Korea is one of the most advanced countries in the world in terms of the percentage of Internet users and broadband Internet penetration rate. According to the Korea Network Information Center, the number of Internet users in Korea reached 33.0 million as of December 31, 2005, or approximately 68.4% of Korea’s total population. In addition, Korea had the second highest broadband Internet penetration rate among the member countries of the Organization for Economic Co-operation and Development in December 2005, with approximately 25.4 broadband subscribers per 100 inhabitants. The popularity of the Internet and high broadband Internet penetration rate have allowed companies in Korea to generate revenues from a variety of services over the Internet, including e-commerce, online advertising, online gaming, video-on-demand and other multimedia entertainment services.

The Internet has emerged as a popular medium for conducting commercial transactions in Korea, in particular for retail e-commerce transactions. The ability to reach a large number of customers at a relatively low cost has made retail e-commerce an attractive sales and marketing channel. According to the Korea National Statistical Office, there were 4,335 online shopping malls that constituted the retail e-commerce industry in Korea accounting for a total GMV of approximately Won 10.7 trillion for the year ended December 31, 2005. The total GMV for the retail e-commerce industry in Korea was Won 7.7 trillion in 2004 and is estimated to become Won 14.6 trillion in 2008, according to the Korea Information Strategy Development Institute. GMV for the retail industry as a whole in Korea was Won 143.5 trillion in 2004 according to the Korean National Statistical Office and is estimated to become Won 168.7 trillion in 2008, according to Euromonitor International.

The evolution of the retail e-commerce industry in Korea is similar to that in the United States. The purchase and sale of goods between and among consumers and retailers have, until recently, been conducted at retail shops, department stores and discount stores. For buyers, these forums generally require face-to-face interactions and significant amount of time and effort in researching product attributes, product availability and prices. For sellers, such forums generally involve higher real estate, labor and inventory costs, with potential sales being limited by the number of outlets as well as hours of operation.

The Company’s GSM program, which is available for download on its website at no charge, is the backbone of its comprehensive sales solutions. Using this proprietary software program, sellers can conveniently manage the entire sales process online in one central location, from listing products, monitoring inventory levels, tracking delivery status and returned products, managing customer contact/ communication, requesting pick up from delivery providers, among others. Additionally, sellers may change the quantity and price of listed products quickly and easily, which provides them the flexibility to adjust to changing market conditions. For certain of the Company’s larger sellers, the GSM program allows a direct link to their inventory management programs, so that such sellers can more effectively monitor their inventory levels as sales occur. Additionally, using the GSM program, sellers can purchase keyword search terms and other premium listing services. Sellers receive up-to-date news and information on new services and product categories, among others. Sellers can view frequently asked questions and other helpful articles on the selling process, including information on credit card payments and tax statements.

The Company encourages and facilitates the free flow and exchange of information regarding goods, consumer trends and other information which may be useful to buyers and sellers through various bulletin boards and consumer comments sections available on the website. Sellers, buyers and other users can post product reviews, rankings and commentary. The Company has a “Hot & News” section, which posts the latest information by users and its staff on new products, trends and the introduction of new services. The Company offers an online magazine, “Shopping Webzine,” where the users and other members of the Internet community can publish their reviews regarding sellers and products, and contribute general interest articles or other commentary regarding fashion and other topics. To encourage participation in the community, the Company provides contributors with coupons and reward points, among other benefits, to be used towards purchases.

Cost of revenues increased by 166.6% to Won 15.30 billion (US$15.74 million) in the three months ended March 31, 2006 from Won 5.74 billion in the three months ended March 31, 2005.

Gross profit increased by 247.7% to Won 13.04 billion (US$13.43 million) in the three months ended March 31, 2006 from Won 3.75 billion in the three months ended March 31, 2005.

Operating expenses increased by 177.3% to Won 11.51 billion (US$11.85 million) in the three months ended March 31, 2006 from Won 4.15 billion in the three months ended March 31, 2005.

Net income was Won 1.93 billion (US$1.99 million) in the three months ended March 31, 2006, compared to a net loss of Won 0.20 billion in the three months ended March 31, 2005.