Chapter 1.

Introduction

Incorporation 1995 April

President Nam Kyu Park

Capital 2,671 MW

CoreConfidence

Digital Audio Technology

Business Area

MP3 PlayerWireless InternetMuitimedia S/W

Employee 105 (R&D 60)

Address Seoul, Koreawww.cowon.com

Affiliate company

JetAudio, Inc. US, CA. IrvineCowon 100% Ownership

Listing date July 11th, 2003

Overview

Overview

Value

Concord Customer Challenge Creativity Confidence Contribution

No.of Shares

5,340,000

par value KRW 500

Stock option

51,000

Capital KRW 2,671M

Overview-Finance

99’ 00’ 01’ 02’ 03’E

Sales 1.4 3.8 8.5 16.8 35.0

After Tax Profit 0.5 1.4 1.8 3.6 6.0

ROE 42% 37% 32% 43% 35%

30

25

20

15

10

5

1.43.8

8.5

16.8

35.0

Every Year 100% Growth rate

0.5 1.41.8

3.6

6.0

42%

37%

32%

43%

FY99 FY00 FY01 FY02

Billion KRW

FY03 E

35%

Over 37% Average ROE

Vision

Core Confidence

“Digital Audio”(iAUDIO.com)Software

(Multimedia)

Hardware(MP3 Player)

WirelessInternet

(Contents)

“ Global Multimedia Total Solution Company ”

3 Business Area Synergy EffectBuild up community for Service, Sales, Advertise in iAUDIO.com

Shareholders

Shareholders’ Ratio

1Month lock-up 18.43%

Others

23.67%

Board of Director 53.63%

1year lock-up 57.90%

23.67%

Lock Up

Bokwang 4.65%

Employees 7.49%

Employees 4.27%

In IPO program

SKT 6.29%

1995.04

1995.05

1996.01

1998.08

1999.05

1999.08

1999.10

2000.08

2001.04

2002.09

Established

Launched voice software ; Jet-talk, jet-voice, voice-wizard

Launched multimedia S/W ; Jet-audio

Established R&D center

MP3 Player

Wireless Internet Business

Funding from Bokwang Venture Capital

Funding from SK Telecom

Established JetAudio, Inc. in US

Launched 3D Avata Chatting Game

Principal History

Chapter 2.

Business parts

• MP3 Player- iAUDIO

• Wireless Internet

• S/W- Jetaudio

• New business- Partyparty

<World/US MP3P Market Estimation>

구 분 2000 2001 2002 2003 2004 2005

World(Volume,Thous.) 2,260 3,500 5,830 8,990 12,110 15,710

World(Amount,USD Mil.)

450 710 1,220 1,930 2,550 3,250

US(Volume,Thous.) 1,810 2,660 4,360 6,610 8,670 10,940

US(Amount,USD Mil.)

360 540 920 1,400 1,790 2,150* Resource: IDC, 2001-

MP3 Player Market Size

Radio Walkman MP3 Player

iAUDIO Small & Multi-function MP3P

MP3 Player-Product

• Function

- MP3 Player : extreme Sound quality

-Voice recoder : 18 hours high quality

voice recoding

- FM radio: 24 channel & recording

• Products (Positioning in high-end market)

- iAUDIO CW250, CW300

- iAUDIO CW400 (Sept.2003, the smallest type)

- iAUDIO CW500 (Nov., Hard Disk type)

- Focus on the high-end market

• Honors

- The World best MP3P by US Amazon.com users

- The World best MP3P by CNet experts

- The Korea best MP3P by PC-line magazine

- The Korea best MP3P by the electric newspaper

MP3 Player- Competitiveness

The proven Worldwide

#1 MP3P By US users & experts

MP3 Player - SWOT

• Superior R&D

• Accumulated S/W R&D

• Brand building

• High royalty customer data base in www.iAUDIO.com

• Set up distribution cannels

• Synergy with S/W, Wireless Internet

* Major competitor : Reincom, Digitalway, Samsung Electric Co., Hyunwon, Mpman.com, Sonicblue

• Produce outsourcing

Solution ; Two partners (Samdo, Mirea)

• Not enough product model

Solution: launch new models (FY03 ; 2 products, FY04: 3~4 products)

• Growing market size

• User infra-system up (P2P, speed-up internet)

• Using for music, language,& business

• China’s low pricing

Solution: High-quality, High-end

Strength

Weakness

Opportunity Threat

MP3 Player- Strategy

• To Build Up Brand Power

- To Intensify Brand Marketing by utilizing domestic infrastructure

• To Diversify Product Portfolio

- To cover wide range of market sectors (including HDD Type market)

- To launch two more models in this year (Oct. and Nov.)

• To increase overseas market

- To launch several products in major markets (Korea, US, China)

- To penetrate new market (Middle East, East Europe)

• To increase production capacity

- To set up Assembly lines in short term

- To produce goods in China in long term when production exceed 50K/Month

• To put products in right position

- To position new products as High-end products continuously

- To cover low/mid-end market with old models with competitive price

MP3 Player-Distribution channel

Traditional market

15%

Chain Store

25%

Major on-line mall

30%

MP3 Specialize

d mall

20%

Event

10%

Traditional Market

Yongsan, Techno Mart

Kugje, Busan & Other cities

ChainStore

Hi-Mart, Junjaland21, eMART, Wall Mart,

Lotte Mart, Home Plus

Major On-line Mall

Samsung Mall, LGeShop, Lotte.com,Interpark, Hmall CJMall, BuynJoy

MP3 Specialized Mall

MPmate, Mpnavi

Total MP3

MP3 Player- Overseas market

- US, Mexico, Canada

- Japan, China, HK,Taipei, Singapore , Australia, Russia

- Germany, Swiss, Austria, UK, Norway, Denmark, Sweden, Fineland

- AFFES(US Army PX: Korea, Japan, Europe) DFS(Incheon, HK)

Country Total 1Q 2Q 3Q(E) 4Q(E)

N. America 29.4 3.4 6.5 8.0 11.5

China/HK 25.3 3.0 4.3 7.8 10.2

Other Asia 12.0 0.4 0.9 4.1 6.6

W. Europe 16.7 0.3 2.6 5.0 8.8

N. Europe 4.3 0.8 1.3 2.2

S. Europe 5.6 2.4 3.2

Arab/E. Europe

2.0 0.5 1.5

AFFES 5.5 0.3 1.7 1.7 1.8

Sub-total Export

100.8 7.4 16.8 30.8 45.8

Domestic 79.0 18.7 12.0 13.5 34.8

Total 179.8 26.1 28.8 44.3 80.6

(Thousand)

* New product launching : CW400-Oct., CW500-Nov.

MP3 Player- FY03 Sales Volume(E)Enlarge & Diversify Overseas market

2001 2002 Growth rate

SKT 2,681 9,457 252%

KTF 751 4,862 547%

LGT 213 1,740 716%

합계 3,645 16,059 340%

(Thousand person)

<CDMA2000-1x Subscriber>

<Wireless internet subscriber & Mobile subscriber>

WI Subscriber (A) Mobile Subscriber(B)

% (A/B)

SKT 14,355 17,105 83.9

KTF 10,387 10,490 99.0

LGT 4,070 4,729 86.1

전체 28,812 32,324 89.1

Resource: Ministry of Information and Communication (2002. Oct)

Resource: Mobilecome, Feb. 2003

Wireless Internet –Market Size

(Thousand person)

Wireless Internet-Sales flowContents Special Ring , Ring-back tone service, June, Game

ContentsContents

Plan

& converse

Service

& Marketing

Copyrighter

Customer

Profit Sharing Structure

45% 45% 10%

* Cowon’s sales revenue : 90%

Wireless Internet

Contents service

• Digital audio contents

Bell sound, ring-back-tone service

live-bell, music on demand

• Digital video contents

Music video, live-screen, VOD

• Game

Casino land, Nemologic, vocabulary-wizard

Wireless Internet-Competition

MobileMobileServerServerSolutionSolutionContents (Multimedia)Contents (Multimedia)

Mobile 용 Server구축 기술

Mobile Solution 및 Application개발 기술

Mobile 용 Contents (Multimedia Contents)

편집 및 제작 기술

Total Mobile Business

• Made an Strategic Alliance with SKT (SKT invested in COWON in August 2000).

•Started business with an inception of wireless Internet in Korea

• Powerful human resources keeping many top-trained engineers

• To maintain information channels for new technology and trend

• To perform reliable after service and adapt new technology and contents

• To have strong partnerships with over 100 music agencies and label companies

• To run multimedia contents Data Base

• To play a role as a leading company in June multimedia service

• To focus on multimedia solution and contents for EV-DO, IMT2000

• Selected the best CP and best partner by SKT

Wireless Internet - SWOT

Main competitor : 5425, Yaho, Danal, Widerdan.com, Feelink

Strength

Weakness

Opportunity Threat• To innovate the internet

technology (Ultra-speed data transfer, grade-up handset with multimedia function, decreasing mobile subscription fee)

• To set up pay-market in digital music

• to move up from WI to mass-media

• WIPI (Wireless Internet Platform for InteroperabilitySolution :To set up and increase our competition than others’- Portals, other CPs

• Strategy partnership with SKT (As a master CP, SKT investment in 6.29%)

• To have taken part in WI contents early stage of SKT

• To take lots of contents (music, video, etc)

• To accumulate know-how of WI business

such as business model, service model

• Lack of own brand in WI Solution : To increase marketing activity –advertisement, promotion, co-marketing with S/W & MP3 Player

• To service for only SKT

Solution : To launch ring-back-tone service for LGT, KTF from July 2003

Wireless Internet-Monthly Sales Amount

0

0.2

0.4

0.6

0.8

1

1.2

1.4Billion KRW

Year 2002 Year 2003

Continuous Sale Growth

Jetaudio - Multimedia S/W Product

• Audio/Video total solution

• Internet broadcasting function

• Able to mp3PRO, OGG, Divx, DVD format

Competitor: Winamp, MediaPlayer

Honors

• 99’ SoftExpo Champion

•, The most popular S/W 20 in Cnet and ZDNet

• 02’ The world-class product of Korea

Marketing Strategy

• To focus on high quality of the product by utilizing accumulated world-class R&D ability

-> To widen market into B2B bundle business (Major reference customers - NEC, Fujitsu, IBM, Gateway)

• To manipulate existing worldwide 10M customer bases -> To enlarge customer base by providing a prompt upgrade and to make online digital audio business by connecting it into JetAudio. “JetAudio is Portal.”

New business - 3D Avata chatting game

Product

• www.partyparty.co.kr

• Chatting & game by 3D Avata

Competition

• Using the first Cartoon 3D

• Using Cowon’s multi-media tech.

Busines Model

• To sale virtual items

• To set up communities

• 60,000 members from April 2003

• To connect with Cowon’s digital audio contents

3D Avata

Game

Dance

Chatting

Music

Community

Chapter 4.

Financial Outlook

Net profit & ROESales

30.0

25.0

20.0

15.0

10.0

5.0

6.0

5.0

4.0

3.0

2.0

1.0

1.43.8

8.5

16.8

35.0

100% YOY

0.5

1.4

1.8

3.6

6.0

42%

37%

32%

43%

99 00

01 02 03E

(KRW, Billion)

99 00

01 02 03E

35%

Average 37% ROE

Financial outlook

(KRW, Billion)

Sales revenue by business part

15.0

10.0

5.0

0.1

99 00 01 02 03(E)

2.52.71.3

1.0

1.80.5

0.6

Wireless Internet

MP3 Player

S/W & Others

4.2

10.0

(4.0)

4.2

12.2

24.0

(8.5)

* ( )

1st Half

0.4

20.0

25.0

30.0

1.43.8

8.5

16.8

35.0

Break-down by business part

FY99 FY00 FY01 FY02

MP3 Player

Sales 1 560 1,780 11,196

Net Profit

55 242 2,053

% 10% 14% 18%

WirelessInternet

Sales 107 459 1,806 4,182

Net Profit

20 108 292 1,129

% 19% 24% 16% 27%

Software Sales 1,301 2,770 2,440 385

Net Profit

448 1,068 1,172 369

% 34% 39% 48% 96%

Other(Xing-Q)

Sales 1 13 2,429 1,048

Net Profit

2 73 30

% 15% 3% 3%

Total Sales 1,410 3,802 8,454 16,811

Net Profit

468 1,233 1,779 3,581

% 33% 32% 21% 21%

- Increasing sales & net profit % in MP3 Player

- Every year twice sales in Wireless internet

(Million, KRW)

R &D

0.15

0.39

0.86

2.84 ( 주1)

1.811% 10% 10%

5%

(KRW, Billion)

99 00

01 02 03E

17%

0.5

2.0

1.0

1.5

2.5

3.0R&D 비용

매출액

Person 1414 1616

3333 4040 5656

R&D

• MP3P R&D Exp/model : 0.25

• 50% Exp of the competitor

• 2 models launched in 2001

• Jet-audio new version in 2002

(1.1 billion won)

주 1) 0.03 won for New business

Chapter 5.

Investment highlight points

• Growth

• Competition

• Profitability

• Stability

• Others

Investment Point 1

Growth

Competition

• CAGR 100% growth in high growing market - MP3 Player, Wireless Internet

• Market growth and M/S increasing

• Worldwide market• The products proven by users and experts

- The world best products - ZDNet, CNet, Amazon -> No.1 in the world

• The well skilled employees in low moving rate

• The synergy in all business parts w/ digital audio

• The flexible company structure

- Quick response to market change

Profitability

• over 37% ROE during 5 years - target 30%

• over 20% Net profit during 5 years

• Almost none of capital expenditure to do more profit

• Increasing interest income from accumulated working capital

Investment Point 2

Stability

Others

• Over 1year lock-up 57.90%

• Market forecasting ability of CEO

• Never borrowing since establishment

• Pull-strategy marketing (small A/R)

• Stable stock share of management and employees (65.39%)

Appendix

• Organization structure

• Affiliate- JetAudio Inc.

• Summary of Financial Statement

• Other products

Organization structure

Stockholders

President

V.President

Wireless Internet Div. (39)

New business div. (15)

MP3 Player Div. (31)

Sales & Marketing-A/S (11)

Finance & Administration : IR (5)

Strategy & PR (2) JetAudio, Inc.

(8)

President Park Namkyu• Seoul National University

• Seoul National University

- MS

• LG Electric Co.

• Establisher of COWON

Vice President M.Y. Lee

• Seoul National University

• Seoul National University- MS

• Samsung Electric Co

Auditor JW Choi

• Seoul National University

• Michigan State Univ.- MBA

•PerreGreen Security Co.

•IMM Venture

Affiliate Company

Outlook

FY02 Financial Outlook (USD, Thousand)

Asset : 1,308Liabil. : 249Cap. : 1,057

Sales : 1,084Net Profit : 268

Name JetAudio, Inc.

Incorporate April 2001

President Jae-Ook Chung

Capital USD 1Million(Cowon 100%)

Business Area

Multimedia S/W R&D, Sales

N. America MP3 Player sales

Employee 8 Person (R&D 5)

Address California, Irvinewww.jetaudio.com

Purpose Open up US market

BOD of JetAudio, Inc.

Chung, Jae-Ook : CEO, President

- Seoul National Univ., BA, Engineering

- Seoul National Univ., Ph.D, Engineering

- An establisher of Cowon

Steve Ryu :CFO

- Seoul National Univ., BA Economics

- Univ. of Southern California, MBA

- Samsung Everland

- Samsung Security Co.

Kang, sangkoo : Sales & Marketing director

- Seoul National Univ., BA, Engineering

- Duke University MBA

- DACOM

- Nortel Networks

Summarized Financial Statements(B/S, P/L)

Current Assets 1,820 3,570 4,403 5,859 7,874

Quick Assets 1,820 3,374 3,679 4,208 6,035

Inventories - 196 724 1,651 1,839

Fixed Assets 225 1,466 3,321 6,122 6,349

항목 1999 2000 2001 2002 2003 1st Half

Total Asset 2,045 5,036 7,724 11,981 14,224Current liabilitie 119 202 1,096 1,634 1,666

Long-term liabilities 40 112 40 103 179

Total liabilities 159 314 1,136 1,737 1,845

Common stock 444 1,522 1,522 2,100 2,100

Capital surplus 956 1,476 1,476 894 894

Retained earnings 486 1,718 3,507 7,089 9,193

Capital adj. - 6 83 161 192

Total equity 1,886 4,722 6,588 10,244 12,379

Lia. & Cap. 2,045 5,036 7,724 11,981 14,224

항목 1999 2000 2001 2002 2003 1st Half

Sales 1,410 3,803 8,455 16,811 12,529

Cost of goods 542 1,994 4,906 10,875 8,236

Gross profits 868 1,808 3,549 5,936 4,293

Sales & Adm.Ex 345 517 1,543 2,769 1,770

Operating income 523 1,291 2,006 3,167 1,094

Non oper income 31 127 121 166 68

Non oper expense 14 1 51 190 56

Ordinary income 541 1,418 2,076 3,144 2,534Extra ordinary income - - - - -

Extra ordinary expense - - - - -EBITA 541 1,418 2,076 3,144 2,534

Taxes 73 185 287 -437 431

Net income 468 1,233 1,789 3,581 2,104

(KRW, Million)

B / S P / L(KRW, Million)

MP3 Player iAUDIO (amazon.com #1)

Thank You