . . . . . . . . . . . . . . . 245,672 390,755
Selling, general and administrative . . . . . . . . . . . 574,181 297,998

Operating income. . . . . . . . . . . . . . . . . . . . . -328,504 92,757

Other income (deductions):
Interest income . . . . . . . . . . . . . . . . . . . . . 10,251 38,520
Other, net. . . . . . . . . . . . . . . . . . . . . . . . -131,274 15,217

Income (loss) before income taxes . . . . . . . . . . . . -470,034 146,494
Income tax expense (recovery) . . . . . . . . . . . . . . -21,203 21,203
Net Income (loss) . . . . . . . . . . . . . . . . . . . . -448,831 125,291
Comprehensive income (loss) . . . . . . . . . . . . . . . ($439,233) $ 107,683

Weighted average number of shares outstanding . . . . . . 12,290,550 7,961,650
Basic and diluted loss per share of common stock. . . . . ($0.04) $ 0.02

[Download Table]

AS OF DECEMBER 31, 2002 AND 2001
(AMOUNTS IN U.S. DOLLARS)
BALANCE SHEET DATA:

2002 2001

Cash and cash equivalents . . . . . . . . $ 31,907 $ 586,047
Working capital . . . . . . . . . . . . . -658,138 809,504
Total assets. . . . . . . . . . . . . . . 2,146,043 1,904,717
Long-term debt, excluding current portion 607,298 604,492
Stockholders' equity:. . . . . . . . . . 971,268 765,565
Common stock 100($0.0762) par value,
Total stockholders' equity. . . . . . . . $ 810,213 873,203

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OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is based on and should be read in
conjunction with the Financial Statements, including the Notes thereto, and
other financial information appearing elsewhere herein. The Financial Statements
have been prepared in accordance with accounting principles generally accepted
in the United States. Any discussion regarding the operating and financial
results of year 2001 in this section refers to the operating and financial
results for the period from the Company's incorporation (inception) on February
21, 2001 to December 31, 2001.

OVERVIEW
VANEX was incorporated on February 21, 2001 under the law of the Republic of
Korea under the name of "VANEX CO., LTD." for the purpose of providing multi
media system integration services and began its focus on digital broadcasting
technologies brought to the Company by Kyu Tae Park, its founder and president.
We intend to become a leading provider of multi media systems integration and
associated services to the broadcast industry in Korea. VANEX has its registered
office and principal place of business at 165-8, LG Palace 5th floor,
Dongkyo-Dong, Mapo-Gu, Seoul, Korea, and the telephone and fax numbers are
82-2-6399-6300 and 82-2-6399-6309.

To date, VANEX has constructed a cable TV system, a Dolby system and retransmit
system for Korea Digital Broadcasting Ltd., a digital outdoor broadcasting van,
and a subway broadcast system. Our services are provided by a team of highly
skilled technicians to customers and businesses in Korea and are marketed under
the ''VANEX'' brand name. VANEX (Value Added Networking Experts) features
broadcast system integration services designed for the digital era, ranging from
equipment needs analysis, purchase recommendations, equipment installation, set
up and programming to complete system design. We also provide intra-facility
data communications services to customers in Korea such as presentation rooms,
video-conference system, and video surveillance system. Our goal is to enable
broadcasters to integrate and streamline their existing operations, to minimize
time to market as businesses absorb new digital broadcast technologies, and to
include flexibility as systems expand to exploit new opportunities with a
seamless growth in their use of technology.

The Company's principal source of revenue in 2001 and 2002 was the provision of
systems integration products and services to the Korean broadcasting industry.
Under these contracts, Vanex provides both hardware and software, then
integrates the newly acquired hardware and software components into each
client's existing systems, and tests the resulting system to ensure that the
integrated system functions as required.

Under these contracts, the Company therefore provides: commercial hardware
purchased from third party suppliers, commercial software purchased from outside
suppliers, integration services of these purchased items and training services,
on the newly installed system as a whole, which will enable the Client to
operate on their own.

The specifications of each contract are determined by the client. Each contract
is unique in terms of the types of products and services to be provided. As a
consequence, Vanex does not maintain significant inventories of hardware or
software products. Each contract is normally for a price determined at the time
the contract is entered into. Contracts can vary in length depending on the
complexity of the system to be integrated. Vanex's contracts are normally for a
period of less than one year. Contract work is principally performed at each
client's place of business.

The Company is providing products and services on a contact basis, which is
concerned as a construction type system building. SOP 81-1 indicates that
construction-type and certain production type contracts to use the percentage of
completion method and the Company believes that it is appropriate to use the
percentage of completion method when recognizing revenue.

Our senior management has extensive knowledge and experiences in the system
integration industry and is, on a daily basis, tracking the costs to be incurred
for each contract. In the event that the clients change their orders, the total

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contract revenues will be adjusted accordingly through negotiation between both
parties and an estimate on the total contract costs will be established in
accordance with the clients' requirements.

Historically, our sales have been concentrated among a small number of Korean
customers. Three significant customers accounted for revenue of $ 1,988,077, $
1,435,198 and $ 608,663 in the year ended December 31, 2002. One customer
accounted for revenue of $ 9,668,998 in the period ended December 31, 2001.
Approximately 91% of the Company's revenue in 2001 was from Korea Digital
Broadcasting LtdThe percentage of revenue attributable to Korea Digital
Broadcasting Ltd. decreased in 2002 but Korea Digital Broadcasting Ltd. was
still the largest customer in 2002, taking 38.86% of the total revenue. Our
sales and results of operations have depended in large part on the level of
capital expenditures by broadcasting industry and companies, which desire to
have the multi media system in place for various purposes.

Systems integration, including software and hardware solutions engineering,
account for our revenues in 2001 and 2002. The Company promotes its business
using the slogan 'Media System Integration Creating Value' and works with
integrators selected by the client. Our revenues in 2001 and 2002 were $9.7
million and US$5.3 million, respectively. In 2002, major telecommunication
service providers, including Korea Telecom and SK Telecom, announced that they
have plans to establish Digital media centers (DMC) in Korea. Digital media
centers include all the systems required for digital communication, broadcasting
program production and all the relevant services to provide digital cable
broadcasting and multimedia service from one place. During 2002, the marketing
activities of Vanex focused on the tenants of these digital media centers as
potential customers for the Vanex integration service and solution software.
However, the principal digital media center projects have been delayed, and
Vanex experienced a decrease in sales revenue in 2002.

Our ability to generate future revenues will be dependent on a number of
factors, which are beyond our management's control, such as the general Korean
economic condition, the computer service industry trends, development of new
technologies and financial or managerial conditions of our customers.
Accordingly, we are unable to forecast our revenues with any degree of accuracy.
In addition, we currently intend to increase our capital expenditures and our
marketing and sales expenditures in order to expand and broaden our client base.
To the extent that such expenses are not accompanied or followed by increased
revenues, our business, we will experience decreasing net income. See ''Risk
Factors" for further discussion.

RECENT DEVELOPMENTS
Continued promotion expenditures to develop new clients
The Company continues to work with several clients, such as Lycos Cinema and
Korean Broadcasting Systems Ltd., among others and is in continued discussions
with alternative suppliers of hardware. We continue to seek out new clients and
sources of revenue in the development and expansion of our business. However, we
cannot provide any assurance that we will be able to negotiate contracts with
new clients or to establish lower pricing structures with alternative suppliers.
Failure to negotiate new contracts or to reduce hardware costs will result in
reduced revenues and adversely affect our results of operations in future
periods.

RESULTS OF OPERATIONS

Our sales revenue of US$5.3 million in 2002 was a decrease of 46% from our sales
revenue of US$9.8 million in 2001. This decrease in sales resulted from the
failure in 2002 to obtain system integration service contracts from major
broadcasters whom the Company anticipated would conduct major upgrades to their
systems as they relocated their premises to the Digital Media Center, the
construction of which was delayed.During 2002, the marketing activities of Vanex
focused on the broadcast industry tenants in the proposed digital media centers
in anticipation of providing Vanex system integration service and solution
software. However, the digital media center projects were postponed, the
broadcasters did not relocate and upgrade and Vanex experienced a decrease in
sales revenue in 2002. The management of Vanex realized that it was necessary
to decrease its dependency on ups and downs of system integration markets and
some biggest clients. Therefore, Vanex determined to focus more on the system

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integration services differentiated, from other competitors, with specialized
solution software programs and concentrated its efforts on developing the
specialized solutions such as Resource Total Management System, Video Total
Management System and Customer Total Management System. From sales of Resource
Total Management System, Vanex generated revenue of US$169,779 and $212,224 in
2001 and 2002 and US$178,268 from January 1, 2003 to September 30, 2003. The
sales revenue for Video Total Management System was US$106,112 in 2002 and
US$35,653 as of September 30, 2003. The Customer Total Management System is
still in the development and experiment stage. Vanex expects the system will be
completed and ready for sale from 2004.

The following table sets forth certain information regarding our financial
performance for the year ended December 31, 2002 and for the period from its
inception on February 21, 2001 to December 31, 2001.

[Enlarge/Download Table]

2002 2001
---- ----

in USD % of sales in USD % of sales
----------- ------------ ---------- -----------

Revenue. . . . . . . . . . . . . . . . . . . . $5,268,892 $ 9,761,958

Cost of sales. . . . . . . . . . . . . . . . . . 5,023,220 95.34% 9,371,203 96.00%
----------- ------------ ---------- -----------

Gross profit . . . . . . . . . . . . . . . . . . 245,672 4.66% 390,755 4.00%
----------- ------------ ---------- -----------

Selling and administrative expenses
Wages and salaries . . . . . . . . . . . . . . 103,410 1.96% 54,297 0.56%
Employee benefit . . . . . . . . . . . . . . . 32,166 0.61% 24,941 0.26%
Entertainment. . . . . . . . . . . . . . . . . 46,080 0.87% 29,676 0.30%
Commission . . . . . . . . . . . . . . . . . . 69,661 1.32% 2,701 0.03%
Public dues. . . . . . . . . . . . . . . . . . 21,302 0.40% 10,248 0.10%
Depreciation of property, plant and equipment. 32,892 0.62% 15,105 0.15%
Research and development . . . . . . . . . . . 129,448 2.46% 83,526 0.86%
Transportation expenses. . . . . . . . . . . . 69,269 1.31% 17,199 0.18%
Bad debts. . . . . . . . . . . . . . . . . . . 7,676 0.15% 5,285 0.05%
Others . . . . . . . . . . . . . . . . . . . . 62,277 1.18% 55,020 0.56%
----------- ------------ ---------- -----------
574,181 10.90% 297,998 3.05%
----------- ------------ ---------- -----------

Operating income(loss) . . . . . . . . . . . . . -328,509 -6.23% 92,757 0.95%
----------- ------------ ---------- -----------

Other income(expenses) . . . . . . . . . . . . . -141,525 -2.69% 53,737 0.55%

Income(loss) before income taxes . . . . . . . . -470,034 -8.92% 146,494 1.50%
----------- ------------ ---------- -----------

Income tax expense(recovery)(Note 10). . . . . . -21,203 -0.40% 21,203 0.22%
----------- ------------ ---------- -----------

Net Income(loss) . . . . . . . . . . . . . . . . ($448,831) -8.52% $ 125,291 1.28%
----------- ------------ ---------- -----------

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YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE PERIOD FROM ITS INCEPTION ON
FEBRUARY 21, 2001 TO DECEMBER 31, 2001

REVENUES

Sales revenue for the year ended December 31, 2002 decreased by approximately
4.5 million dollars, or 46%, to $5,268,892, compared to $9,761,958 for the ten
months ended December 31, 2001. During 2002, the marketing activities of Vanex
focused on the digital media centers to participate as a provider of system
integration service and solution software. However, most of digital media center
projects have been delayed, and Vanex experienced decrease in sales revenue in
2002.

COST OF SALES

The principal components of cost of sales are acquisition costs of computer
software and equipment, labor costs, depreciation expense, initial system
investigation expense and outsourced professional fees. Cost of sales for the
year ended December 31, 2002 was $5,023,220, which was 46% less than the cost
of sales of $9,371,203 for the period from its inception on February 21, 2001 to
December 31, 2001.

GROSS PROFIT

Gross profit decreased to $245,672 for the year ended December 31, 2002 from
$390,755 for the period from inception February 21, 2001 to December 31, 2001.
However, the gross profit ratio to sales remained steady at 4.7% in 2002
compared to 4.0% in 2001. The gross profit per contract is not fixed and will
vary from contract to contract.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased by $276,183, or 92.68%,
to $574,181 in 2002, from $297,998 in 2001(from February 21, 2001 to December
21, 2001).

Selling, general and administrative expenses increased primarily as a result of
the increase in commission and research and development. Commission increased by
$66,960, from $2,701 in 2001 to $69,661 in 2002 due to the professional fee paid
to financial consulting firms which provide services for listing our common
share on Over-the-counter Bulletin Board maintained by NASD. The Company also
spent $129,448 for research and development in 2002 in order to develop Video
Total Management System (VTMS) as an effort of differentiation strategies taken
by the Company.

In addition, salaries increased by $49,113, from $54,297 in 2001 to $103,410 in
2002, primarily due to the changes in composition of employees and due to
shorter operating period for 2001. Although the total number of employees of our
company has not been changed much in 2002, we newly hired engineers and
technicians with more experience in order to provide high quality services to
our clients and to stay competitive.

OPERATING INCOME

Operating loss for the year ended December 31, 2002 was $328,509, which
represented a decrease of $421,266 from our operating income of $92,757 for the
ten-month period ended December 31, 2001. The decrease in operating income
resulted primarily from the decrease in sales revenues. Gross profit from sales
decreased from $390,755 in 2001 to $245,672 in 2002, a decline of $145,083.
General selling and administrative expenses increased $276,183 for an overall
decline in operating income of $421,266 in 2002 from 2001.

OTHER INCOME (EXPENSES)

Other income (expenses) consists primarily of interest income, interest expenses
and miscellaneous items. Other income (expenses) decreased by $195,262, to
expenses of $141,525 in 2002 from incomes of $53,737 in 2001.

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Other income decreased primarily due to a one-time loss of $102,939. During
2002, Vanex advanced $102,939 to Movies Company of Hochiminh City in Vietnam,
pursuant to an agreement. Vanex did not fulfill the terms of its agreement and
has written off the advanced amount. Movies Company of Hochiminh City is not
related to Vanex. According to the investment contract, Vanex was supposed to
invest $400,000 by August 20, 2002. The contract also states that if Vanex
violates any provisions of the contract or does not continue fulfilling the
contract, Vanex is not authorized to take away anything invested in. Since Vanex
failed to fulfill its duties as set forth in the investment contract, the
contract actually was terminated. Vanex has not received any profit distribution
so far and therefore, the investment in this project is considered to be
impaired.

Interest income decreased by $28,269, from $38,520 in 2001 to $10,251 in 2002.
The main reason for such decrease in interest income was the decrease in the net
balance of interest bearing financial instruments. Our balance of cash and cash
equivalents and interest-bearing long-term deposits as of December 31, 2001 and
2002 were $594,422 and $70,894, respectively.

Interest expenses increased by $46,420, to $46,625 in 2002 from $205 in 2001.
The main reason for the increase in interest expenses was that the Company
started, in 2002, to incur interest expenses on long-term borrowings acquired
after the inception in 2001. We entered into loan agreements with HaNa Bank on
December 28, 2001 and with Kuk-Min Bank on December 11, 2001.Our balance of
long-term debts, including a current portion, as of December 31, 2001 and 2002
were $604,497 and $940,520, respectively.

INCOME TAXES

Under Korean income tax law, the Company may apply net operating losses to
reduce taxable income in the two preceding taxation years, resulting in a
recovery of income taxes previously paid. Net operating losses may also be
carried forward up to five years and may be used to reduce taxable income in
those future years.
Due to the provision of Korean income tax law discussed above, income tax of the
Company for 2002 resulted in a recovery of $21,203, net of income tax expenses
paid for $9,650 in 2002. Therefore, total income tax receivable as of December
31, 2002 includes tax recovery of $21,203 and income tax actually paid for
$9,650 during 2002. Income Tax payments are made bi-annually in Korea. The
Company made a full annual tax payment in 2001, which is $21,203.
NET LOSS

Net loss for the year ended December 31, 2002 was $448,831, which was $574,122
less than 2001 when net income was $125,291.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of liquidity have historically been debt and equity
financing. The Company has had sales revenues since its inception on February
21, 2001 but expanding operations of the Company has required significant
amounts of cash. Therefore, the Company has continued to seek additional debt
and equity financing opportunities.

Net cash used in operating activities in 2002 was $1,010,278 as compared to net
cash used in operating activities of $80,246 in 2001. At the end of 2002,
accounts receivable increased by $785,937 over 2001, prepaid expenses increased
by $385,376 over 2001, and inventory increased $195,245 over 2001. As well,
accounts payable increased by $857,042 over 2001. The overall result was a net
decrease in cash of $571,097 plus a loss from operations of $439,181 for a net
decrease in cash provided by operations of $1,010,278 during 2002.

Cash and cash equivalents and long-term bank deposits as of December 31, 2002
and 2001 were $70,894 and $594,422, respectively. Of $70,894 cash and cash
equivalents and long-term bank deposits as of December 31, 2002, $38,987 is
restricted. Of $594,422 cash and cash equivalents and long-term bank deposits as
of December 31, 2001, $8,375 is restricted. The duration of the long-term
deposits are for twenty years and represents that the funds are restricted.

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Cash used in investing activities for the year ended December 31, 2002 and for
the period ended December 31, 2001 were $265,731 and $ 686,111, respectively.
Cash used in investing activities in 2002 and 2001 was primarily due to
acquisition of property, plant and equipment and the write-off of advances to
Movies Company of Hochiminh City

Cash provided by financing activities for the year ended December 31, 2002 and
for the period ended December 31, 2001 were $712,271 and $1,370,057,
respectively. Since our inception, we have met our working capital and other
capital requirements principally from private sales of our shares and bank
borrowings. We raised from the sales of common stock $376,243 in 2002 and
$765,565 in 2001. Proceeds from long-term debt totaled $336,028 in 2002 and
$604,492 in 2001 for total long-term debt of $940,520. Out of $940,520,
$333,222, owing to the HaNa Bank, is secured by the Company's land and building,
was originally due December 31, 2003, and has been extended to the end of year
2004 by the HaNa Bank. The balance of long-term debt, $607,298, is owing to
Kuk-Min Bank. The debt owing to Kuk-Min Bank was guaranteed by Inzi Display
Co., Ltd., a former shareholder of the Company, until the end of October 2003,
and is now secured by the house of Mr. Kyu-Tae Park, the director, CEO and
president of the Company. The annual interest rates of our long-term loans from
HaNa Bank and Kuk-Min Bank were, respectively, 6.9 % and 4.82 % in 2002. HaNa
Bank, bearing interest at 6.9% per annum, payable quarterly. Kuk-Min Bank,
bearing interest at 4.82% per annum, payable quarterly, with principal repayable
in three installments of $ 202,432.

The Company is obligated to make the principal payments on its long-term debt in
each of the next four fiscal years ended as follows:

[Download Table]

December 31, 2003 (Extended by the bank to December 31, 2004) $333,222
December 31, 2004 202,432
December 31, 2005 202,433
December 31, 2006 202,433
--------

$940,520
========

The accounts payable and other accrued liabilities of the Company at December
31, 2002 in the amount of $1,154,683 are unsecured.

Capital expenditures on property and equipment in 2002 totaled $132,181. The
Company invested a further $129,448 in research and development, which was
expensed during the year.

We plan to fund our operations and working capital requirements primarily
through long-term borrowings and positive cash flow from our operations. The
Company has no immediate plans for capital expenditures. A significant drop in
the profitability of our operations could require us to seek additional sources
of financing to satisfy our working capital requirements. Plans to satisfy our
working capital requirements are as follows:

The Company is currently under negotiations to raise $2,000,000 by issuing new
shares of common stock. If the issuance of new shares is realized, the Company
will be eligible to issue up to $3,000,000 in convertible bonds funded by Korea
Technology Credit Guarantee Fund (KORTEC).

The Company expects to improve its working capital from operations by the
launching of a new software package, called 'ez-works', that is used by
business to maintain their accounting transactions. Sales of 'ez-works' software
packages is estimated to be approximately $1,000,000 during 2004, and 30% of the
product sales will be added to the Company's gross profit, according to the
Company's own market research.

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The recently signed contracts and upcoming new contracts are another source of
additional funding for the Company to expand its operations. Following contracts
are in the process to be signed by the end of 2003:

- SK Telecom: Vanex has signed a contract in December 2003 with SK
Telecom. Vanex will design and establish the broadband area (a
telecommunication system in which information is carried in
digital form; broadband includes central monitoring room,
input/output link room, editing room, etc.) for Personal Mobile
Satellite Broadcasting. This project will enable the service
subscribers of SK Telecom to view multimedia contents on their
mobile phones through satellite broadcasting. Vanex is expecting
approximately $2,300,000 of revenue from this contract;
- Korea Telecom: In December 2003, Vanex has also signed a contract
with Korea Telecom. Vanex will be responsible for Video-On-Demand
service system construction and maintenance and provide
middleware solution and storage system. Approximately $1,453,000
of revenue will be generated;
- YTN: Vanex has signed a contract in December 2003 with YTN, a
news channel in Korea, to design and construct the broadcasting
system in the new building of YTN. Vanex expects to generate
approximately $3million of revenue from this contract;
- Korea Digital Broadcasting: Sports Channel expansion to Soccer
and Golf. The contract will be signed before the end of year
2003. Approximately $2,700,000 will be generated;
- Korea Digital Broadcasting: A regional retransmission service
contract will be signed between December 2003 and January 2004.
Approximately $10,000,000 will be generated.

A contract for KDB system integration repair and maintenance that will bring in
approximately $500,000 of revenue will also be materialized in March 2004. As
this repair and maintenance contract is on going service contract, the Company
will not only have a stable revenue source but also the revenue will be
increased as KDB update its equipment provided by the Company.

No commitments to provide additional funds have been made by management,
stockholders or anyone else. The absence of funding would make the successful
completion of any of the Phases of the Company's business plan doubtful.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk that losses may occur in the value of
financial instruments as a result of movements in market rates of interest and
foreign exchange. Our primary market risk exposures are to fluctuations in
exchange rates and interest rates.

As of December 31, 2002, 100% of our long-term debt (including the current
portion thereof) was denominated in Won. As of December 31, 2002, we do not have
short-term borrowings. As well, the Company's monetary assets, liabilities and
revenues are denominated in Won. Because our primary market is limited to Korea
and we only have Korean clientele, we do not have foreign currency risk
sensitive instruments unless the business expands to other countries. As a
result, changes in the foreign exchange rate between the Won and the Dollar may
affect us due to the effect of such changes on the translation from Won to
Dollars in the preparation of our U.S.$ denominated financial statements.
However, fluctuations in foreign currencies do not have a material impact on our
business, results of operations, and financial condition. We do not hold or
issue financial instruments for trading purposes.

All of the long-term debts bear interest at fixed rates. The annual interest
rates of our long-term loans from HaNa Bank and Kuk-Min Bank were, respectively,
fixed at 6.9 % and 4.82 % in 2002. HaNa Bank, bearing interest at 6.9% per
annum, payable quarterly, denominated in Korean Won and collaterized by a pledge
of building and structure. Kuk-Min Bank, bearing interest at 4.82% per annum,
payable quarterly, with principal repayable in three installments of $ 202,432
denominated in Korean Won. Please refer to Note 7 long-term debts in the
financial statements on page 62 for the further details. The long-term debts
therefore do not expose the Company to interest rate cash flow risk.

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INFLATION

We do not consider that inflation in Korea has had a material impact on our
results of operations. Inflation in Korea in 1998, 1999, 2000, 2001 and 2002 was
7.5%, 0.8%, 2.3%, 4.1 % and 2.7%, respectively. See ''Risk Factors: There are
unique economic and political risks associated with investing in companies from
Korea''

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, The Financial Accounting Standards Board (FASB) approved for
issuance of Statement of Financial Accounting Standards (SFAS) No. 143, "asset
Retirement Obligations." SFAS 143 establishes accounting requirements for
retirement obligations associated with tangible long-lived assets, including (1)
the timing of the liability recognition, (2) initial measurement of the
liability, (3) allocation of assets retirement cost to expense, (4) subsequent
measurement of the liability and (5) financial statement disclosure. SFAS No.
143 requires that an asset retirement cost should be capitalized as part of the
cost of the related long-lived asset and subsequently allocated to expense using
a systematic and rational method. The provisions of SFAS No. 143 are effective
for financial statements issued for fiscal years beginning after June 15, 2002.
The adoption of SFAS 143is not expected to have a material effect on the
Company's financial position, results of operations or cash flows.

In June 2002 the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities, except those
incurred in connection with a purchase business combination. The standard
requires that a liability for costs associated with an exit or disposal activity
be recognized and measured initially at its fair value in the period in which
the liability is incurred. The provisions of this standard are effective for
exit or disposal activities initiated after December 31, 2002. SFAS No. 146
will impact the Company's financial statements if and when future restructuring
activities occur.

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

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" (" SFAS 149"). SFAS 149 amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. The standard became effective for us for
contracts entered into or modified after June 30, 2003. We do not expect the
adoption of SFAS 149 to have a material impact on our results of operations or
financial position.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150").
SFAS 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability, or an asset in some circumstances. The standard became effective
for us for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS 150 had no impact on our
results of operations or financial position for the three and six months ending
as of June 30, 2003.

BUSINESS

OVERVIEW
Vanex Co., Ltd. was founded in February 2001 under the laws of Republic of Korea
with capital of over $800,000. Vanex, the name of the Company stands for Value
Added Networking EXperts. With its technology team experienced in media and
system integration(1) (system building), Vanex generates revenues from system
integration service for digital broadcasting companies.
(1) System integration: assembling many components so that they can work
together as a system

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Since its incorporation, Vanex has been serving the Korean market. It has been
providing customized system integration (system building) service and system
integration (system building) consulting service to the Korean broadcasting
industry. The Korean broadcasting industry is going through the process of
total digitalization. Since 1997, the Korean government has been supporting
digitalization of major broadcasting media. The conversion to digital
broadcasting in Korea began in the Seoul Metropolitan region in 2001, and the
Korean government plans to expand the service to every city and county by 2005.
The digital broadcasting industry includes digital terrestrial TV broadcasting,
digital satellite broadcasting, digital cable TV, digital radio broadcasting and
satellite digital audio broadcasting. The recent introduction and growth of
digital broadcasting in Korea has been creating an increasing demand for
broadcasting equipment and related services. Korea Digital Broadcasting, the
platform operator for satellite TV in Korea, projects purchases of a total of
$100 million worth of digital broadcasting systems for satellite broadcasting by
2005. A market research done by Eastern Michigan University estimated the
system integration market size for the telecommunication sector at $1,007
million for 2002.

Vanex earned $9,592,179 in 2001 and $4,950,556 in 2002 from providing system
integration service to digital broadcasting companies. From sales of Resource
Total Management System, Vanex generated revenue of US$169,779 and $212,224 in
2001 and 2002 and US$178,268 from January 1, 2003 to September 30, 2003. The
sales revenue for Video Total Management System was US$106,112 in 2002 and
US$35,653 as of September 30, 2003. The Customer Total Management System is
still in the development and experiment stage. Vanex expects the system will be
completed and ready for sale from 2004

The Company's senior management team once worked for Daewoo Information Systems
(DSI), a wholly owned subsidiary of Daewoo Corporation. Mr. Kyu Tae Park (CEO of
Vanex and formerly managing director of DSI), Mr. Hong Cho (Director of Vanex
and formerly department manager of DSI) and Mr. Woong Kim (Director of Vanex and
formerly assistant department manager of DSI) made contributions to DSI's
survival and growth during the economic crisis which started in 1997,
particularly by assisting DSI to get major contracts. Mr. Park, Mr. Cho and Mr.
Kim worked in a team to get new contracts for digital broadcasting system
integration. They got a $3.3 million contract for video-on-demand system
integration from Crezio.Com in 1999;and a $9.17million contract for
video-on-demand system integration from Watch n Joy in 2000. With their
experiences in IT industry, Mr. Park, Mr. Cho and Mr. Kim established Vanex Co.,
Ltd. in 2001 and the Company has been engaged in different kinds of system
integration projects since that date. In May 2001, Vanex signed a contract to
build and integrate the digital satellite broadcasting system for the Korea
Digital Broadcasting (KDB) and has been providing its services to similar
companies.

The Company aims to become the best system integrator and system integration
software provider. Now Vanex is intent on entering the North American market and
provide its service and products to North American cable TV, satellite TV, web
TV, radio and TV broadcasters.

A brief history of Vanex follows:

[Enlarge/Download Table]

Feb. 2001 Established on February 21, 2001

Apr. 2001 Registered as a broadcasting channel user in Korea

May 2001 Received an order of Skylife project from Korean Digital Broadcasting (KDB) ($11,547,500)

Jun. 2001 Received orders from Webcast / Taiwan Internet Broadcasting system ($1,600,000)

Oct. 2001 Selected as a company eligible for the government support by Ministry of Information and Communication

Nov. 2001 Received a distinguished service medal from KDB (Skylife)

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Nov. 2001 Participated in Korea Digital Satellite Exhibition

Dec. 2001 Selected as one of top ten venture companies by Mun Hwa Ilbo newspaper

Dec. 2001 Integrated Kwang-jin System Operator/Cable TV system ($833,333)

Jan. 2002 Integrated KDB Dolby system ($833,333)

Jan. 2002 Integrated Sky KBS digital out-door) van system ($1,416,667)

Apr. 2002 Participated in Saudi Arabia COMDEX

May 2002 Integrated Cregio.Com's editing room

May 2002 Integrated subway broadcasting (Line 3) system ($608,333)

Oct. 2002 Integrated Bu-ye Cable TV broadcasting system ($600,000)

Nov. 2002 Integrated Sang-ju Cable TV broadcasting system ($700,000)

Dec. 2002 Integrated the Department of Labor statistics system ($67,500)

INDUSTRY BACKGROUND
KOREA: SOFTWARE AND THE COMPUTER RELATED SERVICE INDUSTRY
Software and the computer related service industry has shown substantial growth
compared to other technical industries over the past few years in Korea. In
2001, the computer related service industry generated revenue of $8.66 billion
and over 70% of this revenue was generated in the system integration (system
building) sector. System integration sector showed increase in revenues from
$1.07 billion in 1996 to $6.1 billion in 2001. The software industry grew from
$823 million in 1996 to $2.9 billion in 2001. (2001 Annual Report on Information
and Telecommunication Industry, Korea Association of Information and
Telecommunication)

NORTH AMERICA: COMPUTER SYSTEMS DESIGN AND RELATED SERVICES INDUSTRY

Vanex sees huge potentials in U.S.A. and Canada and targets to market its
services and products in the two countries. 90,776 U.S. companies hired more
than 1 million people in the Computer systems design and related services
industry in 2000 (US Census Bureau). The U.S. Department of Commerce News
released on January 15, 2003 states that the computer systems design and related
services industry reported revenues of $184 billion in 2001. Out of the $184
billion, $85.9 billion was generated from computer systems design service, to
which system integration belongs. In Canada, the computer system design and
related services industry hired 193,892 employees in 2000 (Industry Canada).
43,966 companies generated revenue of approximately Cdn $44 billion (Industry
Canada). According to the Information and Communications Technologies
Statistical Overview released in November 2002, the service sector is showing
the largest growth rate among 3 sectors--manufacturing, wholesaling and
service--of the information and communication technologies industry.

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PRODUCTS AND SERVICES

SYSTEM INTEGRATION SERVICE AND SYSTEM INTEGRATION CONSULTING SERVICE
The Company provides system integration(system building) services to digital
broadcasting companies as required by the customers' specific needs. A system
integrator is a design/build firm that creates the concept of the system,
installs the technology and provides ongoing support. The Company produces
proposals of system design, supplies equipment including hardware and software,
makes sure it is installed correctly, and provides maintenance and supports for
the system afterwards. The client will not need to finger-point if it becomes
apparent that modifications are necessary to the newly installed and/or to the
existing system in order for the system as a whole to function at its best
condition.

The Company is specialized in providing customers with services for totally
integrated broadcasting systems, from consulting and project management; system
design and engineering; equipment specification, procurement and installation;
plus maintenance, support and training. Vanex's system integration services
enable the broadcasting company to operate, control and monitor various
equipments or components from different manufacturers and with different
features.

The Company's system integration service begins by sitting down with clients and
determining their needs. The Company has relationships with many equipment
manufacturers. Once a proposal is approved by the client, the Company makes the
equipment purchase. Once the integrity of the product is established, we
transport the equipment to the client site and install it. Finally, it tests all
the systems and does a final walk-through with the client, followed by thorough
training on all systems once the system is up and running.

The Company is currently marketing its services to the following companies: TV
and radio broadcasting companies; satellite broadcasting companies; cable TV
companies; contents and service provider with emphasis on the internet
broadcasting; education center and individual companies which want to establish
intra-company broadcasting system.

SYSTEM INTEGRATION SOFTWARE
In addition to system integration service and consulting service, the Company
has developed its own software to aid the seamless integration of network
devices and equipment. Vanex has three major software: RTMS (Resource Total
Management System), VTMS (Video Total Management System), and CTMS (Contents
Total Management System). Currently, none of the software is separately sold in
Korea. Vanex includes the software in the system integration service to use in
the process of integration, but plans to customize the software and sell as
separate products in the North American market.

RTMS (RESOURCE TOTAL MANAGEMENT SYSTEM) enables the system administrator to
easily monitor the performances and status of the various kinds of broadcasting
equipments. RTMS identifies and communicates with a host of different
broadcasting equipments to ensure maximum performance through its remote
monitoring and administration capability. RTMS has features such as: real time
alarm reporting and monitoring, real time specific equipment identification and
problem analysis, support for various clients and different protocols (1), and
simplified multi-platform and systems administration.
(1) protocols: standard procedure for regulating data transmission between
computers.

VTMS(VIDEO TOTAL MANAGEMENT SYSTEM) provides a link between the comprehensive
interface between video servers and set top boxes. VTMS provides video service
at the request of the administration and contains all the functions required in
digital TV/interactive TV (1) environments (e.g. JAVA, HTML, graphics
management, network monitoring, etc.) for the fast interpretation of the
delivered media. The system supports high quality video service and a variety
of contents.

CTMS (CONTENTS TOTAL MANAGEMENT SYSTEM) collects and manages media contents,
which are offered by content providers. CTMS is able to simultaneously collect
and distribute media contents from or to more than one content provider. CTMS is
comprised of three components; (a) contents manager, (b) content provider
manager and (c) subscriber manager. The contents manager part of CTMS manages
physical contents file, meta-data (1), and billing information. The content
provider manager manages subscriber log, billing and other subscriber
information, and subscriber manager part provides billing solutions, which
reflect various price plans.
(1) Meta-data: Data about data; for example, tags that indicate the subject of a
WWW document.

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SALES AND MARKETING STRATEGY

SYSTEM INTEGRATION
Based on its successful completion of transmission area of Skylife project which
made possible digital satellite broadcasting of over 140 channels in Korea,
initiated by Korea Digital Broadcasting Ltd. (KDB), Vanex will continue to
market its system integration service to companies with multi-media needs. The
directors of Vanex have experiences in this industry and have established their
own networks and clientele. The Company will fully utilize these networks and
clientele in order to achieve its goals. Vanex will develop total package
products including system integration service, software as well as further
maintenance consulting. In this way, Vanex will increase market acceptance of
its products and services in the Korean market.

For its business in the North American market, Vanex intends to establish an
office in Vancouver, B.C., Canada during the 3rd quarter of 2003 to serve as a
base for their entry into the North American market. The Vancouver office will
collect the North American market information, establish and execute marketing
strategies. Vanex will participate in various exhibitions to increase public
awareness of its brand in the North American market. Vanex will also try to
develop strategic relationship with other system integrators in North America so
that Vanex can have an opportunity to develop joint projects with them or sell
its software to them. Vanex's marketing activities will also include the
distribution of sales and product literature, operation of a web site,
advertising in trade journals and catalogs, direct marketing and ongoing
communications with its customers, the press and industry analysts.

BUSINESS SOLUTION SOFTWARE
The marketing of Vanex's solutions will be focused on the North American market.
In the Korean market, solutions will be included in the package products and
sold along with Vanex's system integration services. In the North American
market, Vanex will customize its software in accordance with the customers'
specific needs and sell the software as separate products.

In order to market its software-RTMS, VTMS, and CTMS--in North America, the
Company plans to update information of the broadcasting equipment by performing
continuous testing and experimentation and, therefore, increases the product's
competitive advantage. Vanex also plans to register with the US Broadcasting
Association within 2003 and participate in numerous North American and global
exhibitions (ex. COMDEX, NAB, InfoComm, ShowBiz Expo). Vanex has already
attended the National Association of Broadcasting (NAB) exhibition, which was
held from April 7th until April 18th, 2003. Many North American broadcasting
companies and contents providers showed their interests in Vanex's products and
services.

COMPETITION
Currently, there is no one dominant company providing system integration service
(system building service) and similar products as Vanex in the Korean market.
The following are some of the major competitors:

SUNKYUNG C&C, with 46 employees, is specializing in system integration, network
integration, integration consulting, system management and software development.
Sunkyung C&C has business partner relationships with Adobe Korea, SK Global,
Samsung SDS and Ahnlab, Inc.
SAMSUNG SDS is providing system integration services, consulting services,
software development and IT training. With about 7,000 employees in Korean and
overseas, Samsung SDS generated revenue of over $1 billion in year 2002.

These competitors have more employees and better financial structure than Vanex.
However, Vanex is ahead of these competitors in terms of software development.
While most of these competitors use imported software to integrate(build)
systems, Vanex has developed its own software, such as CTMS, RTMS or VTMS. So
far, Vanex has rather included its software products in system integration
(building) service than selling them separately to present its software and
increase competitiveness against the competitors who are selling their software
products separately. None of these competitors set up contractual relationship
with any of your potential customers.

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In the North American market, Vanex's competitors are generally small regionally
focused companies. However, there are a growing number of new entrants in the
broadcasting systems integration market world-wide as a function of the
increasing reliance businesses have on integration service providers who are
familiar with their information technology requirements and can provide
value-added services such as design, project management, installation and
product service.

MCSI "MEDIA CONSULTANTS SYSTEMS INTEGRATORS," are a provider of integrated
technical services and audio-visual presentation, broadcast and computer
technology products and services. Technical convergence of audio, data, visual
communications and computer network systems has created the need for
sophisticated providers of these products with the ability to design, source,
install and service complex problems encountered in the industry.
LIBERTY LIVEWIRE CORPORATION, provides technical and creative services to the
entertainment industry. Clients include the major motion picture studios,
independent producers, broadcast networks, cable channels, advertising agencies
and other companies that produce, own and/or distribute entertainment, news,
sports and advertising content. Clients are offered a range of services, from
image capture to distribution of the final product.
DIGITAL GENERATIONS SYSTEMS, INC. ("DGS"), together with its wholly owned
subsidiary StarGuide Digital Networks, Inc. ("StarGuide"), offers a suite of
digital technology products and services. Through the DGS Network Operation
Center ("NOC") located in Dallas, Texas, it delivers audio, video, image and
data content for the advertising and broadcast industries. Through StarGuide,
DGS develops and sells proprietary digital software, hardware and communications
technology, including various satellite receivers, audio compression codes and
software to operate integrated digital multimedia networks, and offers related
engineering consulting services.
ORCA INTERACTIVE LTD. develops and markets solutions for commercial interactive
TV, which are similar to Vanex solutions. Orca's software products address the
needs of movie-on-demand providers, broadcasters, cable operators, content
providers and Internet service providers. ORCA Interactive Ltd. is currently the
only middleware solution provider in the North American market.

RELATED PARTY TRANSACTIONS
No director, executive officer or nominee thereof of Vanex and no owner of five
percent or more of Vanex's outstanding shares or any member of their immediate
family has entered into or proposed any transaction with Vanex in which the
amount involved exceeds $60,000.

INTELLECTUAL PROPERTY
Vanex has proprietary system integration technology and business solution
software. Vanex holds no patents and has not as yet applied for any patents and
holds no other registered proprietary knowledge or assets, though.

EMPLOYEES
We currently have 16 employees: 4 employees for management; 5 employees for the
media business division; 5 employees for the solution development division; and
2 employees for administration. Vanex expects to additionally engage more staffs
in the area of sales and marketing. We expect our labor relations to be good.
None of our employees are covered by a collective bargaining agreement.

FACILITIES
The Company has established its head office at LG Palace 5F Dongkyo-Dong Mapo-Gu
Seoul, Korea and the Company owns the current facilities. The Company intends
to establish an office in Vancouver to serve as a base for their entry into the
North American market. Currently there are 16 people working at the head
office.

LITIGATION
We are not party to any material legal proceedings.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS
As of December 10, 2003, the current board of directors and senior executive
officers (whose business addresses are at LG Palace 5F Dongkyo-Dong Mapo-Gu
Seoul, Korea) are as follows:

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NAME AGE YEAR APPOINTED OFFICE HELD

Kyu-Tae Park. 42 2001 Director, Chief Executive Officer and President
Hong Cho. . . 39 2003 Director
Woong Kim . . 38 2003 Director, Vice President of Business Planning and Solution Marketing
Jae-Soo Kim . 41 2003 Managing Director
Hee Ihn Kim . 45 2001 Formal Director (Resigned on March 31, 2003)
Kwang Woo Lee 47 2001 Formal Director (Resigned on March 31, 2003)

Mr. Kyu-Tae Park has served as a director and president of VANEX since inception
February 21, 2001, and was appointed as Chief Executive at inception of the
Company. He graduated from Navy Military Academy (1979~1982) and completed a
doctorate program in Computing Department at Soongshil University (1994~1997).
After being discharged from army as a navy captain (1983~1988), he worked at
Gumsung Information Communication (1989~1991), Buddhist Broadcasting
(1991~1996), Incheon Broadcasting (1996~1998), and Daewoo Information System
(1998~2000).

While working for newly established Incheon Broadcasting, Mr. Park acquired the
right to broadcast the local government heads voting from the government and
directed the real-time broadcasting of polls and the editing system. He
broadcasted the accurate status of polls and faster than other broadcasting
companies, and he was awarded for his accomplishment by the president of Korea.
While at Daewoo Information System, he acted as a project manager of planning,
designing and installing the multicast Internet broadcasting systems for
nation-wide clients. While at Vanex, he led the baseband area (including central
monitoring room, input/output link room, server room, editing room, etc.) of
Korea Digital Broadcasting Ltd.'s satellite broadcasting system project in 2001
and successfully competed the project.

Mr. Hong Cho has served as a director of VANEX since March 31, 2003 and also
acted as a vice president of sales and marketing of Vanex from inception of the
Company until June 20, 2003. He graduated from Electronic Engineering Department
of Yonsei University (1982~1985) and worked for Daewoo Co., Ltd.(1986~1998) and
Daewoo Information System (1998~2000). While working at the Screen Business
Division of Daewoo Co. for about 10 years, Mr. Cho managed various types of
broadcasting related work. Especially, his forte is experienced in integrating
broadcasting system. While acting as a vice president of sales and marketing of
Vanex, Mr. Cho delivered consulting and engineering service for establishment of
broadcasting-related systems for Vanex's clients.

Mr. Woong Kim has served as a director of VANEX since March 31, 2003 and has
been responsible for business planning and solution marketing from inception of
the Company. He graduated from Computing Department of Ajou University
(1983~1990) and worked for Daewoo Information System (1991~2000). While working
for Daewoo Information System Co., he worked on several projects related to
software, such as a company resource planning system, billing system, Internet
broadcasting system and a network management system. Currently, he serves as a
vice president of business planning and solution marketing of Vanex Co., Ltd.

Mr. Jae Soo Kim has recently joined the Company as a managing director. He
graduated from Seoul National University with a bachelor degree in computer
engineering and has been responsible for system design and integration for
several information communication companies, including LG
Telecommunication(1983-1987), Korea PC Communication Research
Institute(1992-1994), Jungwon System (1995-1996), and CRM Tech (1997-2003).
Since he joined the Company in 2003, he has been managing projects and
supervising solution development as a managing director. Specifically, he plans,
administers and controls budgets for projects and interviews, hires and oversees
training for staff. Even though he is not experienced in management, from his 12
years experience in actual system integration projects Mr. Kim has gained an
oversight and knowledge on how to manage projects and staff involved in such
projects.

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BOARD OF DIRECTORS
The board of directors has the ultimate responsibility for the administration of
the affairs of VANEX. Our Articles of Incorporation, as currently in effect,
provide for a board of directors which is comprised of standing directors and
non-standing directors including independent directors. Under our Articles of
Incorporation, all directors serve a three year term but may be extended to the
close of the ordinary general meeting shareholders convened with respect to the
last fiscal year which ends on or before the date three years from the date of
acceptance of office by such director. The date of expiration of the current
terms of office for our executive officers and directors are as follows:

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Name Titles Date of Expiration

Kyu-Tae Park Director, Chief Executive Officer and President Sep.6, 2004
Hong Cho Director March 30, 2006
Woong Kim Director, Vice President of Business Planning and Solution Marketing March 30, 2006
Jae-Soo Kim Managing Director March 1, 2006

Our Articles of Incorporation provide for a board of directors of not less than
five directors and not more than fifteen directors. It is expected that all
current directors will continue to serve after this offering. The directors are
elected at a general meeting of shareholders by a majority of vote of the
shareholders present or represented, subject to such majority of at least
one-quarter of all issued and outstanding shares having voting rights. The board
of directors elects one Representative Director from the standing directors.
The board of directors maintains an Audit Committee to ensure the impartial
supervision of our business operations. Independent directors must comprise a
majority of the members of the Audit Committee. The Audit Committee may examine
in advance the materials required to be submitted by VANEX to the independent
auditors or other related institutions pursuant to applicable laws, and may
review the independent auditor's reports or other documents which are intended
to be submitted to VANEX by such independent auditor or other persons. The Audit
Committee also reviews matters which may result in the conflict of interests
between VANEX and our officers or employees.

INDEPENDENT DIRECTORS

Currently, none serves on the board as an independent director. We intend to
appoint one additional independent director within 90 days following this
offering.

EXECUTIVE COMPENSATION
In 2002, we paid compensation to our executive officers as follows: $55,793 to
Mr. Kyu Tae Park, $47,340 to Mr. Hong Cho; and $41,865 to Mr. Woong Kim. The
aggregate amount of compensation during fiscal year 2002 to our directors and
officers as a group equals to U.S.$144,998. The amount of retirement and
severance benefits accrued for our executive officers and directors in 2002 was
U.S.$8,695. There were no pension, retirement or other similar benefits set
aside for our executive officers and directors in 2002.

STOCK OPTION PLAN
Under the Company's Articles of Incorporation, the Company may grant options for
the purchase of shares to certain qualified officers and employees. Set forth
below are the details of our stock option plan as currently contained in our
Articles of Incorporation (the ''Stock Option Plan").
In order to qualify for participation in the Stock Option Plan, officers and
employees must have contributed to, or be expected to contribute to, the
establishment, development or technological innovation of VANEX. Notwithstanding
the foregoing, shareholders meeting the following criteria shall not be eligible
to receive options under the Stock Option Plan; (i) our largest shareholder,
(ii) a holder of 10% or more of our shares outstanding, or (iii) a shareholder
who would own 10% or more of our shares upon exercise of options granted under
the Stock Option Plan.
The specific terms and conditions of options granted under the Stock Option Plan
shall be approved at a duly convened shareholders' meeting. Under our Articles
of Incorporation, stock options shall be offered through (i) issuance of new
shares, or (ii) payment in cash of the difference between the market price of
our shares and the option exercise price.

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.. The maximum aggregate number of our shares available for issuance under the
Stock Option Plan shall not exceed 15% of the total number of our shares
outstanding.
.. Options granted under the Stock Option Plan will have a minimum exercise price
equal to the three month average market closing price for our shares prior to
the shareholders' meeting at which the grant of options under the Stock Option
Plan is approved; provided, that if there is no such market closing price for
our shares prior to our shareholders' resolution, the minimum exercise price
will be the price for our shares in this offering; provided further, that the
option exercise price shall not be less than the par value of our shares.
.. Stock options granted under the Stock Option Plan may be exercised after the
third anniversary date
of the shareholders' meeting at which the grant of options under the Stock
Option Plan is approved
but prior to the seventh anniversary date thereof, unless otherwise revoked by
the board of directors.
The board of directors may revoke stock options granted under the Stock Option
Plan if (i) a
beneficiary resigns prior to the exercise of the options, (ii) the beneficiary
causes significant loss to us
by his or her negligence or willful misconduct, or (iii) an event of termination
specified in the Stock
Option Plan occurs.

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of July 1, 2003, our outstanding common stock
owned of record or beneficially by each executive officer and director and by
each person who owned of record, or was known by us to own beneficially, more
than 5% of our common stock, and the shareholdings of all executive officers and
directors as a group. As of July 1, 2003, we had 12,723,300 shares of common
stock issued and outstanding. All shares set forth in the following table are
held directly and each shareholder has sole voting and investment power
concerning their shares.

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NAME SHARES OWNED PERCENTAGE OF SHARES OWNED

Park, Kyu Tae (President and CEO) 3,223,300 25.3%

Cho, Hong (Director) 74,500 0.6%

Kim, Woong (Director) 74,500 0.6%

Delaware Media Inc. 2,554,550 20.1%

Kim, Hoon Sang 1,181,850 9.3%

Choi, Sun Ju 1,020,700 8.0%

Hyun, Hye Sook 1,020,700 8.0%

Oh, Seung Hee 1,017,850 8.0%

Directors and Executive Officers as a group 3,372,300 26.5%

DESCRIPTION OF SHARE CAPITAL

Set forth below is information relating to our shares, including brief summaries
of certain provisions of our Articles of Incorporation, the Commercial Code of
Korea, and certain related laws of Korea, all as currently in effect. The
following summaries do not purport to be complete and are subject to our
Articles of Incorporation and the applicable provisions of such laws.

GENERAL
As of the date hereof, our authorized share capital is 100,000,000 shares, which
consists of our common shares. Under our Articles of Incorporation, we have as
of the dated hereof, 12,723,300shares were issued and outstanding. All of our
issued and outstanding shares have a par value of $0.0762 per share, are fully
paid and non-assessable, and are in registered form. Our authorized but unissued
share capital consists of 87,276,700 shares. We may issue additional shares
without further shareholder approval as provided in our Articles of
Incorporation

DIVIDENDS
Dividends are distributed to shareholders in proportion to the number of shares
of capital stock owned by each shareholder following approval by the
shareholders at a general meeting of shareholders. Under the Commercial Code and
our Articles of Incorporation, we will pay, to the extent declared, full annual
dividends on newly issued shares.

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

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

PREEMPTIVE RIGHTS AND ISSUANCE OF ADDITIONAL SHARES
The authorized but unissued shares may be issued at such times and, unless
otherwise provided in the Commercial Code, upon such terms as the board of
directors of a company may determine. The new shares must be offered on uniform
terms to all shareholders who have preemptive rights and who are listed on the
shareholders' register as of the record date. Our shareholders are entitled to
subscribe for any newly issued shares in proportion to their existing
shareholdings, provided that pursuant to the Articles of Incorporation, new
shares that are (i) issued by public offering in accordance with the Securities
and Exchange Law of Korea, (ii) represented by depositary receipts, (iii) issued
to foreigners in accordance with the Foreign Investment Promotion Law of Korea
within 33% of the total number of shares outstanding, (iv) issued to our
employee stock ownership association up to 20% of the newly issued shares (to
the extent the total number of shares so subscribed and held by the members of
the employee stock ownership association does not exceed 20% of the total number
of shares), (v) issued outside of Korea for listing on a foreign stock exchange
or foreign securities market trading securities by means of an electronic or a
quotation system, (vi) issued according to a stock option plan, (vii) issued to
a domestic corporation having a strategic relationship with us in connection
with our management or technology up to 5% of the total number of issued and
outstanding shares after such issuance, (viii) issued as consideration for the
acquisition of the stock or assets of another company up to less than 20% of the
total number of issued and outstanding shares or (ix) issued through general
public offering in accordance with the Securities and Exchange Law of Korea may
be issued pursuant to a resolution of the board of directors to persons other
than existing shareholders. Under the Commercial Code, a company may vary,
without shareholder approval, the terms of such preemptive rights for different
classes of shares. Public notice of the preemptive rights to new shares and the
transferability thereof must be given not less than two weeks (excluding the
period during which the shareholders' register is closed) prior to the record
date. We will notify the shareholders who are entitled to subscribe for newly
issued shares of the deadline for subscription at least two weeks prior to such
deadline. If a shareholder fails to subscribe on or before such deadline, such
shareholder's preemptive rights will lapse. The board of directors may determine
how to distribute shares in respect of which preemptive rights have not been
exercised or where fractions of shares occur.

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

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

LIMITATION ON SHAREHOLDINGS
Holdings of our shares are subject to restrictions as set forth in ''Korean
Foreign Exchange Controls and Securities Regulations.''

REGISTRATION OF SHAREHOLDERS AND RECORD DATES
The Pacific Corporate Trust Company will be our transfer agent. They will
maintain the register of shareholders and register transfers of registered
shares traded in accordance with the Fast Automated Securities Transfer
(''FAST'') arrangement with The Depository Trust Company, which provides
clearance and settlement in connection with transfers in the U.S. The registered
owner of the shares will be Cede & Co., a nominee of The Depository Trust
Company.
For the purpose of determining the holders of our shares entitled to annual
dividends, the register of shareholders is closed for a period following
December 31 and ending on the close of the ordinary general shareholders'
meeting for such fiscal year. The record date for annual dividends is December
31. Further, the Commercial Code and our Articles of Incorporation permit us
upon at least two weeks' public notice to set a record date and/or close the
register of shareholders for not more than three months for the purpose of
determining the shareholders entitled to certain rights pertaining to our
shares. The trading of our shares and the delivery of certificates in respect
thereof may continue while the register of shareholders is closed.

ANNUAL AND PERIODIC REPORTS
At least one week prior to the annual general meeting of shareholders, our
annual report and audited financial statements must be made available for
inspection at our principal office and at all branch offices. Copies of annual
reports, the audited financial statements and any resolutions adopted at the
general meeting of shareholders will be available to our shareholders. In
addition, we will dispatch the copies of our financial statements and business
report to our shareholders at least two (2) weeks prior to the date of the
annual general meeting of shareholders, and we will make available the copies of
our semi-annual or quarterly reports submitted to the SEC or the NASD to our
shareholders within two (2) weeks from the submission of such report to the SEC
or the NASD.

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

ACQUISITION BY THE COMPANY OF SHARES
We generally may not acquire our own shares except in certain limited
circumstances, including, without limitation, a reduction in capital. Under the
Commercial Code, except in case of a reduction in capital, any of our own shares
acquired by us must be sold or otherwise transferred to a third party within a
reasonable time.

LIQUIDATION RIGHTS
In the event of a liquidation of VANEX, the assets remaining after payment of
all debts, liquidation expenses and taxes will be distributed among shareholders
in proportion to the number of our shares held.

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

SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our shares, and a
significant public market for our shares might not develop or be sustained after
this offering. Future sales of substantial amounts of our shares (including
shares issued upon exercise of outstanding options and warrants) in the public
market following this offering could adversely affect market prices prevailing
from time to time and could impair our ability to raise capital through sale of
our equity securities.

Upon completion of this offering, we will have 12,723,300 shares outstanding. Of
these shares, the 6,445,450 shares sold in this offering will be freely tradable
without restriction under the Securities Act except for any shares purchased by
our ''affiliates'' as that term is defined in Rule 144 under the Securities Act.
Of the remaining 6,277,850 shares outstanding, none will be freely tradable
without restriction under the Securities Act immediately following the offering,
and the remaining 6,277,850 shares, which are held by certain holders of 1% or
more of our shares outstanding as of the date hereof, or otherwise by our
directors and executive officers. In general, under Rule 144 as currently in
effect, beginning 90 days after the date of this prospectus, a person (or
persons whose shares are aggregated) who has beneficially owned Restricted
Shares for at least one year, including a person who may be deemed an affiliate
of VANEX, would be entitled to sell within any three month period a number of
our shares that does not exceed the greater of (i) 1% of the number of our
shares then outstanding (which will equal approximately 127,233 shares
immediately after this offering or (ii) the average weekly trading volume of our
shares on the NASD OTC BB during the four calendar weeks preceding the filing of
a Form 144 with respect to such sale. Sales under Rule 144 are also subject to

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certain manner of sale provisions and notice requirements and to the
availability of current public information about VANEX. Under 144(k), a person
who is not deemed to have been an affiliate of VANEX at any time during the
three months preceding a sale, and who has beneficially owned our shares
proposed to be sold for at least two years (including the holding period of any
prior owner except an affiliate), is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.
Any sale of our shares by a Korean holder would also require satisfactory
fulfillment of certain requirements under Korean law and regulation, including a
report filed to The Bank of Korea by the prospective purchaser who is a
non-resident of Korea and an approval from the Governor of the Financial
Supervisory Service exempting the shares to be sold from the Korean law
requirement to deposit the shares with the Korea Securities Depository. The
ability of prospective sellers of our shares to obtain such regulatory approval
and the timing in which such approval will take place are uncertain.

KOREAN FOREIGN EXCHANGE CONTROLS AND SECURITIES REGULATIONS

GENERAL
The Foreign Exchange Transaction Law of Korea and the Presidential Decree and
regulations established there under (collectively the ''Foreign Exchange
Transaction Laws'') regulate investment in Korean securities by non-residents
and issuance of securities outside Korea by Korean companies. Under the Foreign
Exchange Transaction Laws, non-residents may invest in Korean securities only to
the extent specifically allowed by such laws or otherwise permitted by the
Ministry of Finance and Economy. The Financial Supervisory Commission also has
adopted, pursuant to the delegated authority under the Securities and Exchange
Law of Korea, regulations that restrict investment by foreigners in Korean
securities and regulate issuance of securities outside Korea by Korean
companies.
Under the Foreign Exchange Transaction Laws, if the Government deems that
certain emergency circumstances are likely to occur, it may impose any necessary
restrictions such as requiring foreign investors to obtain prior approval from
the Ministry of Finance and Economy for the acquisition of Korean securities or
for the repatriation of interest, dividends or sales proceeds arising from
Korean securities or from disposition of such securities. Such emergency
circumstances include sudden fluctuations in interest rates or exchange rates,
extreme difficulty in stabilizing the balance of payments or a substantial
disturbance in the Korean financial and capital markets.

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

DIVIDEND TO BE DECLARED IN WON
We do not intend to pay dividends on our shares for the foreseeable future.
However, if we declare cash dividends, such dividends will be declared in Won.
In order for us to pay such dividends outside Korea, such dividends will be
converted into Dollars and remitted to the shareholders, subject to certain
conditions. We will convert dividend amounts in foreign currency and remit them
to shareholders abroad. No governmental approval is required for foreign
investors to receive dividends. However, in order for us to convert the Won
amount in foreign currency and to remit such amount abroad, relevant documents
must be submitted to the foreign exchange bank to verify (i) that the amount
being paid conforms to the amount required to be paid and (ii) whether all
necessary legal procedures have been completed.

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TAX CONSIDERATION

KOREAN TAXATION

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

TAXATION OF DIVIDENDS
For the purposes of Korean taxation of distributions of profits either in cash
or shares made on our shares, a non-resident holder will be treated as the owner
of our shares. Dividends paid (whether in cash or in shares) to a non-resident
holder are generally subject to withholding tax at a rate of 27.5% (which
includes a 10% local tax) or such lower rate as is applicable under a treaty
between Korea and such non-resident holder's country of tax residence. Such tax
is required to be deducted from such dividends and only the net amount is paid
to the non-resident holder of the common stock.
Under the income tax treaty between the United States and Korea (the "U.S.-Korea
Tax Treaty"), the maximum rate of withholding on dividends paid to U.S.
residents eligible for treaty benefits generally is 15% (10% if the recipient of
the dividends has owned at least 10% of the outstanding shares of the voting
stock of Vanex and certain other conditions are satisfied) which does not
include withholding of local tax. If local withholding tax is included, the
maximum rate of withholding is generally 16.5%. A beneficial owner of common
stock generally will be entitled to benefits under the U.S.-Korea Tax Treaty if
it (i) is an individual U.S. resident, a U.S. corporation, or a partnership,
estate or trust to the extent its income is subject to taxation in the United
States as the income of a U.S. resident; (ii) is not also a resident of Korea
for purposes of the U.S.-Korea Tax Treaty; (iii) is not subject to an
anti-treaty shopping article that applies in limited circumstances; and (iv)
does not hold common stock in connection with the conduct of business in Korea
through a permanent establishment or the performance of independent personal
services in Korea through a fixed base. Distributions of free shares
representing a transfer of certain capital reserves or asset revaluation
reserves into paid-in capital may be subject to Korean tax. However, stock
split, if any, will not be treated as dividends.

TAXATION OF CAPITAL GAINS
A non-resident holder will be subject to Korean taxation on capital gains
realized on a sale of the Company's shares rules the non-resident holder is
eligible for the benefits of an applicable tax treaty exempting such capital
gain tax. In addition, the capital gains realized from the transfer of shares
listed on certain foreign stock exchanges (including the Nasdaq National
Market), insofar as the transfer is complete through such stock exchanges, are
exempted form Korean Income taxation by virtue of the Tax Exemption and
Limitation Law.

Under the United States - Korea Tax Treaty, capital gains realized by holders
that are residents of the United States eligible for treaty benefits will not be
subject to Korean taxation upon the disposition of the Company's shares, with
certain exceptions. Residents of the United States who maintain a fixed base in
Korea for a period or periods aggregating 183 days or more during a taxable year
and the property giving rise to such gain is effectively connected with such
fixed base will not be eligible for the relief afforded by the treaty.

In the absence of any applicable treaty, a non-resident shareholder will
generally be subject to Korean taxation on capital gains realized on a sale of
the Company's shares at a rate equal of the lesser of 27.5% of the gains or 11%
of the gross sales proceeds.

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

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

INHERITANCE TAX AND GIFT TAX
Under Korean inheritance and gift tax laws, shares issued by Korean corporations
are deemed located in Korea irrespective of where they are physically located or
by whom they are owned. Therefore, Korean inheritance tax and gift tax are
imposed with respect to our shares. The taxes are imposed currently at the rate
of 10% to 45%, if the value of the relevant property is above a certain limit
and vary according to the identity of the parties involved. At present, Korea
has not entered into any tax treaty with respect to inheritance or gift tax.

WITHHOLDING OF TAXES
Under Korean tax law, holders of the Company's shares in the United States will
generally be subject to Korean withholding taxes on the capital gains and
dividend payments by the Company in respect of those shares, unless exempted by
a relevant tax treaty or the Tax Exemption and Limitation Law. Failure to
withhold Korean taxes may result in the imposition of the withholding tax itself
and 10% penalty tax, and, if prosecuted, a criminal penalty of an imprisonment
of up to one year and/or a fine up to the taxable amount, on the relevant
withholding agent. The Company, as payer of dividends, will act as withholding
agent for the collection of Korean tax on such dividend payment. The capital
gains realized from the transfer of shares listed and traded on the NASDAQ
National Market are exempt from Korean income taxation by virtue of the Tax
Exemption and Limitation Law. It is unknown at this time whether the law will
apply to Companies whose shares trade on the OTC-BB or Small Cap Market.

Korean tax law provides that, in case of transfer of Korean shares, the Korean
securities broker-dealer brokering such transfer, or if there is no such
securities broker-dealer, the purchaser is required to withhold the relevant
Korean capital gains taxes.

Because no Korean securities broker-dealer will be acting as withholding agent
for capital gains resulting from a transfer of the Company's shares through
OTC-BB, purchasers will be required to collect and pay taxes on those capital
gains unless they can demonstrate that the sellers are residents of countries
having a tax treaty with Korea exempting those capital gains from taxation.
Purchasers of the Company's shares through OTC-BB will not be able to identify
the country of residence of the previous owner of the purchased shares and will
therefore be liable for the payment of Korean taxes on the capital gains, if
any, resulting from their transactions. There is currently no practical means

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for Korean tax authorities or purchasers of the Company's shares to determine
the amount of capital gains, if any, resulting from purchases of the Company's
shares through OTC-BB.

UNITED STATES TAXATION

The following is a summary of material U.S. federal income tax consequence of
the purchase, ownership and disposition of our shares by a holder that is a U.S.
holder (as defined below). This summary is based on laws, regulations, rulings
and decisions now in effect, which are subject to change. The summary does not
purport to be a comprehensive description of all of the tax consideration that
may be relevant to a decision to purchase the shares. In particular, the summary
deals only with U.S. holders that hold the shares as capital assets and does not
address the tax treatment relevant to investors that are subject to special tax
rules, such as banks, insurance companies, dealers in securities, persons that
hold the shares as part of an integrated investment (including a straddle)
comprised of a share and one or more other positions, persons that have a
functional currency other than the Dollar and persons that own, directly or
indirectly, 10% or more of the shares.
Prospective purchasers of shares should consult their own tax advisors as to the
tax consequences of an investment in the shares in light of their particular
circumstance, including the effect of any state, local or other national laws.
For purposes of this summary, a U.S. holder is any beneficial owner of a share
that is (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity organized under the laws of the United States or any
State, (iii) an estate the income of which is subject to United States federal
income tax without regard to its source, or (iv) a trust subject to the primary
supervision of a United States court and the control of one or more United
States persons. The discussion below pertains only to U.S. holders and it does
not address any aspects of United States taxation other than federal income
taxation.

TAXATION OF DIVIDENDS
The gross amount of a distribution paid (including amounts withheld in respect
of Korean taxes) generally will be includible in the gross income of a U.S.
holder as foreign source dividend income to the extent of our current or
accumulated earnings and profits (as determined for United States federal income
tax purposes). Any such income will be includible in income on the date of
receipt and will not be eligible for the dividends received deduction generally
available to corporations. Dividends paid in Won will be includible in the
income of a U.S. holder in a Dollar amount calculated by reference to the
exchange rate in effect on the date they are received by the U.S. holder. If
dividends paid in Won are converted into Dollars on the day they are received,
U.S. holders generally should not be required to recognize any foreign currency
gain or loss. Any gain or loss resulting from currency exchange fluctuations
during the period from the date the dividend payment to the date such payment is
converted into U.S. dollars will be treated as U.S. source ordinary income or
loss.
Distributions in excess of current and accumulated earnings and profits will be
treated as a return of capital to the extent of the U.S. holders cost basis in
the shares and thereafter as capital gain.
Korean withholding tax on a distribution will be treated as a foreign income tax
that, subject to generally applicable limitations under U.S. tax law, is
eligible for credit against a U.S. holders U.S. federal income tax liability or,
at the U.S. holders election, may be deducted in computing taxable income. Under
new rules enacted or announced in 1997, foreign tax credits will not be allowed
for withholding taxes imposed in respect of certain short-term or hedged
positions and arrangements in which the holders expected economic profit, after
non-U.S. taxes, is insubstantial. Holders should consult their own advisors
concerning the implications of these rules in light of their particular
circumstances.
Distribution of U.S. holders of additional shares that are made as part of a pro
rata distribution to all of our shareholders generally will not be subject to
U.S. federal income tax.

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TAXATION OF CAPITAL GAINS
Gain or loss realized by a U.S. holder on the sale or other disposition of the
shares generally will be subject to U.S. federal income taxation as capital gain
or loss, and will be long-term gain or loss if the shares were held for more
than one year. Any such gain or loss will be U.S. source income or loss for
foreign tax credit limitation purposes. Prospective purchasers should consult
their tax advisors regarding the treatment of capital gains (which may be taxed
at lower rates than ordinary income for certain non-corporate U.S. holders) and
losses (the deductibility of which is subject to limitations).

PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
A passive foreign investment company is any foreign corporation if (i) at least
75% of its gross income in any taxable year is passive income or (ii) at least
50% of the average value of its assets is attributable to assets that produce
passive income or that are held for the production of passive income.
Whether VANEX is a PFIC in any year and the tax consequences relating to PFIC
status will depend on the composition of the income of VANEX. We believe that we
are not and will not become a PFIC, but this is a factual determination that
must be made annually and therefore is subject to change. Under the PFIC
taxation rules, a U.S. holder owning shares of a PFIC is subject to a special
U.S. federal income tax regime with respect to certain distributions received
from the PFIC and with respect to gain from the sale or disposition of PFIC
stock.
If VANEX is a PFIC for any taxable year during which a U.S. holder holds the
shares and such U.S. holder does not make a qualified election or mark-to-market
election discussed below, such U.S. holder will generally be subject to various
adverse U.S. tax consequences. Upon disposition of the shares, including a
disposition pursuant to an otherwise tax-free reorganization, or receipt of an
excess distribution (generally the amount of each distribution received by the
holder in any year that is greater than its ratable share of 125% of the average
annual distributions received by such holder in the three preceding years or its
holding period, if shorter), be subject generally to tax at the highest
applicable rate or rates of tax imposed on ordinary income as if the gain or
distribution were earned ratably over the period in which the shares were held
(including payment of an interest charge at the rate equal to the charge
generally applicable to underpayment of tax, on the deferred tax). A U.S. holder
who beneficially owns an interest in a PFIC also is ordinarily required to file
an annual information return on a Form 8621.
If VANEX is a PFIC, a U.S. holder may avoid the adverse U.S. tax consequences
set forth in the preceding paragraph by electing to have the PFIC treated, with
respect to the holders shareholding, as a Qualified Electing Fund and to report
currently such holders pro rata share of the PFICs ordinary earnings and net
capital gain even if such holder does not receive distribution (the qualified
election). A U.S. holder that makes a qualified election is taxed on its shares
of the corporations income only with respect to taxable years that the
corporation is a PFIC, and not in taxable years that VANEX does not constitute a
PFIC.

The qualified election is made on a shareholder-by-shareholder basis and can be
revoked only with the consent of the Internal Revenue Service. Each holder of
the shares should consult with his own tax advisor to decide whether to make a
qualified election. This election is made by attaching the shareholder election
statement, the PFIC annual information statement and Form 8621 to such
shareholders timely filed income tax return with a copy of the shareholder
election statement and Form 8621 being sent to the Internal Revenue
Service Center, P.O. Box 21086, Philadelphia, Pennsylvania 19114.
Alternatively, provided that the shares continue to be marketable (which
includes shares regularly traded on a U.S. national securities market), if VANEX
is a PFIC a U.S. holder may elect to include in current ordinary income at the
close of each taxable year that VANEX is a PFIC the amount by which the fair
market value of the shares exceed the U.S. holders adjusted tax basis in such
shares, and to deduct at the close of each year (to the extent of prior income
inclusions as a result of the election and subject to certain other limitations)
and excess of the adjusted basis in the shares over their fair market value at
such time (the market-to-market election). Because the market-to-market election
taxes a U.S. holder based on the appreciation in the value of the shares of the
PFIC, rather than the U.S. holders pro rata share of the PFICs ordinary earnings
and net capital gain, the market-to-market election may not be as desirable as
the qualified election in the case of a corporation like VANEX. The
market-to-market election must be made with respect to the first taxable year
that VANEX is a PFIC to avoid the adverse PFIC regime discussed above.
Although we expect that we will not be treated as a PFIC for any taxable year,
the determination of whether a corporation is a PFIC is made on an annual basis
and operations and business plans of VANEX may change. Therefore, no assurance
can be given that we will not be treated as a PFIC in this year or any
subsequent year. If we determine that it has become a PFIC for any taxable year,

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within two months after the end of each such taxable year it will supply the
PFIC annual information statement to all shareholders of record for each year
and will take any other reasonable steps necessary to facilitate the qualified
election.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Distributions made on the shares and proceeds from the sale of the shares that
are paid within the United States or through certain U.S. related financial
intermediaries to U.S. holders are subject to information reporting and may be
subject to a backup withholding tax unless, in general, the U.S. holder complies
with certain procedures or is a corporation or other person exempt from such
withholding. Holders that are not U.S. persons generally are not subject to
information reporting or backup withholding tax, but may be required to comply
with applicable certification procedures to establish that they are not U.S.
persons in order to avoid the application of such information reporting
requirements or backup withholding tax to payments received within the United
States or through certain U.S. related financial intermediaries.

UNDERWRITING

VANEX is offering the shares for sale on behalf of its shareholder holdings and
has not contracted with an underwriter or broker to assist the holders to
dispose of their shares. Accordingly, there will be no Underwriter discounts or
broker commissions paid out by VANEX and VANEX will receive no proceeds from any
sale of the shares offered by the selling shareholders.

This prospectus is not, and under no circumstances is to be construed as, an
advertisement or a public offering of the shares in Korea or any province or
territory thereof or in the United States or any state. Any offer or sale of the
shares in Korea or the United States may only be made pursuant to registration
or to an exemption from the requirement to file a prospectus in the province or
territory of Korea or any state in the United States in which such offer or sale
is made.
Prior to the offering, there has been no public market for the shares. The
initial public offering price for the shares will be determined by negotiation
between individual holders, their representatives and the purchaser. Among the
factors to be considered in such negotiations are:
- Prevailing market conditions;
- The market values of publicly traded companies that the parties
believe to be comparable to Guardian;
- The current state of Guardian's development and its current
financial condition;
- The history of and prospects for Guardian and the industry in
which it competes;
- The prospects for future revenues and earnings of Guardian; and
- Other factors deemed relevant.
Application is to be made to have the shares approved for quotation on the over
the counter Bulletin Board under a symbol to be applied for. Until the
distribution of the shares is completed, rules of the Securities and Exchange
Commission may limit the ability of certain selling group members to bid for and
purchase the shares.

LEGAL MATTERS

The validity of the shares offered hereby and other legal matters as to Korean
law will be passed upon for VANEX by Seoul International Law Firm, located at
Jang An Building, 1694-4, Seocho-dong, Seocho-gu, Seoul, Korea.

EXPERTS

Our financial statements as of December 31,2002 and for the period from February
21, 2001 (inception) to December 31, 2001are included in the prospectus in
reliance on the report of Shinhan Accounting Corporation, independent certified
public accountants, issued upon the authority of Shinhan Accounting Corporation
as experts in accounting and auditing.

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INFORMATION AVAILABLE TO THE PUBLIC

We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 under the Securities Act with respect to the shares
offered hereby. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in the registration
statement, and the exhibits and schedules thereto. You should refer to the
registration statement for further information. Statements contained in this
prospectus as to the contents of any contract or other document that is filed as
an exhibit to the registration statement are not necessarily complete, and each
such statement is qualified in all respects by reference to the full text of
such contract or document.

Upon declaration by the Securities and Exchange Commission of the effectiveness
of the registration statement, we will become subject to the periodic reporting
and other informational requirements of the United States Securities Exchange
Act of 1934, as amended. Under the United States Securities Exchange Act of
1934, as amended, we will be required to file reports and other information with
the Securities and Exchange Commission. Copies of the registration statement,
its accompanying exhibits, as well as such reports and other information, when
so filed, may be inspected without charge and may be obtained at prescribed
rates at the public reference facilities maintained by the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information regarding the Washington, D.C. Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. As a foreign private issuer, we are exempt from the rules under
the United States Securities Exchange Act of 1934, as amended prescribing the
furnishing and content of proxy statements, and officers, directors and
principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act.
We will furnish our shareholders with our annual reports, which will include a
review of operations and annual audited financial statements prepared in
conformity with accounting principles generally accepted in the United States.
We will also furnish our shareholders with our semi-annual or quarterly reports
submitted to the Securities and Exchange Commission or NASD.

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VANEX CO., LTD.

FINANCIAL STATEMENTS

For the period from incorporation on February 21, 2001 to December 31, 2001
and for the year ended December 31, 2002

[Download Table]

Table of Contents

Independent Auditors' Report 49

Balance Sheets 50

Statements of Operations and Comprehensive Income 52

Statements of Cash Flow 54

Statements of Stockholders' Equity 56

Notes to Financial Statements 57

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AUDITORS' REPORT

TO THE DIRECTORS OF:
VANEX Co., Ltd.

We have audited the accompanying balance sheets of VANEX Co., Ltd.("the
Company") as of December 31, 2002 and 2001 and the related statements of
operations and comprehensive income, stockholders' equity and cash flows for the
year ended December 31 2002 and for the period from incorporation on February
21, 2001 to December 31, 2001. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VANEX Co., Ltd. as of December
31, 2002 and 2001, and the results of its operations and its cash flow for the
year ended December 31 2002 and for the period from incorporation on February
21, 2001 to December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.

/s/
Shinhan Accounting Corporation
Certified Public Accountant
Republic of Korea
February 24, 2003, except for Note 13 which is as of March 3, 2003.

Il-Heung bldg. Suite #8
126-1 ChungMu-Ro 4Ka, Chung-Ku
Seoul, Korea

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VANEX Co., Ltd.
BALANCE SHEETS
--------------
As of December 31, 2002 and 2001
(in US Dollars)

2002 2001

Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 31,907 $ 586,047
Accounts receivable, net of allowance for doubtful
accounts of $12,962 in 2002 and $5,285 in 2001 . . . . . . . . . . . . . . 1,367,194 581,257
Prepaid expenses(Note 3). . . . . . . . . . . . . . . . . . . . . . . . . 419,663 34,287
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,245 -
Note receivable - related . . . . . . . . . . . . . . . . . . . . . . . . 83,306 -
Income tax refund receivable(Note10). . . . . . . . . . . . . . . . . . . 30,853 -
Interest receivable - related (Note 11) . . . . . . . . . . . . . . . . . 5,345 -
Costs and estimated earnings in excess of billings(Note 4). . . . . . . . - 34,935
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,530 -
----------- --_--------
2,146,043 1,236,526
----------- -----------

Property, plant and equipment (Note7):

Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,210 108,946
Building and structure. . . . . . . . . . . . . . . . . . . . . . . . . . 555,045 492,012
Tools and transportation equipment. . . . . . . . . . . . . . . . . . . . 58,112 33,565
Furniture and fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . 77,550 43,213
Accumulated depreciation of property, plant and equipment . . . . . . . . (89,531) (17,920)
---------- ---------
720,386 659,816
---------- ---------

Other non-current assets:
Long-term bank deposits(Notes 5). . . . . . . . . . . . . . . . . . . . . 38,987 8,375
---------- ---------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,905,416 $1,904,717
------------- -----------

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VANEX Co., Ltd.
BALANCE SHEETS
--------------
As of December 31, 2002 and 2001
(in US Dollars)
(CONTINUING)
2002 2001
------- ------

Current liabilities:
Accounts payable and other accrued liabilities(Note 6). . . . . . . . .. 1,154,683 $ 297,641
Billings in excess of costs and estimated earnings (Note 4) . . . . . . . - 57,959
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50,890
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . - 20,532
Current portion of long-term debts (Note 7) . . . . . . . . . . . . . . . 333,222 -
--------- --------
1,487,905 427,022
Long-term debts (Note 7). . . . . . . . . . . . . . . . . . . . . . . . . . 607,298 604,492
--------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,095,203 1,031,514
----------- -----------

Stockholders' equity:
Common stock 100($0.0762) par value,. . . . . . . . . . . . . . . . . . . 971,268 765,565
100,000,000 shares authorized,
12,723,300(10,000,000 in 2001) shares issued and outstanding (Note 8, 12)

Additional paid-in capital (Note 8) . . . . . . . . . . . . . . . . . . . 170,540 -

Accumulated earnings(deficit) . . . . . . . . . . . . . . . . . . . . . . (323,540) 125,291

Other accumulated comprehensive loss. . . . . . . . . . . . . . . . . . . (8,055) (17,653)
-------- ----------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 810,213 873,203
--------- ----------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . 2,905,416 $1,904,717
============ ===========

<FN>
"See accompanying summary of accounting policies and notes to financial statements"

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VANEX Co., Ltd.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
-------------------------------------------------
For the period from incorporation on February 21, 2001 to December 31, 2001
and for the year ended December 31, 2002

2002 2001
------- ------

Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,268,892 $9,761,958

Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . 5,023,220 9,371,203
---------- -----------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 245,672 390,755
---------- -----------
Selling and administrative expenses

Wages and salaries . . . . . . . . . . . . . . . . . . . . . . 103,410 54,297
Employee benefit . . . . . . . . . . . . . . . . . . . . . . . 32,166 24,941
Entertainment. . . . . . . . . . . . . . . . . . . . . . . . . 46,080 29,676
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 69,661 2,701
Public dues. . . . . . . . . . . . . . . . . . . . . . . . . . 21,302 10,248
Depreciation of property, plant and equipment. . . . . . . . . 32,892 15,105
Research and development . . . . . . . . . . . . . . . . . . . 129,448 83,526
Transportation expenses. . . . . . . . . . . . . . . . . . . . 69,269 17,199
Bad debts. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,676 5,285
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,277 55,020
---------- -----------
574,181 297,998
---------- -----------
Operating income(loss) . . . . . . . . . . . . . . . . . . . . . -328,509 92,757
---------- -----------
Other income(expenses) . . . . . . . . . . . . . . . . . . . . . 10,251 38.520
Interest income. . . . . . . . . . . . . . . . . . . . . . . . (46,625) (205)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (102,939) -
Loss from impairment of investment . . . . . . . . . . . . . . (2,212) 15,422
---------- -----------
Other items. . . . . . . . . . . . . . . . . . . . . . . . . . -141,525 53,737
---------- -----------
Income(loss) before income taxes . . . . . . . . . . . . . . . . -470,034 146,494
---------- -----------
Income taxes expense (recovery)(Note 10) . . . . . . . . . . . (21,203) 21,203
---------- -----------
Net Income(loss) . . . . . . . . . . . . . . . . . . . . . . . . (448,831) 125,291
---------- -----------

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VANEX Co., Ltd.

2002 2001
------- ------

Other comprehensive income (loss)
Foreign exchange translation gain (loss) . . . . . . . . . . . 9,598 (17,653)
--------- -----------
Comprehensive income (loss). . . . . . . . . . . . . . . . . . .$ (439,233) $ 107,638
============ ===========
Basic and diluted earnings(loss) per share . . . . . . . . . . .$ -0.04 $ 0.02
============ ===========
Weighted average number of shares outstanding-basic and diluted. 12,290,550 7,961,650
============ ===========
<FN>

"See accompanying summary of accounting policies and notes to financial statements"

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VANEX Co., Ltd.
STATEMENTS OF CASH FLOW
-----------------------
For the period from incorporation on February 21, 2001 to December 31, 2001
and for the year ended December 31, 2002

(in U.S. Dollars)

Cash flows from operating activities: 2002 2001
----------- ----------

Net income(loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (448,831) $ 125,291

Adjustments to reconcile net income(loss) to net cash
provided by operating activities:
Depreciation of property, plant and equipment. . . . . . . . . . . . . 32,892 14,791
Depreciation expense included in cost of goods sold.. . . . . . . . . 38,719 3,129
Bad debts expense. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,676 5,285
Loss from impairment of investment in joint a venture project. . . . . 102,938
Changes in non-cash working capital items :
Decrease(Increase) in accounts receivable. . . . . . . . . . . . . . . (785,937) (586,542)
Decrease(Increase) in prepaid expenses . . . . . . . . . . . . . . . . (385,376) (34,287)
Decrease(Increase) in inventories. . . . . . . . . . . . . . . . . . . (195,245) -
Decrease(Increase) in notes receivable -related. . . . . . . . . . . . (83,306) -
Decrease(Increase) in income tax refund receivable . . . . . . . . . . (30,853) -
Decrease(Increase) in interest receivable -related . . . . . . . . . (5,345)
Decrease(Increase) in costs and earned gross profit in excess of billings. 34,935 (34,935)
Decrease(Increase) in other current assets . . . . . . . . . . . . . . . (12,530) -
Increase(Decrease) in accounts payable and
other accrued liabilities. . . . . . . . . . . . . . . . . . . . . 857,042 297,641
Increase(Decrease) in billings in excess of costs and earned gross profit. (57,959) 57,959
Increase(Decrease) in customer deposits. . . . . . . . . . . . . . . . . (50,890) 50,890
Increase(Decrease) in income taxes payable . . . . . . . . . . . . . . (20,532) 20,532
----------- ----------
Net cash provided by operating activities. . . . . . . . . . . . . . . (1,002,602) (80,246)
------------ ----------

Cash flows from investing activities:
Acquisitions of property, plant and equipment. . . . . . . . . . . . . . (132,181) (677,736)
Investment in a joint venture project. . . . . . . . . . . . . . . . . (102,938)
Increase in long-term bank deposits. . . . . . . . . . . . . .. . . . . (30,612) (8,375)
------------ ----------
Net cash used in investing activities. . . . . . .. . . . . . . . . . (265,731) (686,111)
------------ ----------

Cash flows from financing activities:
Long-term debt borrowings. . . . . . . . .. . . . . . . . . . . . . . . 336,028 604,492
Issuance of common stock, net. . . . . . . . . . . . . . . . . . . . . 376,243 765,565
------------ ----------
Net cash provided by financing activities. . . . . . . . . . . . . . 712,271 1,370,057
------------ ----------

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VANEX Co., Ltd.
STATEMENTS OF CASH FLOW
-----------------------
For the period from incorporation on February 21, 2001 to December 31, 2001
and for the year ended December 31, 2002

(in U.S. Dollars)
(CONTINUING)

Net Increase(Decrease) in cash and cash equivalents. . . . . . . . . . . . . . (563,738) (603,700)
Effect of exchange rate changes on cash balance. . . . . . . . . . . . . . . . 9,598 (17,653)
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . 586,047 -
------------ ----------
Cash and cash equivalents at end of the year . . . . . . . . . . . . . . . . . $ 31,907 $ 586,047
============ ==========

Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes . . . . . . . . . . . . . . . . . $ 30,853 $ -
============ ==========
Cash paid during the year for interest . . . . . . . . . . . . . . . . . . . $ 45,591 $ 205
============ ==========
*Cash and cash equivalents are comprised of:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,616 $ 2,694
Term deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,291 583,353
============ ==========
$ 31,907 $ 586,047
============ ==========

<FN>

"See accompanying summary of accounting policies and notes to financial statements"

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VANEX Co., Ltd.
STATEMENTS OF STOCKHOLDER'S EQUITY
-----------------------------------
For the period from incorporation on February 21, 2001 to December 31, 2001 and for the year ended December 31, 2002
(in US Dollars)

Other
Additional Retained accumulated Accumulated
Common Stock Issued Paid-in Earnings Comprehensive Stockholders'
Shares Amount Capital (Deficit) Income (loss) Equity(Deficit)
------------------ ---------- ----------------- -------------- -------------- -----------------

- - - - - -
Balance at February 21, 2001. . . . $ $ $ $ $ $

Private Placements 10,000,000 765,565 - - - 765,565
Net income (loss) . . . . . . . .. 125,291 125,291
Other comprehensive income (loss)
Foreign exchange translation loss. (17,653) (17,653)
------------ ---------- ---------- ------------- ------------- ---------
Balance at December 31, 2001. . . 10,000,000 $765,565 $ - $ 125,291 $ (17,653) 873.203
Private Placements 2,723,300 205,703 170,540 376,243
Net income (loss) . . . . . . . . (448,831) (448,831)
Other comprehensive income (loss)
Foreign exchange translation gain 9,598 9,598
------------------- -----------
Balance at December 31, 2002. . . 12,723,300 $971,268 $ 170,540 $ (323,540) $ (8,055.00) $ 810,213
=============== =========== ========== =============== ============= =========

<FN>

"See accompanying summary of accounting policies and notes to financial statements"

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VANEX Co., Ltd.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001

1. OPERATIONS

VANEX Co. Ltd. (the "Company") was incorporated on February 21, 2001 under the
law of the Republic of Korea. The Company specializes in providing total system
integration services for clients in the digital and Internet broadcasting
industry. The Company provides customers with services for totally integrated
broadcasting systems, from planning and consulting to design of the systems,
supply of software and hardware, and construction. The Company offers
maintenance and operations support services but has not provided these services
to date. The Company also develops software products, which will become a basis
for various system integration services provided to its clients.

As at December 31, 2002, the Company operated in one industry segment, total
system integration. The Company's identifiable assets are located in one
geographic area, the Republic of Korea (also known as South Korea). The
Company's revenues and net income also relate to business operations in the
Republic of Korea. In the year ended December 31, 2002, three significant
customers accounted for revenue of $4,031,938, which is 76.52% of the total
revenue: $ 1,988,077(37.73% of the total revenue), from Korea Digital
Broadcasting; $ 1,435,198 from (27.24% of the total revenue) and $ 608,663.
One customer accounted for revenue of $ 9,668,998 in the period ended December
31, 2001.

2. BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of financial statements

The Company maintains its books of account in accordance with accounting
principles generally accepted in the Republic of Korea ("Korean GAAP"). The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").

(b) Translation of financial statements and foreign currency

The accompanying financial statements have been translated into U.S. dollars in
accordance with SFAS No.52. All assets and liabilities are translated at the
current exchange rates at the date of translation. The exchange rate applied as
of December 31, 2002 and 2001 were 1,200.40/US$1 and 1,326.1/US$1,
respectively. Elements of income are translated at weighted average exchange
rates for the period. The exchange rate applied for the period were
1,255.21/US$1 for 2002 and 1,290.83/US$1 for 2001. Equity accounts other than
accumulated earnings are translated at historical exchange rates. The resulting
translation adjustment is recognized as a component of other comprehensive
income.

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

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist of cash. The Company maintains cash accounts at two
financial institutions. The Company periodically evaluates the credit worthiness
of financial institutions, and maintains cash accounts only in large high
quality financial institutions, thereby minimizing exposure for deposits in
excess of federally insured amounts. The Company believes that credit risk
associated with cash is remote.

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Accounts receivable are concentrated with Korean companies operating in the
digital and Internal broadcasting industries. The Company only grants credit to
customers who are believed to be creditworthy.

(d) Use of estimates

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

(e) Allowance for doubtful accounts

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

(f) Cash equivalents

Cash equivalents of $30,291 at December 31, 2002 (2001 - $583,353) consist of
certificates of time deposit with an initial term of less than three months. For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of 90 days or less to be cash
equivalents.

(g) Value - Added Taxes

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

(h) Inventories

Inventories, which consist of parts and components held for resale to clients,
are stated at the lower of net realizable value and actual cost as determined by
the First-in First-out method, except for materials in transit, which are valued
by the specific identification method.

(i) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation of property plant and equipment is provided using the declining
balance method over the following estimated useful lives:

Years
Building 40
Other tangible assets 5

Expenditures that prolong the useful lives or enhance the value of property
plant and equipment are capitalized, while expenditures incurred for routine
maintenance are expensed in the year in which they are incurred. Total
depreciation expenses incurred during 2002 and 2001 are $71,611 and $17,920.
Depreciation expenses included in the costs of sales are $38,719 and $3,129 in
2002 and 2001, respectively.

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(j) Impairment of long-lived assets

When events and circumstances warrant a review, the Company evaluates the
carrying value of its long-lived assets in accordance with SFAS 144. The
carrying value of a long-lived asset is considered impaired when the anticipated
undiscounted cash flow from use is less than its carrying value. In that event,
a charge to earnings is recognized based on the amount by which the carrying
value exceeds the estimated fair value.

(k) Stock option plan

The Company applies the intrinsic value-based method of accounting prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations, in accounting for its fixed stock
option plan. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. SFAS No.123, "Accounting for Stock-Based Compensation,"
established accounting and disclosure requirements using a fair value-based
method of accounting for stock-based employee compensation plans. As allowed by
SFAS No. 123, the Company has elected to continue to apply the intrinsic
value-based method of accounting described above, and has adopted the disclosure
requirements of SFAS No. 123.

(l) Software development costs

The Company accounts for costs of developing computer software to be marketed in
accordance with SFAS No. 86. All costs to establish the technical feasibility of
computer software are charged to earnings as research and development costs.
Costs incurred after establishing technical feasibility are capitalized as
intangible assets until such time as the product becomes available for sale to
customers. Capitalized costs are amortized over the estimated lives of the
associated software product using the straight-line method. The amortization of
capitalized costs will begin once commercial sales of the software product
begin.

(m) Revenue recognition

The Company products and services are generally sold as a part of a contract .
The Company recognizes revenue in accordance with Statement of Position (SOP)
81-1 Accounting for Performance of Construction-Type and Certain Production-Type
Contracts.

Contract revenue is recognized using the percentage of completion method. The
degree of completion is determined based on costs incurred, excluding costs that
are not representative of progress to completion, as a percentage of total costs
anticipated for each contract. Complete provision is made for losses on
contracts in progress when such losses first become known.

(n) Income taxes

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

(o) Earnings (loss) per share

Basic earnings (loss) per common shares are calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
year.

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(p) Fair value of financial instruments

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

(i) Cash and cash equivalents, accounts receivable, advance payments, accounts
payable and other accrued liabilities, and advance received.

The carrying amount approximates fair value because of the nature and short
maturity of those instruments

(ii) Long-term debts and long-term bank deposits.

The fair values of long-term debts, $607,298 in 2002 and $604,492 in 2001, and
long-term bank deposits, $38,987 in 2002 and $8,375 in 2001, are estimated based
on the quoted market prices for the same or similar issues.

(q) Recent Accounting Pronouncement

In June 2001, the FASB approved for issuance SFAS 143, "asset Retirement
Obligations." SFAS 143 establishes accounting requirements for retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability recognition, (2) initial measurement of the liability, (3)
allocation of assets retirement cost to expense, (4) subsequent measurement of
the liability and (5) financial statement disclosure. SFAS 143 requires that an
asset retirement cost should be capitalized as part of the cost of the related
long-lived asset and subsequently allocated to expense using a systematic and
rational method. The provisions of SFAS 143 are effective for financial
statements issued for fiscal years beginning after June 15, 2002. The adoption
of SFAS 143is not expected to have a material effect on the Company's financial
position, results of operations or cash flows.

In June 2002 the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities, except those
incurred in connection with a purchase business combination. The standard
requires that a liability for costs associated with an exit or disposal activity
be recognized and measured initially at its fair value in the period in which
the liability is incurred. The provisions of this standard are effective for
exit or disposal activities initiated after December 31, 2002. SFAS 146 will
impact the Company's financial statements if and when future restructuring
activities occur.

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

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3. PREPAID EXPENSES

Prepaid expenses at December 31, 2002 and 2001 consisted of the following:

[Download Table]

2002 2001

Prepaid consulting fees and services (1) $416,526 $ -
Others 3,137 34,287
Total $419,663 $34,287

Note) Prepaid consulting fees and services has been made to a Vancouver based
consulting firm with regard to coordination of process of going public in the
U.S. market and other consulting services to be received. The services are
estimated to be rendered until November of 2003.

4. CONTRACTS IN PROGRESS

The contracts in progress on December 31, 2002 and 2001 are as follows:

[Download Table]

2002 2001
------------ ------------

Contracts in progress at December 31:
Costs incurred on contracts in progress. . . . . . . . . $ - $9,461,335
Estimated gross profit . . . . . . . . . . . . . . . . . - 242,598
------------ ------------
- 9,703,933
------------ ------------
Progress billings. . . . . . . . . . . . . . . . . . . . - 9,726,957
------------ ------------

Costs and earned gross profit in excess of billings. . . $ - ($23,024)
(Billings in excess of costs and earned gross profit) on ============ ============
contract in progress

Comprised of :
Costs and earned gross profit in excess of billings. . . $ - $ 34,935
============ ============
Billings in excess of costs and earned gross profit. . . ($57,959)
------------ ============
$ - ($23,024)
============ ============

5. LONG-TERM BANK DEPOSITS

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Long-term bank deposits represent funds, which are reserved on a voluntary basis
to pay severance payments for its employees.

6. ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

Accounts payable and other accrued liabilities at December 31, 2002 and 2001 are
summarized as follows:

[Download Table]

2002 2001
---------- --------

Accounts payable - trade 1,058,651 $147,885
Accounts payable - other 58,943 40,176
V.A.T Withholdings . . . 29,816 101,005
Accrued expense. . . . . 3,148 2,507
---------- --------
Total. . . . . . . . . . $1,150,558 $291,573
========== ========

[Enlarge/Download Table]

7. LONG-TERM DEBTS
2002 2001

HaNa Bank, bearing interest at 6.9% per annum, payable
quarterly, denominated in Korean Won and collaterized
by a pledge of building and structure, due December 28, 2003 $333,222 $304,530

Kuk-Min Bank, bearing interest at 4.82% per annum,
payable quarterly, with principal repayable in three installments
of $202,432 each due on September 15, 2004, 2005 and 2006,
denominated in Korean Won 607,298 299,962
-------- --------

940,520 604,492
Less: current portion 333,222 -
-------- --------

$607,298 $604,492
======== ========

The long-term debt with Kuk-Min Bank is guaranteed by Inzi Display Co. Ltd.
("Inzi"), a former shareholder. Inzi receives no compensation for providing
this guarantee, see Note 11.

The Company is obligated to make the following principal payments on its
long-term debt in each of the next four fiscal years ended:

December 31, 2003 $333,222
December 31, 2004 202,432
December 31, 2005 202,433
December 31, 2006 202,433
--------
$940,520
========

8. COMMON STOCK

(a) At the time of incorporation on February 21, 2001 the Company issued
1,000,000 common shares for cash of $ 82,068.

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(b) On March 18, 2001 the Company issued 9,000,000 common shares for cash of
$683,497 net of stock issue costs of $10,872.
(c) On February 27, 2002 the Company issued 2,723,300 common shares for cash of
$377,671 net of stock issue costs of $1,428.

9. STOCK OPTIONS

Under the Company's Articles of Incorporation, the Company may grant options for
the purchase of shares to certain qualified officers and employees. In order to
qualify for participation in the Stock Option Plan, officers and employees must
have the ability to contribute to the establishment, development or
technological innovation of the Company.

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The specific terms and conditions of stock options granted under the Stock
Option Plan shall be approved at a duly convened shareholders' meeting. The
maximum aggregate number of shares available for issuance under the Stock Option
Plan may not exceed 50% of the total number of shares outstanding. Stock options
may not be granted to all officers and employees at the same time. Any single
officer or employee may not be granted stock options for shares exceeding 10% of
shares issued and outstanding.

The option exercise price shall not be less than the greater of the market price
of shares valued as of the date of the grant or the par value of the shares
concerned. Under the terms of the Plan, the options vest at the end of the third
year from the date of grant and are exercisable for a period of 7 years from the
date they become vested.

The Company has not issued stock options up to December 31, 2002 from
incorporation on February 21 2001.

10. INCOME TAXES

At December 31,2002 the Company has unused loss carryforwards for income tax
purposes of $327,566. If unused these loss carryforwards will expire after the
2007 fiscal year. The benefit of these loss carryforwards has not been
recognized in the financial statements.

The following is a reconciliation of the expected provision for (recovery of)
income taxes to the actual provision (recovery) for the years ended December 31,
2002 and 2001:

[Download Table]

2002 2001
====== ======

Expected income tax expense (recovery) at
statutory income tax rates $(143,662) $ 43,509
Effect of reduced income tax rate on income
below W100,000,000 10,996 (10,226)
Non-deductible expenses 23,516 (22,733)
Loss carryforwards 87,947 10,653

Actual income tax expense (recovery) $ (21,203) $ 21,203
---------- ---------

The potential benefit of the loss carryforwards of $ 87,947 is not recognized in
these financial statements, as there is no reasonable assurance the potential
benefit will be realized. A valuation allowance of $ 87,947 has therefore been
provided.

11. RELATED PARTY TRANSACTIONS

As of December 31, 2002, notes receivable of $ 83,306 is due from Inzi Display
Co. Ltd. ("Inzi Display"). The notes bear interest at 11% per annum and $ 5,345
of interest income was receivable at December 31, 2002. Inzi Display is a former
shareholder and a director of the Company was an officer of Inzi Display until
December 2002. See Note 7.

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12. SUBSEQUENT EVENT

Subsequent to year-end, the Company split its stock on a 50 for 1 basis. In
addition, the Company increased its authorized share capital from 1 million to
100 million shares. All share figures in these financial statements have been
restated accordingly.

13. INTEREST RATE RISK AND FOREIGN CURRENCY RISK

The Company's monetary assets and liabilities are denominated in Korean Won and
therefore do not expose the Company to foreign exchange risk.

Long-term debts bear interest at fixed rates and therefore do not expose the
Company to interest rate cash flow risk.

14. RISK AND UNCERTAINTIES

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

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Outside Back Cover Page

PROSPECTUS
----------

You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information that is different. This
prospectus may only be used where it is legal to sell these securities. The
information in this prospectus may only be accurate on the date of this
prospectus.

The selling shareholders are not offering their shares where the offer is not
permitted.

DEALER PROSPECTUS DELIVERY OBLIGATION

Until_______ , 2003, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and Bylaws contain provisions that limit the
liability of directors for monetary damages and provide for indemnification of
officers and directors. Every director or other officer of Vanex Co., Ltd.
shall be indemnified out of the assets of the Company against any liability
incurred by him in defending any proceedings, whether civil or criminal, in
which judgment is given in his favor, or the proceedings are otherwise disposed
of without any finding or admission of any material breach of duty on his part,
or in which he is acquitted or in connection with any application in which
relief is granted to him by the court from liability for negligence, default,
breach of duty or breach of trust in relation to the affairs of the Company.

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES
The securities of the Registrant that were sold by the Registrant since its
inception on February 21, 2001 and not registered under the Securities Act of
1933 are described below. All of the securities described below were offered and
issued outside the United States to individuals or entities who were not
citizens or residents of the United States.

[Enlarge/Download Table]

DATE SECURITIES SOLD NUMBER AND CLASS OF SECURITIES CONSIDERATION RECEIVED BY COMPANY

March 18, 2001 (a) 200,000 common shares $ 765,565
(10,000,000*)
February 27, 2002 (b) 54,466 common shares $ 376,243
(2,723,300*)

(a) On March 18, 2001 shortly after the inception of the Company, 200,000
shares (10,000,000 post split) of the common stock were issued at par, pursuant
to the exemption from registration contained within Section 4(2) of the
Securities Act of 1933. These shares were issued to individuals who established
the Company for a total consideration of $765,565. The details of the stock
issuances are as follows:

[Download Table]

Name of Purchaser Class of Stock Number of Shares

Soners Technologies Inc. Common 158,000 (7,900,000 post split)
Park, Kyu Tae Common 10,000 (500,000 post split)
Yoon, Seok Jae Common 10,670 (533,500 post split)
Baek, Nam Chul Common 10,665 (533,250 post split)
Hyun, Soo Hye Common 10,665 (533,250 post split)

(b) Additionally, on February 27, 2002 an additional 54,466 shares
(2,723,300 post split) were issued at $ 6.91per share ($0.138 per share: post
split), resulting in an increase of the capital of $205,703 and additional
paid-in capital of $170,540. These shares were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933 as the shares were not a part of a
public offering. The details of the stock issuances are as follows:
Name of Purchaser Class of Stock Number of Shares

[Download Table]

Name of Purchaser Class of Stock Number of Shares

Yoo, Jae Seon Common 15,256 (762,800 post split)
Song, Hyun Joo Common 11,653 (582,650 post split)
Chun, Sung Joon Common 6,320 (316,000 post split)
Han, Tae Ock Common 6,000 (300,000 post split)
Seo, Hyun Sung Common 15,237 (761,850 post split)

On July 29, 2002, Soners Technologies Inc. transferred all of its shares of
Vanex to Delaware Media, Inc. Park, Kyu Tae purchased 54,466 shares; 15,256
shares from Yoo, Jae Seon; 11,653 shares from Song, Hyun Joo; 6,320 shares from
Chun, Sung Joon; 6,000 shares from Han, Tae Ock; and 15,237 shares from Seo,
Hyun Sung.

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On September 13, 2002, Delaware Media, Inc. transferred 106,909 shares of Vanex
as follows: 23,637 shares to Kim, Hoon Sang; 20,414 shares to Choi, Sun Joo;
20,414 shares to Hyun, Hye Sook; 20,357 shares to Oh, Seung Hee; 12,087 shares
to Kim, Jae Hyun; 1,490 shares to Cho, Hong; 1,490 shares to Kim, Woong; 1,260
shares to Seo, Hyun Sung; 660 shares to Cha, Seong Min; 660 shares to Lee, Tae
Heon; 660 shares to Lee, Tae Hyun; 660 shares to Choi, Jae Seong; 660 shares to
Choi, Hyun Chul; 660 shares to Song, Chang Seop; 400 shares to Ha, Young Jin;
400 shares to Yoon, Young Deuk; 400 shares to Park, Sang Noh; 200 shares to
Bang, Hyun Hee; 200 shares to Choi, Yoon Sook; and 200 shares to Lee, Sung Hee.

ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

[Enlarge/Download Table]

(a) Exhibits.

Exhibit Number Description

3.1 .Articles of Incorporation of the Registrant (including English translation).*
5.1 .Opinion of Seoul International Law Firm, Korean counsel to the Registrant.
23.1 Consent of Seoul International Law Firm, Korean counsel (included in Exhibit 5.1).
23.2 Consent of Shinhan Accounting Corporation*
<FN>
* Previously filed

(b) Schedule II "Valuation and Qualifying Accounts"

[Enlarge/Download Table]

Balance at
Allowance for beginning of Charged to costs Deductions/Write- Balance at end of
Doubtful Accounts period and expenses offs of accounts period
----------------- ------------------

--------------------------------------------------------------------------------------------
December 31, 2002 $ 5,285 $ 7,676 - $ 12,962
<FN>

There are no undisclosed reserves other than the allowance for doubtful accounts

ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) (Sec.230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

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(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) To file a post-effective amendment to the registration statement
to include any financial statements required by Sec.210.3-19 of
this chapter at the start of any delayed offering or throughout a
continuous offering. Financial statements and information
otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the
prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Seoul, Korea, on December 24, 2003.
VANEX CO., LTD.

/s/
NAME: KYU-TAE PARK
Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on December 24, 2003.

SIGNATURE AND TITLE

/s/Kue Tae Park
KYU TAE PARK
Director and CEO

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/s/ Hong Cho
HONG CHO
Director

/s/ Woong Kim
WOONG KIM
Director

SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly
authorized representative in the United States of America VANEX Co., Ltd. has
signed this Registration Statement or amendment thereto in the City of
Vancouver, Province of British Columbia, on December 24, 2003. Target Group

/s/ Hyun J. You
NAME:Hyun J. You
TITLE: MANAGING DIRECTOR

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EXHIBITS INDEX

Exhibit Number Description

[Enlarge/Download Table]

3.1 Articles of Incorporation of the Registrant (including English translation).*
5.1 Opinion of Seoul International Law Firm, Korean counsel to the Registrant.
23.1 Consent of Seoul International Law Firm, Korean counsel (included in Exhibit 5.1).
23.2 Consent of Shinhan Accounting Corporation.
<FN>
* Previously filed

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END OF FILING

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This F-1/A Filing	Date	First	Last	Other Filings

	6/30/97	14
	12/16/97	14
	12/31/97	14
	2/21/01	6	67
	3/18/01	63	67
	12/11/01	26
	12/21/01	25
	12/28/01	26
	12/31/01	8	64
	2/27/02	63	67
	6/15/02	29	60
	7/29/02	67
	8/20/02	26
	9/13/02	68
	12/15/02	29	60
	12/31/02	8	68
	1/1/03	24	30
	1/15/03	31
	2/24/03	49
	3/3/03	49
	3/31/03	35
	5/31/03	29	61
	6/15/03	29	61
	6/20/03	35
	6/30/03	19	61
	7/1/03	37
	9/30/03	24	30
	12/10/03	34
	12/19/03	18
Filed On	12/24/03	1	70
Filed As Of	12/26/03
	12/28/03	62
	12/31/03	27	62
	9/15/04	62
	12/31/04	27
	9/15/05	62
	3/1/06	36
	3/30/06	36
	9/15/06	62

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Vanex Co Ltd · F-1/A · On 12/24/03

Filed On 12/24/03 6:58pm ET · SEC File 333-107121 · Accession Number 1212785-3-3

Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer · Form F-1Filing Table of Contents

F-1/A · Pre-Effective Amendment to Registration Statement of a Foreign Private IssuerDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer · Form F-1
Filing Table of Contents

F-1/A · Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer
Document Table of Contents