20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

OR

o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-51116

HURRAY! HOLDING CO., LTD.

(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant’s name into English)

Cayman Islands
(Jurisdiction of incorporation or organization)

15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, East Third Ring,
Chaoyang District, Beijing 100027, People’s Republic of China
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Name of each exchange and Title of each class on which registered:
American Depositary Shares, each representing 100 ordinary shares, par value US$0.00005 per share,
Nasdaq Global Market
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 2,173,784,440 ordinary shares, par value US$0.00005 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or (15) (d) of the Securities Exchange Act of 1934. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP þ	International Financial Reporting Standards as issued	Other o
	by the International Accounting Standards Board     o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17     o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

TABLE OF CONTENTS

INTRODUCTION
PART I
Item 1. Identity of Directors, Senior Management and Advisers	1
Item 2. Offer Statistics and Expected Timetable	1
Item 3. Key Information	1
Item 4. Information On the Company	21
Item 4A. Unresolved Staff Comments	37
Item 5. Operating and Financial Review and Prospects	37
Item 6. Directors, Senior Management and Employees	53
Item 7. Major Shareholders and Related Party Transactions	61
Item 8. Financial Information	63
Item 9. The Offer and Listing	63
Item 10. Additional Information	64
Item 11. Quantitative and Qualitative Disclosures About Market Risk	71
Item 12. Description of Securities Other than Equity Securities	72
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies	72
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	72
Item 15. Controls and Procedures	72
Item 16. Reserved	73
Item 16A. Audit Committee Financial Expert	73
Item 16B. Code of Ethics	73
Item 16C. Principal Accountant Fees and Services	73
Item 16D. Exemptions from the Listing Standards for Audit Committees	74
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	74
PART III
Item 17. Financial Statements	74
Item 18. Financial Statements	74
Item 19. Exhibits	74
Exhibit 4.81
Exhibit 4.82
Exhibit 4.84
Exhibit 4.85
Exhibit 4.86
Exhibit 8.1
Exhibit 12.1
Exhibit 12.2
Exhibit 13.1
Exhibit 13.2
Exhibit 15.1

INTRODUCTION

Except where the context otherwise requires and for purposes of this annual report on Form 20-F only:

• “ADSs” refers to our American depositary shares, each of which represents 100 ordinary shares;

• “$,” “US$” and “U.S. dollars” refer to the legal currency of the United States;

• “China” and the “PRC” refer to the People’s Republic of China, excluding, for the purposes of this annual report on Form 20-F only, Taiwan and the special administrative regions of Hong Kong and Macau;

• “ordinary shares” refers to our ordinary shares, par value US$0.00005 per share;

• “RMB” and “Renminbi” refer to the legal currency of China; and

• “we,” “us,” “our company” and “our” refer to Hurray! Holding Co., Ltd. and its subsidiaries, affiliates and predecessor entities.

This annual report on Form 20-F includes our audited consolidated financial statements as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005.

Forward-Looking Information

This annual report on Form 20-F contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “seeks, “estimates” and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to those risks and uncertainties identified under the section heading “Risk Factors” below.

All forward-looking statements in this Form 20-F are made as of the date of filing hereof, based on information available to us as of that date, and we assume no obligation to update or revise any of these forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

A. Selected Financial Data

The following table presents certain selected consolidated financial information for our business. You should read the following information in conjunction with our audited consolidated financial statements, the notes thereto and Item 5 “Operating and Financial Review and Prospects” included elsewhere in this annual report on Form 20-F. The following data as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005 has been derived from our audited consolidated financial statements for those years and should be read in conjunction with those statements, which are included in this annual report beginning on page F-1. The following data as of December 31, 2005, 2004 and 2003 and for the years ended December 31, 2004 and 2003 have also been derived from our audited consolidated financial statements for those years, which are not included in this annual report on Form 20-F. Our audited financial statements for the foregoing periods were prepared in accordance with United States generally accepted accounting principles, or US GAAP.

1

	As of and for the Year Ended December 31,
	2007			2006			2005(1)			2004(1)			2003(1)
	(in thousands of U.S. dollars, except percentages)
Historical Condensed Consolidated Statement of Operations Data
Revenues:
Wireless value-added services	$	50,038		$	62,512		$	56,063		$	43,173		$	17,760
Recorded music		10,489			6,203			—			—			—
Total revenues		60,527			68,715			56,063			43,173			17,760
Cost of revenues:
Wireless value-added services		36,394			40,672			28,635			18,053			6,692
Recorded music		6,233			3,553			—			—			—
Total cost of revenues		42,627			44,225			28,635			18,053			6,692
Gross profit		17,900			24,490			27,428			25,120			11,068
Operating expenses		61,462			19,882			14,277			10,436			7,338
(Loss) income from continuing operations		(43,562	)		4,608			13,151			14,684			3,730
Interest income		2,313			2,529			1,390			28			1
Interest expense		(179	)		(45	)		(27	)		(312	)		(390	)
Other income, net		466			315			330			—			—
(Loss) income before provision for income taxes, earnings in equity investments, gain from disposal of subsidiary, minority interest and discontinued operations		(40,962	)		7,407			14,844			14,400			3,341
Income taxes (credit) expense		(182	)		205			(323	)		—			—
Net (loss) income from continuing operations after income taxes before minority interests		(40,780	)		7,202			14,521			14,400			3,341
Equity in losses of affiliate		(63	)		—			—			—			—
Minority interests		(688	)		(562	)		—			—			—
Net (loss) income from continuing operations		(41,531	)		6,640			14,521			14,400			3,341
Discontinued operations:
Net ((loss) income from discontinued operations, net of tax		(612	)		(836	)		4,098			2,840			1,204
Gain from disposal of subsidiary		193			—			—			—			—
Net (loss) income from discontinued operations, net of tax		(419	)		(836	)		4,098			2,840			1,204
Net (loss) income		(41,950	)		5,804			18,619			17,240			4,545
Deemed dividends on Series A convertible preference shares		—			—			—			(40	)		(113	)
Net (Loss) income attributable to holders of ordinary shares	$	(41,950	)	$	5,804		$	18,619		$	17,200		$	4,432
Net (Loss) income per share, basic	$	(0.02	)	$	0.00		$	0.01		$	0.01		$	0.00
Net (Loss) income per share, diluted	$	(0.02	)	$	0.00		$	0.01		$	0.01		$	0.00
Shares used in calculating basic (loss) income per share		2,172,208,190			2,189,748,563			2,092,089,848			1,208,512,142			1,088,810,959
Shares used in calculating diluted (loss) income per share		2,172,208,190			2,208,758,636			2,129,228,961			1,572,887,775			1,343,606,622

(1) The amounts of share-based compensation included in operating expenses for 2006 and 2007 reflect the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” effective January 1, 2006. Had we applied the fair value recognition provisions of SFAS No. 123, “Stock-Based Compensation,” in prior periods, we would have reported net income of $4,318 thousands, $16,511 thousands and $17,007 thousands for 2003, 2004 and 2005, respectively, and net income per share (diluted) of $0.00, $0.01 and $0.01 for 2003, 2004, and 2005, respectively.

2

	As of and for the Year Ended December 31,
	2007			2006			2005			2004			2003
	(in thousands of U.S. dollars, except percentages)
Historical Condensed Consolidated Balance Sheet Data
Cash	$	65,979		$	74,597		$	75,959		$	8,714		$	11,151
Restricted cash		—			—			—			—			1,510
Accounts receivable, net		14,691			13,449			18,089			11,883			7,892
Other current assets		8,777			3,342			2,297			2,133			228
Property and equipment, net		1,636			1,954			2,536			2,617			1,897
Goodwill		5,621			39,621			23,869			20,412			3,950
Other assets		8,890			7,027			4,953			705			231
Total assets	$	105,594		$	139,990		$	127,703		$	46,464		$	26,859
Current liabilities	$	14,467		$	12,960		$	7,636		$	8,743		$	12,165
Non-current liabilities		877			851			843			—			—
Total liabilities	$	15,344		$	13,811		$	8,479		$	8,743		$	12,165
Minority interests		4,667			3,359			605			—			—
Series A convertible preference shares (16,924,497 and 12,347,966 shares issued and outstanding as of December 31, 2004 and 2003, respectively)		—			—			—			17			12
Ordinary shares (2,173,784,440, 2,162,031,740, 2,229,754,340, shares issued and outstanding as of December 31, 2007, 2006 and 2005, respectively)		109			108			111			59			59
Other shareholders’ equity		85,474			122,712			118,508			37,645			14,623
Total liabilities, minority interests and shareholders’ equity	$	105,594		$	139,990		$	127,703		$	46,464		$	26,859
Other Historical Condensed Consolidated Financial Data:
Gross profit margin
Wireless value-added services		27.3	%		34.9	%		48.9	%		58.2	%		62.3	%
Recorded music		40.6			42.7			—			—			—
Total gross profit margin		29.6			35.6			48.9			58.2			62.3
(Loss) income from continuing operations margin(1)		(72.0	)		6.7			23.5			34.0			21.0
Net (loss) income from continuing operations margin(1)		(68.6	)		9.7			25.9			33.4			18.8
Net (loss) income margin(1)		(69.3	)		8.4			33.2			39.9			25.6
Depreciation		1,269			1,580			1,461			1,335			858
Amortization		2,375			1,901			478			651			276
Capital expenditure		864			957			1,289			1,871			1,388

(1) (Loss) income from continuing operations margin, net (loss) income from continuing operations margin and net (loss) income margin are the (loss) income from continuing operations, net (loss) income from continuing operations and net (loss) income as a percentage of our total revenues.

3

Exchange Rate Information

We present our historical consolidated financial statements in U.S. dollars. In addition, certain pricing information is presented in U.S. dollars and certain contractual amounts that are in Renminbi include a U.S. dollar equivalent solely for the convenience of the reader. Except as otherwise specified, this pricing information and these contractual amounts are translated at RMB 7.2946 = US$1.00, the prevailing rate on December 31, 2007. The translations are not a representation that the Renminbi amounts could actually be converted to U.S. dollars at this rate. For a discussion of the exchange rates used for the presentation of our financial statements, see note 2(l) to our audited consolidated financial statements.

The noon buying rate in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York was RMB 6.9400 = US$1.00 on May 30, 2008. The following table sets forth the high and low noon buying rates for cable transfers between Renminbi and U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York for each of periods indicated below.

	Noon Buying Rate
	RMB per US$1.00
	High		Low
December 2007		7.4120		7.2946
January 2008		7.2946		7.1818
February 2008		7.1973		7.1100
March 2008		7.1110		7.0105
April 2008		7.0185		6.9840
May 2008		7.0000		6.9377

The following table sets forth the average noon buying rates for cable transfers between Renminbi and U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York for each of 2003, 2004, 2005, 2006 and 2007, calculated by averaging the noon buying rates on the last day of each month during the relevant year.

	Average Noon Buying Rate
	RMB per US$1.00
2003		8.2771
2004		8.2768
2005		8.1826
2006		7.9579
2007		7.5806
2008 (through May 30)		7.0464

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

4

RISKS RELATED TO OUR COMPANY

Risks Related to Our Wireless Value-added Services

We depend on China Mobile, China Unicom and China Telecom, three of the four major telecommunications network operators in China, for the major portion of our revenue, and any loss or deterioration of our relationship with China Mobile, China Unicom and China Telecom, due to expected government imposed restructurings or otherwise, may result in severe disruptions to our business operations and the loss of a major portion of our revenue.

We offer our services over mobile networks to consumers through the two principal telecom operators in China, China Mobile Communications Corporation, or China Mobile, and China United Telecommunications Corporation, or China Unicom. These principal operators service the major portion of China’s approximately 547 million mobile phone subscribers as of December 31, 2007, according to a December 2007 Report issued by China’s Ministry of Information Industry, or the MII. To a lesser extent, we also offer our services to consumers through China Telecommunications Corporation, or China Telecom, and China Network Communications Corporation, or China Netcom. Our agreements with these operators and their provincial affiliates are non-exclusive, and have a limited term (generally one year for China Mobile and one or two years for China Unicom). We usually renew these agreements or enter into new ones when the prior agreements expire, but on occasion the renewal or new agreements can be delayed by periods of one month or more.

If any of China Mobile, China Unicom or China Telecom ceases to continue to cooperate with us, it would be impossible to find appropriate replacement telecom operators with the requisite licenses and permits, infrastructure and customer base to offer our wireless value-added services (“WVAS”). We derived approximately 60% of our combined WVAS revenue from China Mobile, 26% from China Unicom, 10% from China Telecom and 1% from China Netcom in 2007.

In addition, the Chinese government has extensive involvement in determining the structure of the telecommunications industry in China. During the development of this industry, changes in government policy have resulted in major restructurings of the telecommunications operators, including the establishment of new operators and the combination of all or part of existing operators. In an effort to promote greater competition among the telecommunications operators and foster the development of 3G mobile networks, on May 24, 2008, the MII, the PRC National Development and Reform Commission, or the NDRC, and the PRC Ministry of Finance jointly issued the Notice on Strengthening the Reform of Telecommunications Systems or the Telecom Notice, which aims to consolidate China’s currently existing telecommunication operators into three new telecommunications operators that can offer both mobile and fixed-line services. Under the Telecom Notice, China Mobile is expected to merge with China Railway Communication Co., Ltd., which operates a national fixed-line network, China Telecom is expected to acquire the Code Division Multiple Access (CDMA) wireless business and network from China Unicom, and China Unicom, which operates a Global System for Mobile communications (GSM) network and business, is expected to merge with China Netcom, which is principally a fixed-line operator. Once the consolidations are completed, the PRC government is expected to issue 3G licenses to such operators. We are currently assessing the potential impact of such expected consolidations on our business.

Any significant restructuring of any segment of the telecommunications industry in China, including in particular China Mobile, China Unicom, China Telecom or China Netcom (which are collectively referred to hereinafter in this annual report on Form 20-F as the “telecom operators”) or any other telecom operators in China and the potential combination of the mobile operations of various telecom operators in China, could significantly affect our relationships with these telecom operators, our operations and our revenues. Due to our reliance on China Mobile, China Telecom and China Unicom for our WVAS, any loss or deterioration of our relationship with them, due to their own business decisions or government-imposed restructurings, may result in severe disruptions to our business operations and the loss of a major portion of our revenue.

The termination or alteration of our various agreements with China Mobile, China Unicom, China Telecom and their provincial affiliates would materially and adversely impact our revenue and profitability.

Given the dominant market position of China Mobile, China Unicom and China Telecom, our leverage with these telecom operators is limited in terms of negotiating agreements, resolving disputes or otherwise. In particular, our agreements with them can be terminated in advance, penalties may be imposed or other parts of our services may be suspended or terminated, and approval for our new services may be delayed for a variety of reasons which vary among the individual agreements with the telecom operators, including, for example, where we breach our obligations under the agreements, a high number of customer complaints are made about our services or we cannot satisfy the operational or financial performance criteria established by the applicable mobile operator.

We may also be compelled to alter our agreements with these telecom operators in ways which adversely affect our business, such as by limiting the services we can offer or imposing other changes that limit the revenue we can derive from such agreements. In 2006, China Unicom entered into new contracts in certain provinces with service providers in which it changed the share percentages it retained for customer payments. For example, where prior to 2006, service providers would receive 70% of a payment from a customer purchase and China Unicom would retain 30%, China Unicom changed the share percentage of customer payments that service providers may retain to 40% in 2006. We may not be able to adequately respond to any such changes because we are not able to predict if the telecom operators will unilaterally amend our contracts with them.

5

Unilateral changes in the policies of the MII, China Mobile, China Unicom, and China Telecom and in their enforcement of their policies have resulted in service suspensions and our having to pay additional charges to the telecom operators, and further changes could materially and adversely impact our revenue and profitability in the future.

The MII, China Mobile, China Unicom and China Telecom have a wide range of policies and procedures regarding customer service, quality control and other aspects of the WVAS industry. As the industry has evolved over the last several years, the telecom operators have refined these policies to improve overall service quality and increase customer satisfaction. For example, in July 2006, China Mobile introduced new policies which require extended free trial periods for WVAS, new billing reminders for new and existing monthly subscribers and positive user confirmations for conversion of per-message subscriptions to monthly subscriptions. Subsequently, in May 2007, China Mobile began the operational practice of displaying service fee reminders and seeking express confirmation prior to processing the wireless application protocol (“WAP”) page download requests of mobile phone users. China Mobile also began the practice of only including links to its own WVAS offerings on the embedded menus of certain mobile handsets with customized software for China Mobile users. In the past, such embedded menus featured links to all popular products on China Mobile’s networks, including our products.

In August 2007, MII introduced new policies regarding WVAS that mobile phone users subscribe to on a free trial basis. Service providers are now required to notify such mobile phone users once the free trial period ends and must obtain confirmation from them prior to charging them for continued subscription to the services. Upon obtaining such confirmation, service providers are then required to notify mobile phone users of the exact pricing for such service and send billing reminders to them.

In addition, in the last several years, acting under the guidance of the MII, the telecom operators have begun enforcing their customer service policies more rigorously than in the past and have initiated steps to improve customer service. This rigorous enforcement has resulted in a number of severe penalties being imposed on us and other participants in the market. Penalties have included precluding service providers from offering certain services over a mobile operator’s network or from offering new services for a fixed period.

These new policies and practices negatively affected our results of operations in the second half of 2006 and in 2007 and caused us to record impairment charges of $38.8 million in respect of our goodwill and $2.5 million in respect of our long-lived assets in 2007. We may not be able to adequately respond to these or other developments in mobile operator policies, or changes in the manner in which such policies are enforced. Furthermore, because the telecom operators’ policies are in a state of flux at this time and they are highly sensitive to customer complaints (even if the complaints have no merit), we cannot be certain that our business activities will always be deemed in compliance with those policies despite our efforts to so comply. Accordingly, we may be subject to monetary penalties or service suspensions or both, even for conduct which we believed to be permissible. Any future noncompliance with the telecom operators’ policies by us, whether inadvertent or not, could result in a material and adverse effect on our revenue and profitability.

Our 2.5G revenues were negatively affected in 2007 by the slow growth of China Unicom’s WAP business. If this trend continues or the telecom operators in China experience slow or negative growth in their WVAS user base, our revenue and profitability could be materially and adversely affected.

Revenues from 2.5G value-added services declined from $29.9 million for fiscal year 2006 to $15.4 million for fiscal year 2007, representing a decline of 48.5%. Our 2.5G value-added services have not grown in part because of China Unicom’s decision to delay expanding capacity or building out 2.5G mobile networks into 2008 pending anticipated receipt of 3G licenses. If this market does not grow and evolve in the manner or in the timeframe that we anticipate, we may not be able to generate significant sustainable revenues from our 2.5G business.

The Chinese government, China Mobile, China Unicom or China Telecom may prevent us from distributing, and we may be subject to liability for, content that any of them believe is inappropriate.

China has enacted regulations governing telecommunication service providers, Internet access and the distribution of news and other information. In the past, the Chinese government has stopped the distribution of information over the Internet that it believes to violate Chinese law, including content that is pornographic or obscene, incites violence, endangers national security, is contrary to the national interest or is defamatory.

China Mobile, China Unicom and China Telecom also have their own policies regarding the distribution of inappropriate content by wireless value-added service providers and have punished certain providers for distributing inappropriate content through the imposition of fines and service suspensions. Some of those providers indicated that the telecom operators informed them that certain of their content were construed as too adult-oriented or sexually suggestive. In addition, in June 2004, along with other participants in our industry, we received information and guidance from China Mobile and China Unicom regarding what they consider to be inappropriate content for WVAS. In response, we reviewed our services and removed certain interactive voice response (“IVR”) and picture downloads in order to comply with such information and guidance. There can be no assurance that we will not receive future guidance that could compel us to further alter our services.

6

The appropriateness or inappropriateness of WAP and IVR content is a relatively new concept in China. Most importantly, the determination that content is deemed to be inappropriate is inherently subjective, and is subject to the interpretation of the governmental authorities and telecom operators in China. Their standards are generally more restrictive than those applied in many other countries like the United States. Accordingly, while we intend to comply with all applicable rules regarding wireless content, it may be very difficult for us to assess whether any particular content we offer that could be construed by the telecom operators as inappropriate under current regulations in China. Any penalties imposed on us by the telecom operators for the content of our services could result in a material and adverse effect on our revenue, profitability and reputation.

China Mobile and China Unicom may impose higher service or network fees on us for their own business purposes or if we are unable to satisfy customer usage and other performance criteria, which could reduce our gross margins.

Fees for our WVAS are charged on a monthly subscription or per-use basis. As provided in our network service agreements, we rely on China Mobile and China Unicom for both billing of and collection from, mobile phone users of fees for our services. As noted above under “— The termination or alteration of our various agreements with China Mobile, China Unicom and their provincial affiliates would materially and adversely impact our revenue and profitability,” our negotiating leverage with the telecom operators is limited. As a result, the telecom operators could unilaterally for their own business purposes amend our agreements with them to increase the service or network fees that they retain from the revenues generated by our WVAS.

In addition, under these agreements, these service fees in some cases rise if we fail to meet certain customer usage, revenues and other performance criteria. Moreover, for 2G services, to the extent that the number of messages sent by us over China Mobile’s and China Unicom’s network exceeds the number of messages our customers send to us, we must pay per message network fees, which decrease in several provinces as the volume of customer usage of our services increases. The number of messages sent by us will exceed those sent by our users, for example, if a user sends us a single message to order a game but we in turn must send that user several messages to confirm his or her order and deliver the game itself. We cannot be certain that we will be able to satisfy any performance criteria in the future or that the telecom operators will keep the criteria at their current levels. Any increase in China Mobile’s or China Unicom’s service or network fees could reduce our gross margins.

If either China Mobile or China Unicom change their practices with regard to how service selections appear on their WAP portals, the revenue from our services, and thus our overall financial condition, could be materially and adversely affected.

The current practice of both China Mobile and China Unicom is generally to place the most popular WAP services at the top of the menu on the first page of the list of services available in each service category on their WAP portals. Services at the top of the menu are more accessible to users than other services and, in our experience, are more frequently accessed than those services lower on the menu. This effectively reinforces the position of the most popular services. The placement of services on these menus creates significant competitive advantages for the top-ranked services and significant challenges for newer and less popular services. We believe that our prominent position on the WAP portals of the two principal telecom operators in China historically helped us maintain our position in the market. If either China Mobile or China Unicom changes its current practices so that the most popular services are not those that are the most accessible to customers, restricts the number or type of services a service provider is permitted to place on service menus or adopts new interface technologies that eliminate the current service menus, our services could become more difficult for users to access and could, therefore, become less popular. In addition, as discussed below under the heading “—Our revenue from WVAS may be adversely affected by China Unicom or China Mobile providing their own full portfolio of 2G and 2.5G services that compete with our services,” China Mobile also began the practice of only including links to its own WVAS offerings on the embedded menus of mobile handsets with customized software for China Mobile users while excluding links to products from third party WVAS service providers such as our company. Such practice has adversely affected our revenues. If additional similar changes occur, they will likely materially and adversely affect the revenue from our services, and thus our overall financial condition.

Our revenue from WVAS may be adversely affected by China Unicom or China Mobile providing their own full portfolio of 2G and 2.5G services that compete with our services.

In 2006, China Mobile began operating its own music WAP portal and procuring music content from music companies directly. Our revenues as a service provider have been adversely affected by this development, although some of this effect has been mitigated by China Mobile procuring music content from our affiliated music companies. China Mobile also began the practice of only including links to its own WVAS offerings on the embedded menus of mobile handsets with customized software for China Mobile users while excluding links to products from third party WVAS service providers like us. Such practice has adversely affected our revenues. Our business would likely be adversely affected if China Unicom or China Mobile or both decide to provide additional 2G and 2.5G services to mobile phone users, which compete with our services. In that case, we would not only face enhanced competition, but could be partially or completely denied access to the networks of these telecom operators which would adversely affect our revenue from WVAS.

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The popularity of our 2G and 2.5G services, and therefore revenues from these services and our profitability, would be adversely affected if our competitors offer more attractive and engaging services or our services are rendered obsolete by the introduction of newer technologies such as 3G.

The WVAS market is highly competitive, and our competitors may offer new or different services, which are more popular than our 2G and 2.5G services. Moreover, our services could be rendered obsolete by the introduction of newer technologies such as 3G mobile networks. The PRC government has not as yet granted any licenses for 3G mobile networks to any telecom operators, and it is not clear when such licenses will be granted. Although we are planning to transition our 2.5G services to 3G services when 3G licenses are awarded and 3G mobile networks are launched, it is difficult to predict the development of new mobile technologies or the types of services that will be popular on any new mobile networks. Accordingly, we cannot be certain whether any services we offer which are compatible with such new technologies will be successful.

China Mobile and China Unicom allow us to offer our services over their networks only if we achieve minimum customer usage, revenues and other criteria, and our revenues from 2.5G services depend in particular on our ability to meet those criteria to keep our services among the most popular offered through the telecom operators.

If we fail to achieve minimum customer usage, revenues and other criteria imposed by China Mobile or China Unicom at its discretion from time to time, our services could be excluded from the applicable mobile operator’s entire network at a provincial or national level, or we could be prevented from introducing new services. In addition, we believe that the success of our 2.5G services depends significantly on whether our services appear at the top of the menu on the first page of the list of services available in each service category on the telecom operators’ WAP portals. The ranking of services on these WAP page menus depends on the satisfaction of performance criteria established by the telecom operators from time to time. If we are excluded from any mobile operator’s network or are not able to keep our 2.5G services at the top of the service lists on any mobile operator’s WAP pages due to performance problems, our WVAS revenue would be substantially reduced, which would materially and adversely affect our overall financial condition and the market price of our ADSs.

We must rely on China Mobile and China Unicom to maintain accurate records of fees paid by users of our services, deduct service and network fees due to them and pay us fees due to us. Errors in record-keeping by the telecom operators could adversely affect our profitability and the market price of our ADSs.

We must rely on China Mobile and China Unicom to maintain accurate records of the fees paid by users and deduct the service and network fees due to them under our network service agreements. Specifically, the telecom operators provide us with monthly statements for our 2G services that do not provide itemized information regarding amounts paid for each of our services or calculations of the service and network fees. As a result, monthly statements that we have received from the telecom operators for our 2G services cannot be reconciled to our own internal records for the reasons discussed under “— China Mobile and China Unicom do not supply us with detailed information on billing and transmission failures, revenues, service or network fees or other charges, particularly with respect to our 2G services, and accordingly, it is difficult to analyze the factors affecting our financial performance.” In addition, we have only limited means to independently verify the information provided to us with respect to such 2G services because we do not have access to the telecom operators’ internal records. Rather, we can only seek consultations with the telecom operators to discuss the reasons for any discrepancies.

With respect to our 2.5G services, the telecom operators allow us limited access to their transmission and billing system information to monitor if our services are actually delivered and paid for, which information we then reconcile to our own internal records. In addition, the telecom operators in general provide us with monthly statements within two to three weeks after month end. To date, discrepancies between our internal records and the telecom operators’ confirmations have been insignificant. Nonetheless, we are still ultimately dependent on the ability of the telecom operators’ systems to accurately collect and analyze the relevant transmission and payment data regarding our services.

Because of the dominant market position of these telecom operators, we have limited leverage in challenging any discrepancies between their monthly statements and 2.5G system information, on the one hand, and our own records, on the other hand. Our profitability and the market price of our ADSs could be adversely affected if these telecom operators miscalculate the revenues generated from our services and our portion of those revenues.

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Our dependence on the billing records of China Mobile and China Unicom may adversely affect our ability to record, process, summarize and report revenue and other information regarding our WVAS. Any inaccuracies in our records and public reports could adversely affect our ability to effectively manage our business and the market price of our ADSs.

We maintain controls and procedures to ensure that financial and non-financial information regarding our business is recorded, processed, summarized and reported in a timely and accurate manner. However, as noted in the prior risk factor, we depend on the billing records of China Mobile and China Unicom and have only limited means to independently verify information provided by them. If the information they provide us is incorrect or incomplete, then our own internal records will also be incorrect or incomplete. Our business could be adversely affected if our management and board of directors make decisions based on deficient internal information, such as strategic initiatives involving new WVAS. Moreover, it is possible that, if information provided to us by the telecom operators were not correct or complete, our public reports could also be deficient, which could adversely affect the market price of our ADSs.

We recognize revenue for a portion of our 2G services on an accrual basis, based on an internal estimation process which involves the use of estimates of monthly revenues to the extent we are unable to obtain actual figures from the telecom operators before we finalize our financial statements, which could in turn require us to make adjustments to our financial statements.

Our financial statements through December 31, 2003 reflected our actual revenues as they appear on the telecom operators’ statements. However, starting from 2004, we recognized revenue for a portion of our 2G services (as well as for a smaller portion of our 2.5G services) on an accrual basis and plan to do so in the future as necessary in order to report our quarterly earnings on a timely basis. This involves the use of estimates of monthly revenues based on our internal records for the month and prior monthly confirmation rates with the telecom operators in prior months if we are unable to obtain actual figures from the telecom operators before we finalize our financial statements. We expect the effect of these estimates on our financial results will be more significant on our quarterly results of operations than on our annual results, as we are less likely to receive confirmation on all of our 2G revenues before we disclose our quarterly results. To the extent that our revenues have not been confirmed by the telecom operators for any reporting period, we will need to adjust our revenues in the subsequent periods in which these revenues are confirmed. Actual revenues may differ from prior estimates when unexpected variations in billing and transmission failures occur. Recognizing revenues on an accrual basis could potentially require us to later make adjustments to our financial statements if the telecom operators’ billing statements and cash payments are different from our estimates, which could adversely affect our reputation and the market price of our ADSs.

Our revenues and cost of revenues for 2G services, and to a lesser degree 2.5G services, are affected by billing and transmission failures and other discrepancies which are often beyond our control.

We do not collect fees for our services from China Mobile and China Unicom in a number of circumstances, including if:

• the delivery of our service to a customer is prevented because his or her phone is turned off for an extended period of time, the customer’s prepaid phone card has run out of value or the customer has ceased to be a customer of the applicable mobile operator;

• China Unicom or China Mobile experiences technical problems with its network, which prevent the delivery of our services to the customer;

• we experience technical problems with our technology platform that prevents delivery of our services; or

• the customer refuses to pay for our services due to quality or other problems.

These situations are known in the industry as billing and transmission failures, and we do not recognize any revenues for services which are characterized as billing and transmission failures. Billing and transmission failures therefore significantly lower the revenues we record. The failure rate for 2G services can vary among the telecom operators, and by province, and also has fluctuated significantly in the past, ranging on a monthly basis from 0.0% to 9.8% of the total billable messages which are reflected in our internal records during 2007.

Although we do not experience the same type of billing and transmission failures for our 2.5G services as we do for our 2G services, we do experience a discrepancy between the revenues recorded by our internal system and the revenues confirmed by the telecom operators. This difference has historically averaged approximately 2% per month and relates to services that are provided but are not billed to the user for a variety of reasons associated with the manner in which the telecom operators register new users and manage their internal billing reconciliation process.

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We are also required to pay some of our content providers a percentage of the revenues received from or confirmed by the telecom operators with respect to services incorporating the content providers’ products. In calculating the fees payable to these providers, we make estimates to take into account billing and transmission failures, which may have been applicable to the services incorporating the providers’ products, and reduce the fees payable by us accordingly. Nonetheless, as estimates involve making assumptions which may prove inaccurate, we have in the past paid, and may continue to pay, such providers fees which are disproportionate to what we have been paid for the relevant service. Our costs of services, gross margins and profitability could be adversely affected if, due to problems in estimating billing and transmission failures, we overpay service providers on a consistent and continuous basis.

China Mobile and China Unicom do not supply us with detailed information on billing and transmission failures, revenues, service and network fees or other charges, particularly with respect to our 2G services, and accordingly it is difficult to analyze the factors affecting our financial performance.

China Unicom’s and China Mobile’s monthly statements to service providers, including our company, regarding the services provided through their networks currently do not contain information about billing and transmission failures, revenues, service and network fees or other charges or detailed information on a service-by-service basis, particularly with respect to our 2G services. While the telecom operators allow third party service providers such as our company to have access to their 2.5G transmission and billing systems, such access is limited and does not offer complete information on all fee calculations and other charges. Moreover, China Mobile and China Unicom have from time to time imposed penalty charges and service suspensions on us when they believe we have contravened their customer service policies. The information provided by the telecom operators does not, however, identify exactly which services caused the problem or the time period in which they occurred.

As a result of the foregoing, we are unable to effectively analyze the factors that affect our financial performance and can only estimate our revenues and cost of revenues by service type. We are also unable to confirm which of our 2G services were transmitted but resulted in billing and transmission failures. As a result, with respect to specific services, we are not able to definitively calculate and monitor revenues, margin and other financial information, such as average revenues per-user by service and total revenues per-user by service, and also cannot definitively determine which of these services are or may be profitable. Moreover, we do not know what adjustments, if any, should be made with respect to specific services to avoid inadvertent violations of the telecom operators’ customer service policies.

The services we offer and the prices we charge are subject to approval by China Mobile and China Unicom, and if requested approvals are not granted in a timely manner or approved services are suspended or terminated, our competitive position, revenue and profitability could be adversely affected.

We must obtain approval from China Mobile and China Unicom with respect to each 2G and 2.5G service that we propose to offer to their customers and the pricing for such service. In addition, any changes in the pricing of our existing services must be approved in advance by these operators. There can be no assurance that such approvals will be granted in a timely manner or at all. Failure to obtain, or a delay in, obtaining such approvals could place us at a competitive disadvantage in the market and adversely affect our revenue and profitability. In addition, the recent more rigorous enforcement of customer service policies by China Mobile and China Unicom could result in heightened scrutiny of our existing or proposed services and pricing by the telecom operators. This could, in turn, result in delays in their approving new services, our failure to obtain approval for new services or suspensions or termination of all or part of our existing services or reductions in approved pricing of our services. The occurrence of any of these actions could materially and adversely affect our revenues.

Risks Related to Our Music Business

The businesses of our affiliated music companies are subject to constantly changing consumer tastes.

In order to implement our strategy to enter the music development, production and distribution and concert promotion industries, we formed a new affiliated Chinese entity, Hurray! Digital Music Technology Co., Ltd. in November 2005, whose name was changed to Hurray! Digital Media Technology Co., Ltd. (“Hurray! Digital Media”). In November 2005, Hurray! Digital Media agreed to acquire 60% of the equity interest in Beijing Freeland Wuxian Digital Music Technology Co., Ltd., whose name was subsequently changed to Hurray! Freeland Digital Music Technology Co., Ltd. (“Freeland Music”) to which certain entities of the Freeland Group, a group of affiliated companies in China engaged in the production and distribution of audio and visual products, contributed their respective music businesses. In December 2005, Hurray! Digital Media acquired 51% of the equity interest in Beijing Huayi Brothers Music Co., Ltd. (“Huayi Brothers Music”), a subsidiary of Huayi Brothers Group. In November 2006, Hurray! Digital Media agreed to acquire 30% of the equity interest in Beijing New Run Entertainment Development Co., Ltd. (“New Run”), and in March 2007, Hurray! Digital Media agreed to acquire 65% of the equity interest in Guangzhou Hurray! Secular Bird Culture Communication Co., Ltd. (“Secular Bird”). In April 2007, Freeland Music acquired a 51% equity interest in Beijing Hurray! Fly Songs International Culture Co., Ltd. (“Fly Songs”). These five companies, which we refer to as our affiliated music companies, were either successful top-tier domestic independent record companies in China, which engage in artist development, music production and music distribution, or, in the case of Fly Songs, a successful concert promotion company.

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Each music recording and concert performance is an individual artistic work. The commercial success of a music product or concert depends on consumer taste, the quality and acceptance of competing offerings or events released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which can change quickly. Accordingly, there can be no assurance as to the financial success of any particular product, the timing of such success, or the popularity of any particular artist.

The future success of our affiliated music companies depends on their ability to continue to develop recorded music and organize concerts that are interesting and engaging to our target audience, primarily users of the Internet and WVAS in the case of our recorded music. If our audience determines that the content does not reflect its tastes, then our audience size could decrease, which would adversely affect our results of operations. The ability of Freeland Music, Huayi Brothers Music, New Run and Secular Bird to develop compelling content depends on several factors, including the following:

• technical expertise of their production and recording staff,

• popularity of the artists of our affiliated music companies,

• access to songs or songwriters, and

• effectiveness of online and offline marketing and promotional activities.

Furthermore, our affiliated music companies must invest significant amounts for development prior to the release of any product or event. These costs may not be recovered if the release is unsuccessful. There can be no assurance that such products or events will be successful releases or that any product or events will generate revenues sufficient to cover the cost of development. Because we are relatively inexperienced in the music industry, we cannot predict whether our efforts in this area will be successful.

Our affiliated music companies may unknowingly purchase or license songs, which have already been, or may in the future be, sold or licensed to third parties, which could create costly legal disputes over intellectual property rights with such third parties and the songs’ authors or composers.

Our affiliate music companies generally purchase or license songs for their artists from the original authors or composers of the songs. In China, original authors and composers sometimes license or sell their songs to multiple music companies without informing each such company. In that case, our affiliated music companies may unknowingly purchase or license songs that have already been, or may in the future be, licensed or sold to one or more third parties. As a result, disputes may arise between our affiliated music companies, third party music companies and original authors or composers over the rights to particular songs. Any such dispute may require our affiliated music companies to incur significant costs to investigate and resolve them, including potentially the payment of damages to third parties.

In addition, our affiliated music companies license and distribute songs to third parties such as providers of Internet and WVAS, which then distribute the music content to their customers. Such companies may be subject to claims by such providers or any of their other customers if the customers suffer losses as a result of a dispute over the ownership of copyrights to songs provided to them.

Our affiliated music companies often enter into contracts with third parties on behalf of their artists. If those artists fail to satisfy the requirements under those contracts, our affiliated music companies may be subject to claims, which could expose them to significant costs and business disruption.

Our affiliated music companies often enter into various types of contracts with third parties on behalf of their artists, including contracts relating to album publishing, advertising and promotional activities and public performances. If an artist fails to satisfy the requirements under any such contract for whatever reason (such as health problems), then our affiliated music companies may be deemed to have breached the relevant contracts. In that case, our affiliated music companies may be subject to claims for breach of contract by the counterparty to the contracts, which could expose them to significant costs and business disruption.

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Revenue from our affiliated music companies may not grow as fast as expected due to continuing problems of copyright enforcement in China and retention of popular artists.

It can be difficult to enforce certain copyright protections in China. In particular, the music industry in China has suffered from serious piracy issues for many years. Our management estimates that for every dollar of copyrighted CD sales, there are approximately ten dollars of pirated CD sales in China. In addition, it can be difficult to retain artists who become popular and generate large revenue for us, given that such artists may decide to renegotiate with us or contract with other music content providers. This is a common problem faced by music companies in the PRC. The revenue generated from our affiliated music companies may continue to be adversely affected by the difficulty in enforcing copyrights and retaining popular artists, and therefore may not grow as fast as anticipated.

Additional Risks Related to Our Company

Our recent acquisitions and strategic investments and any future acquisitions or investments may have an adverse effect on our ability to manage our business and may subject us to unforeseen liabilities.

Selective acquisitions and strategic investments, such as our 2007 acquisitions of Shanghai Saiyu Information Technology Co., Ltd. (“Shanghai Saiyu”), Henan Yinshan Digital Network Technology Co., Ltd. (“Henan Yinshan”) and Fly Songs as described in Item 4. “Information About the Company—History and Development of the Company,” form part of our strategy to further expand our business. Such companies may not be as successful as they have been in the past, and may also not perform as well as we expect. Moreover, the integration of such companies into our operations has required significant attention from our management. In particular, we must ensure that the relationships of our newly acquired wireless value-added service companies with the telecom operators are not disrupted by the acquisitions. In addition, our management must also devote significant resources to enhancing its knowledge of the music development, production and distribution business in China, with which we have limited experience. Future acquisitions will also likely present similar challenges.

The diversion of our management’s attention and any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business. Acquisitions expose us to potential risks, including risks associated with the assimilation of new operations, services and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenues to offset the costs and expenses of acquisitions and potential loss of, or harm to, relationships with employees and content providers as a result of integration of new businesses. The acquisition of any company could also subject us to unforeseen liabilities arising from the acquisition itself or the operations of the company or both.

We face intense competition, which could cause us to lose market share and materially adversely affect our business and results of operations.

The Chinese market for WVAS is changing rapidly and is intensely competitive. We compete principally with four groups of 2G and 2.5G service providers in China, which include companies that focus primarily or entirely on these markets, major Internet portal operators in China, niche service providers and the telecom operators.

There are low barriers to entry for new competitors in the 2G and 2.5G services market and many of our competitors have longer operating histories in China, greater name and brand recognition, larger customer bases and databases, significantly greater financial, technological and marketing resources and superior access to original content than we have. Recently, certain of the telecom operators have begun offering WVAS directly to their customers. See “—Our revenue from WVAS may be adversely affected by China Unicom or China Mobile providing their own full portfolio of 2G and 2.5G services that compete with our services” above. As a result, our existing or potential competitors may in the future achieve greater market acceptance and gain additional market share, which in turn could reduce our revenues.

With respect to our music business, we face significant competition from two groups of competitors. The first group consists of traditional record companies, which are extending downstream to establish their own WVAS or Internet services companies in China. Such competitors include international record companies and independent labels based in Hong Kong, Taiwan and mainland China, which have longer operating histories, larger music libraries and greater pools of popular artists in comparison to our affiliated music companies. The second group of competitors consists of WVAS providers that focus on music-related products and have extended upstream to establish their own music production businesses in China. See Item 4.B. “Business Overview—Competition.”

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We operate in rapidly evolving industries, which may make it difficult for investors to evaluate our business.

We began commercially offering WVAS in China in 2001, and since that time, the technologies and services used in the WVAS industry in China have developed rapidly. Moreover, we have recently entered the music development, production and distribution business in China, which is also rapidly evolving. As a result of this rapid and continual change, you should consider our prospects in light of the risks and difficulties frequently encountered by companies in an early stage of development. These risks include our ability to:

• attract and retain users for our 2G and 2.5G services,

• expand the services that we offer,

• respond effectively to rapidly evolving competitive and market dynamics and address the effects of mergers and acquisitions among our competitors,

• effectively manage our new music businesses and leverage our music library,

• continue to develop reliable, state-of-the-art mobile service provisioning and management software for telecom operators,

• maintain, expand and enhance our relationships with telecom operators so that they will allow us to offer our 2G and 2.5G services over their networks, and

• increase awareness of our brand and user loyalty.

Due to these factors, there can be no certainty that we will maintain or increase our current share of the highly competitive markets in which we operate.

We depend on key personnel for the success of our business. Our business may be severely disrupted if we lose the services of our key executives and employees or fail to add new senior and middle managers to our management.

Our future success is heavily dependent upon the continued service of our key executives, namely, Qindai Wang, our chairman and chief executive officer, Shaojian (Sean) Wang, our president and chief operating officer since May 2006 and acting chief financial officer since June 2007, Yuqi Shi, our vice president in charge of WVAS business since 2007, and Feng Wu, our vice president in charge of music companies since 2006. Our future success is also dependent upon our ability to attract and retain qualified senior and middle managers to our management team. If one or more of our current or future key executives or employees are unable or unwilling to continue in their present positions, we may not be able to easily replace them, and our business may be severely disrupted. In addition, if any of these key executives or employees joins a competitor or forms a competing company, we could lose customers and suppliers and incur additional expenses to recruit and train personnel. Each of our executive officers has entered into an employment agreement and a confidentiality, non-competition and non-solicitation agreement with us. As we believe is customary in our industry in China, we do not maintain key-man life insurance for any of our key executives.

We also rely on a number of key technology staff for the development and operations of our various businesses. Given the competitive nature of our industry, the risk of key technology staff departing our company is high and any such departure could disrupt our operations.

Rapid growth and a rapidly changing operating environment strain our limited resources. Our future growth could be adversely affected if we cannot manage our expansion effectively.

We have limited operational, administrative and financial resources, which may be inadequate to sustain the growth we want to achieve. If the user base of our WVAS increases or our affiliated music companies expand, we will need to increase our investment in our technology infrastructure, facilities and other areas of operations, in particular our product development, customer service and sales and marketing, which are important to our future success. If we are unable to manage our growth and expansion effectively, the quality of our services and our customer support could deteriorate and our business may suffer. For example, any such performance issue could prompt China Unicom, China Mobile, China Telecom or China Netcom to cease offering our services over their networks. Our future success will depend on, among other things, our ability to:

• develop and quickly introduce new WVAS, adapt our existing services and maintain and improve the quality of all of our services, particularly as the market for 2.5G services evolves and matures,

• effectively maintain our relationships with China Mobile and China Unicom, enhance our relationships with China Telecom and China Netcom and establish new relationships with any other recipients of mobile licenses in China so that we are able to offer WVAS over their networks,

• attract and retain popular artists for our music businesses,

• continue training, motivating and retaining our existing employees, including our senior management, and attract and integrate new employees,

• develop and improve our operational, financial, accounting and other internal systems and controls, and

• maintain adequate controls and procedures to ensure that our periodic public disclosure under applicable laws, including U.S. securities laws, is complete and accurate.

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Any failures of the mobile telecommunications network, the Internet or our technology platform may reduce use of our services and our revenues.

Our WVAS are offered through the networks of China Unicom, China Mobile, China Telecom and, China Netcom. In addition, we use our website to promote our services and enable users to order them. Thus, both the continual accessibility of the telecom operators’ networks and the performance and reliability of China’s Internet infrastructure are critical to our ability to attract and retain users. Any server interruptions, break-downs or system failures, including failures caused by computer viruses, hacking or sustained power shutdowns, floods or fire causing loss or corruption of data or malfunctions of software or hardware equipment, or other events outside our control that could result in a sustained shutdown of all or a material portion of the mobile networks, the Internet or our technology platform, could adversely impact our ability to provide our services to users and decrease our revenues.

Our corporate structure could be deemed to be in violation of current or future Chinese laws and regulations, which could adversely affect our ability to operate our business effectively or at all.

In connection with China’s entry into the World Trade Organization, or WTO, foreign investment in telecommunications and Internet services in China has been liberalized to allow for a maximum of 50% foreign ownership in value-added telecommunications and Internet services in China. To comply with these ownership requirements, we have implemented a structure which is similar to those used by several of our competitors such as SINA, Sohu, NetEase, Linktone and TOM Online by entering into various agreements with affiliated companies incorporated in China (which we refer to as our affiliated Chinese entities), including Hurray! Solutions Ltd. (“Hurray! Solutions”), Beijing Cool Young Information Technology Co., Ltd. (“Beijing Cool Young”), Beijing WVAS Solutions Ltd. (“WVAS Solutions”), Beijing Enterprise Network Technology Co., Ltd. (“Beijing Network”), Beijing Palmsky Technology Co., Ltd. (“Beijing Palmsky”), Beijing Hutong Wuxian Technology Co., Ltd. (“Beijing Hutong”), Shanghai Magma Digital Technology Co., Ltd. (“Shanghai Magma”), Beijing Hengji Weiye Electronic Commerce Co., Ltd. (“Hengji Weiye”), Shanghai Saiyu and Henan Yinshan and their shareholders. Each of these affiliated Chinese entities is owned by various individuals in China.

We do not have any direct ownership interest in our affiliated Chinese entities but have entered into a series of agreements with these entities through which we intend to be able to assert a degree of control and management. In addition, we control Hurray! Digital Media through three of our affiliated Chinese entities, Hurray! Solutions, Beijing Network and Beijing Hutong. It is possible that the relevant Chinese authorities could, at any time, assert that our agreements with our affiliated Chinese entities or any portion or all of the existing or future ownership structure and businesses of each of our company, our wholly-owned subsidiary, Beijing Hurray! Times Technology Co., Ltd. (“Beijing Hurray! Times”), or our affiliated Chinese entities violate existing or future Chinese laws, regulations or policies. It is also possible that the new laws or regulations governing the telecommunication or Internet sectors in China that have been adopted or may be adopted in the future will prohibit or restrict foreign investment in, or other aspects of, any of our, Beijing Hurray! Times’ or our affiliated Chinese entities’ current or proposed businesses and operations. In addition, these new laws and regulations may be retroactively applied. If any of our company, Beijing Hurray! Times and our affiliated Chinese entities is found to be in violation of any existing or future Chinese laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violation, including, without limitation, the following:

• levying fines,

• confiscating the incomes of any of our company, Beijing Hurray! Times or our affiliated Chinese entities,

• revoking the business licenses of any of our company, Beijing Hurray! Times or our affiliated Chinese entities,

• shutting down servers or blocking websites maintained by any of our company, Beijing Hurray! Times or our affiliated Chinese entities,

• restricting or prohibiting our use of our financial assets to finance our business and operations in China,

• requiring any of us, Beijing Hurray! Times or our affiliated Chinese entities to restructure our ownership structure or operations, and/or

• requiring any of us, Beijing Hurray! Times or our affiliated Chinese entities to discontinue any portion of or all of their WVAS.

In any such case, we could be required to restructure our operations, which could adversely affect our ability to operate our business effectively or at all.

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We depend upon agreements with our affiliated Chinese entities for the success of our business. These agreements may not be as effective in providing operational control as direct ownership of these businesses and may be difficult to enforce.

Because we conduct substantially all our business in China, and because we are restricted to a certain extent by the Chinese government from owning telecommunications or Internet operations in China, we depend on our affiliated Chinese entities, in which we have no direct ownership interest, to provide those services through agreements. These agreements may not be as effective in providing control over our telecommunications or Internet operations as direct ownership of these businesses. For example, our affiliated Chinese entities could fail to take actions required to operate our business, such as renewing their business licenses or services permits or entering into service contracts with China Unicom, China Mobile and other telecom operators. Moreover, the fees for our services are paid by the telecom operators directly to our affiliated Chinese entities, which are then obligated at our request to transfer substantially all of such fees to our wholly owned subsidiary, Beijing Hurray! Times. If our affiliated Chinese entities fail to perform their obligations under these agreements, we may have to rely on legal remedies under Chinese law, which we cannot assure you would be effective or sufficient. In particular, the legal environment in China is not as developed as in other jurisdictions, such as the United States. Thus, Chinese courts are often inexperienced in handling corporate disputes, and different courts may apply laws and procedures in different ways.

We do not believe that we have a reasonable basis to predict the likelihood of the occurrence of the foregoing risks. However, if there is such an occurrence, it could potentially have a significant adverse effect on our ability to operate our business and on our financial condition.

We generate our internal funds almost exclusively from Beijing Hurray! Times. If that company is restricted from paying dividends to us, we may lose almost all of our internal source of funds.

Except for a certain amount of cash held by Hurray! Holding Co., Ltd. (approximately $49 million as of December 31, 2007), we have no significant assets other than our equity interest in Beijing Hurray! Times. We are a holding company, and we rely principally on dividends from Beijing Hurray! Times and technical consulting and service fees, license fees and other fees paid to Beijing Hurray! Times by our affiliated Chinese entities for our cash requirements, including any debt we may incur. We are likely to lose all of our sources of funds if Beijing Hurray! Times is restricted from paying dividends to us. However, Chinese legal restrictions permit payment of dividends only out of net income as determined in accordance with Chinese accounting standards and regulations, which in turn restricts our ability to receive these revenues.

Under Chinese law, Beijing Hurray! Times is also required to set aside a portion of its after-tax profit calculated under PRC generally accepted accounting principles, or PRC GAAP, for which the legal minimum requirement is 10%, to a non-distributable general reserve fund beginning in its first profitable year after offsetting prior year’s cumulative losses and to certain other non-distributable funds at an amount determined by Beijing Hurray! Times. The amount of reserves was nil as of December 31, 2007 since Beijing Hurray! Times incurred an operating loss in 2007. This reserve fund can only be used for specific purposes and is not distributable as cash dividends. Dividends paid to us by our subsidiaries in China will also be subject to withholding tax under the new tax laws adopted in China. See “—Recent changes in PRC tax laws could have a material adverse effect on our operating results.” If further restrictions on payments of dividends by our subsidiary are implemented under Chinese law, we may not be able to access our internal source of funds.

Our revenues may fluctuate significantly and may adversely affect the market price of our ADSs.

Our revenues and results of operations have varied in the past and may continue to fluctuate in the future. Many of the factors that cause such fluctuation are outside our control. Steady revenues and results of operations will depend largely on our ability to:

• attract and retain users in the increasingly competitive WVAS market in China,

• maintain and grow our 2G and 2.5G market share and revenues, and when launched, successfully offer 3G services,

• successfully implement our business strategies, including integrating our recent strategic acquisitions with our existing core business, and

• update and develop our services, technologies and content, which is highly complex.

Because the WVAS industry in China is new and rapidly evolving, our experience in the music industry is limited and our business has experienced significant volatility in terms of financial results as a result of the factors stated above, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance. It is possible that future fluctuations may cause our results of operations to be below the expectations of market analysts and investors. This could cause the market price of our ADSs to decline.

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We may not be able to adequately protect our intellectual property, and we may be exposed to infringement claims by third parties.

We believe the copyrights, service marks, trademarks, trade secrets and other intellectual property we use are important components of our WVAS. In addition, our affiliated music companies are substantially dependent on their ability to protect their rights over their music content. Any unauthorized use of such intellectual property by third parties may adversely affect our current and future revenue from such services and software, as well as our reputation. For example, rampant piracy in China has negatively affected offline sales of CDs and tapes by our affiliated music companies, and if piracy becomes a problem in online distribution channels, their financial results would be further materially adversely affected. We rely primarily on the intellectual property laws and contractual arrangements with our employees, clients, business partners and others to protect such intellectual property rights. Third parties may be able to obtain and use such intellectual property without authorization. Furthermore, the validity, enforceability and scope of protection of intellectual property in the Internet, wireless value-added and music industries in China is uncertain and still evolving, and these laws may not protect intellectual property rights to the same extent as the laws of some other jurisdictions. In particular, the intellectual property law in China is less developed than in the United States and, historically, China has often not protected private parties’ intellectual property rights to the same extent as such parties might enjoy in the United States. Moreover, litigation may be necessary in the future to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources, and have a material adverse effect on our business, overall financial condition and results of operations.

Due to the fact that we aggregate content and applications for our WVAS, and because our services may be used for the distribution of information through, for example, our wireless community services, claims may be filed against us for defamation, negligence, copyright or trademark infringement or other violations. In addition, third parties could assert claims against us for losses in reliance on information distributed by us. For example, if we are found to have infringed any intellectual property rights of others, we may be enjoined from using such intellectual property, and we may incur licensing fees or be forced to develop alternative intellectual property. While the vast majority of claims that have been asserted against us in the past have not developed beyond the demand letter stage and do not ultimately result in liability to us, we may also incur significant costs in investigating and defending such claims. We have not purchased liability insurance for these risks.

We have limited business insurance coverage, which could expose us to significant costs and business disruption.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products, and do not, to our knowledge, offer business liability insurance. As a result, we do not have any business liability insurance coverage for our operations. Moreover, while business disruption insurance is available, we have determined that the risks of disruption and cost of the insurance are such that we do not require it at this time. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources, particularly if it affects our technology platform which we depend on for delivery of our WVAS.

We believe that we were a passive foreign investment company (“PFIC”) for taxable years 2006 and 2007 and are likely a PFIC for the current taxable year of 2008, which could result in adverse U.S. federal income tax consequences to U.S. investors.

We will be classified as a PFIC for U.S. tax purposes for a taxable year if either (a) 75% or more of our gross income for such taxable year is passive income, or (b) 50% or more of the average percentage of our assets during such taxable year either produce passive income or are held for the production of passive income. For such purposes, if we directly or indirectly own 25% or more of the shares of another corporation, we will be treated as if we (a) held directly a proportionate share of the other corporation’s assets, and (b) received directly a proportionate share of the other corporation’s income. The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and assets, including goodwill, from time to time. We believe that we were a PFIC for taxable years 2006 and 2007 and are likely to be classified as a PFIC for the current taxable year of 2008, although such determination cannot be made with certainty until the end of the taxable year. Such characterization could result in adverse U.S. federal income tax consequences to a U.S. investor. For example, if we are a PFIC, then “excess distributions” to a U.S. investor, and any gain realized on the sale or other disposition of our ADSs will be allocated ratably over the U.S investor’s holding period for the ADSs, the amount allocated to the current taxable year and any year prior to our becoming a PFIC will be taxed as ordinary income; and (iii) the amount allocated to each of the other taxable years will be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year. Additionally an interest charge for the deemed deferral benefit will be imposed with respect to the resulting tax attributable to each such other taxable year and the U.S. investor will be subject to U.S. tax reporting requirements. Some of these adverse tax consequences may be avoided if the U.S. investor makes a “mark-to-market” election for the ADSs.

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Accordingly, the adverse U.S. federal income tax consequences described above could apply to you if you are a U.S. investor. Given the complexity of the issues regarding our classification as a PFIC, U.S. investors are urged to consult their own tax advisors for guidance as to the U.S. federal, state and local and other tax consequences of our status as a PFIC in light of the particular circumstances applicable to such U.S. investor, as well as the availability of and procedures for making a mark-to-market or other available election. For further discussion of the adverse U.S. federal income tax consequences of our classification as a PFIC, see “Taxation” below.

Anti-takeover provisions in our charter documents could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management.

Our amended and restated articles of association include two provisions, which could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management. First, our amended and restated articles of association provide for a classified board of directors. Second, our board of directors has the right to issue preference shares without shareholder approval, which could be used to institute a “poison pill” that would work to dilute a potential hostile acquirer’s ownership interest in our company, effectively preventing acquisitions that have not been approved by our board of directors.

Shareholder rights under Cayman Islands law may differ materially from shareholder rights in the United States, which could adversely affect the ability of us and our shareholders to protect our and their interests.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Law (2007 Revision) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders, and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law in this area may not be as clearly established as they would be under statutes or judicial precedent in existence in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate laws. Moreover, our company could be involved in a corporate combination in which dissenting shareholders would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations. Also, our Cayman Islands counsel is aware of only a few reported cases of derivative actions having been brought in a Cayman Islands court. Such actions are ordinarily available in respect of United States corporations in U.S. courts. Finally, Cayman Islands companies may not have standing to initiate shareholder derivative actions before the federal courts of the United States. As a result, our public shareholders may face different considerations in protecting their interests in actions against the management, directors or our controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States, and our ability to protect our interests may be limited if we are harmed in a manner that would otherwise enable us to sue in a United States federal court.

All participants of our existing equity compensation plans who are PRC citizens may be required to register with the State Administration of Foreign Exchange of the PRC, or the SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt additional equity compensation plans for our directors and employees and other parties under PRC law.

On April 6, 2007, the capital account department of the SAFE issued the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Option Plan or Stock Option Plan of an Overseas Listed Company, or Circular 78. It is not clear at this time whether Circular 78 covers all forms of equity compensation plans, including restricted purchase share awards granted by us, or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company such as our company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings by July 5, 2007 if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. In May 29, 2007, the General Affairs Department of the SAFE issued the Notice on Printing and Distributing the Operating Rules for the Notice of the State Administration of Foreign Exchange on the Relevant Issues about Foreign Exchange Control over the Financing and Return Investment of Domestic Residents through Overseas Special Purpose Companies, or Circular 106. This notice also requires PRC citizens who hold stock options pursuant to a company’s equity incentive plan to register with the SAFE. We submitted the required registration on behalf of our stock option holders who are PRC citizens with the SAFE in December 2007 and such registration is currently pending approval. Although Circular 78 has not yet been made publicly available nor has it been formally promulgated by the SAFE, and we have submitted the registration with the SAFE on behalf of our stock option holdings who are PRC citizens stock option holders pursuant to Circular 106, any failure to comply with such provisions may subject us and the participants of our equity compensation plans who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our personnel which is currently a significant component of the compensation of many of our PRC employees, as a result of which our business operations may be adversely affected.

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Recent changes in PRC tax laws could have a material adverse effect on our operating results.

In March 2007, the National People’s Congress of China enacted a new Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. In addition, the Implementation Rules of the New Enterprise Income Tax Law, or the Implementation Rules were promulgated by the PRC State Council on December 6, 2007 and the Notice on Implementation of Transitional Arrangements for Preferential Policies of Enterprise Income Tax, or the Transitional Arrangements Notice, was promulgated by the PRC State Council on December 26, 2007. Under the New EIT system, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and foreign-invested enterprises. Enterprises established prior to March 16, 2007 eligible for preferential tax rate of 15% according to the then effective PRC Enterprise Income to Law for Foreign-Invested Enterprise and Foreign Enterprise tax laws and administrative regulations shall be subject to transitional rules as stipulated in the Transitional Arrangements Notice. In addition, certain qualified high and new technology enterprises strongly supported by the state may still benefit from a preferential tax rate of 15% under the New EIT Law if they meet the definition of “qualified high and new technology enterprise” strongly supported by the state set out in the Implementation Rules which refers to companies hold independent ownership of core intellectual properties and simultaneously meet a list of other criteria as stipulated. As a result, if our PRC subsidiaries qualify as qualified high and new technology enterprises strongly supported by the state under the new EIT Law, they will continue to benefit from a preferential tax rate of 15%. Otherwise, the applicable tax rate of our PRC subsidiaries may be subject to PRC income tax at a rate of 25% starting from 2008 under the New EIT system. We have used the new standard rates for calculation of deferred taxes until the necessary approvals are obtained.

Under the new Enterprise Income Tax law effective on January 1, 2008, the rules for determining whether an entity is resident in the PRC for tax purposes have changed and the determination of residence depends amongst other things on the “place of actual management.” If Hurray! Holding Co., Ltd., or our non-PRC subsidiaries, were to be determined to be a PRC resident for tax purposes, it or they, would be subject to tax in the PRC on our worldwide income including the income arising in jurisdictions outside the PRC. We have evaluated our resident status under the new law and related guidance and believes Hurray! Holding Co., Ltd. would not be a PRC resident for PRC income tax purposes.

As Hurray! Holding Co., Ltd. would be non-resident for PRC tax purposes, dividends paid to it out of profits earned after January 1, 2008 from its PRC subsidiaries would be subject to a withholding tax of 10%.

Aggregate undistributed earnings of our subsidiaries and affiliates located in the PRC that are available for distribution to the Company at December 31, 2007 are considered to be indefinitely reinvested under APB opinion No. 23, “Accounting for Income Taxes — Special Areas,” and accordingly, no provision has been made for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to Hurray! Holding Co., Ltd.. The PRC tax authorities have also clarified that distributions made out of retained earnings accumulated prior to January 1, 2008 are not subject to the withholding tax.

LEGAL RISKS RELATED TO WIRELESS AND INTERNET SERVICES

The telecommunication laws and regulations in China are evolving and subject to interpretation and will likely change in the future. If we are found to be in violation of current or future Chinese laws or regulations, we could be subject to severe penalties.

Although our 2G and 2.5G services are subject to general regulations regarding telecommunication services, specific laws at the national level governing WVAS, such as our services related to short messaging service (“SMS”) and WAP, have only been issued recently. The interpretation and application of newly issued Chinese laws and regulations and the possibility of new laws or regulations being adopted have created significant uncertainty regarding the legality of existing and future foreign investments in, and the businesses and activities of, Chinese companies providing 2G and 2.5G services, including our affiliated Chinese entities. Many providers of 2G and 2.5G services have obtained various value-added telecommunication services licenses.

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Certain of our affiliated Chinese entities, Hurray! Solutions, Beijing Palmsky, Beijing Network, Hengji Weiye, Beijing Hutong, Shanghai Magma, Shanghai Saiyu, and Henan Yinshan, have been granted an inter-provincial value-added telecommunication license by the MII that permits it to conduct inter-provincial operations. Our affiliated Chinese entity, WVAS Solutions, has been granted a value-added telecommunication service license issued by the local Beijing Municipal Telecommunications Administration Bureau. This license may not be sufficient to authorize WVAS Solutions to provide value-added telecommunication services on an inter-provincial basis. We cannot be certain that any local or national value-added telecommunication license requirements will not conflict with one another or that any given license will be deemed sufficient by the relevant governmental authorities for the provision of this category of service, due to the lack of a comprehensive body of laws and regulations governing our 2G and 2.5G services. It is also possible that new national legislation might be adopted to regulate such services.

If we or our subsidiaries or affiliates are found to be in violation of any existing or future Chinese laws or regulations regarding our 2G and 2.5G services or Internet access which is discussed in the following risk factor, the relevant Chinese authorities have the power to, among other things:

• levy fines,

• confiscate our income or the income of our affiliates,

• revoke our business license or the business license of our affiliates,

• shut down our servers or the servers of our affiliates and/or blocking any Web or WAP sites that we operate, and

• require us to discontinue any portion or all of our 2G and 2.5G services business.

The regulation of Internet website operators is also new and subject to interpretation in China, and our business could be adversely affected if we are deemed to have violated applicable laws and regulations.

Our affiliate, Hurray! Solutions, and some of our other affiliated Chinese entities operate Internet websites in China, which are one of the channels through which our services are offered. The interpretation and application of existing Chinese laws and regulations, the stated positions of the main governing authority, the MII, and the possibility of new laws or regulations being adopted have created significant uncertainty regarding the legality of existing and future foreign investments in, and the businesses and activities of, Chinese companies with Internet operations, including ours. In particular, the MII has stated that the activities of Internet content providers are subject to regulation by various Chinese government authorities, depending on the specific activities conducted by the Internet content provider. We cannot be certain that the commercial Internet content provider license issued by the relevant government agencies overseeing the telecommunications industry or any value-added telecommunication license held by Hurray! Solutions or our other affiliated Chinese entities will satisfy these requirements. Our failure to comply with applicable Chinese Internet regulations could subject us to severe penalties as noted in the prior risk factor.

In particular, regulatory and policy changes by MII and the telecom operators can be unpredictable and have caused operating channels to become increasingly unavailable for marketing and promotion. As a result, we have diversified our marketing and promotion channels and developed direct media advertising, Internet marketing alliances, handset vendor partnerships, as well as offline channels such as record stores and convenient stores. These new marketing and promotion methods can be costly and may not be entirely effective in developing new business, which in turn, may adversely affect our customer base and revenues.

RISKS RELATED TO DOING BUSINESS IN CHINA

A slowdown in the Chinese economy may slow down our growth and profitability.

The growth of the Chinese economy has been uneven across geographic regions and economic sectors. There can be no assurance that growth of the Chinese economy will be steady or that any slowdown will not have a negative effect on our business. The Chinese government has, in the past, used macroeconomic tools and regulations to slow the rate of growth of the Chinese economy and may take similar measures in the future, the results of which are difficult to predict. The Chinese economy overall affects our profitability as expenditures for wireless value-added and music content services may decrease due to slowing domestic demand. More specifically, increased penetration of WVAS in the less economically developed central and western provinces of China will depend on their achieving certain income levels so that mobile handsets and related services become affordable to a significant portion of the population. Moreover, sales of music content are substantially dependent on the level of discretionary consumer spending in China.

The Chinese legal system embodies uncertainties which could limit the legal protections available to you and could also adversely affect our ability to operate our business.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Although legislation in China over the past 20 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements in China, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us, and foreign investors, including you. In addition, the Chinese government may enact new laws or amend current laws that may be detrimental to our current contractual arrangements with our Chinese affiliates, which may in turn have a material adverse effect on our ability to operate our business.

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Any occurrence of pandemic avian influenza or other widespread public health problem, or any recurrence of severe acute respiratory syndrome, or SARS, could adversely affect our business and results of operations.

An outbreak of pandemic avian influenza or other widespread public health problem, or a renewed outbreak of SARS in China, where all of our revenues are derived, and in Beijing, where our operations are headquartered, could have a negative effect on our operations. Our operations may be affected by a number of health-related factors, including the following:

• quarantines or closures of some of our offices which would severely disrupt our operations,

• the sickness or death of our key officers and employees, and

• a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our business and results of operations.

Changes in China’s political and economic policies could harm our business.

The economy of China has historically been a planned economy subject to governmental plans and quotas and has, in certain aspects, been transitioning to a more market-oriented economy. Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of China, we cannot predict the future direction of these economic reforms or the effects these measures may have on our business, financial position or results of operations. In addition, the Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD. These differences include:

• economic structure,

• level of government involvement in the economy,

• level of development,

• level of capital reinvestment,

• control of foreign exchange,

• methods of allocating resources, and

• balance of payments position.

As a result of these differences, our business may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to those of the OECD member countries.

Restrictions on currency exchange may limit our ability to receive and use our cash resources effectively.

Because almost all of our future revenues may be in the form of Renminbi, any future restrictions on currency exchanges may limit our ability to use revenues generated in Renminbi to fund our business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents. In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items.

The PRC government also imposes controls on the convertibility of foreign currencies into Renminbi and, in certain cases, the remittance of foreign currency into China. Under existing PRC foreign exchange regulations, approval from appropriate government authorities is required where foreign currency is to be converted into Renminbi and remitted into China to pay capital expenses, such as payments denominated in Renminbi for acquisitions. Shortages in the availability of Renminbi may limit the ability of our PRC subsidiaries and affiliates to remit sufficient Renminbi to fund our business activities including future acquisitions in China. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi and foreign currencies, especially with respect to foreign exchange transactions.

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The value of our ordinary shares and ADSs will be affected by the foreign exchange rate between U.S. dollars and Renminbi.

The change in value of the Renminbi against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in China’s political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of foreign currencies. Since the adoption of this new policy, the value of the Renminbi against the U.S. dollar has fluctuated daily within a narrow band, but overall has appreciated significantly against the U.S. dollar. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant fluctuation of the Renminbi against the U.S. dollar. To the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position and the price of our ordinary shares and ADSs may be adversely affected. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our ordinary shares or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our subsidiary in China would be reduced.

Item 4. Information On the Company

A. History and Development of the Company

We became an independent company in September 1999 when we were spun-off from UT Starcom Inc., a Nasdaq-listed company that manufactures telecommunication equipment in China. At that time, we focused on developing billing software and providing system integration services for telecommunications network operators in their fixed-line Internet infrastructure build-outs. In June 2001, members of our current management team conducted a management buy-in by purchasing a substantial equity interest in our company, at which time the team assumed management control of us with the purpose of developing products and services for 2.5G mobile networks. Prior to the management buy-in, a majority of the new management team had previously worked together in senior management positions at AsiaInfo, a Nasdaq-listed company and a leading provider of telecommunications software and system integration services in China.

In April 2002, we established a new holding company, Hurray! Holding Co., Ltd. in the Cayman Islands. We currently conduct our business in China through our wholly owned subsidiary, Beijing Hurray! Times. To comply with ownership requirements under Chinese law which imposes certain restrictions on foreign companies from investing in certain industries such as value-added telecommunication and Internet services, we have entered into a series of agreements with our ten affiliated Chinese entities and their respective shareholders. We hold no ownership interest in any such affiliated Chinese entities. See Item 7.B. “Related Party Transactions,” and Item 4.C. “Information About the Company — Organizational Structure.”

As part of our strategy to enhance our growth through opportunistic acquisitions and strategic investments and streamline our business focus through certain divestments, we have completed the following in the past year:

• In April 2007, we acquired Shanghai Saiyu, which provides WAP, multimedia messaging service (“MMS”), IVR and SMS services on the China Mobile network throughout China, in exchange for $3.2 million in cash.

• In April 2007, we completed our acquisition of a 30% equity interest in New Run, which is a leading record label in China. We paid a total of $2.45 million in cash for such interest, which consideration is subject to adjustments based on the financial performance of New Run’s business in the one-year period following the closing of the acquisition.

• In April 2007, Freeland Music acquired a 51% equity interest in Fly Songs, a well known performance and concert promotion company in Beijing, in exchange for $0.2 million in cash. Our management believes that Fly Songs has established key relationships with leading domestic and international music companies and music industry participants, which has enabled it to organize various concerts and performances for leading artists. In November 2007, for example, Fly Songs organized the financially successful “The Year of Jacky Cheung World Tour 2007” in Mianyang, a city located in Sichuan Province, China.

• In June 2007, we completed our acquisition of a 65% equity interest in Secular Bird, which is a record label in China. We paid a total of $0.4 million in cash for this interest, which is subject to adjustments based on the financial performance of Secular Bird during the one-year period following the closing of the acquisition.

• In April 2007, we acquired Henan Yinshan, which provides SMS services through China Mobile and China Unicom, in exchange for $0.9 million in cash.

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• In 2007, we signed an agreement to sell our software and systems integration (“SSI”) business unit, Hurray! Times Communications (Beijing) Co., Ltd. (“ Hurray! Times Communications”), to a subsidiary of Taiwan Mobile, a leading telecomunications service provider in Taiwan. With this sale we were able to focus on our music and other entertainment services. We disposed the SSI business unit on August 1, 2007, when Taiwan Mobile assumed control over the management and assumed the risks of this business. The consideration we are to receive for the sale is approximately $4.8 million, of which a certain amount is contingent upon the collection of accounts receivable of SSI business outstanding as of August 1, 2008.

• In November 2007, we announced the signing of an agreement to merge with Enlight Media Ltd., a private entertainment content and distribution company in China, in an all stock transaction. That agreement was subsequently terminated in March 2008 due to a divergence in business strategies and a mutual determination that a combination would not be in our mutual interests.

B. Business Overview

Introduction

We are a leading online distributor of music and music-related products such as ringtones, ringbacktones (“RBT”), and truetones to mobile users in China through the full range of WVAS platforms over mobile networks and through the Internet. Our company also provides a wide range of other WVAS to mobile users in China, including games, pictures and animation, community, and other media and entertainment services. We are also a leader in artist development, music production and offline distribution in China through our affiliated music companies Huayi Brothers Music, Freeland Music, New Run, Secular Bird and Fly Songs.

Traditionally, we focused on marketing directly through mobile operator’s provided services such as SMS and WAP. Due to regulatory and policy changes by the MII and the telecom operators, operator channels have become increasingly unavailable and subject to sudden changes in policies by the telecom operators. Since 2005, we have diversified our marketing and promotion channels and developed direct media advertising, Internet marketing alliances; and handset vendor partnerships, as well as offline channels such as record stores and convenient stores.

We have restructured our business into four main business lines in an effort to better align our corporate strategies and objectives. The four major business lines are WVAS, E-Marketing, Offline Channel and Digital Media. Since we only began offering our E-Marketing services in early 2008 and our Offline Channel business line is still under development, both lines of business are included under our WVAS segment in our financial statements included in this annual report. The business line of Digital Media is under the segment of Recorded Music in our financial statements included in this annual report.

Our WVAS Services

We derive most of our revenues from WVAS, which includes 2G services such as SMS, IVR and RBT, and 2.5G services such as WAP, MMS, and Java™.

Our WVAS business line consists mainly of the following product lines:

SMS Services. SMS is the largest and most mature wireless value-added service in China. It is the most basic form of mobile messaging service and is supported by substantially all mobile phone models currently sold. We have focused our activities in SMS on our strongest core services to maximize our revenues. These core services include chat and other community services, interactive television entertainment, quizzes and games. Users can purchase our SMS services through the networks of China Mobile and China Unicom by responding to our broadcast messages advertising our services, or sending us a request via SMS using a specific code.

IVR Services. IVR services are available on the networks of China Mobile, China Unicom, China Telecom and China Netcom, and include chat services whereby users can chat with each other live over their mobile handsets in wireless public chat rooms. We believe this service is attractive to young mobile users in China as a cost-effective way to speak with their friends and to make new friends, although it may be less useful for business purposes because conversations in these chat rooms are open to anyone. Users can also utilize our IVR services to access music, greetings from famous Chinese celebrities, jokes and serial stories, such as detective stories, from their mobile phones or send this content to the mobile phones of their friends or others.

RBT Services. We offer RBT services on the networks of China Mobile, China Unicom and China Telecom. RBT services allow a mobile phone user to customize the ringtone that callers hear when calling the user’s mobile phone. We offer a variety of entertaining content including pre-recorded messages, movie dialogues and soundtracks and a wide range of classical and popular music. RBT services are currently available on all 2G mobile phones. They are also one of the most effective platforms for mobile music products, which have become one of our strategic focuses. Accordingly, we believe that they present significant growth potential.

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WAP Services. We offer our WAP services through China Mobile’s and China Unicom’s networks. WAP allows users to browse content on their mobile phones so that users can request and receive information in a manner similar to accessing information on Internet web sites through personal computers. The majority of our 2.5G services are WAP services and include ringtone downloads, picture downloads, community services, games, pop culture, news and finance and personal information management services.

MMS Services. We offer MMS services on China Mobile’s and China Unicom’s networks. MMS is a messaging service that allows multimedia content such as ringtones and pictures to be transmitted in a single message, compared to simple text via SMS. MMS can be downloaded on many 2.5G mobile phones in China, and is an effective way for mobile users to send and receive messages that contain sizeable multimedia content such as ringtones, pictures and animation.

Java™ Games. We offer a range of in-house developed games based on the Java^™ platform, which offers an effective way to create sophisticated 2.5G games. In April 2004, we launched our first Java^™ game through China Mobile’s WAP portal. Our affiliated Chinese entity, Shanghai Magma, is a top tier Java^™ game developer and publisher in China with over 200 titles of Java^™ games and a large pipeline of new games under development. We anticipate that the popularity of Java^™ games will accelerate in the next several years, especially after the launch of 3G services. In 2007, we launched 53 new titles on China Mobile’s game portal, including “Speed Race Go-Kart,” “Magma Millionaire Shanghai Tour,” and “Extreme Speed.”

Our E-Marketing Services

Beginning in January, 2008, we began providing customized Internet and mobile phone solutions and support to assist businesses and governmental institutions in interacting with, managing, and marketing to their target customers and constituents through the Internet. Such services include performance-based Internet and mobile phone advertising solutions, search, corporate email, Internet and mobile phone customer relations management, interactive sales, classified marketing, e-advertising and product marketing. We assist our clients in identifying a targeted customer or user base, devise a customized Internet and mobile phone based strategies for reaching that base and implement such strategies by drawing upon our knowledge of internet and mobile phone technologies, internally developed Internet applications and existing relationships with various Internet based distribution and on-line marketing channels.

Our Offline Channel Business

Our offline channel business line is a new business and strategic initiative that we are undertaking with the aim of further expanding the methods by which our customers can directly access our products, such as our digital music, games, pictures, and other interactive media and entertainment services. Through our offline channel business, we have internally developed distribution software which will enable mobile phone users to download various digital entertainment services through offline channels, such as record stores and convenience stores. Our offline channel business will enable us to sell our products without relying on the telecom operators for delivery, billing and collection. Furthermore, this business line will not be regulated by the policies and guidelines of the telecom operators or subject to their fees. We believe this strategic initiative is an important part of our efforts to continue growing our WVAS business over the long term. Our offline channel business is currently under development.

Our Digital Media Business

The music industry in China has suffered from serious piracy issues for many years. Our management estimates that for every dollar of copyrighted CD sales, there are approximately ten dollars of pirated CD sales in China. Consequently, the industry is relatively small and fragmented, with over one hundred record companies of various sizes in China. Our management further estimates that major international record companies such as Warner Music, Universal, EMI and Sony BMG account for approximately 30% of the market in China in terms of revenues in recent years, approximately one dozen Hong Kong- and Taiwan- based independent labels such as Empire International, Rock Music, Linfair, H.I.M and Ocean Butterfly account for approximately 20% of the market, six top tier domestic independent labels such as Taihe Rye, Huayi Brothers Music, the Freeland Group, Zhushu and New Run account for approximately 20% of the market, and approximately eighty second or third tier domestic independent labels account for the remaining 30% of the market. Due to piracy issues, record companies in China have traditionally relied on revenues not only from CD sales, but also from concert tours and corporate sponsorship.

Record companies in China began in 2005 to experience a rapid increase in revenues from sales of digital and mobile music rights to wireless value-added service providers (such as our company) and Internet music website operators. This music content can be used in such services as ringtones, RBT, and truetone downloads and playbacks over mobile and Internet platforms. To capture more of this market opportunity, many record companies in China are increasingly focused on building their wireless and Internet distribution channels, including by offering their own WVAS or working directly with telecom operators.

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Because music-related products are representing an increasingly significant portion of our total WVAS revenues and we have been licensing more and more music rights from record companies in China, we determined to become the first wireless value-added service provider to make a significant upstream investment in the music business by acquiring controlling or significant stakes in top tier local independent record companies in China. We have acquired a number of music companies with diverse and complementary strengths. For example, Freeland Music is a pioneer in China in developing Internet-based singing talent and distributing their music through offline CD distribution as well as through Internet and mobile distribution. Huayi Brothers Music is well known in China for music production. New Run is well known for finding and developing new artists and music in China. Secular Bird has a relatively short history but has been successful in identifying and developing promising artists and producing top hit music. Our newest acquisition, Fly Songs, is well known for organizing various concerts and performances for top artists.

The acquisition of local independent record labels is an important part of our strategy to focus on building digital and mobile music production and distribution expertise and capabilities. We further estimate that Hurray! Digital Media accounts for approximately 15% of the market in China among domestic competitors in terms of revenues following our acquisition of equity interests in such first tier domestic music companies.

Network Service Agreements with Telecom Operators

General

China Mobile and China Unicom are the predominant telecom operators. Given their market presence, our negotiating leverage with these telecom operators is limited, and our business is dependent on maintaining our relationships with them. See Item 3. “Risk Factors — Risks Related to Our Company— We depend on China Mobile, China Unicom and China Telecom, three of the four major telecommunications network operators in China, for the major portion of our revenue, and any loss or deterioration of our relationship with China Mobile, China Unicom and China Telecom, due to expected government imposed restructurings or otherwise, may result in severe disruptions to our business operations and the loss of a major portion of our revenue” and “— The termination or alteration of our various agreements with China Unicom, China Mobile and their provincial affiliates would materially and adversely impact our revenue and profitability.” Our affiliated Chinese entities have entered into network service agreements with the national and certain provincial offices of China Mobile and China Unicom to offer our various services through their networks. More recently, our affiliated Chinese entities have also entered into various agreements with China Telecom and China Netcom for the provision of certain of our services over their limited mobility networks in China. Each of these agreements with each mobile operator covers a specific geographic area and/or service type without overlaps.

For 2007, we derived approximately 60%, 26%, 10% and 1% of our total revenues from customers through China Mobile, China Unicom, China Telecom and China Netcom, respectively.

The following is a summary of the material features of our contractual relationships with China Mobile, China Unicom and China Telecom, the telecom operators from whom we derive most of our WVAS revenues.

Fee Arrangements and Other Payment Considerations

Our network service agreements with China Mobile permit China Mobile to deduct a service fee ranging from 9% to 30%, varying from province to province, from the amounts China Mobile receives from customers for our services. China Mobile relies solely on its records for calculating the amounts of these service fees. We also pay China Mobile a network fee to the extent that the number of SMS messages sent by us over China Mobile’s network exceeds the number of messages our customers send to us. The network fee is on average RMB0.05 ($0.006) per message. In some provinces, the amount of network fees may vary according to the volume of the net balance of such incoming and outgoing messages.

Our network service agreements with China Unicom provide that China Unicom directly bill customers who use our services and, for collecting these fees and for their network services, deduct a service fee from the aggregate amounts paid by customers for our services. These service fees range from 12% to 50% of gross revenue for amounts received by provincial operators of China Unicom and vary from province to province. If there is a discrepancy between our billing records and China Unicom’s billing records and the discrepancy is 5% or less of total amounts billable to our customers, the calculation of service fees is based on China Unicom’s billing records. If the discrepancy exceeds 5%, the agreements provide that we and China Unicom reconcile our records to address the discrepancy.

Our network service agreements with China Telecom permit it to deduct a service fee between 15% to 50% of gross revenue, depending on the type of service, from the amounts it receives from customers for our services.

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Obligations with Respect to Our Services

We must obtain the approval of China Unicom, China Mobile, or China Telecom for our services and their pricing before these services can be offered on their network. Our contracts with China Mobile, China Unicom and China Telecom vary in the specific obligations they impose, but they generally require, among other things, that the telecom operators maintain records regarding transmission and billing matters, collect fees from their customers and remit amounts owed to us and notify us of any customer complaints unrelated to network problems. In turn, we must provide prompt customer support, handle any complaints which are unrelated to the operator’s network and ensure that our content complies with applicable laws and regulations and the policies of the operators and that we have appropriate licenses. For some contracts, we must satisfy operational or financial performance criteria which are established by the mobile operator and modified from time to time.

Term and Termination and Other Material Provisions

The term of our contracts with China Mobile, China Unicom, and China Telecom is generally one or two years. We typically renew these contracts or enter into new ones when the prior contracts expire, but on occasion, the renewal or new contract can be delayed by periods of one month or more. The agreements can also be terminated in advance for a variety of reasons which vary among the individual contracts with the operators, including, for example, when we breach our obligations under the contract, a high number of customer complaints are made about our services or we cannot satisfy the operational or financial performance criteria established by the applicable operator.

Generally, our contracts with the telecom operators are silent on the arrangements relating to payment from the operators in the event such contracts are not renewed. Payment and billing disputes, if any, will therefore be resolved in accordance with the provision in the contracts that the parties resolve disagreements through amicable negotiation (where such provision survives the termination of the respective agreements) or through court proceedings if amicable resolution cannot be reached.

Music Copyright Agreement with Telecom Operators and Service Providers

General

Our affiliated music companies have entered into music copyright agreements with the national and certain provincial offices of certain telecom operators, as well as various domestic service providers such as Kongzhong, Sina and Sohu, to authorize telecom operators and service providers to use music copyrights of our affiliated music companies and distribute music from our artists through the portals, websites or platforms of the various telecom operators and service providers to allow end users to download the music. The following is a summary of the material features of our contractual relationships with the national and certain provincial offices of telecom operators and service providers.

Fee Arrangements

Our music copyright agreements with telecom operators and service providers are usually copyright purchase and use authorization agreements. Telecom operators and service providers will pay service fees ranging from 50% to 60% of gross revenue for amounts received by distributing the music through their network. In some agreements, the amount of service fees may vary according to the popularity and commercial success of a music product and other various tangible and intangible factors.

Term and Termination and Other Material Provisions

The terms of our music copyright agreements with telecom operators and service providers are generally one or two years. We typically renew these contracts or enter into new ones when the prior contracts expire, but on occasion, the renewal or new contract can be delayed by periods of one month or more. The agreements can also be terminated in advance for a variety of reasons which vary among the individual agreements, including, for example, when certain obligations are breached under the agreements.

Payment and billing disputes are resolved in accordance with the provision in the agreements that the parties resolve disagreements through amicable negotiation or through court proceedings if amicable resolution cannot be reached.

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Product and Content Development

Wireless Value-Added Services

We develop most of our content and applications for WVAS in-house through our approximately 100-member product development team. Our product development team focuses primarily on developing new services such as WAP services and Java™ games, as well as developing 3G-compatible services.

In addition to in-house developed content, we also acquire rights to certain copyrighted content such as music, pictures, games, news and other information from a large number of content providers such as record companies, traditional media companies and original providers of news and information services. With the exception of music, content from international and domestic content providers has not contributed a significant portion of our 2G and 2.5G services revenues to date, and we do not expect it to do so for the foreseeable future. Nonetheless, we will continue to seek out content relationships with leading international and domestic content providers to further increase the variety of our services. Under our agreements with these content providers, we pay them a fixed licensing fee or a percentage of the revenue for our services, which we receive from the telecom operators after deducting service and network fees. For most of our agreements, the content providers receive 40% of such net amount, but in a few cases the providers receive between 40% and 50%.

We license music rights from international record companies such as Universal Music and from domestic record companies such as Taihe Rye and Ocean Butterfly. In addition, some music content that we use in our services is provided by our affiliated music companies.

Music Production and Concert Promotion

We engage in music production through our affiliated music companies, Freeland Music, Huayi Brothers Music, New Run and Secular Bird. These companies are domestic record labels with an aggregate of approximately 173 employees specializing in artist development, music production and music distribution. In addition, Freeland Music, Huayi Brothers Music, New Run and Secular Bird currently have a total of 50 artists under contract.

Our affiliated music companies are pioneers in developing music artists and producing and distributing their songs in China. Together, their portfolio of artists includes some of the most popular singers in China, such as Xiangxiang from Freeland Music, Jane Zhang and Kun Yang from Huayi Brothers, Nan He Wen Dou from New Run, and Jing Han from Secular Bird. Many songs produced by our affiliated music companies are top hits in ringtones, ringbacktones and digital downloads on mobile phones and the Internet in China as measured by the number of downloads on both China Mobile’s music portal and the music search platform of Baidu.com, Inc., an online search platform in China. For example, “If This Love Continues” (Ru Guo Ai Xia Qu) by Jane Zhang, “White Fox” (Bai Hu) by Rui Chen, as well as “Autumn Is Not Coming Back” (Qiu Tian Bu Hui Lai) by Qiang Wang were among the most popular songs on those services when they were released.

Many songs and albums produced by our affiliated music companies have also been honored in various music award ceremonies in Asia. For example “This Love” (Zhe Gai Si De Ai) by Jane Zhang was named a “Top 10 Golden Song” by the 2007 Hong Kong TVB8 Annual Awards and “Under the Starlight of Van Gogh” (Zai Fan Gao De Xing Kong Xia) by Wenjie Shang was named “Best Album of The Year” by Beijing Youth Weekly Magazine (BQ) in December 2007.

In addition, Hurray! partnered with the Internet Society of China and successfully launched the “Passion for Internet” Theme Song at a charity event in January, 2008 dedicated to promoting the popularization of Internet usage in certain economically disadvantaged areas in western China. This charity event was the first of its kind for the Chinese Internet industry. Our senior management and artists participated in the charity alongside the senior management of well-known Chinese web portal companies, such as Tencent, Sina, Sohu and Shanda, generating substantial exposure for our company and our artists.

Pursuant to certain contractual arrangements, Hurray! Digital Media has the exclusive right to license and distribute via digital channels, including wireless and Internet-based platforms, all music content of Freeland Music worldwide and all music content of Huayi Brothers Music, New Run and Secular Bird in mainland China. We have also agreed to allow Freeland Music, Huayi Brothers Music, New Run and Secular Bird to directly distribute their respective music content via digital channels, in order to maximize the value of our affiliated music companies’ record labels.

If Hurray! Digital Media licenses the music content of our affiliated music companies to any other third party, then our affiliated music companies are entitled to receive a license fee from Hurray! Digital Media, which is equal to the amounts paid by the third party to Hurray! Digital Media, less any taxes payable on such amount by Hurray! Digital Media and a 10% to 20% service fee which Hurray! Digital Media retains.

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In addition, Freeland Music has entered into an agreement with the affiliates of the Freeland Group pursuant to which such affiliates have the exclusive right to publish and sell music tapes, records and CDs of Freeland Music in mainland China. The price paid by the affiliates of the Freeland Group is determined by Freeland Music, unless the affiliates disagree with such price in which case the price will be highest retail price for the products obtainable in the market. The Freeland Group affiliates have the right to determine the prices at which they sell the products to their customers, but they are required to provide Freeland Music information regarding sales prices, customer data and other sales related information. Huayi Brothers Music, New Run and Secular Bird handle the off-line distribution of their music content themselves.

Our affiliated music companies enter into contracts with their artists which generally provide that the companies produce and publish a minimum number of albums and that the artist agree to certain advertising, promotional and public performance activities.

In April 2007, Freeland Music acquired a 51% equity interest in Fly Songs, a well known performance and concert promotion company in Beijing.

Sales and Marketing

Wireless Value-Added Services

We market and promote our WVAS and music-related products online and offline through channels controlled by the telecom operators in China as well as through non-operator channels such as direct media advertising, Internet marketing alliances, and handset vendor partnerships. We also sell and market our services through offline channels such as retail chains, convenience stores, newsstands, and large consumer goods outlets.

In addition, maintaining and expanding our relationships with China Mobile, China Unicom, China Telecom and China Netcom is central to our sales and marketing activities. Our management team utilizes its extensive experience in China to develop close ties with the key personnel of the telecom operators at the central and provincial levels. As of December 31, 2007, we had 63 sales and marketing professionals strategically located in 25 provinces and municipalities concentrated in the eastern and southern regions of China to work closely with the telecom operators at the provincial level, where pricing and important marketing and operational decisions are made. Our sales and marketing professionals also oversee our sales and marketing activities, which are conducted separately from the telecom operators. These highly motivated professionals, whose bonuses are tied to the revenues each member generates and collects, are supervised by eight regional centers which each have their own sales, marketing, operations and customer service personnel to provide prompt and responsive service to users and telecom operators.

Online Sales and Marketing

Our online sales and marketing activities include:

• Internet Marketing Alliances. We began creating Internet marketing alliances in 2005. Through these alliances, we work with tens of thousands of small, niche or vertical websites in China to market, promote and distribute our WVAS products and content, particularly our music-related products, to Internet and mobile users. We share a portion of the revenues generated with the operators of these websites when their users access to our website and subscribe for our services.

• Handset Manufacturers Partnerships. Starting in 2005, we began partnering with major handset manufacturers to embed our services and service links into mobile handsets, which enables mobile users to directly access our services without having to go through the service portals operated by the telecom operators. We work with major global and domestic handset manufacturers such as Motorola, Sony Ericsson, LG, Legend, TCL and Konka.

• Bundling of Products. We bundle certain of our products, primarily 2.5G products, together for a single fixed fee that is lower than what would be payable if the user had ordered those products separately. We often use bundled products together with a free trial period to attract new users by giving them a free or low-cost 2.5G experience. We also use bundled products to attract users that are price sensitive. In addition, bundling can be an effective way to maintain user interest in our services because they can choose from a number of services without incurring additional incremental cost and also to expose users to the wide range of quality services that we offer. Because the content coverage and product quality of individual products are better than those of the bundled products, we have not experienced migration of high-use customers from individual services to the bundled products.

• Cross-selling. We cross-sell among our various 2G and 2.5G services. Specific cross-selling activities include placing a tool bar on the first page of all our games. This enables users to easily try our other games without needing to return to the main China Unicom WAP portal, as well as promoting our website to potential users as a fun, easy-to-access place to learn about and request our wireless content and applications. We also focus on cross-selling to users of our 2G services to migrate them to our subscription-based, premium 2.5G services.

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Offline Sales and Marketing

We also focus on offline sales and marketing activities, such as:

• Direct Advertising. Starting in 2005, we began to increase our spending on direct advertising in print, radio and TV media to market and promote our WVAS and music-related products. We believe that direct advertising is one of the most effective ways to market and promote our services to mobile users.

• Promotional Events. We maintain important marketing relationships with China Mobile and China Unicom, through which a major portion of our services is provided. We host promotional events throughout China featuring our pop singers or latest releases with the telecom operators. At these events, we create brand awareness by interacting with consumers to educate them about our mobile music services. In addition, our promotion of our innovative services, such as our “mobile novels” which feature various popular PRC titles in electronic format that are delivered to the mobile phones of subscribers in installments, which service we believe was the first of its kind in China, has resulted in significant media attention.

• Sales Co-promotion. We also focus on expanding our sales channels by developing integrated sales campaigns with traditional media companies and multinational corporations such as R.A. Baileys & Co., a beverage company best known for its liqueur, Bailey’s Irish Cream.

• Retail Promotion. We have also entered into partnerships with retailers of mobile handsets in some provinces, whereby the retailers’ sales staff introduces our services to buyers of new handsets and offers them a free trial. In some cases, we share the revenues generated through such promotions with the retailer.

Our Music Business

Record companies in China have traditionally generated revenues from offline CD distribution, concert tours and corporate sponsorship. Starting in 2005, record companies began to see rapid growth of a new revenue stream: music rights sales to Internet and WVAS providers for music-related products such as ringtones, ringbacktones, and MP3-quality truetone downloads or playbacks. In addition to marketing campaigns associated with major album or song releases, our affiliated music companies, Freeland Music, Huayi Brothers Music, New Run and Secular Bird, focus their sales and marketing activities in the following four areas:

• Online and mobile distribution. Our affiliated music companies have built dedicated teams to focus on licensing music rights to Internet and mobile services providers. Such licensing agreements typically involve an upfront minimum license fee, plus royalties paid to the record companies by the services provider based on usage. With the recent significant growth in the distribution of music via the Internet and WVAS and the increased attention by the Chinese government and business community to intellectual property protection, we believe that this new sales channel represents the largest growth potential for our affiliated music companies.

• Concert tours. Record companies routinely organize concert tours from time to time for their major artists, either independently or together with partners or corporate sponsors. This is not only an effective way to raise the profile of our artists nationwide, but also to generate revenues from concert ticket sales and corporate sponsorship. We believe that we have enhanced our capacity to organize concert tours through our acquisition of Fly Songs, a well known performance and concert promotion company in Beijing that has successfully organized various concerts and performances for leading artists including the “The Year of Jacky Cheung World Tour 2007.”

• Corporate sponsorship. Frequently, the artists of our affiliated music companies appear in commercial advertising or serve as corporate image ambassadors on behalf of consumer products and services companies. Our affiliated music companies proactively seek out such opportunities to promote our artists and generate revenues from such corporate sponsorship.

• Offline CD distribution. Upon launching a new album, our affiliated music companies will distribute the album in CD format through traditional offline channels, which primarily consists of the tens of thousands of retail stores in China specializing in audio and video media products. As is customary in the industry, our affiliated music companies enter into distribution agreements with major offline distributors or retail chains. Such agreements typically include an upfront minimum license fee, plus royalties paid to the record companies based on sales. Offline CD distribution channels in China have been seriously affected, however, by piracy issues, and we believe that only a small portion of all CD sales in China are from copyrighted sales which generate royalty payments for the record companies.

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Customer Service

We work to provide high quality customer service. This is an important factor for maintaining our relationships with the telecom operators in China as discussed above in “— Network Service Agreements with Operators.” Our dedicated customer service center in Beijing provides our users real-time support and employed 33 customer service representatives as of December 31, 2007. We strive to achieve the fastest response times and highest customer satisfaction levels in the industry. Our centralized customer service center is supported by our local customer service teams located in our four regional offices. We also maintain a dedicated billing and collection center, which works with the various offices of the telecom operators to ensure that we receive the correct fees for our services provided over their networks.

Infrastructure and Technology

We have developed a reliable, flexible and scalable platform with open and adaptive technology through which we:

• develop and deliver our 2G and 2.5G services which are provided through networks of China Mobile, China Unicom, China Telecom and China Netcom, and

• maintain our internal billing and transmission records.

Our platform supports multiple protocols, networks and billing solutions, with high scalability, load balancing, intelligent session management, and performance measurement. It also allows us to monitor our services and their delivery to the telecom operators’ networks on a real-time basis, which allows us to optimize the efficiency of our system and quickly address any problems. The platform is equipped with an open application interface for rapid connectivity by third party content providers and access to multiple channels for SMS, IVR, RBT, WAP, MMS, Java™ and Web connectivity.

Our user database, which operates on our proprietary software and is an integral part of our platform, allows us to store, analyze, retrieve and compare various statistical information and to identify relevant trends. This database also supports our customer service activities by providing our service professionals with real-time user data and information regarding service delivery and billing. In addition, our platform can rapidly schedule, deploy and manage WAP pushes and SMS pushes to promote our services.

Our website and services are made available primarily through network servers located in the facilities of China Telecom, China Netcom, China Unicom, and China Mobile. Such network servers run on either Unix^™, Windows^™, or Linux^™-based operating systems.

Competition

Wireless Value-Added Services

The market for WVAS in China is highly fragmented with more than 1,000 service providers. Wireless service providers in China can be principally categorized into four groups. The first group is comprised of companies like ours, which focus primarily or entirely on this market and offer a wide range of 2G and/or 2.5G services. These include companies such as Tom Online, KongZhong, and Linktone. This group of competitors is generally characterized by strong market knowledge and, in some cases, well developed relationships with the telecom operators on a provincial and national basis. Companies in this category also tend to focus on entertainment-related services.

The second group is comprised of the major Internet portal operators in China, including publicly-listed companies such as SINA, Sohu and Tencent. The Internet portals leverage their strong brand names and their existing strength in aggregating content, marketing and cross-selling wireless services to their established Internet user base.

The third group is comprised of smaller service providers such as privately owned Rock Mobile and A8, who like us are focused on music-related products.

The fourth group is comprised of the telecom operators. In 2006, China Mobile began operating its own music WAP portal and procuring music content direct from music companies. This development has made China Mobile a competitor for offering music content through WAP services. Some of this competitive effect, however, has been mitigated by the fact that China Mobile has purchased music from our affiliated music companies. China Mobile also began the practice of only including links to its own WVAS offerings on the embedded menus of mobile handsets with customized software for China Mobile users while excluding links to products from third party WVAS service providers like us. Such practices have adversely affected our revenues. Our business would likely be adversely affected if the telecom operators decide to directly provide additional WVAS to mobile phone users, which compete with our services. In that case, we would not only face enhanced competition, but could be partially or completely denied access to the networks of these telecom operators which would adversely affect our revenue from WVAS.

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Our Music Business

In our music business, we face significant competition from two groups of competitors. The first group includes traditional record companies, which are extending downstream to establish their own WVAS or Internet services companies in China. These companies include international record companies such as Warner Music, Universal, EMI and Sony BMG and independent labels based in Hong Kong, Taiwan, and mainland China such as Taihe Rye, Rock Music, Ocean Butterfly, and Zhushu. In comparison to our affiliated music companies, many of these competitors have longer operating histories in China and have accumulated larger libraries of songs and pools of popular artists. They also generally have more experience, expertise, resources and management capacity than us in the artist development and music production field.

The second group of competitors includes WVAS providers such as Rock Mobile, a subsidiary of Rock Music, and A8, which have recently focused on music-related products and extended upstream to establish their own music production businesses in China. We believe that both Rock Mobile and A8 have recently acquired additional capital to accelerate the implementation of their music strategies, and may pose a significant competitive challenge to us in the long-run.

Government Regulation

The following is a summary of the principal governmental laws and regulations that are or may be applicable to companies such as ours in China. The scope and enforcement of many of the laws and regulations described below are uncertain. We cannot predict the effect of further developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement of laws, particularly with regard to 2G and 2.5G services, which is an emerging industry in China. For a description of the regulatory risks related to our business, please see “Risk Factors — Legal Risks Related to Wireless and Internet Services — The telecommunication laws and regulations in China are evolving and subject to interpretation and will likely change in the future. If we are found to be in violation of current or future Chinese laws or regulations, we could be subject to severe penalties;” “— Legal Risks Related to Wireless and Internet Services — The regulation of Internet website operators is also new and subject to interpretation in China, and our business could be adversely affected if we are deemed to have violated applicable laws and regulations;” and “— Risks Related to Our Company — Additional Risks Related to Our Company — Our corporate structure could be deemed to be in violation of current or future Chinese laws and regulations, which could adversely affect our ability to operate our business effectively or at all.”

Regulation of Telecommunication Services

The telecommunications industry, including certain 2G and 2.5G services, is highly regulated in China. Regulations issued or implemented by the State Council of China, the MII and other relevant government authorities cover many aspects of telecommunications network operation, including entry into the telecommunications industry, the scope of permissible business activities, interconnection and transmission line arrangements, tariff policy and foreign investment.

The principal regulations governing the telecommunication services we provide in China include:

• Telecommunications Regulations (2000), or the Telecom Regulations, and the Administrative Measures for Telecommunications Business Operating License (2002), or the Telecom License Measures. The Telecom Regulations categorize all telecommunication services businesses in China as either infrastructure telecommunication services businesses or value-added telecommunication services businesses. The latter category includes WAP, SMS and other 2G and 2.5G services. Under the Telecom Regulations, certain services, including online data processing and transaction processing, call centers and Internet access, are classified as being of a value-added nature and require a commercial mobile operator to obtain an operating license in order to provide such services. The Telecom Regulations also set forth extensive guidelines with respect to different aspects of telecommunications operations in China. Under the Telecom License Measures, an approved value-added telecommunication services provider must conduct its business in accordance with the specifications recorded on its value-added telecommunication services operating license. Certain of our affiliates, Hurray! Solutions, Beijing Palmsky, Beijing Network, Beijing Hengji Weiye, Beijing Hutong, Shanghai Magma, Shanghai Saiyu and Henan Yinshan, have been granted an inter-provincial value-added telecommunication services operating license for mobile information services (excluding fixed line information and Internet information services) by the MII that permits it to conduct nation-wide operations. Our affiliate, WVAS Solutions, has been granted a value-added telecommunication services operating license issued by the local Beijing Municipal Telecommunications Administration Bureau. This license may not be sufficient to authorize WVAS Solutions to provide value-added telecommunication services on a national basis.

• Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (2002), or the FI Telecom Regulations. The FI Telecom Regulations set forth detailed requirements with respect to capitalization, investor qualifications and application procedures in connection with the establishment of a foreign-invested telecom enterprise. Under the FI Telecom Regulations, a foreign entity is prohibited from owning more than 50% of the total equity in any value-added telecommunication services business in China. To comply with these restrictions, we have entered into a series of agreements with each of our affiliated Chinese entities and their respective shareholders. We hold no ownership interest in any such affiliated Chinese entities.

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• Notice on Intensifying the Administration of Foreign Investment in Value-added Telecommunications Services (2006). Under this notice, an operating company holding a value-added telecommunications license (and not its shareholders) must own all related Internet domain names and registered trademarks. In addition, such company’s business site and equipment should comply with its approved licenses, and the company should establish and audit its internal Internet and information security policies and standards and emergency management procedures.

• Notice Concerning Short Message Services (2004), Under this Notice, telecom operators may only cooperate with licensed information service providers for SMS. This Notice sets forth requirements for provision of SMS by information service providers with respect to pricing, content and method of service provision. Certain types of SMS require customer’s explicit confirmation on acceptance of charges before such services could be billed for. This Notice also sets forth a high standard for customer services provided by information service providers and requires the service providers to provide an easy and clear cancellation mechanism for their customers to cancel subscribed services.

• Notice Concerning the Pricing and Billing of Mobile Information Services (2006). Under this notice, the pricing and billing of WVAS must be accurate, clear and fair. In addition, a wireless value-added service provider cannot charge a customer unless the customer responds to two customer requests, and it must maintain detailed invoices for each customer for more than five months. In turn, the telecom operators are required to first deal with customer complaints, requests for refunds and related matters.

• Notice Concerning the Billing of Telecommunications Services (2007). Under this notice, no telecommunication enterprise may activate any service or function directly connected to their platforms, such as call reminder and voice inbox functions, unless the customer affirmatively consents to subscribing to them. For any free trial service subscribed by the mobile phone user, upon expiration of the free trial period, service providers may not charge the mobile phone user any fee for such service or function until the user re-confirms that it wishes to continue such service or function. When a customer calls the customer support line of a service provider, the service provider is prohibited from charging the customer a fee for such call unless the customer expressly confirms its consent to such charge regardless of whether automated or live support is provided. If automated support is provided, the customer is required to be furnished with pricing and billing information through a free voice notice.

In addition to regulations promulgated at the national level by the Chinese government, several provincial governments have issued provisional regulations requiring SMS service providers to obtain licenses from or register with Telecommunications Administration Bureau at the provincial level before providing SMS service within the province.

Regulation for Internet Publication. The State News and Publications Agency of the PRC, or the SNPA, is the government agency responsible for regulating publishing activities in China. On June 27, 2002, the MII and the SNPA jointly promulgated the Internet Publication Tentative Administrative Measures, or the Internet Publication Measures, which took effect on August 1, 2002. The Internet Publication Measures require Internet publishers to secure approval from the SNPA to conduct Internet publication activities. The term “Internet publication” is defined as an act of online dissemination where Internet information service providers select, edit and process works created by themselves or others (including content from books, newspapers, periodicals, audio and video products, electronic publications, and other sources that have already been formally published or works that have been made public in other media) which they then post on the Internet or transmit to users via the Internet for browsing, use or downloading by the public. We currently do not conduct any Internet publication business. The SNPA and the MII have not specified whether the approval required by the Internet Publishing Measures is applicable to the dissemination of works through SMS, WAP, Java^™, IVR or other wireless technologies. If, in the future, the SNPA and the MII confirm that the Internet Publishing Measures apply to wireless value-added telecommunication services operators or issue new regulations or rules regulating publishing through SMS, WAP, Java^™, IVR or other wireless technologies, we may need to apply for a license or permit from relevant governmental agencies in charge of publishing. We cannot assure you that such application would be approved by the relevant governmental agencies.

Regulation for Internet News Dissemination. On November 7, 2000, the State Council News Office and the MII promulgated the Internet News Measures, under which websites established by non-news organizations may only publish news released by certain official news agencies. In order to disseminate news, such websites must satisfy the relevant requirements and have acquired the requisite governmental approval. We currently do not conduct any online news dissemination business. The State Council News Office and the MII have not specified whether the Internet News Measures apply to the dissemination of news through SMS, WAP, Java^™, IVR or other wireless technologies. If, in the future, the State Council News Office and the MII clarify that the Internet News Measures apply to wireless value-added telecommunication services operators or issue regulations or rules regulating wireless news dissemination, we may need to apply for a license or permit from governmental agencies in charge of news dissemination. We cannot assure you that such application would be approved by the relevant governmental agencies.

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Regulation for Internet Games and Culture Activities. On May 10, 2003, the Ministry of Culture of the PRC, or the MCC, promulgated the Internet Culture Administration Tentative Measures, or the Internet Culture Measures, which came into effect as of July 1, 2003. Pursuant to the Internet Culture Measures, if an Internet content provider engages in “Internet culture activities,” which include, among other things, online dissemination of “Internet cultural products” such as gaming products, the provider is required to obtain a license for Internet Culture Business Operations from the MCC in accordance with the procedures set forth in the Internet Culture Measures. Hurray! Solutions and Beijing Hutong were granted such a license in August 2004 and December 2007, which license permits them to conduct an Internet games business.

Regulation of Music Production

The music industry, including the traditional record companies and the more recent digital music providers, is highly regulated in China. Laws and regulations issued or implemented by the NPC; the State Council of China; the National Copyright Administration of China, or the NCAC; the MCC, the MII; and other relevant government authorities cover many aspects of the industry, including entry into the market, scope of permissible business activities, interconnection and transmission line arrangements, tariff policy and foreign investment.

The principal laws and regulations governing the music business in China include:

Copyrights. Under the PRC’s Copyright Law (1990), as revised in 2001, and its related Implementing Regulations (2002), creators of protected works enjoy personal and property rights with respect to publication, identification, alteration, reproduction, distribution, exhibition, performance, transmission, broadcasting and related activities. The term of a copyright is life plus 50 years for individual authors and 50 years for corporations. In consideration of the social benefits and costs of copyrights, China balances copyright protections with limitations that permit certain uses, such as for private study, research, personal entertainment and teaching, without compensation to the author or prior authorization. Section 2, “Performance,” and Section 3, “Phonogram,” of Chapter IV of the Copyright Law cover major aspects of our business related to both online and offline music distribution. These provisions grant performers and record production companies personal and property rights (neighboring rights), including the right to fair compensation for the use of originals or copies of their works. In addition, authors of lyrics and music composers have separate and independent rights with respect to any particular song. The term of the copyright is 50 years after the first performance or authorized publication.

In addition, arrangements for the compulsory collection of license fees and the allocation of such fees were standardized by two interim provisions in the NCAC’s Interim Provisions on Compulsory License of Performance and Phonogram (1993). In response to the changes posed by digital media, and in coordination with international treaties and agreements, the NPC took further action by amending the 1990 Copyright Law to specifically protect the online transmission of music (which is part of our music business). The newly added “digital” rights and responsibilities include a notice-and-takedown procedure for Internet service providers and certain anti-circumvention provisions. In combination, the Copyright Law, the Implementing Regulations, several administrative regulations and judicial interpretations constitute a relatively comprehensive legal framework for copyrights in China, although enforcement of such rights remains difficult. The Regulations on Protection of Information Network Transmission Right (July 1, 2006) stipulate that the digital transmission of copyrightable works by Internet or wireless means, including by making them available via interactive on-demand or similar services, is subject to the regulations described above. In addition, the Chinese National Standing Committee voted to enter into the framework of the World Intellectual Property Organization’s World Copyright Treaty and World Performance and Phonogram Treaty in 2006.

Certification and Licensing System. The music industry is administered by specific ministries or agencies in China. A set of rules and regulations has been established for nearly every aspect of the traditional music business, from market entry to daily operation. In particular, our distribution of music through traditional physical channels (e.g., retail stores or chain stores) requires a license under the Regulations of the Phonographic Products and the Measures on Wholesaling, Retailing and Renting of the Phonographic Products (2002), while distribution through digital means (e.g., Internet or wireless means) requires official approval or record-keeping of music and its permissible content transmitted within the PRC by MCC according to the Opinions on Regulation and Development of Music Transmitted via Network (2006). In addition, the Regulations on the Commercial Performance and its Implementing Provisions (2004) and Measures on the Professional Intermediaries (1998, revised) require professional performers and managers to obtain a license. The public performance of music also requires a license. These regulations are designed to enable the government to monitor the production, reproduction and publication of music, as well as the operations of record companies.

Failure to comply with the foregoing legal requirements could subject our affiliated music companies to civil, administrative and criminal penalties.

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Other Laws and their Application

Regulation of Internet content services. We do not operate a significant Internet portal business, which typically requires the provision of extensive Internet content services, including Chinese language Web navigational and search capabilities, content channels, web-based communications and community services and a platform for e-commerce, such as auction houses.

For the limited Internet content services we provide, we are prohibited from posting or displaying any content that:

• opposes the fundamental principles determined in China’s Constitution;

• compromises state security, divulges state secrets, subverts state power or damages national unity;

• harms the dignity or interests of the state;

• incites ethnic hatred or racial discrimination or damages inter-ethnic unity;

• sabotages China’s religious policy or propagates heretical teachings or feudal superstitions;

• disseminates rumors, disturbs social order or disrupts social stability;

• propagates obscenity, pornography, gambling, violence, murder or fear or incites the commission of crimes;

• insults or slanders a third party or infringes upon the lawful rights and interests of a third party; or

• includes other content prohibited by laws or administrative regulations.

Failure to comply with these prohibitions may result in the closing of our websites. In addition, the Supreme Court of China and the Supreme People’s Procuratorate of China have issued quantitative guidance to the courts in China regarding when criminal penalties should be imposed on persons who distribute or assist in the distribution of obscene content through the Internet or wireless services.

Regulation of advertisements. The State Administration of Industry and Commerce, or the SAIC, is the government agency responsible for regulating advertising activities in China. One provisional regulation issued by Shanghai municipal government prohibits service providers from sending SMS advertisements without the client’s consent.

On January 26, 2005, the SAIC and the MII jointly promulgated a Circular Regarding the Prohibition of Advertisements for Voice Messages, SMS and other Information Services Which Contain Unhealthy Content, or the SMS Advertising Circular . The SMS Advertising Circular prohibits advertisement of information services with pornographic, obscene, superstitious and other unhealthy content, or advertisements that are misleading in pricing and payment terms of information services. The SMS Advertising Circular further provides that information service providers and advertising companies involved in the dissemination of advertisements for information services with pornographic, obscene, superstitious and other unhealthy content, or advertisements that are misleading in pricing and payment terms of information services will be subject to penalties by relevant authorities pursuant to PRC advertising regulations, and that information service providers providing unhealthy contents will be subject to administrative and other measures by telecommunications authorities, the public security authorities and national security authorities in accordance with Telecommunications Regulations (2000) and other applicable laws and regulations.

As part of our non-mobile operator marketing activities, we have developed integrated marketing campaigns with traditional media companies and multinational corporations through certain cross-selling efforts with companies such as R.A. Baileys & Co. If the SAIC were to treat our integrated marketing campaigns or other activities as being advertising activities, we would need to apply to the local SAIC for an advertising license to conduct wireless advertising business (through SMS, for example). We cannot assure you that such application would be approved by the SAIC. Failure to obtain such approval could result in penalties including being banned from engaging in online advertising activities, confiscation of illegal earnings and fines.

Foreign exchange controls. For information regarding relevant foreign exchange controls, please refer to Item 10.D. “Exchange Controls.”

Intellectual Property and Proprietary Rights

We rely primarily on intellectual property laws and our contractual arrangements with our employees, clients, business partners and others to protect our intellectual property rights. We require our employees to enter into agreements requiring them to keep confidential all information relating to our customers, methods, business and trade secrets during and after their employment with us. Our employees are required to acknowledge and recognize that all inventions, trade secrets, works of authorship, developments and other processes, whether or not patentable or copyrightable, made by them during their employment are our property. They also sign agreements to substantiate our sole and exclusive right to those works and to transfer any ownership that they may claim in those works to us.

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While we actively take steps to protect our proprietary rights, such steps may not be adequate to prevent the infringement or misappropriation of our intellectual property. This is particularly the case in China where the laws may not protect our proprietary rights as fully as in the United States. Infringement or misappropriation of our intellectual property could materially harm our business. We have registered a number of domain names including but not limit to: Hurray.com; Hurray.net.cn; Hurray.com.cn; Hawa.cn; Hawa.com.cn; M2me.com; M2me.com.cn; 5200.cn; Icu.com.cn; Icu.net.cn; sooglemusic.com; and hdmcms.com,.

We have registered one trademark with China’s Trademark Office relating to our company logo, two trademarks relating to our website of Hawa and two trademarks relating to Palmsky. We are in the process of applying for two additional trademarks in China. China’s trademark law adopts a “first-to-file” system for obtaining trademark rights. As a result, the first applicant to file an application for registration of a mark will preempt all other applicants. Prior use of unregistered marks, except “well known” marks, is generally not a basis for legal action in China. We may not be able to successfully defend or claim any legal rights in that trademark for which application has been made but for which the Trademark Office has not issued a registration certificate.

Many parties are actively developing and seeking patent protection for wireless services-related technologies. We expect these parties to continue to take steps to protect these technologies, including seeking patent protection. There may be patents issued or pending that are held by others and that cover significant parts of our technology, business methods or services. Disputes over rights to these technologies are likely to arise in the future. We cannot be certain that our products and services do not or will not infringe valid patents, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others, as discussed in “Risk Factors — Additional Risks Related to Our Company — We may not be able to adequately protect our intellectual property, and we may be exposed to infringement claims by third parties.”

With respect to our music business, our affiliated companies, Freeland Music, Huayi Brothers Music, New Run and Secular Bird, have retained recording and publishing rights with respect to the songs in their music libraries. They also own the applicable copyrights with respect to songs written and produced by their respective in-house artists. In addition, our affiliated music companies have either retained licenses to use or purchased the applicable copyrights with respect to songs written and produced by independent artists.

C. Organizational Structure

We currently conduct our business in China through our wholly owned subsidiary, Beijing Hurray! Times. To comply with ownership requirements under Chinese laws, which impose certain restrictions on foreign companies such as us, from investing in certain industries such as value-added telecommunication and Internet services, we have entered into a series of agreements with ten affiliated Chinese entities and their respective shareholders. We hold no ownership interest in any such affiliated Chinese entities, which are discussed below:

1.	Hurray! Solutions is 85% and 15% owned by our chairman and chief executive officer, Qindai Wang, and one of our shareholders, Songzuo Xiang, respectively.
2.	Beijing Cool Young is 95% owned by Hurray! Solutions and 5% owned by Qindai Wang.

3. Beijing Network is 50% owned by each of Li Xun and Hongmei Peng, two individuals in China.

4. WVAS Solutions is 99% owned by Beijing Network, with the remaining 1% equally owned by Hao Sun and Xiaoping Wang.

5. Beijing Palmsky is 50% and 50% owned by two individuals in China, Hong Liu and Haoyu Yang.

6. Beijing Hutong is 50% and 50% owned by two individuals in China, Wenqian Xu and Yi Cai.

7. Shanghai Magma is 50% and 50% owned by two individuals in China, Yi Zhang and Aiqin Shang.

8. Hengji Weiye is 50% and 50% owned by two individuals in China, Hong Pan and Xiaoqing Guo.

9. Shanghai Saiyu is 50% and 50% owned by two individuals in China, Liang Ruan and Yuqi Shi.

10. Henan Yinshan is 50% and 50% owned by two individuals in China, Hua Wei and Yidan Jiang.

In addition, Hurray! Digital Media is 50% owned by Hurray! Solutions, 25% owned by Beijing Network, and 25% owned by Beijing Hutong. In turn, Hurray! Digital Media holds a 51% equity interest in Huayi Brothers Music, a 60% equity interest in Freeland Music, a 30% equity interest in New Run, a 65% equity interest in Secular Bird and Freeland Music owns a 51% equity interest in Fly Songs.

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Through our agreements with these Chinese affiliates, we have the power to vote all shares of all the shareholders of those companies on their matters, through the general manager of Beijing Hurray! Times, as well as the right to enjoy the economic benefits of those companies and the exclusive right to purchase equity interests from the shareholders of those companies to the extent permitted by Chinese laws.

Under Financial Accounting Standards Board (“FASB”) Interpretation No. 46(revised), or FIN 46(R), we are the primary beneficiary of the economic benefits of our variable interest entities, Hurray! Solutions, WVAS Solutions, Beijing Cool Young, Beijing Palmsky, Beijing Network, Beijing Hutong, Hengji Weiye, Shanghai Magma, Hurray! Digital Media, Shanghai Saiyu, Henan Yinshan, Huayi Brothers Music, Freeland Music, Secular Bird, New Run and Fly Songs. Accordingly, these entities are consolidated into our financial statements or, in the case of New Run, accounted for on the equity basis from and after the date we became the primary beneficiary of each such entity. Transactions among the consolidated entities and our company and subsidiaries are eliminated in consolidation.

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The following diagram illustrates our corporate structure as of May 30, 2008.

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D. Property, Plant and Equipment

Our company and certain of our non-music affiliates currently lease an approximate total of 4,805 square meters of office space in Beijing through various lease agreements. The aggregate monthly rent of such lease agreements is approximately $116,265, with effect from August 2006. We also have branches and representative offices in Beijing, Shandong, Heilongjiang, Guangdong, Zhejiang, Liaoning, Chongqing, Shanghai, Henan and Sichuan.

Freeland Music, Huayi Brothers Music and New Run lease an approximate total of 2,612 square meters of office space in Beijing. Secular Bird leases an approximate total of 141 square meters of office space in Guangzhou. We believe that we and our affiliated companies will be able to obtain adequate facilities, principally through the leasing of appropriate properties, to accommodate our future expansion plans.

Item 4A. Unresolved Staff Comments

Not Applicable.

Item 5. Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report on Form 20-F. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this annual report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A. OPERATING RESULTS

Overview

We are a leading online distributor of music and music-related products such as ringtones, ringbacktones, and truetones to mobile users in China through the full range of WVAS platforms over mobile networks and through the Internet.

We also provide a wide range of other WVAS to mobile users in China, including games, pictures and animation, community, and other media and entertainment services. Our services are offered through the various service platforms available on the 2G and 2.5G networks operated by the mobile telecommunication network operators in China, principally China Mobile, China Unicom and increasingly, China Telecom. Many of our services are also available to users in China through our website. We are also a leader in artist development, music production and offline distribution in China through our affiliated music companies, Huayi Brothers Music, Freeland Music, New Run, and Secular Bird.

Our 2G services revenues are derived from our SMS, IVR services and RBT services. Our 2.5G services revenues are derived to a substantial extent from WAP services, the predominant 2.5G service available in China, and to a lesser extent from Java™ games and MMS. Users pay for our services by monthly subscription and/or on a per-use basis. We receive payments for these services principally in the form of payments from the telecom operators after the users have paid for our services and the operators have deducted their service and network fees.

We recorded a net loss of $42.0 million for 2007 and net income of $5.8 million for 2006 and $18.6 million for 2005. For 2007, we generated $60.5 million in total revenues, compared to $68.7 million and $56.1 million for 2006 and 2005, respectively, representing a decline of 11.9 % and an increase of 8.0 %, respectively. For 2007, WVAS revenue and recorded music accounted for 82.7% and 17.3% of our revenues, respectively, compared to 91.0% and 9.0% in 2006 and 100% and nil in 2005. The decrease in total revenues was driven by a significant decrease in demand for WVAS in 2007. The 2007 decrease in revenue from WVAS was offset in part by an increase in recorded music revenues.

We had an accumulated deficit of $2.8 million as of December 31, 2007, and retained earnings of $40.0 million and $34.6 million as of December 31, 2006 and 2005, respectively.

We had statutory reserves of $6.5 million, $5.7 million and $5.3 million as of December 31, 2007, 2006 and 2005, respectively.

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Factors Affecting Results of Operations and Financial Condition

The major factors affecting our results of operations and financial condition include:

• Growth of the WVAS Market in China and Changes in Mobile Operator Policies. Our financial results have been, and we expect them to continue to be, largely dependent on growth in the WVAS market in China. Historically, 2G services, such as SMS, have represented the predominant portion of the WVAS market in China and of our revenues. Our 2G services, represented 75.9% of our total WVAS revenues in 2003, all of which were derived from our SMS services. We commercially launched 2.5G services in September 2002 and began billing users for these services at the beginning of 2003. Since the launch of these 2G and 2.5G services, we have experienced significant growth in revenues from these services followed by a significant decline in revenues for these services in 2006 and 2007. The single most important factor causing this decline is the changes in mobile operator policies or the manner in which they are enforced. Such policy changes and their manner of enforcement have been frequent and unpredictable for the past three years and have caused our revenues to be volatile. See Item 3. “Risk Factors — Risks Related to Our Company— Unilateral changes in the policies of the MII, China Mobile and China Unicom and in their enforcement of their policies have resulted in service suspensions and our having to pay additional charges to the telecom operators, and further changes could materially and adversely impact our revenue and profitability in the future.” Although, we have been adversely affected by recent changes in mobile operator policies and the delay in the launch of 3G networks, we continue to believe that our financial success in the near-term will depend on the growth of the market for our 2G and 2.5G services, especially services utilizing music content, where we have a leading position and, in the longer-term, on our ability to offer popular services on any new wireless technologies that are introduced in China such as 3G.

• Positioning of Our Services on the WAP Portals of China Mobile and China Unicom. A key component of our revenue growth is our ability to not only maintain access to China Unicom’s and China Mobile’s networks, but also our ability to secure prominent positioning for our services at the top of the menu of services for each major service category on the telecom operators’ WAP portals so that users see our services first when opening the service menus. However, Beijing Network, one of our affiliated operating companies providing WAP services through China Mobile, was issued a sanction by China Mobile in January 2006 for improper promotion of one of its WAP services. As part of the sanction, China Mobile downgraded all of Beijing Network’s WAP services to the bottom of the menu and temporarily suspended the approval of new service applications on all platforms by Beijing Network and joint promotions with Beijing Network. The sanction relating to downgrading Beijing Network’s WAP services to the bottom of China Mobile’s menus is no longer in effect.

• Network Service Agreements with China Mobile, China Unicom and China Telecom. Our results of operations are dependent on the terms of network service agreements with China Mobile, China Unicom and China Telecom and the manner in which the telecom operators implement these agreements. Each of these agreements is non-exclusive, and has a limited term, generally one or two years. Renewal of them on favorable terms depends on our relationship with these telecom operators at both the national and provincial level, the popularity of our services and our ability to maintain adequate levels of performance. Any mobile operator could alter any of these terms or terminate the contracts for a variety of reasons in the future, including, for example, to increase their own service or network fees in order to enhance their profitability at the expense of service providers.

• Taxes. Certain of our subsidiaries and affiliated Chinese entities enjoy tax exemptions and reduced tax rates. See “— Taxation” below. Such tax treatment increases our net income. Our future results could be materially adversely affected if we are not able to maintain similar tax treatment, particularly as a result of the recently adopted revisions to PRC income tax laws which became effective on January 1, 2008.

• Billing and Transmission Failures. We do not recognize any revenues for services that are characterized as billing and transmission failures. These failures occur when we do not collect fees for our 2G services from mobile operators in a number of circumstances, including when the delivery of our services to a customer is prevented because the customer’s phone is off, the customer’s prepaid phone card has run out of value or a telecom operator experiences technical problems with its network. These situations are known in the industry as billing and transmission failures. The level of billing and transmission failures significantly affects revenues we record. The failure rate for 2G services has fluctuated significantly in the past, ranging on a monthly basis from 0.0% to 9.8% of the total billable messages which are reflected in our internal records during 2007. Although we do not experience the same type of billing and transmission errors for our 2.5G services as we do for our 2G services, we do experience a discrepancy between the revenues recorded by our internal system and the revenues that we receive from the telecom operators. This difference has historically averaged approximately 2% per month and relates to services that are provided but for a variety of reasons are not billed to the user due to the manner in which the telecom operators register new users or manage their internal billing reconciliation process.

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• Acquisitions and Strategic Investments. Selective acquisitions and strategic investments, such as the ones described in Item 4.A. “History and Development of the Company” above, form part of our strategy to further expand our business. These acquisitions and investments may not produce the results that our management and board of directors anticipate, and may subject our company to unforeseen liabilities. In particular, our future revenue growth will depend on our ability to successfully operate our music development, production and distribution business, with which we have relatively limited experience.

• Developing Artists, Sustaining a Pipeline of New Song Releases and Keeping up with Consumer Music Tastes. Through our acquisition of controlling and minority stakes in Huayi Brothers Music, Freeland Music, New Run and Secular Bird, we have entered the business of artist development and music production. Artist development and music production is inherently a “hit” driven business, and its success depends to a large extent on our ability to maintain a large portfolio of talented singing artists and build a strong pipeline of new song releases. Further, the success of such new releases depends upon their acceptance by consumers with various and changing tastes. If our affiliated music companies fail to expand their portfolio of talented singing artists, sustain a pipeline of new releases, or keep abreast of changes in consumer music tastes, our business and financial condition may be adversely affected with respect to the financial performance of our affiliated music companies.

Revenues

We derive our revenues from our primary operating segments: WVAS and recorded music. Our revenues represent our total revenues from operations, net of certain business and value-added taxes. Our revenues from WVAS and recorded music are subject to a 3.0% and 5.0% business tax, respectively.

The following table sets forth certain historical consolidated revenues, by amount and as a percentage of our total revenues, for the periods indicated:

	For the Year Ended December 31,
	2007					2006					2005
			Percentage					Percentage					Percentage
	Amount		of revenues			Amount		of revenues			Amount		of revenues
			(in thousands of U.S. dollars, except percentages)
Revenues:
Wireless value-added services	$	50,038		82.7	%	$	62,512		91	%	$	56,063		100.0	%
Recorded music		10,489		17.3			6,203		9			—		—
Total revenues	$	60,527		100.0	%	$	68,715		100.0	%	$	56,063		100.0	%

The following tables show our WVAS revenues for 2007, 2006 and 2005 by product and mobile operator (including Personal Handy-phone System, or PHS, operators).

	For the Year Ended December 31, 2007
	China		China		China		China
	Mobile		Unicom		Telecom		Netcom		Others		Total
	(in millions of U.S. dollars)
SMS	$	7.0	$	2.5	$	0.2	$	0.3	$	1.0	$	11.0
IVR		13.3		1.2		2.4		0.3		—		17.2
RBT		1.6		1.7		2.4		—		—		5.7
2G Revenues		21.9		5.4		5.0		0.6		1.0		33.9
WAP		5.9		6.7		—		—		—		12.6
MMS		0.7		0.7		—		—		—		1.4
Java		1.4		—		—		—		—		1.4
2.5G revenues		8.0		7.4		—		—		—		15.4
Other revenues		0.1		—		—		—		0.6		0.7
Total	$	30.0	$	12.8	$	5.0	$	0.6	$	1.6	$	50.0

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	For the Year Ended December 31, 2006
	China		China		China		China
	Mobile		Unicom		Telecom		Netcom		Total
	(in millions of U.S. dollars)
SMS	$	11.3	$	5.7	$	—	$	0.1	$	17.1
IVR		5.2		2.5		2.5		0.6		10.8
RBT		2.0		1.3		1.4		—		4.7
2G Revenues		18.5		9.5		3.9		0.7		32.6
WAP		10.4		11.1		—		—		21.5
MMS		3.5		0.5		—		—		4.0
Java™		4.4		—		—		—		4.4
2.5G revenues		18.3		11.6		—		—		29.9
Total	$	36.8	$	21.1	$	3.9	$	0.7	$	62.5

	For the Year Ended December 31, 2005
	China		China		China		China
	Mobile		Unicom		Telecom		Netcom		Total
	(in millions of U.S. dollars)
SMS	$	2.0	$	8.6	$	—	$	—	$	10.6
IVR		4.8		2.9		0.7		0.2		8.6
RBT		0.5		0.4		—		—		0.9
2G Revenues		7.3		11.9		0.7		0.2		20.1
WAP		10.2		24.1		—		—		34.3
MMS		1.5		0.2		—		—		1.7
Java™		—		—		—		—		—
2.5G revenues		11.7		24.3		—		—		36.0
Total	$	19.0	$	36.2	$	0.7	$	0.2	$	56.1

Wireless Value-added Services. Our 2G and 2.5G services revenues are derived from services that we provide to our users primarily through the networks of China Unicom, China Mobile, China Telecom and China Netcom. 2G SMS and 2.5G WAP services have historically been our primary source of revenues. Our sales in 2007 of 2G IVR and RBT increased by 59.3% and 67.6%, respectively as compared with 2006. Sales in 2007 of 2.5G WAP, MMS and JAVA™ decreased as compared to 2006 due in part to China Mobile’s new requirement that a service fee reminder be sent to users before processing their download requests.

Recorded Music. Our recorded music revenues are derived from artist development, music production, offline music distribution, and online music distribution through WVAS and the Internet, which accounted for approximately 17.3% of our total revenues in 2007.

Cost of Revenues

The following table sets forth certain historical consolidated cost of revenues data by amount for the periods indicated:

	For the Year Ended December 31,
	2007		2006		2005
	(in thousands of U.S. dollars)
Cost of Revenues:
Wireless value-added services	$	36,394	$	40,672	$	28,635
Recorded music		6,233		3,553		—
Total cost of revenues	$	42,627	$	44,225	$	28,635

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Wireless value-added services. The principal cost of revenues for our WVAS is the service and network fees paid to the telecom operators under our network service agreements with them. The cost of revenues also includes fees paid to our content providers and marketing partners, maintenance costs related to equipment used to provide the services, bandwidth leasing charges and data center services, alternative channels, media and related Internet costs, operator imposed penalty charges, and certain distribution costs.

Recorded Music. Cost of revenues for our recorded music includes producing CD masters, artist and songwriter royalties, advertising and royalties payable to other parties for the use of their work.

Gross Profit Margin

The following table sets forth the historical consolidated gross profits and gross profit margin of our business activities for the periods indicated:

	For the Year Ended December 31,
	2007		2006		2005
	(in thousands of
	U.S. dollars, except percentages)
Gross Profits:
Wireless value-added services	$	13,644	$	21,840	$	27,428
Recorded music		4,256		2,650		—
Total gross profits	$	17,900	$	24,490	$	27,428

	For the Year Ended December 31,
	2007			2006			2005
Gross Profit Margin:
Wireless value-added services		27.3	%		34.9	%		48.9	%
Recorded music		40.6			42.7			—
Total gross profit margin		29.6	%		35.6	%		48.9	%

The gross profit margins for our WVAS declined in 2007 compared to 2006 due to sharply decreased revenues due to the challenging wireless services operating environment and stricter policies and regulations announced by the MII and the telecom operators and increased enforcement of those policies and regulations. The gross profit margins for our recorded music declined in 2007 compared to 2006 due to the increased cost of revenues caused by increases in the cost of producing CD masters.

Operating Expenses

The following table sets forth certain historical consolidated operating expenses data, in terms of amount and as a percentage of our total revenues, for the periods indicated:

	For the Year Ended December 31,
	2007					2006					2005
			Percentage					Percentage					Percentage
	Amount		of revenues			Amount		of revenues			Amount		of revenues
	(in thousands of U.S. dollars, except percentages)
Operating Expenses:
Product development expenses (including stock-based compensation expense of $1, $80 and $5 for the years ended December 31, 2007, 2006 and 2005, respectively)	$	2,028		3.0	%	$	2,169		3.2	%	$	1,852		3.3	%
Selling and marketing expenses (including stock-based compensation expense of $287, $346 and $10 for the years ended December 31, 2007, 2006 and 2005, respectively)		11,514		16.8			11,014		16.0			8,982		16.0
General and administrative expenses (including stock-based compensation expense of $155, $118 and $23 for the years ended December 31, 2007, 2006 and 2005, respectively)		9,141		13.3			6,699		9.7			3,443		6.1
Provision for goodwill impairment		38,779		56.4			—		—			—		—
Total operating expenses	$	61,462		89.4	%	$	19,882		28.9	%	$	14,277		25.5	%

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Product Development Expenses. Product development expenses primarily consist of research and development staff costs. Most of our product development expenses relate to enhancing our portfolio of 2G and 2.5G services and improving and updating our services provisioning and management software prior to our sale of the SSI business. Product development expenses also include depreciation and amortization of computers and software related to the activities of our product development teams. We depreciate our computer equipment, software and other assets on a straight-line basis over their estimated useful lives, which is three to five years.

Selling and Marketing Expenses. Selling and marketing expenses primarily consist of staff costs related to managing the development of our service offerings. These expenses also include advertising, sales and marketing expenses, such as expenses associated with sponsoring promotional events, salaries and benefits for our direct sales force, free trial services we offer through, for example, certain retailers of mobile phones in China. We expect that our selling and marketing expenses will continue to increase in future periods as we expand our music business and increasingly use stock-based compensation to reward our sales and marketing personnel.

General and Administrative Expenses. General and administrative expenses primarily consist of stock-based compensation and benefits for our management, salaries for our finance and administrative personnel, professional service fees, lease expenses, other office expenses, expenses related to depreciation of equipment for general corporate purposes and expenses related to amortization of intangible assets from our acquisition.

We lease bandwidth from telecom operators’ provincial offices. Bandwidth and server custody fees, office rentals and depreciation charges allocated to our general management, finance and administrative personnel are also included in general and administrative expenses.

We depreciate leasehold improvements, which are recorded as general and administrative expenses on a straight-line basis over the relevant lease term.

We expect our general and administrative expenses to increase as we add personnel in response to the expansion of our business in future periods and incur additional administrative expenses from our newly acquired companies, New Run, Shanghai Saiyu, Secular Bird, Henan Yinshan and Fly Songs. We also expect general and administrative expenses to increase as we incur professional service fees, such as for legal and accounting services.

Stock-based Compensation. We grant equity incentive awards to our employees and certain non-employees. Until February 2006 when we commenced granting nonvested shares, all of our equity incentive grants were in the form of stock options. Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R) using the modified prospective transition method. Under this method, stock-based compensation expense recognized beginning January 1, 2006 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006 based on the fair market value as of the grant date, measured in accordance with SFAS 123, “Accounting for Stock-based Compensation,” and (b) compensation expense for all stock-based compensation awards granted on or subsequent to January 1, 2006, based on grant date fair value estimated in accordance with the provisions of SFAS 123(R). In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation of SFAS 123(R) and the valuation of stock-based payments for public companies. We have applied SAB 107 in our adoption of SFAS 123(R). We recognize stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting period of the award.

Prior to the adoption of SFAS 123(R), we recognized stock-based compensation expense in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and had adopted the disclosure-only alternative of SFAS 123 and SFAS No. 148, “Accounting for Stock-based Compensation — Transition and Disclosure.” In accordance with APB 25 and related interpretations, stock-based compensation expense was not recorded in connection with share-based payment awards granted with exercise prices equal to or greater than the fair market value of the underlying shares on the date of grant.

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Share-based payment transactions with non-employees are accounted for as share based compensation expenses in accordance with EITF 96-18 “Accounting for Equity Instruments that Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services.”

On December 20, 2005, we accelerated the vesting of all outstanding stock options that would otherwise have been unvested at December 31, 2005. We implemented this acceleration in order to reduce the stock-based compensation expense that would have been incurred by our company if such options continued to vest after January 1, 2006, which is the date that the SFAS 123(R) became effective. This accounting standard requires that all share-based payments to employees, including grants of stock options, be recognized in our financial statements based on their fair values. In connection with the acceleration of such options, we recorded compensation expense of approximately $17,000 which was included in the 2005 total stock-based compensation cost.

On February 7, 2006, Hurray! granted awards of 330,000 ADSs, equal to 33,000,000 ordinary shares that vest over a period of time (which we refer to herein as “nonvested shares”) to certain employees pursuant to its 2004 Share Incentive Plan (the “2004 Plan”). This resulted in stock-based compensation expense of $1.6 million to be recognized over the applicable vesting period. These nonvested shares vest on an annual basis equally over three years.

On June 20, 2006, Hurray! granted 75,000 ADSs, equal to 7,500,000 nonvested shares to certain employees which resulted in stock-based compensation expense of $0.3 million to be recognized over the applicable vesting period. These nonvested shares vest on an annual basis equally over 33 months.

On March 14, 2007, Hurray! granted 20,000,000 nonvested shares to its employees which resulted in stock-based compensation expense of $0.6 million to be recognized over the applicable vesting period. These nonvested shares vest over three years on an annual basis equally.

On November 23, 2007, Hurray! granted 19,500,000 nonvested shares to its employees which resulted in stock-based compensation expense of $0.4 million to be recognized over the applicable vesting period. These nonvested shares vest over three years on an annual basis equally.

The stock-based compensation expense was $0.4 million in 2007 and $0.5 million in 2006.

Provision for impairment of goodwill and intangible assets. In the second quarter of 2007, the telecom operators introduced various new policies that adversely impacted our WVAS business and introduced further uncertainties in our operating environment. By September 30, 2007, our market capitalization was lower than our net book value, thus indicating impairment of our long-lived assets. As of that date, we tested the carrying value of goodwill and acquired intangible assets and recorded a goodwill impairment charge of $9.6 million and an impairment charge to acquired intangibles of $0.6 million. In view of the further decline of Hurray’s market capitalization as of December 31, 2007 and continued difficult operating conditions, we recorded an additional goodwill impairment charge of $29.2 million and an additional impairment charge to acquired intangible assets of $1.9 million. The impairment charges of acquired intangibles are included in operating expenses according to their nature. The valuation of goodwill and other intangible assets was arrived at after using a combination of a market value approach (with comparisons to selected publicly traded companies operating in the same industry) and an income approach (discounted cash flows). Any continued adverse changes in the telecom operators’ policies or in the competitive environment could lead to additional impairment charges.

Critical Accounting Policies

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We have summarized our accounting policies below that we believe are both important to an understanding of our financial results and involve the need to make estimates about the effect of matters that are inherently uncertain. We also have other policies that we consider to be key accounting policies. However, these policies do not meet the definition of critical accounting policies because they do not generally require us to make estimates or judgments that are difficult or subjective.

Revenue Recognition

Wireless value-added services. We contract with the telecom operators for the transmission of wireless services as well as for billing and collection services. The telecom operators provide us with a monthly statement that represents the principal evidence that service has been delivered and triggers revenue recognition for a substantial portion of our revenue. In certain instances, when a statement is not received within a reasonable period of time, we make an estimate of the revenues and cost of services earned during the period covered by the statement based on its internally generated information, historical experience and/or other assumptions that are believed to be reasonable under the circumstances.

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WVAS revenues are derived from providing personalized media, games, entertainment and communication services to mobile phone customers of the various subsidiaries of four major telecom operators, China Mobile, China Unicom, China Telecom and China Netcom. Fees for these services, which are negotiated in network service agreements with the telecom operators and indicated in the message received on the mobile phone, are charged on a per-use basis or on a monthly subscription basis, and vary according to the type of services delivered. We recognized WVAS revenues in the period in which the services are performed net of business taxes of $1.5 million, $1.7 million, and $1.4 million for 2007, 2006 and 2005, respectively.

We measure our revenues based on the total amount paid by mobile phone customers, for which the Telecom Operators bill and collect on our behalf. Accordingly, the service fee paid to the Telecom Operators is included in the cost of revenues. In addition, in respect of 2G services, the Telecom Operators charge us a network fee based on a per message fee, which varies depending on the volume of messages sent in the relevant month, multiplied by the excess of messages sent over messages received. These network fees are likewise retained by the Telecom Operators and are reflected as cost of revenues. The cost of revenues also includes fees paid to our content providers and marketing partners, maintenance costs related to equipment used to provide the services, bandwidth leasing charges and data center services, alternative channels, media and related Internet costs, operator imposed penalty charges, and certain distribution costs.

We evaluate the criteria outlined in Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as Principal Versus Net as an Agent,” in determining whether it is appropriate to record the gross amount of revenues and related costs or the net amount earned after deducting the fees charged by the Telecom Operators. We record the gross amounts billed to its customers based on the following facts: (i) it is the primary obligor in these transactions, (ii) it has latitude in establishing prices and selecting suppliers and (iii) it is involved in the determination of the service specifications.

Recorded Music. Through the acquisition of Huayi Brothers Music, Freeland Music, Secular Bird and New Run beginning in 2005, we entered the business of artist development, music production, offline music distribution and online distribution through WVAS and the Internet. Recorded music revenues are derived from live performances, corporate sponsorship and advertising, online and wireless sales, and offline CD sales.

We generate revenues from the sale of CDs either by providing the CD master to a distributor or by directly arranging for the volume production and subsequent wholesale of the CDs. In the former case, we receive a fixed fee, have no further obligations and recognize the fee as revenue when the master CD is provided. In the latter case, we ship the produced CDs to retail distributors and recognize wholesale revenues at the time of shipment less a provision for future estimated returns. In 2007, the estimated sales returns rate was approximately 18% based on past experience.

We recognize artist performance fees and corporate sponsorship or marketing event fees once the performance or the service has been completed. Where we act as the primary obligor in the transaction, revenues are recorded on a gross basis. Where we are considered an agent or where the artists separately contract with the event organizer, revenues are recorded on a net basis.

We license our music to third parties for guaranteed minimum royalty payments, normally received upfront and typically non-refundable. In such cases we recognize such fees as revenue on a straight-line basis over the life of the license and unrecognized revenues are included in liabilities. When the contract provides for additional payments if revenues exceed the minimum amount guaranteed, such amounts are included in revenues when we are notified of our entitlement to additional payments.

We incur costs in producing CD masters, volume CD production, artist and songwriter royalties, and royalties payable to other parties for the use of their work. The cost of record masters and volume CD productions, and royalties paid in advance are recorded in prepaid expenses and other current assets when the sales of the recording are expected to recover the cost and amortized as cost of revenues over the revenue generating period, typically within one year. The decision to capitalize an advance to an artist, songwriter or other party requires significant judgment as to the recoverability of these advances. Advances for royalties and other capitalized costs are assessed for recoverability continuously.

Stock-based Compensation Cost

We grant equity incentive awards to our employees and certain non-employees. Until February 2006 when we commenced granting nonvested shares, all of our equity incentive grants were in the form of stock options.

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Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R), using the modified prospective transition method and therefore has not restated results for prior periods. Under this transition method, stock- based compensation expense recognized beginning January 1, 2006 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006 based on the fair market value as of the grant date, measured in accordance with SFAS 123, and (b) compensation expense for all stock-based compensation awards granted on or subsequent to January 1, 2006, based on grant-date fair value estimated in accordance with the provisions of SFAS 123(R). We recognize stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting period of the award. Prior to the adoption of SFAS 123(R), we recognized stock-based compensation expense in accordance with APB 25. In March 2005, the SEC issued SAB 107 regarding the SEC’s interpretation of SFAS 123(R) and the valuation of stock-based payments for public companies. We have applied the provisions of SAB 107 in the adoption of SFAS 123(R).

Goodwill and Intangible Assets Impairment

We test goodwill for impairment by reporting unit on an annual basis or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of the goodwill below their carrying amount. We perform a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The impairment of goodwill is determined by us estimating the fair value based upon the present value of future cash flows. In estimating the future cash flows of each reporting unit, we have taken into consideration the overall and industry economic conditions and trends, market risk of our company and historical information.

We measure impairment of intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss based on the fair value of the assets.

Income Taxes

Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years. Deferred 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 tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

In March 2007, the National People’s Congress of China enacted a new Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. In addition, the Implementation Rules of the New Enterprise Income Tax Law, or the Implementation Rules were promulgated by the PRC State Council on December 6, 2007 and the Notice on Implementation of Transitional Arrangements for Preferential Policies of Enterprise Income Tax, or the Transitional Arrangements Notice, was promulgated by the PRC State Council on December 26, 2007. Under the New EIT system, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and foreign-invested enterprises. Enterprises established prior to March 16, 2007 eligible for preferential tax rate of 15% according to the then effective PRC Enterprise Income tax Law for Foreign-Invested Enterprise and Foreign Enterprise tax laws and administrative regulations shall be subject to transitional rules as stipulated in the Transitional Arrangements Notice. In addition, certain qualified high and new technology enterprises strongly supported by the state may still benefit from a preferential tax rate of 15% under the New EIT Law if they meet the definition of “qualified high and new technology enterprise” strongly supported by the state set out in the Implementation Rules which refers to companies hold independent ownership of core intellectual properties and simultaneously meet a list of other criteria as stipulated. As a result, if our PRC subsidiaries and VIEs qualify as qualified high and new technology enterprises strongly supported by the state under the new EIT Law, they will continue to benefit from a preferential tax rate of 15%. Otherwise, the applicable tax rate of our PRC subsidiaries may be subject to PRC income tax at a rate of 25% starting from 2008 under the New EIT system. Hurray! has used the new standard rates for calculation of deferred taxes until the necessary approvals are obtained.

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Results of Operations

The following discussion of our results of operations for the years ended December 31, 2005, 2006 and 2007 is based upon our audited consolidated financial statements included elsewhere in this annual report on Form 20-F.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Our results of operations for the year ended December 31, 2007 compared to the year ended December 31, 2006 were impacted by the inclusion of the operating results for 2007 of Shanghai Saiyu, Henan Yinshan, Secular Bird and Fly Songs, which were acquired in 2007.

Revenues. Our revenues declined 11.9% to $60.5 million in 2007 from $68.7 million in 2006. This decrease was primarily due to a decline in demand for WVAS in 2007.

Wireless Value-added Services. Revenues from our WVAS declined 20.0% to $50.0 million for 2007 from $62.5 million for 2006, primarily due to the decline in the market for SMS and WAP services. SMS revenues were $11.0 million in 2007, a decline of 35.7% from $17.1 million for 2006. WAP revenues were $12.6 million in 2007, a decline of 41.4% from $21.5 million for 2006. IVR and RBT revenues were $17.2 million and $5.7 million in 2007, an increase of 59.3% and 21.3% from $10.8 million and $4.7 million for 2006, respectively.

Recorded Music. Recorded music revenues became a new business line for us in 2006. We expanded our recorded music segment by acquiring 65% of Secular Bird, an independent record label in China, and through Freeland Music, 51% of Fly Songs, a performance and concert organizer. Revenue from recorded music was $10.5 million in 2007, an increase of 69.1% from $6.2 million for 2006. We expect to derive an increasing amount of our total revenues from recorded music in the coming year.

Cost of Revenues. Our cost of revenues declined 3.6% to $42.6 million in 2007 from $44.2 million in 2006 due primarily to decreased costs for our WVAS as our WVAS revenues declined. Our decrease in cost of revenue was partly offset by increased costs of our recorded music business as that business grew organically and through acquisition.

Wireless value-added Services. Our cost of WVAS declined 10.5% to $36.4 million for 2007 from $40.7 million for 2006. This decrease resulted primarily from decreased promotion costs due to the market.

Recorded Music. Our cost of recorded music increased 75.4% to $6.2 million for 2007 from $3.6 million for 2006. This increase resulted primarily from increased commercial development and artists’ performance cost as well as from our music company acquisitions in 2007.

Gross Profits. Our gross profits decreased 26.9% to $17.9 million for 2007 from $24.5 million for 2006, mainly due to the decreased profits from WVAS. Our gross profit margins decreased to 29.6% for 2007 from 35.6% for 2006, due primarily to decreased margins for WVAS, which mainly resulted from increased marketing, promotion and distributions costs related to SMS and WAP services.

Operating Expenses. Operating expenses sharply increased by 209.1% to $61.5 million for 2007 from $19.9 million for 2006, due primarily to impairment charges amounting to $38.8 million for our WVAS business and additional expenses associated with our new acquisitions in 2007.

Product Development Expenses. Our product development expenses decreased slightly to $2.0 million in 2007 from $2.2 million in 2006.

Selling and Marketing Expenses. Our selling and marketing expenses slightly increased by 4.5% to $11.5 million in 2007 from $11.0 million in 2006.

General and Administrative Expenses. Our general and administrative expenses increased 36.4% to $9.1 million in 2007 from $6.7 million in 2006. This increase was mainly due to the increased professional service fees and additional expenses associated with our new acquisitions and to a lesser extent, increased bad debt expense and amortization expense of intangible assets.

Provision for Impairment of Goodwill and Intangible Assets. We tested the carrying value of goodwill and acquired intangible assets and recorded an impairment charge of $41.3 million in 2007.

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(Loss) Income from Continuing Operations. As a result of the foregoing, loss from operations was $43.6 million for 2007 compared to income of $4.6 million for 2006.

Interest Income and Expense. Interest income was $2.3 million for 2007, compared to $2.5 million for 2006. Interest expense increased to $0.2 million for 2007 from $0.05 million in 2006. This increase related to the acquisition payables for Shanghai Magma.

Other Income. Other income, primarily government tax subsidies, was $0.5 and $0.3 million in 2007 and 2006, respectively.

Income Taxes. Income taxes were a benefit of $0.2 million in 2007 and an expense of $0.2 million in 2006.

Equity in Losses of Affiliate. In April 2007, we acquired a 30% interest in New Run, an independent record label in China, and it has been accounted for on the equity basis from April 1, 2007. The equity in the losses of New Run was $0.06 million in 2007.

Net (Loss) Income from Continuing Operations. Net loss from continuing operations was $41.5 million for 2007 compared to income of $6.6 million for 2006.

Net Loss from Discontinued Operations. Effective August 1, 2007, we accounted for our SSI Business as a discontinued operation. Net loss from discontinued operations was reduced from $0.8 million in 2006, a full year’s operations, to $0.4 million in 2007, which included the benefit of income of $0.2 million representing the gain recognized on the sale of the SSI Business.

Net (Loss) Income. As a result of the foregoing, net loss was $42.0 million due to an impairment charge of $41.3 million for 2007 compared to net income of $5.8 million for 2006. Our net loss in 2007 was offset by net income of approximately $0.6 million derived from our new acquisitions, mainly Shanghai Saiyu.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Our results of operations for the year ended December 31, 2006 compared to the year ended December 31, 2005 were impacted by the inclusion of the operating results for 2006 of Shanghai Magma and Freeland Music, which were acquired in 2006 and the results of Huayi Brothers Music which had been acquired on December 31, 2005.

Revenues. Our revenues increased 22.6% to $68.7 million in 2006 from $56.1 million in 2005. This increase was primarily due to an increase in revenues from our 2G services and revenues from the affiliated music companies,which were consolidated into our financial statements in 2006.

Wireless Value-Added Services. Revenues from our WVAS increased 11.5% to $62.5 million for 2006 from $56.1 million for 2005, primarily due to the growth in the market for 2G services, especially for SMS. SMS revenues were $17.1 million in 2006, an increase of 61.2% from $10.6 million for 2005. Following the first quarter of 2004 and continuing through 2005, our SMS revenues were negatively affected by new billing systems of China Mobile and China Unicom and other changes in their policies and the enforcement of their policies. We did, however, relaunch our SMS services in the second half of 2005 through various marketing and promotional activities that were independent of the telecom operators which contributed to our increased SMS revenues in 2006. IVR revenues were $10.8 million in 2006, an increase of 25.9% from $8.6 million for 2005. RBT revenues were $3.4 million in 2006, a significant increase over $0.9 million for 2005.

Recorded Music. Recorded music revenues, which became a new business line for us in 2006, were $6.2 million in 2006, accounting for 9.0% of total revenues in 2006.

Cost of Revenues. Our cost of revenues increased 54.4% to $44.2 million in 2006 from $28.6 million in 2005 due primarily to increased costs for 2G services and, to a lesser extent, increased costs for our 2.5G services and our new recorded music business.

Wireless Value-Added Services. Our cost of WVAS increased 42.0% to $40.7 million for 2006 from $28.6 million for 2005. This increase resulted primarily from increased costs incurred to promote our services through channels which are independent of the telecom operators, including mobile handset partnerships, internet marketing alliances and direct advertising. It also resulted from increased levels of service and network fees corresponding to the growth in sales of 2G services in 2006 compared to 2005, a RMB5.7 million ($0.7 million) fine imposed on Hurray! Solutions by China Unicom for improper delivery of one of its SMS services to users and a RMB3.0 million ($0.4 million) fine imposed on Beijing Hutong by China Unicom for violating a China Unicom billing policy by one of its WAP services. In addition, the increase reflects, to a lesser extent, the cost of purchasing content for our IVR services.

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Gross Profits. Our gross profits decreased 10.7% to $24.5 million for 2006 from $27.4 million for 2005, mainly due to the decreased profits from 2.5G services. Our gross profit margins decreased to 35.6% for 2006 from 48.9% for 2005, due primarily to decreased margins for 2.5G services, which mainly resulted from new policies mandating free trial periods and double confirmation reminders for subscription based services and increased marketing, promotion and distributions costs related to WAP services.

Operating Expenses. Operating expenses increased 39.3% to $19.9 million for 2006 from $14.3 million for 2005, due primarily to the additional expenses associated with our newly acquired companies, Huayi Brothers Music, Freeland Music and Shanghai Magma.

Product Development Expenses. Our product development expenses increased slightly to $2.2 million in 2006 from $1.9 million in 2005.

Selling and Marketing Expenses. Our selling and marketing expenses increased 22.6% to $11.0 million in 2006 from $9.0 million in 2005. This increase was primarily due to the additional expenses associated with our newly acquired companies, Huayi Brothers Music, Freeland Music and Shanghai Magma and increased use of stock-based compensation in 2006 to reward our sales and marketing personnel, which created stock-based compensation expense allocable to selling and marketing expenses.

General and Administrative Expenses. Our general and administrative expenses increased 94.6% to $6.7 million in 2006 from $3.4 million in 2005. This increase was mainly due to the additional expenses associated with our newly acquired companies, Huayi Brothers Music, Freeland Music and Shanghai Magma and to lesser extent, increased rental expenses, bad debt expenses and amortization expenses of intangible assets

Income from Operations. As a result of the foregoing, income from operations decreased to $4.6 million for 2006 from $13.2 million for 2005.

Interest Income and Expense. Interest income was $2.5 million for 2006, compared to $1.4 million for 2005. This increase was mainly due to the interest rates increase in 2006 and increased collections from our customers. Interest expense increased to $45,000 for 2006 from $27,000 in 2005.

Other Income. Other income, primarily government tax subsidies, was $0.3 million in 2006 and 2005, respectively.

Income Taxes. Income taxes were $0.2 million in 2006 and $0.3 million in 2005 resulting from the lower level of profitability in 2006 compared to 2005.

Net Income from Continuing Operations. Net income from continuing operations was $6.6 million for 2006 compared to income of $14.5 million for 2005.

Net (Loss) Income from Discontinued Operations. The SSI Business generated a loss of $0.8 million in 2006 as business declined significantly as the telecom operators awaited the issue of 3G licenses, therefore delaying the build out of their networks and the awarding of significant contracts. In 2005, this business had net income of $4.1 million.

Net Income. As a result of the foregoing, net income decreased 68.8% to $5.8 million for 2006 from $18.6 million for 2005.

B. LIQUIDITY AND CAPITAL RESOURCES

Cash Flows and Working Capital

The following table sets forth our cash flows with respect to operating activities, investing activities and financing activities for the periods indicated:

	For the Year Ended December 31,
	2007			2006			2005
	(in thousands of U.S. dollars)
Net cash (used in) provided by operating activities	$	(2,055	)	$	17,636		$	13,980
Net cash used in investing activities		(8,120	)		(15,157	)		(6,591	)
Net cash provided by (used in) financing activities		16			(4,399	)		59,305
Net (decrease) increase in cash and cash equivalents	$	(10,159	)	$	(1,920	)	$	66,694

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Our net cash used in operating activities in 2007 was $2.1 million. This was primarily attributable to our net loss of $41.9 million, as adjusted for an add-back of $41.3 million in loss on impairment of goodwill and other intangible assets and $3.7 million in depreciation and amortization as non-cash items, which was offset in part by a $2.1 million increase in accounts receivable and $3.2 million increase in receivable from disposal of subsidiary. Our net cash provided by operating activities in 2006 was $17.6 million. This was primarily attributable to our net income of $5.8 million, as adjusted for an add-back of $3.5 million in depreciation and amortization as a non-cash item, $5.5 million decrease in accounts receivable and $3.1 million decrease in prepaid expenses and other current assets. Our net cash provided by operating activities in 2005 was $14.0 million. This was primarily attributable to our net income of $18.6 million, as adjusted for an add-back of $1.9 million in depreciation and amortization as a non-cash item, which was offset in part by a $5.8 million increase in accounts receivable.

Net accounts receivable declined from $18.1 million as of December 31, 2005 to $13.4 million as of December 31, 2006 and increased to $14.7 million as of December 31, 2007. The decrease from 2005 to 2006 is primarily due to a significant improvement in collections from the telecom operators, mainly from China Unicom. The increase from 2006 to 2007 is primarily due to lengthened collection periods from the telecom operators. The average collection time for our accounts receivable from WVAS was 81 days in 2005, decreasing to 71 days in 2006 and increasing to 78 days in 2007.

Net cash used in investing activities was $8.1 million in 2007, of which $3.2 million was used in the acquisition of equity interests in Shanghai Saiyu, Henan Yinshan, Fly Songs and Secular Bird and $2.5 million was used in the acquisition of an equity affiliate, New Run. Net cash used in investing activities was $15.2 million in 2006, of which $12.6 million was used in the acquisition of equity interests in Huayi Brothers Music, Freeland Music and Shanghai Magma. Net cash used in investing activities was $6.6 million in 2005, of which $4.2 million was used for the acquisitions of intangible assets and $1.1 million was a prepayment for the acquisition of an equity interest in Freeland Music and Shanghai Magma. Our total capital expenditures for computer hardware, software and office equipment for the years ended December 31, 2007, 2006 and 2005 were $0.9 million, $1.0 million and $1.3 million, respectively. Our capital divestitures are not material.

Net cash provided by financing activities was $16,334 for 2007, resulting from proceeds arising in connection with the exercise of stock options in 2007. Net cash used in financing activities was $4.4 million for 2006, mainly due to our repurchase and cancellation of 79,260,000 ordinary shares under our stock repurchase program in 2006 with a total cost of $5.0 million. Net cash provided by financing activities was $59.3 million for 2005, mainly reflecting the proceeds from our initial public offering.

We keep almost all of our cash in U.S. dollar or RMB denominated bank accounts or short-term time deposits for two principal purposes: to finance our operations and to manage the interest rate and currency risks arising from our operations. We adjust the amount of cash held in U.S. dollars and RMB from time to time to maximize our interest rate returns and to ensure that we have sufficient RMB for our operational needs, including for lease and other commitments. We have not historically used derivative instruments to hedge market risks.

We believe that our current cash and cash equivalents, cash flow from operations and the proceeds from our initial public offering will be sufficient to meet our anticipated cash needs, including for working capital, capital expenditures and various contractual obligations, for at least the next 12 months. We also believe that our recent investments in New Run, Shanghai Saiyu, Fly Songs and Secular Bird will have no material impact on our future liquidity or capital resources in the near term. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these sources are insufficient to satisfy our cash requirements, we may seek to issue debt securities or additional equity or to obtain bank borrowings. The issue of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict our operations and the placement of liens over some or all of our assets. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Indebtedness

As of December 31, 2007, other than a remaining payment for the acquisition of Shanghai Magma of $6 million originally due in December 2007, we did not have any indebtedness or any material debt securities or material mortgages or liens. In February 2008, we agreed with the former shareholders of Shanghai Magma to reduce this liability to $1 million, which amount has subsequently been paid. In addition, as of December 31, 2007, we did not have any material contingent liabilities. We may, however, be obligated to make certain earn-out payments in connection with our investments in New Run, Shanghai Saiyu, and Secular Bird, as discussed under “Tabular Disclosure of Contractual Obligations” below.

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C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

See Item 4.B. “Information About the Company — Business Overview — Product and Content Development,” “—Infrastructure and Technology,” and “—Intellectual Property and Proprietary Rights.”

D. TREND INFORMATION

See Item 3.D. “Key Information — Risk Factors” and “—Operating and Financial Review and Prospects” above.

E. OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations as of December 31, 2007:

	Payments Due by Period
			Less than		1-3		3-5
	Total		1 year		years		years
	(in thousands of U.S. dollars)
Operating lease commitments	$	3,125	$	1,725	$	1,379	$	21
Other contractual commitments*		5,086		1, 974		3,112		—
Total contractual obligations	$	8,211	$	3,699	$	4,491	$	21

* Represents non-cancelable agency agreements with certain artists that provide for minimum payments.

The agreements entered into in connection with our acquisitions and strategic investments described above under Item 4.A “History and Development of the Company” include earn-out provisions pursuant to which the sellers will become entitled to additional consideration, which may be material and may in certain circumstances include either cash or additional equity interests, if the relevant business achieves specified performance measures.

Holding Company Structure

We are a holding company with no operations of our own. All of our operations are conducted through Beijing Hurray! Times. As a result, our ability to pay dividends and to finance any debt that we may incur is dependent upon service fees paid by our affiliated Chinese entities to Beijing Hurray! Times, and dividends and other distributions paid by those subsidiaries. If any of our subsidiaries or our affiliated Chinese entities incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay service fees or dividends to Beijing Hurray! Times or us. In addition, Chinese legal restrictions permit payment of dividends to us by our subsidiaries only out of the net income from our subsidiaries, if any, determined in accordance with Chinese accounting standards and regulations. Under Chinese law, our subsidiaries are also required to set aside a portion (at least 10%) of their after tax net income, if any, each year for certain reserve funds. These reserve funds are not distributable as cash dividends.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to the interest income generated by our cash deposits in banks. We have not used derivative financial instruments in our investment portfolio. Interest-earning instruments and floating rate debt carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. Our future interest income may fluctuate in line with changes in interest rates. However, the risk associated with fluctuating interest rates is principally confined to our cash deposits in banks, and, therefore, our exposure to interest rate risk is minimal and immaterial.

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Foreign Exchange Risk

While our reporting currency is the U.S. dollar, to date, virtually all of our revenues and costs are denominated in Renminbi and substantially all of our assets (other than the proceeds from our initial public offering) and liabilities are denominated in Renminbi. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be impacted by fluctuations in the exchange rate between U.S. dollars and Renminbi. If the Renminbi depreciates against the U.S. dollar, the value of our Renminbi revenues and assets as expressed in U.S. dollars in our financial statements will decline.

Between 2001 and 2007, the exchange rate between Renminbi and U.S. dollars has varied by less than 11.9%. If the Renminbi had been 1% and 5% less valuable against the U.S. dollar than the actual rate as of December 31, 2007 which was used in preparing the Company’s audited financial statements as of and for the year ended December 31, 2007, our net asset value, as presented in U.S. dollars, would have been reduced by $0.09 million and $0.4 million, respectively. Conversely, if the Renminbi had been 1% and 5% more valuable against the U.S. dollar as of that date, then our net asset value would have increased by $0.09 million and $0.5 million, respectively. We cannot predict at this time what will be the long-term effect of the Chinese government’s decision to tie the Renminbi to a basket of currencies, rather than just to the U.S. dollar.

Inflation

Inflation has not materially impacted our results of operations in recent years. However, in 2007, China experienced significantly increased inflation, which, if it continues at that level or increases further, could have an adverse impact on our financial condition and result of operation in future periods. According to the China Statistical Bureau, China’s overall national inflation rate, as measured by the general consumer price index, was approximately 4.8%, 1.3% and 1.8% in 2007, 2006 and 2005, respectively.

TAXATION

Hurray! Holding Co., Ltd. is a tax-exempted company incorporated in the Cayman Islands. Up until December 31, 2007, pursuant to the Income Tax Law of the PRC Concerning Foreign Investment and Foreign Enterprises and the Tentative Regulations of the PRC on Enterprise Income Tax (the “Income Tax Laws”), our PRC subsidiaries and variable interest entities (“VIEs”) were generally subject to enterprise income tax at a statutory rate of 33%. Some of these subsidiaries and VIEs were qualified as high technology enterprises and under the Income Tax Laws, they were subject to a preferential tax rate of 15%. In addition, some of Hurray!’s subsidiaries are new-technology enterprises located in Beijing new-technology development zone and the Income Tax Laws, they were entitled to either a three-year tax exemption followed by three years with a 50% reduction in tax rate, commencing the first operating year. During 2007, the newly acquired companies, Shanghai Saiyu and Henan Yinshan enjoyed reduced taxable income which is calculated based on 10% of the revenue and subject to an income tax rate of 33%.

These preferential tax arrangements were originally to expire at various dates between 2006 and 2010. In 2005 and 2006 a number of our VIEs became subject to a higher tax rate as tax exemptions expired or were reduced. The aggregate dollar and per share effect of the tax holidays in 2007, 2006 and 2005 were $1.9 million, $2.2 million and $5.6 million and $0.0009, $0.0010 and $0.0027 per share, respectively.

In March 2007, the National People’s Congress of China enacted a new Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. In addition, the Implementation Rules of the New Enterprise Income Tax Law, or the Implementation Rules were promulgated by the PRC State Council on December 6, 2007 and the Notice on Implementation of Transitional Arrangements for Preferential Policies of Enterprise Income Tax, or the Transitional Arrangements Notice, was promulgated by the PRC State Council on December 26, 2007. Under the New EIT system, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and foreign-invested enterprises. Enterprises established prior to March 16, 2007 eligible for preferential tax rate of 15% according to the then effective PRC Enterprise Income to Law for Foreign-Invested Enterprise and Foreign Enterprise tax laws and administrative regulations shall be subject to transitional rules as stipulated in the Transitional Arrangements Notice. In addition, certain qualified high and new technology enterprises strongly supported by the state may still benefit from a preferential tax rate of 15% under the New EIT Law if they meet the definition of “qualified high and new technology enterprise” strongly supported by the state set out in the Implementation Rules which refers to companies hold independent ownership of core intellectual properties and simultaneously meet a list of other criteria as stipulated. As a result, if our PRC subsidiaries qualify as qualified high and new technology enterprises strongly supported by the state under the new EIT Law, they will continue to benefit from a preferential tax rate of 15%. Otherwise, the applicable tax rate of our PRC subsidiaries may be subject to PRC income tax at a rate of 25% starting from 2008 under the New EIT system. We have used the new standard rates for calculation of deferred taxes until the necessary approvals are obtained.

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Under the new Enterprise Income Tax law effective on January 1, 2008, the rules for determining whether an entity is resident in the PRC for tax purposes have changed and the determination of residence depends amongst other things on the “place of actual management.” If Hurray! Holding Co., Ltd., or our non-PRC subsidiaries, were to be determined to be a PRC resident for tax purposes, it or they, would be subject to tax in the PRC on our worldwide income including the income arising in jurisdictions outside the PRC. We have evaluated our resident status under the new law and related guidance and believes Hurray! Holding Co., Ltd. would not be a PRC tax resident for PRC income tax purposes.

As Hurray! Holding Co., Ltd. would be non-resident for PRC tax purposes, dividends paid to it out of profits earned after January 1, 2008 from its PRC subsidiaries would be subject to a withholding tax of 10%.

Aggregate undistributed earnings of our subsidiaries and affiliates located in the PRC that are available for distribution to the Company at December 31, 2007 are considered to be indefinitely reinvested under APB opinion No. 23, “Accounting for Income Taxes — Special Areas,” and accordingly, no provision has been made for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to Hurray! Holding Co., Ltd. The PRC tax authorities have also clarified that distributions made out of retained earnings accumulated prior to January 1, 2008 are not subject to the withholding tax.

Our WVAS revenues are subject to a 3% business tax. Our recorded music services revenues are subject to a 5% business tax for royalties and advertising revenues and a 13% value-added tax for revenues from the sale of CDs. Our software and system integration services revenues, which have been classified as a discontinued operation on their sale in August 2007, were subject to a 17% value-added tax. Companies that develop their own software and register the software with the relevant authorities in China are generally entitled to a value-added tax rebate of 14%. Any service fees that Beijing Hurray! Times charges and subsequently collects pursuant to the exclusive technical and consulting service agreements with Hurray! Solutions and our other Chinese affiliates are subject to a 5% business tax.

Subject to the approval of the relevant tax authorities, Hurray! Solutions and other affiliated Chinese entities had total tax loss carryforwards of approximately $4.2 million and $3.7 million as of December 31, 2007 and 2006, respectively, for enterprise income tax purposes, which will expire by 2012. These tax loss carryforwards give rise to potential deferred tax assets totaling $1.1 million and $0.6 million as of December 31, 2007 and 2006, respectively. In 2005, we concluded that Hurray! Solutions and other affiliated Chinese entities did not record sufficient net income within the carryforward period to realize the full tax benefit of these past net losses. As a result, we established a valuation allowance for the full amount of these deferred tax assets. In 2006, we expected some of the affiliated Chinese entities would record sufficient net income within the carryforward period to realize the tax benefit of these past net losses, and the valuation allowance in respect of such deferred tax assets was reduced accordingly.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted. We adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on our accounting for income taxes for the year ended December 31, 2007. We did not incur any interest or penalties related to potential underpaid income tax expenses, and also do not expect to have a significant increase or decrease on the unrecognized tax benefits within 12 months from December 31, 2007.

We are subject to taxation in PRC and other tax jurisdictions. There is no ongoing examination by taxing authorities at this time. Our various tax years from 2002 to 2007 are remaining open in various taxing jurisdictions.

Hurray Technologies (HK) Ltd., (“Hurray Technologies”), our 99% owned subsidiary, is subject to income tax in Hong Kong. Hong Kong companies are generally subject to a 17.5% corporate income tax. Hurray Technologies has not, however, paid any income taxes in Hong Kong because to date it has not received any revenues.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging Activities” to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The standard requires disclosure of fair values of derivative instruments and their gains and losses in a tabular format as well as cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. It also requires that more information be provided about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. SFAS No.161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We do not expect the adoption of SFAS No. 161 to have a material impact on our financial statements.

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In December 2007, the FASB issued SFAS No.141(R), “Business Combinations”, to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. The standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is prohibited. We have not yet begun the process of assessing the potential impact that the adoption of SFAS No. 141(R) may have on its consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No.160, “Noncontrolling Interests in Consolidated Financial Statements” to improve the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way as required in the consolidated financial statements. Moreover, SFAS No. 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS No. 160 is effective for fiscal year, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. We have not yet begun the process of assessing the potential impact that the adoption of SFAS No. 160 may have on our consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115”. SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. The standard requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS 157. We are currently evaluating whether the adoption of SFAS 159 will have a significant effect on our consolidated results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which provides enhanced guidance for using fair value to measure assets and liabilities. This standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” delays the effective date of Statement 157 for all nonrecurring fair value measurements of non-financial assets and non-financial liabilities until fiscal years beginning after November 15, 2008. We are currently evaluating whether the adoption of SFAS 157 will have a significant effect on our consolidated financial position, results of operations or cash flows.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

The names of our current directors and executive officers, their ages as of May 30, 2008 and the principal positions with the company held by them are as follows:

Name	Age		Position	Class	Term of Office
Qindai Wang		43	Chairman of the Board and Chief Executive Officer	Class I	2 years
Jesse Liu		45	Director	Class I	2 years
Robert Mao (1)		64	Director	Class I	2 years
Alan Powrie (1)		57	Director	Class III	1 year
Suberna Shringla(1)		42	Director	Class II	3 years
Songzuo Xiang		43	Director	Class II	3 years
Shudan Zhang		48	Director	Class III	1 year
Shaojian (Sean) Wang		44	President, Chief Operating Officer and Acting Chief Financial Officer	—	—

(1) Member of the audit committee, compensation committee and nominating committee.

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Our Amended and Restated Memorandum and Articles of Association provide for the division of the board of directors into three classes: Class I directors (currently Qindai Wang, Jesse Liu and Robert Mao), Class II directors (currently Suberna Shringla and Songzuo Xiang) and Class III directors (currently Shudan Zhang and Alan Powrie). At each annual general meeting, directors who are elected will serve a three-year term until such director’s successor is elected and is duly qualified, or until such director’s earlier death, bankruptcy, insanity, resignation or removal. There are no family relationships among any of the directors or executive officers of our company.

Biographical Information

Qindai Wang. Mr. Wang has served as our Chief Executive Officer and Chairman of the Board since June 2001. From December 1999 to February 2001, Mr. Wang was President of AsiaInfo Technologies (China), the Chinese operating subsidiary of AsiaInfo Holdings, Inc. and a provider of telecom network integration and software solutions in China. Previously, Mr. Wang worked at Nortel Networks (China) from 1996 until 1999 as General Manager of the China Telecom account at Nortel. He served as Regional Director at Lucent Technologies (China) from 1995 to 1996 and as a Senior Group Manager at AT&T China from 1989 to 1995. Mr. Wang holds a Bachelor of Science degree in Engineering from the Chengdu Institute of Telecommunications Engineering.

Jesse Liu. Mr. Liu has served on our board of directors since June 2001. From that date until June 2007, he also served as our Senior Vice President and Chief Financial Officer. Previously, Mr. Liu was the Vice President of Marketing at AsiaInfo Technologies (China) from July 1999 to August 2000. He served as the Business Development Director at Lucent Technologies for the North American market from 1995 to 1999 and as a Marketing Manager at AT&T Network Systems for Greater China from 1990 to 1995. Mr. Liu holds a Master of Business Administration degree from Columbia University, a Master of Science degree in Engineering from Iowa State University and a Bachelor of Science degree in Engineering from Tongji University.

Robert Mao. Mr. Mao has served on our board of directors since March 2003. He also serves as chairman of the board of Augux Technology, a start up provider of high intensity LED lighting equipment and as a member of the board of 3Com Corporation. Mr. Mao previously held senior executive positions at Nortel, Alcatel and ITT. Mr. Mao holds a Master degree in Management from the Massachusetts Institute of Technology as well as a Master of Science degree in Engineering and a Bachelor of Science degree in Engineering from Cornell University.

Alan Powrie. Mr. Powrie has served on our board since July 2004. Mr. Powrie was a partner with Deloitte Touche Tohmatsu, Hong Kong, until his retirement in September 2000. From October 2000 to May 2001 and again from January 2002 to May 2002, he worked as a part-time advisor to Deloitte Touche Tohmatsu China. Mr. Powrie joined Deloitte Touche Tohmatsu in 1971 and has worked with that firm in the United Kingdom, United States, Hong Kong and China. Mr. Powrie holds a Bachelor of Laws degree from the University of Edinburgh and is a member of the Institute of Chartered Accountants of Scotland and the Hong Kong Institute of Certified Public Accountants.

Suberna Shringla. Mr. Shringla has served on our board since February 2006. Mr. Shringla is a founding partner of Team Ventures, a boutique corporate finance advisory firm focused on media and communication sectors primarily in Hong Kong, China and Korea. From August 2000 to January 2002, Mr. Shringla served as Director and Head of Media and Technology Corporate Finance for SG Cowen, a subsidiary of Banque Societe Generale. Prior to that, Mr. Shringla served as Vice President and Head of Business Development of Turner Broadcasting Services International Asia Pacific/Time Warner and as a Manager of Business Development for Walt Disney Studios, Asia Pacific. Mr. Shringla holds a Masters of Business Administration degree from ENPC Paris and a Bachelor of Arts degree from St. Stephens College, Delhi. He is also an investment adviser licensed with the Securities and Futures Commission in Hong Kong.

Songzuo Xiang. Dr. Xiang has served on our board since July 2000. He was a visiting scholar at Columbia University from May 1999 to July 2000, and at Cambridge University from October 1998 to May 1999. He previously worked at the People’s Bank of China, Shenzhen branch, as the Deputy Director of the Fund Planning Department from 1995 to 1998 and as the Director of the Non-Performing Loan Management Department from 1996 to 1998. Dr. Xiang was formerly an investment manager at Shenzhen Resources & Property Development (Group) Ltd. from 1993 to 1995. He holds a Master of International Affairs degree from Columbia University, a Ph.D in Economics and a Master in Management Science degree from Renmin University of China, and a Bachelor degree in Mechanical Engineering from HuaZhong University of Science and Technology.

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Shudan Zhang. Mr. Zhang has served on our board since 2000. From 1995 to 1999, he served as Vice President of Sales and Marketing at UTStarcom. Formerly, from 1991 to 1995, he served as Vice President of Sales and Marketing at Starcom, a company which he also co-founded. Mr. Zhang holds a Bachelor of Science degree from Beijing Polytechnic University.

Shaojian (Sean) Wang. Mr. Wang has served as our President and Chief Operating Officer since May 2006 and our Acting Chief Financial Officer since July 2007. Previously, Mr. Wang was Chief Operating Officer and Acting Chief Financial Officer at Opta Corporation, a publicly listed consumer electronics company in the U.S. that is controlled by TCL. Prior to that, he served as Chief Financial Officer at Pacificnet Inc., a technology investment and management company that invests in CRM solutions, mobile applications, and telecommunications in Asia. Prior to that, he served as the managing director at Thian Bing Investments PTE, Ltd, and as a country manager at Ecolab, Inc. Mr. Wang attended Peking University, received a Bachelor of Science degree in Economics from Hamline University and a Master of Business Administration from Carlson School of Management, University of Minnesota.

B. Compensation

Compensation of Directors and Executive Officers

In 2007, we paid an aggregate of approximately $578,633 and $160,000 in compensation to our executive officers and non-executive directors, respectively. In 2007, we granted an aggregate of 395,000 ADSs, equal to 39,500,000 nonvested shares, in lieu of stock options, to certain of our executive officers and senior management under our 2004 Share Incentive Plan, or 2004 Plan. These nonvested shares vest on an annual basis equally over three years, or 33.33% on each anniversary of the grant dates.

Full-time employees of our company and our subsidiaries in China participate in a government-mandated multi-employer defined contribution plan pursuant to which pension benefits, medical care, unemployment insurance and other welfare benefits are provided to those employees. The total provision for such employee benefits, corresponding to the full amount of our company’s obligation in connection therewith was $2.6 million for 2007.

We have entered into indemnification agreements with each of our directors and executive officers under which we agree to indemnify each of them to the fullest extent permitted by Cayman Islands law, our articles of association and other applicable law, from and against all expenses and liabilities arising from any proceeding, to which the indemnitee is or was a party, witness or other participant. Upon the written request by a director or officer, we will, within 30 days after receipt of the request, advance funds for the payment of expenses, unless there has been a final determination that the director or officer is not entitled to indemnification for these expenses. We also maintain director and executive officer insurance for our directors and executive officers with limited liability of $20,000,000.

Employment Agreements

We have entered into employment, invention assignment and confidentiality, and non-compete agreements with each of our executive officers as described below.

These employment agreements provide that our obligations to compensate each officer will terminate if that officer resigns other than for a good reason or is discharged by us for cause or gross negligence, as determined by a majority of our board of directors. However, if an officer is terminated without cause or resigns for good reason, we are obligated to provide severance compensation equivalent to six months of the officer’s annual gross base salary to that officer.

The term “cause” includes actions by the officer involving:

• dishonesty,

• fraud,

• breach of trust,

• physical harm to any person,

• breach of the employment agreement, or

• other similar conduct.

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The term “good reason” includes:

• changes in the officer’s position, which materially reduce his level of responsibilities, duties or stature, or

• a reduction in the officer’s compensation.

The executive officers are also entitled to exercise their stock options, which have vested at the time of employment termination, if not for cause, for a period of thirty days thereafter (or such other period of time not exceeding three months as is determined by the board of directors).

In addition, if a change of control occurs with respect to our company and an officer is terminated without cause or resigns for good reason prior to the termination date of the officer’s employment agreement or the date on which either our company or the officer elects not to extend the agreement further by giving written notice to the other party, then we will be obligated to pay severance benefits in an amount equal to six times the monthly rate of annual gross base salary in effect immediately prior to the termination of employment.

Under the invention assignment and confidentiality agreements, each officer agrees, among other things, to assign all rights in company-related inventions to us and to keep our proprietary information confidential. The non-compete agreements prohibit each officer from being employed by, or participating in any manner in the management or operation of, any business that is or may reasonably become our competitor for a period of 12 months after termination of employment for any reason.

Summary of Stock Plans

2004 Share Incentive Plan

Our board of directors and shareholders adopted our 2004 Plan in July 2004. Our board of directors initially authorized the issuance of an aggregate of up to 80,000,000 of our ordinary shares under the 2004 Plan, subject to adjustment for a share split, or any future share dividend or other similar change in our ordinary shares or our capital structure. Commencing on the first business day of each calendar year for three years beginning in 2005, the number of ordinary shares reserved for issuance under the 2004 Plan (including issuances as incentive stock options) will be increased annually by a number equal to the lesser of (a) 2.5% of the total number of shares outstanding as of that date, (b) 70,000,000 ordinary shares, or (c) a lesser number of shares determined by the board. Pursuant to the adjustment provisions described above, the number of ordinary shares reserved for issuance under the 2004 Plan was increased by 29,666,800 shares for an aggregate total of 109,666,800 ordinary shares in 2005. No such adjustment was made in 2006. The number of ordinary shares reserved for issuance under the 2004 Plan was further increased by 50,000,000 shares for an aggregate total of 159,666,800 ordinary shares in 2007. No adjustment was made in 2008. In addition, shares which are currently subject to awards under our 2003 Stock Option Plan or 2002 Incentive Compensation Plan (which plans are described below) that terminate or expire on or after July 1, 2004 without the issuance of such shares will become available for award grants under our 2004 Plan. As a result of such terminations and expirations of options under these plans, an additional 6,448,740 ordinary shares are available for issuance under the 2004 Plan. A general description of the terms of the 2004 Plan is set forth below.

Types of Awards. Awards that can be granted under the 2004 Plan consist of:

• our ordinary shares,

• options to purchase our ordinary shares,

• dividend equivalent rights, the value of which is measured by the dividends paid with respect to our ordinary shares,

• nonvested shares,

• stock appreciation rights the value of which is measured by appreciation in the value of our ordinary shares, and

• any other securities the value of which is derived from the value of our ordinary shares and which can be settled for cash, our ordinary shares or other securities or a combination of cash, our ordinary shares or other securities.

Under the 2004 Plan, we may also grant incentive stock options (also known as ISOs) within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, to employees who are located in the U.S., or who are U.S. tax payers.

Plan Administration. Our board currently administers the 2004 Plan, and may designate a committee to administer it in the future.

Eligibility. Under the 2004 Plan, awards may be issued to employees, directors or consultants of our company or our subsidiaries, although ISOs may only be issued to our employees or the employees of our subsidiaries.

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Acceleration of Awards upon Corporate Transactions or Changes in Control. The 2004 Plan provides for acceleration of awards upon the occurrence of specified corporate transactions or changes in control. In the event of certain corporate transactions, including specified types of reorganizations and acquisition transactions, each outstanding award granted under the 2004 Plan will automatically become fully vested and exercisable and be released from any restrictions on transfer (other than transfer restrictions applicable to the award) and repurchase or forfeiture rights immediately prior to the specified effective date of the corporate transaction, unless the award is assumed or replaced by the successor company or its parent company in connection with the corporate transaction. Upon consummation of the corporate transaction, each outstanding award will terminate unless the award is assumed by the successor company or its parent company.

Awards. Awards under the 2004 Plan are evidenced by an award agreement which contains, among other things, provisions concerning exercisability and forfeiture upon termination of employment or consulting arrangement (by reason of death, disability or otherwise) as have been determined by our board. In addition, in the case of stock options the award agreement also specifies whether the option constitutes an ISO or a non-qualified stock option (also known as NSOs) and may, but need not, include a provision whereby a grantee at any time during his or her employment with us may exercise any part or all of the award prior to full vesting of the award.

Exercise or Purchase Price and Term of Awards. An award may be exercised when a holder delivers a notice of such exercise to us. The exercise or purchase price must be paid at the time of exercise in full by cash, check or whole ordinary shares with a fair market value at least equal to the option price (or in another appropriate manner approved by us, such as in a combination of cash and whole ordinary shares or, with respect to options, by cashless exercise through a broker-dealer).

The exercise price of ISOs cannot be less than the fair market value of our ordinary shares on the date of grant. However, in the case of an ISO granted to a grantee, who, at the time the ISO was granted, owned stock possessing more than 10.0% of the combined voting power of all classes of our share capital or the share capital of any parent or subsidiary of us, the option price may not be less than 110.0% of the fair market value of our ordinary shares on the date of grant of such ISO. The term of an ISO cannot exceed 10 years. In addition, the term of an ISO granted to a person, who, at the time of grant, owns stock possessing more than 10.0% of the combined voting power of all classes of our share capital, is limited to five years from the date of the grant of the award. To the extent that the aggregate fair market value of our ordinary shares subject to options granted as ISOs under the 2004 Plan which become exercisable for the first time by a recipient during any calendar year exceeds $100,000, then options represented by ordinary shares in excess of the $100,000 limitation shall be treated as NSOs.

The plan administrator will determine the term and exercise or purchase price, if any, of all other awards granted under our 2004 Plan. The exercise or purchase price for the awards is specified in the award agreement.

Transferability. Under the 2004 Plan, ISOs may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the grantee only by the grantee. Other awards shall be transferable by will or by the laws of descent or distribution and to the extent provided in the award agreement. The 2004 Plan permits the designation of beneficiaries by holders of awards, including ISOs.

Termination of Service. The period following the termination of a grantee’s employment or service with us during which the grantee can exercise his or her option, if any, will be provided in the award agreement, and it cannot end later than the last day of the original term of the award. In the event a grantee’s employment or service with us is terminated without cause (as defined in the 2004 Plan), any awards which have become exercisable prior to the time of termination will remain exercisable for three months from the date of termination. In the event a grantee’s employment or service with us is terminated for cause, the grantee’s right to exercise his or her options will terminate concurrently with the termination of the grantee’s service. If termination is caused by death or disability, any awards which have become exercisable prior to the time of termination, will remain exercisable for six months from the date of termination.

Amendment or Termination of 2004 Plan. Under the 2004 Plan, our board may at any time terminate, suspend, or amend the 2004 Plan in any respect, except that no termination, suspension or amendment will be effective without shareholder approval if such approval is required to comply with any law, regulation or stock exchange rule and no such change may adversely affect any award previously granted without the consent of the recipient. The 2004 Plan will expire on the tenth anniversary of the date that it was approved by the shareholders.

2003 Stock Option Plan

In September 2003, our board of directors adopted our 2003 Stock Option Plan, or 2003 Plan, which governs an aggregate of 41,191,000 stock option grants as of December 31, 2005. The 2003 Plan was terminated upon the adoption of the 2004 Plan. All future stock incentive awards will be granted pursuant to the 2004 Plan or other plans that are adopted from time to time. Option grants made under the 2003 Plan prior to its termination are still effective and governed by the 2003 Plan. A general description of the terms of the 2003 Plan is set forth below.

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Types of Awards. All awards made under the 2003 Plan prior to its termination were options to purchase our ordinary shares.

Plan Administration. Same as the 2004 Plan.

Eligibility. Same as the 2004 Plan.

Acceleration of Awards upon Corporate Transactions. The 2003 Plan provides for acceleration of awards upon the occurrence of specified corporate transactions. In the event of certain corporate transactions, including specified types of reorganizations and acquisition transactions, each outstanding award granted under the 2003 Plan will automatically become fully vested and exercisable and be released from any restrictions on transfer (other than transfer restrictions applicable to the award) and repurchase or forfeiture rights immediately prior to the specified effective date of the corporate transaction, unless the award is assumed or replaced by the successor company or its parent company in connection with the corporate transaction. Upon consummation of the corporate transaction, each outstanding award will terminate unless the award is assumed by the successor company or its parent company.

Awards. Awards under the 2003 Plan are evidenced by an award agreement which contains, among other things, provisions concerning exercisability and forfeiture upon termination of employment or consulting arrangement (by reason of death, disability or otherwise) as have been determined by our board. In addition, the award agreement also specifies whether the option constitutes an ISO or a NSO and may, but need not, include a provision whereby a grantee at any time during his or her employment with us may exercise any part or all of the award prior to full vesting of the award.

Exercise or Purchase Price and Term of Awards. An award may be exercised when a holder delivers a notice of such exercise to us. The exercise or purchase price must be paid at the time of exercise in full by cash, check or whole ordinary shares with a fair market value at least equal to the option price (or in another appropriate manner approved by us, such as in a combination of cash and whole ordinary shares or, with respect to options, by cashless exercise through a broker-dealer). To the extent permitted by the Sarbanes-Oxley Act of 2002, the 2003 Plan also allows for the payment of the exercise price with a promissory note.

The exercise prices for the awards granted under the 2003 Plan are specified in the applicable award agreements.

Transferability. Under the 2003 Plan, awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the grantee only by the grantee.

Termination of Service. The period following the termination of a grantee’s employment or service with us during which the grantee can exercise his or her option, if any, is provided in the award agreements for all outstanding option grants, and it cannot end later than the last day of the original term of the award. In the event a grantee’s employment or service with us is terminated without cause (as defined in the 2003 Plan), any awards which have become exercisable prior to the time of termination will remain exercisable for thirty days from the date of termination (unless a longer period of time not exceeding three months is determined by the plan administrator). In the event a grantee’s employment or service with us is terminated for cause, the grantee’s right to exercise his or her options will terminate concurrently with the termination of the grantee’s service. If termination is caused by death or disability, any awards which have become exercisable prior to the time of termination, will remain exercisable for six months from the date of termination.

2002 Incentive Compensation Plan

In July 2002, our board of directors adopted our 2002 Incentive Compensation Plan, or 2002 Plan, which governs an aggregate of 45,840,700 stock option grants as of December 31, 2005. The 2002 Plan was terminated upon the adoption of the 2003 Plan. Option grants made under the 2002 Plan prior to its termination are still effective and governed by the 2002 Plan. The 2002 Plan is substantially identical to the 2003 Plan in all material respects.

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C. Board Practices

For information regarding the terms of our current directors and the period during which our officers and directors have served in their respective positions, please refer to Item 6.A. “— Directors and Senior Management” above.

Our board of directors held 4 regular meetings and took action on 22 occasions by unanimous written consent during 2007. All of the directors who were serving in office during 2007 attended at least 75% of all the meetings of our board of directors and its committees on which such director served after becoming a member of our board of directors. We have no specific policy with respect to director attendance at our annual general meetings of shareholders, and three of our directors attended the annual general meeting of shareholders held on August 30, 2007. Our board has determined that four of our current board members, Messrs. Mao, Shringla, Powrie and Zhang, are “independent” as defined under applicable NASDAQ rules.

The board has three committees: the audit committee, the compensation committee and the nominating committee.

In 2007, our audit committee held four formal meetings. Our audit committee charter pursuant to which the audit committee is responsible for overseeing the accounting and financial reporting processes of our company, including the appointment, compensation and oversight of the work of our independent auditors, monitoring compliance with our accounting and financial policies and evaluating management’s procedures and policies relative to the adequacy of our internal accounting controls.

Our compensation committee held two meetings in 2007. The compensation committee’s functions are to review and make recommendations to our board of directors regarding our compensation policies and all forms of compensation to be provided to our executive officers and directors.

No interlocking relationships have existed between our board of directors or compensation committee and the board of directors or compensation committee of any other company.

Our nominating committee held two meetings in 2007. The nominating committee is responsible for the assessment of the performance of the board of directors and considering and making recommendations to the board of directors with respect to the nominations or elections of directors.

The audit, compensation and nominating committees operate under written charters setting forth the functions and responsibilities of each such committee. Copies of those charters are available on our website at www.hurray.com. The members of our audit, compensation and nominating committees are Robert Mao, Suberna Shringla and Alan Powrie, each of whom satisfies the “independence” and financial literacy requirements of the National Association of Securities Dealers’ listing standards. Our board of directors has determined that Alan Powrie is an “audit committee financial expert” as that term is defined in Item 16A of Form 20-F.

D. Employees

As of December 31, 2007, 2006 and 2005 we had 444, 471 and 535 full-time employees, respectively.

The following table summarizes the functional distribution of our full-time employees as of December 31, 2007 after we restructured of our business lines as described in Item 4.B. “Information About the Company—Business Overview—Introduction.”

Department	2007
WVAS Business Unit (Wireless Value-Added Services)		292
E-Marketing Business Unit		40
Digital Media Business Unit		13
Offline Channel Business Unit		16
Marketing and New Business Development		12
Finance and Operation Planning		38
Human Resources and Administrative		24
Legal and Corporate Development		5
Office of Chief Executive Officer		4
Total		444

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In addition, our affiliated music companies (Freeland Music, Huayi Brothers Music, New Run and Secular Bird) had an aggregate of approximately 173 employees as of December 31, 2007.

None of our personnel are represented under collective bargaining agreements. We consider our relations with our employees to be good.

E. Share Ownership

The following table sets forth certain information known to us with respect to the beneficial ownership as of May 30, 2008 by:

• all persons who are beneficial owners of five percent or more of our ordinary shares,

• our current executive officers and directors, and

• all current directors and executive officers as a group.

As of May 30, 2008, 2,186,509,840 of our ordinary shares were outstanding. The amounts and percentages of ordinary shares beneficially owned are reported on the basis of regulations of the US Securities and Exchange Commission, or SEC, governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of securities as to which such person has no economic interest. Unless otherwise indicated in the footnotes that follow, the parties named below have sole voting and dispositive powers over the shares beneficially owned by them.

	Number of Shares
	Beneficially Owned
Name	Number		Percentage
5% and above Shareholders
Venrock Associates		257,377,900		11.8	%
30 Rockefeller Plaza - 5508
New York, NY 10112-0015, United States(1)
Executive Officers and Directors(2)
Pleasant Season Ltd./Qindai Wang(3)		188,621,660		8.6	%
Jesse Liu(4)		80,443,560		3.7	%
Robert Mao(5)		2,000,000		*
Suberna Shringla		—		*
Xero Holdings Ltd./Songzuo Xiang(6)		109,510,320		5.0	%
Shudan Zhang		110,712,840		5.0	%
Alan Powrie(7)		600,000		*
Shaojian (Sean) Wang		9,799,900		*
All current directors and executive officers as a group (8 persons)		501,688,280		22.9	%

(1)	Venrock Associates is an investment adviser. This share information is based solely on information filed by such shareholder with the SEC.
(2)	The address of our executive officers and directors is c/o Hurray! Holding Co., Ltd., 15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, East Third Ring, Chaoyang District, Beijing 100027, People’s Republic of China.
(3)	Represents shares beneficially owned by Mr. Wang through a revocable trust in which he retains voting and dispositive power over such shares.

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(4)	Includes 39,031,780 ordinary shares beneficially owned by Mr. Liu’s spouse, Carol Ng, through an irrevocable trust in the name of Olympia Hills Ltd. Ms. Ng retains voting and dispositive power over those shares in trust.
(5)	Represents ordinary shares issuable upon the exercise of stock options. All of the options have an exercise price of $0.0705 per ordinary share and an expiration date of June 30, 2013.
(6)	Represents ordinary shares beneficially owned by Dr. Xiang through a revocable trust in which he retains voting and dispositive power over such shares.
(7)	Represents ordinary shares issuable upon the exercise of stock options. All of the options have an exercise price of $0.1025 per ordinary share and an expiration date of January 1, 2014.

As of May 30, 2008, based on public filings with the SEC, there are no major shareholders holding 5% or more of our ordinary shares or ADSs representing ordinary shares, except as described above.

As of May 30, 2008, approximately 80 of our ordinary shares were held in the U.S. by two holders of record, excluding shares held by our ADS depositary bank, Citibank N.A., on behalf of our ADS holders. Citibank N.A. has advised us that as of that date 18,588,867 ADSs, representing 1,858,886,700 ordinary shares, were held of record by Cede & Co and one other registered shareholder. We have no further information as to ordinary shares held, or beneficially owned, by U.S. persons.

Our company’s major shareholders do not have different voting rights from each other or other shareholders of our company. To our knowledge, except as disclosed above, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal person or persons, severally or jointly. To our knowledge, there are no arrangements the operation of which may at a subsequent date result in us undergoing a change in control.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

Please refer to Item 6.E. “Directors, Senior Management and Employees—Share Ownership.”

B. Related Party Transactions

Related Party Transactions

We currently conduct our business in China through our wholly-owned subsidiary, Beijing Hurray! Times. To comply with ownership requirements under Chinese law, which impose certain restrictions on foreign companies from investing in certain industries such as value-added telecommunication and Internet services, our former wholly-owned subsidiary, Hurray! Times Communications, entered into a series of agreements with our affiliated Chinese entities, Hurray! Solutions, Beijing Cool Young, WVAS Solutions, Beijing Network, Beijing Palmsky, Beijing Hutong, Hengji Weiye Henan Yinshan, Shanghai Saiyu, and Shanghai Magma (which are collectively referred to below as “our affiliated Chinese entities”) and their respective shareholders. Prior to transferring ownership of Hurray! Times Communications to TWM Holding Co. Ltd. as part of our sale of our SSI Business, we caused Hurray! Times Communications to transfer all of its agreements not pertaining to the SSI Business (including the agreements described below) to Beijing Hurray! Times. We hold no ownership interest in such affiliated Chinese entities. In addition, we control Hurray! Digital Media through three of our affiliated Chinese entities, Hurray! Solutions, Beijing Network and Beijing Hutong. See Item 4.C. “Information About the Company — Organizational Structure.”

The principal terms of the agreements with our affiliated Chinese entities and their respective shareholders are described below.

Powers of Attorney. Each of the shareholders of our affiliated Chinese entities has irrevocably designated Qindai Wang, in his capacity as General Manager of Beijing Hurray! Times, as attorney-in-fact, to vote on their behalf at shareholders meetings on matters on which they are entitled to vote with respect to Hurray! Solutions, Beijing Cool Young, WVAS Solutions, Beijing Network, Beijing Palmsky, Beijing Hutong, Hengji Weiye, Henan Yinshan, Shanghai Saiyu and Shanghai Magma, as the case may be,including matters relating to the transfer of any or all of their respective equity interests in our affiliated Chinese entities and the appointment of the directors of our affiliated Chinese entities. The term of each of the powers of attorney is ten years. These powers of attorney do not extend to votes by the shareholders of our company or subsidiaries.

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Each such power of attorney by its terms is valid only for so long as the designated attorney-in-fact remains the general manager of Beijing Hurray! Times. If the attorney-in-fact ceases to be the general manager, the power of attorney will terminate automatically and the succeeding general manager shall be designated.

Operating Agreements. Through Beijing Hurray! Times, we may provide guarantees to our affiliated Chinese entities of their contracts, agreements or transactions with third parties, to the extent permitted under Chinese law. In return, our affiliated Chinese entities have granted us a security interest over all of their assets, including all of their accounts receivable, which have not previously been encumbered by security interests. We also have the right of first refusal with respect to future loan guarantees. In addition, our affiliated Chinese entities and their shareholders have each agreed that they will not enter into any transaction, or fail to take any action, that would substantially affect their assets, rights and obligations, or business without our prior written consent. They will also appoint persons designated by Beijing Hurray! Times as the directors, officers and other senior management personnel of our affiliated Chinese entities, as well as accept the guidance of Beijing Hurray! Times regarding their day-to-day operations, financial management and the hiring and dismissal of their employees. While Beijing Hurray! Times has the right to terminate all of its agreements with our affiliated Chinese entities if any of our agreements with them expires or is terminated, our affiliated Chinese entities may not terminate the operating agreements during the term of the agreements, which is ten years.

Exclusive Technical Consulting and Services Agreements. Through Beijing Hurray! Times, we provide our affiliated Chinese entities with exclusive technical support and related consulting and information services. We are the exclusive provider of these services. The initial term of these agreements is ten years. The service fees are subject to adjustment from time to time based on the services provided to our affiliated Chinese entities, up to amounts equaling all of these entities’ revenues.

Software Transfer Agreements and Software License Agreements. Beijing Palmsky also entered into agreements to transfer to Beijing Hurray! Times its ownership rights in its games software, which Beijing Hurray! Times has licensed back for Beijing Palmsky’s use in its operations on a non-exclusive basis for a nominal license fee.

Contracts Relating to the Exclusive Purchase Right of Equity Interest. Under the Contracts Relating to the Exclusive Purchase Right of Equity Interest among us, our affiliated Chinese entities and each of their shareholders, we or our designee has an exclusive option to purchase from each of their shareholders all or part of each such shareholder’s equity interest in our affiliated Chinese entities at book value, to the extent permitted by Chinese law. The term of these agreements is 10 years, renewable by us for an additional 10-year term at our sole discretion.

Equity Interests Pledge Agreements. Each of the shareholders of our affiliated Chinese entities pledged their respective equity interests in such entities to guarantee the payment of the service fee by our affiliated Chinese entities under the Exclusive Technical Consulting and Services Agreements described above. If any of our affiliated Chinese entities breach any of their obligations under the Equity Interests Pledge Agreements, Beijing Hurray! Times is entitled to sell the equity interests held by such shareholders and retain the proceeds of such sale or require any of them to transfer to us their equity interest in the applicable affiliated entity.

We believe that the terms of these agreements are no less favorable to us than we could obtain from disinterested parties. The material terms of the agreements among us, our respective affiliated Chinese entities and their shareholders are substantially identical except for the amount of license fees paid by each entity. We believe that the individual shareholders of each entity will not receive any personal benefits from these agreements, except as shareholders of our company. As a result of the foregoing contractual arrangements, we effectively have financial control over our affiliated Chinese entities through our security interests over their assets, our ability to receive up to all of their revenue and our other rights described above. In turn, the general manager of Beijing Hurray! Times (currently Qindai Wang), who, as a matter of Chinese law, is subject to the direction of Beijing Hurray! Times’ board of directors, maintains control over all voting matters involving our affiliated Chinese entities.

We have also entered into certain agreements with Huayi Brothers Music and Freeland Music for online and offline distribution of music content which are described under Item 4.B. “Business Overview — Product and Content Development — Music Production.”

As part of the acquisition agreements for the purchase of Huayi Brothers Music and Freeland Music, we agreed to use the existing distribution and CD manufacturing operations, where appropriate, owned by the minority shareholders, or their related parties, of these companies. In addition these parties may use the music or artists of Huayi Brothers Music and Freeland Music and make royalty and other payments to Huayi Brothers Music or Freeland Music. The term of such agreements is one year although such agreements may be extended by the mutual agreement of both parties. During 2007, we recognized revenues of $645,134 and made payments under these agreements of $96,725.

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C. Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See Item 18. “Financial Statements” for our audited consolidated financial statements filed as part of this annual report on Form 20-F.

A.7 Legal Proceedings

We are not currently a party to any material litigation and are not aware of any pending or threatened litigation.

A.8 Dividend Policy

We have never declared or paid any dividends on our ordinary shares. We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and for the expansion of our business. Payments of dividends by our subsidiaries in China to our company are subject to restrictions including primarily the restriction that foreign invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents. There are no such similar foreign exchange restrictions in the Cayman Islands.

B. Significant Changes

See Item 5.A “Operating Results — Recent Developments” and Item 18 “Financial Statements” for information regarding significant changes to us since December 31, 2007.

Item 9. The Offer and Listing

Not applicable except for Item 9.A.4. and Item 9.C.

American Depositary Shares, or ADSs, each representing 100 of our ordinary shares, have been listed on the Nasdaq Global Market since February 4, 2005. Our ADSs trade under the symbol “HRAY.”

The following table provides the high and low prices for our ADSs on the Nasdaq Global Market for (1) each year since our initial public offering, (2) each quarter in the two most recent financial years and the most recent quarter and (3) each of the most recent six months.

	Sales Price
	High		Low
Annual highs and lows
2005 (February 4, 2005 through December 31, 2005)	$	11.80	$	7.67
2006 (January 1, 2006 through December 31, 2006)	$	9.71	$	4.70
2007 (January 1, 2007 through December 31, 2007)	$	6.53	$	3.05
2008 (January 1, 2008 through May 30, 2008)	$	4.21	$	2.36
Quarterly highs and lows
First Quarter 2006	$	9.68	$	7.51
Second Quarter 2006	$	9.71	$	5.22
Third Quarter 2006	$	6.74	$	4.70
Fourth Quarter 2006	$	8.28	$	5.67
First Quarter 2007	$	6.53	$	4.85
Second Quarter 2007	$	5.62	$	4.36
Third Quarter 2007	$	6.04	$	3.32
Fourth Quarter 2007	$	6.04	$	3.05

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	Sales Price
	High		Low
First Quarter 2008	$	4.21	$	2.36
Second Quarter 2008 (April 1, 2008 through May 30, 2008)	$	3.10	$	2.61
Monthly highs and lows
December 2007	$	4.53	$	3.46
January 2008	$	4.21	$	3.11
February 2008	$	3.52	$	3.05
March 2008	$	3.38	$	2.36
April 2008	$	3.00	$	2.61
May 2008	$	3.10	$	2.66

Item 10. Additional Information

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Please see “Description of Share Capital” in our registration statement on Form F-1 filed on January 12, 2005, as amended, with the SEC.

C. Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described in Item 4. “Information About the Company,” and Item 7.B. “Related Party Transactions,” or elsewhere in this annual report on Form 20-F.

D. Exchange Controls

Foreign currency exchange regulation in China is primarily governed by the following rules:

• Foreign Currency Administration Rules (1996), as amended, or the Exchange Rules; and

• Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.

Under the Exchange Rules, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is subject to the approval of the SAFE.

Under the Administration Rules, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the PRC Ministry of Commerce, the SAFE and the NDRC.

E. Taxation

The following summary of the material Cayman Islands and United States federal income tax consequences relevant to the purchase, ownership or sale of our ADSs is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor depending on its individual circumstances. Accordingly beneficial owners of shares should consult their own tax advisors regarding the application of the considerations discussed below to their particular situations and the consequences, including U.S. federal estate or gift tax laws, foreign, state, or local laws, and tax treaties.

Cayman Islands Taxation

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the company levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

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United States Federal Income Taxation

The following is a summary of the material U.S. federal income tax consequences of the ownership and disposition of ordinary shares or ADSs. The following discussion is not exhaustive of all possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated under the Code by the U.S. Treasury Department (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (the “IRS”), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS will not assert, or that a court will not sustain, a position contrary to any of the tax consequences described below.

This discussion does not address state, local, or foreign tax consequences of the ownership and disposition of ordinary shares or ADSs. (See “Cayman Islands Taxation” above). The United States does not have an income tax treaty with the Cayman Islands.

This summary is for general information only and does not address all aspects of U.S. federal income taxation that may be important to a particular holder in light of its investment or tax circumstances or to holders subject to special tax rules, such as: banks; financial institutions; insurance companies; dealers in stocks, securities, or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; tax-exempt organizations; real estate investment trusts; regulated investment companies; qualified retirement plans, individual retirement accounts, and other tax-deferred accounts; expatriates of the United States; persons subject to the alternative minimum tax; persons holding ordinary shares or ADSs as part of a straddle, hedge, conversion transaction, or other integrated transaction; persons who acquired ordinary shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation for services; persons actually or constructively holding 10% or more of our voting stock; and U.S. Holders (as defined below) whose functional currency is other than the U.S. dollar.

This discussion is not a comprehensive description of all of the U.S. federal tax consequences that may be relevant with respect to the ownership and disposition of ordinary shares or ADSs. We urge you to consult your own tax advisor regarding your particular circumstances and the U.S. federal income and estate tax consequences to you of owning and disposing of ordinary shares or ADSs, as well as any tax consequences arising under the laws of any state, local, or foreign or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax laws.

This summary is directed solely to persons who hold their ordinary shares or ADSs as capital assets within the meaning of Section 1221 of the Code, which generally means as property held for investment. For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of ordinary shares or ADSs that is any of the following:

• a citizen or resident of the United States or someone treated as a U.S. citizen or resident for U.S. federal income tax purposes;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source;

• a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all substantial decisions of the trust; or

• a trust in existence on August 20, 1996 that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

The term “Non-U.S. Holder” means a beneficial owner of ordinary shares or ADSs that is not a U.S. Holder. As described in “Taxation of Non-U.S. Holders” below, the tax consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of ordinary shares or ADSs, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of ordinary shares or ADSs that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of ordinary shares or ADSs.

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ADSs

As relates to the ADSs, this discussion is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance to its terms.

Generally, a holder of ADSs will be treated as the owner of the underlying ordinary shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if the holder exchanges ADSs for the underlying ordinary shares represented by those ADSs. The holder’s adjusted tax basis in the ordinary shares will be the same as the adjusted tax basis of the ADSs surrendered in exchange therefor, and the holding period for the ordinary shares will include the holding period for the surrendered ADSs.

TAXATION OF U.S. HOLDERS

Passive Foreign Investment Company

We believe that we were a PFIC for taxable years 2006 and 2007 and are likely to be classified as a PFIC for the current taxable year of 2008. Because the PFIC determination is highly fact intensive and made at the end of each taxable year, there can be no assurance that we will not be a PFIC for the current or any future taxable year.

We generally will be a PFIC under Section 1297 of the Code if, for a taxable year, either (a) 75% or more of our gross income for such taxable year is passive income (the “income test”) or (b) 50% or more of the average percentage, generally determined by fair market value, of our assets during such taxable year either produce passive income or are held for the production of passive income (the “asset test”). “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

Certain “look through” rules apply for purposes of the income and asset tests described above. If we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if we (a) held directly a proportionate share of the other corporation’s assets, and (b) received directly a proportionate share of the other corporation’s income. In addition, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by us from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to income of such related person that is not passive income.

Under the income and asset tests, whether or not we are a PFIC will be determined annually based upon the composition of our income and the composition and valuation of our assets, all of which are subject to change.

Default PFIC Rules under Section 1291 of the Code. If we are a PFIC for any taxable year during which a U.S. Holder holds ordinary shares or ADSs, we will continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which such U.S. Holder holds ordinary shares or ADSs. Since we believe that we were a PFIC for 2006 and 2007, if you held ordinary shares or ADSs in 2006 or 2007, we will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold ordinary shares or ADSs. Even if you only began holding ordinary shares or ADSs in the current taxable year of 2008, if it turns out that we are a PFIC for 2008, we will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold ordinary shares or ADSs. You may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the default tax rules of Section 1291 of the Code discussed above) as if your ordinary shares or ADSs had been sold on the last day of the last taxable year for which we were a PFIC.

If we are a treated as a PFIC with respect to you, the U.S. federal income tax consequences to you of the ownership and disposition of ordinary shares or ADSs will depend on whether you make an election to treat us as a qualified electing fund (“QEF”) under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”). If you owned or own ordinary shares or ADSs while we were or are a PFIC and have not made either a QEF Election or a Mark-to-Market Election, you will be referred to in this summary as a “Non-Electing U.S. Holder.”

If you are a Non-Electing U.S. Holder, you will be subject to the default tax rules of Section 1291 of the Code with respect to:

• any “excess distribution” paid on ordinary shares or ADSs, which means the excess (if any) of the total distributions received by you during the current taxable year over 125% of the average distributions received by you during the three preceding taxable years (or during the portion of your holding period for the ordinary shares or ADSs prior to the current taxable year, if shorter); and

• any gain recognized on the sale or other taxable disposition (including a pledge) of ordinary shares or ADSs.

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Under these default tax rules:

• any excess distribution or gain will be allocated ratably over your holding period for the ordinary shares or ADSs;

• the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC will be treated as ordinary income in the current taxable year;

• the amount allocated to each of the other years will be treated as ordinary income and taxed at the highest applicable tax rate in effect for that year; and

• the resulting tax liability from any such prior years will be subject to the interest charge applicable to underpayments of tax.

In addition, notwithstanding any election you may make, dividends that you receive from us will not be eligible for the preferential tax rates applicable to QDI (as discussed below in “Distributions on Ordinary Shares or ADSs”) if we are a PFIC either in the taxable year of the distribution or the preceding taxable year, but will instead be taxable at rates applicable to ordinary income.

Special rules for Non-Electing U.S. Holders will apply to determine U.S. foreign tax credits with respect to foreign taxes imposed on distributions on ordinary shares or ADSs.

If we are a PFIC in any year with respect to you, you will be required to file an annual return on IRS Form 8621 regarding distributions received on ordinary shares or ADSs and any gain realized on the disposition of ordinary shares or ADSs. Since we believe that we were a PFIC for 2007, if you held ordinary shares or ADSs in 2007, you are required to file IRS Form 8621 for 2007 and for all succeeding years during which we continue to be treated as a PFIC with respect to you. Alternatively, even if you only began holding ordinary shares or ADSs in the current taxable year of 2008, if it turns out that we are a PFIC for 2008, you will be required to file IRS Form 8621 for 2008 and for all succeeding years during which we continue to be treated as a PFIC with respect to you.

QEF Election. If you make a QEF Election, you generally will not be subject to the default rules of Section 1291 of the Code discussed above. Instead, you will be subject to current U.S. federal income tax on your pro rata share of our ordinary earnings and net capital gain, regardless of whether such amounts are actually distributed to you by us. However, you can make a QEF Election only if we agree to furnish you annually with certain tax information, and we currently do not intend to prepare or provide such information.

Mark-to-Market Election. U.S. Holders may make a Mark-to-Market Election, but only if our ordinary shares or ADSs are marketable stock. Our ordinary shares are not currently listed on any exchange, but our ADSs will be “marketable stock” as long as they remain listed on the Nasdaq Global Market and are regularly traded. Stock is “regularly traded” for any calendar year during which it is traded (other than in de minimis quantities) on at least 15 days during each calendar quarter. There can be no assurances, however, that our ADSs will be treated, or continue to be treated, as regularly traded.

If you make a Mark-to-Market Election, you generally will not be subject to the default rules of Section 1291 of the Code discussed above. Rather, you generally will be required to recognize ordinary income for any increase in the fair market value of the ADSs for each taxable year that we are a PFIC. You will also be allowed to deduct as an ordinary loss any decrease in the fair market value to the extent of net marked-to-market gain previously included in prior years. Your adjusted tax basis in the ADSs will be adjusted to reflect the amount included or deducted.

The Mark-to-Market Election will be effective for the taxable year for which the election is made and all subsequent taxable years, unless our ADSs cease to be marketable stock or the IRS consents to the revocation of the election. You should consult your own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

U.S. Federal Income Tax Consequences If We Are Not Treated as a PFIC

The discussion in “Distributions on Ordinary Shares or ADSs” and “Dispositions of Ordinary Shares or ADSs” below describes the applicable U.S. federal income tax consequences to a U.S. investor in the event that that we are not treated as a PFIC for U.S. federal income tax purposes. For a discussion of the rules that apply if we are treated as a PFIC, see the discussion in “Passive Foreign Investment Company” above.

Distributions on Ordinary Shares or ADSs

General. Subject to the discussion in “Passive Foreign Investment Company” above, if you actually or constructively receive a distribution on ordinary shares or ADSs, you must include the distribution in gross income as a taxable dividend on the date of your (or in the case of ADSs, the depositary’s) receipt of the distribution, but only to the extent of our current or accumulated earnings and profits, as calculated under U.S. federal income tax principles. Such amount must be included without reduction for any foreign tax withheld. Dividends paid by us generally will not be eligible for the dividends received deduction allowed to corporations with respect to dividends received from certain domestic corporations. Dividends paid by us may or may not be eligible for preferential rates applicable to qualified dividend income, as described below.

To the extent a distribution exceeds our current and accumulated earnings and profits, it will be treated first as a non-taxable return of capital to the extent of your adjusted tax basis in the ordinary shares or ADSs, and thereafter as capital gain. Preferential tax rates for long-term capital gain may be applicable to non-corporate U.S. Holders.

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We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

Qualified Dividend Income. With respect to non-corporate U.S. Holders (i.e., individuals, trusts, and estates), for taxable years beginning before January 1, 2011, dividends that are treated as qualified dividend income (“QDI”) are taxable at a maximum tax rate of 15%. However, we believe that we are likely a PFIC for the current taxable year of 2008, and as a result, dividends paid by us will likely not be treated as QDI.

Foreign Currency Distributions. A dividend paid in foreign currency (e.g., Renminbi) must be included in your income as a U.S. dollar amount based on the exchange rate in effect on the date such dividend is received, regardless of whether the payment is in fact converted to U.S. dollars. If the dividend is converted to U.S. dollars on the date of receipt, you generally will not recognize a foreign currency gain or loss. However, if you convert the foreign currency to U.S. dollars on a later date, you must include in income any gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the U.S. dollar value of the amount you included in income when the dividend was received and (ii) the amount that you receive on the conversion of the foreign currency to U.S. dollars. Such gain or loss will generally be ordinary income or loss and U.S. source for U.S. foreign tax credit purposes.

In-Kind Distributions. Distributions to you of new ordinary shares or ADSs or rights to subscribe for new ordinary shares or ADSs that are received as part of a pro rata distribution to all of our shareholders will not be subject to U.S. federal income tax. The adjusted tax basis of the new ordinary shares or ADSs or rights so received will be determined by allocating your adjusted tax basis in the old ordinary shares or ADSs between the old ordinary shares or ADSs and the new ordinary shares or ADSs or rights received, based on their relative fair market values on the date of distribution. However, in the case of a distribution of rights to subscribe for ordinary shares or ADSs, the adjusted tax basis of the rights will be zero if the fair market value of the rights is less than 15% of the fair market value of the old ordinary shares or ADSs on the date of distribution and you do not make an election to determine the adjusted tax basis of the rights by allocation as described above. Your holding period for the new ordinary shares or ADSs or rights will generally include the holding period for the old ordinary shares or ADSs on which the distribution was made.

Foreign Tax Credits. Subject to certain conditions and limitations, any foreign taxes paid on or withheld from distributions from us and not refundable to you may be credited against your U.S. federal income tax liability or, alternatively, may be deducted from your taxable income. This election is made on a year-by-year basis and applies to all foreign taxes paid by you or withheld from you that year.

Distributions will constitute foreign source income for foreign tax credit limitation purposes. The foreign tax credit limitation is calculated separately with respect to two specific classes of income. For this purpose, distributions characterized as dividends distributed by us will generally constitute “passive category income” or, in the case of certain U.S. Holders, “general category income.” Special limitations may apply if a dividend is treated as QDI (as defined above).

Special rules may apply to electing individuals whose foreign source income during the taxable year consists entirely of “qualified passive income” and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return).

In certain circumstances, a U.S. Holder that (i) has held ordinary shares or ADSs for less than a specified minimum period during which it is not protected from risk of loss, (ii) is obligated to make payments related to the dividends, or (iii) holds ordinary shares or ADSs in arrangements in which the U.S. Holder’s expected economic profit, after foreign taxes, is insubstantial, will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on ordinary shares or ADSs.

Since the rules governing foreign tax credits are complex, you should consult your own tax advisor regarding the availability of foreign tax credits in your particular circumstances.

The U.S. Treasury has expressed concerns that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs. Such actions would also be inconsistent with the claiming of the preferential tax rates applicable to QDI, as defined above. Accordingly, the creditability of foreign taxes and the availability of such preferential tax rates could be affected by future actions that may be taken by the U.S. Treasury or parties to whom ADSs are pre-released.

Dispositions of Ordinary Shares or ADSs

Subject to the discussion in “Passive Foreign Investment Company” above, you generally will recognize taxable gain or loss realized on the sale or other taxable disposition of ordinary shares or ADSs equal to the difference between the U.S. dollar value of (i) the amount realized on the disposition (i.e., the amount of cash plus the fair market value of any property received), and (ii) your adjusted tax basis in the ordinary shares or ADSs. Such gain or loss will be capital gain or loss.

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If you have held the ordinary shares or ADSs for more than one year at the time of disposition, such capital gain or loss will be long-term capital gain or loss. Preferential tax rates for long-term capital gain (currently, with a maximum rate of 15% for taxable years beginning before January 1, 2011) will apply to non-corporate U.S. Holders. If you have held the ordinary shares or ADSs for one year or less, such capital gain or loss will be short-term capital gain or loss taxable as ordinary income at your marginal income tax rate. The deductibility of capital losses is subject to limitations.

Generally, any gain or loss recognized will not give rise to foreign source income for U.S. foreign tax credit purposes.

You should consult your own tax advisor regarding the U.S. federal income tax consequences if you receive currency other than U.S. dollars upon the disposition of ordinary shares or ADSs.

Since the PFIC rules are complex, you should consult your own tax advisor regarding them and how they may affect the U.S. federal income tax consequences of the ownership and disposition of ordinary shares or ADSs.

Information Reporting and Backup Withholding

Generally, information reporting requirements will apply to distributions on ordinary shares or ADSs or proceeds from the disposition of ordinary shares or ADSs paid within the United States (and, in certain cases, outside the United States) to a U.S. Holder unless such U.S. Holder is an exempt recipient, such as a corporation. Furthermore, backup withholding (currently at 28%) may apply to such amounts unless such U.S. Holder (i) is an exempt recipient that, if required, establishes its right to an exemption, or (ii) provides its taxpayer identification number, certifies that it is not currently subject to backup withholding, and complies with other applicable requirements. A U.S. Holder may generally avoid backup withholding by furnishing a properly completed IRS Form W-9.

Backup withholding is not an additional tax. Rather, amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability. Furthermore, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

TAXATION OF NON-U.S. HOLDERS

Distributions on Ordinary Shares or ADSs

Subject to the discussion in “Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on ordinary shares or ADSs, unless the distributions are effectively connected with your conduct of a trade or business in the United States and (if an applicable income tax treaty so requires) attributable to a permanent establishment that you maintain in the United States.

If distributions are effectively connected with a U.S. trade or business and (if applicable) attributable to a U.S. permanent establishment, you generally will be subject to tax on such distributions in the same manner as a U.S. Holder, as described in “Taxation of U.S. Holders - Distributions on Ordinary Shares or ADSs” above. In addition, any such distributions received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Dispositions of Ordinary Shares or ADSs

Subject to the discussion in “Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of ordinary shares or ADSs, unless (i) the gain is effectively connected with your conduct of a trade or business in the United States and (if an applicable income tax treaty so requires) attributable to a permanent establishment that you maintain in the United States, or (ii) you are an individual and are present in the United States for at least 183 days in the taxable year of the disposition, and certain other conditions are met.

If you meet the test in clause (i) above, you generally will be subject to tax on any gain that is effectively connected with your conduct of a trade or business in the United States in the same manner as a U.S. Holder, as described in “Taxation of U.S. Holders — Dispositions of Ordinary Shares or ADSs” above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

If you meet the test in clause (ii) above, you generally will be subject to tax at a 30% rate on the amount by which your U.S. source capital gain exceeds your U.S. source capital loss.

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Information Reporting and Backup Withholding

Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, ordinary shares or ADSs are generally exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be required to establish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.

Backup withholding is not an additional tax. Rather, amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability. Furthermore, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

Enforcement of Civil Liabilities

We are incorporated in the Cayman Islands because of the following benefits found there:

• political and economic stability;

• an effective judicial system;

• a favorable tax system;

• the absence of exchange control or currency restrictions; and

• the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

(1) The Cayman Islands has a less developed body of securities laws as compared to the United States and provides significantly less protection to investors; and

(2) Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders be arbitrated.

A substantial portion of our current operations is conducted in China through our wholly-owned subsidiaries which are incorporated in China. All or most of our assets are located in China. We have appointed CT Corporation System, 111 Eighth Avenue, New York, NY 10011, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States. A majority of our directors and officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

Appleby, our counsel as to Cayman Islands law, has advised us and we are of the understanding as to Chinese law, that there is uncertainty as to whether the courts of the Cayman Islands or China would:

(1) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

(2) entertain original actions brought in the Cayman Islands or China against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Appleby has further advised us that a final and conclusive judgment in the federal or state courts of the United States under which a sum of money is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings as a debt in the courts of the Cayman Islands under the common law doctrine of obligation.

We are further of the understanding that the recognition and enforcement of foreign judgments are provided for under Chinese Civil Procedures Law. Chinese courts may recognize and enforce foreign judgments in accordance with the requirements of Chinese Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

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H. Documents on Display

We have previously filed with the Commission a registration statement on Form F-1 and prospectus, and a registration statement on Form F-6, under the Securities Act of 1933, as amended, with respect to our ordinary shares represented by ADSs, as well as the ADSs.

We are subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than six months after the close of each fiscal year, which is December 31 of each year. Copies of 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 SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and 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.

Our financial statements have been prepared in accordance with US GAAP.

We will make available to our shareholders annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with US GAAP.

I. Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Please refer to Item 5. “Operating and Financial Review and Prospects—Quantitative and Qualitative Disclosures About Market Risk.”

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Item 12. Description of Securities Other than Equity Securities

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not Applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Use of Proceeds

The following “Use of Proceeds” information relates to the registration statement on Form F-1 (File No. 333-121987) (the “Registration Statement”) for our initial public offering of 6,880,000 American Depositary Shares, each representing 100 of our ordinary shares, which were sold by us and certain selling shareholders for an aggregate offering price of $70.5 million. Our Registration Statement was declared effective by the SEC on February 3, 2005.

We received net proceeds of approximately $59.4 million from our initial public offering (taking into account underwriting discounts of approximately $4.9 million, transaction expenses of approximately $3.8 million and payments to selling shareholders of approximately $2.4 million). None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning 10% or more of our equity securities or our affiliates.

As of December 31, 2007, we have used approximately $11.8 million in net proceeds from our initial public offering to acquire certain businesses, and fund expenses primarily for general corporate purposes, product development, software and technology infrastructure products and other capital expenditures. None of the net proceeds from the initial public offering were paid, directly or indirectly, to any of our directors or officers of our company or their associates, persons owning 10% or more of our equity securities or our affiliates.

Citigroup Global Markets Inc., Piper Jaffray Co. and Think Equity Partners LLC were the underwriters for our initial public offering.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our chief executive officer and the chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2007. Based on this evaluation, our chief executive officer and chief financial officer concluded as of December 31, 2007 that our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles and includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors, and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements.

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Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company.

Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of the Company’s internal control over financial reporting. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2007.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Our management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only our management’s report in this annual report on Form 20-F.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Item 16. Reserved

Item 16A. Audit Committee Financial Expert

Our board of directors has determined that Mr. Alan Powrie qualifies as an Audit Committee Financial Expert as defined by the applicable rules of the SEC and that Mr. Powrie is “independent” as defined under applicable Nasdaq rules.

Item 16B. Code of Ethics

We have adopted a Code of Business Conduct which applies to our employees, officers and non-employee directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. This code is intended to qualify as a “code of ethics” within the meaning of the applicable rules of the SEC.

The Code of Business Conduct is available on our website at www.hurray.com. To the extent required by law, any amendments to, or waivers from, any provision of the Code of Business Conduct will be promptly disclosed to the public. Copies of the Code of Business Conduct will be provided to any shareholder upon written request to the Legal Counsel, 15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, East Third Ring, Chaoyang District, Beijing 100027, People’s Republic of China.

Item 16C. Principal Accountant Fees and Services

Disclosure of Fees Charged by Independent Accountants

The following table summarizes the fees charged by Deloitte Touche Tohmatsu CPA Ltd. (our independent accountants from 2001 until the present time) for certain services rendered to our company during 2007 and 2006.

	For the year ended
	December 31,
	2007		2006
Audit fees(1)	$	641,898	$	315,375
Audit related fees(2)	$	6,362	$	4,696
Tax fees(3)		—		—
All other fees(4)		—		—

(1)	“Audit fees” means the aggregate fees incurred in each of the fiscal years listed for our calendar year audits and reviews of financial statements.
(2)	“Audit-related fees” means the aggregate fees incurred in each of the fiscal years listed for professional services related to the audit of our financial statements that are not reported under “Audit fees” and consultation on accounting standards or transactions.

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(3)	“Tax fees” means the aggregate fees incurred in each of the fiscal years listed for professional services rendered for tax compliance, tax advice and tax planning.
(4)	“All other fees” means the aggregate fees incurred in each of the fiscal years listed for professional services rendered other than those reported under “Audit fees,” “Audit-related fees,” and “Tax fees.”

Audit Committee Pre-approval Policies and Procedures

Our audit committee has adopted procedures which set forth the manner in which the committee will review and approve all audit and non-audit services to be provided by Deloitte Touche Tohmatsu CPA Ltd. before that firm is retained for such services. The pre-approval procedures are as follows:

• Any audit or non-audit service to be provided to us by the independent accountant must be submitted to the audit committee for review and approval, with a description of the services to be performed and the fees to be charged.

• The audit committee in its sole discretion then approves or disapproves the proposed services and documents such approval, if given, through written resolutions or in the minutes of meetings, as the case may be.

Item 16D. Exemptions from the Listing Standards for Audit Committees

We have not been granted an exemption from the applicable listing standards for the audit committee of our board of directors.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

PART III

Item 17. Financial Statements

The Company has elected to provide financial statements pursuant to Item 18.

Item 18. Financial Statements

The consolidated financial statements for Hurray! Holding Co., Ltd. and its subsidiaries are included at the end of this annual report on Form 20-F.

Item 19. Exhibits

Exhibit
Number		Document
	1.1	Amended and Restated Memorandum and Articles of Association of the Company (incorporated herein by reference to Exhibit 3.1 to our registration statement on Form F-1 (Registration No. 333-121987) filed with the Commission on January 12, 2005).
	2.1	Specimen American Depositary Receipt of the Company (incorporated by reference to Exhibit 4.1 to our registration statement on Form F-6 (Registration No. 333-122004) filed with the Commission on January 13, 2005).
	2.2	Specimen Share Certificate of the Company (incorporated herein by reference to Exhibit 4.2 to our registration statement on Form F-1 (Registration No. 333-121987) filed with the Commission on January 12, 2005).
	2.3	Deposit Agreement dated February 9, 2005 among the Company, Citibank N.A. and holders of the American Depositary Receipts issued thereunder (incorporated by reference to Exhibit 3(a) to our registration statement on Form F-6 (Registration No. 333-122004) filed with the Commission on January 13, 2005).

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Exhibit
Number		Document
	4.1	Amended and Restated Registration Rights Agreement dated as of June 16, 2003 by and among Hurray! Holding Co., Ltd., Fidelity Greater China Ventures Fund L.P., Venture TDF Technology Fund III, L.P., Granite Global Ventures (Q.P.) L.P. and Granite Global Ventures L.P. (incorporated by reference to Exhibit 10.1 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.2	2002 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.3	2003 Stock Option Plan (incorporated by reference to Exhibit 10.3 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.4	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.4 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.5	Employment Agreement by and between Hurray! Holding Co., Ltd. and Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.5 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.6	Employment Agreement by and between Hurray! Holding Co., Ltd. and Shaojian (Sean) Wang on May 23, 2006 (incorporated by reference to Exhibit 4.7of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2007).
	4.7	Translation of Equity Transfer Agreement by and among Zhang Yi, Shang Aiqin, Wang Jiang, Xu Hongyan, Xie Peifu, He Ming and Chen Yixiao dated December 30, 2005 (incorporated by reference to Exhibit 4.13 of our annual report on Form 20-F filed with the Commission on June 15, 2006).
	4.8	Translation of Equity Transfer and Capital Increase Agreement by and among Beijing Huayi Brothers Advertising Co., Ltd., Beijing Qixin Weiye Culture Development Co., Ltd. and Hurray! Digital Music Technology Co., Ltd. dated December 12, 2005 (incorporated by reference to Exhibit 4.15 of our annual report on Form 20-F filed with the Commission on June 15, 2006).
	4.9	Translation of Cooperation Agreement by and among Hurray! Solutions, Ltd., Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong Wuxian Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland Movie and Television Production Co., Ltd., Beijing Shiji Freeland Movie and Television Distribution Co., Ltd., Shanghai Hai Le Audio & Video Distribution Co., Ltd. and Hong Kong Freeland Movie Industry Group Co., Ltd. dated November 14, 2005 (incorporated by reference to Exhibit 4.16 of our annual report on Form 20-F filed with the Commission on June 15, 2006).
	4.10	Translation of Data Service Cooperation Agreement between Beijing Enlight Times Info Co., Ltd and Hurray! Solutions Ltd. (incorporated by reference to Exhibit 10.21 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.11	Translation of Contracts in Relation to Maximum Amount of Guarantee between Hua Xia Bank as creditor and each of Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology Co., Ltd. as guarantor dated December 31, 2004 (incorporated by reference to Exhibit 10.23 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.12	Translation of Agreement for Transfer of Entitlement to Dividends between Qindai Wang and Hurray! Holding Co., Ltd. dated August 15, 2003 (incorporated by reference to Exhibit 10.24 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.13	Translation of Software Assignment Agreement between Hurray! Solutions Ltd. and Hurray! Times Communications (Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.27 of our registration statement on Form F-1 (File No. 333 121987) filed with the Commission on January 12, 2005).

75

Exhibit
Number		Document
	4.14	Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004(incorporated by reference to Exhibit 10.28 of our registration statement on Form F-1 (File No. 333 121987) filed with the Commission on January 12, 2005).
	4.15	Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.31 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.16	Translation of Authorization Agreement by Songzuo Xiang dated May 5, 2004 (incorporated by reference to Exhibit 10.32 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.17	Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.33 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.18	Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Hurray! Solutions Ltd., Qindai Wang and Songzuo Xiang dated May 5, 2004 (incorporated by reference to Exhibit 10.34 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.19	Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Hurray! Solutions Ltd. and Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.35 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.20	Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Hurray! Solutions Ltd. and Songzuo Xiang dated May 5, 2004 (incorporated by reference to Exhibit 10.36 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.21	Translation of Equity Interests Pledge Agreement between Qindai Wang and Hurray! Times Communications (Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.37 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.22	Translation of Equity Interests Pledge Agreement between Songzuo Xiang and Hurray! Times Communications (Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.38 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.23	Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.39 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.24	Translation of Authorization Agreement by Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.40 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.25	Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.41 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.26	Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Beijing Cool Young Information Technology Co., Ltd., Qindai Wang and Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.42 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).

76

Exhibit
Number		Document
	4.27	Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Qindai Wang and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.43 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.28	Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Hurray! Solutions Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.44 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.29	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.45 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.30	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.46 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.31	Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.49 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.32	Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.53 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.33	Translation of Authorization Agreements by each of Sun Hao and Wang Xiaoping dated October 1, 2004 and October 1, 2004, respectively (incorporated by reference to Exhibit 10.55 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.34	Translation of Authorization Agreement by Beijing Enterprise Network Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to Exhibit 10.56 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.35	Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.57 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.36	Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Beijing WVAS Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd., Sun Hao and Wang Xiaoping dated October 1, 2004 (incorporated by reference to Exhibit 10.58 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.37	Translation of Contracts Relating to Exclusive Purchase Right of Equity Interest between Hurray! Holding Co., Ltd., Beijing WVAS Solutions Ltd. and each of Sun Hao and Wang Xiaoping dated October 1, 2004 and October 1, 2004, respectively (incorporated by reference to Exhibit 10.59 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.38	Translation of Contract Relating to Exclusive Purchase Right of Equity Interest between Hurray! Holding Co., Ltd., Beijing WVAS Solutions Ltd. and Beijing Enterprise Network Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to Exhibit 10.60 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.39	Translation of Equity Interests Pledge Agreements between Hurray! Times Communications (Beijing) Ltd. and each of Sun Hao and Wang Xiaoping dated October 1, 2004 and October 1, 2004, respectively (incorporated by reference to Exhibit 10.61 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).

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Exhibit
Number		Document
	4.40	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to Exhibit 10.62 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.41	Translation of Software Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.65 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.42	Translation of Software License Agreement between Hurray! times Communications (Beijing) Ltd. and Beijing Palmsky Technology Col, Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.66 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.43	Translation of Authorization Agreement by Yang Haoyu dated October 1, 2004 (incorporated by reference to Exhibit 10.69 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.44	Translation of Authorization Agreement by Wang Jianhua dated October 1, 2004 (incorporated by reference to Exhibit 10.70 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.45	Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.71 of our registration statement on Form F-1 (File No. 333-121987) filed with the
		Commission on January 12, 2005).
	4.46	Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Beijing Palmsky Technology Co., Ltd., Yang Haoyu and Wang Jianhua dated October 1, 2004 (incorporated by reference to Exhibit 10.72 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.47	Translation of Contract Relating to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Yang Haoyu and Beijing Palmsky Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to Exhibit 10.73 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.48	Translation of Contract Relating to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Wang Jianhua and Beijing Palmsky Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to Exhibit 10.74 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.49	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Yang Haoyu dated October 1, 2004 (incorporated by reference to Exhibit 10.75 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.50	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Wang Jianhua dated October 1, 2004 (incorporated by reference to Exhibit 10.76 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.51	Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.79 of our registration statement on Form F-1 (file No. 333-121987) filed with the Commission on January 12, 2005).

78

Exhibit
Number		Document
	4.52	Translation of Authorization Agreement by Sun Hao dated August 15, 2004 (incorporated by reference to Exhibit 10.81 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.53	Translation of Authorization Agreement by Wang Xiaoping dated August 15, 2004 (incorporated by reference to Exhibit 10.82 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.54	Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.83 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.55	Translation of Operating Agreement between Hurray! Times Communications (Beijing) Ltd., Beijing Enterprise Network Technology Co., Ltd., Sun Hao and Wang Xiaoping dated August 15, 2004 (incorporated by reference to Exhibit 10.84 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.56	Translation of Contract Relating to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Wang Xiaoping and Beijing Enterprise Network Technology Co., Ltd. dated August 15, 2004 (incorporated by reference to Exhibit 10.85 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.57	Translation of Contract Relating to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co., Ltd., Sun Hao and Beijing Enterprise Network Technology Co., Ltd. dated August 15, 2004 (incorporated by reference to Exhibit 10.86 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.58	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Sun Hao dated October 1, 2004 (incorporated by reference to Exhibit 10.87 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.59	Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Wang Xiaoping dated October 1, 2004 (incorporated by reference to Exhibit 10.88 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.60	Translation of Agreement on Transfer of Shares of Beijing Enterprise Network Technology Co., Ltd. between Sun Hao and Wang Xiaoping and Hurray! Solutions Ltd. and Wang Qindai dated July 19, 2004 (incorporated by reference to Exhibit 10.89 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.61	Translation of Software License Agreement by and between Hurray! Times Communications (Beijing) Ltd. and Shanghai Magma Digital Technology Co. Ltd. dated January 12, 2006 (incorporated by reference to Exhibit 4.97 of our annual report on Form 20-F (File No. 000-51116) filed with the
		Commission on June 15, 2006).
	4.62	Translation of Software Assignment Agreement by and between Shanghai Magma Digital Technology Co. Ltd. and Hurray! Times Communications (Beijing) Ltd. dated January 12, 2006 (incorporated by reference to Exhibit 4.98 of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2006).
	4.63	Translation of Authorization Agreement by Shang Aiqin dated January 12, 2006 (incorporated by reference to Exhibit 4.101 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.64	Translation of Authorization Agreement by Zhang Yi dated January 12, 2006 (incorporated by reference to Exhibit 4.102 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).

79

Exhibit
Number		Document
	4.65	Translation of Exclusive Technical Consulting and Services Agreement by and between Hurray! Times Communications (Beijing) Ltd. and Shanghai Magma Digital Technology Co. Ltd. dated January 12, 2006 (incorporated by reference to Exhibit 4.103 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.66	Translation of Operating Agreement by and among Hurray! Times Communications (Beijing) Ltd., Shanghai Magma Digital Technology Co. Ltd., Zhang Yi and Shang Aiqin dated January 12, 2006 (incorporated by reference to Exhibit 4.104 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.67	Translation of Contract Relating to the Exclusive Purchase Right of an Equity Interest by and among Hurray! Holding Co., Ltd., Shang Aiqin and Shanghai Magma Digital Technology Co. Ltd. dated January 12, 2006 (incorporated by reference to Exhibit 4.105 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.68	Translation of Contract Relating to the Exclusive Purchase Right of an Equity Interest by and among Hurray! Holding Co., Ltd., Zhang Yi and Shanghai Magma Digital Technology Co. Ltd. dated January 12, 2006 (incorporated by reference to Exhibit 4.106 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.69	Translation of Equity Interests Pledge Agreement by and between Hurray! Times Communications (Beijing) Ltd. and Zhang Yi dated January 12, 2006 (incorporated by reference to Exhibit 4.107 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.70	Translation of Equity Interests Pledge Agreement by and between Hurray! Times Communications (Beijing) Ltd. and Shang Aiqin dated January 12, 2006 (incorporated by reference to Exhibit 4.108 of our annual report on Form 20-F (File No. 000 51116) filed with the Commission on June 15, 2006).
	4.71	2004 Share Incentive Plan (incorporated by reference to Exhibit 10.95 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.72	Translation of Supplemental Agreement to Agreement on Transfer of Shares of Beijing Enterprise Network Technology Co., Ltd. among Hurray! Holding Co., Ltd., Qindai Wang, Yu Qin and Zhang Chen dated November 4, 2004 (incorporated by reference to Exhibit 10.96 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.73	Translation of Supplemental Agreement to Agreement on Transfer of Shares of Beijing Enterprise Mobile Technology Co., Ltd. among Hurray! Holdings Co., Ltd., Funway Investment Holdings Ltd. and I-mode Technology Ltd. dated November 4, 2004 (incorporated by reference to Exhibit 10.97 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.74	Translation of Loan Agreement between Beijing Enterprise Network Technology Co., Ltd. and Yu Qin dated November 4, 2004 (incorporated by reference to Exhibit 10.98 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.75	Translation of Loan Agreement between WVAS Solutions Ltd. and Yu Qin dated November 4, 2004 (incorporated by reference to Exhibit 10.99 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).
	4.76	Translation of Supplemental Agreement dated January 25, 2005 to certain Equity Interests Pledge Agreements (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 28, 2005).
	4.77	Translation of Cooperation Agreement between Hurray! Digital Media Technology Co., Ltd., Lan Gang, Chen Jianzhong, Hu Li, and Guangzhou Hurray! Secular Bird Culture Communication Co., Ltd, dated March 12, 2007 (incorporated by reference to Exhibit 4.120 of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2007).

80

Exhibit
Number		Document
	4.78	Translation of Supplemental Agreement between Hurray Holdings Co., Ltd. and Magma Digital International Limited, dated September 1, 2006 (incorporated by reference to Exhibit 4.121 of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2007).
	4.79	Translation of Supplemental Agreement between Hurray Solutions, Ltd., Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong Wuxian Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland Movie and Television Production Co., Ltd., Beijing Shiji Freeland Movie and Television Distribution Co., Ltd., Shanghai Hai Le Audio and Video Distribution Co., Ltd., Hong Kong Freeland Movie Industry Group Co., Ltd. and Beijing Freeland Wu Xian Digital Music Technology Co., Ltd., dated July 30, 2006 (incorporated by reference to Exhibit 4.122 of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2007).
	4.80	Translation of Supplemental Agreement between Hurray Solutions, Ltd., Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong Wuxian Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland Movie and Television Production Co., Ltd., Beijing Shiji Freeland Movie and Television Distribution Co., Ltd., Shanghai Hai Le Audio and Video Distribution Co., Ltd. and Hong Kong Freeland Movie Industry Group Co., Ltd, dated November 30, 2006 (incorporated by reference to Exhibit 4.123 of our annual report on Form 20-F (File No. 000-51116) filed with the Commission on June 15, 2007).
	4.81	Translation of Cooperation Agreement between China Mobile Communications Group Corporation and Monternet WAP Service Provider between China Mobile Communications Group Corporation and Beijing Hutong Wuxian Technology Co., Ltd, dated April 27, 2007.
	4.82	Translation of Mobile Value-added Service Cooperation Agreement with China United Telecommunications Corporation between China United Telecommunications Corporation and Beijing Hengjiweiye Electronic Commerce Co., Ltd., dated August 30, 2007.
	4.83	Share Purchase Agreement among Hurray! Holding Co., Ltd., Enlight Media Limited, Changtian Wang, Yinglian Du, Delai Li, Xiaoping Li and Hongtian Wang (incorporated by reference to Exhibit 99.3 of our report of foreign issuer on Form 6-K (File No. 000-51116) filed with the Commission on November 23, 2007).
	4.84	Translation of Equity Transfer Agreement between TWM Holding, Hurray! Holding Co., Ltd., and Hurray! Times Communications (Beijing) Ltd. dated October 8, 2007.
	4.85	Translation of Equity Transfer Agreement of Shanghai Saiyu Information Technology Co., Ltd. among Liang Ruan, Yuqi Shi, Jie Li and Jianmei Wan, dated February 12, 2007.
	4.86	Translation of Transfer Agreement between Hurray! Times Communications (Beijing) Co., Ltd., Beijing WVAS Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd., Xiaoping Wang, Hao Sun and Beijing Hurray! Times Technology Co., Ltd., dated May, 2007.
	8.1	List of Significant Subsidiaries and Affiliates.

81

Exhibit
Number		Document
	11.1	Code of Business Conduct (incorporated by reference to Exhibit 11.1 of our annual report on Form 20-F filed with the Commission on June 15, 2006).
	12.1	Certification of Chief Executive Officer Required by Rule 13a-14(a).
	12.2	Certification of Chief Financial Officer Required by Rule 13a-14(a).
	13.1	Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
	13.2	Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
	15.1	Consent of Deloitte Touche Tohmatsu CPA Ltd., Independent Registered Public Accounting Firm.

82

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

HURRAY! HOLDING CO., LTD.
By:	/s/ Shaojian (Sean) Wang
	Shaojian (Sean) Wang
	Acting Chief Financial Officer

Date: June 19, 2008

83

INDEX TO FINANCIAL STATEMENTS
HURRAY! HOLDING CO., LTD.

	Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2007 and 2006		F-2
Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005		F-3
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2007, 2006 and 2005		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005		F-7
Notes to the Consolidated Financial Statements		F-8
Additional Information — Financial Statement Schedule 1		F-35

84

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Hurray! Holding Co., Ltd.
Beijing, the People’s Republic of China

We have audited the accompanying consolidated balance sheets of Hurray! Holding Co., Ltd. and its subsidiaries and variable interest entities (the “Company”) at December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and comprehensive income, and cash flows for the years ended December 31, 2007, 2006 and 2005, and related financial statement schedule included in Schedule 1. These financial statements and related financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and related financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Hurray! Holding Co., Ltd. and its subsidiaries and variable interest entities at December 31, 2007 and 2006 and the results of their operations and their cash flows for the above stated periods in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As described in Note 2 to the consolidated financial statements, effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based payment”. In addition, effective January 1, 2007, the Company adopted the recognition and measurement methods under Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes— An Interpretation of FASB Statement No.109”.

Deloitte Touche Tohmatsu CPA Ltd.

Beijing, the People’s Republic of China

June 18, 2008

F-1

HURRAY! HOLDING CO., LTD.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
	(in U.S. dollars, except share data)
Assets
Current assets:
Cash	$	65,978,884		$	74,596,978
Accounts receivable, net of allowance of $699,525 and $284,402 as of December 31, 2007 and 2006, respectively		14,691,160			13,449,419
Prepaid expenses and other current assets		3,120,050			2,700,704
Amount due from related parties		464,410			167,464
Inventories		292,655			177,926
Current deferred tax assets		748,049			295,755
Receivable on disposal of subsidiary		4,151,400			—
Total current assets		89,446,608			91,388,246
Property and equipment, net		1,636,089			1,954,201
Acquired intangible assets, net		4,970,920			6,023,183
Investment in equity affiliate		2,420,522			—
Goodwill		5,620,906			39,621,494
Deposits and other long-term assets		848,588			632,494
Non-current deferred tax assets		650,091			370,781
Total assets	$	105,593,724		$	139,990,399
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,575,410		$	3,680,913
Acquisitions payable		7,101,498			5,832,464
Accrued expenses and other current liabilities		2,906,400			2,613,313
Amount due to related parties		256,058			321
Income tax payable		210,548			488,639
Current deferred tax liabilities		416,835			344,802
Total current liabilities		14,466,749			12,960,452
Long-term payable		32,304			—
Non-current deferred tax liabilities		844,610			850,734
Total liabilities		15,343,663			13,811,186
Commitments and contingencies (Note 20)
Minority interests		4,667,402			3,359,193
Shareholders’ equity:
Ordinary shares ($0.00005 par value; 4,560,000,000 shares authorized; 2,173,784,440 and 2,162,031,740 shares issued and outstanding as of December 31, 2007 and 2006, respectively)		108,689			108,102
Additional paid-in capital		74,066,839			73,608,117
Statutory reserves		6,502,849			5,661,061
(Accumulated deficit) retained earnings		(2,750,592	)		40,041,391
Accumulated other comprehensive income		7,654,874			3,401,349
Total shareholders’ equity		85,582,659			122,820,020
Total liabilities, minority interests and shareholders’ equity	$	105,593,724		$	139,990,399

The accompanying notes are an integral part of these consolidated financial statements.

F-2

HURRAY! HOLDING CO., LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended December 31,
	2007			2006			2005
	(in U.S. dollars, except share data)
Revenues:
Wireless value-added services	$	50,038,014		$	62,512,483		$	56,062,368
Recorded music		10,488,613			6,203,418			—
Total revenues		60,526,627			68,715,901			56,062,368
Cost of revenues:
Wireless value-added services		36,394,300			40,672,113			28,634,488
Recorded music		6,232,728			3,553,144			—
Total cost of revenues		42,627,028			44,225,257			28,634,488
Gross profit		17,899,599			24,490,644			27,427,880
Operating expenses:
Product development (including stock-based compensation expense of $921, $79,587 and $4,886 for the years ended December 31, 2007, 2006 and 2005, respectively)		2,028,265			2,169,124			1,852,421
Selling and marketing (including stock-based compensation expense of $286,885, $346,456 and $9,911 for the years ended December 31, 2007, 2006 and 2005, respectively)		11,513,850			11,014,215			8,981,998
General and administrative (including stock-based compensation expense of $155,169, $117,514 and $22,775 for the years ended December 31, 2007, 2006 and 2005, respectively)		9,141,381			6,699,607			3,442,916
Provision for goodwill impairment		38,778,584			—			—
Total operating expenses		61,462,080			19,882,946			14,277,335
(Loss) income from continuing operations		(43,562,481	)		4,607,698			13,150,545
Interest income		2,313,576			2,529,419			1,390,392
Interest expense		(179,062	)		(44,765	)		(27,312	)
Other income, net		465,825			315,210			330,299
(Loss) income before provision for income taxes, earnings in equity investments, gain from disposal of subsidiary, minority interest and discontinued operations		(40,962,142	)		7,407,562			14,843,924
Income taxes (credit) expense		(182,370	)		204,980			322,800
Net (loss) income from continuing operations after income taxes before minority interests		(40,779,772	)		7,202,582			14,521,124
Equity in losses of affiliate		(62,756	)		—			—
Minority interests		688,440			562,189			—
Net (loss) income from continuing operations		(41,530,968	)		6,640,393			14,521,124
Discontinued operations:
Net (loss) income from discontinued operations, net of tax		(612,170	)		(836,448	)		4,097,608
Gain from disposal of subsidiary		192,943			—			—
Net (loss) income from discontinued operations, net of tax		(419,227	)		(836,448	)		4,097,608
Net (loss)income	$	(41,950,195	)	$	5,803,945		$	18,618,732

F-3

	Year ended December 31,
	2007			2006			2005
	(in U.S. dollars, except share data)
Net (loss) income from continuing operations per share:
Basic	$	(0.02	)	$	0.00		$	0.01
Diluted	$	(0.02	)	$	0.00		$	0.01
Net (loss) income from discontinued operations per share:
Basic	$	(0.00	)	$	(0.00	)	$	0.00
Diluted	$	(0.00	)	$	(0.00	)	$	0.00
Net (loss) income per share
Basic	$	(0.02	)	$	0.00		$	0.01
Diluted	$	(0.02	)	$	0.00		$	0.01
Weighted average shares used in calculating basic (loss) income per share		2,172,208,190			2,189,748,563			2,092,089,848
Weighted average shares used in calculating diluted (loss) income per share		2,172,208,190			2,208,758,636			2,129,228,961

The accompanying notes are an integral part of these consolidated financial statements.

F-4

HURRAY! HOLDING CO., LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME

																					(Accumulated			Accumulated
	Series A convertible															Additional					deficit)			other			Total
	preference shares						Ordinary shares						Subscription			paid-in			Statutory		retained			comprehensive			shareholders’			Comprehensive
	Shares			Amount			Shares			Amount			receivable			capital			reserves		earnings			income (loss)			equity			income (loss)
	(in U.S. dollars, except share data)
Balance as of January 1, 2005		16,924,497		$	16,925			1,186,672,000		$	59,334		$	(50,880	)	$	16,416,197		$	2,085,269	$	19,194,506		$	(685	)	$	37,720,666
Initial public offering of shares, net of offering costs of $8,655,528		—			—			662,433,900			33,121			—			59,394,269			—		—			—			59,427,390
Conversion of Series A convertible preference shares		(16,924,497	)		(16,925	)		338,489,940			16,925			—			—			—		—			—			—
Collection of subscription receivable		—			—			—			—			50,880			—			—		—			—			50,880
Stock-based compensation from accelerated-vesting of stock options		—			—			—			—			—			16,804			—		—			—			16,804
Stock options issued to non-employees		—			—			—			—			—			20,768			—		—			—			20,768
Exercise of stock options		—			—			42,158,500			2,108			—			1,487,494			—		—			—			1,489,602
Statutory reserve		—			—			—			—			—			—			3,201,788		(3,201,788	)		—			—
Foreign currency translation adjustment		—			—			—			—			—			—			—		—			1,274,189			1,274,189		$	1,274,189
Net income		—			—			—			—			—			—			—		18,618,732			—			18,618,732			18,618,732
Balance as of December 31, 2005		—			—			2,229,754,340			111,488			—			77,335,532			5,287,057		34,611,450			1,273,504			118,619,031		$	19,892,921
Issuance of ordinary shares related to acquisition of Shanghai Magma (see Note 3)		—			—			8,955,200			448			—			539,552			—		—			—			540,000
Repurchase and cancellation of ordinary shares		—			—			(79,260,000	)		(3,963	)		—			(5,030,785	)		—		—			—			(5,034,748	)
Forward contract at fair value (See Note 3)		—			—			—			—			—			124,918			—		—			—			124,918
Stock-based compensation expense		—			—			—			—			—			543,557			—		—			—			543,557
Exercise of stock options		—			—			2,582,200			129			—			95,343			—		—			—			95,472
Statutory reserve		—			—			—			—			—			—			374,004		(374,004	)		—			—

F-5

															(Accumulated			Accumulated
	Series A convertible										Additional				deficit)			other		Total
	preference shares				Ordinary shares				Subscription		paid-in		Statutory		retained			comprehensive		shareholders’			Comprehensive
	Shares		Amount		Shares		Amount		receivable		capital		reserves		earnings			income (loss)		equity			Income (loss)
	(in U.S. dollars, except share data)
Foreign currency translation adjustment		—		—		—		—		—		—		—		—			2,127,845		2,127,845		$	2,127,845
Net income		—		—		—		—		—		—		—		5,803,945			—		5,803,945			5,803,945
Balance as of December 31, 2006		—		—		2,162,031,740		108,102		—		73,608,117		5,661,061		40,041,391			3,401,349		122,820,020		$	7,931,790
Stock-based compensation expense		—		—		11,099,300		554		—		442,421		—		—			—		442,975
Exercise of stock options		—		—		653,400		33		—		16,301		—		—			—		16,334
Statutory reserve		—		—		—		—		—		—		841,788		(841,788	)		—		—
Foreign currency translation adjustment		—		—		—		—		—		—		—		—			4,253,525		4,253,525		$	4,253,525
Net loss		—		—		—		—		—		—		—		(41,950,195	)		—		(41,950,195	)		(41,950,195	)
Balance as of December 31, 2007		—		—		2,173,784,440	$	108,689		—	$	74,066,839	$	6,502,849	$	(2,750,592	)	$	7,654,874	$	85,582,659		$	(37,696,670	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

HURRAY! HOLDING CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended December 31,
	2007			2006			2005
	(In U.S. dollars)
Operating activities:
Net (loss) income	$	(41,950,195	)	$	5,803,945		$	18,618,732
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Impairment of goodwill		38,778,584			—			—
Impairment of acquired intangible assets		2,480,253			—			—
Stock-based compensation		442,975			543,557			37,572
Depreciation and amortization		3,644,095			3,481,415			1,939,130
Bad debt provision		453,674			269,235			2,783
Minority interests		688,440			562,189			—
Equity in losses of affiliate		62,756			—			—
Gain from disposal of subsidiary		(192,943	)		—			—
Receivable from disposal of subsidiary (net of cash disposed of $771,570)		(3,186,887	)		—			—
Loss on disposal of property and equipment		74,300			1,155			16,920
Changes in assets and liabilities net of effect of businesses acquired and sold:
Accounts receivable and notes receivable		(2,069,378	)		5,518,845			(5,799,209	)
Prepaid expenses and other current assets		(138,548	)		3,113,531			(528,260	)
Amount due from related parties		(273,618	)		(164,008	)		—
Deposits and other long-term assets		(147,543	)		(258,610	)		(62,341	)
Inventories		(81,422	)		268,556			(363,511	)
Current deferred tax assets		(414,011	)		(289,651	)		—
Non-current deferred tax assets		(285,660	)		(221,599	)		(137,292	)
Accounts payable		(140,809	)		(222,881	)		(282,045	)
Accrued expenses and other current liabilities		305,097			(899,530	)		203,030
Amount due to related parties		245,379			(204,420	)		—
Income tax payable		(299,897	)		387,148			90,308
Current deferred tax liabilities		64,060			86,212			246,431
Non-current deferred tax liabilities		(114,325	)		(139,229	)		(2,165	)
Net cash (used in) provided by operating activities		(2,055,623	)		17,635,860			13,980,083
Investing activities:
Purchases of property and equipment		(863,603	)		(956,972	)		(1,288,698	)
Proceeds from disposal of property and equipment		—			30,229			4,955
Acquisitions of intangible assets		(1,535,436	)		(1,714,198	)		(4,161,788	)
Payments related to acquisitions of new businesses (net of cash acquired of $1,398,709, $441,147, and $2,316,674 for the years ended December 31, 2007, 2006 and 2005, respectively)		(3,237,834	)		(12,515,544	)		(1,145,472	)
Investment in equity affiliate		(2,483,277	)		—			—
Net cash used in investing activities		(8,120,150	)		(15,156,485	)		(6,591,003	)
Financing activities:
Proceeds from the issuance of ordinary shares		—			540,000			—
Repurchase of ordinary shares		—			(5,034,748	)		—
Proceeds from issuance of ordinary shares upon initial public offering, net of offering costs of $7,660,172 paid in 2005		—			—			60,422,746
Proceeds from exercise of options		16,334			95,472			1,489,602
Collection of subscription receivable		—			—			50,880
Repayments of short-term borrowings		—			—			(2,658,128	)
Net cash provided by (used in) financing activities		16,334			(4,399,276	)		59,305,100
Net (decrease) increase in cash		(10,159,439	)		(1,919,901	)		66,694,180
Cash, beginning of year		74,596,978			75,958,964			8,713,697
Effect of exchange rate changes		1,541,345			557,915			551,087
Cash, end of year	$	65,978,884		$	74,596,978		$	75,958,964
Supplemental disclosure of cash flow information:
Interest paid	$	—		$	—		$	92,539
Income taxes paid	$	854,864		$	287,266		$	390,062
Supplemental disclosure of non-cash financing activities:
Conversion of Series A convertible preference shares into ordinary shares	$	—		$	—		$	16,925

The accompanying notes are an integral part of these consolidated financial statements.

F-7

HURRAY! HOLDING CO., LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 and 2005

(in U.S. dollars, unless otherwise stated)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Hurray! Holding Co., Ltd. (“Hurray!”), a Cayman Islands corporation, and its consolidated subsidiaries, its variable interest entities and equity associate (collectively the “Company”) provide wireless value-added services to mobile phone users delivered over the wireless networks of the two mobile operators and over the fixed wireless networks of the two major fixed-line telecommunication operators in the People’s Republic of China (“PRC”) and also music production and distribution in the PRC. The Company specializes in the development, marketing and distribution of music and entertainment oriented consumer wireless value-added services.

At December 31, 2007, Hurray!’s subsidiaries and variable interest entities (“VIEs”) are as follows (unless otherwise stated, all of these entities are incorporated in the PRC and the Company is entitled to the whole benefit of these entities’ economic interest ):

			Percentage of
	Date of		effective
	incorporation or	Place of	ownership by
Name of Subsidiaries	acquisition	incorporation	Hurray!			Principal activities
Wireless value-added services (“WVAS”) business segment:
Subsidiaries
Beijing Hurray! Times Technology Co., Ltd. (“Beijing Hurray Times”)	June 27, 2002	the PRC		100	%	WVAS business
Hurray Technologies (Hong Kong) Ltd.	July 23, 2003	Hong Kong		99	%	WVAS business
Invest China Group Limited	April 1, 2007	British Virgin Islands		100	%	WVAS business
Beijing Hand in Hand Media Technology Co., Ltd.	April 1, 2007	the PRC		100	%	WVAS business
Variable Interest Entities
Hurray! Solutions Ltd.	September 21, 1999	the PRC		100	%	WVAS business
Beijing Enterprise Network Technology Co., Ltd.	March, 31, 2004	the PRC		100	%	WVAS business
Beijing Hengji Weiye Electronic Commerce Co., Ltd. (“Hengji Weiye”)	October 1, 2005	the PRC		100	%	WVAS business
Beijing Hutong Wuxian Technology Co., Ltd. (“Beijing Hutong”)	April 1, 2005	the PRC		100	%	WVAS business
Beijing Palmsky Technology Co., Ltd.	March, 31, 2004	the PRC		100	%	WVAS business
Henan Yinshan Digital Network Technology Co., Ltd. (“Henan Yinshan”)	June 30, 2007	the PRC		100	%	WVAS business
Shanghai Magma Digital Technology Co., Ltd. (“Shanghai Magma”)	January 1, 2006	the PRC		100	%	WVAS business
Shanghai Saiyu Information Technology Co., Ltd. (“Saiyu”)	April 1, 2007	the PRC		100	%	WVAS business

F-8

			Percentage of
	Date of		effective
	incorporation or	Place of	ownership by
Name of Subsidiaries	acquisition	incorporation	Hurray!			Principal activities
Subsidiaries of Variable Interest Entities
Beijing Cool Young Information Technology Co., Ltd.	January 28, 2003	the PRC		100	%	WVAS business
Beijing WVAS Solutions Ltd.	October 10, 2001	the PRC		100	%	WVAS business
Recorded music business segment:
Subsidiaries
Hurray! Music Holding Co., Ltd.	August 19, 2005	Cayman Islands		100	%	Recorded music business
Subsidiaries of Variable Interest Entities
Hurray! Digital Media Technology Co., Ltd.	November 10, 2005	the PRC		100	%	Recorded music business
Beijing Huayi Brothers Music Co., Ltd. (“Huayi Brothers Music”)	December 31, 2005	the PRC		51	%	Recorded music business
Beijing Huayi Brothers Broker Co., Ltd.	April 17, 2007	the PRC		51	%	Recorded music business
Hurray! Freeland Digital Music Technology Co., Ltd. (“Freeland Music”)	January 1, 2006	the PRC		60	%	Recorded music business
Hurray! Freeland Cultural Media Co., Ltd.	January 8, 2007	the PRC		60	%	Recorded music business
Beijing Hurray! Fly Songs International Culture Co., Ltd. (“Fly Songs”)	August 21, 2007	the PRC		30.6	%	Recorded music business
Guangzhou Hurray! Secular Bird Culture Communication Co., Ltd. (“Secular Bird”)	May 30, 2007	the PRC		65	%	Recorded music business

To comply with PRC laws and regulations that restrict direct foreign ownership of telecommunication service businesses in the PRC, the Company conducts substantially all of its business through several VIEs. The VIEs have entered into various agreements with one of Hurray!’s subsidiaries, including exclusive cooperation agreements. Under these agreements, Hurray! through a wholly owned PRC subsidiary, Beijing Hurray! Times, is the exclusive provider of technical and consulting services to the VIEs. In return, the VIEs are required to pay Beijing Hurray! Times’ service fees for the technical and consulting services received. The technical and consulting service fees can be, and are, adjusted at Hurray!’s discretion depending on the level of service provided. Beijing Hurray! Times is entitled to receive service fees in an amount up to all of the net income of the VIEs In addition, Beijing Hurray! Times has been assigned all voting rights by the direct and indirect owners of the VIEs through agreements which are valid for ten years and cannot be amended or terminated except by written consent of all parties. Finally, Beijing Hurray! Times has the option to acquire the equity interest of the VIEs . The Company also has extended loans without interest to the registered shareholders to finance their investments in the VIEs. Each of the registered shareholders is a related party of the Company acting as de facto agent for the Company. The direct equity interest in these entities has been pledged as collateral for the loans and when permitted under Chinese laws, the loans are to be repaid by transferring the direct equity interest in these entities to the Company. Therefore, no minority interest was recorded for the registered capital from the registered shareholders.

Hurray! is the sole beneficiary of the VIEs because all the variable interests are held by Hurray!. Accordingly, the Company consolidates the VIEs under Financial Accounting Standard Board (“FASB”) Interpretation (“FIN”) No. 46 (revised), “Consolidation of Variable Interest Entities,” which requires certain VIEs to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.

F-9

In February 2005, Hurray! completed an initial public offering of 6,880,000 American Depositary Shares on the NASDAQ Global Market in the United States of America.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

(b) Basis of consolidation

The consolidated financial statements include the financial statements of Hurray!, its subsidiaries and VIEs. All inter-company transactions and balances have been eliminated upon consolidation. The affiliated company in which the Company controls more than 20% but less than 50% of the investment is accounted for using the equity method of accounting. The Company’s share of earnings (losses) of the equity investment is included in the accompanying consolidated statements of operations.

(c) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses in the reporting periods. Significant accounting estimates reflected in the Company’s financial statements include accruals for revenue and cost of revenue adjustments, valuations of acquired intangible assets and goodwill, stock based compensation, and deferred income tax assets valuation allowances.

(d) Significant risks and uncertainties

The Company participates in industries with rapid changes in regulations, technology trends, customer demand and competition and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: changes in the overall demand for entertainment-oriented wireless value-added services; advances and trends in new technologies and industry standards; changes in key suppliers; changes in certain strategic relationships or customer relationships; regulatory or other factors; risks associated with the ability to maintain strategic relationships with the mobile and fixed-line telecommunication operators; risks associated with attracting and retaining music artists, accessing songs and songwriters, and managing the Company’s new music businesses; and risks associated with the Company’s ability to attract and retain other necessary employees to support its growth.

(e) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less.

(f) Inventories

Inventories represent music compact discs (“CDs”)and related music products and are stated at the lower of cost, determined using the first-in, first-out method, or market.

(g) Property and equipment, net

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives:

Furniture and office equipment	3 years
Motor vehicles	5 years
Telecommunications equipment	3 years
Leasehold improvements	Lesser of original lease term or estimated useful life

F-10

(h) Acquired intangible assets, net

Acquired intangible assets consists of intangible assets, as detailed in Note 8, acquired through direct purchases and various business acquisitions and are amortized on a straight-line basis over their expected useful economic life.

(i) Goodwill

Goodwill represents the excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed as a result of the Company’s acquisitions.

The Company tests goodwill for impairment by reporting unit on an annual basis or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of the goodwill below its carrying amount. The Company performs a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The impairment of goodwill is determined by the Company estimating the fair value based upon the present value of future cash flows. In estimating the future cash flows of each reporting unit, the Company has taken into consideration the overall and industry economic conditions and trends, market risk of the Company and historical information.

The Company changed the impairment test date from January 31 to December 31 in 2006 to better utilize the existing budget information for the future cash flow projection for each fiscal year ending December 31. Such change has no material effect on the Company’s financial statements.

(j) Impairment of long-lived assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets.

(k) Revenue recognition and cost of revenues

Wireless value-added services

Wireless value-added service revenues are derived from providing personalized media, games, entertainment and communication services to mobile phone and personal handy phone (collectively “mobile phones”) customers of the various subsidiaries of four major Chinese operators of mobile and fixed-line telecommunication networks, China United Telecommunications Corporation (“China Unicom”), China Mobile Communications Corporation (“China Mobile”), China Telecommunications Corporation and China Netcom Communications Group Corporation (collectively, the “Telecom Operators”). Fees for these services, negotiated by a network service agreement with the Telecom Operators and indicated in the message received on the mobile phone, are charged on a per-use basis or on a monthly subscription basis, and vary according to the type of services delivered.

The Company contracts with the Telecom Operators (defined above) for the transmission of wireless services as well as for billing and collection services. The Telecom Operators provide the Company with a monthly statement that represents the principal evidence that service has been delivered and triggers revenue recognition for a substantial portion of the Company’s revenue. In certain instances, when a statement is not received within a reasonable period of time, the Company makes an estimate of the revenues and cost of services earned during the period covered by the statement based on its internally generated information, historical experience and/or other assumptions that are believed to be reasonable under the circumstances. The Company recognizes WVAS revenues in the period in which the services are performed net of business taxes of $1,506,002, $1,664,706 and $1,397,538 for 2007, 2006 and 2005, respectively.

F-11

The Company measures its revenues based on the total amount paid by mobile phone customers, for which the Telecom Operators bill and collect on the Company’s behalf. Accordingly, the service fee paid to the Telecom Operators is included in the cost of revenues. In addition, in respect of 2G services, the Telecom Operators charge the Company a network fee based on a per message fee, which varies depending on the volume of messages sent in the relevant month, multiplied by the excess of messages sent over messages received. These network fees are likewise retained by the Telecom Operators and are reflected as cost of revenues. The cost of revenues also includes fees paid to our content providers and marketing partners, maintenance costs related to equipment used to provide the services, bandwidth leasing charges and data center services, alternative channels, media and related Internet costs, operator imposed penalty charges, and certain distribution costs.

The Company evaluates the criteria outlined in Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as Principal Versus Net as an Agent,” in determining whether it is appropriate to record the gross amount of revenues and related costs or the net amount earned after deducting the fees charged by the Telecom Operators. The Company records the gross amounts billed to its customers based on the following facts: (i) it is the primary obligor in these transactions, (ii) it has latitude in establishing prices and selecting suppliers and (iii) it is involved in the determination of the service specifications.

Recorded Music

Through the acquisition of Huayi Brothers Music and Freeland Music at the end of 2005 and the beginning of 2006, respectively, the Company entered the business of artist development, music production, offline music distribution and online distribution through wireless value added services and the Internet. Recorded music revenues are derived from live performances, corporate sponsorship and advertising, online and wireless sales, and offline CD sales.

The Company generates revenues from the sale of CDs either by providing the CD master to a distributor or by directly arranging for the volume production and subsequent wholesale of the CDs. In the former case, the Company receives a fixed fee, has no further obligations and recognizes the fee as revenue when the master CD is provided. In the latter case, the Company ships the produced CDs to retail distributors and recognizes wholesale revenues at the time of shipment less a provision for future estimated returns. In 2007, the estimated sales returns rate is approximately 18% based on past experience.

The Company recognizes artist performance fees and corporate sponsorship or marketing event fees once the performance or the service has been completed. Where the Company acts as the primary obligor in the transaction, revenues are recorded on a gross basis. Where the Company is considered an agent or where the artists separately contract with the event organizer, revenues are recorded on a net basis.

The Company licenses its music to third parties for guaranteed minimum royalty payments, normally received upfront and typically non-refundable. In such cases the Company recognizes revenue on a straight-line basis over the life of the license and unrecognized revenues are included in liabilities. When the contract provides for additional payments if revenues exceed the minimum amount guaranteed, such amounts are included in revenues when the Company is notified of its entitlement to additional payments.

The Company incurs costs in producing CD masters, volume CD production, artist and songwriter royalties, and royalties payable to other parties for the use of their work. The cost of record masters and volume CD productions, and royalties paid in advance are recorded in prepaid expenses and other current assets when the sales of the recording are expected to recover the cost and amortized as costs of revenues over the revenue generating period, typically within one year. The decision to capitalize an advance to an artist, songwriter or other party requires significant judgment as to the recoverability of these advances. Advances for royalties and other capitalized costs are assessed for recoverability continuously.

(l) Foreign currency translation

Hurray! uses the United States dollar (“U.S. dollar”) as its functional and reporting currency. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates of exchange prevailing at the balance sheet date. Transactions in currencies other than U.S. dollars during the year are converted into U.S. dollars at the applicable rates of exchange prevailing at the last day of the month transactions occurred. Transaction gains and losses are recognized in the statements of operations.

The financial records of certain of Hurray!’s subsidiaries and VIEs are maintained in Renminbi (“RMB”), which is their functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are reflected as a separate component of comprehensive income in the statements of shareholders’ equity.

RMB is not fully convertible into U.S. dollars. The rate of exchange for the U.S. dollar quoted by the Bank of China was RMB 7.2946, RMB 7.8087 and RMB 8.0702 on December 31, 2007, 2006 and 2005, respectively.

F-12

(m) Product development expenses

Product development expenses consist of content development expenses including compensation and related costs for employees associated with the development and programming of mobile data content. These costs are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. To date, the Company has essentially completed its development concurrently with the establishment of technological feasibility, and, accordingly, no costs have been capitalized.

(n) Stock-based compensation

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), using the modified prospective transition method and therefore has not restated results for prior periods. Under this transition method, stock-based compensation expense recognized beginning January 1, 2006 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006 based on the fair market value as of the grant date, measured in accordance with SFAS 123, and (b) compensation expense for all stock-based compensation awards granted on or subsequent to January 1, 2006, based on grant-date fair vale estimated in accordance with the provisions of SFAS 123(R). In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation of SFAS 123(R) and the valuation of stock-based payments for public companies. The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R). The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting period of the award.

Prior to the adoption of SFAS 123(R), the Company recognized stock-based compensation expense in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and had adopted the disclosure-only alternative of SFAS 123 and SFAS No. 148, “Accounting for Stock-based Compensation — Transition and Disclosure”. In accordance with APB 25 and related interpretations, stock-based compensation expense was not recorded in connection with share-based payment awards granted with exercise prices equal to or greater than the fair market value of the underlying shares on the date of grant.

Share-based payment transactions with non-employees are accounted for as share based compensation expenses in accordance with EITF 96-18 “Accounting for Equity Instruments that Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services”.

See Note 15 to the Consolidated Financial Statements for further discussion on stock-based compensation.

(o) Taxation

Income taxes — Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years. Deferred 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 tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

Value added taxes — The Company’s PRC subsidiaries and VIEs are subject to value-added tax at a rate of 17% on revenues from sales of hardware and software as well as the installation and system integration services which are deemed as mixed-sale of goods and thus subject to VAT. Value-added tax payable on revenues is computed net of value-added tax paid on purchases. If the net amount of value added tax payable exceeds 3% of the sales, the excess portion of value added tax can be refunded immediately. The Company therefore is subject to an effective net value added tax burden of 3% from the sales. This government policy is effective until 2010. The net amount of value added tax is recorded either in the line item of other tax payable or prepaid expenses and other current assets on the face of consolidated balance sheet. In 2007, 2006 and 2005, the Company received rebates of $7,001, $229,824 and $649,204, respectively, which are included in income from discontinued operations as the Company sold its software and system integration services in 2007.

Business taxes — The Company’s PRC subsidiaries and VIEs are also subject to business tax at a rate of 3-5% on wireless value-added services revenues. Business taxes are recorded as a deduction of revenue when incurred.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on the Company’s accounting for income taxes for the year ended December 31, 2007. The Company did not incur any interest or penalties related to potential underpaid income tax expenses, and also does not expect to have a significant increase or decrease on the unrecognized tax benefits within 12 months from December 31, 2007.

F-13

The Company is subject to taxation in PRC and other tax jurisdictions. There is no ongoing examination by taxing authorities at this time. The Company’s various tax years from 2002 to 2007 are remaining open in various taxing jurisdictions.

(p) Comprehensive income (loss)

Comprehensive income (loss) includes foreign currency translation adjustments. Comprehensive income (loss) is reported in the statements of shareholders’ equity.

(q) Fair value of financial instruments

Financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable, and accrued expenses and other current liabilities. The carrying values of cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and accrued liabilities and other current liabilities approximate their fair values due to their short-term maturities. The amount payable in December 2007 in respect of the acquisition of Shanghai Magma has been calculated after applying a discount of 3.875% to reflect approximate market rates for such liabilities.

(r) Advertising costs

The Company expenses advertising costs as incurred. Total advertising expenses were $5,269,550, $5,404,935 and $969,122 an in 2007, 2006 and 2005, respectively, and have been included in selling and marketing expenses and cost of revenues.

(s) Net (Loss) income per share

Basic (loss) income per share is computed by dividing income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted (loss) income per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. The dilutive effect of the stock options and nonvested shares is computed using treasury stock method.

(t) Recently issued accounting standards

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The standard requires disclosure of fair values of derivative instruments and their gains and losses in a tabular format as well as cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. It also requires that more information be provided about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. SFAS No.161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not expect the adoption of SFAS No. 161 to have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No.141(R), “Business Combinations,” to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. The standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is prohibited. The Company has not yet begun the process of assessing the potential impact that the adoption of SFAS No. 141R may have on its consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No.160, “Noncontrolling Interests in Consolidated Financial Statements” to improve the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way as required in the consolidated financial statements. Moreover, SFAS No. 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS No. 160 is effective for fiscal year, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company has not yet begun the process of assessing the potential impact that the adoption of SFAS No. 160 may have on its consolidated financial position or results of operations.

F-14

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. The standard requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS 157. The Company is currently evaluating whether the adoption of SFAS 159 will have a significant effect on its consolidated results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which provides enhanced guidance for using fair value to measure assets and liabilities. This standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. FASB Staff Position No. FAS 157-2, “ Effective Date of FASB Statement No. 157” delays the effective date of SFAS 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15, 2008. The Company is currently evaluating whether the adoption of SFAS 157 will have a significant effect on its consolidated financial position, results of operations or cash flows.

(u) Reclassifications

Certain prior year amounts have been reclassified to conform to the 2007 financial statement presentation.

3. ACQUISITIONS

During the three-year period ended December 31, 2007, the Company made a number of acquisitions of businesses directly or through its VIE companies. Each acquisition has been recorded using the purchase method of accounting, and accordingly the acquired assets and liabilities were recorded at their fair values on the dates of acquisitions and the results of their operations have been included in our operations since their respective acquisitions dates. The fair values of the assets and liabilities acquired were estimated using a combination of valuation methods, such as “income approach,” “market approach,” and “cost approach” methods, considering, among other factors, forecasted financial performance of the acquired business, market performance, and market potential of the acquired business in China.

(a) 2007 acquisitions

Acquisition of Henan Yinshan and Saiyu

In April and June of 2007, the Company acquired 100% of the equity of Saiyu and Henan Yinshan, for a total cash consideration of $5,328,699, including transaction costs of $1,292,960, to further expand the Company’s portfolio of wireless value-added services in China. Of the total consideration, an amount of $1,089,160 was unpaid as of December 31, 2007. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

Total purchase price:
Cash consideration	$	4,035,739
Transaction costs		1,292,960
	$	5,328,699

				Amortization
				period
Aggregate purchase price allocation — Saiyu and Henan Yinshan:
Cash and cash equivalents	$	1,311,572
Accounts receivable		45,451
Other current assets		1,226
Acquired intangible assets:
Agreements with China Mobile		1,946,402			5 years
WVAS license		24,763			3 years
Goodwill (allocated to WVAS segment)		2,134,375			N/A
Property and equipment, net		9,496			3 – 5 years
Other assets		17,751
Current liabilities		(71,652	)
Non-current deferred tax liabilities		(90,685	)
Total	$	5,328,699

F-15

Acquisition of Secular Bird and Fly Songs

During 2007, the Company expanded its recorded music segment by acquiring 65% of Secular Bird, an independent record label in China, and through its Freeland Music joint venture, a 51% interest in Fly Songs, a concert and performance organizer in China for a total consideration of $576,066, all paid in 2007. The following table summarizes the estimated fair values acquired and liabilities assumed at the dates of acquisition:

				Amortization
				period
Aggregate purchase price allocation — Secular Bird and Fly Songs:
Cash and cash equivalents	$	87,138
Inventory		10,747
Other current assets		116,559
Acquired intangible assets:
Artist management contract		32,293			4.6 years
Trademarks		24,644			20 years
Copyright for songs		17,846			1.9 years
Non-complete contract		4,249			3.8 years
Goodwill (allocated to recorded music segment)		253,705			N/A
Property and equipment, net		53,375			3 – 5 years
Other assets		1,402
Current liabilities		(11,108	)
Non-current deferred tax liabilities		(14,784	)
Total	$	576,066

The following unaudited pro forma information summarizes the results of operations for the years ended December 31, 2007 and 2006 assuming the acquisitions during the years of 2006 and 2007 had occurred as of January 1, 2006. The following pro forma financial information is not necessarily indicative of the results that would have occurred had the acquisitions been completed at the beginning of that period, nor is it indicative of future operating results:

	Year ended December 31,
	2007			2006
	(unaudited)			(unaudited)
Pro forma total revenue	$	60,897,824		$	69,617,966
Pro forma net (loss) income attributable to holders of ordinary shares		(42,565,473	)		5,783,149
Pro forma net (loss) income per share:
- basic	$	(0.02	)	$	0.00
- diluted	$	(0.02	)	$	0.00
Weighted average shares used in calculation of pro forma net (loss) income per share:
- basic		2,172,208,190			2,189,748,563
- diluted		2,172,208,190			2,208,758,636

The pro forma results of operations give effect to certain adjustments, including amortization of acquired intangible assets with definite lives, associated with the acquisitions.

F-16

Acquisition of Beijing New Run Entertainment Development Co., Ltd. (New Run)

In April 2007, the Company acquired a 30% interest in New Run, an independent record label in China, and it has been accounted for on the equity basis from April 1, 2007. The cash acquisition cost of $2,483,277, including transaction costs, has been paid during 2007. Additional consideration may be required upon the attainment of certain performance targets for the twelve-month period subsequent to the acquisition. At December 31, 2007, the Company’s share of New Run’s loss since acquisition was $62,756.

Acquisitions payable as of December 31, 2007 represents the payables for the acquisition of Shanghai Magma, Henan Yinshan and Saiyu, and Beijing Hutong of $6,000,000, $1,089,160 and $12,338 respectively.

(b) 2006 acquisitions

Acquisition of Shanghai Magma

Effective January 1, 2006, the Company acquired 100% of the outstanding equity of Shanghai Magma, a leading developer and publisher of wireless Java™ Games in China and Shanghai Magma has been consolidated since that date. Under the acquisition agreements, the Company made an initial cash payment of $4.1 million and agreed to pay additional amounts based on Shanghai Magma’s financial performance in 2006 and 2007 with a maximum total consideration, including the initial payment, of $22 million. In September 2006, the Company agreed with the selling shareholders to fix the additional amounts at a total of $10.5 million payable in two installments of $4.5 million in October 2006 and $6.0 million in December 2007. As part of the amended agreements certain selling shareholders agreed to subscribe $1.25 million of the payments received in the issue of Hurray’s ordinary shares at a price based on the 5 –day average price of Hurray’s shares prior to signing the revised agreements. Such right of subscription was fair valued at $124,918 using the respective valuation model. On December 31, 2007, the amount payable under these agreements was $6.0 million, out of which $0.71 million will be used by the selling shareholders for subscription of the Company’s shares at a price of $6.03 per share. Subsequently, in February 2008, the Company and the selling shareholders agreed to further amend the agreements to reduce the consideration payable to $1 million and eliminate the need for the selling shareholders to subscribe for the Company’s shares. This amount was paid in March 2008. The gain on reduction of $5 million in the purchase liability was recognized as other income in the first quarter of 2008.

Total purchase price:
Cash consideration	$	14,246,746
Fair value of share purchase right		124,918
Transaction costs		438,263
	$	14,809,927

				Amortization
				period
Purchase price allocation:
Cash and cash equivalents	$	393,425
Accounts receivable		564,291
Other current assets		1,156,492
Acquired intangible assets:
Partnership agreement with China Mobile		418,826			4 years
Trademarks		147,456			20 years
Software		59,478			5 years
Website		21,065			4.5 years
WVAS license		9,913			4.5 years
Non-compete agreement		63,196			4 years
Game content		76,826			0.17 years
Goodwill (allocated to WVAS segment)		12,168,190			N/A
Property and equipment, net		25,289			3 – 5 years
Current liabilities		(191,214	)
Non-current deferred tax liabilities		(103,306	)
Total	$	14,809,927

Acquisition of Freeland Music

Effective January 1, 2006, the Company acquired 60% of Freeland Music from the Freeland group, which is a group of affiliated companies in China engaged in the production and distribution of audio and video music products and Freeland Music has been consolidated from that date. In this acquisition the Freeland group injected its music business in a newly formed company, Freeland Music, owned 60% by the Company and 40% by the Freeland group. The initial consideration was $7,560,000 in cash, of which $2,160,000 was payable to the existing shareholders of the business and $5,400,000 was payable into Freeland Music as a capital injection to fund its operation. At December 31, 2007, all purchase consideration has been paid.

F-17

The final consideration payable by the Company and the respective ownership interests of the shareholders of Freeland Music were subject to adjustment based on the financial performance of Freeland Music in 2006. Subsequent to the acquisition, the Company and the Freeland group agreed to amend the terms of the agreements to extend the performance period to the 2007 financial year. If the actual net income of Freeland Music in that year exceeds $1.53 million (RMB 12 million), the Company will contribute the full amount of the remaining purchase consideration as a capital injection into Freeland Music. If the actual net income is between $1.28 million (RMB10 million) and $1.53 million, inclusive, the Company will contribute 50% of the remaining purchase consideration, equal to $1.35 million, as a capital injection. As the actual net income of Freeland Music for 2007 was less than $1.28 million, the Company was not required to make any further capital injection.

Total purchase price:
Cash consideration	$	4,320,000
Transaction costs		265,113
	$	4,585,113

				Amortization
				period
Purchase price allocation:
Cash and cash equivalents	$	47,722
Accounts receivable		43,568
Acquired intangible assets:
Artist contracts		1,406,890			5 years
Trademarks		215,932			8 years
Exclusive WVAS agreement		42,464			5 years
Exclusive copyright agreement		12,543			3 years
WVAS contracts		249,845			5 years
Copyright contracts		99,954			4 years
Goodwill (allocated to recorded music segment)		2,538,962			N/A
Property and equipment, net		14,540			3 – 5 years
Current liabilities		(57,469	)
Non-current deferred tax liabilities		(29,838	)
Total	$	4,585,113

The interests in Shanghai Magma and Freeland Music have been consolidated from January 1, 2006 and their results for the year ended December 31, 2006 are included in the Company’s 2006 financial statements. The following unaudited pro forma information summarizes the results of operations for the year ended December 31, 2005 assuming the acquisitions of Shanghai Magma and Freeland Music had occurred as of January 1, 2005. The following pro forma financial information is not necessarily indicative of the results that would have occurred had the acquisitions been completed at the beginning of that period, nor is it indicative of future operating results:

	Year ended
	December 31, 2005
	(unaudited)
Pro forma total revenue	$	63,612,451
Pro forma net income attributable to holders of ordinary shares		18,756,840
Pro forma net income per share:
- basic	$	0.01
- diluted	$	0.01
Weighted average shares used in calculation of pro forma net income per share:
- basic		2,092,089,848
- diluted		2,129,228,961

The pro forma results of operations give effect to certain adjustments, including amortization of acquired intangible assets with definite lives, associated with the acquisition.

F-18

Acquisitions payable as of December 31, 2006 represents the payables for the acquisition of Shanghai Magma and Beijing Hutong of $5,820,938 and $11,526 respectively.

(c) 2005 acquisitions

Acquisition of Huayi Brothers Music

On December 31, 2005, the Company acquired 51% of the outstanding equity of Huayi Brothers Music, which focuses on artist development, music production and off-line distribution of music in China, for a total cash consideration of $4,458,206, of which $196,206 was transaction costs. As part of the agreement, the Company will invest $4,262,000 in cash for 51% of Huayi Brothers Music, of which $2,905,000 was payable to the existing shareholders and $1,357,000 was payable into Huayi Brothers Music as a capital injection. As of December 31, 2006, all the cash consideration and transaction costs had been paid.

The final consideration payable by the Company and the respective ownership interests of the shareholders of Huayi Brothers Music were subject to adjustment based on the financial performance in 2006 and 2007 of Huayi Brothers Music following the closing of the transaction. As the benchmark profit was not achieved for 2006 and 2007, therefore no additional consideration was required.

Total purchase price:
Cash consideration	$	4,262,000
Transaction costs		196,206
	$	4,458,206

				Amortization
				period
Purchase price allocation at 51% of Huayi Brothers Music:
Cash and cash equivalents	$	143,366
Capital contribution receivable		628,443
Accounts receivable		141,710
Other current assets		146,258
Acquired intangible assets:
Artist contracts		1,020,420			6.52 years
Trademarks		454,250			20 years
Copyright surrogate contract		69,578			5.67 years
Existing record copyright		17,189			3 years
Exclusive WVAS agreement		542,408			20 years
Non-compete agreement		131,257			20 years
Goodwill (allocated to recorded music segment)		2,331,239			N/A
Property and equipment, net		43,567			3 – 5 years
Current liabilities		(473,895	)
Non-current deferred tax liabilities		(737,584	)
Total	$	4,458,206

At the date of acquisition, Huayi Brothers Music had a payable of $202,276 due to its minority shareholders, which represents an advance for operational purposes and included in current liability above.

F-19

The following unaudited pro forma information summarizes the results of operations for the year ended December 31, 2005 assuming the acquisition of Huayi Music had occurred as of January 1, 2005. The following pro forma financial information is not necessarily indicative of the results that would have occurred had the acquisition been completed at the beginning of the period indicated, nor is it indicative of future operating results:

	Year ended
	December 31, 2005
	(unaudited)
Pro forma total revenue	$	62,944,870
Pro forma net income attributable to holders of ordinary shares		17,822,639
Pro forma net income per share:
- basic	$	0.01
- diluted	$	0.01
Weighted average shares used in calculation of pro forma net income per share:
- basic		2,092,089,848
- diluted		2,129,228,961

The pro forma results of operations give effect to certain adjustments, including amortization of acquired intangible assets with definite lives, associated with the acquisition.

Acquisition of Beijing Hutong, Guangzhou Piosan and Hengji Weiye

During 2005, the Company made three other acquisitions of companies in China to expand the Company’s portfolio of wireless value-added services in China. The Company acquired the entire equity interests of Beijing Hutong, Guangzhou Piosan and Hengji Weiye for a total cash consideration of $3,406,693, including transaction costs of $135,488. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

				Amortization
				period
Aggregate purchase price allocation –Beijing Hutong, Guangzhou Piosan and Hengji Weiye:
Cash and cash equivalents	$	2,035,565
Prepaid expenses and other receivables		12,451
Acquired intangible assets:
Telecommunication wireless value-added licenses		113,062			4 – 4.25 years
Agreements with Telecom Operators		348,150			1.25 – 3 years
Business transaction codes		166,090			3 years
SMS platform		156,822			7 years
Goodwill (allocated to WVAS segment)		654,744			N/A
Property and equipment, net		105,424			3 – 5 years
Current liabilities		(80,375	)
Non-current deferred tax liabilities		(105,240	)
Total	$	3,406,693

F-20

The following unaudited pro forma information summarizes the results of operations for the year ended December 31, 2005 assuming the acquisitions of Beijing Hutong, Guangzhou Piosan and Hengji Weiye had occurred as of January 1, 2005. The following pro forma financial information is not necessarily indicative of the results that would have occurred had the acquisitions been completed at the beginning of the period, nor is it indicative of future operating results:

	Year ended
	December 31, 2005
	(unaudited)
Pro forma revenue	$	63,051,933
Pro forma net income attributable to holders of ordinary shares		18,269,399
Pro forma net income per share:
- basic	$	0.01
- diluted	$	0.01
Weighted average shares used in calculation of pro forma net income per share:
- basic		2,092,089,848
- diluted		2,129,228,961

The pro forma results of operations give effect to certain adjustments, including amortization of acquired intangible assets with definite lives, associated with the acquisition.

4. DISCONTINUED OPERATIONS

In 2007, the Company signed an agreement to sell its software and systems integration (“SSI”) business unit, Hurray! Times, to a subsidiary of Taiwan Mobile, a shareholder of Hurray!. With this sale the Company was able to focus on its music and other entertainment services. The business was disposed on August 1, 2007, when the acquiring company took over the management and risks of this business. The consideration of the sale is approximately $4.8 million. Of the total consideration, $1.4 million is contingent upon the receipt of accounts receivable of SSI business as of August 1, 2008. By the end of April 2008, the Company received a total of $4,283,338. In addition, the Company is entitled to further payments if the performance of the business sold exceeds specified profit targets in 2007, 2008 and 2009. As the SSI business did not achieve the specified profit target for 2007, no additional consideration was receivable in respect of that year.

Gains from disposal of the SSI segment are adjusted based on the payment contingent upon the collections of trade receivables and future performance. At December 31, 2007, approximately 53% of trade receivables for SSI business as of August 1, 2007 had been collected.

A summary of the financial information for the discontinued operations as of August 1, 2007 is set out below:

	August 1,
	2007
	Unaudited
	(in U.S. dollars)
Current assets of discontinued operations
Cash	$	771,746
Accounts receivable, net of allowance		1,868,593
Prepaid expenses and other current assets		18,942
Amount due from related parties		4,918,631
Inventories		1,397
	$	7,579,309
Non-current assets of discontinued operations:
Property and equipment, net		49,842
Rental deposits		462
	$	50,304
Current liabilities of discontinued operations
Accounts payable		270,843
Accrued expenses and other current liabilities		605,739
Dividend payable		3,002,588
	$	3,879,170

F-21

				Year ended December 31,
	As at August 1, 2007			2006			2005
				(in U.S. dollars)
Revenues	$	227,391		$	1,177,053		$	6,312,363
Operating (loss) income		(643,151	)		(1,173,424	)		3,470,108
Income taxes		178			(83,650	)		70,546
Net (loss) income from discontinued operations, net of tax		(612,170	)		(836,448	)		4,097,608
Gain from disposal of SSI segment		192,943			—			—
Total net (loss) income from discontinued operations	$	(419,227	)	$	(836,448	)	$	4,097,608

5. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

In the second quarter of 2007, the mobile operators introduced various new policies that adversely impacted the Company’s wireless value-added business and introduced further uncertainties in the Company’s operating environment. By September 30, 2007, the market capitalization of Hurray! was lower than the Company’s net book value, which was an indicator of impairment. At that date the Company tested the carrying value of goodwill and acquired intangible assets and recorded a goodwill impairment charge of $9.6 million and an impairment of acquired intangible assets of $575,205. In view of the further decline of Hurray’s market capitalization at December 31, 2007 and continued difficult operating conditions, the Company recorded an additional goodwill impairment charge of $29.2 million and a further impairment of acquired intangible assets of $1,905,048. The impairment charges of acquired intangibles are included in product development, selling and marketing and general and administrative of $88,838, $1,791,833 and $599,582, respectively. The valuation of goodwill and other intangible assets was performed using a combination of a market value approach (with comparisons to selected publicly traded companies operating in the same industry) and an income approach (discounted cash flows). Any continued adverse changes in the mobile operators’ policies or in the competitive environment could lead to additional impairment charges.

6. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of:

	December 31,
	2007		2006
Staff advances and other receivables	$	690,005	$	793,660
Advances to suppliers		1,042,427		1,231,258
Prepaid expenses		632,893		426,352
Prepaid artist costs		754,725		249,434
	$	3,120,050	$	2,700,704

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of:

	December 31,
	2007			2006
Furniture and office equipment	$	2,924,803		$	2,755,139
Motor vehicles		244,813			217,839
Telecommunications equipment		4,500,285			3,965,885
Leasehold improvements		1,132,946			1,048,292
		8,802,847			7,987,155
Less: accumulated depreciation and amortization		(7,166,758	)		(6,032,954	)
	$	1,636,089		$	1,954,201

Depreciation expense for the years ended December 31, 2007 and 2006 was $1,269,203 and $1,580,005, respectively.

F-22

8. ACQUIRED INTANGIBLE ASSETS, NET

	December 31, 2007
	Gross carrying		Accumulated		Intangible assets		Net carrying
	amount		amortization		impairment		amount
WVAS Segment:
Amortizable intangible assets
WVAS licenses	$	482,551	$	332,564	$	52,010	$	97,977
Customer agreements with Telecom Operators		2,666,773		705,785		1,840,399		120,589
Non-compete agreement		925,344		323,870		566,648		34,826
Business transaction codes		184,246		138,185		—		46,061
Platform		443,343		280,399		36,828		126,116
Software		89,107		36,678		—		52,429
Trademarks		163,135		—		—		163,135
		4,954,499		1,817,481		2,495,885		641,133
Recorded Music Segment:
Amortizable intangible assets
Artist contracts		3,172,460		1,027,576		—		2,144,884
Producing cost		1,418,847		853,993		—		564,854
Copyrights		616,744		348,738		—		268,006
Exclusive WVAS agreements		584,872		16,986		—		567,886
Exclusive copyright agreements		12,543		8,362		—		4,181
Non-compete agreement		135,506		652		—		134,854
Software		6,018		1,739		—		4,279
Trademarks		694,826		53,983		—		640,843
		6,641,816		2,312,029		—		4,329,787
	$	11,596,315	$	4,129,510	$	2,495,885	$	4,970,920

	December 31, 2006
	Gross carrying		Accumulated		Net carrying
	amount		amortization		amount
WVAS Segment:
Amortizable intangible assets
WVAS licenses	$	427,567	$	216,716	$	210,851
Customer agreements with Telecom Operators		918,473		508,042		410,431
Non-compete agreement		864,419		129,663		734,756
Business transaction codes		172,115		71,715		100,400
Platform		414,153		154,841		259,312
Software		84,003		17,894		66,109
Trademarks		152,394		7,620		144,774
Game content		79,398		79,398		—
		3,112,522		1,185,889		1,926,633

F-23

	December 31, 2006
	Gross carrying		Accumulated		Net carrying
	amount		amortization		amount
Recorded Music Segment:
Amortizable intangible assets
Artist contracts		2,427,310		431,321		1,995,989
Copyrights		1,071,861		323,924		747,937
Exclusive WVAS agreements		584,872		8,493		576,379
Exclusive copyright agreements		12,543		4,181		8,362
WVAS contracts		249,845		249,845		—
Non-compete agreement		131,257		6,563		124,694
Trademarks		670,182		26,993		643,189
		5,147,870		1,051,320		4,096,550
	$	8,260,392	$	2,237,209	$	6,023,183

Assuming no subsequent impairment of the identified intangible assets recorded as of December 31, 2007, amortization expenses for the net carrying amount of intangible assets is expected to be as follows in future years. If the Company acquires additional intangible assets in the future, the operating expenses or cost of revenue will be increased by the amortization of those assets.

2008	$	1,771,947
2009		818,092
2010		621,864
2011		257,898
2012 and later		1,501,119
	$	4,970,920

9. GOODWILL

	Year ended December 31,
	WVAS			Recorded Music		Total
Balance as of January 1,2006	$	21,537,504		$	2,331,239	$	23,868,743
Effect of exchange rate changes		1,045,599			—		1,045,599
Goodwill arising from acquisitions during the year		12,168,190			2,538,962		14,707,152
Balance as of December 31, 2006		34,751,293			4,870,201		39,621,494
Effect of exchange rate changes		2,389,916			—		2,389,916
Goodwill arising from acquisitions during the year		2,134,375			253,705		2,388,080
Goodwill impairment		(38,778,584	)		—		(38,778,584	)
Balance as of December 31, 2007	$	497,000		$	5,123,906	$	5,620,906

In 2007, the Company recorded $38.8 million of goodwill impairment due to the further decline of Hurray’s market capitalization and difficult operating conditions (see footnote 5).

10. SHORT-TERM BORROWINGS

Interest expense and the average interest rate for 2007, 2006 and 2005 were $179,062, and 3.875%, $44,765 and 3.875%, and $27,312 and 4.87%, respectively. Interest expense in 2007 and 2006 represents the imputed interest on the amount payable on the balance owed for the acquisition of Shanghai Magma.

F-24

11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of:

	December 31,
	2007		2006
Accrued payroll	$	406,608	$	528,843
Value-added tax payable		177,556		376,115
Other accrued expenses		1,231,384		1,108,437
Accrued welfare benefits		119,957		97,720
Business tax payable		857,062		411,660
Other taxes payable		113,833		90,538
	$	2,906,400	$	2,613,313

12. RELATED PARTY TRANSACTIONS AND BALANCES

As part of the acquisition agreements for the purchase of the equity interests in Huayi Brothers Music and Freeland Music and New Run, the Company agreed to use the existing distribution and CD manufacturing operations, where appropriate, owned by the other shareholders, or their related parties, of these companies. In addition these parties may use the music or artists of these companies and make royalty and other payments to Huayi Brothers Music, Freeland Music or New Run. These agreements are for duration of one year but may be extended by the mutual agreement of both parties. During 2007 and 2006 the Company recognized revenues of $645,134 and $449,638, respectively, and had expenses of $96,725 and $28,256, respectively, under these agreements. In 2006 prior to the acquisition of the interest in New Run, Huayi Brothers Music acquired copyrights from that company amounting to $175,783. At December 31, 2007 and 2006, the amounts payable to and receivable from related parties represent the outstanding amounts arising from such transactions.

In addition to the above transactions, during 2006 Huayi Brothers Music made short-term loans totaling $2,288,592 to its minority shareholders and their related parties generating interest income of $17,355. All loans were repaid in 2006.

13. INCOME TAXES

Hurray! is a tax-exempted company incorporated in the Cayman Islands. Up until December 31, 2007, pursuant to the Income Tax Law of the PRC Concerning Foreign Investment and Foreign Enterprises and Tentative Regulations of the PRC on Enterprise Income Tax (the “Income Tax Laws”), Hurray’s PRC subsidiaries and VIEs were generally subject to Enterprise Income Tax at a statutory rate of 33%. Some of these subsidiaries and VIEs are qualified as high technology enterprises and under Income Tax Laws, they are subject to a preferential tax rate of 15%. In addition, some of Hurray’s subsidiaries are new-technology enterprises located in Beijing new-technology development zone and under PRC Income Tax Laws, they are entitled to either a three-year tax exemption followed by three years with a 50% reduction in tax rate, commencing the first operating year. During 2007, the newly acquired companies, Saiyu and Henan Yinshan enjoyed reduced taxable income which is calculated based on 10% of the revenue and subject to an income tax rate of 33%.

These preferential tax arrangements will expire at various dates between 2006 and 2010. In 2005 and 2006 a number of VIEs became subject to a higher tax rate as tax exemptions expired or were reduced. The aggregate dollar and per share effect of the tax holidays in 2007, 2006 and 2005 were $1,904,064, $2,218,713 and $5,627,575 and $0.0009, $0.0010 and $0.0027 per share, respectively.

In March 2007, the National People’s Congress of China enacted a new Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. In addition, the Implementation Rules of the New Enterprise Income Tax Law, or the Implementation Rules were promulgated by the PRC State Council on December 6, 2007 and the Notice on Implementation of Transitional Arrangements for Preferential Policies of Enterprise Income Tax, or the Transitional Arrangements Notice, was promulgated by the PRC State Council on December 26, 2007. Under the New EIT system, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and foreign-invested enterprises. Enterprises established prior to March 16, 2007 eligible for a preferential tax rate of 15% according to the effective PRC Enterprise Income tax law for Foreign-Invested Enterprise and Foreign Enterprise tax laws and administrative regulations shall be subject to transitional rules as stipulated in the Transitional Arrangements Notice. In addition, certain qualified high and new technology enterprises strongly supported by the state may still benefit from a preferential tax rate of 15% under the New EIT Law if they meet the definition of “qualified high and new technology enterprise” strongly supported by the state set out in the Implementation Rules which refers to companies hold independent ownership of core intellectual properties and simultaneously meet a list of other criteria as stipulated. As a result, if our PRC subsidiaries and VIEs qualify as qualified high and new technology enterprises strongly supported by the state under the new EIT Law, they will continue to benefit from a preferential tax rate of 15%. Otherwise, the applicable tax rate of our PRC subsidiaries may be subject to PRC income tax at a rate of 25% starting from 2008 under the New EIT system. Hurray! has used the new standard rates for calculation of deferred taxes until the necessary approvals are obtained.

F-25

Provision for income taxes consists of:

	Year ended December 31,
	2007			2006			2005
Current	$	576,774		$	685,597		$	286,372
Deferred		(759,144	)		(480,617	)		36,428
	$	(182,370	)	$	204,980		$	322,800

The principal components of the deferred tax assets are as follows:

	December 31,
	2007			2006
Deferred tax assets:
Cost and expenses accruals	$	748,049		$	295,755
Current deferred tax assets	$	748,049		$	295,755
Depreciation and amortization	$	347,877		$	203,149
Net operating loss carry forwards		1,051,308			614,919
Less: valuation allowance		(749,094	)		(447,287	)
Non-current deferred tax assets	$	650,091		$	370,781
Deferred tax liabilities:
Revenue recognition	$	(416,835	)	$	(344,802	)
Current deferred tax liabilities	$	(416,835	)	$	(344,802	)
Intangible assets	$	(844,610	)	$	(850,734	)
Non-current deferred tax liabilities	$	(844,610	)	$	(850,734	)

A reconciliation between statutory income tax rate and the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2007			2006			2005
Statutory tax rate		33.0	%		33.0	%		33.0	%
Effect of tax holidays		0.3	%		(34.2	)%		(29.6	)%
Non-deductible expenses		(38.3	%)		11.9	%		9.0	%
Non-taxable income		45.0	%		(9.0	)%		(9.0	)%
Change in enterprise income tax rate		(8.6	%)		—			—
Change in valuation allowance		(13.8	%)		0.2	%		(1.3	)%
Impairment loss on intangibles		(9.2	%)		—			—
Effective tax rate		8.4	%		1.9	%		2.1	%

At December 31, 2007, tax loss carry forwards amounted to approximately $4.2 million, which will expire by 2012. A valuation allowance of $749,094 and $447,287 has been established as of December 31, 2007 and 2006, respectively, in respect of certain deferred tax assets as it is considered more likely than not that the relevant deferred tax asset will not be realized in the foreseeable future.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on the Company’s accounting for income taxes for the year ended December 31, 2007. The Company did not incur any interest or penalties related to potential underpaid income tax expenses, and also does not expect to have a significant increase or decrease on the unrecognized tax benefits within 12 months from December 31, 2007.

F-26

The Company is subject to taxation in PRC and other tax jurisdictions. There is no ongoing examination by taxing authorities at this time. The Company’s various tax years from 2002 to 2007 are remaining open in various taxing jurisdictions.

Under the new Enterprise Income Tax law effective on January 1, 2008, the rules for determining whether an entity is resident in the PRC for tax purposes have changed and the determination of residence depends amongst other things on the “place of actual management”. If the Company, or its non-PRC subsidiaries, were to be determined to be a PRC resident for tax purposes, it or they, would be subject to tax in the PRC on its worldwide income including the income arising in jurisdictions outside the PRC. The Company has evaluated its resident status under the new law and related guidance and believes it would not be an income tax resident of PRC.

As the Company would be non-resident for PRC tax purposes, dividends paid to it out of profits earned after January 1, 2008 from its PRC subsidiaries would be subject to a withholding tax. In the case of dividends paid by PRC subsidiaries the withholding tax would be 10%.

Aggregate undistributed earnings of the Company’s subsidiaries, VIE’s and its VIEs’ subsidiaries located in the PRC that are available for distribution to the Company at December 31, 2007 are considered to be indefinitely reinvested under APB opinion No. 23, “Accounting for Income Taxes – Special Areas,” and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to the Company. The Chinese tax authorities have also clarified that distributions made out of retained earnings accumulated prior to January 1, 2008 are not subject to the withholding tax.

14. SHAREHOLDERS’ EQUITY

On February 8, 2005, Hurray! completed an initial public offering of 6,880,000 ADSs, with each ADS representing 100 ordinary shares, at $10.25 per ADS to the public, of which 6,624,339 ADSs were issued by Hurray! and 255,661 ADSs were offered by existing shareholders. Total proceeds, net of direct offering expenses, of approximately $59.4 million were received by Hurray! as a result of the initial public offering.

On October 1, 2006, Hurray! issued 89,552 ADSs, represented by 8,955,200 ordinary shares, at a price of $6.03 per ADS, to former shareholders of Shanghai Magma pursuant to the amended purchase agreements.

In 2003, Hurray! issued 12,347,966 Series A convertible preference shares and warrants to purchase 8,786,077 Series A convertible preference shares for cash proceeds of $8,000,000.On April 30, 2004, pursuant to the Series A convertible preference share agreement, Hurray! exercised its clawback rights to repurchase and retire 1,122,546 shares of Series A convertible preference shares at $0.001 per share. The remaining 16,924,497 shares of Series A convertible preference shares were automatically converted into ordinary shares upon Hurray!’s initial public offering on February 8, 2005 on a one-to-one basis.

In February 2006, the Board of Directors (“Board”) of Hurray! approved a stock repurchase program whereby Hurray! may repurchase up to $15.0 million of its issued and outstanding ADSs in open-market transactions. Under this program, in 2006, Hurray! purchased and cancelled 792,600 ADSs, equivalent to 79,260,000 ordinary shares, at an average cost of $6.35 per ADS for a total consideration of $5,034,748.

15. STOCK PLANS

Stock option

Hurray!’s 2002, 2003 and 2004 stock option plans (the “Plans”) allow the Company to offer incentive awards to employees, directors, consultants or external service advisors of the Company. Under the terms of the Plans, options are generally granted at prices equal to or greater than the fair market value on the grant date, expire 10 years from the date of grant, and generally vest over 3-4 years.

Stock options under these plans were all granted prior to 2006. On December 20, 2005, Hurray!’s Board approved a plan to accelerate vesting of all outstanding stock options awarded under Hurray!’s stock option plans that would otherwise be unvested on December 31, 2005. As a result, the Company recorded compensation expense of $16,804 in 2005, which includes the intrinsic value measured at the acceleration date in excess of the original intrinsic value, which is zero, on date of grant for the estimated number of options that, absent the modification, would be unvested on December 31, 2005. As a result of the Board’s action, unvested stock options for approximately 40,021,000 ordinary shares became exercisable effective on January 1, 2006. The exercise prices of the affected stock options range from $0.0705 to $0.1405 per share. The acceleration of vesting did not change the exercise prices or other terms of the options.

F-27

There were 75,266,200 and 81,506,600 options outstanding as of December 31, 2007 and 2006, respectively. No stock options have been granted since January 1, 2006. As of December 31, 2007, 63,712,340 ordinary shares were available for future grants.

Prior to Hurray!’s initial public offering, the Company obtained, subsequent to the dates of grant, a valuation analysis performed by an independent appraiser to determine the fair market value of the Hurray!’s ordinary shares. The valuation analysis utilizes generally accepted valuation methodologies such as the income and market approach and discounted cash flow approach to value the Company’s business. For grants subsequent to the initial public offering, the Company uses NASDAQ market values to determine fair market value. Other than the stock-based compensation expenses recognized for the vesting acceleration on December 31, 2005, the Company did not recognize any compensation expenses for employee options under APB 25 since the exercise prices were equal to or greater than the fair market values at the date of grant..” Under SFAS 123(R), no expenses has incurred since all the options were fully vested as of January 1, 2006.

A summary of the stock option activity is as follows:

	Ordinary shares
				Weighted
	Number of			average
	options			exercise price
Options outstanding at January 1, 2005		151,374,220		$	0.075
Granted		16,228,000		$	0.102
Exercised		(42,158,500	)	$	0.035
Cancelled		(25,870,020	)	$	0.110
Options outstanding at December 31, 2005		99,573,700		$	0.088
Exercised		(2,582,200	)	$	0.037
Cancelled		(15,484,900	)	$	0.109
Options outstanding at December 31, 2006		81,506,600		$	0.085
Exercised		(653,400	)	$	0.027
Cancelled		(5,587,000	)	$	0.106
Options outstanding at December 31, 2007		75,266,200		$	0.084

The following table summarizes information with respect to stock options outstanding at December 31, 2007:

	Options outstanding								Options exercisable
			Weighted average		Weighted		Aggregated				Weighted		Aggregated
	Number		remaining		average		Intrinsic		Number		average		intrinsic
Exercise Prices	outstanding		contractual life		exercise price		value		exercisable		exercise price		value
Ordinary shares:
$0.0250		11,872,100		4.75	$	0.03	$	296,803		11,872,100	$	0.03	$	296,803
$0.0705		27,626,100		5.5	$	0.07	$	1,947,640		27,626,100	$	0.07	$	1,947,640
$0.1170		28,182,000		6	$	0.12	$	3,297,294		28,182,000	$	0.12	$	3,297,294
$0.1405		700,000		6.25	$	0.14	$	98,350		700,000	$	0.14	$	98,350
$0.1025		6,886,000		7	$	0.10	$	705,815		6,886,000	$	0.10	$	705,815
Total		75,266,200					$	6,345,902		75,266,200			$	6,345,902

F-28

In January 2005, Hurray! granted 1,000,000 options to purchase ordinary shares to its external consultants in exchange for past services, which vested immediately. The Company recorded compensation expense of $20,768 in 2005, based on the fair value of each stock option estimated using the Black-Scholes Option Pricing model with the following assumptions on the date of grant:

Average risk free rate of return		2.77	%
Weighted average expected option life	7 months
Volatility rate		65	%
Dividend yield		0	%

Stock-based compensation

The Company grants stock options to its employees and certain non-employees. For stock options vested prior to January 1, 2006 which represent all the options that have been granted by the Company under APB 25, the Company records compensation expense for employees for the excess of the fair value of the stock at the grant date or any other measurement date over the amount an employee must pay to acquire the stock. The compensation expense is recognized over the applicable service period, which is usually the vesting period. The Company accounts for stock-based awards to non-employees by recording compensation expense for the services rendered by the non-employees using their estimated fair values.

Had compensation cost for options granted to employees under Hurray!’s stock option plans been determined based on the fair values at the grant dates in accordance with SFAS123, the Company’s pro forma income for the year ended December 31, 2005 would have been as follows:

Net income, as reported	$	18,618,732
Add: Employee stock-based compensation as reported		16,804
Less: Employee stock-based compensation determined using the fair value method		(1,628,723	)
Pro forma income attributable to ordinary shareholders	$	17,006,813
Basic income per share:
As reported	$	0.01
Pro forma	$	0.01
Diluted income per share:
As reported	$	0.01
Pro forma	$	0.01

There was no pro-forma information for 2006 since the Company adopted SFAS 123(R). The fair value of each option granted is estimated on the date of grant using the Black-Scholes Option Pricing model with the following assumptions for grants during 2005.

Option Grants	2005
Average risk-free rate of return		3.27% – 3.75	%
Weighted average expected option life		3.25 years
Volatility rate		65	%
Dividend yield		0	%

Nonvested shares

In 2006, the Company granted restricted purchase share awards, in lieu of stock options, under Hurray!’s 2004 Share Incentive Plan (the “2004 Plan”) to certain officers and senior management.

On February 7, 2006, Hurray! granted 33,000,000 nonvested shares to its employees pursuant to the 2004 Plan which resulted in stock-based compensation expense of $1.6 million to be recognized over the applicable vesting period. The nonvested shares vest on an annual basis equally over three years.

On June 20, 2006, Hurray! granted 7,500,000 nonvested shares to its employees which resulted in stock-based compensation expense of $0.3 million to be recognized over the applicable vesting period. The nonvested shares vest on an annual basis equally over 34 months.

F-29

On March 14, 2007, Hurray! granted 20,000,000 nonvested shares to its employees which resulted in stock-based compensation expense of $0.61 million to be recognized over the applicable vesting period. The nonvested shares vest on an annual basis equally over three years.

On November 23, 2007, Hurray! granted 19,500,000 nonvested shares to its employees which resulted in stock-based compensation expense of $0.36 million to be recognized over the applicable vesting period. The nonvested shares vest on an annual basis equally over three years.

A summary of nonvested shares’ activity is as follows:

	Nonvested shares
	Outstanding
Nonvested shares outstanding at January 1, 2006		—
Granted		40,500,000
Forfeited		(8,666,700	)
Vested		—
Nonvested shares outstanding at December 31, 2006		31,833,300
Granted		39,500,000
Forfeited		(10,400,200	)
Vested		(11,099,300	)
Nonvested shares outstanding at December 31, 2007		49,833,800

The following table summarizes information with respect to nonvested shares outstanding at December 31, 2007:

	Nonvested shares outstanding
	Number		Aggregate intrinsic
	outstanding		value
Grant date
February 7, 2006		11,333,800	$	859,102
June 20, 2006		4,000,000	$	211,200
March 14, 2007		15,000,000	$	750,000
November 23, 2007		19,500,000	$	610,350
Total		49,833,800	$	2,430,652

The weighted average fair value per share of the nonvested shares awarded in 2007 was $0.05, calculated based on the fair market value of the underlying stock on the respective grant dates.

The Company recorded share-based compensation expenses of $442,975 and $543,557 for the years ended December 31, 2007 and 2006, respectively. The amount of unvested stock-based compensation currently estimated to be expensed from 2008 through 2010 related to unvested share-based payment awards at December 31, 2007 is $1,289,931. This amount will be recognized as presented by the following table.

2008	$	762,981
2009		378,780
2010		148,170
	$	1,289,931

That cost is expected to be recognized over a weighted-average period of 2.15 years. To the extent the actual forfeiture rate is different from the Company’s original estimate, share-based compensation related to these awards may require to be adjusted.

F-30

16. SEGMENT INFORMATION

Based on the criteria established by Statement of Financial Accounting Standards No. 131, “Disclosure about Segments of an Enterprise and Related Information”, the Company currently operates in two principal business segments: wireless value-added services (“WVAS”) and recorded music. The wireless value-added services are delivered through the 2.5G mobile networks, which comprise of Wireless Application Protocol (“WAP”) services, Multimedia Messaging Services (“MMS”), and Java™ services, and through 2G technology platforms, which comprise of Short Messaging Services (“SMS”), Interactive Voice Response services (“IVR”), and Color Ring Back Tones (“CRBT”). Recorded music services are delivered through the majority-controlled music companies the Company acquired at the end of 2005 and beginning of 2006 which contract with music artists and composers to perform and produce music. Business segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company does not allocate any operating expenses or any assets, with the exception of newly acquired intangible assets and goodwill, to its business segments as management does not believe that allocating these expenses is useful in evaluating these segments’ performance. Also, no measures of assets by segment are reported and used by the chief operating decision maker. Hence, the Company has not made disclosure of total assets by reportable segment.

Summarized information by business segment for the years ended December 31 2007, 2006 and 2005 is as follows:

	Year ended December 31,
	2007		2006		2005
Revenues
WVAS	$	50,038,014	$	62,512,483	$	56,062,368
Recorded Music		10,488,613		6,203,418		—
Total revenue	$	60,526,627	$	68,715,901	$	56,062,368
Cost of revenues
WVAS	$	36,394,300	$	40,672,113	$	28,634,488
Recorded Music		6,232,728		3,553,144		—
Total cost of revenues	$	42,627,028	$	44,225,257	$	28,634,488
Gross profit
WVAS	$	13,643,714	$	21,840,370	$	27,427,880
Recorded Music		4,255,885		2,650,274		—
Total gross profit	$	17,899,599	$	24,490,644	$	27,427,880

Geographic Information

The Company operates in the PRC and all of the Company’s long-lived assets are located in the PRC.

17. NET (LOSS) INCOME PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share:

	Year ended December 31,
	2007			2006			2005
Net (loss) income from continuing operations (numerator), basic and diluted	$	(41,530,968	)	$	6,640,393		$	14,521,124
Net (loss) income from discontinued operations, net of tax (numerator), basic and diluted		(419,227	)		(836,448	)		4,097,608
Net (loss) income (numerator), basic and diluted	$	(41,950,195	)	$	5,803,945		$	18,618,732
Weighted average shares (denominator):
Weighted average ordinary shares outstanding used in computing basic income per share		2,172,208,190			2,189,748,563			2,092,089,848
Dilutive effect of nonvested shares, stock options and warrants		—			19,010,073			37,139,113
Weighted average ordinary shares outstanding used in computing diluted income per share		2,172,208,190			2,208,758,636			2,129,228,961
Net (loss) income from continuing operations per share, basic and diluted	$	(0.02	)	$	0.00		$	0.01
Net (loss) income from discontinued operations per share, basic and diluted		(0.00	)		(0.00	)		0.00
Net (loss) income per share, basic and diluted	$	(0.02	)	$	0.00		$	0.01

F-31

Ordinary share equivalents are calculated using the treasury stock method. Under the treasury stock method, the proceeds from the assumed conversion of options, warrants and nonvested shares are used to repurchase outstanding ordinary shares using the average fair value for the period.

The Company had a weighted-average of 63,931,948, 71,626,000 and 66,481,587 ordinary share options outstanding during the years ended December 31, 2007, 2006 and 2005, respectively, which were excluded in the computation of diluted income per share, as their effect would have been antidilutive, as their exercise prices were above the average market values in such periods.

18. CONCENTRATIONS

(a) Dependence on Telecom Operators

The revenues of the Company are substantially derived from network service agreements with China Mobile and China Unicom. These companies are entitled to a service and network fee for the transmission of wireless value-added services as well as for the billing and collection of services. If the contractual relationships with either company in the PRC are terminated or scaled-back, or if these companies alter the network service agreements in a way that is adverse to the Company, the Company’s wireless value-added service business would be adversely affected.

Revenues generated from the mobile phone customers through China Mobile and China Unicom and as a percentage of total revenues were as follows:

	Year ended December 31,
	2007					2006					2005
	Revenues		%			Revenues		%			Revenues		%
China Unicom	$	12,789,026		21	%	$	21,144,096		31	%	$	36,267,213		65	%
China Mobile		29,921,502		49	%		36,756,895		53	%		18,946,035		34	%

Accounts receivable due from the mobile phone customers through China Mobile and China Unicom and as a percentage of total accounts receivables were as follows:

	December 31
	2007					2006
	Accounts					Accounts
	receivable		%			receivable		%
China Unicom	$	5,289,178		36	%	$	6,246,702		46	%
China Mobile		4,699,399		32	%		5,493,069		41	%

(b) Credit risk

The Company depends on the billing systems of the Telecom Operators to charge the mobile phone customers through mobile phone bills and to collect payments from customers. The Company generally does not require collateral for its accounts receivable. The movements of the allowance for doubtful accounts were as follows:

Movement of allowance for doubtful accounts

	Year ended December 31,
	2007			2006
Balance at beginning of the period	$	284,402		$	15,167
Provisions		661,504			269,235
Reversed		(233,057	)		—
Written off		(13,324	)		—
Balance at the end of the period	$	699,525		$	284,402

F-32

19. MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION

Full time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were $2,434,409, $2,396,079 and $1,647,503 for the years ended December 31, 2007, 2006 and 2005, respectively.

PRC legal restrictions permit payments of dividends by PRC companies only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations. Prior to payment of dividends, pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company’s subsidiaries and VIEs in the PRC must make appropriations from after-tax profit to non-distributable reserve funds as determined by the Board of Directors of each company. These reserve funds include (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriations of 10% of after-tax profit (as determined under generally accepted accounting principles in the PRC at each year-end); the other fund appropriations are at the Company’s discretion. These reserve funds can only be used for specific purposes of enterprise expansion and staff bonus and welfare and are not distributable as cash dividends. For the years ended December 31, 2007, 2006 and 2005, the Company’s PRC subsidiaries and VIEs made appropriations to the general reserve fund of $841,788, $374,004 and $3,201,788, respectively. The PRC subsidiaries and VIEs elected not to make any appropriations to the enterprise expansion fund and staff bonus and welfare fund in any of the periods presented. As a result of these PRC laws and regulations, the PRC subsidiaries and VIEs are restricted from transferring a portion of their net assets to the Company. Restricted net assets were approximately $75.6 million and $69.1 million, as of December 31, 2007 and 2006, respectively. Accordingly, the Company has included Schedule 1 in accordance with Regulation S-X promulgated by the United States Securities and Exchange Commission.

20. COMMITMENTS AND CONTINGENCIES

Operating leases as lessee

The Company leases certain office premises under non-cancelable leases, of which the principal one expires in 2009. Rent expense under operating leases for 2007, 2006 and 2005 was $1,862,610, $1,455,640 and $1,051,276, respectively.

Future minimum lease payments under non-cancelable operating lease agreements were as follows:

December 31,
2008	$	1,725,147
2009		1,378,993
2010		21,443
Total	$	3,125,583

Artist contracts

Huayi Brothers Music and Freeland Music have non-cancelable agency agreements with certain artists that provide for minimum payments. Future minimum payments were as follows:

December 31,
2008	$	1,974,067
2009		1,974,067
2010		1,137,830
Total	$	5,085,964

F-33

21. SUBSEQUENT EVENTS

Amendment to Shanghai Magma purchase agreement

In February 2008, the Company and the former shareholders of Shanghai Magma agreed to amend the purchase agreements, whereby, among other things, the Company’s remaining purchase liability to these shareholders was reduced from $6 million to $1 million. This amount was paid in March 2008. The gain on reduction of $5 million in the purchase liability was recognized as other income in the first quarter of 2008. The parties have also agreed to waive the requirement that the selling shareholders subscribe for shares in Hurray!.

Termination of agreement with Enlight

On November 19, 2007, the Company agreed to acquire 100% of Enlight Media, Ltd (“Enlight”), a leading private entertainment content and distribution company in China in an all stock transaction. Upon completion of the transaction, Hurray! would be required to issue ordinary shares equivalent to 15.74 million American Depository Shares (“ADSs”), representing a 42% interest in Hurray! on a pro-forma basis and additional shares, up to a maximum of the equivalent of 23.3 millions ADSs, would to be issued to the original shareholders of Enlight if, during the sixth and twenty-fourth months after completion of the transaction, the three-month average share price of Hurray! exceeded certain targets ranging from $5.00 per ADS to $8.50 per ADS. If all price targets were met the original Enlight shareholders could own up to 65% of Hurray!.

On March 6, 2008, the Company and the Enlight agreed to terminate the agreement due to a divergence in business strategies and a mutual determination that a combination would not be in our mutual interests. Each party will bear their own costs relating to the proposed transaction.

F-34

HURRAY! HOLDING CO., LTD.

ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
BALANCE SHEETS
(In U.S. dollars)

	December 31,
	2007		2006
	(in U.S. dollars, except share data)
Assets
Current assets:
Cash	$	49,061,529	$	48,496,751
Prepaid expenses and other current assets		224,297		450,298
Amounts due from subsidiaries and variable interest entities		—		12,404,359
Total current assets		49,285,826		61,351,408
Receivable on disposal of subsidiary		4,151,400		—
Investments in subsidiaries and variable interest entities		39,681,837		67,481,687
Investment in equity affiliate		150,000		—
Total assets	$	93,269,063	$	128,833,095
Liabilities and shareholders’ equity
Current liabilities:
Accrued expenses and other current liabilities	$	595,648	$	192,137
Amounts due to subsidiaries and variable interest entities		530,756		—
Acquisitions payable		6,560,000		5,820,938
Total current liabilities		7,686,404		6,013,075
Shareholders’ equity:
Ordinary shares ($0.00005 par value; 4,560,000,000 shares authorized; 2,173,784,440 and 2,162,031,740 a shares issued and outstanding as of December 31, 2007, and 2006, respectively)		108,689		108,102
Additional paid-in capital		74,066,839		73,608,117
Retained earnings		3,752,257		45,702,452
Accumulated other comprehensive income		7,654,874		3,401,349
Total shareholders’ equity		85,582,659		122,820,020
Total liabilities and shareholders’ equity	$	93,269,063	$	128,833,095

F-35

HURRAY! HOLDING CO., LTD.

ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENT OF OPERATIONS
(In U.S. dollars)

	Year ended December 31,
	2007			2006			2005
	(in U.S. dollars, except share data)
Operating expenses
Product development (represents stock-based compensation expense of $921, $79,587 and $4,886 for the years ended December 31, 2007, 2006 and 2003, respectively)	$	9,385		$	79,587		$	4,886
Selling and marketing (including stock-based compensation expense of $286,885, $346,456 and $9,911 for the years ended December 31, 2007, 2006 and 2005, respectively)		286,885			346,211			187,111
General and administrative (including stock-based compensation expense of $155,169, $117,514 and $22,775 for the years ended December 31, 2007, 2006 and 2005, respectively)		2,440,417			1,757,720			1,411,309
Total operating expenses		2,736,687			2,183,518			1,603,306
Loss from operations		(2,736,687	)		(2,183,518	)		(1,603,306	)
Interest income		2,082,629			2,372,585			1,291,258
Interest expense		(179,062	)		(44,765	)		—
Other income, net		105,485			—			—
Gain from disposal of subsidiary		192,943			—			—
Equity in earnings (loss) of subsidiaries, variable interest entities and affiliate		(41,415,503	)		5,659,643			18,930,780
Net (loss) income	$	(41,950,195	)	$	5,803,945		$	18,618,732

F-36

HURRAY! HOLDING CO., LTD.

ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF CASH FLOWS
(In U.S. dollars)

	Year ended December 31,
	2007			2006			2005
	(in U.S. dollars)
Cash flows from operating activities:
Net (loss) income	$	(41,950,195	)	$	5,803,945		$	18,618,732
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Stock-based compensation expense		442,975			543,557			37,572
Equity in (losses) earnings of subsidiaries, variable interest entities and affiliate		41,415,503			(5,659,643	)		(18,930,780	)
Gain from disposal of subsidiary		(192,943	)		—			—
Receivable from disposal of subsidiary (net of cash disposed of $771,570)		(3,186,887	)		—			—
Changes in assets and liabilities:
Prepaid expenses and other current assets		226,001			(19,649	)		(807,662	)
Amounts due from subsidiaries and variable interest entities		5,843,380			792,290			—
Accrued expenses and other current liabilities		403,512			(243,793	)		224,768
Amounts due to subsidiaries and variable interest entities		530,756			(1,243,090	)		(1,063,505	)
Payroll withholding taxes payable		—			(504,945	)		504,945
Net cash provided by (used in) operating activities		3,532,102			(531,328	)		(1,415,930	)
Investing activities:
Investment in subsidiaries and variable interest entities		(2,833,658	)		(7,475,860	)		(62,350	)
Purchase of equity affiliate		(150,000	)		—			—
Net cash (used in) provided by investing activities		(2,983,658	)		(7,475,860	)		(62,350	)
Financing activities:
Proceeds from the issuance of ordinary shares upon initial public offering, net of offering costs of $7,578,637 (offering costs of $7,399,844 and $178,793 were paid for the years ended December 31, 2006 and 2005, respectively)		—			540,000			60,422,746
Payment to repurchase ordinary shares		—			(5,034,748	)		—
Collection of subscription receivable		—			—			50,880
Proceeds from exercise of stock options		16,334			95,472			1,489,602
Net cash provided by (used in) financing activities		16,334			(4,399,276	)		61,963,228
Net increase (decrease) in cash and cash equivalents		564,778			(12,406,464	)		60,484,948
Cash and cash equivalents, beginning of year		48,496,751			60,903,215			418,267
Cash and cash equivalents, end of year	$	49,061,529		$	48,496,751		$	60,903,215

Note

Basis for Preparation

The Financial Information of the Parent Company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the Company has used the equity method to account for its investment in its subsidiaries and its variable interest entities.

F-37

EXHIBIT INDEX

Exhibit
Number		Document
	4.81	Translation of Cooperation Agreement between China Mobile Communications Group Corporation and Monternet WAP Service Provider between China Mobile Communications Group Corporation and Beijing Hutong Wuxian Technology Co., Ltd, dated April 27, 2007.
	4.82	Translation of Mobile Value-added Service Cooperation Agreement with China United Telecommunications Corporation between China United Telecommunications Corporation and Beijing Hengjiweiye Electronic Commerce Co., Ltd., dated August 30, 2007.
	4.84	Translation of Equity Transfer Agreement between TWM Holding, Hurray! Holding Co., Ltd., and Hurray! Times Communications (Beijing) Ltd. dated October 8, 2007.
	4.85	Translation of Equity Transfer Agreement of Shanghai Saiyu Information Technology Co., Ltd. among Liang Ruan, Yuqi Shi, Jie Li and Jianmei Wan, dated February 12, 2007.
	4.86	Translation of Transfer Agreement between Hurray! Times Communications (Beijing) Co., Ltd., Beijing WVAS Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd., Xiaoping Wang, Hao Sun and Beijing Hurray! Times Technology Co., Ltd., dated May, 2007.
	8.1	List of Significant Subsidiaries and Affiliates.
	12.1	Certification of Chief Executive Officer Required by Rule 13a-14(a).
	12.2	Certification of Chief Financial Officer Required by Rule 13a-14(a).
	13.1	Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
	13.2	Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
	15.1	Consent of Deloitte Touche Tohmatsu CPA Ltd., Independent Registered Public Accounting Firm.

EX-4.81

Exhibit 4.81

Cooperation Agreement on Monternet WAP Services dated April 27, 2007

Cooperation Agreement Between China Mobile Communications
Group Corporation and Monternet WAP Service Provider
Contract Registration No.: 2007110032013571

Party A: China Mobile Communications Group Corporation

Party B: Beijing Hutong Wuxian Technology Co., Ltd.

The parties hereto agree to establish cooperation in the principle of equality, mutual benefit and win-win through friendly negotiation. This Agreement is hereby formulated to regulate the rights and obligations of the parties hereto during their cooperation. This Agreement shall have the same binding power upon Party A and Party B.

I. Cooperation Principle

The parties hereto shall cooperate in good faith in the area of mobile data internet services (WAP) in the principle of benefit sharing, reciprocality and win-win. The parties hereto shall adhere to their agreements and provide active cooperation with the other party’s work.

II. Cooperation Project

Party A, as the network operator, shall provide network platform and communication services, as well as operational and interfacing specifications for Monternet WAP services to Party B; Party B, as the service provider, shall develop and provide application content services in accordance with the specifications provided by Party A. Party B may link its application content to Party A’s Monternet WAP main website subject to testing and permit of Party A, the URL address of which is http://wap.monternet.com.

III. Obligations of the Parties

(I) Party A’s Obligations

1. Party A shall use the promotional media under its control to promote and market Monternet WAP main website to attract website visits.

2. Party A shall provide to Party B technical specifications and support for WAP connection, to ensure Party B’s smooth connection with Party A’s Monternet WAP main website.

3. Party A shall provide to Party B necessary trainings as required by Party B.

4. Using the connection point of Party A’s WAP system firewall with Party B as the boundary, Party A shall be responsible for the maintenance of all equipment on its own side to ensure the smooth operation of such equipment.

5. Party A shall connect and make available Party B’s application services following Party A’s testing of such services on its Monternet WAP main website.

6. Party A shall be responsible for daily maintenance of Monternet WAP main website, and be responsible to address the technical breakdown caused by Party A, so as to ensure smooth operation of application services.

7. Party A shall provide free-of-charge network connection point service to Party B and assist Party B to cause its application service to be connected with Monternet WAP main website.

8. Party A shall be responsible to determining all of the targets for operation of WAP service, and inform Party B of such targets in whole and without ambiguity. Party A shall also give Party B reasonable time to realize such targets.

9. Party A shall be responsible to handle registration, log-on, verification and ID confirmation of users and feedback-related data to Party B.

10. Party A shall count the volume of visits to Monternet WAP main website and provide the data to Party B subject to Party B’s request.

11. For the services provided by Party B at the Monternet WAP main website, Party A shall collect information service fees from its customers for their use of Party B’s services in light of the pricing materials provided by Party B, and settle the fee with Party B pursuant to the provisions under Section 6 of this Agreement.

12. Party A shall be responsible to respond to and address inquiries and complaints from customers. Any failure caused by network, gateway or operation platform of Party A shall be immediately addressed. For any failure caused by Party B, Party A shall communicate such failure to Party B and cause Party B to address it immediately. If both Parties shall change the customer-service interface and business model in the subsequent negotiations, they shall further define such changes through supplemental agreements.

(II) Party B’s Obligations

1. Party B shall use all types of media under its control (including website, WAP site, plane media and television etc.) to help China Mobile promote Monternet WAP main website (wap.monternet.com) and application services thereon and to attract visits to and use of such website. Party B shall secure prior consent from Party A before Party B uses Party A’s name and business mark in its promotion of main Monternet WAP website; without prior written consent of Party A, Party B shall not use the name of “China Mobile” or “Monternet” to conduct promotional activity unrelated to Monternet WAP business in media.

2. Party B shall be responsible to provide application servers, application software, information source, special line for application data and other necessary equipment to the satisfaction of Party A on the basis of the parties’ cooperation project.

3. Party B shall provide active collaboration in Party A’s testing of connection points, and undertake to connect to the Monternet WAP main website in accordance with WAP service and interfacing specifications provided by Party A.

4. Using the connection point of Party A’s WAP system firewall with Party B as the boundary, Party B shall be responsible for the maintenance of all equipment on its own side to ensure smooth operation of such equipment.

5. Party B shall achieve the following network performance targets subject to Party A’s testing and record-keeping:

a.	connection success rate during busy hours not less than 98%;
b.	networking period (time for round-trip from WTBS Ping SP Server) not exceeding 0.1 second;
c.	SP response time (from the issue of business request from WTBS to the receipt of the response by WTBS) not exceeding 0.5 second.

6. Party B shall be responsible for immediately addressing the failure of application service caused on its side, and taking practical measures to prevent the reoccurrence of such failure. Party B shall be liable for any economic losses thus incurred by Party A or its customer.

7. Party B shall be responsible to negotiate and enter into commercial arrangements with direct providers of the application contents. Party B shall ensure the information and service it provides be subject to applicable State policies and regulations, do not infringe upon consumers’ interest, intellectual property rights or relevant interest of any third party. Party B shall be solely liable for any proceedings arising therefrom.

8. Party B shall ensure that the use of Party B’s services be free of any obstacles to customers at the Monternet WAP main website. Unless permitted by Party A, Party B shall not require the users who have logged on the Monternet WAP main website to undertake registration and verification, or require the users to undertake prior registration outside of the Monternet WAP main website.

9. Party B shall ensure the contents it provides be valuable to the user and timely updated.

10. Party B shall not provide any other service to Party A’s customers through Party A’s WAP website without prior written consent of Party A .

11. Party B shall not provide to any other telecommunication service operator the same content as provided to Party A by any transmission means whatsoever; otherwise, Party A may terminate the application services provided by Party B on Party A’s WAP main website and cease fee settlement with Party B.

12. Party B shall discontinue any fee-based services on its own WAP website or other websites, otherwise Party A may terminate the application services provided by Party B on Party A’s WAP main website and cease fee settlement with Party B.

13. If, prior to cooperation with Party A, Party B has provided the same services on its own WAP website or WAP web sites of Party A’s provincial subsidiaries, Party B shall in principle discontinue such services but may add a link to the Monternet WAP main website with the original website, otherwise Party A may terminate the services provided by Party B on Party A’s WAP main website and cease fee settlement with Party B.

14. Party B shall provide linkage to the portal page of Monternet WAP main website (http://wap.monternet.com) at its own WAP website, and recommend the Monternet application services to users.

15. Party B may apply to provide its services at Party A’s main WAP website on a national or local level. However, any service of the same type shall not be simultaneously provided on both the national and local level, i.e., any service provided locally shall not be provided nationally and vice versa, and any service provided provincially shall not be provided nationally by linking with numerous provincial WAP websites of Party A; otherwise Party A may terminate Party B’s nationwide service.

16. Without Party A’s written consent, Party B may not use its own brand or mark when providing its application services on the Monternet WAP main website. Instead, Party B shall use the uniform mark of the Monternet WAP main website.

17. The services provided by Party B on Party A’s WAP website shall not have linkage to the URL address of Party B or any third party. Instead, all services should have linkage to return to the portal page of the Monternet WAP website (http://wap.monternet.com).

18. Party B shall provide to Party A clearly and unambiguously all information required to calculate fees for the services provided by Party B, and shall assume all economic and legal liabilities related thereto.

19. Party B shall acquire the Business License (a Commercial Internet Information Service License ) approved and issued by the Ministry of Information Industry of People’s Republic of China (MII). The coverage of Party B’s services shall be in compliance with the term and geographic coverage set forth in Party B’s Business License for value-added services.

IV. Rights of the Parties

(I) Party A’s Rights

1. If there is any policy adjustment by the competent authority, Party A shall have the right to inform Party B of the same, and make appropriate changes as required under the new policy.

2. Party A has the right to review or engage qualified institutions to review the information provided by Party B and the content of Party B’s application services, and also inspect the timeliness of the contents provided by Party B.

3. Party A has the right to refuse transmission or may delete information which contravenes State directives, regulations and policies and other contents that Party A deems inappropriate, and demand compensation for any adverse impact on Party A’s business and reputation.

4. Party A has the right to demand that Party B amend, modify and delete the above contents at Party A’s own discretion.

5. Party A has the right to determine targets for the application services provided by Party B, and review Party B’s performance in light of such targets. Party A has the right to require adjustment or modification to services that failed to achieve such targets for three (3) months consecutively. If no adjustment or modification is made, or the services still fail to achieve the targets after adjustment or modification, Party A may cancel Party B’s qualification to provide services.

6. Party A shall have full discretion to determine the sequence of the services provided by Party B on Party A’s WAP main website.

7. Party A has the right to give guidance and supervision of the pricing policy of Party B’s service.

8. Party A has the right to obtain reasonable revenue. (Refer to Section 6 of this Agreement for detailed allocation of revenue).

(II) Party B’s Rights

1. Party B has the right to provide nationwide service or a local service on Party A’s WAP main website. Application to provide nationwide service shall be submitted to Party A, while application to provide local service shall be submitted to Party A’s local subsidiaries. Party A will not provide settlement services for local service; instead, Party B shall enter into separate agreement with Party A’s local subsidiaries for fee settlement.

2. Party B has the right to determine the pricing of its services under Party A’s guidance.

3. Party B has the right to obtain data regarding customer visits to the Party B’s information and application service contents through the network platform.

4. Without Party B’s consent or written authorization, Party A shall not transfer, release or resell any information products provided by Party B to any other third party unrelated to this Agreement by any means.

5. Party B shall have the right to obtain a reasonable share of the business revenue. Refer to Section 6 of this Agreement for detailed allocation of revenue.

6. In case of significant discrepancy between the data of Party A and Party B, Party B may require Party A to provide detailed statistical data for verification.

V. Confidentiality Clause

1. Either party shall maintain the confidentiality of Commercial Secrets and not disclose any such Commercial Secrets to any person or entity. “Commercial Secrets” shall mean any relevant data, price, quantity, technical scheme, terms and conditions to this Agreement and any other information related to the businesses disclosed by either Party (“disclosing Party”) to the other Party (“receiving Party”), including its parents, its subsidiaries and its affiliates.

2. Any information disclosed or may be disclosed by either Party to the other Party shall be the Confidential Information to this Agreement. The receiving Party shall not disclose any such Confidential Information to any other third party or for any purposes other than those specifically set out in this Agreement.

3. Either party and its employees, representatives, agents and other advisors who need to know such information to perform their responsibilities shall maintain the confidentiality obligations as stringently as the terms provided in this Article.

4. The confidentiality obligations shall be effective during the Term of the Agreement and for one (1) year thereafter.

VI. INTELLECTUAL PROPERTY

1. Party A authorize Party B to use Party A’s register trademark and company name for the purpose of the terms and condition of this Agreement. Party B shall guarantee to employ Party A’s register trademark and company name through correct and legitimate method, and shall not amend, imply negative influence upon Party A’s overall image and other relative images, as well as employ Party A’s register trademark and company name through any method for the purpose outside of the terms and condition of this Agreement.

2. Party A shall provide to Party B, in accordance with the terms and conditions of this Agreement, promotion materials, and the creation, design, graphic, picture, words, and etc which contained in the promotion materials. Party A reserve all rights to the above promotion materials, and without prior written consent from Party A, Party B shall not personally employ or allow any third party to employ for any purpose outside of the terms and condition of this Agreement.

3. Party B guarantee that the WAP content provided to Party B do not infringe upon other intellectual property rights. Party B shall be hold responsible and shall resolve any redemption or litigation incur or caused by such WAP content or by Party A employing such WAP content, and Party B shall indemnify Party A for any loss incur.

VII. Revenue Sharing and Fee Settlement

1. Party A and Party B shall cooperate to provide WAP service to Party A’s customers, and both parties are entitled to reasonable revenue which shall be calculated based on the data generated in Party A’s billing system.

2. Fee settlement under this Agreement is applicable only to nationwide services provided by Party B on Party A’s WAP main website, not to the local services provided by Party B at Party A’s local websites.

3. Communication fees for use of Party A’s network resources to access WAP services shall be solely owned by Party A.

4. The term of fee settlement shall commence as of the commencement of this project and end at the expiration of this Agreement.

5. Party A’s billing system generates the fee receivable from its customers for use of Party B’s services on Monternet WAP main website, of which 15% shall be Party A’s revenue of information fee, and the remaining 85% be paid to Party B.

6. Prior to the twentieth (20) day of each month, Party A shall notify Party B of the revenue amount (in which, already deducted compensation entitled by Party A for collecting the information fee on behalf of Party B) payable to Party B in the preceding month, and Party B shall issue a legitimate invoice according to this amount to Party A.

7. Within ten (10) business days after its receipt of such invoice, Party A shall remit the amount payable to Party B in the preceding month to Party B’s designated account after audit check.

8. Party A and Party B shall pay any tax arising from WAP business revenue respectively.

9. The fee settlement between Party A and Party B shall be based on the data generated in Party A’s billing system. If Party B has doubts on such data, Party A may provide a detailed schedule of telephone fees and assist Party B to identify the cause therefore. However, no adjustment shall be made to the settled amount for such month.

10. Party B shall provide its accurate bank account and related information to Party A:

Name of Beneficiary: Beijing Hutong Wuxian Technology Co., Ltd.

Opening Bank: Hua Xia Bank, Capital Gymnasium Sub-branch

Account No. 742-819935124

VIII. Force Majeure

1. If an event of Force Majeure occurs, include war, fire, flood, typhoons, earthquakes or any instances, which prevents total or partial performance by either of the parties, a party’s contractual obligations affected by such an event under this Agreement shall be automatically extended for a period equal to the suspension caused by the Force Majeure.

2. “Force Majeure” shall mean all events which are beyond the control of the parties to this Agreement, and which are unforeseen, unavoidable or insurmountable. The party claiming Force Majeure shall promptly inform the other party by telegraph, telex or fax, and shall furnish within fourteen (14) days thereafter authoritative proof of the occurrence and duration of such Force Majeure by means of express or registered delivery for the other party’s review and confirmation.

3. A party may terminate the Agreement to the other party if the conditions or consequences of Force Majeure, which have a material adverse effect on the affected party’s ability to perform, continue for a period in excess of 120 days.

IX. Breach Liabilities

1. If either party breaches this Agreement and consequently causes this Agreement to become unenforceable, the non-breaching party has the right to terminate this Agreement and hold the breaching party liable for any loss thus incurred.

2. If either party breaches this Agreement and consequently causes adverse social impact or economic losses on the other party, the non-breaching party may hold the breaching party liable, require corresponding damages, or terminate this Agreement.

X. Dispute Resolution

1. If any dispute arises relating to performance of this Agreement, the parties hereto shall settle it through equal consultation.

2. If the consultation fails to resolve the dispute, either party may submit the dispute to Beijing Arbitration Commission for arbitration according to its present rules. The arbitration award is final and legally binding upon both parties hereto.

XI. Term of this Agreement

1. This Agreement shall become effective as of the date on January 1, 2007, and valid on December 31, 2007.

2. This Agreement may be automatically null and void upon agreement by both parties during the term of this Agreement.

3. If the occurrence of force majeure makes it impossible to continue performance of this Agreement, this Agreement may be automatically terminated following settlement of all outstanding accounts by both parties.

4. If the occurrence of a certain event makes it impossible for one party to continue performance of this Agreement, and such event is foreseeable, such party shall notify such event to the other party within five (5) working days after its reasonable forecast of such event, and cooperate with the other party to complete all outstanding matters. If such party fails to notify the other party of such event and thus make the other party suffer losses, such party shall indemnify the other party correspondingly.

XII. Miscellaneous

1. Attachment to this Agreement, Monternet SP Cooperation Administrative Measures, WAP Handbook, has the same legal effect as this Agreement.

2. Any outstanding matter shall be addressed by both parties through friendly negotiation.

3. This Agreement is made in duplicate and each party shall hold one copy. Each copy shall have the same legal effect.

Party A; China Mobile Communications Group Corporation (seal)

Representative: Nianshu Gao

Date: April 27, 2007

Party B: Beijing Hutong Wuxian Technology Co., Ltd. (seal)

Representative: Hong Jiang

Date: April 27, 2007

EX-4.82

Exhibit 4.82

Translation of Mobile Value-added Service Cooperation Agreement

Mobile Value-added Service Cooperation Agreement
China United Telecommunications Corporation

Master Contract No.: CUVAS-A2006-0050

Party A: China United Telecommunications Corporation

Party B: Beijing Hengjiweiye Electronic Commerce Co., Ltd.

Date: [ ],[ ] 2007

CONTENTS

PREAMBLE	3
CHAPTER 1 RECITALS	3
CHAPTER 2 DEFINITIONS	4
CHAPTER 3 WAYS OF COOPERATION	5
CHAPTER 4 RIGHTS AND OBLIGATIONS OF PARTIES	5
CHAPTER 5 MANAGEMENT MECHANISM	9
CHAPTER 6 WORK INTERFACE AND MAINTENANCE COOPERATIVE SERVICES	13
CHAPTER 7 CREDIT RATING SYSTEM	15
CHAPTER 8 COMPLAINT AND BREACH RESOLUTION	17
CHAPTER 9 CLIENT SERVICE	25
CHAPTER 10 BILLING, SETTLEMENT AND COLLECTION	27
CHAPTER 11 INTELLECTUAL PROPERTIES	31
CHAPTER 12 MODIFICATION OR TERMINATION OF AGREEMENT	32
CHAPTER 13 CONFIDENTIALITY	34
CHAPTER 14 FORCE MAJEURE	35
CHAPTER 15 GOVERNING LAW AND DISPUTE RESOLUTION	36
CHAPTER 16 MISCELLANEOUS	36
SIGNATURE PAGE	38
ANNEX I DEFINITIONS	39
ANNEX II LIST OF ACTS IN BREACH	43
ANNEX III CREDIT RATING	52
ANNEX IV SCHEDULE OF PROFIT DISTRIBUTION PERCENTAGES	53

PREAMBLE

1. This Cooperation Agreement (hereinafter referred to as this “Agreement”) is entered into as of [ ],[ ] 2007 in Beijing by and between the following Parties (individually referred to as a “Party” and collectively the “Parties”):

China United Telecommunications Corporation (hereinafter referred to as “Party A”), is a company duly incorporated and validly existing under the laws of the People’s Republic of China (“PRC”), with the registered office at A-133 Xidan North Street, Xicheng District, Beijing, PRC. Its legal representative is Chang Xiaobing;

Beijing Hengjiweiye Electronic Commerce Co., Ltd. (hereinafter referred to as “Party B”), is a company duly incorporated and validly existing under the laws of PRC, with the registered office at 15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, North Road, East Third Ring Chaoyang District, Beijing, PRC. Its legal representative is Xiaoqing Guo.

2.	Scope of application: For purpose of convenience in writing, this Agreement consists of the Body Text (“Text”) and Annexes (“Annexes”). Each of the Text and the Annexes is an integral part of this Agreement.
3.	The Text hereof, the Annexes and any amendments and supplements hereto shall be provided by Party A, and shall take effect in accordance with the terms and/or procedures as agreed by the Parties after consultations.
4.	If the Parties intend to cooperate in the provision of any other Value-added Services (hereinafter “New Value-added Service”) in addition to those as set forth hereunder in future, the Parties may, through amicable consultations, either enter into a separate agreement in connection with the New Value-added Service (the text thereof to be provided by Party A) or incorporate such New Value-added Service into this Agreement and implement the same in accordance herewith.

CHAPTER 1 RECITALS

WHEREAS:

1.1 Party A is a telecommunication operator approved by the competent authorities of information industry under the State Council of PRC to provide the customers nationwide with basic telecom services and value-added telecom services, with its own telecom infrastructure network, Value-added Service Platform, service distribution system, and vast customer base. Party A has the full authority to execute and perform this Agreement.

1.2 Party B is a service provider (SP) that lawfully provides Mobile Value-added Services. It is qualified to operate the cooperation services hereunder and has duly obtained the following certificates:

3

a.	Business License for Incorporated Enterprise No. 1102282169526(1-1);
b.	Operation License for Cross-region Telecom VAS No. B2-20040210;
c.	Operation and Maintenance License for VAS No. 10091305;
d.	Customer Service License for VAS No. HG2007003;; and
e.	Other qualification certificates evidencing Party B’s qualification and capacity to engage in the Value-added Services which Party B intends to operate together with Party A; and
f.	Any document, as acceptable to Party A, evidencing that Party B meets the required conditions of qualification and market entry and/or that Party B has passed relevant Testing.

1.3	Party B desires to provide Value-added Service through Party A’s Mobile Communication Network and Mobile Value-added Service Platform, and has the full authority to execute and perform this Agreement.
1.4	Party B has duly executed the Information Security Guarantee Letter, Anti-Corruption Guarantee and Responsible Letter or any other instrument of similar nature, and is willing to take any responsibilities in respect of information security in accordance with relevant laws and regulations.
1.5	The Parties have reached consensus on the principles of openness, innovation, cooperation, and win-win with respect to the cooperation in the development of Value-added Services and shall execute and perform this Agreement based on such principles.

THEREFORE, in consideration of the foregoing and in the principles of equality and mutual benefits, advantage sharing and efficiency, the Parties hereby reach this Agreement for the purpose of developing and flourishing Mobile Value-added Services and achieving a win-win relationship. The Parties shall, in light of the cooperation principle, exercise and perform in good faith their respective rights and obligations hereunder.

CHAPTER 2 DEFINITIONS

Unless separately defined herein or otherwise specified in writing by the Parties, all relevant terms of this Agreement shall have the meaning as set out in Annex I. Other relevant terms not expressly defined hereunder shall be construed in accordance with the laws, regulations, governmental rules, or policies of competent authorities of PRC, and to the extent that there is no explicit definition in such laws and regulations, shall be construed according to industry practices.

4

CHAPTER 3 WAYS OF COOPERATION

3.1	In this Agreement, Value-added Services (the “VAS”) shall refer to Party A’s mobile telecom network and various VAS platform, and Party B shall provide various Mobile VAS services to Party A’s mobile telecom network subscribers.
3.2	The Mobile Value-added Services include several broad categories as follows, i.e. Uni-Info, Uni-Wap, Uni-Voice, Uni-Mail, Uni-Magic, Uni-Tone, and Uni-Video, and other service categories which continue to be expanded as a result of innovations in technology and business.
3.3	Party A shall collect telecommunication fee from subscribers in return for providing mobile telecom network and various VAS platforms. Party B shall collect information service fee from subscribers in return for providing VAS services, and Party A will be responsible for billing and fee collection on behalf of Party B.
3.4	Party A shall collect certain fee from Party B for providing mobile telecom network, customer resources, connection service, and fee collection services. Such fee shall be collected based on the agreed divided percentage of information service fee between both Party A and Party B. Detailed fee collection method, distribution percentage, fee calculation, fee settlement, collection of information service fee on behalf of Party B, and other relevant content shall be conducted in accordance with Chapter 10 hereof.
3.5	Unless both Parties enter into a separate agreement, Party B shall acknowledge that Party A may amend the above VAS services provide and ways of cooperation as a result of developments in its business, and Party B shall assist Party A to complete the above amendments.
3.6	Both Party A and Party B shall be in compliance with the applicable laws, regulations and policies of the State concerning telecommunications and internet information in the event of a newly issue rules and regulation by the relevant State authority regulatory.

CHAPTER 4 RIGHTS AND OBLIGATIONS OF PARTIES

Rights and Obligations of Party A

4.1 Party A provide the network and user resources for a charge, and aslso connection services to Party B, and Party A will be responsible for billing and fee collection on behalf of Party B.

5

4.2	Party A shall have the right to cause Party B to abide with the industry rules and regulations, management method, quality control standard and (or) service standard in the event of Party A newly establish or amend the industry rules and regulations, management method, quality control standard and (or) service standard according to Party A’s business and market development situation.
4.3	Party A shall have the right to asses various business application of Party B, and reward Party B for any creative business, and (or) supervise Party B’s customer service quality according to Party B’s business development, credit rating and (or) any act of breach.
4.4	Party A shall be responsible for establishment and maintenance of the SP Service System to realize the communication between the Parties in connection with cooperation in the Value-added Services hereunder. Party A shall, according to the work process of the SP Service System, notify Party B of the user name and password (in which, Party B shall use such user name and password to log on the SP Service System). Party A will use the SP Service System to issue notices, policies and measures for business management and other information necessary to inform SP, and manage and promptly update the information in relation to the cooperation hereunder.
4.5	The information on contracts, settlements, complaints and default handling as generated by the SP Service System, including but not limited to issuance, reply, confirmation, and explanation in relation to data, exhibits, and schedules, etc., unless otherwise specified, shall be deemed to be evidence for communications between the Parties; and such information shall be effective as of the time it reaches Party B’s point of access to the SP Service System. Party B shall keep in proper condition the foregoing information on contracts, settlements, complaints and default handling as generated by the SP Service System. Party A may provide appropriate backup and inquiry system in the SP Service System, but shall not be responsible for maintaining or furnishing again the foregoing information.
4.6	Party A will assign a Corporate Code to Party B for use in identification of Party B in Party A’s billing and settlement system, Value-added Service Platform system and client service system. Party A shall ensure the stability of the Corporate Code assigned to Party B and acknowledge that such Corporate Code shall have the same effect as the name of Party B’s corporate entity with respect to identification of Party B in Party A’s system.
4.7	Party A will conduct a Testing of such service applied for by Party B provided that such service has been examined and approved, and will issue a written approval to Party B after such service has passed the Testing, or make acknowledgement in an appropriate manner in SP Service System. The time for formal activation of service shall be subject to the time when Party A formally activates billing of such service

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4.8

Party B shall assist Party A on request for promptly resolving any disputes, arbitration and other litigations arising in connection with the contents and services that it provides to Party A.

4.9

In the event that Party A and (or) Party A’s affiliates serve as defendant or engage in the litigation, arbitration or other lawsuit of any client due to Party B’s business, in which any incur expenses (including without limitation, litigation fee, notary fee, inspection fee, legal fee, travel expenses, and etc.) shall be automatically deducted from the Information Service Fee as reimbursement to Party A in the subsequent settlements on the part of Party B. If the settled amount is insufficient for such deduction, Party A shall have the right to recover the remaining amount thereof.

Rights and Obligations of Party B

4.10	Party B will be responsible for the organization and provision of the contents, product development, the establishment and maintenance of the Value-added Service Platform, marketing and client service.
4.11	Party B shall strictly abide by the applicable regulations, management style, and other provision establish by Party A or other relevant business quality standard, operation and maintenance procedure, client service standards, and etc. which Party A may issue or amend from time to time.
4.12	“Organization and provision of contents” refers to the provision of specific services and/or contents of the customized Mobile Value-added Services. The organization and provision of contents by Party B shall be in compliance with the applicable laws, regulations and policies of the State concerning telecommunications and internet information, etc. and it shall be ensured that the services furnished by Party B shall not contravene the applicable laws, regulations and policies of the State, and no illegal information as set forth in the Information Security Guarantee Letter signed by Party B shall be transmitted through Party A’s systems. Any acts of Party B in breach of the foregoing provisions of this Clause shall be deemed to be substantial breach.
4.13	Party B shall use such user name and password to log on the SP Service System and operate pursuant to the instructions of such system so that the Parties will be able to communicate between each other in respect of cooperation in Value-added Services including applying for cooperation in Value-added Services, modifying corporate information online, obtaining confirmation by Party A’s Testing, etc. Party B shall correctly register in the SP Service System its accurate name, designated banks, accounts, contacts, client service information and shall ensure the authenticity and prompt updating of the foregoing information.
4.14	Party B shall keep in proper condition its user name and password to log on the SP Service System, and shall not allow any third party to use such user name and password. Party B shall be solely responsible for any damages to itself arising from the disclosure due to Party B’s reason of such user name and password to any third party or the employee without the need to know; it shall indemnify Party A or Subscribers for any damages to Party A or Subscribers as a result thereof.

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4.15	If Party B intends to conduct additional Mobile Value-added Service, or alter the contents of existing services (subject to the applicable provisions of business management of Party A), Party B shall make valid application to Party A in writing or through Party A’s SP Service System, and submit certificates evidencing its qualification to conduct such service.
4.16	In connection with Party B intends to conduct additional Mobile Value-added Services, Party B shall also pass necessary technology testing. As from the date when the testing period begins, if any service application fails the testing required by Party A for one time for Party B’s reason, such service application shall be avoided, with the costs thereof to be borne solely by Party B. Party B shall resubmit a service application to Party A if it intends to proceed with the cooperation in the service for which such application was made..
4.17	During the term of this Agreement, Party B shall upon Party A’s request provide Party A with reports on the Subscriber development, Subscriber classification, Subscriber habits, business prospectus forecast, etc. and shall provide Subscriber information necessary for the administration of such services to ensure timely update of Party A’s Subscriber database.
4.18	Party B shall not promote in its content service and/or other services competitors of Party A that have identical and/or similar business scope as Party A, or make representations in favour of such competitors.
4.19	Party B shall not, by itself or together with other mobile terminal producers, embed services in the mobile terminals or UTK/STK, OTA cards without the prior written consent from Party A.
4.20	The organization and provision of contents by Party B shall be in compliance with the applicable laws, regulations and policies of the State concerning telecommunications and internet information, etc. and it shall be ensured that the services furnished by Party B shall not contravene the applicable laws, regulations and policies of the State, and no illegal information as set forth in the Information Security Guarantee Letter signed by Party B shall be transmitted through Party A’s systems. Any acts of Party B in breach of the foregoing provisions of this Clause shall be deemed to be substantial breach. In addition to being subject to the provisions of substantial breach herein, Party B shall be liable for any economic losses thereby incurred to Party A and/or Subscribers. In the event that the acts of Party B in breach of the foregoing provisions of this Clause have brought adverse social impact to Party A and/or Subscribers, Party B shall make a public announcement of its responsibilities in an appropriate manner, and eliminate such adverse effects by way of public apologies to Party A and/or the Subscribers, etc.

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4.21	Before Party B provides by any method any Value-added Services to the Subscribers (or in the process of marketing and promotion of such services), Party B shall give full notice to the Subscribers about the content, method, billing (fees relating to information and communications) and other information of such services that the Subscribers need to know for their acceptance of such services and/or payment of Information Service Fee. Party B shall start to provide such services only to the extent that there is evidence that it has made the notice mentioned above and has obtained the confirmation and/or Customization from Subscribers acknowledging their acceptance of the Value-added Services.
4.22	Party B shall not cause the Subscribers to accept such Customization and collect corresponding fees from Subscribers by means of fraud, cajolery and other dishonest means or impose any unnecessary burdens to Subscribers as a result thereof.
4.23	Party B shall assume all the responsibilities arising from the provision of Mobile Value-added Service whatsoever to the Subscribers by any third party through the Maintenance Interface of Party B. Party A will not be held liable to the Subscribers or such third party for reason thereof.
4.24	In furnishing the Subscribers with the Value-added Services, Party B shall not do any act listed in Annex II “List of Acts in Breach”, or any act that may have negative impact on the interests of Party A and/or the Subscribers, or give support for any acts that may have negative impact on the interests of Party A and/or the Subscribers.

CHAPTER 5 MANAGEMENT MECHANISM

5.1	Party A shall approve Party B and its business market entry through assessments and other methods. Basic market entry conditions are as follows:
5.1.1	Party B has duly obtained legitimate certificates to provide Mobile Value-added Services, which include Business License for Incorporated Enterprise, Telecom Value-added Services Operation License for corresponding region, and other qualification certificate that meets the requirements of the Administrative Measures for Telecommunications Business Operating License (2002), or the Telecom License Measures implemented by the Ministry of Information Industry (“MII”).
5.1.2	Party B has favorable capabilities in terms of scale of company, content, technical resources, marketing channel, operational experience and etc.

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5.1.3 Party B has Telecommunication operation and maintenance abilities, and meet the various requirements including host machine conditions, maintenance organization, security mechanism, daily maintenance, connection method, and other key requirements in Operation, Maintenance and Management Requirements of China Unicom VAS as follows:

1.	Operation and maintenance management: conditions of host machine, maintenance organization, and position set up, security mechanism, malfunction and alteration mechanism of system database, daily maintenance mechanism should meet the relevant requirements.
2.	connection method: Specific line, and Virtual Private Network (VPN) connection method;
3.	Key performance requirements: successful connection rate between Uni-info gateway and SP, revert time of WAP services, successful WAP site-visits rate, equipments capable of operating 7 X 24 hours, and etc. should meet the relevant requirements.
4.	China Unicom VAS Service Provider Operational and Maintenance Training Certificate: Mobile Value-added Service Cooperation require no less than three (3) person per company which has duly obtained training certificates as operational and maintenance staff, and should increase such technical staff amount in the event of expanding business.

5.1.4	Party B has a developed and effective client service system, and other relevant requirements under Chapter 9 hereof.
5.2	Party A shall adopt assessment and withdrawal mechanism on Party B and its business respectively.
5.2.1	Party A shall assess Party B. The assessment shall be applied according to the business development, client service quality, operational and maintenance quality, credit rating, and other relevant details of Party B. Such criteria shall meet the requirements of this Agreement and other measures establish by Party A, and this Agreement shall terminate in the event that Party B fails to meet such requirements. The assessment criteria and conditions which include without limitation are as follows:

1.	Received client service assessment resolve warnings for three (3) times in the aggregate within a quarter or rectification period is more than two (2) weeks;
2.	withdrawal of certain service which result in withdrawals of other services, and result in withdrawal of qualification.

5.2.2 Party A shall apply assessment on each business of Party B, and the assessment shall be applied based on the revenue, subscriber volume, maintenance quality, and other relevant criteria of the business of Party B. The detailed requirements shall meet the relevant management mechanism of Party A as set forth under the terms and conditions of this Agreement. Party A shall have the right to terminate this Agreement in the event that Party B fail to meet the criteria as agreed, in which the relevant criteria shall include without limitation as follows:

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1.	In connection with Uni-Info, withdrawal mechanism shall be applied to SP which has handled at least 10,000 messages effectively and non-effectively terminated (MT) within a month for delivery-on-demand service, and at least 2,000 subscribers for subscription-based service; (the “effectively” herein shall refer to the use of the relevant service by a normal Subscriber in its own initiative through the normal process, which results in a bill);
2.	In connection with CDMA IX/ GPRS services, both services shall be deemed as supporting services, and shall not be included in the assessment of single business revenue.
3.	Assessment criteria for the operation and maintenance of business shall based on the China Unicom VAS Service Provider Operational and Maintenance Management Measures, and shall conduct assessment on the ‘success rate of connecting Party A’s Uni-Info Gateways to Party B’s servers’, ‘wireless application protocol (WAP) service response time’, ‘WAP site visit success rate’, and other business performances. Patry A shall adopt the Business Closedown procedure for services that fail to meet the requirements. Withdrawal mechanism shall be applied to services that received Business Closedown procedure notice for three (3) times in the aggregate or the rectification period is more than two (2) weeks;

5.2.3	The assessment and withdrawal with respect to Service Categories shall be conducted once every quarter.
5.2.4	In the event that Party B is to closedown the service after assessment upon notice, Party A shall withhold it acceptance of Party B’s application for qualification thereof within one (1) year. For service category which is to closedown upon notice, Party A shall withhold it acceptance of Party B’s application for new services under the service category thereof within one (1) year.
5.2.5	The Business Support Period for Party B or Party B’s new service shall be three months (three complete billing month after activation of new services), shall not participate in the above assessment and withdrawal.
5.3	Unless otherwise expressly agreed by the Parties, or with the prior consent from Party A, Party B shall not transfer the services conducted by it on a cooperative basis to any third party. Any transfer in breach of this Agreement shall be construed as a breach on the part of Party B, and Party B shall assume the consequential liability for breach.
5.4	In the event of occurrence of any change to Party B’s corporate nature (including Business License for Incorporated Enterprise and Operation License for Cross-region Telecom VAS), Party B shall settle any outstanding payments to party A, and shall only submit application to conduct relevant transfer procedure under no outstanding breach of terms and conditions under this Agreement.

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5.5 The standard of transfer service fee in relations to the Value-added Services are as follows:

1.	In connection to the transfer of Uni-Info, and Uni-Voice 10159 service category, the transfer service fee shall be RMB 100,000 per service category;
2.	In connection to the transfer of other service category, the transfer service fee shall be RMB 50,000 per service category.

5.6	Party B shall guarantee that the third party transferee shall have the qualification and capacity no lower than those of Party B to engage in the Value-added Services hereunder, and shall meet the requirements for business transfer as set forth in the business standards and management measures of Party A and shall perform the obligations required for such transfer and deal with necessary procedures for such transfer.
5.7	The transferor or transferee of the transfer service as set forth above shall submit to Party A all relevant costs and expenses, including change and testing of relevant communication lines, changes of data, client service, and any other costs and expenses with respect thereto, for the support and assistance of Party A to the transferor or transferee.
5.8	Party A encourage, support Party B to create new services, and be responsible to establish and implement new services management mechanism. New services shall include without limitation:

1.	No similar services or application within the Internet, with brand new design, and special features; or
2.	content resources is of monopoly or rare nature, and is hard to modify or obtain within a short period; or
3.	Special, patented, created services or application which has own intellectual property rights

5.9	Party A shall confirm the above new services hereof through quarterly assessment.
5.10	In connection to the above new services, Party A shall apply green pathway services. Green Pathway shall means that all new services shall enjoy preferential service in submitting application, assessment, testing, connecting and etc. Party A shall also appoint a designated service manager to provide assistance and consultation for Party B to prepare materials for any new services. The service manager will also track, coordinate and revert any comments during the entire process.
5.11	Party A shall provide service promotion period for any new services for six (6) months, and shall open a designated spot within the new features column.
5.12	Party A shall provide Business support period for any new services for six (6) months, and during the Business support period, new services shall not participate in the assessment and withdrawal mechanism.

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CHAPTER 6 WORK INTERFACE AND MAINTENANCE

6.1 During the term hereof, each of the Parties shall be solely responsible for maintenance of its own interface that is divided by Equipment Connection Point. The work and maintenance interface of each of the Parties are indicated in the diagram as follows:

Illustration of Maintenance Interface of the Parties

6.2	Party A’s Maintenance Responsibilities
6.2.1	Party A shall contribute the software and hardware systems as necessary for its Mobile Communication Network and Value-added Service Platform.
6.2.2	Party A shall cooperate with Party B to connect Party A’s various Gateways or servers to the communication lines of Party B’s servers.
6.2.3	Party A shall be responsible for providing Party B with its standards for technology protocol and interface with respect to the Value-added Service.

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6.2.4	Party A shall be responsible for maintaining the normal operation of network communication that are within the responsibility of Party A as shown in the diagram above, and assume responsibilities for network failures other than those attributable to Party B’s reasons. Party A shall have the right to restrict the transmission of any abnormal overloads of data or information which may affect the operation security of Party A’s network.
6.2.5	Party A shall have the right to control and adjust the Data Flow and Port of the Maintenance Interface that belongs to Party A, and notify Party B of the result thereof.
6.2.6	Party A shall have the right to conduct necessary testing and data statistics from time to time during the service operation period with respect to such services provided by Party B, and, based on the testing results, require Party B to carry out rectification in accordance with Party A’s Mobile Value-added Services management procedures.
6.2.7	Party A shall be responsible for providing Party B with the statistics of Data Flow with respect to Party B’s use of Communication Channels, and ensure the reliability and timeliness of such statistics.
6.2.8	Party A shall give a notice to Party B as soon as practicable prior to any transmission interruption caused by the debugging and maintenance of the Gateways or other network equipment or due to other foreseeable reasons, including specific reasons, time and period for interruption.
6.2.9	Party A shall ensure that Party B will be given notice within reasonable time upon the occurrence of any transmission interruption caused by problems with Gateways or other networks or any other unforeseeable reasons.
6.3	Party B’s Maintenance Responsibilities
6.3.1	Party B shall be solely responsible for the construction and maintenance of its own systems, including any work and cost involved in all the hardware equipment, system debugging, activation, and System Maintenance with respect to the performance of the Mobile Value-added Services hereunder in this Agreement.
6.3.2	Party B shall be responsible for the interconnection between Party B’s system and Party A’s various Gateways or servers, and shall be responsible for the application for, lease and maintenance of relevant communication lines, and any costs and expenses with respect thereto.
6.3.3	Party B shall ensure that no debugging, activation and maintenance of its system shall be conducted at Party A’s busy hours, and operations that might affect the Subscribers substantially shall be conducted at midnight such that the Subscribers’ use of the Mobile Value-added Services might be affected to a minimum extent. Party B shall ensure that normal functioning of Party A’s network will not be affected by the aforesaid operations, and shall assume any liability for any damages to Party A’s work arising therefrom.

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6.3.4	Party B shall provide Party A with prior notice in writing or in other appropriate forms (e.g. through SP Service System) of the debugging, activation and modification of its system, and shall upon receipt of Party A’s confirmation notify the Subscribers of the same through effective ways such as mails, advertisement, or short message, etc. and shall ensure minimum impact upon the Subscribers.
6.3.5	Party B shall accept such adjustments on Data Flow as made by Party A in case of emergency to ensure the normal and stable conditions of various Value-added Services.
6.3.6	Party B shall, at its transmission of various data or information to Party A’s Communication Platform, ensure that the Data Flow will not cause any damage to the safe load of network. Party A shall have the right to restrict the transmission of any abnormal overloads of data or information with negative impact on the operation security of Party A’s network.
6.3.7	Party B shall provide 24-hour uninterrupted System Maintenance.

CHAPTER 7 CREDIT RATING SYSTEM

7.1 For the purpose of good faith cooperation between the Parties, Party B shall be evaluated in terms of credit rating and good faith according to Party B’s events of default, acts in breach of rules, Subscriber complaints, and cooperation on the services during the term hereof, and relevant provisions hereof and appropriate incentives or restrictions shall apply to Party B according to the results of such evaluation.

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7.2 A scoring system for measuring the credit rating shall be adopted as follows:

Credit Rating	Credit Score	Responses	Policies of Incentives and Restrictions
Excellent	90<credit score<100	Development support	Include without limitation: 1. Eligible to apply for “Green Pathway” for services 2. Party A shall support the development of Party B by providing relevant subscriber data 3. Eligible to apply for WAP PUSH message or group short message according to the situation of services. 4. Grant appropriate incentives from time to time.
Good	75<credit score<90	Implement standard cooperation policies	N/A
Fair	60<credit score<75	Development restriction	1. Reduce profit distribution percentage by 5%; 2. Suspend the acceptance of applications for new businesses and Service Categories;
Unqualified	Below 60 points	Termination of cooperation	Terminate cooperation in all businesses.

Notes:

(1) Regarding Credit Rating:

• Credit Score is ‘zero (0)’ to ‘one hundred (100)’ points, and shall have a total four (4) ratings: ‘Excellent’, ‘Good’, ‘Fair’, and ‘Unqualified’.

• For new SP beginners, credit score shall be ‘80’ points, and credit rating shall be ‘Good’

(2) Development support shall refer to:

• the friendly policies adopted by Party A for promoting cooperation with Party B, or facilitating Party B’s operation of the Value-added Services, which shall apply to Party B if applicable.

• Normal cooperation shall refer to the terms of this Agreement that shall apply to the cooperation between the Parties and that the development support policy may not be applied to Party B unless otherwise expressly stated in writing;

• Development restriction shall refer to the restriction policies adopted by Party A in order to restrict its cooperation with Party B to a certain extent, which shall apply to Party B if applicable.

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• Termination of cooperation shall refer to the termination of this Agreement. In the event that Party B gets a credit score below 59 points, Party A shall have the right to terminate this Agreement, and all the Value-added Services hereunder. In such case, Party A shall give a notice thereof to Party B in an appropriate manner, and make arrangements according to the provisions relating to termination herein.

7.4 During the term of this Agreement, prior to the fifteenth day of each month, Party A shall conduct a credit rating on all SPs and announce the credit scores to them. The factors in credit rating and methods for score increase and reduction are set out in Annex III hereto.

CHAPTER 8 COMPLAINT AND BREACH RESOLUTION

8.1	The Parties shall strictly observe the provisions of this Agreement, if either Party suffers any damage to its interests or the cooperation hereunder is unable to proceed due to the failure of the other Party to perform its obligations, warrants or undertakings hereunder, or the violation of its representations hereunder, then the other Party shall constitute a breach of this Agreement.
8.2	If any Party’s breach causes negative social impact or economic losses to the other Party, the non-defaulting Party shall have the right to hold the defaulting Party liable for such breach and require the defaulting Party to eliminate such impact and make corresponding compensations, and shall have the right to terminate this Agreement.
8.3	Any acts of Party B in breach of the terms of this Agreement and breach of the business standards shall be deemed as ‘Act of breach’. Other than the liabilities as set forth under this Chapter, in the event that Party B breach the business standards or relevant management measures or etc. of Party A, the act of Party B shall be deemed to be a breach of rules and shall hold responsible with the corresponding liabilities.
8.4	Party B shall be dealt with in accordance with the provisions regarding “breach of Rules” in the aforesaid standards or measures, including but not limited to Service Screening for services in breach of rules, and reduction in credit rating, by Party A. If there is any discrepancy between the provisions of this Agreement and those of the aforesaid standards or measures with respect to any acts in breach of contract or rules, the provisions of this Agreement shall prevail.
8.5	Party A shall adopt Service Screening to the relevant services provided by Party B based on subscriber complaints. The Service Screening shall be issue to Party B through the SP service system.
8.5.1	Service Screening due to acts in breach of contract or rules, and conditions: Service Screening shall be conducted based on the evidence of any acts in breach of contract or rules. Upon Service Screening, Party A will then dealt the matter as acts in breach. Acts in breach include without limitation:

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• Provide contents which contain vulgar, explicit information, which violates the relevant State regulations;

• Provide illegal contents, including contents containing conservative and superstitious, gambling, illegal drugs, criminal organization, guns, and etc;

• Provide contents containing information in violation of the relevant national security laws;

• Forcibly or discreetly send PUSH information, messages to multiple receivers or voice outbound without Party A’s consent through techniques including frauds, and etc;

• Send PUSH information, messages to multiple receivers or voice outbound without Party A’s consent through techniques including frauds, and default subscriber default or charge subscribers;

• Call (10159) non-subscribers without the customer’s consent and illegally charge information fee of the non-subscribers.

8.5.2

Group Messages Service Screening: Party A shall apply Service Screening to the relevant services according to complaints received from subscriber for receiving any vulgar short messages that contains promotional value-added services (such as IVR services). Service Screening period shall be of two (2) weeks in the event that customer complaints on certain services reach more than two hundred (200) complaints within one (1) month. After expiration of the screening period, Party A will cancel the screen and restore the service in the event that there are no more complaints from customers. In the event that there are still such complaints from customers during the screening period or after restoring the service, the service in breach shall be closed down through procedures as set forth above.

8.5.3

The Screening method is as follows:

Service Category		Screening Method
	MyUni	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
Uni-Info	On-Demand	Subscriber unable to use service if service code fails to pass assessment
	Monthly Subscription	While maintaining the customization of Subscribers, the billing rate shall be set at zero.
	Uni-Tone	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
	Uni-Video	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
	BREW	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
	Uni-JA	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
	MMS	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)
	Uni-Mail	Screen Service (service subscriber will receive service; non-service subscribers unable to receive service)

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8.6	Party A defines the events of default of Party B’s acts in breach into six (6) classes (Minor Class A, Minor Class B, Major Class A, Major Class B, Material Breach Class A, Material Breach Class B), warnings, and termination of fee settlements. Detailed acts in breach as set forth under ‘List of Acts in Breach’.
8.7	In the event of acts in breach of Party B, Party A shall conduct the corresponding breach resolution to Party B, in addition to apply the ‘Credit Rating System’ under Chapter 6. Detail resolution shall be as follows:
	Minor Class A default: There will be a 30-day rectification period after Party A has sent the notice of default to Party B, during which period Party A shall screen such services in breach and withhold its acceptance of Party B’s application for new services under the service category thereof. For 10159 services including, Uni-Info and Uni-Voice, at provincial level, Party A shall closedown service in breach. After expiration of the rectification period, if the result of rectification is satisfactory, Party A will cancel the screen and restore acceptance of new applications; if the result of rectification is unsatisfactory, the service in breach shall be closed down, and Party B shall continue with its rectification until the result thereof is satisfactory and Party A will restore its acceptance of new applications; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and a liquidated damages shall be paid at 10% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB5,000, it shall be collected at RMB5,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.
	Minor Class B default: There will be a 30-day rectification period after Party A has sent the notice of breach to Party B, during which period it will withhold its acceptance of Party B’s application for new services under the service category thereof. For 10159 services including, Uni-Info and Uni-Voice, at provincial level, Party A shall closedown service in breach. After expiration of the rectification period, if the result of rectification is satisfactory, Party A will cancel the screen and restore acceptance of new applications; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and liquidated damages shall be paid at 30% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB5,000, it shall be collected at RMB5,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.

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Major Class A default: In connection with on-demand service category, Party A shall apply closedown of the service in breach; In connection with monthly subscription service category, Party A shall apply termination of cooperation on the service in breach; There will be a 60-day rectification period after Party A has sent the notice of breach to Party B, during which period it will withhold its acceptance of Party B’s application for new services under the service category thereof. For 10159 services including, Uni-Info and Uni-Voice, at provincial level, Party A shall closedown service in breach. After expiration of the rectification period, if the result of rectification is satisfactory, Party A will cancel the screen and restore acceptance of new applications; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and liquidated damages shall be paid at 30% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB10,000, it shall be collected at RMB10,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.

Major Class B default: In connection with on-demand service category, Party A shall apply closedown of the service in breach; In connection with monthly subscription service category, Party A shall apply termination of cooperation on the service in breach; There will be a 60-day rectification period after Party A has sent the notice of breach to Party B, during which period it will withhold its acceptance of Party B’s application for new services under the service category thereof. For 10159 services including, Uni-Info and Uni-Voice, at provincial level, Party A shall closedown service in breach. After expiration of the rectification period, if the result of rectification is satisfactory, Party A will cancel the screen and restore acceptance of new applications; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and liquidated damages shall be paid at 50% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB10,000, it shall be collected at RMB10,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.

Material Breach Class A default: In connection with on-demand service category, Party A shall apply closedown of the service in breach; In connection with monthly subscription service category, Party A shall apply termination of cooperation on the service in breach; There will be a 60-day rectification period after Party A has sent the notice of breach to Party B, during which period it will withhold its acceptance of Party B’s application for new services under the service category thereof. For 10159 services including, Uni-Info and Uni-Voice, at provincial level, Party A shall closedown service in breach. After expiration of the rectification period, if the result of rectification is satisfactory, Party A will cancel the screen and restore acceptance of new applications; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and liquidated damages shall be paid at 80% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB10,000, it shall be collected at RMB10,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.

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Material Breach Class B default: termination of cooperation on the service in breach; After Party A has sent the notice of breach to Party B, Party A shall withhold its acceptance of Party B’s application for new services under the service category thereof within one (1) year; the Information Service Fee proceeds from the service in breach shall be deducted by two times at the amount thereof for compensation to Subscribers, and liquidated damages shall be paid at 80% of the aggregate amount of such Information Service Fee (including Information Service Fee proceeds from the service in breach) arising from the Billing Cycle during which such breach occurs (if such amount is less than RMB10,000, it shall be collected at RMB10,000); and such breach shall be notified to Party A’s branch companies and announced on the SP Service System.

Warnings: The actual month in which Party A issue warning notice to Party B shall be the statistical month, 1.5 credit rating score shall be deducted from the aggregate monthly credit rating score of Party B.

Termination of fee settlements: The actual month in which Party A issue warning notice to Party B shall be the statistical month, 2 credit rating score shall be deducted from the aggregate monthly credit rating score of Party B. Other resolve method shall be conducted in accordance to the ‘China Unicom Messaging Service Quality, Supervision and Management Measures (2007)’.

8.8

Methods for deducting by two times the total amount of Information Service Fee proceeds from the service in breach and relevant liquidated damages: If the currently settled amount is insufficient for deduction by two times of the total amount of Information Service Fee from the service in breach and liquidated damages, further deduction shall be conducted in the subsequent settlements on the part of Party B until all the remaining amount thereof has been deducted; if the settled amount is insufficient for such deduction as of the termination hereof, Party A shall have the right to recover the remaining amount thereof.

8.9

Methods for deducting shall not be calculated in repetition, in the event that Party B engage in acts in breach within different branch companies of Party A, and has receive notice of breach issue by different branch companies of Party A.

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8.10 During the transition period, branch companies of Party A shall be responsible for investigating, collect evidence, confirm breach category, and then deduct corresponding compensations in connection with Party A’s connection, agreement, fee settlement in respective provinces, and management in respective provinces during acts in breach of 10159 services including, Uni-Info and Uni-Voice. Simultaneously, branch companies of Party A shall notify Party A regarding the acts in breach of services, breach class and result of post-investigation on evidence. Party shall execute the corresponding breach in service according to the situation of acts in breach. Detailed execution method shall be as follows:

	Penalty Method
	Branch Company of	Party A
	Party A	Service Screening	Deduct
	Temporary Shutdown	for breach in	Information
Minor Class A	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for one (1) month	Service Screening for breach in services for one (1) month	Deduct 10% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for one (1) month	Service Screening for breach in services for one (1) month	Deduct 10% Information Fee
IX and GPRS	N/A	Service Screening for breach in services for one (1) month	Deduct 10% Information Fee

		Service Screening	Deduct
	Temporary Shutdown	for breach in	Information
Minor Class B	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for one (1) month	Service Screening for breach in services for one (1) month	Deduct 30% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for one (1) month	Service Screening for breach in services for one (1) month	Deduct 30% Information Fee
IX and GPRS	N/A	Service Screening for breach in services for one (1) month	Deduct 30% Information Fee

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		Service Screening	Deduct
	Temporary Shutdown	for breach in	Information
Major Class A	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for two (2) months	For breach in On-Demand services, business closedown procedure shall be applied. For breach in monthly subscription services, termination of cooperation shall be applied on the service in breach;	Deduct 30% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for two (2) months	business closedown procedure shall be applied for breach in services	Deduct 30% Information Fee
IX and GPRS	N/A	business closedown procedure shall be applied for breach in services	Deduct 30% Information Fee

		Service Screening	Deduct
	Temporary Shutdown	for breach in	Information
Major Class B	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for two (2) months	For breach in On-Demand services, business closedown procedure shall be applied. For breach in monthly subscription services, termination of cooperation shall be applied on the service in breach;	Deduct 50% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for two (2) months	business closedown procedure shall be applied for breach in services	Deduct 50% Information Fee
IX and GPRS	N/A	business closedown procedure shall be applied for breach in services	Deduct 50% Information Fee

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		Service Screening	Deduct
Material Breach	Temporary Shutdown	for breach in	Information
Class A	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for two (2) months	For breach in On-Demand services, business closedown procedure shall be applied. For breach in monthly subscription services, termination of cooperation shall be applied on the service in breach;	Deduct 80% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for two (2) months	business closedown procedure shall be applied for breach in services	Deduct 80% Information Fee
IX and GPRS	N/A	business closedown procedure shall be applied for breach in services	Deduct 80% Information Fee

		Service Screening	Deduct
Material Breach	Temporary Shutdown	for breach in	Information
Class B	of Service Access	services	Fee
Uni-Info	Temporary Shutdown of Service Access for twelfth (12) months	termination of cooperation on the service in breach; withhold its acceptance of Party B’s application for new services under the service category thereof within one (1) year;	Deduct 80% Information Fee
Uni-Tone	Temporary Shutdown of Service Access for twelfth (12) months	termination of cooperation on the service in breach; withhold its acceptance of Party B’s application for new services under the service category thereof within one (1) year;	Deduct 80% Information Fee
IX and GPRS	N/A	termination of cooperation on the service in breach; withhold its acceptance of Party B’s application for new services under the service category thereof within one (1) year;	Deduct 80% Information Fee

8.11

If Party A applies the Withdraw Mechanism, it shall give an appropriate notice in a proper way to Party B, and notify Party B of the effects on their cooperation resulting therefrom. Information Service Fee proceeds that has not yet been settled shall be settled in accordance with the relevant rules and regulations under this Agreement.

8.12

In that Party B’s operation of one or more Value-added Services has substantially or significantly breached the standards for service quality and client service instructed by Party A, or there are material defects in the services or contents provided by Party B to the Subscribers hereunder, or Party B, through using technologies, has participated, on its own initiative or as requested, in any activities which have violated the interests of Party A or the Subscribers, or problems in Party B’s operation has caused serious social impact on Party A or the Subscribers, then in addition to termination of cooperation with Party B in such services pursuant to this Chapter, Party A may also terminate cooperation with Party B in all or part of other services with respect to which no acts in breach of rules have occurred, or may terminate this Agreement.

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8.13 If Party B has maliciously caused damages to the interests of Party A or the Subscribers by using technologies on its own or through conspiracy with any other party, or if data or irregularities occur in Party A’s business platform/system by reason thereof, Party A may suspend the services conducted by party B and promptly notify Party B of such suspension, and Party B shall provide sufficient evidence for explanations of the aforesaid data or irregularities within 7 business days, otherwise Party B shall be deemed to have maliciously caused damages to the interests of Party A or the Subscribers and shall be dealt with in accordance with the relevant terms of this Agreement.

CHAPTER 9 CLIENT SERVICE

9.1	The client service with respect to the Value-added Services hereunder shall be implemented by making reference to the standards issued by the Ministry of Information Industry, and Party A’s client service standards then in effect, including without limitation, ‘Telecommunications Regulations (2000)’, ‘Standard of China Unicom Client Service Brand’, ‘China Unicom Uni-10010 Service Measures’, ‘China Unicom Messaging Service Quality, Supervision and Management Measures (2007)’, and etc.
9.2	The SP Service Supervision telephone number of Party A within the state and various provinces is 10109696.
9.3	Party B shall provide developed and effective client service system, which include without limitation:

(1)	Customer service hotline: 7×24 hours customer service hotline with numbers starting with 800, 400, 1010XXXX, and other short numbers. The hotline number shall not be a fix line or a mobile number.
(2)	Platform Function: Customer Service system general functions including, exchange, automatic calling allocation, computerized telephone, IVR automatic voice answering machine, manually operated call center, voice recording, database, preposition-service function, and etc.

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(3)	Service Function: Customer Service Call Center shall support Client Service functions to subscribers including, information search, service cancellation, service enquiry, customer complaint solution provider, and mostly call-in and manual services.
(4)	Manual Service Allocation: shall guarantee no less than 5 seats, and 12 call-in staff.
(5)	System performance and service criteria: 99% of system connection rate and 80% of service rating (successful manual connection in 20 seconds).

9.4	The Parties hereof shall notify the subscribers through reasonable methods in connection to details including company name, detail service name, service content, fee and charges, customer service hotline, unsubscribe method, and other relevant information, before providing the services to customers.
9.5	The Parties hereof shall notify the subscribers through reasonable methods in connection to details including company name, detail service name, service content, fee and charges, customer service hotline, unsubscribe method, and other relevant information, before providing the services to customers.
9.6	Complaints from Subscribers shall fall in the responsibility of the Party first receiving such complaints, whether they are actually within the responsibility of either Party; provided that if the other Party is involved in the problems, such other Party shall assist in resolving the problems.
9.7	Party A’s customer complaint or enquiry center (1001 customer service hotline) shall direct to Party B for solution of such issues that are not the responsibility of Party A, and Party B shall send initial reply to Party A or directly respond to Subscribers within one (1) hour thereafter, and shall be responsible for the final explanation or solution of such issues.
9.8	Party B shall not require Subscribers to contact directly with Party A on the excuse that the inquires or complaints it received are the responsibilities of Party A. If Party B believes that the inquires or complaints it received are the responsibility of Party A, Party B’s customer service personnel or customer service system shall assist Party A to analyze and resolve such inquires or complaints, and contact with Party A within one (1) hour after receipt thereof, and direct the same to Party A upon Party A’s confirmation.
9.9	If neither Party A nor Party B can determine which Party shall be responsible for the inquiries or complaints it received, such Party shall contact with the other Party within one (1) hour after the receipt thereof to find out the Party to be responsible, and help the Subscriber resolve the problem as soon as possible. Neither Party shall try to evade from its responsibilities thereto.

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9.10	If the complaints from Subscribers have arisen from the services have not been provided in such quality as specified in promotions or covenants, the Party making such promotions and covenants shall be responsible for responding and resolving the problems in relation to such complaints and the other Party shall give necessary cooperation.
9.11	In the event that Party B cannot continue to provide the Value-added Services due to poor operation, withdrawal from this Agreement or for other reasons of its own, Party B shall be directly responsible for making appropriate explanations to the Subscribers and dealing with subsequent problems. Except for the Withdrawal Mechanism as provided herein, Party B shall inform Party A of the suspension of its provision of the Value-added Services three months ahead; Party A shall promptly stop the collection of Information Service Fee on behalf of Party B, and assist Party B in making explanations to the Subscribers.
9.12	The client service with respect to the Value-added Services provided by both Parties hereunder shall be implemented by making reference to the standards issued by the Ministry of Information Industry.

CHAPTER 10 BILLING, SETTLEMENT AND COLLECTION

10.1	Billing
10.1.1	Communication Fee shall be set by Party A, and Information Service Fee shall be set by Party B upon Party A’s examination and approval. Any amendment to the Information Service Fee (including the amendment to the manner of fee collection) shall be implemented only upon Party A’s approval.
10.1.2	Party B may set the Information Service Fee according to various methods of collection including frequency, duration and monthly payment, and may provide such various methods of collection for Subscribers to select from. Party B may, through announcement on its website, explicit indication in the Customization agreement, display on the interface of cell phone, or transmission of short message, specifically inform the Subscribers of the collection methods, pricing standards, payment deadline, customer service hotline etc. for the Information Service Fees.
10.2	Settlement
10.2.1	Party A shall be entitled to various Communication Fees arising from the use of Party A’s Communication Network by Subscribers or Party B.

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10.2.2	Proceeds of the Information Service Fee shall be distributed between Party A and Party B in certain percentage after deduction of certain allowance percentage for bad accounts, advance compensation in connection with the complaints from Subscribers and other expenses acknowledged by the parties. Party A’s share in the proceeds is based on the following services it provided: Mobile Communication Network Subscriber resources, relevant service platform, service testing and quality supervision, more than 20 Information Fee arising from unified customer service (excluding zero (0) Communication Fee subscribers) per hour per customer subscription fee and business promotion, collection of Information Service Fees, and/or billing services.
10.2.3	The distribution percentage of the Information Service Fee is set forth as per business type in Annex IV hereto.
10.2.4	Settlement cycle: Party A and Party B shall settle account once in each month, the settlement cycle shall constitute one (1) full calendar month.
10.2.5	Settlement procedure

(1)	Subscribers use of the Value-added Service in the first month.
(2)	Subscribers shall settle the Value-added Service Fee in the second and third month.
(3)	Party A shall send the settlement information (including the amount of Communication Fee and Information Service Fee) to Party B through the SP Service System within 15 days after the beginning of the fourth month.
(4)	Party B shall apply to receive the statement of account from Party A within 15 days after the beginning of the fourth month if Party B have any enquiry regarding the statement received from Party A. If no application is submitted, Party A shall not process any application further on. After application, Party A shall revert back within three (3) months, the relevant management measure of providing statement of accounts shall be in accordance with the relevant management measure of Party A and the ‘Management Measure of China Unicom WVAS SP statement of accounts’.
(5)	Both parties shall reconcile the account on the aggregate amount of the Communication Fee and Information Service Fee. If the discrepancy between Party A’s billing and that of Party is no more than 8%, the billing shall be based on Party A’s data; if the discrepancy is more than 8%, both parties shall redo the reconciliation and identify the reasons for such discrepancy and timely find out reasonable solutions thereto. Any delay in Party A’s payment due to reconciliation of account shall not be deemed as a violation of Party A’s obligation in timely payment.

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(6)	Party B shall submit the reconciliation and invoice affixed with its seal as required by Party A prior to the 25th day of the fourth month immediately after the occurrence of respective service due to Party B’s reason or the process of reconciliation, Party A will suspend its payment for Party B’s share of revenue until upon receipt of Party B’s reconciliation and invoice.
(7)	Party A shall make payment to the bank account designed by Party B no later than the 28th day of the fifth month after the reduction of penalties, and etc.
(8)	In the event that the aggregate amount of the Communication Fee and Information Service Fee of Party B is more than RMB 50,000, Party A shall make payment. In the event that the aggregate amount of the Communication Fee and Information Service Fee of Party B is less than RMB 50,000 during the term of this Agreement, Party A shall make payment to Party B one month before the expiration date of this Agreement.
(9)	If Party B fails to submit the reconciliation and invoice affixed with its seal as required by Party A prior to the 25th day of the fourth month immediately after the occurrence of respective service due to Party B’s reason or the process of reconciliation, Party A will suspend its payment for Party B’s share of revenue until the end of next quarter upon receipt of Party B’s reconciliation and invoice. Party A’s suspension of payment pursuant to this clause shall not constitute a breach or delayed payment under this Agreement, and Party A shall not be liable for default as a result thereof.
(10)	If Party B fails to submit the reconciliation to Party A within one (1) year, commencing from the 25th day of the fourth month immediately after the occurrence of respective service, it shall be deemed as Party B’s waiver of its rights to such payment, and Party A shall be therefore released from any obligations to make such payment to Party B.

10.2.6 The actual amount that should be paid to Party B (“Settled Information Service Fee”) in connection with various services conducted on a joint basis shall be determined by Party A according to the amount payable to Party B calculated and aggregated in proportion to the relevant distribution percentages of the parties applicable to each of such services, after deducting (or adding) other fees to be paid (or received) by Party B. The foregoing “other fees” include but are not limited to: Resource Use Charge, liquidated damages deductible as a result of breach, and hosting expense. The amount of service revenue payable to Party B may, upon agreement between the Parties, be settled separately from the costs and expenses payable from Party B, to which the settlement process shall apply separately.

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10.2.7	If after reconciliation the amount of the Settled Information Service is negative, Party B shall make up the amount to Party A within ten (10) days upon receipt of notice from Party A. After payment, Party B shall promptly obtain formal invoices from Party A. In the event that Party B delay payments, Party B shall be charged with 1‰ of the total amount of the Settled Information Service according to the amount of days delayed. At the same time, Party A shall reserve the right to directly deduct any outstanding service fee and overdue charges from Party B in the next round of settlement cycle. In the event that Party B delay payments for more than 60 days, Party A shall have the right to terminate any cooperation agreement and Party B shall be hold liable.
10.2.8	Party B shall timely update its information (such as bank account) in connection with the payment recorded in the SP Service System. If due to Party B’s failure to timely update its information, Party A’s payment is rejected by the bank, or Party A is otherwise prevented from making timely payment, Party A shall suspend making such payment. Such suspended payment shall be made together with the most recent payment of settled amount in either June or December since Party A acknowledges Party B’s correct bank account, and Party A shall not be liable for default due to failure of timely payment.
10.2.9	If Party B changes it corporate name, it shall promptly (through the SP Service System or other appropriate manner) notify Party A of the same. All the amount that should be paid by Party A to Party B after such change to Party B’s corporate name shall be remitted to such bank account with the changed corporate name of Party B, regardless whether or not such payment accrue after the change of Party B’s corporate name. If Party A is unable to make timely payment due to Party B’s failure in the handling of formalities for the change of its corporate name, it shall be dealt with in accordance with Clause 10.2.8 hereof.
10.2.10	If this Agreement is terminated by Party B as provided hereunder, the Parties shall settle the Information Service Fees accrued prior to the termination hereof. The settlement method, cycle and procedure shall be determined according to Clause 10.2 hereof, together with the provisions relating to the deduction of Information Service Fee and liquidated damages as a result of breach.
10.3	Fee Collection
10.3.1	Information Service Fee shall be charged and collected by Party A. Party B shall not collect the Information Service Fee from the Subscribers. Communication Fee shall be charged by Party A and collected from the Subscribers or Party B.

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10.3.2	Prior to collection of the Information Service Fee on behalf of Party B, Party A shall review in detail the fee collection items and the summary thereof, and Party B shall provide active support to Party A in this respect. The key details to be reviewed shall include to make sure whether the contents provided by Party B are in violation of the provisions of Article 57 and Article 58 of the Telecommunication Regulations of People’s Republic of China and other relevant laws, regulations and policies.
10.3.3	Prior to Party A’s collection of the Information Service Fee on behalf of Party B, Party B shall provide relevant documents evidencing that the Subscriber is using such service with knowledge and willingness, and the fee to be collected shall accrue at the time of actual use by such Subscriber (except for monthly fee). The parties shall keep the record of Subscriber Customization and use of service for more than 5 months.
10.3.4	The invoice issued by Party A to Subscribers shall explicitly indicate “Fee Collection” and the amount thereof for the portion of fees collected on behalf of Party B. Party A shall provide Subscribers with reasonable and effective methods and ways to inquire about Party B’s name, name of services for fee collection and the specific amount thereof. If the Subscribers require the billing record for such fee collection, the parties shall provide such record to Subscribers without charge.
10.3.5	If the Subscribers refuse to pay the Information Service Fee for any objection thereto, Party A shall only collect the portion of fees other than that is under dispute, and timely notify Party B of the case.
10.3.6	If there is any dispute with any Subscriber on a pre-paid basis, and both parties cannot prove that the amount to be collected is correct within 15 days thereafter, Party A shall for the time being refund to such Subscriber, and deduct the portion of Information Service Fee in dispute from Party B’s share of distribution in the next round of settlement cycle. Thereafter, Party B shall be responsible to settle the dispute with the Subscriber.
10.3.7	During the process of dispute resolution, both parties shall not suspend or terminate services to such Subscriber other than those in dispute.

CHAPTER 11 INTELLECTUAL PROPERTY

11.1 Issues relating to copyrights, trade marks, patents and other intellectual property rights during the term of this Agreement shall be in compliance with relevant State laws; Party B shall, in accordance with relevant State laws and regulations, enter into appropriate authorization/license agreements with the intellectual property rights owner/patentee and or/agent, to ensure that the Mobile Value-added Service provided by Party B will not infringe on the legal interest of the owner/patentee of the intellectual property rights. Party A shall not be liable for any intellectual property right disputes between Party B and any third parties arising from services provided by Party B.

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11.2

In the event that Party B desire to insert Party A’s company brand, customer brand, service names, trademark, service mark or logo, and etc. to its Mobile Value-added Services, both Parties agree to negotiate beforehand. Without prior written consent from Party A, Party B shall not use such properties as stated above, and shall not misled customers to believe that Party B the sole provider or joint provider of such content or services. Party B shall, in accordance with the “China Unicom Management Handbook VIrelevant State laws and regulations, enter into appropriate authorization/license agreements with the intellectual property rights of Party A.

11.3

The parties hereby agree to not infringe upon the trademark rights, intellectual property rights or industrial property rights either of Party A or Party B and/or any third parties under any circumstances. If any party hereto infringes upon the trademark rights, intellectual property rights or industrial property rights of any third party through its unilateral acts, the infringing party shall be liable for all the consequences of infringement, compensate the economic loss that the non-infringing party may suffer, and eliminate negative social impact upon the non-infringing party that may arise therefrom.

CHAPTER 12 MODIFICATION OR TERMINATION OF AGREEMENT

12.1	During the term of this Agreement, should Party A make any business provision, management measure, quality standard and/or client service standard relating to the Mobile Value-added Services, such provision and standard shall be deemed as a part of the covenants hereof with which both Parties shall comply. In case of any conflicts between such provision and/or standard and the provisions hereof, such provision, measure and/or standard shall prevail, except for the provisions with respect to defaults; provided, however, that except for cases that both Parties consider, through consultation, to be applicable to this Agreement or otherwise enter into a separate agreement if necessary in relation to such conflicts.
12.2	In the event that either Party desires to alter or amend this Agreement, such Party shall notify in writing the other Party thereof with 15 days in advance. Parties shall alter or amend this Agreement in writing through negotiation.
12.3	Except as expressly provided herein, during the performance this Agreement, neither Party may, without the prior written consent of the other Party, suspend or terminate the performance hereof or unilaterally cancel this Agreement.
12.4	Any failure of one Party to operate or smoothly conduct the Mobile Value-added Services hereunder shall, as a result of non-performance of its duties or obligations hereunder or otherwise material breach of provisions herein by the other Party, be deemed as the defaulting Party’s unilateral termination of this Agreement, and the non-defaulting Party shall have the right to lodge a claim to the defaulting Party for economic losses suffered by it as a result thereof and cancel this Agreement.

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12.5 Amendment or termination hereof as a result of Party B’s qualification for cooperation: In the event that Party B has any of the following behaviors, this Agreement shall be automatically terminated:

(1)	transfer, without Party A’s approval, such resources as service number, trunk line, digital URL, etc that Party B has obtained from Party A;
(2)	conduct business beyond its physical boundary and business scope as provided in its qualification license;
(3)	provide, without qualification license granted by competent State authorities, content and category of services requiring such qualification license;
(4)	provide false copyright and/or qualification license;
(5)	engage in other unauthorized services or provide content in violation of the requirements of relevant competent authorities or the agreement between the Parties hereto.

12.6	During the term of this Agreement, in case of occurrence of any event involving corporate nature, qualification and civil capacity resulting from the split, merger, dissolution, liquidation or bankruptcy of Party B, Party B shall forthwith notify Party A thereof, and shall comply with provisions hereunder concerning the Grace Period for Withdrawal. If Party B no longer qualifies for or has the capacity to provide, the Mobile Value-added Services hereunder due to its dissolution, liquidation or bankruptcy, this Agreement shall be terminated accordingly. and the successor company (or other entity) of Party B’s Mobile Value-added Services hereunder shall reapply to Party A for activation of such service and timely modify Party B’s corporate code and other information in Party A’s service system or the SP Service System.
12.7	If there is any change to Party B’s company name, Party B shall timely register such change with relevant administrative authority for industry and commerce and authority in charge of information industry, and receive a valid entity qualification certificate and business qualification certificate.
12.8	Where Party B fails to obtain this Agreement duly sealed by Party A due to its own reason within one month after receipt of Party A’s notice thereof, that is to say, the interval between the dates of execution hereof by Party A and Party B is more than one (1) month, this Agreement shall be deemed as null and void, and Party B’s qualification for access shall be automatically cancelled, and application for services shall simultaneously become void. Or where Party B fails to serve, within one (1) month after its receipt hereof duly signed by Party A, this Agreement duly signed by both Parties to Party A due to its own reason, this Agreement shall be deemed as null and void, and Party B’s qualification for access shall be automatically cancelled, and application for services shall simultaneously become void.

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CHAPTER 13 CONFIDENTIALITY

13.1	For the purpose of this Agreement, “Confidential Information” means trade secret (including financial secret), technical secret, know-how and/or other confidential information and materials that one Party (“Receiving Party”) obtains or learns from the other Party (“Disclosing Party”), or jointly developed by both parties through the performance hereof, no matter whether such information or materials is in any form or contained in any media, or the Disclosing Party has indicated its confidentiality in oral, graphic or written form at the time of such disclosure.
13.2	During the term of this Agreement and five years thereafter, neither Party shall disclose, reveal or provide any Confidential Information to any third party.
13.3	Each Party shall take proper measures to keep the Confidential Information provided by the other Party strictly confidential, using the same degree of care as it uses to protect its own Confidential Information. Neither Party shall use the Confidential Information for purposes or objectives other than that provided herein with respect to the cooperation hereunder.
13.4	Each of the Parties warrants that it shall only disclose the Confidential Information to its personnel in charge and employees engaged in such services. Prior to its disclosure thereof, it shall notify such personnel of the confidentiality of the Confidential Information and their obligations hereunder, and shall demonstrate such personnel are subject to confidentiality obligations hereunder in a certifiable manner.
13.5	If necessary, the Receiving Party shall at the instruction of the Disclosing Party return all documents or other materials containing the Confidential Information to the Disclosing Party, or otherwise destroy the same if so requested by the Disclosing Party.
13.6	The preceding provisions shall not apply to the following:

A.	The Receiving Party has already legally owned the Confidential Information on or prior to the execution of this Agreement;
B.	The Confidential Information is already known to the general public or otherwise can be obtained from the public domain prior to disclosure to the Receiving Party;

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C.	The Confidential Information has been obtained from a third party which is not bound to confidentiality or non-disclosure obligation hereunder;
D.	The Confidential Information has already became known to the general public or otherwise can be obtained from the public domain other than by breach of this Agreement;
E.	The Confidential Information is developed independently by the Receiving Party or its affiliate or associate companies without any benefit from the information obtained from the Disclosing Party or its affiliate or associate companies;
F.	The Receiving Party discloses the Confidential Information in response to a court order or as otherwise required by law or administrative authorities (by way of oral enquiry, interrogation, request for submission of material or document, subpoena, civil or criminal investigations or other legal proceedings) provided, however, that the Receiving Party shall promptly notify the Disclosing Party thereof and provide necessary explanations.

13.7

Both Parties shall keep the content of this Agreement in strict confidence.

13.8

Both Parties shall keep a good record of communications, notices or any other document transmitted or exchanged by them for performance of this Agreement, and shall not use the same for purposes other than in relation to the cooperation hereunder. Neither Party shall do any act of slander or defamation against the other Party, nor make any public statement detrimental to the cooperation between the two Parties.

CHAPTER 14 FORCE MAJEURE

14.1

“Force Majeure” means all the events that can not be controlled nor foreseen, or can be foreseen but can not be avoided by the Parties hereto, which prevent any Party to perform part or all of this Agreement. These events shall only include: natural disaster (such as earthquake, landslide, collapse, flood, typhoon, abnormal weather, etc.) and incidents (such as fire, explosion, accident, war, terrorist event, large-scale epidemic, sabotage, hacking, network failures or any other similar or dissimilar incidents).

14.2

In the event that any Party hereto affected by Force Majeure event is unable to perform its obligations hereunder, such Party shall not be held responsible for the other Party’s losses arising therefrom.

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14.3 The Party affected by Force Majeure event shall promptly inform the other Party of occurrence of such event in writing, and shall, within 15 days thereafter, send a valid certificate issued by the relevant authority evidencing the detail of such event and the reason for the failure or delay to perform all or any part of this Agreement. Both parties shall negotiate whether to continue to perform or terminate this Agreement according to the degree of impact on the performance hereof caused by such event.

CHAPTER 15 GOVERNING LAW AND DISPUTE RESOLUTION

15.1	The execution, validity, performance and interpretation of this Agreement shall be governed by the laws and regulations of the People’s Republic of China.
15.2	Any disputes arising from or in connection with this Agreement shall be settled through amicable consultations between the Parties in the spirit of cooperation. If the dispute can not be settled through consultations, such dispute shall be submitted to the people’s court where Party A is domiciled for ruling.

CHAPTER 16 MISCELLANEOUS

16.1	Transferability. Unless otherwise provided in Clause 6.9 hereof, any or all rights and obligations hereunder shall not be transferred or assigned.
16.2	This Agreement shall constitute a contractual relationship only between the Parties hereto. Any provisions hereof shall not be construed as: (a) establishing partnership or other relationship of joint liability between the Parties hereto; (b) making any Party to be an agent of the other Party (except with prior written approval from the other Party); (c) authorizing any Party to incur expenses or any other obligations to the other Party (except with prior written approval from the other Party).
16.3	Any failure or delay in the exercise of certain right hereunder by either Party shall not constitute a waiver of such right by such Party; any complete or partial exercise of certain right by either Party shall not preclude further exercise of such right by such Party in the future.
16.4	The invalidity of any provision hereof shall not affect the validity of the remaining provisions of this Agreement.
16.5	This Agreement shall become effective as of September 1, 2007, and expire on June 30, 2008, unless terminated earlier according to the terms hereof. If Parties have cooperated to develop the Mobile Value-added Service or otherwise have signed similar agreements prior to the term hereof, both Parties shall execute this Agreement as of the date hereof; if Parties have not cooperated to develop the Mobile Value-added Service or otherwise have not signed similar agreements prior to the term hereof, this Agreement shall become effective as of the date of signature or of affixing of seal by the authorized representative of each Party.

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16.6	On the expiration hereof, Party A may examine Party B’s capacity and qualification in performing this Agreement, and, to the extent that Party A believes that Party B has the capability to perform this Agreement and that Party B is qualified for the continued performance hereof, this Agreement shall be automatically renewed, and each renewed term hereof shall be one (1) year.
16.7	This Agreement and the Annexes attached hereto shall be in two originals, each of Party A and Party B shall hold one thereof, and such originals shall be of equal legal effect.

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Party A: China United Telecommunications Corporation

Legal representative/Authorized representative:

Date of signature:

Party B: Beijing Hengjiweiye Electronic Commerce Co., Ltd.

Legal representative/Authorized representative:

Date of signature:

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Annex I Definitions

Unless otherwise stated in this Agreement or required in the context, the following terms shall have meanings as below:

1. “SP”

“SP”, is the abbreviation for “Service Provider”. For the purpose of this Agreement, “SP” shall refer to the professional provider of telecom and information services. “SP” can be a network operator or an integrator of business provided by other network providers and provides integrate services to its customers.

In this Agreement, “SP” shall include all the professional entities willing to cooperate with Party A, use Party A’s mobile telecom network and data service platform, and provide various Mobile Value-added Services to Party A’s mobile telecom network Subscribers.

2. “Subscribers”, shall refer to such individuals, corporate persons or other entities that connect with Party A’s mobile telecom network and Value-added Service Platform via mobile terminals or other telecom terminals approved by Party A, and voluntarily receive the Mobile Value-added Service provided by Party A and Party B.

3. “Mobile Value-added Services”, shall collectively mean the various information services and applications, among other things, provided to Party A’s Subscribers jointly by both of the Parties based on the mobile network of China Unicom and various Mobile Value-added Service Platforms. The Mobile Value-added Services of China Unicom, with “UNI” as the single brand name, include seven broad categories as follows, i.e. Uni-Info, Uni-Wap, Uni-Voice, Uni-Mail, Uni-Magic, Uni-Tone, and Uni-Video, and the Service Categories will continue to be expanded as a result of innovations in technology and business.

(1)	Uni-Info: Information on demand and customization, location service and e-commerce application, etc. via short message technology; Uni-Wap: Information browse, download of pictures, music, Download Fun, WAP PUSH, interactive application and e-commerce, etc. via wireless application protocol (WAP);
(2)	Voice information service: Voice information service via IVR technology, including music voice, chatting, information enquiry, and interactive participation, etc.
(3)	Uni-Mail: Publication subscription and transmission on cell phone via SMTP/IMAP4/POP3, and information on demand and customization via multi-media messaging service (MMS) technology;
(4)	Uni-Magic: Closedown and online application of various general information, entertainments via BREW/JAVA technology;
(5)	Uni-Tone: Customized ring back tone service (CRBT);
(6)	Uni-Video: High quality video and audio services via stream media technology.

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4. “Mobile Telecom Network and Value-added Service Platform” For the purpose of this Agreement, “Mobile Telecom Network” refers to the mobile telecom infrastructure facilities provided by Party A. “Value-added Service Platform” refers to the service platform added based on the mobile telecom network, which is specially designed for one or more specific Value-added Service, including but not limited to Subscriber interface, SP/CP interface, business management and application billing functions.

5. “Service Supporting Systems”, means Subscriber management and accreditation, billing, settlement, and accounting systems required for the normal operation of services.

6. “Communication Channel”, means physical and logical connections within mobile communication system for the communication between subscribers.

7. “Port”, means the interface for the communication connection between data service platform and mobile telecom network, data service platform and application server provided by SP/CP, including communication address and relevant specifications.

8. “Data Flow”, means the communication volume coming in and out of the data service platform.

9. “Testing”, means the testing on services provided by SP/CP, which may include network connection test, interface conformity test, and function test, so as to ensure the service meets the requirements for activation. The period necessary for Testing or believed necessary to finish Testing by Party A is the Testing Period.

10. “Grace Period for Withdrawal”, means certain period that if the SP/CP services are required to be terminated, the SP/CP shall make prior notice to Subscribers in appropriate manner within such period prior to the termination thereof, and shall continue its services to Subscribers according to Subscriber agreement to minimize the Subscribers’ losses arising from such termination.

11. “Equipment Junction Point”, means the location of linkage between two physical or logical equipments.

12. “Maintenance Interface”, as the whole service system is composed of different parts, and the responsibility of maintenance also belongs to different parties, the maintenance interface is to set up the location for different parties to take responsibility for maintenance.

13. “System Maintenance”, means the daily maintenance and trouble shooting for the normal operation of system.

14. “Gateway”, means the equipment that provides the function of protocol transition and system interconnection.

15. “Customize”, means the Subscribers acknowledge their acceptance of content services, and voluntarily ask for such services.

16. “MO”, means the short message sent from the cell phone of the subscriber to the short message Gateway of Party B. The expense arising from MO shall be the MO Communication Fee, which shall be collected by Party A from the subscriber.

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17. “MT”, means the short message sent from the Part B’s access number for short message to the cell phone of subscriber. MT includes the short messages under the service category of PUSH.

18. “Asymmetric Communication Fee”, mean the fee arising from the short message of asymmetric part (i.e. number of MT — number of MO). Asymmetric Communication Fee shall be collected by Party A from Party B.

19. “7×24 hours”, means 24 hours a day and 7 days a week, regardless of public holidays.

20. “Communication Fee”, means such fee arising from the use of Party A’s network resources by Subscribers or the SP/CP; Communication Fee shall be collected by Party A from subscribers or the SP/CP.

21. “Information Service Fee”, means such fee arising from the use of SP/CP’s content information or application services other than communication fee. Information Service Fee shall be divided in certain portions between Party A and Party B. Before the distribution in certain percentage between Party A and Party B, the fee, calculated by Party A’s settlement system, to be collected from Subscribers is, the “Aggregate Amount of Information Service Fee”. The fee paid to Party B after Party A deducts certain percentage and expenses from the Aggregate Amount of information Service Fee is the “Settlement Information Service Fee”.

22. “Billing Cycle”, means the statistic cycle for Party A’s billing system on Party B’s Information Service Fee, which shall be one (1) complete calendar month, from 0:00:00 on the first day of each calendar month until 24:00:00 on the last day of that month.

23. “Corporate Code”, refers to “China Unicom Mobile Data Service SP/CP Corporate Code”, which is the sole corporate identification to identify Party B in Party A’s system.

24. “SP Service System”, means the online office system established and maintained by Party A for integration, agreement execution, account reconciliation, information disclosure and feed back, and other daily work.

25. “Ranking”, means the ranking conducted by Party A according to one or more targets including income of Information Service Fee or business volume of all SP/CP that are beyond the Business Support Period with respect to a certain mobile value-added service. If there is any decimal after the total number of SP/CP multiplied by percentage, the round number shall remain, and the decimal number shall be omitted. With respect to any SP/CP for which the income of Information Service Fee is unable to be determined due to account reconciliation, its ranking shall be determined according to Party A’s statistics prior to the reconciliation.

26. “Business Support Period”, means the period in which there are certain preferential policies that Party A extends to Party B in terms of ranking and withdrawal on certain service for a period of three complete Billing Cycle after Party B obtains the all network accession qualification, and has passed testing of such service, the purpose of which is to provide Party B with time to accept training for the business cooperation between Party A. This time of period shall be called the Business Support Period. Party A and Party B shall decide whether to apply the Business Support Period according to the characteristics of the mobile value-added service, and specify in detail in the Exhibits the rights and obligations of both parties during the Business Support Period.

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27. “Service Screening”, means except for Uni-Voice and Uni-Info, Party A cancels the display of Party B’s service to Subscribers, but remains the customization and billing therefor. Service Screening for Uni-Voice means temporary shutdown of the service access number; Service Screening for Uni-Info means while maintaining the customization of Subscribers, the billing rate shall be set at zero.

28. “Service Closedown”, means Party A’s termination of cooperation on Party B’s service section by canceling the customization of Subscribers and terminating the billing for such services.

29. “Withdrawal”, means Party A’s termination of cooperation with Party B on certain service, and Party A will not accept Party B’s application for cooperation on such service in certain period of time.

30. “Service Category”, means service classification according to the similarity of techniques as provided by the administrative specifications of Party A, such as “Uni-Info Service Category”.

31. “Credit Rating System”, means evaluation of creditworthiness of SP based on subscriber complaints, SP’s default, SP’s breach of rules and cooperation, etc., for the purpose of defining the credit rating of SP through quantified scoring, and applying different policies of cooperation to SP at different credit ratings.

32. “Resource Use Charge”, means resource use charge in a certain amount payable from Party B to Party A for Party A’s access numbers and/or E1 port resources occupied by Party B and management costs thereof.

33. “Number of Complaints Compensated”, means the number of complaints resulting in actual compensation due to Party B’s reasons.

34. “Establishment and Maintenance of the SP Service System”, means providing the software and hardware infrastructure to provide the value-added services as set forth under this Agreement, and shall also provide daily maintenance and system failure restoration work in order to maintain daily operation.

35. “Marketing and Promotion”, means the marketing, and promotion activities and implementation of the value-added services.

36. “Client Service”, means providing necessary customer services including without limitation service enquiry, complaints, and other relevant customer services to ensure the normal and reasonable use of value-added services by customers.

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Annex II List of Acts in Breach

Item	Acts in Breach
1	Provide free of charge services in violation of the relevant rules and regulations	Class
1	In case Party B promotes services by providing free trial service to Subscribers, Party B fails to notify Subscriber explicitly of the period or conditions for free trial before Subscribers begin free trail.	A
2	In free services: connect the Subscribers to the webpage with charge by using technical methods; or make changes to the normal link of the services in violation of the logics of services through technical methods, with less than 50 complaints from Subscribers	A
3	In free services: connect the Subscribers to the webpage with charge by using technical methods; or make changes to the normal link of the services in violation of the logics of services through technical methods, with more than 50 complaints from Subscribers	B
4	In case Party B promote the service by providing free trail service for Subscribers, upon the end of free trial period and prior to the beginning of fee collection, Party B fails to explicitly notify the Subscribers of the billing rate	Major A
5	In case Party B promote the service by providing free trail service for Subscribers, upon the end of free trial period and prior to the beginning of fee collection, Party B begins Customization without receipt of confirmation of Customization from the Subscriber	Major B
2	Significantly Adjust Business Content Without Approval	Class
6	After the service is available online, significantly adjust the contents of service without authorization, for example, adjust news content to travel content services	A
7	After the service is available online, significantly adjust the contents of service without authorization into content or content of service links containing vulgar information	Major B
8	After the service is available online, significantly adjust the contents of service without authorization into content or content of service links containing illegal, in violate with the state security, such as superstitious, gambling, drugs, illegal activities, firearms, illegal medications, improper, falungong, and other relevant contents.	Material Breach A

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Item	Acts in Breach
3	Conduct services without approval	Class
9	Without approval by Party A, conduct services and officially provide the services online.	Major A
4	Provide services without approval	Class
10	Provide the contents without the authorization of the rights holder, which violates the State regulations concerning intellectual property rights	Major A
11	Provide the contents without the authorization of the rights holder, which violates the State regulations concerning intellectual property rights, and result into economic losses to Party A or the rights holder	A
5	Arbitrarily Collect Fees on behalf of Party A	Class
12	Provide fee collection service in respect of illegal services or contents of Internet websites in violation of relevant regulations of the State	A
13	Provide fee collection service in respect of illegal services or contents of Internet websites containing vulgar information and in violation of relevant regulations of the State	Major A
14	Provide fee collection service in respect of illegal services or contents of Internet websites containing illegal and anti-social security information and in violation of relevant regulations of the State	Material Breach A
6	Significantly Adjust Scope and Content of Group Messaging approved by Party A	Class
15	Significantly adjust the scope and content of group messaging services as approved by Party A.	A
16	Significantly adjust the scope and content of group messaging as approved by Party A, and contain misleading, fraud, and other false information.	B
17	Significantly adjust the contents of service without authorization into content or content of service links containing illegal information that is in violate with the state security rules and regulations, including superstitious, gambling, drugs, illegal activities, firearms, illegal medications, improper, falungong, and other relevant contents.	Major A

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Item	Acts in Breach
7	Group Message with Approval from Party A	Class
18	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber, with less than 200 complaints from Subscribers	A
19	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber containing vulgar information, with less than 200 complaints from Subscribers	B
20	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber, with more than 200 to 500 complaints from Subscribers	Major A
21	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber containing vulgar information, with more than 200 to 500 complaints from Subscribers	Major B
22	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber containing vulgar information, with more than 500 complaints from Subscribers	Material Breach A
23	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber that is in violate with the state security rules and regulations, including superstitious, gambling, drugs, illegal activities, firearms, illegal medications, improper, falungong, and other relevant contents to Subscribers.	Material Breach A
24	Without the consent from Party A, send PUSH message, group short message, group mail to Subscriber or alter the scope or contents of PUSH containing illegal information that is in violate with the state security rules and regulations with more than 500 complaints from Subscribers	Material Breach B
8	Misled Subscribers into Customization or fee-based services	Class
25	Whilst providing services to Subscribers, mislead Subscribers into Customization without knowledge or willingness, or there is any fraud including enticing Subscribers into the fee-based service without knowledge or willingness, with less than 20 complaints from Subscribers	A
26	Whilst providing services to Subscribers, mislead Subscribers into Customization without knowledge or willingness, or there is any fraud including enticing Subscribers into the fee-based service without knowledge or willingness, with more than 20 complaints from Subscribers	B

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Item	Acts in Breach
27	Mislead Subscribers into Customization without knowledge or willingness, or there is any fraud including enticing Subscribers into the fee-based service without knowledge or willingness, which result into charges to Subscribers, and with less than 20 complaints from Subscribers, or less than 200 reported cases of such misleading from Subscribers.	Major A
28	Mislead Subscribers into Customization without knowledge or willingness, or there is any fraud including enticing Subscribers into the fee-based service without knowledge or willingness, which result into charges to Subscribers, and with more than 20 complaints from Subscribers, or more than 200 reported cases from Subscribers.	Major B
29	Maliciously mislead Subscribers into Customization without knowledge or willingness, or there is any fraud including enticing Subscribers into the fee-based service without knowledge or willingness, which result into charges to Subscribers, and causes significant negative social impact or negative influence to Party A.	Material Breach B
9	Force Subscribers into Customization or fee-based services	Class
30	Force the Subscriber into Customization, or make Customization without authorization, but party B retain evidence that the problem was caused by a third party or not solely due to the reasons of party B.	A
31	By using technical means, cheat or force the Subscriber into Customization, or make Customization without authorization, or maliciously excessive or incorrect fees from Subscribers, with less than 20 complaints from Subscribers, or less than 200 reported cases from Subscribers.	B
32	By using technical means, cheat or force the Subscriber into Customization, or make Customization without authorization or maliciously excessive or incorrect fees from Subscribers, with 20 to 200 complaints from Subscribers, or 200 to 2,000 reported cases from Subscribers.	Major B
33	By using technical means, cheat or force the Subscriber into Customization, or make Customization without authorization, or maliciously excessive or incorrect fees from Subscribers, with more than 200 complaints from Subscribers, or more than 2,000 reported cases from Subscribers.	Material Breach A
34	By using technical means, cheat or force the Subscriber into Customization, or make Customization without authorization, or maliciously excessive or incorrect fees from Subscribers, and causes significant negative social impact or negative influence to Party A.	Material Breach B

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Item	Acts in Breach
10	Deduct the fees from the Subscriber or effect Customization without opened account or an unused phone number	Class
35	Deduct the fees from the Subscriber without opened account or an unused phone number, or by technical means simulate the Subscribers without opened account or an unused phone number in order to effect Customization, and subscribers numbers which are deducted fees from are less than 1,000	Major B
36	Deduct the fees from the Subscriber without opened account or an unused phone number, or by technical means simulate the Subscribers without opened account or an unused phone number in order to effect Customization, and subscribers numbers which are deducted fees from are more than 1,000	Material Breach B
11	Conduct Embedded Services Without Approval	Class
37	Without the consent from Party A, conduct services embedded in mobile terminals together with the producers of such mobile terminals	Major B
12	Use Party A’s Materials without Approval	Class
38	Without the consent from Party A, use the name, logo and other related materials of Party A in violation of this Agreement	A
39	Without the consent from Party A, use the name, logo and other related materials of Party A in violation of this Agreement, and causes negative impact or economic losses to Party A	Major A
13	Fail to explicitly notify the Subscriber Regarding Relevant Information	Class
40	Fail to explicitly notify the Subscriber of any of the following items after the Subscriber is connected: the name of Party B, the name of the service, billing rate, client service number, and etc.	A
14	Malfunction of Services	Class
41	Due to service design or system problems on the part of Party B, services cannot be provided to the Subscribers or the customization is cancelled	A
42	Due to service design or system problems on the part of Party B, Subscribers cannot cancel services provided through normal procedures.	Major A
15	Collect Fees without Providing Services	Class
43	Collect fees from the Subscriber without providing any service	A

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Item	Acts in Breach
16	Malfunction of Network	Class
44	Due to problems of security mechanism, a third party causes significant malfunction of party A’s service platforms or networks through party B’s system, affecting services in a part of or the entire network	Major B
17	Unfair Competition	Class
45	Conduct unfair competition in the marketing process, disrupt market order	Major A
46	Conduct unfair competition in the marketing process, disrupt market order, and the normal business activities of Party A, and causes economic losses to Party A	Material Breach A
18	Litigation or Unresolved Matters	Class
47	Litigations, arbitration or other legal actions arising from the services provided by or involving Party B, and Party D did not immediately handle, unreasonably resolve, or reject to cooperate with Party A.	A
48	Litigations, arbitration or other legal actions arising from the services provided by or involving Party B, and Party D did not immediately handle, unreasonably resolve, or reject to cooperate with Party A, and causes negative impact or economic losses to Party A	Major A
19	Fail to Offer Client Support Services or Fail to Provide Sufficient Client Services	Class
49	Information as to 24-hour client service telephone number, etc. is inconsistent with that in Party A’s SP Service System, or the client service number cannot be connected or there is no response for a long time	A
50	Fail to offer client support service in line with this Agreement and service management procedures, evade or fail to respond to client service complaints of Party A in the promised time limit	B
20	In Violation of the rules and regulations under the China Unicom Mobile Value-added Service Cooperation Management Measures	Class
51	Due to Party B’s reason, the Percentage of Compensation for Complaints rank in the top 5 across the country are more than or equal to “3 complaints compensated /RMB10,000 of Information Service Fee proceeds”	Warning

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Item	Acts in Breach
52	Due to Party B’s reason, the Percentage of Compensation for Complaints are more than or equal to “10 complaints compensated /RMB10,000 of Information Service Fee proceeds”, and more than 10 provinces are involved in the Percentage of Compensation for Complaints	Warning
53	Party B is suspected to be engage in group messaging information containing misleading information or providing other IVR services in violation with the relevant rules and regulations of Party A, and there arise significant complaints from Subscribers, with more than or equal to 200 cases of Complaints from such act per province per month	Warning
54	Party B fails to complete the confirming procedure under a given time limit, in accordance with the relevant authority requirement during Subscriber Complaint check by the relevant authority	Warning
55	Party B decline to cooperate to resolve Subscriber Complaints	Warning
56	Due to Party B’s reason, Party A has been criticized publicly, significant negative impact or complaint from Subscribers	Warning
57	Client complaints resulting from SPs problem, which have been made before the Ministry of Information Industry and filed for investigation, leading to major media’s adverse report of Party A or its business, and post-investigation, confirm that is due to Party B’s reason	Warning
58	Due to Party B’s reason, Party A is being investigated by relevant governmental authorities, Ministry of Information Industry, and quality inspection authorities.	Warning
59	Due to Party B’s reason, the Percentage of Compensation for Complaints are more than or equal to “20 complaints compensated /RMB100,000 of Information Service Fee proceeds”, and more than 20 provinces are involved	Termination of Fee Settlements
60	Engage in group messaging containing information misleading Subscribers to use such services or other IVR services in violation with the business standard of Party A, and causes complaints from Subscribers, and more than or equal to 350 complaints from Subscribers per province.	Termination of Fee Settlements
61	Due to Party B’s reason, there are complaints filed by the Ministry of Information Industry for investigation and SP have been deemed to be responsible for such complaints	Termination of Fee Settlements
62	There are complaints filed by the relevant governmental authorities, Ministry of Information Industry, quality inspection authorities for investigation and SP have been deemed to be responsible for such complaints	Termination of Fee Settlements

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Item	Acts in Breach
63	Due to Party B’s reason, Party A has been criticized publicly for three times in the aggregate within one year	Termination of Fee Settlements
64	Due to Party B’s reason, Party B has been terminated fee settlement for two times in the aggregate of one year, or has been terminated fee settlement and have not regain fee settlement within six (6) months	Major B
65	Due to Party B’s reason, there are two complaints filed by the Ministry of Information Industry for investigation within one year and SP have been deemed to be responsible for such complaints	Major B
66	Due to Party B’s reason, there arise significant complaints or adverse report on Party A or Party A’s business by the media at or above the provincial level	Major B
67	Due to Party B’s reason, there arise warning and above penalty on Party A or Party A’s business by the Ministry of Information Industry, state telecommunication authorities, and etc at or above the provincial level	Major B
68	Engage in any other activities in violation with the relevant rules and regulations of the State or in violate with the benefit of the Subscribers	Major B
21	Miscellaneous	Class
69	Engage in any other activities with prejudice to the interests of Party A and/or Subscribers, or provide contents of service with prejudice to the interests of Party A and/or Subscribers	A to Major B

Notes:

1. Unless otherwise specified in the Text hereof, Annexes or this List, acts listed in the column of “Acts in Breach” cover all breaches that might arise while carrying out Mobile Value-added Services; provided that, some acts in breach are not applicable to all kinds of Mobile Value-added Services due to special reasons in terms of technologies or business characters.

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2. “Classes” are divided into Class A, B, Major A, Major B, Material Breach A, Material Breach B, Warning, and Termination of Fee Settlement, which correspond to the three methods for handling breaches set forth in the main body of the Agreement. Such three classes are basically divided on the basis of severity and (possible) losses/adverse affects to Party A or subscribers. If no specific class but only a wider grade (such as A-Major B) has been identified for a kind of acts in breach, then Party A may select a suitable handling method under an applicable class based on the nature and affects of such act in breach, and the losses it has caused to Party A and/or Subscribers, and the effects arising therefrom upon Party A and/or Subscribers.

3. Apart from this List, Party A may also apply business standards and management procedures developed itself in accordance with Text of this Agreement. If such business standards and management procedures conflict with this Schedule, this List shall prevail.

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Annex III Credit Rating

In accordance with the provisions of Chapter 7 of this Agreement and other provisions in relation to credit rating and credit scoring, this Annex sets out the criteria and points for score increase and reduction in connection with credit rating.

Criteria for score increase:

(1)	The score shall be calculated on a quarterly basis. In the event of no reduction of credit rating score, i.e. no acts in breach of contract or rules, satisfactory ratio of Subscribers complaints, cooperation in accordance with the relevant policies of China Unicom, etc. , and the average information fee revenue is no less than RMB 600, 000 per quarter, 3 points will be added to the score
(2)	The full score is 100 points, and no more points shall be added to a full score. Any reduction in score shall be conducted from 100 points in case of circumstances for which score reduction shall apply.
(3)	For any new SP involved in cooperation, there shall be no increase but only reduction in its score within the three full Billing Cycles commencing from the activation of services and billing for the first time. Upon the end of such three full Billing Cycles, score increase will be conducted for any SP satisfying the conditions to score increase.

Criteria for score reduction: reduction in score shall be conducted according to the table below.

Factors in Credit		Points to
Rating	Details	be Reduced		Unit	Extra Points
Default	Class A/B Class Major A/B		1 2	Per each time	The score shall be calculated on a quarterly basis. In the event of no reduction of credit rating score, i.e. no acts in breach of contract or rules, satisfactory ratio of Subscribers complaints, cooperation in accordance with the relevant policies of China Unicom, etc. , and the average information fee revenue is no less than RMB 600, 000 per quarter, 3 points will be added to the score
	Class Material Breach A/B		3
Breach of rules	Service Screening due to complaints from Subscribers, without breaching any rules		1	Per each time/service category/ month
Client complaints	Receive warning due to complaints from Subscribers,		1.5	Per each time
	Termination of fee settlement due to complaints from Subscribers		2	Per each time
Cooperation	Failure to make payment the expenses payable to Party A as required		2	Per each item of payment
	Failure to punctually submit the materials and settlement statements for confirmation		1	Per each time
	Provide fraudulent materials		2	Per each time
	Failure to promptly update SP Service System		1	Per each time
	Response in a bad manner to the solution for default, provision of fraudulent statements, failure to cooperate with evidence collection in respect of events of default		2	Per each time
	failure to attend the meetings at the agreed time		1	Per each time
Miscellaneous	Breach of business standards and cooperation management measures, complaints, and other uncooperative manner		1-3	Per each time

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Annex IV Schedule of Profit Distribution Percentages

Service Category		Profit Distribution Percentage
		(Party A/Party B)
Uni-Info		20 : 80
CDMA IX services	Uni-Wap
	Uni- Magic	15 : 85
	Uni-Mail
GPRS (WAP, MMS, JAVA)
Mobile Stock Market		40 : 60

Notes:

1.	The Communication Fee and basic function fee under each Service Category shall be the property of Party A, for which no distribution shall apply.
2.	The Information Service Fee received for BREW service under the Service Category of Uni-Magic may serve as the basis for settlement after deduction of 10% developer application fee payable to Brew Company.
3.	Asymmetric Communication Fee shall be charged for the Service Category of Uni-Info at (MT — MO ) * RMB0.05/message.
4.	Formulas for settlement:

(1)	Uni-Info :Settled expenses of Party B = Total amount of Information Service Fee × ( 1 — 8% allowance for bad account ) × 80% profit - Asymmetric Communication Fee
(2)	Uni-Wap :Settled expenses of Party B = Total amount of Information Service Fee × 85% as the profit distribution percentage of Party B - WAP PUSH Communication Fee
(3)	Unija under the Service Category of Uni-Magic : Settled expenses of Party B = Total amount of Information Service Fee × 85% as the profit distribution percentage of Party B
(4)	BREW under the Service Category of Uni-Magic : Settled expenses of Party B = ( Total amount of Information Service Fee × 85% as the profit distribution percentage of Party B) — Developer application fee Developer application fee = the rate of developer application fee( >=5)× 10% as the profit distribution percentage of developer + RMB0.5 (in case the rate of developer application fee is less than RMB5)

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(5)	Uni-Mail : Settled expenses of Party B = Total amount of Information Service Fee × 85% as the profit distribution percentage of Party B
(6)	GPRS (WAP, MMS, JAVA) :Settled expenses of Party B =Total amount of Information Service Fee × 85% as the profit distribution percentage of Party B
(7)	Mobile Stock Market :Settled expenses of Party B =Total amount of Information Service Fee × 60% as the profit distribution percentage of Party B

5. In the above formulas, the amount equal to “Total amount of Information Service Fee × ( 1 — 8% allowance for bad account )” shall be the basis for settlement, subject to deductions of advance compensation in connection with Subscribers complaints under Clause 10.2.2 and other expenses as agreed upon by the Parties hereto.

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EX-4.84

Exhibit 4.84

SHARE TRANSFER AGREEMENT

This SHARE TRANSFER AGREEMENT (“Agreement”) is made on  _____  , 2007, by and among: TWM Holding Co. Ltd., a company established under the laws of British Virgin Islands (“TWM”); Hurray! Holding Co., Ltd, a company established under the laws of the Cayman Islands (“CAYMAN”) (“Hurray Cayman”); and Hurray! Times Communications (Beijing) Ltd. , a wholly foreign-owned company established under the laws of the People’s Republic of China (“PRC”) (“Hurray! Times”). TWM, Hurray Cayman, and Hurray! Times are collectively referred to as the “Parties”, and each, a “Party”.

RECITALS

A.	Hurray! Times is a company engaged in the business of telecommunications software and software integration services (“Business”), with its principal place of business in the PRC ( for purpose of this Agreement, “PRC” doesn’t include Hong Kong Special Administration Region, Macau Special Administration Region and Taiwan Island).
B.	Hurray Cayman owns 100% of the equity interest in Hurray! Times.

C. TWM desires to purchase one hundred percent (100%) of the issued and outstanding capital stock of Hurray! Times (“Shares”), and Hurray Cayman desires to sell, assign and transfer the Shares to the Buyers.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

1. Sale and Purchase of Hurray! Times Shares

1.1 Sale and Purchase of Shares. Hurray Cayman shall sell to TWM and TWM shall purchase from Hurray Cayman the Shares for the Total Consideration (the “Total Consideration”) which shall equal to the summation of the following two parts:

1.1.1 (i) the net value of all of Hurray! Times’ assets as of July 31, 2007, which is RMB$31,937,059; the parties hereto understand that the net value of all of Hurray! Times’ assets is evaluated in accordance with the PRC GAAP and be converted by Hurray! Times on a consistent basis in accordance with the US GAAP; (ii) the up-front payment of US$600,000 (“Up-Front Payment”);

1.1.2 Earnout payment: (i) the first payment of US$400,000 (“First Payment”), provided that the Target Gross Profit (as defined in this Section) of fiscal year 2007 exceeds RMB5,000,000. If the Target Gross Profit is less than RMB5,000,000, but exceeds RMB2,000,000, the First Payment will be calculated in the following formula: First Payment = US$400,000 x (2007 Target Gross Profit — RMB1,500,000 ) / (RMB5,000,000). If the Target Gross Profit is less than RMB 2,000,000, there will be no First Payment; (ii) the second payment in the amount equal to 20% of portion of the Target Gross Profit of fiscal year 2008 exceeding RMB7,500,000 (“Second Payment”); and (iii) the third payment in the amount equal to 20% of the portion of the Target Gross Profit of fiscal year 2009 exceeding RMB18,500,000 (“Third Payment”).

For the purpose of this Agreement, “Target Gross Profit” of a specific fiscal year shall mean the earnings generated from existing software and system integration business in China excluding any hardware sales revenue and any other revenue brought in by TWM; the earnings shall be before taxes indicated in the balance sheet, income statement and cash flow statement of Hurray! Times and/or any notes thereto of such fiscal year prepared (“Financial Statement”) by Hurray! Times. The formula should be: Target Gross Profit = US GAAP gross profit + reclassified operating expenses. The Financial Statements shall be prepared by an auditor engaged by Hurray! Times (“Auditor”) in accordance with the PRC GAAP and be converted by Hurray! Times on a consistent basis in accordance with the US GAAP. The converted version of Financial Statement shall be provided for Hurray Cayman to review. If there is any discrepancy, Hurray Cayman shall raise a written objection to TWM in ten (10) days as of the date of Hurray! Cayman’s receipt of such converted version of Financial Statement, and both parties shall negotiate it in an amicable way.

1.2 Payment Terms of the Total Consideration. Subject to the terms and conditions herein, the Total Consideration shall be paid in US Dollars as follows:

1.2.1 The part of the net value of all of Hurray! Times’ assets as of July 31, 2007 and the Up-Front Payment:

(a) TWM shall pay the Up-Front Payment in full and the amount of US Dollar equivalent to RMB 2,875,161 to Hurray Cayman by electronic funds transfer to a bank account designated by Hurray Cayman on the Closing Date.

(b) TWM shall pay Hurray Cayman the remaining RMB 29,061,898 by equivalent US Dollar after Hurray! Times has collected the Account Receivables and Other Receivable which are shown in the Balance Sheet of Hurray! Times dated July 31, 2007 by electronic funds transfer to a bank account designated by Hurray Cayman. The details of the payment are as follows:

i. After collection of Account Receivables: The Parties hereto understand that Hurray! Times has account receivables in an aggregated amount of RMB 10,797,411, which are shown in Hurray! Times’ balance sheet dated July 31, 2007 (“Account Receivables”). TWM agrees to pay to Hurray Cayman the Account Receivables it collects on a quarterly basis in U.S. Dollars, provided however, if the Account Receivables is not collected before December 31, 2008, the remaining unpaid Account Receivables will be retained by and deemed as properties of Hurray! Times and Hurray Cayman cannot claim against TWM for the remaining unpaid Account Receivables.

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ii After collection of Other Receivable: The Parties hereto understand that (“Hu Tong”) is under contractual obligations to pay Hurray! Times RMB 41,000,000 (“Other Receivables”). If Hurray! Times collects the Other Receivables in full, within 10 business days after collection, Hurray! Times will pay the dividends payables to Hurray Cayman, and TWM will pay RMB18,264,487 by equivalent US Dollar to Hurray Cayman. However, if Hurray! Times does not collect the Other Receivable in full before March 31, 2008, Hurray! Times will write off all the Other Receivables as bad debt and give up its right to collect it, and Hurray Cayman will also give up its right to claim the RMB22,735,513 to be paid by Hurray! Times in the form of dividend payable and the RMB18,264,487 to be paid by TWM.

(c) The Parties hereto understand that, for the encouragement of Hurray! Times’ collection of Account Receivables, Hurray Cayman may under its sole decision, return 2-5% of the Account Receivables to TWM and TWM shall use its best effort to ensure that Hurray! Times will deliver the equivalent amount of money to the managers of Hurray! Times as bonus.

1.2.2 The part of earnout payment:

(a) The First Payment shall be paid in full to Hurray Cayman by electronic funds transfer to a bank account designated by Hurray Cayman within ten (10) Business Days from the delivery by the Auditor of (i) the Financial Statements for fiscal year 2007, and (ii) a statement indicating the amount of Target Gross Profit for fiscal year 2007 calculated in accordance with Section 2.1(b). “Business Day” means any day, excluding Saturdays and Sundays, on which commercial banks in Hong Kong Special Administration Region (“Hong Kong”) and the PRC are open for business during their normal business hours.

(b) The Second Payment shall be paid in full to Hurray Cayman by electronic funds transfer to a bank account designated by Hurray Cayman within ten (10) Business Days from the delivery by the Auditor of (i) the Financial Statements for fiscal year 2008 and (ii) a statement indicating the amount of Target Gross Profit for fiscal year 2008.

(c) The Third Payment shall be paid in full to Hurray Cayman by electronic funds transfer to a bank account designated by Hurray Cayman within ten (10) Business Days from the delivery by the Auditor of (i) the Financial Statements for fiscal year 2009 and (ii) a statement indicating the amount of Target Gross Profit for fiscal year 2009.

1.3 In the event that (i) TWM fails to make any payment when due under this Agreement, TWM shall have ten (10) Business Days (“Grace Period”) upon receiving a written notice given by Hurray Cayman to be delivered both by certified mail and by fax to the recipients as set forth in the Notice section of this Agreement indicating such failure by TWM to make the foregoing payment in full, and (ii) if any over-due payment by TWM shall remain unpaid at the end of the Grace Period, interest on overdue payment shall accrue at the US Dollars interest rate announced by the People’s Bank of China on the payment day.

1.4 For the purpose of this Agreement, the exchange rate between US Dollars and RMB will be the average of the CNY base rate announced by the China Foreign Exchange Trade System & National Interbank Funding Center on the date when this Agreement is executed and on the date when the payment will be paid.

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2. Closing

2.1 Closing. Subject to the satisfaction of all of the Closing Conditions as set forth in Section 2.2 or the waiver by TWM thereof, the consummation of the Transfer shall take place at the office of Hurray! Times, located at 16/F, Tower B Gateway Plaza, No. 18 Xia Guang Li, North Road, East Third Ring, Chaoyang District, Beijing, within five (5) Business Days from the date of that all Closing Conditions (as defined in Section 2.2) are met or such other place and time as the Parties may mutually agree (“Closing” and the date on which the Closing takes place shall be referred to as “Closing Date”). The following actions shall be carried out at the Closing on the Closing Date:

(a) TWM shall pay the amount of US Dollar equivalent of RMB2,875,161 and the Up-Front Payment by electronic funds transfer to a bank account designated by Hurray Cayman on the Closing Date;

(b) The relevant Parties shall execute and deliver all the Transaction Documents listed hereto as Schedule 1 (“Transaction Documents”) that have not been executed prior to the Closing.

(c) A sufficient and complete application for the registration and approval of the share transfer of Hurray! Times Shares shall be submitted by a person designated and authorized by Hurray Cayman and approved by TWM to do so to the relevant Administration of Industry and Commerce on the Business Day immediately following the Closing. Hurray Cayman, Hurray! Times, and Hurray Cayman director (namely, Mr. QinDai Wang and Jesse Liu) hereby agree to take all actions that are necessary for the completion of the registration and approval.

2.2 Closing Conditions

(a) Unless otherwise waived before the Closing Date by TWM, the following conditions (“Closing Conditions”) must be satisfied by the relevant Warrantor (as defined in this section) responsible for satisfying those conditions before TWM shall be obliged to carry out its obligations at Closing:

(i) Representations and Warranties. The representations and warranties of each of the Warrantors shall be true and accurate on and as of the Closing Date with the same effect as if made on and as of the Closing Date. “Warrantor” shall mean Hurray! Times and Hurray Cayman.

(ii) Qualifications. All authorizations, approvals, or permits or other regulatory requirements, if any, of any governmental authority or regulatory body that are required under CAYMAN laws or PRC laws or Taiwan laws in connection with the duly and lawful signing of this Agreement shall have been duly obtained or fulfilled and shall remain effective as of the Closing Date, including but not limited to (a) Approval Certificate of High Technology Enterprise; (b) Certificate of Verification for Software Enterprises; (c) Certificate of Qualification for Computer information system integration; (d) the Foreign Investment Approval from the Investment Commission of Taiwan.

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(iii) Approval. A sufficient and complete application for the approval of the transactions contemplated herein shall be submitted with the Ministry of Commerce or its branches, and the approval herein shall be granted prior to the Closing date.

(iv) Good Standing Certificate. Hurray Cayman shall have delivered to TWM or its legal counsel at or before the Closing a certified copy of Hurray Cayman’s Certificate of Incorporation.

(v) Legal Opinion. Hurray Cayman or the relevant Warrantors shall have delivered to TWM, and TWM shall have delivered to Hurray Cayman a legal opinion issued by a reputable PRC law firm reasonable acceptable to TWM and Hurray Cayman on the validity and enforceability of execution and deliver of this Agreement, in substantially the form attached hereto as Schedule 2 and Schedule 4.

(vi) Due Diligence. TWM has not been informed by any of the Warrantors of any Material Adverse Event which actually occurred prior to the Closing or has a likelihood to occur. For purpose of this Agreement, “Material Adverse Event” means (i) with respect to the Transaction Documents, any change, event, or effect that materially and adversely affects the validity, content and/or enforceability thereof or the ability of Hurray Cayman and/or Hurray! Times to perform their obligations under the Transaction Documents and (ii) with respect to the Group and/or a Group Company, any change, event, or effect that is materially adverse to the business, operations, assets, financial condition, prospects of the Group and/or a Group Company. For purposes of this Agreement, “Group” or “Group Companies” means Hurray Cayman and Hurray! Times.

(b) Conditions Subsequent. All Parties shall each use its best effort to cause Hurray! Times in the accomplishment as soon as possible of the following conditions subsequent after the Closing.

(i) the application and registration of the trademark with competent government authority;

(ii) the application for the Software Product Registration Certificate of the software to competent government authority;

(iii) the entering into of a lease agreement between Hurray! Times and the Landlord regarding the original area used by Hurray! Times; if the Landlord is still unwilling to enter into a lease agreement with Hurray! Times, Hurray Cayman shall provide assistance for the rental issue.

(iv) the Closing Conditions waived by TWM on or prior to the Closing.

3. Representations and Warranties of the Warrantors to TWM

As of the date of this Agreement up to, and including the Closing Date as though made on each day and up to the Closing Date, each of the Warrantors hereby jointly and severally represents and warrants to TWM, except as set forth in the disclosure schedule attached hereto as Schedule 3 (“Disclosure Schedule”), as follows:

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3.1 Transfer of Shares

(a) Hurray Cayman has and as of the Closing Date shall have good and marketable title to the Shares free and clear of all liens, security interests, claims, options, charges or encumbrances. None of the Shares are subject to any outstanding agreements of sale or rights of third parties to acquire any interest therein. The Shares constitute all of the capital stock of Hurray! Times. Hurray Cayman has the right and authority to execute, deliver, and perform this Agreement and all Transaction Documents delivered in connection herewith and to sell and transfer the Shares to TWM. To Hurray Cayman’s knowledge, this Agreement, and all Transaction Documents, constitute a valid, enforceable and legitimate contract that is binding upon the parties thereto in accordance with its terms;

(b) the execution, delivery and/or performance of this Agreement and all Transaction Documents will not result in any material violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (i) any law, regulation, administrative measure, judgement or order of any competent court or arbitration panel, (ii) any policy of any of the Network Operators through which Hurray! Times delivers its services and products or collects payments for the purchase or subscription of Hurray! Times’ services and products, (iii) the by-laws or any constitutional provision of Hurray Cayman or Hurray! Times; or (iv) any material agreement, obligation or commitment to which Hurray Cayman or Hurray! Times is a party or by which either of them is bound. For purposes of this Agreement, “Network Operators” or “Operators” shall mean China Mobile Communications Corporation, China United Communications Corporation, China Telecommunications Corporation, China Netcom Corporation, China Tietong Communications Co., Ltd. and other entities duly licensed to engage in the basic telecommunications business as such term is defined in the “PRC Telecommunications Regulatory Measures” and any of the affiliates, subsidiaries and branches of the foregoing entities.

3.2 Hurray! Times’ Corporate Organization and Authority. Hurray! Times

(a) is a wholly foreign-owned company duly established, validly existing and is authorized to exercise all its corporate powers, rights and privileges under the laws of PRC;

(b) has the corporate power and corporate authority to own, lease and operate its properties and to carry on its business as now conducted and as is authorized to be conducted;

(c) has not given any powers of attorney currently in force, and there are no outstanding authorities (express or implied) by which any Person may enter into any contract or commitment to do anything outside the ordinary course of business on behalf of Hurray! Times.

3.3 Capitalization of Hurray! Times

(a) The registered capital of Hurray! Times is US$3,000,000. All of Hurray! Times Shareholders have fully paid the requisite amount into the registered capital of Hurray! Times in the amount and within the time limit as required by the relevant PRC laws and regulations. An accurate and complete list of Hurray! Times’ Shareholders and the capital structure is set forth in Schedule 3.1.

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(b) Hurray! Times’ Shares are not considered State-owned assets or property rights.

(c) Hurray! Times’ Shares are transferable to TWM as intended and contemplated in this Agreement.

3.4 Subsidiaries. At the date of this Agreement, Hurray! Times does not have any Subsidiaries, and is not participant in any joint venture, partnership, or other similar arrangement.

3.5 Financial Statements

(a) The Financial Statements attached hereto as Schedule 3.2 have been prepared in accordance with the requirements of the relevant statutes and on a consistent basis in accordance with the US GAAP, showing a true and fair view of the assets, liabilities, and financial condition of Hurray! Times for the period concerned. No changes in the policies of accounting have been made in preparing the accounts of Hurray! Times for each of its previous financial periods ended on July 31, 2007 (“Balance Sheet Date”), except as stated in the balance sheets and income statements for such period.

(b) Provision for liabilities, etc. Full disclosure of and adequate provisions for bad and doubtful debts and all liabilities, actual, contingent or otherwise and of all financial commitments in existence at the Balance Sheet Date have been made in the Financial Statements to the extent required under US GAAP.

(c) No Guarantee. Hurray! Times has not provided any guaranty to any person.

(d) Extraordinary/exceptional items. The results shown by the Financial Statements on the Balance Sheet Date have not (save for therein disclosed) been affected by any extraordinary or exceptional or non-recurring item or by any other circumstances rendering the profits or losses for the period covered by the Financial Statements unusually high or low.

(e) Provision for Taxation. The Financial Statements reserve or provide in full for all Taxation for which a Group Company was liable at the Balance Sheet Date, and whether or not the Group Company has or may have any right of reimbursement against any other Person, the Financial Statements have provided for in full for any contingent or deferred liability to Taxation to the extent required under US GAAP.

(f) Acquisition of assets. None of Hurray! Times’ assets has been acquired for any consideration in excess of its net realizable value at the date of such acquisition or otherwise than by way of an arm’s length transaction.

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3.6 Changes since Balance Sheet Date

(a) General Changes. Since the Balance Sheet Date, the business of Hurray! Times has been carried on in the ordinary course and maintained as a going concern; and there has been no material adverse change in the financial position or trading prospects of each of Hurray! Times.

(b) Specific Changes. Since the Balance Sheet Date:

(i) there has not been any change in the assets, liabilities, financial condition or operations of any of Hurray! Times except changes in the ordinary course of business which have not been, either in any case, or in the aggregated, materially adverse;

(ii) none of the amounts under any guarantees or secured by the mortgages, charges, liens or Encumbrance disclosed in the Financial Statements has been increased beyond the amount shown in the Financial Statements and no material guarantee, mortgage, charge, lien or Encumbrance has been entered into, given or created since the Balance Sheet Date;

(iii) no business of Hurray! Times has been materially adversely affected by the loss of any material contract, including but not limited to the cooperation agreements with Network Operators, and none of the Warrantors are aware of any facts which are likely to give rise to any such effects;

(iv) Unless otherwise provided in this Agreement, no dividends, bonuses or distributions have been declared, paid or made by Hurray! Times;

(v) there has not been any waiver or compromise granted by Hurray! Times of a valuable right owned by it or of a material debt owing to it; and

(vi) there has been no adverse change to any material contract or agreement which Hurray! Times or any of its assets is bound by or subject to.

(vii) there has no any condition or event of any character which has materially and adversely affected Hurray! Times’ business or prospects.

3.7 Taxation

(a) General. Hurray! Times has timely made or filed all tax return and has duly and punctually paid all Taxation which it has become liable to pay as of the date of this representation and is under no liability to pay any penalty, interest, surcharge or fine in connection with any Taxation and has complied in all respects with all legislation relating to Taxation applicable to it. Hurray! Times is not involved in any dispute or investigation in relation to Taxation. For purpose of this Agreement, “Taxation” means and includes all forms of tax, levy, duty, charge, impost, fee, deduction or withholding of any nature imposed, levied, collected, withheld or assessed by any governmental authority or other taxing or similar authority in any part of the world, including Social Insurance Contributions, and includes any interest, additional tax, penalty or other charge payable or claimed in respect thereof.

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(b) Overseas Business. Hurray! Times has only carried on their trade, business or other activities in the PRC expect in Macao Special Administration Region and Taiwan Island and do not have any overseas subsidiary or associated or related company (as such terms are used in relation to Tax in any foreign country).

(c) Secondary Liability. No event, transaction, act or omission has occurred which could result in Hurray! Times becoming liable to pay or to bear any Taxation which is primarily or directly chargeable against or attributable to any person other than Hurray! Times.

(d) Favorable Tax Treatment. Hurray! Times was duly qualified or in due possession of the specific status for any favorable tax treatment it has actually claimed, including but not limited to the waiver of income tax it has claimed on the basis of Hi-tech Enterprise Status.

3.8 Books and Financial Records. All the accounts, books, registers, ledgers and financial and other material records of whatsoever kind of Hurray! Times have been properly and accurately kept and completed; there are no material inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial position of Hurray! Times and of its fixed and current assets and liabilities (actual and contingent), debtors, creditors and work-in-progress.

3.9 Accounts Receivable. Unless otherwise provided in this Agreement, all accounts receivable of Hurray! Times reflected on the Balance Sheet are valid receivable subject to no material setoffs or counterclaims and are current and collectible, net of the applicable reserve for bad debts reflected in the Balance Sheet.

3.10 Litigation. There is no action, proceeding, or investigation against Hurray! Times, pending or, to the Knowledge of the Warrantors, threatened, or any basis for any such action, proceeding, or investigation, including (without limitation) any action, proceeding or investigation that challenges or calls into question the validity of the Transaction Documents or the consummation of the transactions contemplated by the Transaction Documents, or that would result, either individually or in the aggregate, in any Material Adverse Event. There is no judgment, decree, or order of any court or award or finding of any arbitration or tribunal body, in effect against Hurray! Times, and none of Hurray! Times is in default with respect to any order of any governmental authority to which it is a party or by which it is bound. There is no action, suit, proceeding, or investigation by Hurray! Times currently pending or which Hurray! Times presently intends to initiate.

3.11 Title to Properties; Liens and Encumbrances. Unless otherwise provided in this Agreement, Hurray! Times has good and marketable title to all its owned properties and assets, both real and personal, including without limitation all owned properties and assets as set forth in the Financial Statements, and has good title to all its leasehold interests, in each case free from any Encumbrance. With respect to the properties and assets leased by Hurray! Times, that Hurray! Times is in compliance with any such leases to which it is a party, and such leases are in full force and effect.

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3.12 Condition of Assets. The Assets are currently in good operating condition and repair (subject to normal wear and tear) and are suitable for the purposes for which they are currently used. All current inventory of Hurray! Times is of merchantable quality and saleable in the ordinary course of Hurray! Times’ business.

3.13 Intellectual Property Rights

(a) Hurray! Times has independently developed and own or possess sufficient legal rights to all Intellectual Property Rights (including registrations and applications to register or renew such rights), and licenses of any of the foregoing necessary for its business as now conducted and as proposed to be conducted (collectively, the “Group Intellectual Property”), without any infringement of the rights of others. Schedule 3.3 contains true, complete and accurate lists of all material Intellectual Property Rights presently owned by Hurray! Times and Hurray! Times has the right to use under the agreements, all the material Intellectual Property Rights set out in Schedule 3.3 There are no outstanding options, licenses or agreements of any kind relating to the Group Intellectual Property, nor is Hurray! Times bound by or are parties to any options, licenses or agreements of any kind with respect to the Intellectual Property of any other person or entity except, in either case, for standard end-user agreements with respect to “off-the-shelf” computer software that is generally commercially available. Hurray! Times is in compliance with all material terms of any material licenses by which it uses any Group Intellectual Property, and each such material license is in full force and effect. Each licensor thereof is in compliance with all material terms of the respective license. Hurray! Times is not aware of the existence of any fact or circumstance that would give the licensor thereof grounds under the terms of such license to cancel, terminate or suspend such license. There is no expectation by Hurray! Times that any licenses material to the operation of Hurray! Times will not be renewed in the ordinary course of business on terms that are commercially reasonable which will result in a Material Adverse Event. Hurray! Times has not received any written communications alleging that it has violated or, by conducting its businesses as presently conducted or proposed to be conducted, would violate any of the Intellectual Property Rights of any other person or entity. To the Knowledge of the Warrantors, no employee of Hurray! Times is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or is subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with the normal business of Hurray! Times, or that would materially conflict with Hurray! Times’ business as presently conducted or proposed to be conducted. To the Knowledge of the Warrantors, it is not necessary for Hurray! Times to utilize any Intellectual Property Rights of any employees of Hurray! Times made prior to employment by Hurray! Times, except for Intellectual Property Rights that have been assigned to Hurray! Times.

(b) Other than pursuant to the Transaction Documents, none of Hurray! Times or the Warrantors has entered into any agreement to indemnify any other person against any charge of infringement or misappropriation of any Group Intellectual Property.

(c) Hurray! Times has taken all necessary action to protect and preserve (i) the validity and enforceability of trade and service marks and associated goodwill included in the Group Intellectual Property, if any; (ii) the enforceability of copyrights and the confidentiality, validity and enforceability of pending patent applications included in the Group Intellectual Property, if any; and (iii) the validity and enforceability of patents included in the Group Intellectual Property, if any; and (iv) the confidentiality and enforceability of trade secrets and the confidentiality of other proprietary information included in the Group Intellectual Property.

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(d) No material trade secret or confidential information constituting Group Intellectual Property has been used, divulged or appropriated for the benefit of any person other than Hurray Cayman or Hurray! Times or otherwise to the detriment of Hurray! Times, except pursuant to appropriate non-disclosure agreements. None of the Warrantors, current employees or consultants of Hurray! Times has used any trade secrets or other confidential information of any other Person in the course of work for Hurray! Times, except with the legally valid consent of such Person.

(e) Hurray! Times has no written agreements or, to the Knowledge of the Warrantors, any oral agreements with current or former employees or consultants with respect to the ownership of Group Intellectual Property, including inventions, trade secrets or other works created by them as a result of which any such employee or consultant may have exclusive or nonexclusive rights to any portion or part of the Group Intellectual Property created by such individual.

(f) Hurray! Times does not use any processes nor is it engaged in any activities which involve the misuse of any know-how, lists of customers or suppliers, trade secrets, technical processes or other confidential information (“IP Confidential Information”) belonging to any third party. To the Knowledge of the Warrantors, there has been no actual or alleged misuse by any Person of any IP Confidential Information belonging to Hurray! Times. To the Knowledge of each of the Warrantors, none of the Warrantors and current or former officers, employees or consultants of Hurray! Times have disclosed to any Person any IP Confidential Information of Hurray! Times except where such disclosure was properly made in the normal course of the Hurray! Times’ business and was made subject to an agreement under which the recipient is obliged to maintain the confidentiality of such IP Confidential Information and is restrained from further discussing it or using it other than for the purposes for which it was disclosed by Hurray! Times.

(g) No government funding, facilities of any university, college or other educational institution or research center or funding from third parties (other than funds received in consideration of capital stock of Hurray! Times or issuance of debt) was used in the development of any Group Intellectual Property.

(h) No Public Software (A) was or is used in connection with the development of any Group Intellectual Property, or (B) was or is incorporated in whole or in part, or has been distributed in whole or in part in conjunction with any product or serviced provided by any Hurray! Times. “Public Software” means any software that contains, or is derived (in whole or in part) from any software that is distributed as free software, open source software (such as, without limitation, Unix or Linux) or similar licensing or distribution models, including but not limited to, software licensed or distributed under any of the following: (i) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g. PERL); (iii) the Mozilla Public License; (iv) the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD License; and (viii) the Apache License. For purpose of this Agreement,

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(i) Hurray! Times has exerted all reasonable efforts in assuring the adequate authority of each of the parties by which Hurray! Times is currently licensed or otherwise authorized to use or otherwise dispose of any content or other intellectual properties.

3.14 Contracts and Commitments

(a) Schedule 3.4 lists each of the following contracts or agreements (if any) of each of Hurray! Times:

(i) any material contract entered into otherwise than in the ordinary course of business;

(ii) all material documents evidencing or creating indebtedness for borrowed money of Hurray! Times with a remaining principal balance in excess of RMB100,000 individually and outstanding on the date of this agreement which will not be retired or repaid on or prior to the Closing Date;

(iii) any material agreement or arrangement otherwise than by way of an arm’s length transaction;

(iv) all agreements between Hurray! Times and Network Operators in PRC and/or any subsidiaries, branches or affiliates thereof

(v) any sale or purchase option or similar contract or arrangement affecting any material assets owned or used by Hurray! Times or by which Hurray! Times is bound;

(vi) any contract which cannot readily be fulfilled or performed by Hurray! Times on time or without undue or unusual expenditure of money or effort;

(vii) any agreement whereby Hurray! Times is, or has agreed to become, a member of any joint venture, consortium or partnership or other unincorporated association, except for those relating to the Dissolving Subsidiaries;

(viii) any agreement whereby Hurray! Times is, or has agreed to become, a party to any distributorship or agency agreement other than in the ordinary course of business;

(ix) any agreement with a customer which constitutes five percent (5%) or more of the annual sales of Hurray! Times on an annual basis;

(x) any agreement with a supplier which constitutes five percent (5%) or more of the total supply of that Hurray! Times on an annual basis;

(xi) any inter-company agreements and arrangements between any Group Companies.

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(b) True and complete copies of the contracts and agreements disclosed pursuant to this Section have been made available to TWM. (i) each contract and agreement disclosed pursuant to Section 3.14 is valid and binding on Hurray! Times thereto, and is in full force and effect in accordance with its respective terms, (ii) Hurray! Times has never been in breach of, or default under, any such contract or agreement, and no event exists that, but for the giving of notice or passage of time, would result in breach thereof or default thereunder, and no events exists that, but for the giving of notice or passage of time, would result in such a breach or default by the other party thereto.

3.15 Employee Relations and Compensation Plans

(a) General

(i) Other than the employment agreements set forth in Schedule 3.5, there are not in existence any contracts of service with directors of the Warrantors nor any consultancy or management agreements with Hurray! Times Companies.

(ii) There are not in existence any contracts of service with employees of Hurray! Times which cannot be terminated by three months’ notice or less without giving rise to any claim for damages or compensation (other than statutory severance payments) and Hurray! Times has not received notice of resignation from any key employees or directors.

(iii) There are no existing contracts of service with any employees of Hurray! Times carrying remuneration and of all directors entitled to emoluments at a rate, or (in the case of fluctuating amounts) an average annual rate since the incorporation of Hurray! Times, in excess of US$50,000 per annum per person.

(iv) There are no amounts owing to any present or former directors or employees of Hurray! Times other than remuneration accrued due or for reimbursement of business expenses.

(v) There is no agreement or understanding (contractual or otherwise) between Hurray! Times and any employee or ex-employee with respect to his employment, his ceasing to be employed or his retirement which is not included in the written terms of his employment or previous employment (as the case may be).

(vi) Hurray! Times has entered into with its employees as listed in the Schedule 3.6 of this Agreements, an employment agreement listed in the Schedule 3.5 and including such contents as non-competition, non-disclosure and IP property assignment, etc.

(b) Payments on termination. Save to the extent (if any) to which provision or allowance has been made in the Financial Statements and except for those which would not be reasonably expected to result in a Material Adverse Effect:

(i) No liability has been incurred by Hurray! Times for breach of any contract of service, contract for services, payments under any applicable laws or for any other obligations resulting from and accruing after the termination of any contract of employment or for services; and

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(ii) Hurray! Times has not made or agreed to make any payment or provided or agreed to provide any benefit to any present or former director or employee or any dependant of any such former director or employee in connection with the actual or proposed termination or suspension of employment or variation of any contract of employment of any present or former director or employee.

(c) Compliance with relevant legislation, etc. Except for those which would not be reasonably expected to result in a Material Adverse Effect, Hurray! Times has in relation to each of its employees (and, so far as relevant, to each of its former employees):

(i) complied with all obligations imposed on it by, and all orders and awards made under, all statutes, regulations, codes of conduct and practice, collective agreements, customs and practices relevant to the relations between it and its employees or any trade union or the conditions of service of its employees, especially on social insurance; and

(ii) maintained current, adequate and suitable records regarding the service of each of its employees.

(d) Proprietary Information and Inventions Agreements. Each former and current employee, officer and consultant of Hurray! Times has executed a form of agreement which provides that all Intellectual Property Rights which arise during the course of their employment or engagement by Hurray! Times shall belong to such Hurray! Times.

(e) Trade Union.

(i) Hurray! Times does not have any agreement or other arrangement (binding or otherwise) with any trade union or other body representing its employees or any of them nor does it recognize any trade union or other body representing its employees or any of them for negotiating purposes; or

(ii) Hurray! Times is not involved in any industrial or trade disputes or any dispute or negotiation regarding a claim of material importance with any trade union or association of trade unions or organization or body of employees and there are no circumstances likely to give rise to any such dispute.

(f) Incentive Schemes. Hurray! Times does not in existence nor is it proposing to introduce any share incentive scheme, share option scheme or profit sharing bonus or other such incentive scheme for all or any of its directors or employees.

3.16 Transactions with Affiliates. No director of Hurray! Times, no spouse, parent, sibling, child or other relative or family member of any such director, and no entity Controlled by any of the foregoing, has any agreement, understanding, proposed transaction with, indebtedness owing to, commitments to make loans or to extend or guarantee credit from Hurray! Times, other than in the ordinary course of business; and (ii) no director of Hurray! Times, no spouse, parent, sibling, child or other relative or family member of any such director, and no entity Controlled by any of the foregoing, has any direct or indirect ownership interest in any Affiliate of Hurray! Times or in any firm or corporation that competes with Hurray! Times. For the purpose of this Agreement, “Affiliate” means, in respect of a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is controlled by, or is under the common Control with, the first-mentioned Person.

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3.17 Governmental and Third Party Consents. Except for relevant filing procedures with the Administration for Industry and Commerce and its local branches or otherwise provided in the Schedule 3.7, no consent, approval, order, or authorization of, or registration, qualification, designation, declaration, or filing with, any governmental authority on the part of Hurray! Times will be required in connection with the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated in the Transaction Documents which has not already been secured or effected prior to the Closing.

3.18 Licenses. Hurray! Times has all material franchises, permits, licenses, and any similar governmental authority necessary for the conduct of its business as now being conducted (“Licenses”). Each of the Licenses is in full force and effect and a list of such Licenses is attached hereto as Schedule 3.8. Except as disclosed in Schedule 3.8, Hurray! Times has been never in default in any respect under any of its Licenses and has not received any notice relating to the suspension, revocation or modification of any such Licenses and has no Knowledge of any event or occurrence or act or omission on the part of Hurray! Times that would or should serve as sufficient notice to Hurray! Times, or that would or should serve as sufficient ground, for the suspension, revocation or modification of any such Licenses. The execution of the Transaction Documents and the execution and implementation of the transactions contemplated therein do not adversely affect the Licenses held by Hurray! Times.

3.19 Qualifications and Status. Every qualification or status based on which Hurray! Times has claimed or received deduction, waiver, benefit, financial support or any favorable treatment has been duly procured and was in full effect as of the time such qualification or status was relied upon.

3.20 Full Disclosure. Each of the Warrantors has provided TWM with all the information that TWM has requested in connection with deciding whether to consummate the transactions contemplated hereunder, all such information being true, accurate and complete in all material respects and not misleading in any material respect. The representations and warranties contained in this Agreement and any other Transaction Documents, certificates and other documents made or delivered in connection herewith do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements contained therein or herein, in view of the circumstances under which they were made, not misleading.

3.21 Not Disclosure. Nothing other than the information as set forth in this Agreement and/or any schedule attached hereto shall be deemed a disclosure to TWM in connection with the execution and delivery of this Agreement.

3.22 Brokers and Finders. None of the Warrantors has retained any investment banker, broker, or finder and there are no fees or charges due or payable to third parties by Hurray! Times (other than reasonable legal fees) in connection with the transactions contemplated by this Agreement.

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3.23 Penalty. Hurray! Times has not been imposed with any form of material penalty, fines, sanctions, suspensions, monetary or otherwise, which has not already been settled in full or set aside, and none of Hurray! Times have received any written notice with respect to any material penalty, fines, sanctions, suspensions, and to the best Knowledge of Hurray! Times, it is not aware of any material penalty, fines, sanctions, suspensions that may be imposed upon it or any events, circumstances, conditions or facts which may result in the imposition of the penalty, fines, sanctions, suspensions upon it which will result in a Material Adverse Event.

3.24 Separate Warranty. Each warranty is a separate and independent warranty and shall not be deemed qualified, limited, altered or amended by any other warranty or any term of this Agreement.

4. Representations and Warranties of TWM. As of the date hereof, TWM represents and warrants to the Warrantors as follows:

4.1 Authorization. TWM has obtained all the relevant corporate authorities that are required for the execution, delivery and performance of this Agreement and TWM has obtained all the relevant corporate authorities that are required for the execution, delivery and performance of this Agreement and Transaction Documents.

4.2 No Conflict. The execution, delivery and/or performance of this Agreement (i) does not violate any law, regulation, administrative measure, judgment or order of any competent court or arbitral body, (ii) does not violate or conflict with the constitutional documents of TWM, and (iii) does not conflict with or constitute a breach of any agreement to which TWM or any of its Affiliates is a party, nor would it cause expiry, cancellation or early termination of any of the agreements to which TWM or any of its Affiliates is a party.

5. Covenants for the Period Preceding the Closing

5.1 Resolutions, Contracts or Commitments. Each of the Warrantors, severally and jointly, covenants with TWM that, except as required by this Agreement or the Transaction Documents, no resolution of the directors, owners, members, partners or Shareholders of Hurray! Times shall be passed nor shall any contract or commitment (other than commercial agreements entered into in the ordinary course of business) be entered into from the date of this Agreement up to, and including the Closing Date without the written consent of TWM.

5.2 Business Operations. Notwithstanding anything to the contrary in this Agreement, except as otherwise permitted by this Agreement or any of the Transaction Documents or with the written consent of TWM, from the date of this Agreement and at all times up to and including the Closing Date, each of the Warrantors undertakes, and shall cause Hurray! Times to comply with, the following restrictions and requirements (except for any non-compliance which would not be reasonably expected to have a Material Adverse Effect):

(a) carry on its business prudently in the usual and ordinary course consistent with past practice and, subject to the compliance with applicable laws, use its best efforts to preserve its relationships with customers, suppliers and other third parties having business dealings with any of Hurray! Times;

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(b) not amend, alter or repeal, whether by merger, reclassification or otherwise any provision of its memorandum or articles of incorporation, and other by-laws or equivalent constitutional documents;

(c) not increase, reduce, consolidate, sub-divide or cancel its authorized capital or total investment or issued capital or registered capital;

(d) not change its name or the name under which it carries on business;

(e) not change its jurisdiction of incorporation;

(f) not make any composition or arrangement with its creditors;

(g) not pass any resolution which would result in its winding up, liquidation or entering into administration or receivership;

(h) not change its nature or scope (including the geographical scope) of the business or not commence or carry on any type of business not ancillary or deviating from its existing business; not consolidate or merge with any other business, which is not part of its existing business of as at the date of this Agreement;

(i) not offer, sell or issue, or enter into any agreement or issue any instrument providing for the offer, sale or issuance (contingent or otherwise) of, any shares or convertible securities, or any equity securities of Hurray! Times ;

(j) not increase the number of shares available for grant or issuance under any share option plan or other share incentive plan or arrangement or make any amendment to or terminate any such plan or arrangement;

(k) not make any investment or incur any commitment other than in the ordinary course of business;

(l) not borrow any sum which when aggregated with all other outstanding borrowings of Hurray! Times exceeds US$50,000 other than in the ordinary course of Hurray! Times’ business.

(m) not sell, dispose of or transfer any of its assets, business or shares;

(n) not create any Encumbrance (other than a lien arising by operation of law) over the whole or any part of its undertaking, property or assets;

(o) not enter into any contract for transaction or expenditure the value of which exceeds US$50,000 unless with the prior written consent of TWM and not to enter into any contract other than in the ordinary course of business and on arm’s length terms;

(p) not make any loan or advance or give any credit (except trade credit to customers in the ordinary course of business); not to give any guarantee or indemnity for or otherwise secure the liabilities or obligations of any Person;

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(q) not amend, alter, terminate or resolve any material contract; and

(r) not agree in writing or otherwise to take any of the foregoing actions.

5.3 Subsequent Disclosure. If at any time before Closing, any of the Warrantors comes to know of any fact or event which, save for any matter already qualified herein by specific reference to any Schedule hereto:

(a) is in any way inconsistent with any of the representations and warranties given by any of the Warrantors resulting in a Material Adverse Event, and/or

(b) suggests that any fact warranted by any of the Warrantors may not be as warranted or may be misleading resulting in a Material Adverse Event, and/or

(c) would be material to any decision made by a prudent strategic investor in similar situations as to whether or not to enter into this Agreement and/or consummate the transactions contemplated herein

the Warrantor shall give immediate written notice thereof to TWM and the other Parties and rectify the matters to the satisfaction of TWM within five (5) Business Days from the date the written notice is delivered to TWM, and in the event the Warrantor fails to rectify the matters to the satisfaction of TWM within the 5-day period, TWM may terminate this Agreement without any penalty whatsoever, by delivering written notice of such termination, within fourteen (14) Business Days from the expiration of the 5-day period.

5.4 Exclusivity. From and after the date hereof until Closing or other termination hereof, no parties shall, directly or indirectly, (i) encourage, solicit, initiate, engage or participate in discussions or negotiations with any person or entity (other than TWM) concerning any merger, consolidation, sale of material assets, or other business combination involving Hurray Cayman or Hurray! Times or Hurray! Times, or to sell the Shares, or (ii) provide any non-public information concerning prospective acquirer (other than TWM)

6. Special Covenants and Stipulations. Each of TWM, the Warrantors, and Hurray! Times s covenants respectively with respect to the matter relevant to such Person as follows:

6.1 Rescission. As a separate and independent remedy to TWM for the events set forth below and in addition to other remedies available to TWM, TWM shall have the right to terminate this Agreement and to be repaid all or the portion of the Total Considerations that has been paid pursuant to Article 2 above, or renegotiate the Total Considerations or other terms and conditions under this Agreement if any of the following events occurs during the period commencing from the signing date of this Agreement up to the Closing Date: Hurray! Times ceasing to hold any of licenses or permits required for its business operation, including but not limited to the operation of its software and system integration business.

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6.2 Material Breach. The failure by any of the Warrantors in carrying out any one of the following covenants shall constitute a material breach and the party in breach shall be liable for the specific damage as provided herein:

(a) The Warrantors shall jointly and severally use their best efforts to cause each of the Personnel under Software Providing Agreement or System Integration Service Agreement to duly perform pursuant to such agreements.

(b) Each of the Warrantors shall jointly and severally use their best efforts in causing each manager to duly perform pursuant to the relevant Employment Agreement.

(c) The Parties hereto acknowledge that the determination of the majority of the Consideration depends upon the performance of Hurray! Times in years 2007, 2008 and 2009 and the Parties hereby agree that for the purpose of making accurate determination of the Consideration, the performance of Hurray! Times will be assessed as if Hurray! Times is an independent operation and any transaction between Hurray! Times and an affiliate of TWM shall be conducted in an arm-length manner.

(d) It is the understanding of the parties hereto that, subject to the relevant provisions contained in this section and elsewhere in this Agreement, if any, the managers will be given sufficient autonomy with respect to the management and operation of Hurray! Times; provided that managers shall not cause Hurray! Times to take any actions, engage in any activities or carry out any transaction that (1) is inconsistent with Hurray! Times Business scope, and (2) is inconsistent with the restrictions set forth in the relevant Employment Agreement, and TWM shall not exercise its control power over Hurray! Times to change such autonomy.

(e) Hurray Cayman agrees to pay all the Taxation related to the operation of Hurray! Times in the ordinary course of business that Hurray! Times becomes liable to pay on or before July 31, 2007. Besides, Hurray Cayman agrees to be responsible for all punishments, sanctions, penalties or any other liabilities imposed by relevant tax authorities with respect to any unlawful action before July 31, 2007 of Hurray! Times.

7. Confidentiality and Announcements

7.1 Disclosure of Terms. Each Party acknowledges that (i) the terms and conditions (collectively, the “Transaction Terms”) of the Transaction Documents, and all exhibits, restatements and amendments hereto and thereto, including their existence, and (ii) any information obtained by TWM and/or its Affiliates regarding the assets, properties, operations, financial performance and condition, and business of Hurray! Times shall be considered confidential information and shall not be disclosed by it to any third party except in accordance with the provisions set forth below.

7.2 Permitted Disclosures. Notwithstanding anything in the foregoing to the contrary, a Party may only disclose: (i) information which was in the public domain or otherwise known to such Party before it was furnished to such Party by any other Party or, after it was furnished to such Party, entered the public domain other than as a result of a breach by such Party of this Agreement; (ii) information the disclosure of which is necessary in order to comply with any applicable law, the order of any court, the requirements of a stock exchange or to obtain Tax or other clearances or consents from any relevant authority.

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7.3 Other Information. The provisions of this Section shall be in addition to, and is not in substitution for, any separate nondisclosure agreement executed by any of the Parties with respect to the transactions contemplated in this Agreement.

8. Non Competition. Except as disclosed on Schedule 3.9, as of the date of the signing of this Agreement, Hurray Cayman and any of its Affiliated Enterprise shall not, in any circumstance, directly or indirectly operate in any form such business as system integration business. For purpose of this article, “Affiliated Enterprise” shall mean an affiliated enterprise or entity of Hurray Cayman, which means with respect to a limited liability company or a limited liability partnership, a fund or entity managed by the same manager or managing member or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or management company, and “control” shall mean (a) an ownership interest, directly or indirectly, of fifty percent (50%) or more in such enterprise or entity; or (b) the ability to direct the management or policies of such enterprise or entity, whether through ownership, contract, or otherwise. For the agreements listed on Schedule 3.9, Hurry Cayman will cause its Affiliated Enterprise to return 5% of the account receivable to Hurray! Times as bonus, and Hurray! Times will perform contractual obligations under the agreements listed on Schedule 3.9 and collect all receivable amounts on the behalf of Hurray Cayman and/or its Affiliated Enterprise.

9. Long-Stop Date. In the event that any conditions to the Closing hereunder is not fulfilled or waived within one hundred and eighty (180) Business Days as of the signing date of this Agreement, or after all the Closing Conditions are met, but the Closing shall not have occurred on or prior to March 31, 2008, whichever is earlier, (“Long-Stop Date”), each of the parties may terminate this agreement by giving to each of the other Parties a written notice indicating such intent of the terminating Party. Notwithstanding any termination of this Agreement and notwithstanding the non-consummation of any transaction contemplated under the Transaction Documents, the obligations of the Parties specified in Article 7 shall continue unimpaired and in full force and effect.

10. Indemnity.

10.1 The Warrantors jointly and severally agree to indemnify and hold harmless TWM and assigns of TWM, and TWM agrees to indemnify and hold harmless the Warrantors, (each of the Party being indemnified under this clause is called an “Indemnitee”), against any and all Indemnifiable Losses (as defined below) to such Indemnitee, directly or indirectly, as a result of, or based upon or arising from, or related to, any inaccuracy in or breach or nonperformance of any of the representations, warranties, covenants or agreements made by the relevant Party in or pursuant to this Agreement. For purposes of this clause, “Indemnifiable Loss” means, with respect to any Indemnitee, any action, cost, damage, disbursement, expense, liability, loss, deficiency, diminution in value, obligation, penalty or settlement of any kind or nature, whether foreseeable or unforeseeable, including, but not limited to, (i) interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses reasonably incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by such Indemnitee and (ii) any Taxes that may be payable by such Indemnitee as a result of the indemnification of any Indemnifiable Loss hereunder.

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10.2 The Parties hereto further agree that should the final award or agreement instates any liability against any of the Warrantors and thus, a payment obligation in favor of TWM, then TWM shall be fully entitled to set-off such amount against any payment obligation of TWM in favor of any of the Warrantors whether under this Agreement or under any other of the Transaction Documents.

11. Miscellaneous

11.1 Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of People’s Republic of China.

11.2 Dispute Resolution

(a) Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall be resolved through consultation. Such consultation shall begin immediately after one Party has delivered to the other Party a written request for such consultation. If within 30 days following the date on which such notice is given the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of either Party with notice to the other.

(b) The arbitration shall be conducted through the [Hong Kong International Arbitration Centre/ICC London] (“HKIAC”). There shall be three (3) arbitrators. Each disputing Party to the dispute shall be entitled to appoint one arbitrator, and the third arbitrator shall be jointly appointed by the disputing Parties or, failing which the HKIAC shall appoint the third arbitrator, as the Chairman.

(c) The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Domestic Arbitration Rules of the Hong Kong International Arbitration Centre as administered by the HKIAC at the time of the arbitration.

(d) The arbitrators shall decide any dispute submitted by the Parties to the arbitration strictly in accordance with the substantive laws of PRC and shall not apply any other substantive law.

(e) Each Party shall cooperate with the other in making full disclosure of and providing complete access to all information and documents requested by the other in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on such Party.

(f) The award of the arbitration tribunal shall be final and binding upon the disputing Parties, and the prevailing Party may apply to a court of competent jurisdiction for enforcement of such award.

(g) Either Party shall be entitled to seek preliminary injunctive relief from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

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11.3 Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when printed confirmation sheet verifying successful transmission of the facsimile is generated by the sender’s machine, when sent by facsimile at the number set forth below (or hereafter amended by subsequent notice to the parties hereto); (c) five (5) Business Days after deposit in the mail as certified mail, receipt requested, postage prepaid and addressed to the other party as set forth below; or (d) three (3) Business Days after deposit with an overnight delivery service, postage prepaid, addressed to the parties as set forth below, provided that the sending party receives a confirmation of delivery from the delivery service provider.

To:	Hurray! Cayman
	Address: 15/F, Tower B Gateway Plaza, No. 18 Xia Guang Li, North Road, East Third Ring, Chaoyang District, Beijing
	Telephone: 86-10-84555566
	Fax: 86-10-84555555 Addressee: Wang Qindai
To:	Hurray! Times
	Address: 16/F, Tower B Gateway Plaza, No. 18 Xia Guang Li, North Road, East Third Ring, Chaoyang District, Beijing
	Telephone: 86-10-84555566
	Fax: 86-10-84555555 Addressee: Xiang Songzuo
To:	TWM
	Address: 13-1F, 172-1, Sec.2, Ji-Lung Rd., Taipei 106, Taiwan
	Telephone: 886-2-66366979
	Fax: 886-2-66369889
	Addressee: Harvey Chang

Each Party making a communication hereunder by facsimile shall promptly confirm by telephone to the Party to whom such communication was addressed each communication made by it by facsimile pursuant hereto but the absence of such confirmation shall not affect the validity of any such communication. A Party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 11.5 by giving the other Parties written notice of the new address in the manner set forth above.

11.4 Force Majeure. Any Party shall be entitled to terminate this Agreement if any representation or warranty contained in this Agreement is or becomes untrue, incomplete or inaccurate as a consequence of any Force Majeure Event between the time of signing of this Agreement up to the Closing Date. For purposes of this Agreement, “Force Majeure Event” shall mean acts of God, natural disasters, war, fire, strike, riots, change in law or any other events which are unforeseeable and cannot be overcome and cannot be avoided by the prevented Party.

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11.5 Amendment of this Agreement. Any provision of this Agreement may be amended by a written instrument signed by all the Parties.

11.6 Entire Agreement. Except as specifically referenced in this Agreement, this Agreement, together with all Exhibits and Schedules to this Agreement, constitute the entire contract among the Parties with respect to the transactions and subject matters under this Agreement. Any prior or contemporaneous agreement, discussion, understanding, or correspondence among the Parties (including any prior representations or warranties given by the Parties) regarding the subject matters of this Agreement is superseded by this Agreement. For the avoidance of doubt, in the event of any inconsistency between the provisions of this Agreement and those of any other Transaction Document, the provisions of this Agreement shall prevail.

11.7 Successors and Assigns. Subject to the exceptions specifically set forth in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors, and assigns of the Parties.

11.8 Survival of Warranties. The representations, warranties, covenants and stipulations of each of the Warrantors contained in this Agreement shall survive the execution and delivery of this Agreement, other Transaction Documents and the Closing until the three (3) year anniversary of the Closing, except for those regarding taxation and/or social security, which shall survive until the expiration of the statute of limitations.

11.9 Further Assurances. From and after the date of this Agreement, upon the request of TWM, each of the Warrantors shall execute and deliver such instruments, documents or other writings as may be necessary or desirable to confirm and carry out and to fully give effect the intent and purposes of this Agreement, or as the case may be the rest of the Transaction Documents.

11.10 Fees and Expenses. Each Party shall bear its own costs and expenses relating to the discussion, preparation, negotiation and the execution of this Agreement and other Transaction Documents and activities taken by each of the parties in connection therewith and the implementation of, performance under, and the completion of the transactions contemplated in, this Agreement and other Transaction Documents (collectively, “Transaction Expenses”); provided that all Transaction Expenses incurred by or on behalf of Hurray! Times shall be borne by Hurray Cayman.

11.11 Severability. To the extent permitted under the applicable laws, each provision of this Agreement shall be interpreted in such manner so as to be effective and valid under the applicable laws, but if any provision of this Agreement is held to be prohibited by or invalid under the applicable laws, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

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11.12 Cross Default. Any material breach by a party to a Transaction Document shall constitute a material breach by such party under all of the Transaction Documents executed by such party.

11.13 Counterparts. This Agreement may be executed in three counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.14 Headings. The headings of the clauses of this Agreement are for convenience only and shall not by themselves determine the interpretation of this Agreement.

IN WITNESS WHEREOF, the Parties to this Agreement have executed this Agreement as of the date first written above.

TWM Holding Co. Ltd.
By:
	Name: Wang Qindai Title: Chief Executive Officer
Hurray! Holding Co., Ltd
By:
	Name: Harvey Chang Title: Chairman
Hurray! Times Communications (Beijing) Ltd.
By:
	Name: Xiang Songzuo Title: Legal Representative

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Appendix

Schedule Number	Name of Document
Schedule 1	Transaction Documents
1.1	Revised Memorandum and Articles of Association
1.2	Director Appointment Letter
1.3	Hurray! Cayman Board Resolution
1.4	Hurray! Times Board Resolution
1.5	TWM Board Resolution
Schedule 2	Legal Opinion
Schedule 3	Disclosure Schedule
3.1	List of Hurray! Times’ Shareholders and the capital structure
3.2	Financial Statements
3.3	List of all material Intellectual Property Rights
3.4	Lists of important contracts or agreements
3.5	Existing Employment agreement of Hurray! Times
3.6	List of employees of Hurray! Times
3.7	List of Governmental and Third Party Consents
3.8	List of material franchises, permits, licenses
3.9	List of the SI agreements that are exceptions to the non-competition clause
Schedule 4	Legal Opinion

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SCHEDULE 1

Transaction Documents

Revised Memorandum and Articles of Association

Director Appointment Letter

Board Resolutions

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SCHEDULE 2

Legal Opinion

27

SCHEDULE 3

Disclosure Schedule

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SCHEDULE 4

Legal Opinion

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EX-4.85

Exhibit 4.85

EQUITY TRANSFER AGREEMENT

among

Liang Ruan

Yuqi Shi

And

Shanghai Saiyu Information Technology Co., Ltd.

Jie Li

Jiamei Wan

12 February, 2007

Equity Transfer Agreement

This Equity Transfer Agreement (“this Agreement”) is entered into by the following parties on [  ] [  ], 2007, in Beijing, People’s Republic of China.

Party A: Liang Ruan

Identification Number: 360403197312260018

Party B: Yuqi Shi

Identification Number:

(hereinafter referred to as the “Transferee”)

Party C: Jie Li

Identification Number:

Party D: Jianmei Wan

Identification Number:

(hereinafter referred to as the “Transferor”, and together with the Transferee, as the “Parties”)

Target Company: Shanghai Saiyu Information Technology Co., Ltd.

Registered Address: Suite 206-P, Pucang Road 485, Qingpu District, Shanghai

Legal Representative: Jie Li

Business Registration Number: 3102292095806

1

WHEREAS

1.	Shanghai Saiyu Information Technology Co., Ltd. (“Shanghai Saiyu”) is a limited liability company duly incorporated and existing under the laws of People’s Republic of China. The Henan Yinshan’s register capital is RMB10 million, in which Party C holds 70% equity interest, and Party D holds 30% equity interest. As of the date as set forth in this Agreement, the Sellers are joint controlling sharehoders of the Henan Yinshan for their capital contribution
2.	Both Party A and Party B are PRC citizens with full capacity of civil conduct, and jointly wish to accept the 100% equity interest of Shanghai Saiyu from the Transferees.
3.	The Transferors wish to transfer the 100% equity interest of Shanghai Saiyu to the Transferees, in which, Party C shall transfer 50% equity interest to Party A, and 20% equity interest to Party B. Party D shall transfer 30% equity interest to Party B. Upon the closing of the transaction, Party A shall own 50% equity interest of Shanghai Saiyu, and Party B shall own 50% equity interest of Shanghai Saiyu.

NOW, THEREFORE, the Parties enter into the following agreement through amicable negotiations in the spirit of mutual benefit and good faith, and pursuant to the relevant laws and regulations:

Article 1 Equity Transfer

1.	The Transferor hereby agrees to transfer, pursuant to the terms and conditions hereunder, all of its 100% equity interest in Shanghai Saiyu to the Transferee on the Effective Date of Transfer (defined below) described in Article 3, and the Transferee hereby agrees to accept such transfer pursuant to the terms and conditions hereunder (the “Equity Transfer”).
2.	From the Effective Date of Transfer under Article 3 hereof, the Transferee shall become the lawful owner of the transferred equity interest pursuant to the terms and conditions hereunder, enjoy and bear all the rights and obligations in connection with the transferred equity interest (including all the rights, interests and obligations relating to its investment); the Transferor shall cease to enjoy any rights, or bear any obligations, in connection with the transferred equity interest, except as otherwise provided hereunder.
3.	From the Effective Date of Transfer, the Transferee shall own the following capital contribution and percentage in the registered capital:
	Party A: RMB 5,000,000, own 50% equity interest of Shanghai Saiyu registered capital
	Party B: RMB 5,000,000, own 50% equity interest of Shanghai Saiyu registered capital

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Article 2 Equity Transfer Price and Method of Payment

1. The Equity Transfer Price for the share shall be RMB 10,000,000 and the payment schedule shall be as follows:

( 1 )	The initial payment of 40% shall be paid to the designated account of the Transferor through bank transfer within five (5) working days from the Effective Date of Transfer;
( 2 )	The second payment of 10% shall be paid to the designated account of the Transferor through bank transfer within five (5) working days after the following pre-requisite terms as follows:

a)	Both parties agree that the Transferor shall, within twenty (20) business days after the equity transfer hereunder has been approved by the original approval authority of Shanghai Saiyu and the amended foreign-invested enterprise approval certificate has been issued, complete the formalities for amended industrial and commercial registration at the relevant industrial and commercial authority.
b)	Shanghai Saiyu has undergone no unfavorable changes in its business, operation, properties, prospects and assets;
c)	All the representations, warranties and covenants of the Transferor under Article 4 hereof are true and accurate as of the Execution Date hereof and the Effective Date of Equity Transfer, as if such representations and warranties are made as of the Execution Date and the Effective Date of Equity Transfer (except for such representations and warranties that are made at a specific date and are required to be true and accurate only at such date);
d)	The Transferor has terminated all employment contracts with the existing staff of Shanghai Saiyu and has completed all necessary procedures, and shall be hold liable for any expenses (including without limitation reimbursement, penalties, social security expenses, and etc.)

( 3 ) The third payment shall be paid within five (5) business days after the Transferor has entered into formal agreements with China Mobile Communications Group Corporation in connection with all services (including IVR, SMS, MMS, and WAP) provided by Shanghai Saiyu, and . The amount of such payment shall be determined in the following manner:

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( 4 ) The fourth payment of 30% shall be paid to the designated account of the Transferor through bank transfer in the event that:

a)	Shanghai Saiyu has provided services online for one (1) year;
b)	Perform in strict compliance with the relevant rules and regulations in connection with the Monternet services of China Mobile Communications Group Corporation and the Ministry of Information Industry;
c)	Satisfy the assessment standards of new business operation;
d)	Successfully renews all formal agreements in connection with services including IVR, SMS, MMS, and WAP with China Mobile Communications Group Corporation.

The fourth payment shall be paid upon the effective signing date of the above various service agreements (in the event that different effective signing date in various service agreement, the last effective signing date shall be the effective payment date). In the event of Shanghai Saiyu unable to successfully renew agreements with mobile operators due to any unpredictable and inevitable significant changes of the relevant policies of government authorities and mobile operators, the fourth payments shall still be paid to the Transferor.

( 5 )	Either the Transferors or the Transferees shall promptly, but in no event later than the third business day after they have learned that any of the above Preconditions has been satisfied, notify the other party of such satisfaction and provide written evidence thereof (such as photocopies of relevant approvals or filed documents).
( 6 )	All the Preconditions listed in Article (3) shall be satisfied as a whole within six (6) months upon execution hereof. In the event that any of the Preconditions set forth above has failed to be satisfied in the specified in the specified time limit, both Parties agree to engage in further negotiations on this issue to resolve this matter.
( 7 )	According to all the services (including IVR, SMS, MMS, WAP) in connection with the formal agreement entered by the Company and the mobile operators as set forth under Article 3 (a), in the event that the Information Fee of each business line is lower than the Information Fee as set forth under the Appendix 1 of this Agreement, the Transferee shall have the right to lower the total consideration of this Agreement and renegotiate with the Transferor, or the Transferee shall have the right to terminate this Agreement without any prior consent from the Transferee. This Agreement shall promptly terminate after the Transferee issue a written termination agreement to the Transferor, and the Transferor shall promptly pay back the Transferee considerations in one payment received from the Transferee.

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( 8 )	The designated bank account details of the Transferor are as follows:
	Name of Bank: Construction Bank of China Beijing Branch Haidian Sub-branch
	Account Number: 4367420011190071124
	Name of Account: Jianmei Wan

Article 3 Balance Sheet Date

1. Upon the Effective Date of Transfer of this Agreement, both Parties shall negotiate the detail date of the Balance Sheet Date. Upon Balance Sheet Date, both Parties shall enter into the formal financial hand over procedures.

Article 4

1. The Transferor shall, within twenty (20) business days after the equity transfer hereunder has been approved by the original approval authority of Shanghai Saiyu and the amended foreign-invested enterprise approval certificate has been issued, complete the formalities for amended industrial and commercial registration at the relevant industrial and commercial authority, and the Transferee shall assist the Transferor in completing such formalities. The amendment of industrial and commercial registration shall include the following:

a)	Completion of registration amendment in connection with the equity transfer, the registered shareholder shall be changed from the Transferor to the Transferee;
b)	Completion of the amendment to registration of the directors and legal representative, appointing Shi Yuqi as the director and legal representative;
c)	Completion of the amendment to registration of the General Manager of the company, appointing Shi Yuqi as the General Manager;
d)	Completion of the amendment to registration of the chairman of supervisor, appointing Liu Juanmei as the chairman of supervisor;
e)	Completion of registration of the amended articles of association.

2. The Transferor shall promptly notify the Transferee upon receipt of the notice about completion of the formalities issued by the industrial and commercial administration, and the Transferee shall get all the documents for the completed amended industrial and commercial registration within three (3) business days after receipt of the notice from the Transferor. The amended industrial and commercial registration in this Article shall be finally completed after the Transferee has received all the documents.

3. The materials required by the industrial and commercial administration provided by the Transferor shall be authentic and valid, and satisfy the requirements of the industrial and commercial administration.

5

Article 5 Representations, Warranties and Covenants of the Transferor

1.	Shanghai Saiyu is a wholly foreign owned limited liability company duly established and effectively existing under the PRC laws;
2.	The Transferor has all the necessary rights, powers and capacities to execute and perform all the duties and obligations hereunder, and this Agreement shall constitute its legal, valid and binding obligations after execution hereof.
3.	The Transferor has the legal and actual ownership to the equity interest to be transferred hereunder, has the capacity for rights and actions in connection with the equity transfer, and has obtained all the necessary approvals other than the approval from the original approval authority of Shanghai Saiyu regarding the equity transfer hereunder.
4.	The execution and performance of this Agreement by the Transferor do not contravene any law, articles of association, contract, agreement or other legal documents binding on the Transferor.
5.	There exists no pledge, preferential right or third party’s rights and interests in any form, or any encumbrance.
6.	The transferor agreed to give up the preemptive right arising from the equity transfer under this Agreement.
7.	The information contained in the due diligence and other materials of Shanghai Saiyu delivered to the Transferee by the Transferor are complete, true and accurate.
8.	The transferors warrant that Shanghai Saiyu is duly qualified to operate its main business within its existing business scope and owns a valid Multi-Area Value-Added Telecom Business Operation License which has been duly acquired and is valid; the Transferors will not unilaterally take any action that would impair Shanghai Saiyu’s existing business eligibility or any part thereof.
9.	As of the Execution Date, Shanghai Saiyu does not have any outstanding shareholders resolutions and documents other than the shareholder resolutions and documents that have been disclosed by the Transferors to the Transferees. Shanghai Saiyu does not have any valid resolutions or document of the board/ acting board since established.

6

10.	As of the Execution Date, Shanghai Saiyu does not have any other liabilities (“Undisclosed Liabilities”). If any Undisclosed Liabilities exist, the Transferors shall be fully liable for repayment of such liabilities. In the event of any loss to the Transferees or Shanghai Magma resulting from the Undisclosed Liabilities, the Transferors shall indemnify the loss in full amount. As of the Execution Date, Shanghai Saiyu has not violated any material aspect of laws relating to taxes, employees, insurance and property; has never suffered any administrative penalties or penalties imposed by mobile operators, and will not be subject to such penalties in the future due as a result of any action to date; and there does not exist any actual or threatened lawsuit.
11.	As of the Execution Date, Shanghai Saiyu does not have any outstanding contract, agreement or binding document other than the contracts, agreements and documents that have been disclosed by the Transferors to the Transferees.
12.	Business Code, fee standards, and other information provided by the Transferors to the Transferees is true and correct in all material aspects.
13.	The Transferors warrant that they explicitly understand that the purpose of the Transferees for executing this Agreement is to carry out Java and WAP business nationwide. The Transferors warrant that they will perform this Agreement in good faith and in all aspects to cause such purpose to be achieved. The Transferors warrant that, prior to handover of the company, they will promptly notify the Transferees of any event coming to their attention that might affect the contract purpose (including without limitation to changes in policies of operators and any event occurred in the process of preparation and filing, which is unpredictable at the time of execution hereof, etc.), and consult with the Transferees in good faith to work out countermeasures.
14.	Except the prior written consent of the Transferees has been acquired, the Transferors warrant that, as from the Execution Date till the Equity Transfer Closing Date:

1)	Shanghai Saiyu will remain in normal operation, and will send a notice to the Transferees to seek approval therefrom two (2) days prior to disbursement of any expenditure at or higher than RMB10, 000;
2)	No significant change (including without limitation the assignment or creation of any encumbrance or third parties’ rights) as to financial condition, status or prospect and the value and structure of assets or liabilities of Shanghai Saiyu will take place;
3)	Shanghai Saiyu will not change its equity structure and articles of association;
4)	Shanghai Saiyu shall use its best efforts to ensure that operation of Shanghai Magma be free from any negative influence.

15. All statements, representations and warranties made by the Transferors hereunder are true and correct.

7

Article 6 Representations, Warranties and Covenants of the Transferee

1.	The Transferee is a legal person duly established and effectively existing under the PRC laws;
2.	The Transferee has the full rights to carry out the activities in connection with the equity transfer hereunder, and has obtained all the approval and/or authorization necessary for the execution and performance of this Agreement.
3.	The execution and performance of this Agreement by the Transferee do not contravene any law, articles of association, contract, agreement or other legal documents binding on the Transferee.
4.	This Agreement and the equity transfer have been approved by the relevant Ministry of Information Industry and the Industrial and Commercial authority;
5.	The Transferee shall perform its obligations of paying the Equity Transfer Price to the Transferor in strict compliance with the provisions hereof;
6.	Upon the completion of industrial and commercial registration in connection with the equity transfer hereunder, the Transferee shall replace any content (such as pictures, songs, and etc.) applied by the Transferors for use of business, and shall duly resolve the copyrights of the replaced content thereafter.
7.	The Transferees shall be responsible for filing the registration of the industrial and commercial authority, the annual inspection of the industrial and commercial authority, ministry of information industry, and the relevant work in connection with the annual inspection of the Multi-Area Value-Added Telecom Business Operation License, and shall be hold liable for all relevant expenses in connection with the filing above. The Transferors shall provide assistance.
8.	The Transferees agree that all revenue as of February 2007 received from the WAP services provided to Shanghai district is own by the Transferor. The Transferee shall transfer the relevant actual revenue as per received from the mobile operators to the Transferor, and shall deduct the relevant tax of the Company and personal income tax of the Transferor before payment.

8

ARTICLE 7: Confidentiality

Without the written approval of the other Parties, neither Party shall disclose the relevant content of this Agreement to any third parties other than the Parties hereto (not including the affiliates of the Parties and the professionals engaged by the Parties) prior to the Closing Date hereunder, except as explicitly required under the relevant PRC laws and regulations, relevant articles of association, or other applicable PRC laws and regulations.

Article 8 Expenses

The Transferors and the Transferees shall each be responsible for their respective taxes incurred in the equity transfer hereunder according to law.

Article 9 Issues not Mentioned

All the Parties agree to engage in further negotiations on issues not mentioned herein, and enter into supplemental agreement in writing, after the execution of this Agreement. The supplemental agreement shall constitute an integral part of this Agreement.

Article 10 Liabilities for Breach

1. A Party hereto shall constitute a breach of this Agreement if such Party:

(1)	fails to perform any obligations hereunder;
(2)	Violates any representations, warranties and covenants hereunder;
(3)	Makes any false or misleading representations and warranties hereunder (either in good faith or bad faith).

2. In the event of any breach of this Agreement as set forth above, the Party that is not hold liable shall have the right to request the Party hold liable to resolve the breach within thirty (30) days. In the event that the Party hold liable cannot resolve the breach within the time limit, the Party that is not hold liable shall have the right to terminate this Agreement, and the other Party shall indemnify any loss incur by the Party that is not hold liable.

9

Article 11 Dispute Resolution

Any dispute arising from or in connection with this Agreement shall be resolved by the Parties through amicable consultation. If the Parties cannot resolve the dispute through amicable consultation within sixty (60) days after the occurrence thereof, such dispute shall be submitted for arbitration at the China International Economic and Trade Arbitration Commission according to its then effective arbitration rules. The arbitration award shall be final and binding upon the Parties. The location of arbitration shall be in Beijing.

Article 12 Governing Laws

The formation, validity, interpretation, performance and dispute resolution of this Agreement shall be governed by the PRC laws.

Article 13 Contractual Rights

Neither Party shall assign its rights hereunder without the prior written consent of the other Party. This Agreement shall be binding and inure to the benefit of the successors and approved assignees of the Parties hereto.

Article 14 Force Majeure

1.

For the purpose of this Agreement, “force majeure” event refers to any event beyond the reasonable control of the Parties that can not be predicted (or can be predicted but cannot be avoided) by the Parties hereto, which event has caused failure of any Party hereto to perform any or all terms and conditions of this Agreement, including without limitation natural disasters such as earthquake, typhoon, flood, fire and other natural disasters, war, riot, strike or any other similar incidents. The Parties hereto acknowledge and agree, the non-performance by either Party of this Agreement due to force majeure event shall not constitute a breach in subsection 1 of Article 11 hereof, and the Party affected shall not be liable for any compensation or indemnity thereto.

2.

The Party affected by the force majeure event shall immediately notify the other Party of the occurrence of force majeure event via the most rapid means of communication available, and provide the other Party with documents specifying the details of the event and the reason for the non-performance, partial non-performance for delay of performance of this Agreement, and the Parties shall negotiate whether to postpone the performance of this Agreement or terminate this Agreement.

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Article 15 Entire Agreement

This Agreement constitutes the entire representations and agreement between the Parties and supersede any oral or written representations, warranties, understandings and agreements concerning the subject matter hereof between the Parties prior to the execution hereof. The Parties acknowledge and agree, any representations or warranties not explicitly included herein shall not constitute the basis of this Agreement, nor constitute the basis for the determination of the rights and obligations of the Parties and the construction of the terms and conditions hereof.

Article 16 Notice

Any notice hereunder shall be in written form, in Chinese language, and delivered via registered mail, fax or other electronic means of communication. A notice shall be deemed to be duly given when it is delivered to the registered address of the receiving Party. If the notice is sent by registered mail, it shall be deemed to have been duly given on the date shown on the receipt thereof. If the notice is transmitted by facsimile, it shall be deemed to have been duly given on the date of receipt of the transmission confirmed by receipt of a transmittal confirmation.

Transferees: Liang Ruan

Address: 15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, North Road, East Third Ring Chaoyang District, Beijing, 100027 P.R.China

Zip Code:

Tel.: 010 - 8455-5566

Fax:

Attention:

Transferors: Jianmei Wan

Address: 206-P, Fucang Road 485, QingFu District, Shanghai

Zip Code:

Tel.: 13910711990

Fax:

Attention:

11

Article 17 Language

This Agreement shall be written in Chinese language in six (6) originals, with each Party holding one (1) original thereof, the remaining shall be filed for approval and the industrial and commercial registration, each of which shall have equal legal validity.

Article 18 Supplemental Agreement or Exhibits

The supplements or revisions to this Agreement agreed upon and duly executed by the Parties shall be attached as the Exhibits hereto, constituting an integral part hereof.

12

SIGNATURE PAGE

In Witness Whereof, the Parties have executed this Agreement on the date first shown above.

Party A: Ruan Liang

Party B: Shi Yuqi

Party C: Li Jie

Party D: Wan Jianmei

13

EX-4.86

Exhibit 4.86

Transfer Agreement

This Transfer Agreement (this “Agreement”) is executed by and among the parties below as of May [ ], 2007 in Beijing:

Party A: Hurray! Times Communications (Beijing) Co., Ltd. (“Hurray! Times”)
Party B: Beijing WVAS Solutions Ltd. (“WVAS Solutions”)
Party C: Beijing Enterprise Network Technology Co., Ltd. (“Beijing Network”)
Party D: Xiaoping Wang, Hao Sun
Party E: Beijing Hurray! Times Technology Co., Ltd. (“Beijing Hurray! Times”)

As used in this Agreement, Party A, Party B, Party C, Party D, and Party E is each a “Party” and collectively, the “Parties”.

WHEREAS, Party A, Party B, Party C, and Party D has signed a series of cooperation agreements (the “Original Agreement”, detailed agreement list as specified in Appendix 1)

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

1.	Party E agreed with Party A, Party B, Party C, and Party D that Party E shall duly execute the rights, duties and obligations as set forth under the Original Agreement, and guarantees to perform the Original Agreement. The terms and conditions of the Original Agreement shall be binding upon Party E, as if Party E is the duly authorized representative of the Original Agreement on behalf of Party A as of the effective date first written upon the Original Agreement.
2.	Party B, Party C, and Party D hereby jointly agree to terminate any rights, duties and obligations of Party A as set forth under the Original Agreement, as well as all claims and reimbursements in connection with the Original Agreement. Any rights, duties and obligations of Party A as set forth under the Original Agreement shall terminate and Party E shall execute the Original Agreement and shall bear all legal responsibilities in connection with the Original Agreement on behalf of Party A.
3.	Party B, Party C, and Party D hereby jointly agree to accept Party E in executing the rights, duties and obligations as set forth under the Original Agreement on behalf of Party A. Party B, Party C, and Party D shall duly execute all rights, duties and obligations as set forth under the Original Agreement to Party E, and the terms and conditions of the Original Agreement shall be binding upon Party B, Party C, and Party D herein, as if Party E is the duly authorized representative of the Original Agreement on behalf of Party A as of the effective date first written upon the Original Agreement.

4.	The parties shall strive to settle any dispute arising from the interpretation or performance in connection with this Agreement through friendly consultation. In case no settlement can be reached through consultation within sixty (60) days, either party can submit such matter to the China International Economic and Trade Arbitration Commission (“CIETAC”) in Beijing.
5.	This Agreement shall be governed by and construed in accordance with the PRC law.
6.	This Agreement may be executed in five (5) counterparts, with each Party holding one copy, of which shall take immediate effect upon authorized signature or company stamp of the Parties herein.

[Remainder of Page Intentionally Left Blank]

Transfer Agreement

Party A: Hurray! Times Communications (Beijing) Co., Ltd. (“Hurray! Times”)
[Company Seal]

Party B: Beijing WVAS Solutions Ltd. (“WVAS Solutions”)
[Company Seal]

Party C: Beijing Enterprise Network Technology Co., Ltd. (“Beijing Network”)
[Signature]

Party D: Xiaoping Wang, Hao Sun
[Signature]

Party E: Beijing Hurray! Times Technology Co., Ltd. (“Beijing Hurray! Times”)
[Company Seal]

Appendix 1: Transfer Agreement List

Name of Agreements	Parties	New Parties	Effective Date
Exclusive Technical Consulting and Service Agreement	Hurray! Times WVAS Solutions	Beijing Hurray! Times WVAS Solutions	May 5, 2004
Business Cooperation Agreement	Hurray! Times WVAS Solutions Beijing Network Xiaoping Wang, Hao Sun	Beijing Hurray! Times WVAS Solutions Beijing Network Xiaoping Wang, Hao Sun	October 1, 2004
Share Pledge Agreement	Hurray! Times Beijing Network	Beijing Hurray! Times Beijing Network	October 1, 2004
Share Pledge Agreement	Hurray! Times Xiaoping Wang	Beijing Hurray! Times	October 1, 2004
Share Pledge Agreement	Hurray! Times Hao Sun	Beijing Hurray! Times Hao Sun	October 1, 2004
Letter of Commitment	Hao Sun		October 1, 2004
Letter of Commitment	Xiaoping Wang		October 1, 2004
Letter of Commitment	Beijing Network		October 1, 2004

EX-8.1

Exhibit 8.1

List of Significant Subsidiaries and Affiliates of Hurray! Holding Co., Ltd.

Name of Subsidiary or Affiliate	State or Jurisdiction of Incorporation
Beijing Hurray! Times Technology Co., Ltd.	People’s Republic of China
Hurray! Solutions Ltd.	People’s Republic of China
Beijing Cool Young Information Technology Co., Ltd.	People’s Republic of China
Beijing Enterprise Network Technology Co., Ltd.	People’s Republic of China
Beijing WVAS Solutions Ltd.	People’s Republic of China
Beijing Palmsky Technology Co., Ltd.	People’s Republic of China
Beijing Hutong Wuxian Technology Co., Ltd.	People’s Republic of China
Shanghai Magma Digital Technology Co., Ltd.	People’s Republic of China
Beijing Hengji Weiye Electronic Commerce Co., Ltd.	People’s Republic of China
Shanghai Saiyu Information Technology Co., Ltd.	People’s Republic of China
Henan Yinshan Digital Network Technology Co., Ltd.	People’s Republic of China
Hurray! Digital Media Technology Co., Ltd.	People’s Republic of China
Beijing Huayi Brothers Music Co., Ltd.	People’s Republic of China
Hurray! Freeland Digital Music Technology Co., Ltd.	People’s Republic of China
Beijing New Run Entertainment Development Co., Ltd.	People’s Republic of China
Guangzhou Hurray! Secular Bird Culture Communication Co., Ltd.	People’s Republic of China
Beijing Hurray! Fly Songs International Culture Co., Ltd.	People’s Republic of China
Hurray Technologies (HK) Ltd.	Hong Kong

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Qindai Wang, certify that:

1. I have reviewed this annual report on Form 20-F of Hurray! Holding Co., Ltd.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: June 19, 2008
By:	/s/ Qingdai Wang
	Qindai Wang

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Shaojian (Sean) Wang, certify that:

1. I have reviewed this annual report on Form 20-F of Hurray! Holding Co., Ltd.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: June 19, 2008
By:	/s/ Shaojian (Sean) Wang
	Shaojian (Sean) Wang

EX-13.1

Exhibit 13.1

906 CERTIFICATION

In connection with the annual report of Hurray! Holding Co., Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2007 filed with the Securities and Exchange Commission (the “Report”), I, Qindai Wang, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: June 19, 2008
 

/s/ Qindai Wang  

Qindai Wang 

Chief Executive Officer 

EX-13.2

Exhibit 13.2

906 CERTIFICATION

In connection with the annual report of Hurray! Holding Co., Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2007 filed with the Securities and Exchange Commission (the “Report”), I, Shaojian (Sean) Wang, Acting Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: June 19, 2008
 

/s/ Shaojian (Sean) Wang  

Shaojian (Sean) Wang 

Acting Chief Financial Officer 

EX-15.1

Exhibit 15.1

[Deloitte Touche Tohmatsu CPA Ltd. Letterhead]

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Hurray! Holding Co., Ltd’s Registration Statement on Form S-8 (No. 333-125174) of our report dated June 17, 2008, relating to the consolidated financial statements of Hurray! Holding Co., Ltd., appearing in and incorporated by reference in the annual report on Form 20-F of Hurray! Holding Co., Ltd. for the year ended 2006.

Deloitte Touche Tohmatsu CPA Ltd.
 

/s/ Deloitte Touche Tohmatsu CPA Ltd.  

Beijing, China 

June 19, 2008