EUGENE BELL FOUNDATION FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010, AND INDEPENDENT AUDITORS REPORT

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1 FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010, AND INDEPENDENT AUDITORS REPORT

2 Independent Auditors Report English Translation of a Report Originally Issued in Korean To the Board of Trustees of Eugene Bell Foundation We have audited the accompanying statements of assets and liabilities of Eugene Bell Foundation (the Foundation ) as of December 31, 2011 and 2010, and the related statements of activities and changes in net assets and cash flows for the years then ended, all expressed in Korean won. These financial statements are the responsibility of the Foundation 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 Republic of Korea. 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 assets and liabilities of the Foundation as of December 31, 2011 and 2010, and the results of its activities, changes in its net assets and its cash flows for the years then ended in conformity with Accounting Standards for Non-Public Entities in the Republic of Korea and regulations on not-for-profit organization (see Note 2). Our audits also comprehended the translation of Korean won amounts into U.S. dollar amounts, and in our opinion, such translation has been made in conformity with the basis in Note 2. Such U.S. dollar amounts are presented solely for the convenience of readers outside of Korea. Accounting principles and auditing standards and their application in practice vary among countries. The accompanying financial statements are not intended to present the assets and liabilities, results of activities, changes in net assets and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying financial statements are for use by those knowledgeable about Korean accounting principles and auditing standards and their application in practice. July 4, 2012 Notice to Readers This report is effective as of July 4, 2012, the auditors report date. Certain subsequent events or circumstances may have occurred between the auditors report date and the time the auditors report is read. Such events or circumstances could significantly affect the accompanying financial statements and may result in modifications to the auditors report.

3 (the Foundation ) FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 The accompanying financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the Foundation. Eugene Bell Foundation Chairman : Stephen W. Linton

4 STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2011 AND 2010 ASSETS Korean won CURRENT ASSETS: Cash and cash equivalents (Notes 3 and 4) 1,298,482, ,315,765 $ 1,125,884 $ 757,232 Short-term financial instruments (Note 3) 1,364,203,086 1,314,926,266 1,182,869 1,140,142 Accounts receivable 3, , Accrued income 42,077,972 31,996,978 36,485 27,744 Advance payments, net of allowance for doubtful accounts of 980,000 in 2011 and , Value-added tax receivables 3,524,231 60,683,372 3,056 52,617 Income tax refundable 9,581,110 4,730,910 8,308 4,102 Inventories (Note 5) 25,575, ,000 22, Total current assets 2,743,757,433 2,286,626,341 2,379,049 1,982,681 NON-CURRENT ASSETS: Long-term financial instruments (Note 3) 171,800, ,800, , ,964 Guarantee deposits (Note 9) 27,342,000 27,342,000 23,708 23,708 Buildings, net of accumulated depreciation of 27,479,325 in 2011 and 22,073,556 in 2010 (Note 6) 80,636,069 86,041,838 69,918 74,605 Vehicles, net of accumulated depreciation of 7,282,128 in 2011 and 3,120,912 in 2010 (Note 6) 13,523,952 17,685,168 11,726 15,334 Furniture and fixtures, net of accumulated depreciation of 38,051,422 in 2011 and 33,641,117 in 2010 (Note 6) 18,928,743 11,502,373 16,413 9,973 Equipment, net of accumulated depreciation of 2,011,520 in 2011 and 1,005,760 in 2010 (Note 6) 3,017,280 4,023,040 2,616 3,488 Intangible assets, net of accumulated amortization of 2,535,666 in 2011 and 1,178,333 in 2010 (Note 7) 5,754,334 5,471,667 4,989 4,745 Total non-current assets 321,002, ,866, , ,817 Total Assets 3,064,759,811 2,610,492,427 $ 2,657,383 $ 2,263,498 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Other payables 7,891,218 15,843,456 $ 6,842 $ 13,737 Withholdings 5,836,610 5,111,180 5,061 4,432 Unearned revenues 3,040,827 1,067,543 2, Total current liabilities 16,768,655 22,022,179 14,540 19,095 Total liabilities 16,768,655 22,022,179 14,540 19,095 (Continued)

5 STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) AS OF DECEMBER 31, 2011 AND 2010 Korean won NET ASSETS: Unrestricted 3,037,991,156 2,578,470,248 $ 2,634,173 $ 2,235,73 2 Permanently restricted (Note 8) 10,000,000 10,000,000 8,670 8,671 Total net assets 3,047,991,156 2,588,470,248 2,642,843 2,244,403 Total Liabilities and Net Assets 3,064,759,811 2,610,492,427 $ 2,657,383 $ 2,263,498 (Concluded) See accompanying notes to financial statements.

6 STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 Korean won REVENUES: Contributions (Notes 10 and 15) 1,733,146,628 2,832,927,504 $ 1,502,772 $ 2,456,367 Other revenues (Note 11) 79,707,430 70,610,497 69,112 61,225 Total revenues 1,812,854,058 2,903,538,001 1,571,884 2,517,592 EXPENDITURE: Program (Note 12) 1,054,893,122 1,941,507, ,674 1,683,436 General and administrative expenses (Note 13) 294,434, ,679, , ,484 Other expenditure (Note 14) 4,005,606 29,199,160 3,472 25,318 Total expenditure 1,353,333,150 2,363,386,260 1,173,443 2,049,238 EXCESS OF REVENUES OVER EXPENDITURE 459,520, ,151, , ,354 UNRESTRICTED NET ASSETS, BEGINNING OF YEAR 2,578,470,248 2,038,318,507 2,235,732 1,767,378 TRANSFER TO PERMANENTLY RESTRICTED NET ASSETS UNRESTRICTED NET ASSETS, END OF YEAR 3,037,991,156 2,578,470,248 $ 2,634,173 $ 2,235,732 See accompanying notes to financial statements.

7 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 Korean won CASH FLOWS FROM OPERATING ACTIVITIES: Excess of revenues over expenditure 459,520, ,151,741 $ 398,441 $ 468,354 Addition of expenditure not involving cash outflows: Depreciation 14,983,050 12,983,192 12,991 11,257 Amortization of intangible assets 1,357, ,000 1, Provision for severance indemnities 4,411,459 12,928,402 3,825 11,211 20,751,842 26,581,594 17,992 23,048 Deduction of revenues not involving cash inflows: Interest income (78,616,621) (52,483,213) (68,167) (45,507) Income from sale of marketable securities - (480) - - (78,616,621) (52,483,693) (68,167) (45,507) Changes in assets and liabilities resulting from operating activities: Decrease in accounts receivable 309,330 2,954, ,561 Increase in accrued income (20,161,988) - (17,482) - Decrease (increase) in value-added tax receivables 57,159,141 (57,866,105) 49,561 (50,174) Decrease (increase) in prepaid expense (310,000) 2,417,700 (269) 2,096 Increase in inventories (24,915,098) - (21,603) - Decrease in other payables (12,363,697) (381,647) (10,720) (331) Increase (decrease) in withholdings 725,430 (185,265) 629 (161) Decrease in advances from customers - (385,896) - (335) Increase in unearned revenues 1,973,284 1,067,543 1, Decrease in accrued severance indemnities - (10,839,157) - (9,398) Interest income received 88,697,615 33,882,071 76,908 29,378 Income taxes received - 1,785,610-1,548 Income taxes paid (4,850,200) - (4,205) - 86,263,817 (27,551,066) 74,798 (23,890) Net cash provided by operating activities 487,919, ,698, , ,005 CASH FLOWS FROM INVESTING ACTIVITIES: Cash inflows from investing activities: Disposition of short-term financial instruments 1,314,926, ,655,276 1,140, ,763 Disposition of marketable securities - 130, ,314,926, ,785,756 1,140, ,876 Cash outflows for investing activities: Acquisition of short-term financial instruments (1,364,203,086) (1,314,926,266) (1,182,869) (1,140,142) Acquisition of long-term financial instruments - (168,800,000) - (146,363) Acquisition of furniture and fixtures (11,836,675) (7,336,272) (10,263) (6,361) Acquisition of vehicles - (20,806,080) - (18,040) Acquisition of equipment - (5,028,800) - (4,360) Acquisition of intangible assets (1,640,000) (3,600,000) (1,422) (3,122) Acquisition of marketable securities - (130,000) - (113) (1,377,679,761) (1,520,627,418) (1,194,554) (1,318,501) (Continued)

8 STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 Korean won Net cash used in investing activities (62,753,495) (881,841,662) $ (54,412) $ (764,625) CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 425,166,451 (395,143,086) 368,652 (342,620) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 873,315,765 1,268,458, ,232 1,099,852 CASH AND CASH EQUIVALENTS, END OF YEAR (Concluded) 1,298,482, ,315,765 $ 1,125,884 $ 757,232 See accompanying notes to financial statements.

9 NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND NATURE OF ACTIVITIES: Eugene Bell Foundation (the Foundation ) was established in February 2000, under the Civil Code and regulations of the Republic of Korea, to provide humanitarian, medical and educational services specifically geared towards the Democratic People s Republic of Korea (North Korea). The Foundation was approved by the Ministry of Health and Welfare ( MOHW ) as a not-for-profit organization in February SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Financial Statement Presentation The Foundation has prepared the accompanying financial statements in accordance with regulations on not-forprofit organization and Accounting Standards for Non-Public Entities in the Republic of Korea ( KAS-NPEs ) for the reporting periods beginning on or after January 1, In accordance with the KAS-NPEs Effective date and Transitional Provisions paragraph 4, on January 1, 2011, the prior periods financial position, results of activities, and cash flows under previous generally accepted accounting principles in the Republic of Korea have been carried over and presented as is, with no retrospective adjustments due to the application of KAS- NPEs. Accordingly, the accompanying financial statements are intended for use by those who are informed about KAS-NPEs and Korean practice. The accompanying financial statements have been condensed, restructured and translated into English (with certain expanded descriptions) from the Korean language financial statements. The accompanying financial statements are stated in Korean won, the currency of the country in which the Foundation is established and operates. The translation of Korean won amounts into U.S. dollar amounts is included solely for the convenience of readers outside of the Republic of Korea and has been made at the rate of 1, to USD 1.00 at December 31, 2011, the basic rate announced by Seoul Money Brokerage Services, Ltd. Such translations should not be construed as representations that the Korean won amounts could be converted at that or any other rate. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from the estimates.

10 - 2 - The significant accounting policies followed by the Foundation in the preparation of its financial statements are summarized below: Cash and Cash Equivalents Cash and cash equivalents are the most liquid assets found within the asset portion of the Foundation's statements of assets and liabilities. Cash equivalents are assets that are readily convertible into cash, such as money market holdings, short-term government bonds or treasury bills, marketable securities and commercial paper. Cash equivalents are distinguished from other investments through their short-term existence; they mature within three months, whereas short-term investments mature within 12 months or less, and long-term investments are any investments that mature in more than 12 months. Revenue Recognition Contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Tangible Assets Buildings, furniture and fixtures are stated at cost, less accumulated depreciation. Repairs and maintenance expenses that are recurring in nature are expensed as incurred. Expenditure that result in the enhancement of the value or extension of the useful life of the related assets are capitalized as additions to tangible assets. Depreciation is computed using the straight-line method based on estimated useful lives of assets as follows: Tangible assets Buildings Vehicles Furniture and fixtures Equipment Estimated useful life 20 years 5 years 5 years 5 years Intangible Assets Software is amortized on a straight-line basis over the estimated useful lives of the assets. Defined contribution plan The Foundation enrolled a defined contribution plan to its employee in When an employee has rendered service to an entity during a period, the entity shall recognize the contribution payable to a defined contribution plan in exchange for that service. The employee s contribution is expensed, except for being capitalized as additions to related assets. The contribution payable to a defined contribution plan is 4,411 thousand and 12,928 thousand in 2011 and 2010, respectively. The amount of 11,018 thousand and 15,424 thousand in 2011 and 2010, respectively is expensed. Accounting for Foreign Currency Transactions and Translation The Foundation maintains its accounts in Korean won. Transactions in foreign currencies are recorded in Korean won based on the prevailing rates of exchange on the transaction date. Monetary accounts with balances denominated in foreign currencies are recorded and reported in the accompanying financial statements at the exchange rate prevailing at the closing date of the fiscal year ( 1, and 1, to USD 1.00 at December 31, 2011 and 2010, respectively). Translation gains and losses on foreign currency-denominated assets and liabilities are credited or charged to current operations.

11 CASH AND CASH EQUIVALENTS AND FINANCIAL INSTRUMENTS: Cash and cash equivalents and financial instruments as of December 31, 2011 and 2010, consist of the following: Korean won (In thousands) Type Petty cash $ 371 $ 224 Passbook accounts 1,298, ,058 1,125, ,009 Subtotal 1,298, ,316 1,125, ,232 Short-term financial instruments 1,364,203 1,314,926 1,182,869 1,140,142 Long-term financial instruments 171, , , ,964 2,834,485 2,360,042 $ 2,457,717 $ 2,046, ASSETS DENOMINATED IN FOREIGN CURRENCIES: Assets denominated in foreign currencies as of December 31, 2011 and 2010, are as follows: Korean won equivalent Foreign (In thousands) currencies Korean won equivalent (In thousands) Foreign currencies Cash and cash equivalents $ 109, ,810 $ 69, ,324 AUD CNY ,811 79, INVENTORIES: Inventories are medical equipment and related components, which will be sent to North Korea. 6. TANGIBLE ASSETS: The changes in the book value of tangible assets in 2011 are as follows (Korean won in thousands): Accounts Beginning of year Acquisition Disposal Depreciation End of year Buildings 86, ,406 80,636 Vehicles 17, ,161 13,524 Furniture and fixtures 11,502 11,837-4,410 18,929 Equipment 4, ,006 3, ,252 11,837-14, ,106 The changes in the book value of tangible assets in 2010 are as follows (Korean won in thousands): Accounts Beginning of year Acquisition Disposal Depreciation End of year Buildings 91, ,405 86,042 Vehicles - 20,806-3,121 17,685 Furniture and fixtures 7,617 7,336-3,451 11,502 Equipment - 5,029-1,006 4,023 99,064 33,171-12, ,252

12 INTANGIBLE ASSETS: The changes in the book value of intangible assets in 2011 are as follows (Korean won in thousands): Beginning Accounts of year Acquisition Disposal Depreciation End of year Software 5,472 1,640-1,358 5,754 The changes in the book value of intangible assets in 2010 are as follows (Korean won in thousands): Accounts Beginning of year Acquisition Disposal Depreciation End of year Software 2,542 3, , PERMANENTLY RESTRICTED NET ASSETS: Permanently restricted net assets as of December 31, 2011 and 2010, represent the amount kept intact as required in the Foundation s articles of incorporation approved by the MOHW. 9. GUARANTEE DEPOSITS: Guarantee deposits as of December 31, 2011 and 2010, consist of the following: Korean won (In thousands) Description Refundable leasehold deposits for office spaces 27,342 27,342 $ 23,708 $ 23, CONTRIBUTIONS: Sources of contributions in 2011 and 2010 are as follows: Korean won (In thousands) Description Government of the Republic of Korea - 253,934 $ - $ 220,180 Eugene Bell Foundation, Inc. (US)(*) 258, , , ,879 Domestic organizations and individuals 1,449,309 1,816,070 1,256,663 1,574,673 Donation in kind 24, ,665 21, ,635 1,733,147 2,832,927 $ 1,502,772 $ 2,456,367 (*) Donation amounting to 51,147 thousand (USD 44,348) from the United States Agency for International Development (USAID) is included in above contributions in 2010; however, there is no contribution from USAID for the year ended December 31, 2011.

13 OTHER REVENUES: Details of other revenues in 2011 and 2010 are as follows: Korean won (In thousands) Account Interest income 78,616 52,483 $ 68,166 $ 45,507 Gain on foreign currency transactions 1,078 10, ,087 Gains on foreign currency translation - 7,448-6,458 Other ,707 70,610 $ 69,112 $ 61, PROGRAM: Expenditure for the program in 2011 and 2010 consists of the following: Korean won (In thousands) Description Antituberculosis drug kits 794,275 1,205,161 $ 688,698 $ 1,044,967 Government subsidy - 6,978-6,050 Other support , ,927 Affirmation of usage 89, ,259 77,455 86,932 Collection expense 170, , , ,560 1,054,893 1,941,507 $ 914,674 $ 1,683,436 Expenditure for the program amounting to 6,978 thousand (USD 6,050) from USAID is included in 2010; however, there is no expenditure for the program for the year ended December 31, GENERAL AND ADMINISTRATIVE EXPENSES: Details of general and administrative expenses in 2011 and 2010 are as follows: Korean won (In thousands) Account Salaries 145, ,605 $ 125,785 $ 206,022 Office rent 27,216 26,568 23,598 23,037 Insurance 4,357 5,729 3,778 4,967 Commissions 33,204 35,284 28,790 30,594 Provision for severance indemnities 11,018 15,424 9,553 13,374 Depreciation 14,983 12,983 12,992 11,257 Other 58,588 59,087 50,801 51, , ,680 $ 255,297 $ 340,484

14 OTHER EXPENDITURE: Details of other expenditure in 2011 and 2010 are as follows: Korean won (In thousands) Account Loss on foreign currency transactions 3,780 29,199 $ 3,277 $ 25,318 Loss on foreign currency translation ,006 29,199 $ 3,472 $ 25, RELATED-PARTY TRANSACTIONS: Transactions with a related party in 2011 and 2010 are summarized below: Korean won (In thousands) Related party Eugene Bell Foundation, Inc. (US): Contributions 258, ,258 $ 224,506 $ 256, CASH FLOWS: (1) The cash and cash equivalents in the statements of cash flows are the same as the cash and cash equivalents in the statements of assets and liabilities. (2) There are no significant transactions not involving cash inflows and outflows for the years ended December 31, 2011 and 2010.