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2006 Annual Report - MZ Asia-Pacific

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2006 Annual Report - MZ Asia-Pacific Powered By Docstoc
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Morningstar Document Research
FORM 20-F
Ku6 Media Co., Ltd - KUTV
Filed: June 15, 2007 (period: December 31, 2006)
Annual and transition report of foreign private issuers under sections 13 or 15(d)
Table of Contents


                                           UNITED STATES
                               SECURITIES AND EXCHANGE COMMISSION
                                                                WASHINGTON, D.C. 20549



                                                                        FORM 20-F

(Mark One)

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


⌧      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
       For the fiscal year ended December 31, 2006

                                                                                   OR


�      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
       For the transition period from           to        .

                                                                                   OR


�      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)




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                      Powered by Morningstar® Document Research℠
       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: 2,162,031,740 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 �            No ⌧

      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 � No ⌧

      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 ⌧ No �

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

                                           Large Accelerated Filer � Accelerated Filer �           Non-Accelerated Filer ⌧

      Indicate by check mark which financial statement item the registrant has elected to follow.       Item 17 �      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 � No ⌧




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                               Powered by Morningstar® Document Research℠
Table of Contents
                                                                 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
  Item 5.     Operating and Financial Review and Prospects                                                                          38
  Item 6.     Directors, Senior Management and Employees                                                                            55
  Item 7.     Major Shareholders and Related Party Transactions                                                                     63
  Item 8.     Financial Information                                                                                                 65
  Item 9.     The Offer and Listing                                                                                                 65
  Item 10.    Additional Information                                                                                                66
  Item 11.    Quantitative and Qualitative Disclosures About Market Risk                                                            74
  Item 12.    Description of Securities Other than Equity Securities                                                                75


PART II

  Item 13.    Defaults, Dividend Arrearages and Delinquencies                                                                       75
  Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds                                          75
  Item 15.    Controls and Procedures                                                                                               75
  Item 16.    Reserved                                                                                                              76
  Item 16A.   Audit Committee Financial Expert                                                                                      76
  Item 16B.   Code of Ethics                                                                                                        76
  Item 16C.   Principal Accountant Fees and Services                                                                                76
  Item 16D.   Exemptions from the Listing Standards for Audit Committees                                                            77
  Item 16E.   Purchases of Equity Securities by the Issuer and Affiliated Purchasers                                                77


PART III

  Item 17.    Financial Statements                                                                                                  77
  Item 18.    Financial Statements                                                                                                  77
  Item 19.    Exhibits                                                                                                              77




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                              Powered by Morningstar® Document Research℠
Table of Contents
                                                                        INTRODUCTION

     This annual report on Form 20-F includes our audited consolidated financial statements as of December 31, 2006 and 2005 and for the years ended
December 31, 2006, 2005 and 2004.

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 historical consolidated financial statements, the notes thereto and Item 5 “Operating and Financial Review and Prospects” included
elsewhere in this annual report. The following data as of December 31, 2006 and 2005 and for the years ended December 31, 2006, 2005 and 2004 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, 2002 (predecessor) and for the years ended December 31, 2003 and December 31,
2002 (predecessor) have also been derived from our audited consolidated financial statements for those years, which are not included in this annual report. Our
audited financial statements for the foregoing periods were prepared in accordance with United States generally accepted accounting principles, or US GAAP.

              Our company, Hurray! Holding Co., Ltd. (“Hurray! Holding”), was formed on April 23, 2002. Because Hurray! Holding had not yet entered into
definitive agreements with Hurray! Solutions Ltd. (“Hurray! Solutions”) in 2002 and it had limited operations in that year, our 2002 financial statements are
presented with Hurray! Solutions as a predecessor entity. For our 2003, 2004, 2005 and 2006 financial statements, Hurray! Holding is treated as a successor
entity. Effective January 1, 2006, we 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. 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 Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (“SFAS 123”), and (b) compensation expense for all stock-based compensation awards grant 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 over
the requisite service period which is generally the vesting period.

            For options vested prior to January 1, 2006, we accounted for share-based compensation plans in accordance with Accounting Principles Board
(“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, as amended (“APB 25”). Accordingly, we recognized stock-based compensation expense
only when options were granted with a discounted exercise price. The stock-based compensation expense was recognized ratably over the requisite service
period, which was generally the vesting period of the options. The stock-based compensation expenses prior to and after January 1, 2006 are therefore not
comparable. See Item 5 “Operating and Financial Review and Prospects” below.

                                                                                  1




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
Table of Contents

                                                                                   As of and for the Year Ended December 31,
                                                     2006                   2005                         2004                       2003               2002
                                                                                                                                                   (Predecessor)
                                                                               (in thousands of U.S. dollars, except percentages)
Historical Condensed Consolidated
   Statement of Operations Data
Revenues:
2G services                                   $         32,571       $         20,131           $          14,946           $          13,471      $      5,948
2.5G services                                           29,941                 35,932                      28,227                       4,289               —
Recorded music                                           6,203                    —                           —                           —                 —
Software and system integration services                 1,177                  6,312                      10,267                       5,363             4,565
Total revenues                                          69,892                 62,375                      53,440                      23,123            10,513
Cost of revenues:
2G services                                             24,615                 13,714                       7,050                       4,586             3,363
2.5G services                                           16,057                 14,921                      11,003                       2,106               —
Recorded music                                           3,553                    —                           —                           —                 —
Software and system integration services                   946                  1,302                       6,277                       4,151             4,478
Total cost of revenues                                  45,171                 29,937                      24,330                      10,843             7,841
Gross profit                                            24,721                 32,438                      29,110                      12,280             2,672
Operating expenses                                      21,287                 15,818                      11,596                       7,348             5,156
Income (loss) from operations                            3,434                 16,620                      17,514                       4,932            (2.484)
Interest income                                          2,576                  1,428                          38                           3               —
Interest expense                                           (45)                   (27)                       (312)                       (390)             (357)
Other income, net                                          522                    991                         —                           —                 —
Income before income taxes                               6,487                 19,012                      17,240                       4,545            (2,841)
Income taxes                                              (121)                  (393)                        —                           —                 —
Net income after income taxes before
   minority interests                                       6,366              18,619                      17,240                          4,545         (2,841)
Minority interests                                           (562)                —                           —                              —              —
Net income (loss)                                           5,804              18,619                      17,240                          4,545         (2,841)
Deemed dividends on Series A convertible
   preference shares                                         —                      —                          (40)                        (113)            —
Income (loss) attributable to holders of
   ordinary shares                            $             5,804    $         18,619           $          17,200           $              4,432   $     (2,841)
Income per share, basic                       $              0.00    $             0.01         $             0.01          $               0.00
Income per share, diluted                     $              0.00    $             0.01         $             0.01          $               0.00
Shares used in calculating basic income per
  share                                           2,189,748,563          2,092,089,848              1,208,512,142               1,088,810,959
Shares used in calculating diluted income
  per share                                       2,208,758,636          2,129,228,961              1,572,887,775               1,343,606,622

                                                                           2




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
Table of Contents



                                                                                                           As of and for the Year Ended December 31,
                                                                                             2006             2005              2004              2003           2002
                                                                                                        (in thousands of U.S. dollars, except percentages)
Historical Condensed Consolidated Balance Sheet Data
Cash                                                                                     $ 74,597         $ 75,959           $ 8,714          $ 11,151       $ 3,493
Restricted cash                                                                                —                —                 —              1,510         1,510
Accounts receivable, net                                                                    13,449           18,089            11,883            7,892         2,937
Other current assets                                                                         3,342            2,297             2,133              228           329
Property and equipment, net                                                                  1,954            2,536             2,617            1,897         1,028
Goodwill                                                                                    39,621           23,869            20,412            3,950           —
Other assets                                                                                 7,027            4,953               705              231           473
Total assets                                                                             $ 139,990        $ 127,703          $ 46,464         $ 26,859       $ 9,770
Current liabilities                                                                      $ 12,960         $    7,636         $ 8,743          $ 12,165       $ 12,404
Non-current liabilities                                                                       851                843             —                 —              —
Total liabilities                                                                        $ 13,811         $    8,479         $ 8,743          $ 12,165       $ 12,404
Minority interests                                                                            3,359              605               —                —              —
Series A convertible preference shares (nil, nil, 16,924,497, 12,347,966 and nil
  shares issued and outstanding as of December 31, 2006, 2005, 2004, 2003 and
  2002, respectively)                                                                           —                —                  17                12           —
Ordinary shares (2,162,031,740, 2,229,754,340, 1,186,672,000, 1,176,000,000, nil
  and nil shares issued and outstanding as of December 31, 2006, 2005, 2004,
  2003 and 2002, respectively)                                                                 108              111                59               59            —
Other shareholders’ equity (deficiency)                                                    122,712          118,508            37,645           14,623         (2,634)
Total liabilities, minority interests and shareholders’ equity                           $ 139,990        $ 127,703          $ 46,464         $ 26,859       $ 9,770
Other Historical Condensed Consolidated Financial Data:
Gross profit margin
2G services                                                                                    24.4%            31.9%           52.8%            66.0%             43.5%
2.5G services                                                                                  46.4             58.5            61.0             50.9               —
Recorded music                                                                                 42.7              —               —                —                 —
Software and system integration services                                                       19.6             79.4            38.9             22.6               1.9
Total gross profit margin                                                                      35.4             52.0            54.5             53.1              25.4
Income (loss) from operations                                                                   4.9             26.6            32.8             21.3             (23.6)
Net profit (loss) margin                                                                        8.3             29.8            32.3             19.7             (27.0)
Depreciation                                                                             $    1,580       $    1,461         $ 1,335          $   858        $      652
Amortization                                                                                  1,901              478             651              276               142
Capital expenditure                                                                             957            1,289           1,871            1,388               441

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 RMB7.8087 = US$1.00, the prevailing rate on December 31, 2006. 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 historical consolidated financial statements.

       On July 21, 2005, the PRC government changed its 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 certain foreign currencies.

       Although Chinese governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current
account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or security, requires the approval of the
State Administration for Foreign Exchange and other relevant authorities.

      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 RMB7.6666 =
US$1.00 on June 8, 2007. The following table sets forth, for the period indicated, information concerning the number of Renminbi for which one U.S. dollar
could be exchanged based on the noon buying rate for cable transfers in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York.

                                                                                  3




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
Table of Contents

                                                                                                                                          Noon Buying Rate
                                                                                                                                          RMB per US$1.00
                                                                                                                                          High       Low
      December 2006                                                                                                                       7.8350    7.8041
      January 2007                                                                                                                        7.8127    7.7705
      February 2007                                                                                                                       7.7632    7.7410
      March 2007                                                                                                                          7.7454    7.7232
      April 2007                                                                                                                          7.7345    7.7090
      May 2007                                                                                                                            7.7065    7.6463
      June 2007 (as of June 8)                                                                                                            7.6666    7.6377

      The following table sets forth the average noon buying rates between Renminbi and U.S. dollars for each of 2002, 2003, 2004, 2005 and 2006, 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
      2002                                                                                                                                          8.2772
      2003                                                                                                                                          8.2771
      2004                                                                                                                                          8.2768
      2005                                                                                                                                          8.1826
      2006                                                                                                                                          7.9579

B. Capitalization and Indebtedness
      Not Applicable.

C. Reasons for the Offer and Use of Proceeds
      Not Applicable.

D. Risk Factors


                                                          RISKS RELATED TO OUR COMPANY

Risks Related to Our wireless value-added Services
We depend on China Mobile and China Unicom, the two principal mobile operators in China, for the major portion of our revenue, and any loss or
deterioration of our relationship with China Mobile and China Unicom 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 mobile operators in China, China Mobile Communications
Corporation, or China Mobile, and China United Telecommunications Corporation, or China Unicom, which service the major portion of China’s approximately
461 million mobile phone subscribers as of December 31, 2006. To a much lesser extent, we also offer our services to consumers through China Network
Communications Corporation, or China Netcom, and China Telecommunications Corporation, or China Telecom. These companies are owned by the Chinese
government and have publicly listed subsidiaries. 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 either China Mobile or China Unicom ceases to continue to cooperate with us, it would be impossible to find appropriate replacement mobile operators
with the requisite licenses and permits, infrastructure and customer base to offer our wireless value-added services. We derived approximately 59% of our
combined 2G and 2.5G services revenue from China Mobile, 34% from China Unicom, 6% from China Telecom and 1% from China Netcom in 2006. 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. Any significant restructuring of any segment of the telecommunications industry in China,
including in particular China Mobile, China Unicom or any other mobile operators in China and the potential combination of the mobile operations of various
mobile operators in China, could significantly affect these relationships, our operations and our revenues.

       Due to our reliance on China Mobile and China Unicom for our wireless value-added services, 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.

                                                                                4




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
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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.
       Given the dominant market position of China Mobile and China Unicom, our leverage with these mobile 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 mobile 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 mobile 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 certain provinces, China Unicom recently entered
into new contracts with service providers in which it changed the share percentages it retained for customer payments. For example, where in the past service
providers would receive 85% of a payment from a customer purchase and China Unicom would retain 15%, China Unicom has changed the share percentage of
customer payments that service providers may retain to 70%. We may not be able to adequately respond to any such changes because we are not able to predict if
the mobile operators will unilaterally amend our contracts with them.

Unilateral changes in the policies of 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 mobile operators, and further changes could materially and adversely impact our revenue and profitability in the
future.
       China Mobile and China Unicom have a wide range of policies and procedures regarding customer service, quality control and other aspects of the
wireless value-added services industry. As the industry has evolved over the last several years, the mobile 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 wireless value-added services, new billing reminders for new and existing monthly subscribers and positive user confirmations for conversion of
per-message subscriptions to monthly subscriptions. These new policies negatively affected our results of operations in the second half of 2006. In addition, in
the last several years, acting under the guidance of China’s Ministry of Information Industry, or the MII, the mobile 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.

       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 mobile operators’ policies are in a state of flux at this time and they are highly sensitive to customer complaints (even if the
complaints may not have a bona fide basis), 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. In January 2006, China Mobile downgraded all of the Wireless Application Protocol (WAP) services of Beijing Enterprise Network Technology
Co., Ltd. (“Beijing Network”), one of our affiliated Chinese entities, to the bottom of its WAP menu and temporarily suspended the approval of all of its new
services due to improper promotion of one of its WAP services. In addition, Hurray! Solutions, another of our affiliated Chinese entities, was charged a fine of
approximately RMB5.7 million ($0.7 million) by China Unicom for improper delivery of one of its Short Messaging Services (SMS) services to users. Finally in
April 2006, China Unicom imposed a fine of RMB3.0 million ($0.4 million) on our affiliated Chinese entity, Beijing Hutong Wuxian Technology Co., Ltd.
(“Beijing Hutong”), for violating a China Unicom billing policy by one of its WAP services. The WAP service was also suspended. Any future noncompliance
with the mobile operators’ policies by us, whether inadvertent or not, could result in a material and adverse effect on our revenue and profitability.

       In addition, China Mobile has implemented a new “double confirmation” policy which requires consumers to confirm their purchases of value-added
services by replying to a message from the operator. Without confirmation, the service will not work and we cannot receive payment. This new policy adversely
affects our sales of such services.

Our 2.5G revenues were negatively affected in 2006 by the slow growth of China Unicom’s WAP business. If this trend continues or the mobile operators in
China experience slow or negative growth in their wireless value-added services user base, our revenue and profitability could be materially and adversely
affected.
      Revenues from 2.5G value-added services declined from $35.9 million for fiscal year 2005 to $29.9 million for fiscal year 2006, representing a decline of
16.7%. 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 2007 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. Such delay has negatively affected revenue from our VASPro Software as
noted under “Risks Related to our Software Products.”

                                                                                 5




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
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The Chinese government, China Mobile or China Unicom 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 and China Unicom 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 mobile operators informed them that certain of their content was 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 wireless value-added services. In response, we reviewed our services and removed certain interactive voice response, or 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.

      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 mobile 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 mobile
operators as inappropriate under current regulations in China. Any penalties imposed on us by the mobile 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 wireless value-added services 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 mobile operators is limited. As a result, the mobile 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 wireless
value-added services.

       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 mobile 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 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 mobile 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
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for users to access and could, therefore, become less popular. In addition, as discussed under the heading “— Unilateral changes in the policies of 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 mobile
operators, and further changes could materially and adversely impact our revenue and profitability in the future,” China Mobile downgraded the WAP services of
Beijing Network to the bottom in its WAP menu in January 2006 for improper promotion of its WAP services. Such downgrade or any of the foregoing changes,
if they occur, will likely materially and adversely affect the revenue from our services, and thus our overall financial condition.

Our revenue from wireless value-added services 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. 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 mobile operators which would adversely affect our revenue from wireless value-added services.

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 wireless value-added services 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 mobile 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 mobile 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 mobile operators’ WAP portals. The ranking of services on these WAP page menus depends
on the satisfaction of performance criteria established by the mobile 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 wireless value-added
services 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 mobile 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 mobile 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 mobile 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 mobile operators’
internal records. Rather, we can only seek consultations with the mobile operators to discuss the reasons for any discrepancies.

      With respect to our 2.5G services, the mobile 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
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records. In addition, the mobile 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 mobile operators’ confirmations has been insignificant. Nonetheless, we are still ultimately dependent on the ability of the
mobile operators’ systems to accurately collect and analyze the relevant transmission and payment data regarding our services.

      Because of the dominant market position of these mobile 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 mobile operators miscalculate the revenues generated from our services and our portion of those revenues.

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 wireless value-added services. 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 wireless value-added services. Moreover, it is possible that, if information provided to
us by the mobile 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 mobile 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 mobile 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 mobile operators in prior months if we are unable to obtain actual figures from the mobile
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 mobile 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 mobile 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 mobile operators, and by province, and also has fluctuated significantly in the past, ranging on a monthly basis from 0.5% to 9.1% of the total
billable messages which are reflected in our internal records during 2006.

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
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      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 mobile 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 mobile operators register new users and manage their internal billing reconciliation process.

       We are also required to pay some of our content providers a percentage of the revenues received from or confirmed by the mobile 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 mobile 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 mobile 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 mobile 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 mobile operators. This
could, in turn, result in delays in their approving new services, our failure to obtain approval for new services or suspensions (such as the service suspensions we
received in January and April 2006) 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.

If either China Unicom or China Mobile adopts a policy that prohibits branding by service providers for services provided on their WAP portals, our
revenues could be adversely affected.
     We introduced our Hawa brand in the fourth quarter of 2003. The branding of our services is an important part of our marketing strategy to increase user
awareness of our services and create enhanced customer loyalty. China Mobile currently does not permit the use of corporate names to brand services on their
WAP portals. If China Mobile expands this policy to include non-corporate names such as Hawa or China Unicom adopts similar restrictions, we do not believe
we could market our services as effectively, which could have an adverse effect on our revenues.

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
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The Chinese government has granted licenses to offer limited mobility wireless telecommunications services (or “little smart) in China to China Telecom and
China Netcom, two operators with which we have only begun developing relationships, and may grant such licenses to other parties with which we have not
yet developed close relationships. If China Telecom, China Netcom or other parties receiving licenses in the future are successful in the wireless value-added
services market, but we are unable to continue developing deeper cooperative relationships with such parties, our revenue and overall financial condition
could be adversely affected.
      The Chinese government has granted licenses to offer limited mobility wireless telecommunications services in China to China Telecom and China
Netcom. We have begun to develop limited business relationships with China Telecom and China Netcom, but such relationships are not as close as the ones we
have developed with China Mobile and China Unicom. As a result, if we are unable to develop closer cooperative relationships with such operators, our revenue
and overall financial condition could be adversely affected if they take market share from China Mobile and China Unicom.

       The Chinese government may also grant such licenses to other parties besides China Unicom, China Mobile, China Netcom and China Telecom, although
the timing of such grants is unclear. As a result, if any other parties receive wireless telecommunications licenses and are successful in the wireless value-added
services market, but we are unable to develop closer cooperative relationships with them, our revenue and overall financial condition could be adversely affected
if they take market share from China Unicom, China Mobile, China Telecom and China Netcom. It is also possible that such parties receiving wireless
telecommunications licenses may decide to offer wireless value-added services created by themselves, rather than by third party service providers such as our
company. In that case, we would be in direct competition with those operators, and our revenue and overall financial condition could be adversely affected if we
are not able to compete effectively against them.

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 industry, we formed a new affiliated Chinese entity,
Hurray! Digital Music Technology Co., Ltd. (“Hurray! Digital Music”) 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 Beijing 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 New Run Entertainment Co., Ltd. (“New Run”). In March 2007, Hurray! Digital Media agreed to acquire 65% of the equity interest in Beijing Secular
Bird Culture and Art Development Center (“Secular Bird”). These four companies have been successful top-tier domestic independent record companies in
China which engage in artist development, music production and music distribution.

      Each music recording is an individual artistic work. The commercial success of a music product depends on consumer taste, the quality and acceptance of
competing offerings 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 that is interesting and engaging to our
target audience, primarily users of the Internet and wireless value-added services. 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 product development prior to the release of any product. These costs may
not be recovered if the release is unsuccessful. There can be no assurance that such products will be successful releases or that any product will generate revenues
sufficient to cover the cost of product 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.

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
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       Freeland Music, Huayi Brothers Music, New Run and Secular Bird 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, Freeland Music, Huayi Brothers Music, New Run and Secular Bird license and distribute songs to third parties such as providers of Internet
and wireless value-added services, which then distribute the music content to their customers. Freeland Music, Huayi Brothers Music, New Run and Secular Bird
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.
      Freeland Music, Huayi Brothers Music, New Run and Secular Bird 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.

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.

Risks Related to our Software Products
The market for our VASPro software is rapidly evolving and dependent on the growth of 2.5G and 3G services in China and elsewhere. We may not be able
to generate significant sustainable revenues from this software if the market does not develop as we anticipate or we are unable to respond to new market
developments promptly.
       The market for our VASPro software, which allows 2.5G services to be offered through the mobile operators’ networks, is rapidly evolving. We may not
be able to develop and introduce software, software enhancements or services that respond to market demands, technology developments, increased competition
or industry standards on a timely basis, or at all. In addition, to date, our revenues from VASPro have been primarily derived from one-time licensing and
maintenance fees paid by China Unicom based on the capacity of its platform in terms of number of users. Under our current agreements, we only generate
additional software revenues if China Unicom adds capacity for additional users on its nation-wide WAP portal or we supply such software to additional China
Unicom provincial offices. In 2006, our revenues from VASPro were significantly negatively affected by China Unicom’s decision to delay expanding capacity
or building out 2.5G and 3G mobile networks into 2007 pending anticipated receipt of 3G licenses. If this market does not grow and evolve in the manner or in
the timeframe that we anticipate, or if we are unable to respond to new market developments promptly, we may not be able to generate significant sustainable
revenues from our software.

Our software sales are currently entirely dependent on China Unicom, and the loss of our relationship with China Unicom would materially and adversely
affect the revenue from our software business.
       The only customer for our VASPro software currently is China Unicom. While VASPro is highly complex and customized software and, therefore,
difficult to replace, it is possible that China Unicom could purchase similar software from third parties, or develop such software itself, and cease using VASPro.
Moreover, several provincial offices of China Unicom that operate their own local WAP portals have purchased services provisioning and management software
from other parties, and other provincial offices may do so in the future. In this case, not only would we lose future revenues from sales of additional software to
China Unicom at the national or provincial level, but we could also lose what we view to be an important selling point when marketing our software to other
mobile operators, the fact that the software is being used successfully by a major mobile operator. This would materially and adversely affect the revenue from
our software business.

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
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The market for our VASPro software in China is limited, and we may not be able to sell our software outside of China, in which case the potential growth of
our software business would be limited.
       The other principal mobile operator in China besides China Unicom, China Mobile, purchases its services provisioning and management software from a
subsidiary company of China Mobile specifically established for this purpose, and we believe it is unlikely that China Mobile will purchase our software for the
foreseeable future. China Telecom and China Netcom have also not purchased our software. Accordingly, the market for VASPro is limited in China. In addition,
we may have to market our software in other countries to increase sales, which we may not be able to do successfully. This strategy contains risks, including
difficulty in managing international operations due to distance, language and cultural differences and an inability to successfully market and operate services in
foreign markets. There are also risks inherent in doing business on an international level, including unexpected changes in regulatory requirements, trade barriers,
difficulties in staffing and managing foreign operations, fluctuations in currency exchange rates, and potentially adverse tax consequences.

Our provision of both 2G and 2.5G services and services provisioning and management software and related services to China Unicom or other mobile
operators could be perceived as a conflict of interest and unfair competitive advantage. As a result, we could be prohibited from providing certain of those
types of services, which could materially and adversely affect our competitive position, revenue and overall financial condition.
       In addition to providing VASPro software, we provide China Unicom, at its request, operations support, data gathering, testing, consulting and
maintenance services for its WAP portal. Third party wireless value-added service providers may complain to China Unicom or any other mobile operator that
purchases our software that the simultaneous provision of wireless value-added services, VASPro software and technical consulting services for the software by
us, which gives us access to China Unicom’s wireless value-added system, presents a conflict of interest and gives us an unfair competitive advantage. Actions
arising from any such complaints could impair our ability to provide services to China Unicom or other mobile operators, which could materially and adversely
affect our competitive position in the wireless value-added services market, the services provisioning and management software market, or both, as well as our
revenue and overall financial condition.

Our VASPro software is highly complex, and any defects in it could result in a refusal by China Unicom or other mobile operators to use it, as well as errors
or failures in the networks in which it operates. Accordingly, any such defects could not only adversely affect our revenue from VASPro, but could also
subject us to claims from users, mobile operators or other parties and damage our credibility.
       Our VASPro software enables mobile operators to manage a wide range of functions, including managing billing and multiple third party service
providers. Given the breadth of this software, it is extremely complex for us to design, develop, install and support the operations of VASPro. Accordingly,
despite our testing, current or enhanced versions of VASPro may contain software defects. Any such defects could cause China Unicom to stop licensing
VASPro and cause other mobile operators to select services provisioning and management software from our competitors. Moreover, VASPro is a key
component of the 2.5G mobile networks in which it operates, and defects could cause errors in such activities as billing or provisioning of services or even cause
the whole network to crash. In that case, we could be subject to claims from mobile users, mobile operators which use VASPro or third party service providers
for incorrect billing or delivery of services or other damages caused by network problems. Our credibility among mobile operators and users could also be
adversely affected, which could adversely affect the long-term growth and profitability of our business as a whole.

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 the recent agreement to acquire Shanghai Saiyu Information Technology Co., Ltd. (“Shanghai
Saiyu”) and investments in New Run and Secular Bird, 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
mobile 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
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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 wireless value-added services is changing rapidly and is intensely competitive. We compete principally with three 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 and
niche service providers.

      We have faced competition from all three groups since our entry into this market. Moreover, there are low barriers to entry for new competitors in the 2G
and 2.5G services market. 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. 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 wireless value-added services 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 wireless
value-added services providers that focus on music-related products and have extended upstream to establish their own music production businesses in China.

       With respect to our software products, we face significant competition from major international software companies such as Microsoft, traditional
telecommunications companies such as Motorola and NEC, and major software and professional services companies such as Hewlett-Packard and IBM, all of
which have greater market share worldwide and financial resources than we do. These established software and telecommunications companies are better
positioned to finance research and development activities relating to 2.5G and 3G technologies. They are also able to provide a wider range of products and
services for a greater spectrum of media and have greater resources with which to purchase additional technologies or acquire other companies. We also compete
against local software developers and telecommunications companies such as Aspire, Huawei and ZTE.

We operate in rapidly evolving industries, which may make it difficult for investors to evaluate our business.
      We began commercially offering wireless value-added services and developing our VASPro software business in China in 2001, and since that time, the
technologies and services used in the wireless value-added services 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 mobile operators,


      •    maintain, expand and enhance our relationships with mobile operators so that they will allow us to offer our 2G and 2.5G services over their networks
           and will buy our service provisioning and management software, 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.

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
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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, particularly certain members of the team which conducted the
management buy-in of our company in June 2001, namely, Qindai Wang, our chairman and chief executive officer, Jesse Liu, our senior vice president and chief
financial officer, and Haoyu Yang, our senior vice president in charge of music companies, as well as Shaojian (Sean) Wang, our president and chief operating
officer since May 2006 and Jiang Wang, our senior vice president in charge of marketing and content sales since September 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 users base
of our wireless value-added services 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 wireless value-added services, 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 wireless value-added services over their
           networks and induce them to purchase our VASPro software,


      •    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.

Any failures of the mobile telecommunications network, the Internet or our technology platform may reduce use of our services and our revenues.
       Our wireless value-added services 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 mobile operators’ networks and the
performance and reliability of China’s Internet infrastructure are critical to our ability to attract and retain users. Moreover, our business depends on our ability to
maintain the satisfactory performance, reliability and availability of our technology platform and the VASPro software we license. 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
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agreements with affiliated companies incorporated in China, including Hurray! Solutions, Beijing Cool Young Information Technology Co., Ltd. (“Beijing Cool
Young”), Beijing WVAS Solutions Ltd. (“WVAS Solutions”), Beijing Network, Beijing Palmsky Technology Co., Ltd. (“Beijing Palmsky”), Beijing Hutong,
Shanghai Magma and Hengji Weiye 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, Hurray! Times Communications (Beijing) Ltd. (“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, 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, 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, Hurray! Times or our affiliated Chinese entities,


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


      •    shutting down servers or blocking websites maintained by any of our company, 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, Hurray! Times or our affiliated Chinese entities to restructure our ownership structure or operations, and/or


      •    requiring any of us, Hurray! Times or our affiliated Chinese entities to discontinue any portion of or all of their wireless value-added services.

      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.

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 mobile operators. Moreover, the fees for our
services are paid by the mobile 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, 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 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 (approximately $48 million as of December 31, 2006), we have no significant assets other
than our equity interest in Hurray! Times. We are a holding company, and we rely principally on dividends from Hurray! Times and technical consulting and
service fees, license fees and other fees paid to 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                              Powered by Morningstar® Document Research℠
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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.

       The principal differences between net income under Chinese accounting standards and US GAAP relate to pre-operating costs, stock-based compensation
and deferred taxes. Pre-operating costs are expensed when incurred under US GAAP, while they are amortized over five years under Chinese accounting
standards. Stock-based compensation and deferred taxes are not recognized under Chinese accounting standards. Under Chinese law, 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 Hurray! Times. The amount of reserves was nil as of December 31, 2006 since Hurray! Times incurred
an operating loss in 2006. This reserve fund can only be used for specific purposes and is not distributable as cash dividends. 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 wireless value-added services 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, including our VASPro software, which is highly complex.

       Because the wireless value-added services 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.

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 wireless
value-added services. In addition, our software products are highly complex and involve proprietary software source code and know-how. Our affiliated music
businesses are also 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 wireless value-added services, 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. We receive numerous threats of infringement claims, often in the form of demand letters. Claims are
typically made by music companies or other service providers. One recent lawsuit was settled and one is still pending in court. While

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
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the vast majority of such claims do not develop 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 wireless value-added services.

We believe that we were a passive foreign investment company for 2006 and are likely a passive foreign investment company for the current taxable year of
2007, which could result in adverse U.S. federal income tax consequences to U.S. investors.
       We may be classified as a passive foreign investment company (“PFIC”) by the U.S. Internal Revenue Service for U.S. federal income tax purposes. Such
characterization could result in adverse U.S. federal income tax consequences to you if you are a U.S. investor. For example, if we are a PFIC, our U.S. investors
will be subject to increased tax liabilities under U.S. tax laws and regulations and will be subject to U.S. tax reporting requirements. 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.
Specifically, 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.

      We believe that we were a PFIC for 2006 and are likely a PFIC for the current taxable year of 2007. 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 our status as a PFIC. 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 (2004 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

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
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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 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 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, Hui Zong Fa [2007] No. 78),” 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. We believe that the registration and approval requirements contemplated in Circular 78 are
burdensome and time consuming.

       Circular 78 has not yet been made publicly available nor formally promulgated by SAFE, however, it is our understanding that SAFE has begun enforcing
its provisions, although we cannot predict whether it will continue to enforce it or adopt additional or different requirements with respect to equity compensation
plans. If it is determined that our equity compensation plans are subject to Circular 78, 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.

Our business benefits from certain PRC government incentives. Expiration of, or changes to, these incentives and PRC tax laws could have a material
adverse effect on our operating results.
       Pursuant to the Income Tax Law of the PRC Concerning Foreign Investment and Foreign Enterprises and various local income tax laws (the “Income Tax
Laws”), Hurray’s PRC subsidiaries and variable interest entities are generally subject to enterprise income tax at a statutory rate of 33%, which comprises a 30%
national income tax and a 3% local income tax. Some of Hurray’s subsidiaries and variable interest entities qualify as “high technology” enterprises, and under
PRC Income Tax Laws, they are subject to a preferential tax rate of 15%. This classification entitles Hurray! Times to a three-year exemption from enterprise
income tax commencing in 2003, followed by a 7.5% preferential tax rate for the succeeding three years and a 15% preferential tax rate thereafter. The three year
income tax exemption commenced in 2000 for Hurray! Solutions, 2002 for WVAS Solutions, 2003 for Beijing Cool Young, Beijing Network and Beijing
Palmsky, 2004 for Beijing Hutong, 2001 for Shanghai Magma and 2006 for Hurray! Digital Music and Freeland Music. Huayi Brothers Music is classified as a
“new enterprise” and, accordingly, enjoys an exemption from both national and local enterprise income tax in 2005. It will be subject to a 30.0% national
enterprise income tax and 3.0% local enterprise income tax thereafter. Hengji Weiye is subject to a 15% enterprise income tax. In addition, Hurray’s subsidiaries
in the PRC are “foreign invested enterprises,” 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, or a two-year tax exemption followed by three years with a 50% reduction in tax rate,
commencing the first profitable year. These preferential tax arrangements will expire at various dates between 2006 and 2010.

       On March 16, 2007, the National People’s Congress of the PRC adopted a new enterprise income tax law that imposes a single uniform income tax rate of
25% for most domestic enterprises and foreign-invested enterprises. This new law will be effective as of January 1, 2008. It contemplates various transition
periods and measures for existing preferential tax policies, including a grace period for as long as five years for foreign-invested enterprises which are currently
entitled to a lower income tax rate and continued implementation of preferential tax treatment with a fixed term until the expiration of such fixed term. In
addition, under the new enterprise income tax law, foreign investors are not expressly exempted from the income tax on dividends from a foreign-invested
enterprise, which exemption is currently available until the effectiveness of the new enterprise income tax law. Furthermore, the new law deems an enterprise
established offshore but having its management organ in the PRC as a “resident enterprise” which will be subject to PRC tax on its global income. The term
“management organ” has not yet been defined by the PRC government. The new enterprise income tax law empowers the State Council of the PRC to enact
appropriate implementing rules and regulations. If the transition periods and measures for existing preferential tax policies are enacted as currently contemplated,
any preferential tax treatment enjoyed by our subsidiaries and affiliated companies will terminate at the end of the grace period, which period may be eliminated
or significantly shortened by the PRC government. In addition, the PRC government may treat us as a resident enterprise

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under the new enterprise income tax law, which would adversely affect our financial condition and results of operations. Moreover, our historical operating
results may not be indicative of our operating results for future periods as a result of changes in applicable tax laws.


                                         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
wireless value-added services, such as our services related to 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 Chinese affiliated
entities. Many providers of 2G and 2.5G services have obtained various value-added telecommunication services licenses.

       Each of our affiliates, Hurray! Solutions, Beijing Palmsky, Beijing Network, Hengji Weiye, Beijing Hutong and Shanghai Magma, has been granted an
inter-provincial value-added telecommunication license by the MII that permits it to conduct inter-provincial operations. Our affiliate, 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 mobile 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.

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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 wireless value-added services 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.

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.

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Restrictions on currency exchange may limit our ability to receive and use our revenues 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. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the
Renminbi, especially with respect to foreign exchange transactions.

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 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 About 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, 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
nine 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, we have completed the following in recent
years:


         • In June 2004, we entered into an agreement to acquire 100% of the equity interest of Beijing Network, which offers 2.5G services through China
           Mobile. Beijing Network is 50% and 50% owned by two individuals in China, Li Xun and Hongmei Peng.


         • In March 2005, we entered into an agreement to acquire 100% of the equity interest of Beijing Hutong, which is an IVR service provider through China
           Mobile. Beijing Hutong is 50% and 50% owned by two individuals in China, Wenqian Xu and Yi Cai. In the same month, we also entered into an
           agreement to acquire 100% of the equity interest of Guangzhou Piosan Information Technology Co., Ltd. (“Guangzhou Piosan”), which is a provider of
           multimedia messaging services, or Multimedia Messaging Services (MMS), through China Mobile. After transferring all tangible and intangible assets
           and related liabilities of Guangzhou Piosan to Hurray! Solutions, we subsequently sold Guangzhou Piosan in February 2006 to streamline our corporate
           structure.

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      • In September 2005, we entered into an agreement to acquire Beijing Hengji Weiye, which provides SMS services through China Mobile. Beijing
        Hengji Weiye is 50% and 50% owned by two individuals in China, Xiaoqing Guo and Hong Pan.


      • In December 2005, we agreed to acquire Shanghai Magma, which is a Java™ game developer and publisher in China. Shanghai Magma is 50% and
        50% owned by two individuals in China, Yi Zhang and Aiqin Shang. For accounting purposes, we obtained effective control over Shanghai Magma in
        January, 2006, and began consolidating it into our financial statements from that date.


      • In February 2007, we agreed to acquire Shanghai Saiyu, which provides WAP, MMS, IVR and SMS services on China Mobile network throughout
        China. Shanghai Saiyu is 50% and 50% owned by two individuals in China, Yuqi Shi and Liang Ruan.


      • In November 2005, in order to implement our music strategy which is discussed below under “—Business Overview,” we formed a new affiliated
        Chinese entity, Hurray! Digital Music, whose name was changed to Hurray! Digital Media. Hurray! Digital Media is owned by three of our other
        affiliated Chinese entities, Hurray! Solutions, Beijing Hutong and Beijing Network. Subsequently, in November and December 2005 and November
        2006, Hurray! Digital Media agreed to acquire 60% of the equity interest of Freeland Music, 51% of the equity interest of Huayi Brothers Music and
        30% of the equity interest of New Run, respectively, three top-tier domestic independent record companies in China which engage in artist
        development, music production and music distribution. In March 2007, Hurray! Digital Media also agreed to acquire 65% of the equity interest in
        Secular Bird. For accounting purposes, we obtained effective control over Huayi Brothers, Freeland Music, New Run and Secular Bird in December
        2005, January 2006, April 2007 and June 2007, respectively, which represent the dates on which we began to consolidate such entities into our financial
        statements.

B. Business Overview
Introduction
       We are 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. We are also 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 wireless value-added services platforms over mobile networks and through the Internet. The company
also provides a wide range of other wireless value-added services to mobile users in China, including games, pictures and animation, community, and other
media and entertainment services.

       We also design, develop, sell and support service provisioning and management software, called VASPro, which enables mobile operators to manage a
variety of functions, related to the sale of 2.5G services by third party service providers through mobile operators’ WAP portals.

Our Wireless Value-Added Services
     We derive most of our revenues from wireless value-added services which include 2G services such as SMS, IVR, and RBT, and 2.5G services such as
WAP, MMS, and Java™.

SMS Services
      SMS is the largest and most mature wireless value-added service in China. It is the basic form of mobile messaging service and 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. Users can purchase our
SMS services through the network 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. These core services are:


      • Chatting and other community services,


      • Interactive television entertainment, quizzes and contests, and


      • Games.

IVR Services
      Our Interactive Voice Response (IVR) services, which are available on the networks of China Mobile, China Unicom, China Telecom and China Netcom,
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

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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 Ring Back Tone (RBT) services on the networks of China Mobile, China Unicom and China Telecom. RBT services allow a mobile phone user
to customize the sound that callers hear when ringing 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, and we believe that
they present significant growth potential. In particular, it is also one of the most effective platforms for mobile music products, which has become one of our
strategic focuses.

WAP Services
      We offer our Wireless Application Protocol (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 service.

MMS services
      We offer Multimedia Messaging Services (MMS) on China Mobile and China Unicom’s networks. MMS is a messaging service that allows multimedia
content such as ringtone 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. In the fourth quarter of 2005, we agreed to acquire Shanghai Magma, a top tier
     ™                                                                                        ™
Java game developer and publisher in China. Shanghai Magma has over 200 titles of Java games and has a large pipeline of new games under development.
                                                                                ™                                                                           ™
This acquisition has enabled us to become one of the leaders in China in Java game development and publishing. We anticipate that the popularity of Java
games will accelerate in the next several years, especially after the launch of 3G services. In 2006, we launched 47 new titles on China Mobile’s game portal,
including “Explorer”, “Magma Millionaire in Shanghai”, “Sword of Fairy”, and “Mice Love Rice.”

       We distribute, market and promote our wireless valued-services via a diverse range of channels and platforms. 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 mobile operators, operator
channels have become increasingly unavailable and subject to sudden changes in policies by the mobile operators. Since 2005, 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. Although these new marketing and promotion methods can be costly, we believe that marketing diversification has helped
reduce our dependency on using operators to promote our wireless value-added services and provides new methods to expand our business.

Our Music Development, Production and Distribution 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 accounted for approximately 30% of the market in China in terms of revenues in recent years, approximately one dozen Hong Kong- and
Taiwan-

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based independent labels such as Empire International, Rock Music, Linfair, H.I.M and Ocean Butterfly accounted 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 accounted for approximately 20% of the
market, and approximately eighty second or third tier domestic independent labels accounted 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.

      We believe that record companies in China in 2005 began 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,
ringbacktones, 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 wireless value-added services or
working directly with mobile operators.

        Because music-related products are representing an increasingly significant portion of our total wireless value-added services 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.
Since the fourth quarter of 2005, we acquired 51% of Huayi Brothers Music, 60% of Freeland Music, 30% of New Run, and 65% of Secular Bird. Freeland
Music is a pioneer in China in developing Internet-based singing talents 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 movie and 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. 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.

VASPro Services Provisioning and Management Software
      We design, develop, sell and support services provisioning and management software, called VASPro. We also provide system integration service for
VASPro. VASPro enables mobile operators to manage a variety of functions related to the provision of 2.5G services by third party service providers through
mobile operators’ WAP portals. Some of the principal functions supported by VASPro include the following:
      • Billing. VASPro enables mobile operators to more accurately bill their customers for the services provided through their WAP portals and determine
amounts paid to their service providers after the deduction of various service and network fees. The billing function for wireless value-added services is more
complex than the billing function for voice services because of the wide range of wireless value-added services provided by a large number of service providers
in China. In addition, service providers rely on mobile operators to bill and collect on their behalf, using multiple billing schemes such as per-use, subscription or
a combination of both.

       VASPro also supports flexible billing functions that allow service providers to cross sell and differentiate their services by offering innovative promotion
packages and service bundling to their users. For example, VASPro allows service providers to offer discount schemes, such as first month free followed by
billing and packaged services with more than one service and combined billing.

       • Service provider management. VASPro allows mobile operators to easily manage their large number of service providers by providing a variety of
functions, such as authentication of service providers when they first offer their services on mobile operators’ WAP portals, ongoing account management and
automatic service provisioning, which eliminates service providers’ need to run such software in-house and thereby reduces their set-up time to link themselves
to mobile operators’ WAP portals. VASPro allows mobile operators to authenticate, approve and link a new service provider in less than 24 hours.

       • WAP portal management. VASPro allows mobile operators to manage the look and feel as well as functionality of their WAP portals. Some of the
functions include advanced directory management, personalization of menus, which allows users to personalize the WAP menu displayed on their mobile
phones, single sign-on, which enhances users’ ease of use by allowing them to avoid signing on each time they access a service on the WAP portal, and service
subscription confirmation.

      • Customer care and business intelligence tools. VASPro provides a variety of customer care tools to mobile operators, which include customer
information management, service history, complaint history, blacklist management and customer web registration. In addition, mobile operators are provided
with functions that can be used for business intelligence, such as data warehousing, integrated authorization and authentication, flexible multi-dimensional data
analysis, analysis based on time, service, region and service provider, and several rich charting functions.

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       We assisted China Unicom in designing and building its WAP portals and are the sole provider of service provisioning and management software to China
Unicom for its nation-wide WAP portal and to 12 of its provincial-level operators in key coastal and southern provinces. VASPro supported 100% of China
Unicom’s WAP users on its nation-wide portal and more than 60% of its WAP users on provincial portals. Phases I, II, III and IV of the implementation of
VASPro were completed in 2002, 2003, 2004 and 2005, respectively, and supported 0.5, 1.5, 5.0 and 15.0 million users, respectively. Commencing in the second
half of 2005, we have been designing and building 2.5G WAP portals for China Unicom’s GSM (Global System for Mobile Communications) network which is
being upgraded to 2.5G GPRS (General Packet Radio Service). We are also in trials with China Telecom to support its 3G wireless value-added services portal
using a 3G-compatible version of VASPro.

Network Service Agreements with Operators
General
       China Mobile and China Unicom are the predominant mobile operators. Given their market presence, our negotiating leverage with these mobile operators
is limited, and our business is dependent on maintaining our relationships with them. See “Risk Factors — Risks Related to Our Company— We depend on
China Mobile and China Unicom, the two principal mobile operators in China for the major portion of our revenue, and any loss or deterioration of our
relationship with China Mobile and China Unicom may result in severe disruptions to our business operations and the loss of some or 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 affiliates, including Hurray! Solutions, Beijing Cool Young, Beijing Palmsky, WVAS Solutions, Beijing
Network, Beijing Hutong, Beijing Hengji Weiye and Shanghai Magma, 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, they 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 2006, we derived approximately 59% and 34% of our total revenues from China Mobile and China Unicom, respectively.

      The following is a summary of the material features of our contractual relationships with China Mobile and China Unicom.

Fee Arrangements and Other Payment Considerations
       Our network service agreements with China Mobile permit China Mobile to deduct a service fee 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
the gross revenue, varying from province to province, for amounts received by provincial operators of China Unicom. 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 and China Netcom permit them to deduct a service fee between 15% to 50% of the gross revenue,
depending on the type of service, from the amounts such mobile operators receive from customers for our services.

Obligations with Respect to Our Services
       We must obtain China Unicom’s or China Mobile’s approval for our services and their pricing before these services can be offered on their network. Our
contracts with China Mobile and China Unicom vary in the specific obligations they impose, but they generally require, among other things, that the mobile
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.

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Term and Termination and Other Material Provisions
       The term of our contracts with China Mobile and China Unicom 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 mobile 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.

Agreements with China Unicom for Software and System Integration Services
     We provide to China Unicom’s headquarters and certain of its provincial offices for the construction and expansion of their WAP portals third party
hardware and software, system integration services, license of our VASPro software and technical support and maintenance services.

       In late 2004, we entered into the CDMA WAP (Phase IV) Equipment and Service Purchase Agreement with China Unicom’s headquarters. Under this
contract, we provided third party hardware and software, our VASPro software and system integration services to China Unicom’s headquarters and WAP portals
for the Phase IV WAP portal expansion, in exchange for a fixed fee. This project was completed in 2005. In June 2005, we entered into a CDMA WAP (Phase I)
Equipment and Service Purchase Agreement with each of Shaanxi China Unicom and Shanxi China Unicom. Under these contracts, we provide third party
hardware and software, our VASPro software and system integration services to Shaanxi China Unicom and Shanxi China Unicom for WAP portal construction,
in exchange for a fixed fee. We will also provide technical support and maintenance and software updates after the installation of the equipment.

Product and Content Development
Wireless Value-Added Services
      We develop most of our content and applications for wireless value-added services in-house through our more than 200-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, 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 mobile operators after deducting service and network fees. For most of our agreements,
the content providers receive 50% of such net amount, but in a few cases the providers receive between 40% to 60%.

       For music owned by third parties, we pay a royalty fee directly to the Music Copyright Society of China, which serves as the representative for all major
international music companies to collect royalty fees for ringtone downloads and other wireless value-added services in China. As one of the largest service
providers in China, we believe that we obtained more favorable terms with the Music Copyright Society of China than a number of our competitors, which we
believe has enhanced gross margin for all our music-related services. Also, we license music rights from international record companies such as Sony-BMG and
EMI. In addition, some music content that we use in our services, such as Liangying Zhang’s first EP, is provided by Freeland Music, Huayi Brothers Music,
New Run, and Secular Bid, our affiliated companies.

Music Production
       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 100 employees specializing in artist development, music production and music
distribution. Freeland Music, Huayi Brothers Music, New Run and Secular Bird currently have a total of 32 artists under contract.

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      Freeland Music, Huayi Brothers Music, New Run, and Secular Bird are all 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, Liangying Zhang from Huayi
Brothers, Long Pang from New Run, and Qiang Wang 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, on both China Mobile’s music portal and Baidu’s music search platform in
terms of number of downloads. For example, Qiang Wang’s “Qiu Tian Bu Hui Lai” received the “Most Popular Album in 2006” award at the China Mobile
M.Music Awards in January 2007.

       Pursuant to certain contractual arrangements with Freeland Music, Huayi Brothers Music, New Run and Secular Bird, which we entered into at the time of
our investment in each of them, 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 of Huayi Brothers Music, New Run and Secular Bird in mainland China. We have, however,
agreed to allow Freeland Music, Huayi Brothers Music, New Run and Secular Bird to also 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 music affiliates Freeland Music, Huayi Brothers Music, New Run, and Secular Bird to any of
our non-music affiliates, then our music affiliates are entitled to receive a license fee from Hurray! Digital Media which is equal to 50% of the aggregate amounts
paid by the mobile operators for the content, less any taxes paid by the affiliate and Hurray! Digital Media. If Hurray! Digital Media licenses the music content of
our music affiliates to any other third party, then our music affiliates 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 10-20% service fee which
Hurray! Digital Media retains.

       In addition, Freeland Music has entered into an agreement with 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 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 notify Freeland Music as to 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.

      Freeland Music, Huayi Brothers Music, New Run and Secular Bird enter into contracts with their artists that 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.

Software Products
       Our 40-member software development team focuses on enhancing the available features and functions of our VASPro software, including improving its
efficiency and reliability. We believe that our success in this area will depend, in part, on our ability to work with China Unicom and other mobile operators to
develop and introduce new versions of VASPro that continue to address the needs of mobile operators in China and elsewhere. Sales of our VASPro software are
also dependent on the overall growth of China Unicom’s 2.5G user base, which growth slowed in 2006. This team is also developing carrier management
software which is 3G-compatible and is currently conducting trials with China Telecom to support its future 3G portals.

       We focus on product reliability during all stages of our software development activities. We review quality and reliability data during our tests of each new
version of VASPro and as part of our technical consulting services to China Unicom. Each of our software products undergoes, or will undergo, three test cycles,
which are known as alpha, beta and production. We believe this testing allows us to improve the quality and reliability of our software products. In the alpha
cycle, we test the samples of the products by simulating the use of the product in real-life environments. In the beta cycle, after the product has been validated in
the alpha cycle, we send the product to third parties such as China Unicom who test the product in diverse environments and provide us with feedback. In the
production cycle, after feedback from our beta testing, we make any appropriate changes and re-validate the functionality and performance of a product before it
is implemented.

Sales and Marketing
Wireless Value-Added Services
      We market and promote our wireless value-added services online and offline through channels controlled by the mobile 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.

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       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 mobile operators at the
central and provincial levels. As of December 31, 2006, we had approximately 100 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 mobile 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 mobile 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 mobile operators.

Online Sales and Marketing
      Our online sales and marketing activities include:


      • WAP and SMS Pushes. We push WAP messages to mobile users promoting our WAP services operated by China Mobile and China Unicom, which
        pop up when users access WAP portals. Such message placements are known as “WAP pushes.” We engage in SMS pushes as well to promote all of
        our services, and place banner ads on China Unicom’s WAP pages from time to time. We are entirely dependent on the mobile operators to allow us to
        engage in WAP and SMS pushes and place banner ads on their networks. In recent years, the mobile operators have tightened control and approval of
        such promotional activities, which has limited our ability to conduct such promotions.


      • 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.


      • Internet Marketing Alliances. In 2005, we also created Internet marketing alliances. Through these alliances, we work with tens of thousands of small,
        niche or vertical websites in China to market, promote and distribute our wireless value-added services, in particular 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 come to our website and subscribe
        for our services.


      • Handset Manufactures Partnerships. Starting in 2005, we began partnering with major handset manufactures 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 mobile
        operators. We work with major global and domestic handset manufacturers such as Nokia, Motorola, LG and TCL.

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
        wireless value-added services. 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 featuring our pop singers or latest releases around China with the mobile operators at which 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 Pepsi and Enlight Media.

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      • 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 wireless value-added service 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 four 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 wireless value-added services 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 record 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.


      • 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, primarily the tens of thousands of retail stores in China which specialize 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.

Our Software Products
       China Unicom and 12 of its provincial affiliates are the current customers for our VASPro software. We work to maintain our relationships with these
customers and seek to establish new relationships with more of China Unicom’s provincial offices. We use our sales and marketing team and strive to maintain
constant contact between our software development and technical teams and China Unicom in the course of providing technical consulting services for our
VASPro software. We believe that our close working relationship with China Unicom creates a virtuous cycle, whereby we are able to continuously learn more
about China Unicom’s needs and plans for its wireless value-added services platform and, as a result, improve our software to satisfy those needs and plans. This
in turn reinforces China Unicom’s willingness to continue to rely on us as its WAP user base grows and it has to license additional software.

     Through our sales and marketing team and our software development team, we have also initiated contact with China Telecom, China Netcom and other
companies that may receive mobile licenses in the near future to build a relationship with those parties and market our software for their networks.

Customer Service
       We work to provide high quality customer service. This is an important factor for maintaining our relationships with China Mobile and China Unicom as
discussed above in “— Network Service Agreements with Operators.” Our dedicated customer service center in Beijing provides our users real-time support and
employed approximately 80 customer service representatives as of December 31, 2006. 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 mobile operators to ensure that we receive the correct fees
for our services provided over their networks.

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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,


      • design and develop our software products, as well as provide our technical consulting services, to China Unicom in connection with the VASPro
        software we license to it, 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 mobile 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, ringbacktone, 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 wireless value-added services in China is highly fragmented with more than 1,000 service providers. Wireless service providers in China
can be principally categorized into three 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 mobile 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.

      In 2006, China Mobile began operating its own music WAP portal and procuring music content from music companies directly. 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.

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 wireless value-added services 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 wireless value-added services 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.

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Software and System Integration Services
      We do not compete in the general software and system integration services market in China but specialize in designing, developing, selling and supporting
VASPro, our service provisioning and management software for 2.5G services. We are the sole provider of this type of software to China Unicom for its
nation-wide WAP portal and to 12 of its provincial-level operators for both its CDMA (Code Division Multiple Access) 1x and GPRS networks. We currently do
not have any other customer for our software and system integration services.

      We face significant competition to provide the software and related system integration services for China Unicom’s WAP portals. Our competitors include
major international software companies such as Microsoft, traditional telecommunications companies such as Motorola and NEC, major software and
professional services companies such as Hewlett-Packard and IBM, and local software developers and telecommunications companies such as Aspire, Huawei
and ZTE. We believe that we will continue to face significant competition from these companies in the market for software we intend to develop in the future,
such as software for 3G services and video streaming. Currently, we are competing with Huawei, Alcatel and Ericsson in our ongoing 3G portal system trial with
China Telecom.

      All of our competitors have greater market share worldwide and financial resources than we do. These established software and telecommunications
companies are better positioned to finance research and development activities relating to 2.5G and 3G. They are also able to provide a wider range of products
and services for a greater spectrum of media and have greater resources with which to purchase additional technologies or acquire other companies. In particular,
while we are still the only provider of services provisioning and management software for China Unicom’s nation-wide WAP platform, both we and Microsoft
have been engaged by China Unicom to provide integration services for different portions of China Unicom’s Phase IV expansion of its nation-wide WAP portal.
In previous phases, we had provided all such services, and it is possible that Microsoft or other third parties that China Unicom engages for future expansions
could use such engagement to begin selling their own services provisioning and management software to China Unicom.

      Please refer to “Risk Factors — Risks Related to Our Company — Additional Risks Related to Our Company — We face intense competition, which
could cause us to lose market share and materially adversely affect our business and results of operations” for a more detailed discussion of the risks we face
from our competitors.

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 near future. If we are found to be in violation of current or future Chinese laws or regulations, we could be subject to severe penalties”; “Risk
Factors — 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 “Risk Factors — 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, 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 are classified as being of a value-added nature and require the
        commercial mobile operator of such services to obtain an operating license, including online data processing and transaction processing, call centers
        and Internet access. The Telecom Regulations also set forth extensive guidelines with respect to

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         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. Each of our affiliates Hurray! Solutions, Beijing Palmsky, Beijing Network, Beijing Hengji Weiye, Beijing Hutong and Shanghai Magma has
         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 nine affiliated Chinese entities and their respective shareholders. We hold no ownership interest in any such affiliated Chinese entities.


      • 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. To comply with these requirements,
        we transferred certain domain names and are in the process of transferring certain trademarks from our subsidiary, Hurray! Times to our affiliated
        companies Hurray! Solutions, Beijing Palmsky and Beijing Hutong.


      • Notice concerning Short Message Services (2004), or the Notice. Under the Notice, mobile operators may only cooperate with licensed information
        service providers for SMS. The 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. The 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 wireless value-added
        services 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 mobile operators are required to
        first deal with customer complaints, requests for refunds and related matters. The deadline for compliance with this notice was March 1, 2007.

       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 Publishing 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
                                                     not
publication business. The SNPA and the MII have™ 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
           Measures apply to wireless value-added telecommunication services operators or issue new regulations or rules regulating publishing through SMS,
Publishing ™
WAP, Java , IVR or other wireless technologies, we may need to apply for a license or permit from governmental agencies in charge of publishing. We can not
assure you that such application would be approved by the relevant governmental agencies.

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       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.

       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 has been granted a license in August 2004 pursuant to the Internet Culture Measures by the MCC which
permits it to conduct an Internet games business.

       Regulation for system integration. On January 1, 2000, the Provisional Rules on Computer Information System Integration Qualification was promulgated
by the MII. The MII is responsible for regulating computer information system integration. The Computer Information System Integration Qualification
Certification Committee established under the supervision of the MII is the specific governmental agency in charge. Pursuant to this regulation, an entity must
obtain a qualification certificate for system integration to provide computer information system integration services and in turn, anybody planning to install
computer information systems shall only engage entities with an appropriate qualification certificate. Historically, qualification certificates have not been
required generally in the market for system integration services or by our principal customers. No specific penalties for non-compliance are provided under this
regulation. Nevertheless, Hurray! Times obtained this certification in October 2005.

       Regulation for software products registration. The MII is the government agency responsible for regulating software development, production and sales
activities in China. On October 27, 2000, the MII promulgated the Software Products Administrative Measures, which took effect on the same day. The Software
Products Administrative Measures require that all software products be registered and filed with government delegated entities before being sold in China.
Historically, proof of registration has not been required generally in the market for our software products or by our principal customers. The Software Products
Administrative Measures provide that failure to register software can result in the MII issuing a warning and publishing the name of the entity failing to register.
We registered versions 5.4.0 and 7.0 of our VASPro software with the Beijing Municipal Science & Technology Commission in July 2004 and June 2006,
respectively.

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 National People’s Congress, or the NPC; the State Council; 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:
       Copyright. 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 for fair compensation of 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

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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 playing 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 newly implemented Regulations on Protection of Information Network Transmission Right (July 1,
2006) stipulate 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 those regulations as discussed 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 at the end of last year (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 territory of PRC by MCC according to the Opinions on Regulation
and Development of Music transmitted via Network (2006). Besides these company-focused regulations, 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.

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. The SAIC has not promulgated regulations specifically aimed at wireless advertising through a media other than the Internet, such
as through SMS. One provisional regulation issued by Shanghai municipal government prohibits service providers from sending SMS advertisements without the
client’s consent.

      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 that include Enlight Media and Pepsi. 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.

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     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 the intellectual property laws and 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.

       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: Hurray.com;
Hurray.net.cn; Hurray.com.cn; Hawa.cn; Hawa.com.cn; M2me.com; M2me.com.cn; 5200.cn; Icu.com.cn; and Icu.net.cn. In 2005, we also acquired the
following domain names through our acquisition activities: Ok960.com; Magma-digital.com and Magma-land.com.

       We have registered one trademark with China’s Trademark Office relating to our company logo and two trademarks relating to our website of Hawa. We
are in the process of applying for one additional trademark 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.

      We registered versions 5.4.0 and 7.0 of our VASPro software with the State Copyright Bureau of the PRC in February 2004 and June 2005, respectively.

       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, Hurray! Times. To comply with ownership requirements under Chinese
law, 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 nine 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.

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      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.

      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 Music holds a 51% equity interest in Huayi Brothers Music, a 60% equity interest in Freeland Music, a 30% equity interest in New Run and a
65% equity interest in Secular Bird.

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

      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 Music, Huayi Brothers Music, Freeland Music and Secular Bird Accordingly, these entities are consolidated into our
financial statements from and after the date we became the primary beneficially of each such entity. Transactions among these entities and our company and
subsidiaries are eliminated in consolidation.

      The following diagram illustrates our corporate structure as of June 8, 2007.

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D. Property, Plant and Equipment
      Our company and its affiliates currently lease an approximate total of 4805 square meters of office space in Beijing through various lease agreements. The
aggregate monthly rent of such lease agreements is approximately $108,812, with effect from August 2006. We also have branches and representative offices in
Beijing, Shandong, Heilongjiang, Guangdong, Shenzhen, Zhejiang, Jiangsu, Liaoning, Fujian, Chongqing, Shanghai, Henan, Changsha, Guiyang and Sichuan.

       Freeland Music, Huayi Brothers Music and New Run lease their principal offices, which are located in Beijing. Shanghai Magma leases its principal office
in Shanghai. Secular Bird leases its principal offices 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 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 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. We are also 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 wireless value-added services platforms over mobile networks and through the Internet.

       The company also provides a wide range of other wireless value-added services 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 and China Unicom. Many of our services are also available to
users in China through our website. In addition, we design, develop, sell and support service provisioning and management software, called VASPro, and are the
sole provider of this type of software to China Unicom for its nation-wide WAP portal.

       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 mobile operators after the users have
paid for our services and the operators have deducted their service and network fees. We also earn revenues from our software and system integration services
that enable mobile operators to manage and support wireless value-added services on the 2.5G and, in the future, 3G mobile networks.

      We achieved net income of $5.8 million for 2006, $18.6 million for 2005 and $17.2 million for 2004. For 2006, we generated $69.9 million in total
revenues, compared to $62.4 million and $53.4 million for 2005 and 2004, respectively, representing an increase of 12.1 % and 16.7 %, respectively. For 2006,
2G, 2.5G, recorded music and software and system integration services accounted for 46.6%, 42.8%, 8.9% and 1.7% of our revenues, respectively, compared to
32.3%, 57.6%, nil and 10.1% in 2005 and 28.0%, 52.8%, nil and 19.2% in 2004. The increase in total revenues was driven by growth in demand for 2G services
and music and music-related services in 2006. Our sales of services through China Mobile’s networks also increased significantly in 2004, 2005 and 2006
compared to prior years. In 2006, the increase in revenues from wireless value-added services and music and music-related services was offset in part by a
decline in software and system integration services revenues due primarily to delays in entering into new contracts for those items as China Unicom delayed
expanding capacity or building its 2.5G and 3G networks.

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     We had retained earnings of $45.7 million, $39.9 million and $21.3 million as of December 31, 2006, 2005 and 2004, respectively.

Recent Developments
       As part of our ongoing strategy to establish a significant presence in the music development, production and distribution business in China and enhance
our proprietary music library we acquired majority interests in two music companies, Huayi Brothers Music and Freeland Music, at the end of December 2005
and at the beginning of January 2006 respectively, and we have continued to expand our music business through acquisitions. In November 2006, we entered into
agreements to acquire 30% of the equity interest in New Run, which is a leading independent record label in China. We paid a total of $2.25 million in cash for
such acquisition of New Run’s equity, 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. The acquisition was completed in April 2007.

       In March 2007, we entered into agreements to acquire a 65% equity interest in Secular Bird, which is an up-and-coming independent label in China. We
paid a total of $346,000 in cash for the 65% 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. The acquisition was completed in June 2007.

      In order to strengthen our wireless value-added services development, in February 2007, we agreed to acquire 100% of the equity interest in Shanghai
Saiyu, a provider of wireless value-added services in China, for a cash consideration of US$3.1 million.

       To further expand customer reach and diversify marketing, promotion and distribution channels, we entered into agreement with Beijing TV Media Co.,
Ltd.(“BTVM”) to establish an equity joint venture for the development and delivery of mobile interactive services to the audience of China Beijing TV Station
(“BTV”)’s audience. BTVM is BTV’s wholly owned subsidiary which owns the exclusive right of mobile interactive services in addition to other new media
rights for BTV’s national satellite channel and 12 local channels.

      Our 30% share of the results of New Run will be equity accounted in our financial statements starting from April 1, 2007. The results of Secular Bird are
expected to be consolidated into our financial statements starting from the second quarter of 2007 and the results of our project with BTVM are expected to be
incorporated in our financial statements starting from the third quarter of 2007.

      Factors Affecting Results of Operations and Financial Condition
      The major factors affecting our results of operations and financial condition include:


      • Changes in Mobile Operator Policies or the Manner in Which They are Enforced. Despite the long term growth potential of the wireless value added
        services market in China, the single most important factor affecting our business results since 2005 are the changes in mobile operator policies or the
        manner in which they are enforced. The policies and procedures adopted by China Mobile and China Unicom regarding content type, marketing and
        promotion, billing and collection, revenue share, customer service, and other aspects of the wireless value-added services significantly affect the
        industry as a whole and our business in particular. Such policy changes and their manner of enforcement have been frequent and unpredictable for the
        past two years and have caused our revenues to be volatile. For example, in addition to the sanction of Beijing Network by China Mobile in January
        2006 for improper promotion of one of its WAP services., as part of China Unicom’s efforts to improve customer service, it imposed a one-time fine on
        Hurray! Solutions, one of our affiliated operating companies providing SMS services, of approximately RMB5.7 million ($0.7 million) for improperly
        delivering one of its SMS services to users. In April 2006, China Unicom imposed a fine of RMB3.0 million ($0.4 million) on our affiliated Chinese
        entity, Beijing Hutong for violation a China Unicom billing policy with respect to one of its WAP services. Further changes in their policies or in their
        implementation by the mobile operators could adversely affect our business and financial condition.


      • Growth of the Wireless Value-Added Services Market in China. Our financial results have been, and we expect them to continue to be, largely
        dependent on growth in the wireless value-added services market in China. Historically, 2G services, such as SMS, have represented the predominant
        portion of the wireless value-added services market in China and of our revenues. Our 2G services, represented 75.9% of our total wireless value-added
        services 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. We subsequently launched our IVR services in 2004 and RBT services in 2005. Since

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        the launch of these 2G and 2.5G services, we have experienced significant growth in revenues from these services. SMS continues to generate a large
        portion of our revenues, as slower than expected growth in China Unicom’s WAP user base and new policies implemented by the mobile operators in
        2006 had a negative impact on 2006 revenues from certain of our services, particularly our 2.5G services. Our 2.5G services, primarily WAP services
        but also including MMS and Java™, represented 64.1% and 47.9% of our total wireless value-added services revenue for 2005 and 2006. Our IVR
        services represented 15.2% and 17.3% of our total wireless value-added services revenue for 2005 and 2006. Our RBT services represented 1.6% and
        5.4% of our total wireless value-added services revenue for 2005 and 2006. Although, we have been adversely affected by the slower than expected
        growth of China Unicom’s WAP services 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 mobile 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 (including
       SMS, IVR, RBT, WAP, MMS, and Java™) by Beijing Network and joint promotions with Beijing Network. We believe that such actions may have
       negatively affected our WAP revenues for at least the first two quarters of 2006, although the actual effect is difficult to quantify. 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 and China Unicom. Our results of operations are dependent on the terms of network
       service agreements with China Mobile and China Unicom and the manner in which the mobile 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 mobile operators at both the national and provincial level, the popularity of our services and our ability to
       maintain adequate levels of performance. Either 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. Our subsidiary, Hurray! Times, is subject to a 30.0% state enterprise income tax and a 3.0% local enterprise income tax and our affiliated
       Chinese entities are generally subject to a 33.0% enterprise income tax in China. However, Hurray! Times, as well as Hurray! Solutions and certain of
       other variable interest entities in China, have obtained approval from the Chinese government authorities to be classified as “high technology”
       companies. This classification entitles such companies to a three-year exemption from enterprise income tax commencing from various dates, followed
       by a 7.5% preferential tax rate for the succeeding three years and a 15% preferential tax rate thereafter. For additional information on such preferential
       tax arrangements and the potential affect on us of the new enterprise income tax law recently adopted in the PRC, see “— Taxation” below.


     • Maintaining and Expanding the Customer Base for Our VASPro Services Provisioning and Management Software. China Unicom and 12 of its
       provincial offices that have their own local WAP portals, use our VASPro services provisioning and management software. China Mobile, the other
       principal mobile operator in China purchases this kind of software from its own subsidiary. Therefore, it is unlikely that China Mobile would be a
       customer for our VASPro software and services in the foreseeable future. Accordingly, continued sales of our software depend on our ability to
       maintain our relationship with China Unicom and the expansion of China Unicom’s WAP user base. The rate of growth of such user base declined,
       however, in 2005 and 2006, causing China Unicom to delay expanding the capacity of its 2.5G networks. We cannot predict if or at what pace China
       Unicom will expand its 2.5G networks or build out 3G networks in future periods. We are also pursuing sales of our software to new customers in
       China, such as China Telecom and China Netcom. For example, we have begun developing carrier management software which is 3G-compatible and
       are currently conducting trials with China Telecom to support its future 3G portals. However, we have not yet developed close relationships with China
       Telecom and China Netcom.


     • 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 mobile operator
       experiences technical problems with its network.

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         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 0.5% to 9.1% of the total
         billable messages which are reflected in our internal records during 2006. Although we do not experience the same type of billing and transmission
         errors for our WAP services as we do for our SMS, we do experience a discrepancy between the revenues recorded by our internal system and the
         revenues that we receive from the mobile operators. This difference has historically averaged approximately 2.0% 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 mobile operators register new users or manage their
         internal billing reconciliation process.


      • Acquisitions and Strategic Investments. Selective acquisitions and strategic investments, such as the ones described under the heading “Recent
        Developments” 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: wireless value-added services (“WVAS”), recorded music and software and system
integration services. Our revenues represent our total revenues from operations, net of certain business and value-added taxes. Our revenues from wireless
value-added services are subject to a 3.0% business tax and our revenues from software and system integration services are subject to a value-added tax at the
rate of 17.0%. Furthermore, any service fees that Hurray! Times charges and subsequently collects pursuant to the exclusive technical and consulting service
agreements with our affiliated Chinese entities are subject to a 5.0% business tax.

      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,
                                                                                        2006                             2005                          2004
                                                                                            Percentage                       Percentage                    Percentage
                                                                                 Amount     of revenues         Amount       of revenues        Amount     of revenues
                                                                                                  (in thousands of U.S. dollars, except percentages)
Revenues:
2G services                                                                     $ 32,571           46.6%      $ 20,131            32.3%     $ 14,946            28.0%
2.5G services                                                                     29,941           42.8         35,932            57.6        28,227            52.8
Subtotal of WVAS                                                                $ 62,512           89.4%      $ 56,063            89.9%     $ 43,173            80.8%
Recorded music                                                                     6,203            8.9            —               —             —               —
Software and system integration services                                           1,177            1.7          6,312            10.1        10,267            19.2
Total revenues                                                                  $ 69,892          100.0%      $ 62,375           100.0%     $ 53,440           100.0%

     The following tables show our 2G and 2.5G revenues for 2006, 2005 and 2004 by product and mobile operator (including Personal Handy-phone System,
or PHS, operators). In 2004, we had no sales through the PHS networks of China Telecom and China Netcom.

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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



                                                                                                                          For the Year Ended December 31, 2004
                                                                                                                       China               China
                                                                                                                       Mobile             Unicom              Total
                                                                                                                                (in millions of U.S. dollars)
SMS                                                                                                                $        4.0          $      9.7         $     13.7
IVR                                                                                                                         —                   1.3                1.3
RBT                                                                                                                         —                   —                  —
2G Revenues                                                                                                                 4.0                11.0               15.0
WAP                                                                                                                         5.5                22.7               28.2
MMS                                                                                                                         —                   —                  —
Java™                                                                                                                       —                   —                 —
2.5G revenues                                                                                                               5.5                22.7               28.2
Total                                                                                                              $        9.5          $     33.7         $     43.2

       2G and 2.5G services. Our 2G and 2.5G services revenues are derived from services that we provide to our users primarily through China Unicom’s and
China Mobile’s networks. In 2005, we also commenced offering certain of our services through the networks of China Telecom and China Netcom, as part of our
strategy to diversify our operator reach. 2G SMS and 2.5G WAP services have historically been our primary source of revenues. As part of our strategy begun in
2005 to expand our wireless value added services platforms, our sales in 2006 of 2G IVR, 2G RBT, 2.5G MMS, and 2.5 G Java™ increased by 25.9%, 274.4%,
136% and 100%, respectively as compared with 2005. We expect that sales of our 2G IVR and RBT services and our 2.5G MMS and Java™ services will
continue to grow and account for larger percentages of our total revenues.

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       Recorded Music. Our recorded music revenues are derived from artist development, music production, offline music distribution, and online music
distribution through wireless value-added services and the Internet, which accounted for approximately 8.9% of our total revenues in 2006.

       Software and system integration services. Our revenues from these services have been derived from the design, development, licensing fees, hardware
installation and after-sale support of our VASPro services provisioning and management software, which has been purchased by China Unicom and 12 of its
provincial offices. We deliver these services under a small number of relatively high value contracts. The revenues from these contracts are recognized based on
the percentage of completed contractual obligations. Since a large part of certain projects often relates to third party hardware and software, the timing of their
delivery can cause our quarterly gross revenues and cost of revenues to fluctuate significantly. However, those fluctuations do not significantly affect our gross
profits because hardware-related revenues approximate the costs of such revenues. See “— Critical Accounting Policies.” We have focused on providing our own
software and services in an effort to minimize third-party hardware and software pass-through sales.

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,
                                                                                                                                       2006         2005           2004
                                                                                                                                        (in thousands of U.S. dollars)
Cost of Revenues:
2G services                                                                                                                         $ 24,615      $ 13,714      $ 7,050
2.5G services                                                                                                                         16,057        14,921        11,003
Subtotal of WVAS                                                                                                                    $ 40,672      $ 28,635      $ 18,053
Recorded music                                                                                                                         3,553           —             —
Software and system integration services                                                                                                 946         1,302         6,277
Total cost of revenues                                                                                                              $ 45,171      $ 29,937      $ 24,330

     2G and 2.5G services. The principal cost of revenues for our 2G and 2.5G services is the service and network fees paid to the mobile 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.

     Software and system integration services. Our cost of revenues for our software and system integration services includes acquisition cost of third party
hardware and software products provided to our customers and staffing and travel costs related to system integration services in connection with a given project.

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,
                                                                                                                                       2006           2005         2004
                                                                                                                                               (in thousands of
                                                                                                                                       U.S. dollars, except percentages)
Gross Profits:
2G services                                                                                                                         $ 7,956       $ 6,417       $ 7,896
2.5G services                                                                                                                         13,884        21,011        17,224
Subtotal of WVAS                                                                                                                    $ 21,840      $ 27,428      $ 25,120
Recorded music                                                                                                                         2,650           —             —
Software and system integration services                                                                                                 231         5,010         3,990
Total gross profits                                                                                                                 $ 24,721      $ 32,438      $ 29,110

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                                                                                                                                         For the Year Ended December 31,
                                                                                                                                       2006              2005            2004
                                                                                                                                                  (in thousands of
                                                                                                                                          U.S. dollars, except percentages)
Gross Profit Margin:
2G services                                                                                                                            24.4%           31.9%            52.8%
2.5G services                                                                                                                          46.4            58.5             61.0
Subtotal of WVAS                                                                                                                       34.9%           48.9%            58.2%
Recorded music                                                                                                                         42.7             —                —
Software and system integration services                                                                                               19.6            79.4             38.9
Total gross profit margin                                                                                                              35.4%           52.0%            54.5%

      The gross profit margins for our 2G and 2.5G services declined in 2006 compared to 2005 due to increased costs associated with establishing operator
independent marketing, promotion and distribution channels, and higher revenue share costs paid to operators and content partners

       The gross profit margins for software and system integration services have varied significantly between 2004, 2005 and 2006. This variance is primarily
attributable to our delivery of more third party hardware and software in 2006 and 2005, which has significantly lower margins, compared to the delivery of our
own software and services. In the last three fiscal years combined, third party hardware and software accounted for an average of 56.7% of the total contract
value of our software system and integration services, or 44.1%, 13.4% and 91.0% of our total revenues from software and systems integration services in 2006,
2005 and 2004, respectively. In 2006 and 2005, we significantly minimized the provision of third party hardware and software in connection with our software
and system integration services, but we may still be required by our customers to provide those items from time to time.

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,
                                                                                       2006                                  2005                            2004
                                                                                              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 $80, $5 and $60 for the years ended December 31,
   2006, 2005 and 2004, respectively)                                     $     2,629                3.8%       $    2,537             4.1%      $     2,306             4.3%
Selling and marketing expenses (including stock-based compensation
   expense of $346, $10 and $221 for the years ended December 31,
   2006, 2005 and 2004, respectively)                                          11,893               17.0             9,797            15.7             7,433            13.9
General and administrative expenses (including stock-based
   compensation expense of $118, $23 and $nil for the years ended
   December 31, 2006, 2005 and 2004, respectively)                           6,765                   9.7           3,484               5.6          1,821                3.4
In-process research and development                                            —                    —                —                —                36                0.1
Total operating expenses                                                  $ 21,287                  30.5%       $ 15,818              25.4%      $ 11,596               21.7%

       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. 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.

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       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 mobile 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 and Secular Bird. 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 restricted 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, 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 over the requisite service period which is generally the vesting period.

       For options vested prior to January 1, 2006, we accounted for share-based compensation plans in accordance with APB 25. Accordingly, we recognized
stock-based compensation expense only when options were granted with a discounted exercise price. The stock-based compensation expense was recognized
ratably over the requisite service period, which was generally the vesting period of the options. Due to the adoption of SFAS 123(R) in 2006, the stock- based
compensation expenses prior to and after January 1, 2006 are therefore not comparable.

       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 new 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 330,000 ADSs, equal to 33,000,000 restricted shares, in lieu of stock options, 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 restricted shares vest on an annual basis equally over three years, 33.33% on each anniversary of the grant date.

      On June 20, 2006, Hurray! granted 75,000 ADSs, equal to 7,500,000 restricted shares to certain employees which resulted in stock-based compensation
expense of $0.3 million to be recognized over the applicable vesting period. These restricted shares vest on an annual basis equally over 33 months. The
stock-based compensation expense was $543,557 in 2006.

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

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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
      2G and 2.5G services. Our revenues are primarily derived from the sale of 2G and 2.5G services to our customers delivered over China Unicom’s and
China Mobile’s mobile telecommunications networks. Fees for these services are established by an agreement with the mobile operators and indicated in the
message received on the mobile phone.

       Our services are delivered to users through the mobile telecommunication networks of the mobile operators, and we rely upon them to provide us with
billing and collection services. We have, however, developed an internal system that records the number of transactions and subscriptions of our services, which
we then compare to the confirmations received from the mobile operators. Generally within 15 to 30 days after the end of each month, a statement from the
mobile operators confirming the value of the 2G and 2.5G services they bill to users in that month will be delivered to us, and usually within 60 days after such
delivery, we will be paid by the mobile operators for these services, net of their service fees, network fees and applicable business taxes.

       We initially ascertain the value of the 2G and 2.5G services provided based upon statements sent to us by the mobile operators with respect to the amount
of services we deliver to the end users. Because there has historically been a discrepancy between the value of our 2G and 2.5G services based on our internal
system and the value of the services based on the statements received from the mobile operators due to technical issues with the transmission and billing systems,
at the end of each month, we will, based on the historical data regarding such discrepancies and other factors, make an estimate of our revenues for such month.
This estimate may be higher or lower than the actual revenues we have a right to receive based on the statements received from the mobile operators.

      We evaluate our network service agreements with the mobile operators to determine whether to recognize our revenues gross or net of the fees charged by
the mobile operators. Pursuant to applicable accounting standards, our determination is based upon an assessment of whether we act as a principal or agent when
providing the services to our mobile operators. We have concluded that we act as a principal and therefore we recognize revenue for the gross amounts billed to
our mobile phone customers. Factors that we believe support our conclusion are as follows:


      • We have latitude in establishing prices within ranges prescribed by the mobile operators;


      • We determine the specifications of the services we will be rendering;


      • We have the ability to control the selection of our content suppliers; and


      • We assume the risk of non-payment by customers.

       Although the mobile operators must approve the prices of our services in advance, we have been able to adjust our prices from time to time to reflect or
react to changes in the market. In addition, the mobile operators will usually not pay us if users of our services do not pay them and they will not pay us if users
do not receive the services due to billing or transmission failures. As a result, we in fact bear the credit and delivery risk for our portion of the revenues generated
with respect to our services.

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

      Our affiliated music companies 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 distribution of the CDs. Our affiliated music companies 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, 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 an expense over the revenue generating period, typically within one year.

       Software and System Integration. We generally charge a fixed price for all of our projects and recognize revenues based on the percentage of completion
of the project. Software revenues from customer orders requiring design, development and support of the software are recognized over the installation period. We
use labor costs and direct project expenses to determine the stage of

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
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completion, except for revenues associated with the procurement of hardware, which we recognize upon delivery of the hardware to the customer. Historically,
since a large part of the cost of certain projects related to third party software and hardware, the timing of such software and hardware delivery caused our
quarterly gross revenues and cost of revenues to fluctuate significantly. We recognized total revenues from the sale of third party hardware and software of $0.5
million, $0.8 million and $5.8 million, and cost of such revenues of $0.5 million, $0.8 million and $5.8 million in 2006, 2005 and 2004, respectively. Because
third party software and hardware-related revenues approximate the costs of those items, our gross profit margins on such revenues were nominal in 2006, 2005
and 2004. Recognized revenues and profit are subject to adjustments in current periods as the contract progresses to completion. Accordingly, any changes in our
estimates would affect our future operating results.

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

       Prior to January 1, 2006, we accounted for share-based compensation plans in accordance with APB 25, we did not record deferred stock-based
compensation cost for employee stock option grants as the deemed fair value of our ordinary shares for accounting purposes is lower than or equal to the option
exercise price on the measurement date. Prior to our initial public offering, we determined the deemed fair value of our ordinary shares based upon several
factors, including a valuation report from an independent appraiser and the price of our then most recent preference share placement. Had different assumptions
or criteria been used to determine the deemed fair value of our ordinary shares, materially different amounts of stock-based compensation cost could have been
reported. Following our initial public offering, we have determined the fair market value of our ordinary shares by reference to the current trading price of our
American Depositary Shares on The Nasdaq Global Market.

      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, 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 over the requisite service period which is generally the vesting
period.

       In 2006, we 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. The fair market value of restricted share is determined by the market value of unrestricted shares.

Results of Operations
      The following discussion of our results of operations for the years ended December 31, 2004, 2005 and 2006 is based upon our audited historical
consolidated financial statements included elsewhere in this annual report.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
Revenues. Our revenues increased 12.1% to $69.9 million in 2006 from $62.4 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.

      2G Services. Revenues from our 2G services increased 61.8% to $32.6 million for 2006 from $20.1 million for 2005, primarily due to the growth in the
market for SMS, IVR and RBT services. 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 mobile 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.

      2.5G Services. Revenues from our 2.5G services decreased 16.7% to $29.9 million for 2006 from $35.9 million for 2005, primarily due to a decrease in
WAP revenues. Total WAP revenues were $21.5 million for 2006, a decrease of 37.0% over 2005. This decrease was primarily due to decreased sales on the
WAP portals of China Unicom as result of declines in Unicom’s active CDMA and WAP user declined and new policies of mandatory free trial periods and
double reminders for subscription based services. WAP revenues generated through China Unicom’s WAP portals were $11.1 million in 2006, a decrease of
53.6% as compared with

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$24.1 million for 2005. MMS revenues, predominantly from China Mobile’s users, were $4.0 million, a significant increase over $1.7 million for 2005. Revenues
from Java™ services were $4.4 million in 2006 compared with an insignificant amount in 2005, due primarily to revenues generated by Shanghai Magma
following our acquisition of such company in 2005.

      Recorded Music. Recorded music revenues, which became a new business line for us in 2006, were $6.2 million in 2006, accounting for 8.9% of total
revenues in 2006. We expect to derive an increasing amount of total revenues from recorded music for at least the near term.

      Software and System Integration Services. Revenues from our software and system integration services declined 81.4% to $1.2 million for 2006 from $6.3
million for 2005. The decline in 2006 of such revenue was due primarily to a delay in China Unicom’s build-out of its 2.5G and 3G networks in 2006.

Cost of Revenues. Our cost of revenues increased 50.9% to $45.2 million in 2006 from $29.9 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. This increase was offset in part by a decline in costs associated
with our software and system integration services.

       2G Services. Our cost of 2G services increased 79.5% to $24.6 million for 2006 from $13.7 million for 2005. This increase resulted primarily from
increased costs incurred to promote our 2G services through channels which are independent of the mobile 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. In addition, the increase reflects, to a lesser extent, the cost of purchasing content for our IVR services.

      2.5G Services. Our cost of 2.5G services increased 7.6% to $16.1 million for 2006 from $14.9 million for 2005, due primarily to increased service and
network fees of our 2.5G services in 2006 compared to 2005, the cost incurred to promote our MMS services through channels independent of the mobile
operators, 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.

      Software and System Integration Services. Our cost of software and system integration services decreased significantly to $0.9 million for 2006 from $1.3
million for 2005, due primarily to decreased sales of third party hardware and software.

      Gross Profits. Our gross profits decreased 23.8% to $24.7 million for 2006 from $32.4 million for 2005, mainly due to the decreased profits from 2.5G
services and, to a lesser extent, from software and system integration services. Our gross profit margins decreased to 35.4% for 2006 from 52.0% 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 This decrease was also due, to a lesser extent, to
the lower gross profit margins for our software and system integration services as a result of a delay in China Unicom’s build-out of its 2.5G and 3G networks in
2006.

      Operating Expenses. Operating expenses increased 34.6% to $21.3 million for 2006 from $15.8 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 $2.6 million in 2006 from $2.5 million in 2005.

       Selling and Marketing Expenses. Our selling and marketing expenses increased 21.4% to $11.9 million in 2006 from $9.8 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 94.2% to $6.8 million in 2006 from $3.5 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

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     Income from Operations. As a result of the foregoing, income from operations decreased to $3.4 million for 2006 from $16.6 million for 2005.

       Interest Income and expense. Interest income was $2.6 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 rebates, was $0.5 and $1.0 million in 2006 and 2005, respectively.

      Income Taxes. Income taxes were $0.1 million in 2006 and $0.4 million in 2005 resulting from the lower level of profitability in 2006 compared to 2005.

      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.

      Income Attributable to Holders of Ordinary Shares. As a result of the foregoing, our net income attributable to holders of ordinary shares was $5.8 million
in 2006, compared to $18.6 million in 2005.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Revenues. Our revenues increased 16.7% to $62.4 million in 2005 from $53.4 million in 2004. This increase was primarily due to an increase in revenues from
our 2.5G services and, to a lesser extent, an increase in revenues from our 2G services.

       2G Services. Revenues from our 2G services increased 34.7% to $20.1 million for 2005 from $14.9 million for 2004, primarily due to the growth in the
market for IVR and RBT services. SMS revenues were $10.6 million, a decline of 22.4% from $13.7 million for 2004. 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 which were independent of the mobile operators. IVR revenues were $8.6 million, a significant increase over $1.3 million for 2004 (the
year in which such services were introduced). RBT revenues were $0.9 million for 2005, as compared with nil for 2004.

      2.5G Services. Revenues from our 2.5G services increased 27.3% to $35.9 million for 2005 from $28.2 million for 2004, primarily due to an increase in
WAP revenues. Total WAP revenues were $34.3 million for 2005, an increase of 21.2% over 2004. This increase was primarily due to increased sales on the
WAP portals of China Mobile and, to a lesser extent, of China Unicom. WAP revenues generated through China Unicom’s WAP portals were $24.1 million, an
increase of 5.4% as compared with $22.7 million for 2004. WAP revenues generated through China Mobile’s WAP portals were $10.2 million, an increase of
88.7% as compared with $5.5 million for 2004. MMS revenues, predominantly from China Mobile’s users, were $1.7 million for 2005, as compared with nil for
2004. Revenues from Java™ services remained insignificant in 2005.

       Software and System Integration Services. Revenues from our software and system integration services declined 38.5% to $6.3 million for 2005 from
$10.3 million for 2004. The decline in 2005 of such revenue is due primarily to our strategy to minimize revenues from third-party hardware sold on a no-margin,
pass-through basis.

      Cost of Revenues. Our cost of revenues increased 23.0% to $29.9 million in 2005 from $24.3 million in 2004 due primarily to increased costs for 2G
services and, to a lesser extent, increased costs for our 2.5G services. This increase was offset in part by a decline of costs associated with our software and
system integration services.

       2G Services. Our cost of 2G services increased 94.5% to $13.7 million for 2005 from $7.0 million for 2004. This increase resulted primarily from
increased costs incurred to promote our 2G services through channels which are independent of the mobile 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 2005 compared to 2004 and a $0.7 million fine imposed on Hurray! Solutions by China Unicom for improper delivery of one of its SMS services to
users. In addition, the increase reflects, to a lesser extent, the cost of purchasing content for our IVR services.

     2.5G Services. Our cost of 2.5G services increased 35.6% to $14.9 million for 2005 from $11.0 million for 2004, due primarily to increased service and
network fees corresponding to the growth in sales of our 2.5G services in 2005 compared to 2004 and the cost incurred to promote our MMS services through
channels independent of the mobile operators.

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      Software and System Integration Services. Our cost of software and system integration services decreased significantly to $1.3 million for 2005 from $6.3
million for 2004, due primarily to decreased sales of third party hardware and software.

       Gross Profits. Our gross profits increased 11.4% to $32.4 million for 2005 from $29.1 million for 2004, reflecting increased profits from all our business
segments. Our gross profit margins decreased to 52.0% for 2005 from 54.5% for 2004, due primarily to decreased margins for 2G services, which mainly
resulted from increased marketing, promotion and distributions costs. This decrease was also due, to a lesser extent, to lower gross profit margins for our 2.5G
services as a result of higher third party content revenue sharing cost and increased revenues from lower gross margin MMS services. This decrease in gross
profit margins in 2005 was offset in part by increased gross profit margins for software and system integration services due to reduced third-party hardware
pass-through sales.

       Operating Expenses. Operating expenses increased 36.4% to $15.8 million for 2005 from $11.6 million for 2004, due primarily to increases in stock-based
compensation expense. The increase in stock-based compensation expense resulted primarily from increased headcount as our company implemented various
strategic initiatives in 2005.

      Product Development Expenses. Our product development expenses increased slightly to $2.5 million in 2005 from $2.3 million in 2004.

      Selling and Marketing Expenses. Our selling and marketing expenses increased 31.8% to $9.8 million in 2005 from $7.4 million in 2004. This increase
was primarily due to an increase in staff costs related to increased headcount (from 282 to 387) to accommodate the growth and expansion of different marketing,
promotion and distribution channels.

      General and Administrative Expenses. Our general and administrative expenses increased 91.3% to $3.5 million in 2005 from $1.8 million in 2004. This
increase mainly reflects increased professional services fees.

      Income from Operations. As a result of the foregoing, income from operations decreased to $16.6 million for 2005 from $17.5 million for 2004.

      Interest Income and expense. Interest income was $1.4 million for 2005, compared to $38,000 for 2004. The interest income for 2005 represented interest
earned on the proceeds of our initial public offering in February 2005. Interest expense decreased to $27,000 for 2005 from $0.3 million in 2004.

      Other Income. Other income, primarily government tax rebates, was $1.0 million in 2005. There was no such income for 2004.

     Income Taxes. Income taxes were $0.4 million in 2005 principally as a result of increased tax rates as certain affiliates were no longer eligible for a full tax
exemption. There were no income taxes in 2004.

      Net Income. As a result of the foregoing, net income increased 8.0% to $18.6 million for 2005 from $17.2 million for 2004.

      Income Attributable to Holders of Ordinary Shares. As a result of the foregoing, our net income attributable to holders of ordinary shares was $18.6
million in 2005, compared to $17.2 million in 2004.

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,
                                                                                                                              2006             2005               2004
                                                                                                                                   (in thousands of U.S. dollars)
Net cash provided by operating activities                                                                                  $ 17,894         $ 14,042         $ 15,822
Net cash used in investing activities                                                                                        (15,415)         (6,653)          (17,160)
Net cash (used in) provided by (financing activities                                                                          (4,399)         59,305            (1,104)
Net (decrease) increase in cash and cash equivalents                                                                       $ (1,920)        $ 66,694         $ (2,442)

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       Our net cash provided by operating activities in 2006 was $17.9 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, $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. Our net cash provided by operating activities in 2004 was $15.8 million. This was primarily attributable to our net income of $17.2 million, as
adjusted for an add-back of $2.0 million in depreciation and amortization as a non-cash item which was offset by a $3.5 million increase in accounts receivable.

       Net accounts receivable increased from $11.9 million as of December 31, 2004 to $18.1 million as of December 31, 2005 and declined to $13.4 million as
of December 31, 2006. The increase from 2004 to 2005 is primarily due to an amount due from one customer who was granted extended credit terms during the
year; the amount was fully settled subsequently. The decrease from 2005 to 2006 is primarily due to a significant improvement in collections from the mobile
operators, mainly from China Unicom. The average collection time for our accounts receivable from 2G and 2.5G services was 55 days in 2004, increasing to 81
days in 2005 and decreasing to 75 days in 2006. The average collection time for our accounts receivable from software and system integrations services increased
from 114 days in 2004 to 141 days in 2005 and increased to 600 days in 2006.

      Net cash used in investing activities was $15.4 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 $6.7 million in 2005, of which $2.9 million was used in the acquisition of
an equity interest of Huayi Brothers Music and $1.1 million was a prepayment for the acquisition of an equity interest of Freeland Music and Shanghai Magma.
Our total capital expenditures for computer hardware, software and office equipment for the years ended December 31, 2006, 2005 and 2004 were $1.0 million,
$1.3 million and $1.9 million, respectively. Our capital expenditures in progress are financed from retained earnings. Our principal capital divestitures are not
material. We do not have any material capital divestitures in progress.

      The following table sets forth our capital expenditures and divestitures for the periods indicated:


                                                                                                                             For the Year Ended December 31,
                                                                                                                            2006             2005              2004
                                                                                                                                 (in millions of U.S. dollars)
      Capital expenditures                                                                                              $     1.0          $   1.3          $   1.9
      Capital divestitures                                                                                                    —                —                —

       Net cash used in financing activities was $4.4 million for 2006, mainly due to the 79,260,000 ordinary shares repurchased and cancelled by us 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. Net cash used in financing activities was $1.1 million for 2004, mainly reflecting repayments of our short-term loans.

       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 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.

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Indebtedness
        As of December 31, 2006, other than a remaining payment for the acquisition of Shanghai Magma of $5.8 million due in December 2007 we did not have
any indebtedness or any material debt securities or material mortgages or liens. In addition, as of December 31, 2006, 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 Huayi Brothers Music, Freeland Music, New
Run, Shanghai Saiyu, and Secular Bird, as discussed under “Tabular Disclosure of Contractual Obligations” below.

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, 2006:


                                                                                                                             Payments Due by Period
                                                                                                                      Less than         1-3           3-5    More than
                                                                                                          Total        1 year          years         years    5 years
                                                                                                                          (in thousands of U.S. dollars)
Operating lease commitments                                                                             $ 4,711      $    1,868      $ 2,843       $ —       $    —
Other contractual commitments*                                                                              614             204          410         —            —
Total contractual obligations                                                                           $ 5,325      $    2,072      $ 3,253       $ —       $    —


* 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 the heading “Recent Developments”
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 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 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 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.

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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.

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 2000 and 2006, the exchange rate between Renminbi and U.S. dollars has varied by less than 5.7%. If the Renminbi had been 1% and 5% less
valuable against the U.S. dollar than the actual rate as of December 31, 2006 which was used in preparing the Company’s audited financial statements as of and
for the year ended December 31, 2006, our net asset value, as presented in U.S. dollars, would have been reduced by $516,029 and $2,481,853, 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
$526,454 and $2,743,101, 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
       In recent years, China has not experienced significant inflation, and thus inflation has not had a significant effect on our business during the past three
years. According to the China Statistical Bureau, China’s overall national inflation rate, as measured by the general consumer price index, was approximately
1.3%, 1.8% and 3.9% in 2006, 2005 and 2004, respectively.

TAXATION
      Hurray! is a tax-exempted company incorporated in the Cayman Islands. The subsidiaries incorporated in the PRC are currently governed by the Income
Tax Law of the PRC Concerning Foreign Investment and Foreign Enterprises and various local income tax laws (the “Income Tax Laws”). Pursuant to the PRC
Income Tax Laws, Hurray’s PRC subsidiaries and variable interest entities are generally subject to enterprise income tax at a statutory rate of 33%, which
comprises of a 30% national income tax and a 3% local income tax.

       Some of Hurray’s subsidiaries and variable interest entities qualify as “high technology” enterprises, and under PRC Income Tax Laws, they are subject to
a preferential tax rate of 15%. This classification entitles Hurray! Times to a three-year exemption from enterprise income tax commencing in 2003, followed by
a 7.5% preferential tax rate for the succeeding three years and a 15% preferential tax rate thereafter. The three year income tax exemption commenced in 2000
for Hurray! Solutions, 2002 for WVAS Solutions, 2003 for Beijing Cool Young, Beijing Network and Beijing Palmsky, 2004 for Beijing Hutong, 2001 for
Shanghai Magma and 2006 for Hurray! Digital Music and Freeland Music. Huayi Brothers Music is classified as a “new enterprise” and, accordingly, enjoys an
exemption from both national and local enterprise income tax in 2005. It will be subject to a 30.0% national enterprise income tax and 3.0% local enterprise
income tax thereafter. Hengji Weiye is subject to a 15% enterprise income tax.

      In addition, Hurray’s subsidiaries in the PRC are “foreign invested enterprises,” 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, or a two-year tax exemption followed by three
years with a 50% reduction in tax rate, commencing the first profitable year. These preferential tax arrangements will expire at various dates between 2006 and
2010. Due to these preferential tax treatments and cumulative tax loss carryforwards, we were not subject to any current income tax expense in 2004 and 2003.

      If our activities constitute a permanent establishment in China, the income we earn in China would also be subject to a 30.0% state enterprise income tax
and 3.0% local enterprise income tax. Income of our company that is not connected to a permanent

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establishment in China would be subject to a 10% withholding tax on gross receipt from profit, interest, rentals, royalties and other income earned in China.
Dividends from our wholly owned subsidiary, Hurray! Times, to our company are currently exempt from Chinese withholding tax.

      Our wireless value-added services revenues are subject to a 3% business tax. Our recorded music services revenues are subject to a 5% tax for royalties
and advertising revenues and a 17% tax for revenues from the sale of CDs. Our software and system integration services revenues are 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 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 $3.7 million and $3.6 million as of December 31, 2006 and 2005, respectively, for enterprise income tax purposes, which will expire by 2010.
These tax loss carryforwards give rise to potential deferred tax assets totaling $0.6 million and $0.4 million as of December 31, 2006 and 2005, respectively. In
2005, we conclude that Hurray! Solutions and other affiliated Chinese entities will 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 will 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 will be reduced accordingly.

      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.

Tax Reform
      At the Fifth Session of the Tenth National People’s Congress in March 2007, the NPC approved the draft Enterprise Income Tax Law of the People’s
Republic of China (the “new tax law”). The new tax law was passed to achieve unification of income tax law applicable to both domestic and foreign-funded
enterprises. The key elements of the new tax law include the following:


      (i)     A new corporate income tax rate of 25% will be applicable to both domestic and foreign-invested enterprises.


      (ii)    An enterprise established offshore but having its management organ in the PRC will be deemed as a “resident enterprise”, which will be subject to
              PRC tax on its global income. The term “management organ” has not yet been defined by the PRC government.


      (iii)   Foreign investors are not expressly exempted from the income tax on their dividend from a foreign-invested enterprise, which exemption is
              currently available until the effectiveness of the new enterprise income tax law.


      (iv)    Enterprises which are currently entitled to a lower income tax rate for a fixed term will continue to enjoy the preferential tax treatment until the
              expiration of such fixed term.


      (v)     Preferential income tax rates will continue to be provided for the promotion of technological innovation and progress, encouragement of
              infrastructure construction, and environmental protection and energy conservation, among other things. A preferential income tax rate of 15% will
              continue to be made available to hi-tech enterprises receiving priority support from the State. In addition, the new law will provide a grandfather
              period of five years to enterprises currently enjoying an income tax rate of 15% or 24% after the new tax law becomes effective in 2008.


      (vi)    The new tax law unifies the policy for expenditure deduction and defines the scope of nondeductible expenditures. Further, it makes unified
              provisions for the deduction of expenditures related to an enterprise’s fixed assets, intangibles, long-term prepaid expenses, and investment assets
              and inventory.

       We are currently monitoring and assessing the impact of the new tax law on our tax position as it is expected that the State Council will make available the
detailed regulations for the implementation of the new tax law in the coming months. The new tax law will become effective in January 2008.

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Recently Issued Accounting Standards
        In February 2007, the FASB issued Statement of Financial Accounting Standards 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 Statement of Financial Accounting Standards 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. 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.

      In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires quantification of financial
statement errors based on the effects of each on a company’s balance sheet and statement of operations and the related financial statement disclosures. The
Company does not expect the adoption of SAB 108 to have a material impact on its consolidated results of operations and financial condition.

      In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”
(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or
expected to be taken on a tax return. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48
to have a material impact on its consolidated results of operations and financial condition.

       In June 2006, the FASB ratified the consensus on Emerging Issues Task Force (“EITF”) Issue No. 06-03 (“EITF 06-03”), “How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” EITF 06-03
provides that the presentation of taxes assessed by a governmental authority that is directly imposed on a revenue producing transaction between a seller and a
customer on either a gross basis (included in revenues and costs) or on a net basis (excluded from revenues) is an accounting policy decision that should be
disclosed. The provisions of EITF 06-03 will be effective for interim and annual reporting periods beginning after December 15, 2006. The Company does not
expect the adoption of EIFT 06-03 to have a material impact on its consolidated results of operations and financial condition.




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 June 8, 2007 and the principal positions with the company held by them are as
follows:


Name                           Age                                                 Position                                                  Class       Term of Office
Qindai Wang
          (1)
                                42    Chairman of the Board and Chief Executive Officer                                                    Class I          3 years
Jesse Liu (2)(3)(4)             44    Director, Senior Vice President and Chief Financial Officer                                          Class I          3 years
Robert Mao (2)(3)(4)            63    Director                                                                                             Class I          3 years
Alan Powrie      (2)(3)(4)
                                56    Director                                                                                             Class III        2 years
Suberna Shringla                41    Director                                                                                             Class II         1 year
Songzuo Xiang                   42    Director                                                                                             Class II         1 year
Shudan Zhang                    47    Director                                                                                             Class III        2 years
Haoyu Yang                      35    Senior Vice President                                                                                  —                —
Shaojian (Sean) Wang            43    President and Chief Operating Officer                                                                  —                —
Jiang Wang                      34    Senior Vice President                                                                                  —                —

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(1)   Jesse Liu intends to resign as our Chief Financial Officer on June 30, 2007.
(2)   Member of the audit committee.
(3)   Member of the compensation committee.
(4)   Member of the nominating committee.

      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 as a director and as our Senior Vice President and Chief Financial Officer since June 2001. 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.

       Haoyu Yang. Dr. Yang has served as our Senior Vice President of Research and Development since June 2001. Formerly, he worked as a chief software
architect at Infospace, an Internet search and directory and mobile value-added services provider, from 2000 to 2001 and as a development manager at Prio, an
e-commerce service provider, from 1999 to 2000. Prior to that, Dr. Yang worked as a software engineer at Insight Development Corporation, a software
development firm. Dr. Yang holds a Ph.D. in Physics from the University of Miami and a Bachelor of Science degree in Physics from Peking University.

       Shaojian (Sean) Wang. Mr. Wang has served as our President and Chief Operating Officer since May 2006. 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.

      Jiang Wang. Mr.Wang has served as our Senior Vice President in charge of marketing and content sales since September 2006. Prior to that, he served as
Chairman and Chief Executive Officer of Shanghai Magma, which he founded in October 2001. From March 2000 to August 2001, he worked as the Vice
President of Intrinsic Inc. Prior to that, he served as a marketing and sales manager in Siemens Mobile from 1996 to 2000, a major wireless infrastructure vendor
in China. Mr.Wang holds a Bachelor of Science degree in Engineering Physics from Qinghua University.

B. Compensation
Compensation of Directors and Executive Officers
       In 2006, we paid an aggregate of approximately $377,000 and $128,125 in compensation to our executive officers and non-executive directors,
respectively. In 2006, we granted an aggregate of 405,000 ADSs, equal to 40,500,000 restricted shares, in lieu of stock options, to certain of our executive
officers and senior management under our 2004 Plan. These restricted shares vest on an annual basis equally over three years, 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 $2.4 million for 2006.

       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 purchased director and executive officer insurance for our directors and executive officers with limited liability of
US$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,

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      • physical harm to any person,


      • breach of the employment agreement, or


      • other similar conduct.

      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 the 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.

Option and Restricted Share Grants in Last Fiscal Year
      In 2006, none of our executive officers or senior management were granted any stock options to purchase our shares while certain of our executive officers
and senior management were granted in aggregate 405,000 ADSs, equal to 40,500,000 restricted shares, in lieu of stock options, under our 2004 Plan, of which,
330,000 ADSs, equal to 33,000,000 restricted shares vest on an annual basis equally over three years, 33.33% on each anniversary of the grant dates and 75,000
ADSs, equal to 7,500,000 restricted shares vest on an annual basis equally over 33 months.

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 shares, or (c) a lesser number of shares determined by the board. As a result of
the adjustment which became effective on January 1, 2005, 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. No such adjustment was made in 2006. 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,


      • restricted share units,


      • 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.

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     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.

       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.

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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.

      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 6A. “Directors and Senior Management” above.

       Our board of directors met in person or passed resolutions by unanimous written consent seventeen times and held conference calls three times during
2006. All of the directors who were serving in office during 2006 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 18, 2006. Our board has determined that
four of our current board of directors members, Messrs. Mao, Shringla, Powrie and Zhang, are “independent” as that term is defined in Rule 4200 of the listing
standards of the Marketplace Rules of the Nasdaq Global Market, Inc. (“Nasdaq”).

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

       In 2006, our audit committee held five 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 one meeting in 2006. 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 one meeting in 2006. 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 satisfy 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
      At December 31, 2006, 2005 and 2004, we had 471, 535 and 429 full-time employees, respectively.

      The following table summarizes the functional distribution of our full-time employees as of December 31, 2006, 2005 and 2004.


                                                                                                                                                    December 31,
Department                                                                                                                                       2006   2005   2004
Wireless Value-Added Services Regional Sales                                                                                                      98     104    72
Wireless Value-Added Services Marketing and Operation                                                                                            117     120    57
Wireless Value-Added Services Product Planning                                                                                                    72     156   102
Software Product Marketing and Operations                                                                                                         28      32    39
Research and Development                                                                                                                          90      71   117
Digital Media                                                                                                                                     18     —     —
Human Resources                                                                                                                                   15      22    18
Finance and Corporate Development                                                                                                                 29      26    18
Office of Chief Executive Officer                                                                                                                  4       4     6
Total                                                                                                                                            471     535   429

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

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E. Share Ownership
       The following table sets forth certain information known to us with respect to the beneficial ownership as of June 8, 2007 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 June 1, 2007, 2,173,731,040 of our ordinary shares were outstanding. The amounts and percentages of ordinary shares beneficially owned are
reported on the basis of regulations of the 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
Wellington Management Company, LLP                                                                                                      154,580,000         7.11%
     75 State Street       (1)
     Boston, MA, USA 02109
                                    (2)
Executive Officers and Directors(3)
Pleasant Season Ltd./Qindai Wang
         (4)
                                                                                                                                        188,621,660         8.68%
Jesse Liu (5)                                                                                                                            80,443,560         3.70%
Robert Mao                                                                                                                                2,000,000            *
Suberna Shringla                     (6)
                                                                                                                                                —              *
Xero Holdings Ltd./Songzuo Xiang                                                                                                        109,510,320         5.04%
Shudan Zhang (7)
                                                                                                                                         93,162,840         4.29%
Alan Powrie                       (8)
                                                                                                                                            600,000            *
Harrison Youth Ltd./Haoyu Yang                                                                                                           77,791,300         3.58%
Shaojian (Sean) Wang                                                                                                                      2,800,000            *
Jiang Wang                                                           (9)
                                                                                                                                          1,622,000            *
All current directors and executive officers as a group (10 persons)                                                                    556,551,680        25.60%


(1)    Wellington Management Company, LLP 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.
(4)    Includes 40,031,780 ordinary shares beneficially owned by Mr. Liu’s spouse, Carol Ng, through a 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 which are exercisable within 60 days of May 1, 2007. 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.
(8)    Represents ordinary shares beneficially owned by Dr. Yang through a revocable trust in which he retains voting and dispositive power over such shares.
(9)    Includes 2,600,000 ordinary shares issuable upon the exercise of stock options which are exercisable within 60 days of May 1, 2007.

      As of June 1, 2007, 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.

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      As of June 1, 2007, approximately 348,404,340 of our ordinary shares were held in the U.S. by 11 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. 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, 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, we
have entered into a series of agreements with nine affiliated Chinese entities, Hurray! Solutions, Beijing Cool Young, WVAS Solutions, Beijing Network,
Beijing Palmsky, Beijing Hutong, Hengji Weiye and Shanghai Magma and their respective shareholders. We hold no ownership interest in such affiliated
Chinese entities. In addition, we control Hurray! Digital Music 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 Hurray! Solutions, Beijing Cool Young, WVAS Solutions, Beijing Network, Beijing Palmsky, Beijing Hutong,
Hengji Weiye and Shanghai Magma (which are collectively referred to below as “our affiliated Chinese entities”) are described below.

       Powers of Attorney. Except for Qindai Wang, each of the shareholders of our affiliated Chinese entities has irrevocably designated Qindai Wang, in his
capacity as General Manager of 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 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.

       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 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 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 Hurray! Times as the directors, officers and other senior management personnel of our affiliated Chinese entities, as well as accept the guidance of
Hurray! Times regarding their day-to-day operations, financial management and the hiring and dismissal of their employees. While 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 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.

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       Trademark, Domain Name and Software Transfer Agreements. Hurray! Solutions had entered into agreements to transfer to Hurray! Times its ownership
rights in its domain names, some of which Hurray! Times has licensed back for Hurray! Solutions’ use in its operations on a non-exclusive basis. Each of WVAS
Solutions, Beijing Cool Young, Beijing Palmsky, Beijing Network, Hengji Weiye and Shanghai Magma had entered into agreements to transfer to Hurray! Times
its ownership rights in its domain names and Hurray! Times had licensed back to each of them their respective domain names for use in their operations on a
non-exclusive basis. Hurray! Solutions had transferred to Hurray! Times its ownership rights in its registered trademark of our corporate logo, which Hurray!
Times had licensed back for Hurray! Solutions’ use in its operations on a non-exclusive basis. Beijing Palmsky also has entered into agreements to transfer to
Hurray! Times its ownership rights in its games software, which Hurray! Times had licensed back for Beijing Palmsky’s use in its operations on a non-exclusive
basis. Under the Notice on Intensifying the Administration of Foreign Investment in Value-added Telecommunications Services (2006), an operating company
holding a value-added telecommunications license (and not its shareholders) must own all related Internet domain names and registered trademarks. To comply
with these requirements, we transferred certain domain names described above and are in the process of transferring certain trademarks from our subsidiary,
Hurray! Times to our affiliated companies Hurray! Solutions, Beijing Palmsky and Beijing Hutong.

       Trademark, Domain Name and Software License Agreements. Hurray! Times had granted to each of Hurray! Solutions, Beijing Cool Young, WVAS
Solutions, Beijing Palmsky, Beijing Network, Hengji Weiye and Shanghai Magma a license to use certain of its domain names. Hurray! Times had also granted
Hurray! Solutions a license to use its registered trademark of our corporate logo. The licensee of each of the licenses described above paid us a nominal annual
license fee. In addition, Hurray! Times had granted Beijing Palmsky a license to use several games software for a nominal annual license fee. Each of these
license agreements was to terminate upon the earlier of ten years or the expiration of Hurray! Times’ right to use the relevant domain names and trademarks. Due
to the adoption of the Notices on Intensifying the Administration of Foreign Investment in Value-added Telecommunications Services (2006) described above,
these license agreements have been terminated or are in the process of being terminated.

        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, 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 Hurray! Times
(currently Qindai Wang), who, as a matter of Chinese law, is subject to the direction of 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 these companies 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 2006 we received income of $449,638 and made payments
under these agreements of $28,256. At December 31, 2006 the amounts payable to and receivable from related parties represent the outstanding amounts arising
from such transactions. As of December 31, 2005, the amount was due to a minority shareholder, Beijing Huayi Brothers Advertising Co., Ltd, and was
non-interest bearing, unsecured and repayable on demand. In addition, during 2006 Huayi Bothers Music made short-term loans amounting to an aggregate of
$2,288,592 to its minority shareholders and their related parties generating interest income of $17,355. All such loans were repaid in 2006.

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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.

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 of this annual report under the heading “Operating Results – Recent Developments” and Item 18 of this annual report under the heading
“Financial Statements” for information regarding significant changes to us since December 31, 2006.




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 June 8, 2007)                                                                         $ 6.53         $ 4.50

             Quarterly highs and lows
                 First Quarter 2005 (February 4, 2005 through March 31, 2005)                                                        $   10.90      $ 7.67
                 Second Quarter 2005                                                                                                 $   11.80      $ 8.29
                 Third Quarter 2005                                                                                                  $   11.50      $ 8.08
                 Fourth Quarter 2005                                                                                                 $   10.41      $ 8.30
                 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 (April 1, 2007 through June 8, 2007)                                                            $    5.62      $ 4.50

             Monthly highs and lows
                 December 2006                                                                                                       $    8.28      $ 6.07
                 January 2007                                                                                                        $    6.53      $ 5.70
                 February 2007                                                                                                       $    6.44      $ 5.14
                 March 2007                                                                                                          $    6.19      $ 4.85
                 April 2007                                                                                                          $    5.62      $ 4.85
                 May 2007                                                                                                            $    5.37      $ 4.50

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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” or elsewhere in this annual report on Form 20-F.

D. Exchange Controls
       China’s government imposes control over the convertibility of Renminbi into foreign currencies. Under the current unified floating exchange rate system,
the People’s Bank of China, or the PBOC, publishes a daily exchange rate for Renminbi, or the PBOC Exchange Rate, based on the previous day’s dealings in
the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange
rates within an authorized range above or below the PBOC Exchange Rate according to market conditions.

       Pursuant to the Foreign Exchange Control Regulations issued by the State Council on January 29, 1996 and effective as of April 1, 1996 (and amended on
January 14, 1997) and the Administration of Settlement, Sale and Payment of Foreign Exchange Regulations which came into effect on July 1, 1996 regarding
foreign exchange control, or the Regulations, conversion of Renminbi into foreign exchange by foreign investment enterprises for current account items,
including the distribution of dividends and profits to foreign investors of joint ventures, is permissible. Foreign investment enterprises are permitted to remit
foreign exchange from their foreign exchange bank account in China on the basis of, inter alia, the terms of the relevant joint venture contracts and the board
resolutions declaring the distribution of the dividend and payment of profits. Conversion of Renminbi into foreign currencies and remittance of foreign currencies
for capital account items, including direct investment, loans, security investment, is still subject to the approval of the SAFE, in each such transaction. On
January 14, 1997, the State Council amended the Foreign Exchange Control Regulations to provide, among other things, that the State shall not impose
restrictions on recurring international payments and transfers.

       Under the Regulations, foreign investment enterprises are required to open and maintain separate foreign exchange accounts for capital account items (but
not for other items). In addition, foreign investment enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign
exchange business upon the production of valid commercial documents and, in the case of capital account item transactions, document approval from SAFE.

       On July 21, 2005, the Chinese government changed its 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 certain foreign currencies. Since the adoption of this new policy, the value of the Renminbi
has fluctuated daily within a narrow band, but overall has appreciated against the US dollar. Nevertheless, the PRC government continues to receive significant
international pressure to further liberalize its currency policy which could result in a further and more significant appreciation in the value of the Renminbi
against the US dollar.

       The PBOC issued a directive in 2007 regarding individual foreign exchange transactions. An annual quota of $20,000 that will be assigned to each
individual for the settlement of foreign exchange sets a threshold below which foreign exchange transactions can be handled directly at a bank. The SAFE issued
detailed rules for administering individual foreign exchange transactions, prescribing an annual quota of $50,000 for both individual settlement of foreign
exchange and individual purchases of foreign exchange from February 1, 2007. The measures liberalize a number of types of capital account transactions by
domestic individuals. In particular, individuals will be allowed to purchase domestically listed “B” shares and make financial investments involving overseas
shares, fixed income products and other approved financial instruments through the qualified domestic institutional investor scheme. Chinese citizens will be able
to participate in overseas listed companies’ employee stock ownership and stock option plans. The listed companies will be required to file applications on behalf
of their employees and obtain approval from the foreign exchange department before handling relevant foreign exchange transactions. The rules also liberalize
provisions dealing with remittances by

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Chinese citizens for offshore special purpose vehicles for “roundtrip investments,” an integral step in the conversion of a domestic enterprise into a
wholly-foreign owned enterprise under an offshore holding company for the purpose of listing offshore.

      Currently, foreign investment enterprises are required to apply to SAFE for “foreign exchange registration certificates for foreign investment enterprises.”
With such foreign exchange registration certificates (which are granted to foreign investment enterprises upon fulfilling specified conditions and which are
subject to review and renewal by the SAFE on an annual basis) or with the foreign exchange sales notices from the SAFE (which are obtained on a
transaction-by-transaction basis), foreign-invested enterprises may enter into foreign exchange transactions at banks authorized to conduct foreign exchange
business to obtain foreign exchange for their needs.

       In recent years, the State Development and Reform Commission, or the SDRC, and the SAFE have promulgated regulations on the exchange control in
relation to investments made by Chinese companies and residents in offshore companies and reinvestments in China made by these offshore companies. Pursuant
to such regulations, certain investment activities would be subject to more stringent regulatory controls.

       In October 2004, the SDRC promulgated an administrative rule for the approval of offshore investment projects. The administrative rule provides that
offshore investments made by Chinese companies and residents must be approved by SDRC agencies at the provincial level. If, however, the amount of foreign
exchange to be used in such offshore investment exceeds the threshold of US$30,000,000 (for investment in natural resources sector) or US$10,000,000 (for
investment in other industry sectors), the offshore investment must be approved by the national SDRC agency. Furthermore, if the amount of foreign exchange to
be used in such offshore investment exceeds the threshold of US$200,000,000 (for investment in natural resources sector) or US$50,000,000 (for investment in
other industry sectors), the offshore investment must be approved by the State Council.

       In October 2005, the SAFE issued a public notice concerning foreign exchange regulations on investments by Chinese residents in China through special
purpose companies incorporated overseas. According to the public notice, if Chinese residents use assets or equity interests in their domestic entities as capital
contribution to establish offshore companies or inject assets or equity interests of their Chinese entities into offshore companies to raise capital overseas, such
Chinese residents must register with local SAFE branches with respect to their overseas investments in offshore companies. In addition, if the offshore
companies of the Chinese residents experience material events, such as changes in share capital, share transfer, mergers and acquisitions, spin-off transactions or
use of assets in China to guarantee offshore obligations, the Chinese residents must file amendments to their registrations with the SAFE. The public notice also
provides that failure by any of our shareholders who is a Chinese resident or controlled by a Chinese resident to comply with the registration procedures set forth
in such notice may subject our company to fines or sanctions imposed by the Chinese government.

      As a Cayman Islands company, and therefore an offshore company, if we purchase the assets or equity interest of a Chinese company owned by Chinese
residents, including those which we will generate revenue from and exercise control over through agreements, such Chinese residents who become our
shareholders may be subject to registration procedures described in the aforementioned SAFE notice. Moreover, Chinese residents who are already our beneficial
shareholders may be required to register with the SAFE or the SDRC or both in connection with their shareholdings in us.

       As it is uncertain how the SAFE or the SDRC notices will be interpreted or implemented, we cannot predict how they will affect our business operations or
future acquisition strategy. For example, our present and prospective Chinese subsidiaries’ ability to conduct foreign exchange activities, such as remittance of
dividends and foreign-currency-denominated borrowings, may be conditioned upon compliance with the SAFE registration requirements by such Chinese
residents, over whom we have no control. In addition, we cannot assure you that such Chinese residents will be able to complete the necessary approval and
registration procedures required by the SAFE or SDRC notices because we have no control over the outcome of the registration procedures. With respect to our
recent acquisitions of Huayi Brothers Music, Freeland Music, New Run and Secular Bird or any future acquisitions of Chinese companies, we cannot assure you
that we or the owners of such Chinese companies, each as the case may be, will be able to complete the necessary approvals, filings and registrations required by
the aforementioned SAFE or SDRC notices for such acquisitions. Such uncertainties may restrict our ability to implement our acquisition strategy and adversely
affect our business and prospects.

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.

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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.

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 the 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.

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             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.

             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
              The discussion in “Distributions on Ordinary Shares or ADSs” and “Dispositions of Ordinary Shares or ADSs” below assumes that we will not be
treated as a passive foreign investment company (“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” below.

             Distributions on Ordinary Shares or ADSs
              General. Subject to the discussion in “Passive Foreign Investment Company” below, 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.

             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 2007, 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

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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” below, 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.

              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.

             Passive Foreign Investment Company
             We believe that we were a PFIC for 2006 and are likely a PFIC for the current taxable year of 2007. 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.

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               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, if you held ordinary shares or ADSs in 2006, 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
2007, if it turns out that we are a PFIC for 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. 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 has 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.

             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 above 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.

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             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 2006, if you held
ordinary shares or ADSs in 2006, you are required to file IRS Form 8621 for 2006 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 2007, if it turns out that we are a PFIC
For 2007, you will be 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.

             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.

           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.

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             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.

             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 or the British
Virgin Islands. 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

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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.

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 Securities and Exchange Commission. 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 Securities and
Exchange Commission 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 Web site 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.

        We have used the 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
       As of the end of the period covered by this report, our principal executive officer and principal financial officer have performed an evaluation of the
effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of Exchange Act. Based upon that evaluation, they
have concluded that our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we
file and furnish under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in by the Securities and Exchange
Commission’s rules and regulations, except as disclosed in the following paragraphs.

Changes in Internal Control Over Financial Reporting
       We are aware of the importance of maintaining controls and procedures and are working towards improving our controls and procedures. According to
Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to include an internal control report of management with our annual report
on Form 20-F for the first fiscal year ending on or after December 15, 2007 by June 30, 2008. The internal control report must contain (1) a statement of
management’s responsibility for establishing and maintaining adequate internal control over financial reporting, (2) a statement identifying the framework used
by management to conduct the required evaluation of the effectiveness of our internal control over financial reporting and (3) management’s assessment of the
effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year, including a statement as to whether or not our internal
control over financial reporting is effective.

      In connection with the required Section 404 evaluation described above, we are currently performing the system and process evaluation and testing
required (and any necessary remediation) in an effort to comply with such requirements by the effective date for compliance.

       Under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer, we are
in the process of conducting further evaluation of our internal control over financial reporting. We plan to design enhanced processes and controls to address
these and any other issues that might be identified through our review. As we are still in the evaluation process, we may identify other conditions that may result
in significant deficiencies or material weaknesses in the future; should we discover such conditions, we will take action to correct them. We are committed to
taking appropriate steps for remediation, as needed.

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     In addition, we are taking the following measures in order to make these improvements in our internal controls:


      • contract with independent accounting software specialists to help us upgrade and enhance our accounting software system which we believe will
        greatly improve overall efficiency and internal control effectiveness;


      • reinforce existing control over the reporting process of all consolidated entities, as well as develop additional control processes to enhance our internal
        controls in areas where we noted perceived deficiencies; and


      • update our general computer system and server controls.

      Over the past year, we undertook a number of actions to strengthen our internal controls, including the formalization and adoption of accounting and
management policies, and the hiring and training of personnel as required to implement these policies and those which will be required for compliance with
Section 404 upon its applicability to us.




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 that term is defined in Rule 4200 of the listing standards of the Marketplace Rules of the Nasdaq Stock Market, Inc.




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 2006 and 2005.


                                                                                                                                          For the year ended
                                                                                                                                            December 31,
                                                                                                                                         2006            2005
                 (1)
      Audit fees           (2)                                                                                                        $ 315,375       $ 240,000
      Audit related fees                                                                                                              $ 4,696         $ 3,105
              (3)
      Tax fees (4)                                                                                                                          —               —
      Other fees                                                                                                                            —         $ 923,329

(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.
(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)   “Other fees” means fees incurred in respect of our initial public offering in February 2005 and the financial due diligence service rendered.

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.

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         • 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


                                                                                                                                                         Maximum
                                                                                                                                                      Aggregate Dollar
                                                                                                                        Total Number of                Value of ADSs
                                                                                                Average                Shares Purchased               that May Yet Be
                                                                                                 Price                 as Part of Publicly            Purchased Under
                                                              Total Number                      Paid per               Announced Plans                  the Plans or
Period                                                    of ADSs Purchased (1)                 ADS (1)                 or Programs (1)                 Programs (1)
May 22, 2006 to                                             307,000 ADSs,                                              307,000 ADSs,
May 31, 2006                                                 equivalent to                                              equivalent to
                                                          30,700,000 ordinary                                        30,700,000 ordinary
                                                                shares                          $ 6.72                     shares                    $    12,936,960

June 1, 2006 to                                             485,600 ADSs,                                              485,600 ADSs,
June 26, 2006                                                equivalent to                                              equivalent to
                                                          48,560,000 ordinary                                        48,560,000 ordinary
                                                                shares                          $ 6.11                     shares                    $     9,969,944


(1)      In February 2006, our Board approved a share repurchase program whereby we may repurchase up to $15.0 million of our issued and outstanding ADSs in
         open-market transactions. The timing and dollar amount of repurchase transactions are be determined by our Board depending on market conditions and
         are be subject to regulatory requirements. There is no expiration date for the stock repurchase program.

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.




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 the Company’s
             Registration Statement on Form F-1 (Registration No. 333-121987) as filed with the Commission on January 12, 2005).

 2.1         Specimen American Depositary Receipt of the Company (incorporated by reference to Exhibit 3(a) to the Company’s Registration Statement on Form
             F-6 (Registration No. 333-122004) as 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 the Company’s Registration Statement on Form F-1
             (Registration No. 333-121987) as 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 the Company’s Registration Statement on Form F-6 (Registration No. 333-122004) as filed with the
             Commission on January 13, 2005).

 2.4         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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).
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 4.1      2002 Incentive Compensation Plan (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

 4.2      2003 Stock Option Plan (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

 4.3      Form of Indemnification Agreement (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

 4.4      Employment Agreement by and between Hurray! Holding Co., Ltd. and Qindai Wang dated May 5, 2004 (incorporated by reference to the
          registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

 4.5      Employment Agreement by and between Hurray! Holding Co., Ltd. and Jesse Liu dated May 5, 2004 (incorporated by reference to the registration
          statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

 4.6      Employment Agreement by and between Hurray! Holding Co., Ltd. and Haoyu Yang dated May 5, 2004 (incorporated by reference to the registration
          statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

 4.7      Employment Agreement by and between Hurray! Holding Co., Ltd. and Shaojian (Sean) Wang on May 23, 2006

 4.8      Translation of Employment Agreement by and between Hurray! Times Communications (Beijing) Ltd. and Jiang Wang on September 1, 2006

 4.9      Translation of Agreement of Transfer of Shares of Beijing Enterprise Mobile Technology Co., Ltd. between Hurray! Holding Co., Ltd. and Funway
          Investment Holdings, Ltd. dated April 8, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed
          with the Commission on January 12, 2005).

4.10      Translation of Agreement of Transfer of Shares of Beijing Enterprise Network Technology Co., Ltd. between Hurray! Solutions Ltd., Qindai Wang,
          Yu Qin and Zhang Chen dated April 8, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with
          the Commission on January 12, 2005).

4.11      Translation of Agreement of Transfer of Shares of Beijing Enterprise Mobile Technology Co., Ltd. between Hurray! Holding Co., Ltd. and
          Nihon-Enterprise Mobile, Ltd. dated April 13, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as
          filed with the Commission on January 12, 2005).

4.12      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 as filed with the Commission on June 15,
          2006).

4.13      Translation of Equity Transfer Agreement by and between Hurray! Holdings Co., Ltd. and Magma Digital International Limited dated December 30,
          2005 (incorporated by reference to Exhibit 4.14 of our Annual Report on Form 20-F as filed with the Commission on June 15, 2006).

4.14      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 as filed with the Commission on June 15, 2006)..

4.15      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 as filed with the Commission on June 15,
          2006).

4.16      Translation of Technology Service Agreement between China Mobile Communications Group Corporation and Beijing Enterprise Network
          Technology Co., Ltd. dated May 22, 2003 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with
          the Commission on January 12, 2005).

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4.17      Translation of Mobile Value-added Service Cooperation Agreement between China Unicom Co., Ltd. and Hurray! Solutions Ltd. dated March 29,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.18      Translation of Mobile Value-Added Service Cooperation Agreement by and between China Unicom Co., Ltd. and Beijing Hutong Wuxian
          Technology Co., Ltd. dated May 30, 2005 (incorporated by reference to Exhibit 4.19 of our Annual Report on Form 20-F as filed with the
          Commission on June 15, 2006).

4.19      Translation of Cooperation Agreement on Monternet SMS Service between Zhejiang Mobile Communications Co., Ltd. and Beijing WVAS Solutions
          Ltd. dated May 1, 2003 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.20      Translation of Cooperation Agreement on Monternet WAP Services by and between China Mobile Communications Group Corporation and Beijing
          Hutong Wuxian Technology Co., Ltd. dated May 1, 2005 (incorporated by reference to Exhibit 4.21 of our Annual Report on Form 20-F as filed with
          the Commission on June 15, 2006).

4.21      Translation of Agreement on Entrusted Fee Collection between Zhejiang Mobile Communications Co., Ltd. and Beijing WVAS Solutions Ltd. dated
          May 1, 2003 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12,
          2005).

4.22      Translation of China Unicom SMS Cooperation Agreement between China Unicom Zhejiang Branch Company and Hurray! Solutions Ltd., dated
          August 20, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January
          12, 2005).

4.23      Translation of Unicom New Times CDMA WAP (Phase III) Operation Platform System Equipment Purchase Contract among Unicom Import &
          Export Company Limited, Unicom New Times Mobile Telecommunications Company Limited and Hurray! Times Communications (Beijing) Ltd.
          dated November 24, 2003 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission
          on January 12, 2005).

4.24      Translation of Unicom New Times CDMA WAP (Phase III) Operation Platform System Integration and Service Purchase Contract among Unicom
          Import & Export Company Limited, Unicom New Times Mobile Telecommunications Company Limited and Hurray! Times Communications
          (Beijing) Ltd. dated November 24, 2003 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.25      Translation of Data Service Cooperation Agreement between Beijing Enlight Times Info Co., Ltd and Hurray! Solutions Ltd. (incorporated by
          reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.26      Translation of Music Copyright License Agreement between Music Copyright Society of China and Hurray! Solutions Ltd. dated August 1, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.27      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.28      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.29      Translation of Domain Name Assignment Agreement between Hurray! Solutions Ltd. and Hurray! Times Communications (Beijing) Ltd. dated May
          5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12,
          2005).

4.30      Translation of Domain Name License Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.31      Translation of Software Assignment Agreement between Hurray! Solutions Ltd. and Hurray! Times Communications (Beijing) Ltd. dated May 5,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.32      Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

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4.33      Translation of Trademark Assignment Agreement between Hurray! Solutions Ltd. and Hurray! Times Communications (Beijing) Ltd. dated May 5,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.34      Translation of Trademark License Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.35      Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File
          No. 333-121987) as filed with the Commission on January 12, 2005).

4.36      Translation of Authorization Agreement by Songzuo Xiang dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1
          (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.37      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.38      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.39      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.40      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.41      Translation of Equity Interests Pledge Agreement between Qindai Wang and Hurray! Times Communications (Beijing) Ltd. dated May 5, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.42      Translation of Equity Interests Pledge Agreement between Songzuo Xiang and Hurray! Times Communications (Beijing) Ltd. dated May 5, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.43      Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File
          No. 333-121987) as filed with the Commission on January 12, 2005).

4.44      Translation of Authorization Agreement by Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on
          Form F-1 (File No. 333-121987) as 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 Cool
          Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

4.46      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

4.47      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

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4.48      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

4.49      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Qindai Wang dated May 5, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.50      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.51      Translation of Domain Name Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Cool Young Information
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.52      Translation of Domain Name License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Cool Young Information
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.53      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission
          on January 12, 2005).

4.54      Translation of Trademark License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Cool Young Information
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.55      Translation of Domain Name Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd.
          dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.56      Translation of Domain Name License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated
          May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12,
          2005).

4.57      Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated May 5,
          2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.58      Translation of Trademark License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated May
          5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12,
          2005).

4.59      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.60      Translation of Authorization Agreement by Beijing Enterprise Network Technology Co., Ltd. dated October 1, 2004 (incorporated by reference to the
          registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.61      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.62      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 the registration statement on Form
          F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.63      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 the registration
          statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

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4.64      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 the registration statement on Form F-1
          (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.65      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 the registration statement on Form F-1 (File No. 333-121987)
          as filed with the Commission on January 12, 2005).

4.66      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 the registration statement on Form F-1 (File No. 333-121987) as filed with
          the Commission on January 12, 2005).

4.67      Translation of Domain Name Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co.,
          Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.68      Translation of Domain Name License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd.
          dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.69      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.70      Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd. dated
          May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12,
          2005).

4.71      Translation of Software Technology Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.72      Translation of Trademark License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd.
          dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.73      Translation of Authorization Agreement by Yang Haoyu dated October 1, 2004 (incorporated by reference to the registration statement on Form F-1
          (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.74      Translation of Authorization Agreement by Wang Jianhua dated October 1, 2004 (incorporated by reference to the registration statement on Form F-1
          (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.75      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.76      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.77      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 the registration statement on Form F-1 (File No. 333-121987) as filed with
          the Commission on January 12, 2005).

4.78      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 the registration statement on Form F-1 (File No. 333-121987) as
          filed with the Commission on January 12, 2005).

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4.79      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Yang Haoyu dated October 1,
          2004(incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.80      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Wang Jianhua dated October 1, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.81      Translation of Domain Name Assignment Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.82      Translation of Domain Name License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network
          Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the
          Commission on January 12, 2005).

4.83      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 the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on
          January 12, 2005).

4.84      Translation of Trademark License Agreement between Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology
          Co., Ltd. dated May 5, 2004 (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission
          on January 12, 2005).

4.85      Translation of Authorization Agreement by Sun Hao dated August 15, 2004 (incorporated by reference to the registration statement on Form F-1 (File
          No. 333-121987) as filed with the Commission on January 12, 2005).

4.86      Translation of Authorization Agreement by Wang Xiaoping dated August 15, 2004 (incorporated by reference to the registration statement on Form
          F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.87      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

4.88      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 the registration statement on Form F-1 (File No. 333-121987) as filed
          with the Commission on January 12, 2005).

4.89      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

4.90      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 the registration statement on Form F-1 (File No. 333-121987) as
          filed with the Commission on January 12, 2005).

4.91      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Sun Hao dated October 1, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.92      Translation of Equity Interests Pledge Agreement between Hurray! Times Communications (Beijing) Ltd. and Wang Xiaoping dated October 1, 2004
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.93      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 the registration statement on Form F-1 (File No.
          333-121987) as filed with the Commission on January 12, 2005).

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4.94      Translation of Domain Name 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 4.95 of our Annual Report on Form 20-F as filed with the
          Commission on June 15, 2006)

4.95      Translation of Domain Name 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 4.96 of our Annual Report on Form 20-F as filed with
          the Commission on June 15, 2006).

4.96      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 as filed with the Commission on June
          15, 2006).

4.97      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 as filed with the Commission on
          June 15, 2006).

4.98      Translation of Trademark 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 4.99 of our Annual Report on Form 20-F as filed with the
          Commission on June 15, 2006).

4.99      Translation of Trademark 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 4.100 of our Annual Report on Form 20-F as filed with
          the Commission on June 15, 2006).

4.100     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 as filed with the Commission on June 15, 2006).

4.101     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 as filed with the Commission on June 15, 2006).

4.102     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 as filed
          with the Commission on June 15, 2006).

4.103     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 as filed with the
          Commission on June 15, 2006).

4.104     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 as filed with the Commission on June 15, 2006).

4.105     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 as filed with the Commission on June 15, 2006).

4.106     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 as filed with the Commission on June 15, 2006).

4.107     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 as filed with the Commission on June 15, 2006).

4.108     Translation of Office Lease Contract between Hurray! Solutions Ltd. and Beijing China Resources Building Co. Ltd. dated April 29, 2003
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.109     Translation of Office Lease Contract between Hurray! Solutions Ltd. and Beijing China Resources Building Co. Ltd. dated November 14, 2003
          (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

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4.110     2004 Share Incentive Plan (incorporated by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission
          on January 12, 2005).

4.111     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 the registration statement on Form
          F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.112     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 the
          registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.113     Translation of Loan agreement between Beijing Enterprise Network Technology Co., Ltd. and Yu Qin dated November 4, 2004 (incorporated by
          reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.114     Translation of Loan agreement between WVAS Solutions Ltd. and Yu Qin dated November 4, 2004 (incorporated by reference to the registration
          statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.115     Translation of CDMA WAP (Phase IV) Equipment and Service Purchase Agreement among Unicom Import & Export Company Limited, Unicom
          New Times Mobile Telecommunications Company Limited and Hurray! Times Communications (Beijing) Ltd. dated January 11, 2005 (incorporated
          by reference to the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 12, 2005).

4.116     Translation of Supplemental Agreement dated December 1, 2004 to Domain Name Assignment Agreement between Hurray! Times Communications
          (Beijing) Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 and Domain Name License Agreement between Hurray!
          Times Communications (Beijing) Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to
          the registration statement on Form F-1 (File No. 333-121987) as filed with the Commission on January 28, 2005).

4.117     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) as filed with the Commission on January 28, 2005).

4.118     Translation of Cooperation Agreement between China Mobile Communications Group Corporation and Beijing Enterprise Network Technology Co.,
          Ltd., dated January 1, 2006.

4.119     Translation of Mobile Value-added Service Cooperation Agreement, between China United Telecommunications Corporation Limited and Beijing
          Hutong Wuxian Technology Co., Ltd., dated April 13, 2006.

4.120     Translation of Cooperation Agreement between Hurray! Digital Media Technology Co., Ltd., Lan Gang, Chen Jianzhong, Hu Li, and Beijing Secular
          Bird Culture and Art Development Center, dated March 12, 2007.

4.121     Translation of Supplemental Agreement between Hurray Holdings Co., Ltd. and Magma Digital International Limited, dated September 1, 2006.

4.122     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.

4.123     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.

 8.1      List of Subsidiaries and Affiliates.

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11.1      Code of Business Conduct (incorporated by reference to Exhibit 11.1 of our Annual Report on Form 20-F as 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.

15.2      Consent of Appleby.

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                                                                          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/ Jesse Liu
         Jesse Liu
         Chief Financial Officer


Date: June 15, 2007

                                                                                 87




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                                                       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, 2006 and 2005                                                                                         F-2

Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004                                                           F-3

Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2006, 2005 and 2004                        F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004                                                           F-6

Notes to the Consolidated Financial Statements                                                                                                       F-7

Additional Information — Financial Statement Schedule 1                                                                                            F-30




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                                       REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Hurray! Holding Co., Ltd.
Beijing, 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, 2006 and 2005, and the related consolidated statements of operations, shareholders’ equity and comprehensive income, and cash flows for the
years ended December 31, 2006, 2005 and 2004, 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, 2006 and 2005 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 discussed in Note 2 to the consolidated financial statements, in 2006 the Company changed its method of accounting for stock-based compensation to
conform to Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-Based Payment”, effective on January 1, 2006.

Deloitte Touche Tohmatsu CPA Ltd.

Beijing, China

June 8, 2007

                                                                                  F-1




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                                                              HURRAY! HOLDING CO., LTD.
                                                            CONSOLIDATED BALANCE SHEETS


                                                                                                                                            December 31,
                                                                                                                                  2006                         2005
                                                                                                                                 (in U.S. dollars, except share data)
Assets
Current assets:
Cash                                                                                                                    $         74,596,978          $        75,958,964
Accounts receivable, net of allowance of $284,402 and $15,167 as of December 31, 2006 and 2005, respectively                      13,449,419                   18,089,063
Prepaid expenses and other current assets                                                                                          2,700,704                    1,858,999
Amount due from related parties                                                                                                      167,464                          —
Inventories                                                                                                                          177,926                      437,493
Current deferred tax assets                                                                                                          295,755                          —
Total current assets                                                                                                              91,388,246                   96,344,519

Property and equipment, net                                                                                                        1,954,201                   2,536,349
Acquired intangible assets, net                                                                                                    6,023,183                   3,311,561
Goodwill                                                                                                                          39,621,494                  23,868,743
Deposits and other long-term assets                                                                                                  632,494                   1,501,970
Non-current deferred tax assets                                                                                                      370,781                     139,829
Total assets                                                                                                            $        139,990,399          $      127,702,971
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable                                                                                                        $          3,680,913          $         3,730,884
Acquisitions payable                                                                                                               5,832,464                      154,197
Accrued expenses and other current liabilities                                                                                     2,613,313                    3,210,232
Amount due to related parties                                                                                                            321                      202,276
Income tax payable                                                                                                                   488,639                       90,308
Current deferred tax liabilities                                                                                                     344,802                      248,455
Total current liabilities                                                                                                         12,960,452                    7,636,352

Non-current deferred tax liabilities                                                                                                 850,734                      842,824
Total liabilities                                                                                                       $         13,811,186          $         8,479,176
Commitments and contingencies (Note 20)
Minority interests                                                                                                                 3,359,193                      604,764

Shareholders’ equity:
Ordinary shares ($0.00005 par value; 4,560,000,000 shares authorized; 2,162,031,740 and 2,229,754,340 shares
  issued and outstanding as of December 31, 2006 and 2005, respectively)                                                             108,102                     111,488
Additional paid-in capital                                                                                                        73,608,117                  77,335,532
Retained earnings                                                                                                                 45,702,452                  39,898,507
Accumulated other comprehensive income                                                                                             3,401,349                   1,273,504
Total shareholders’ equity                                                                                                       122,820,020                 118,619,031
Total liabilities, minority interests and shareholders’ equity                                                          $        139,990,399          $      127,702,971

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

                                                                                F-2




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                                                             HURRAY! HOLDING CO., LTD.
                                                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                                          Year ended December 31,
                                                                                                       2006                          2005                          2004
                                                                                                                     (in U.S. dollars, except share data)
Revenues:
      2G services                                                                               $     32,571,278             $     20,130,752               $     14,946,274
      2.5G services                                                                                   29,941,205                   35,931,616                     28,227,033
      Recorded music                                                                                   6,203,418                          —                              —
      Software and system integration services                                                         1,177,053                    6,312,363                     10,267,050
      Total revenues                                                                                  69,892,954                   62,374,731                     53,440,357
Cost of revenues:
      2G services                                                                                     24,615,272                   13,713,675                      7,049,848
      2.5G services                                                                                   16,056,841                   14,920,813                     11,003,395
      Recorded music                                                                                   3,553,144                          —                              —
      Software and system integration services                                                           946,046                    1,302,028                      6,276,761
      Total cost of revenues                                                                          45,171,303                   29,936,516                     24,330,004
Gross profit                                                                                          24,721,651                   32,438,215                     29,110,353
Operating expenses:
      Product development (including stock-based compensation expense of $79,587,
         $4,886 and $60,140 for the years ended December 31, 2006, 2005 and 2004,
         respectively)                                                                                 2,629,349                    2,536,930                      2,306,248
      Selling and marketing (including stock-based compensation expense of $346,456,
         $9,911 and $221,046 for the years ended December 31, 2006, 2005 and 2004,
         respectively)                                                                                11,893,238                    9,796,538                      7,433,005
      General and administrative (including stock-based compensation expense of
         $117,514, $22,775 and $nil for the years ended December 31, 2006, 2005 and
         2004, respectively)                                                                           6,764,790                    3,484,094                      1,820,878
      In-process research and development                                                                    —                            —                           36,000
      Total operating expenses                                                                        21,287,377                   15,817,562                     11,596,131
Income from operations                                                                                 3,434,274                   16,620,653                     17,514,222
Interest income                                                                                        2,575,824                    1,428,267                         38,185
Interest expense                                                                                         (44,765)                     (27,312)                      (312,440)
Other income, net                                                                                        522,131                      990,470                            —
Income before income taxes                                                                             6,487,464                   19,012,078                     17,239,967
Income taxes                                                                                             121,330                      393,346                            —
Net income after income taxes before minority interests                                                6,366,134                   18,618,732                     17,239,967
Minority interests                                                                                      (562,189)                         —                              —
Net income                                                                                             5,803,945                   18,618,732                     17,239,967
Deemed dividends on Series A convertible preference shares                                                   —                            —                          (39,917)
Income attributable to holders of ordinary shares                                               $      5,803,945             $     18,618,732               $     17,200,050
Income per share, basic                                                                         $             0.00           $             0.01             $             0.01
Income per share, diluted                                                                       $             0.00           $             0.01             $             0.01
Shares used in calculating basic income per share                                                   2,189,748,563                2,092,089,848                  1,208,512,142
Shares used in calculating diluted income per share                                                 2,208,758,636                2,129,228,961                  1,572,887,775

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

                                                                              F-3




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                                                                    HURRAY! HOLDING CO., LTD.
                                                        CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
                                                                   AND COMPREHENSIVE INCOME


                        Series A convertible                                                                                                             Accumulated
                         preference shares               Ordinary shares                                               Additional                            other              Total
                       Shares         Amount          Shares         Amount                         Subscription         paid-in         Retained       comprehensive       shareholders’       Comprehensive
                                                                                    Warrants         receivable          capital         earnings        income (loss)         equity              Income
                                                                                                (in U.S. dollars, except share data)
Balance as of
   January 1, 2004    12,347,966     $   12,348     1,176,000,000    $   58,800 $     2,287,966 $         (50,880) $       8,310,939 $     4,079,725 $          (4,748) $        14,694,150 $         4,542,148

Issuance of ordinary
   shares related to
   acquisitions of
   Beijing Palmsky
   and Beijing
   Enterprise (see
   Note 3).                  —              —         53,360,780          2,668             —                —             7,499,799            —                  —              7,502,467
Repurchase of
   ordinary shares
   related to
   acquisition of
   Beijing Enterprise
   (see Note 3)              —              —         (42,688,780)       (2,134)             —               —            (5,997,866)           —                  —              (6,000,000)
Exercise of warrants   5,699,077          5,699               —             —         (2,287,966)            —             6,282,222            —                  —               3,999,955
Repurchase of Series
   A convertible
   preference shares (1,122,546)          (1,122)            —             —                —                —                   —              —                  —                  (1,122)
Stock options issued
   to non-employees          —              —                —             —                —                —              281,186             —                  —                281,186
Deemed dividends
   on Series A
   convertible
   preference shares         —              —                —             —                —                —                39,917         (39,917)              —                    —
Foreign currency
   translation
   adjustment                —              —                —             —                —                —                   —               —               4,063                4,063 $             4,063
Net income                   —              —                —             —                —                —                   —        17,239,967               —             17,239,967          17,239,967
Balance as of
   December 31,
   2004               16,924,497         16,925     1,186,672,000        59,334             —             (50,880)       16,416,197       21,279,775              (685)          37,720,666 $        17,244,030

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

                                                                                                    F-4




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                      Series A convertible                                                                                                     Accumulated
                       preference shares           Ordinary shares                                          Additional                             other              Total
                    Shares          Amount      Shares         Amount                     Subscription        paid-in         Retained        comprehensive       shareholders’       Comprehensive
                                                                              Warrants      receivable        capital         earnings         income (loss)         equity              Income
                                                                                       (in U.S. dollars, except share data)
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
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      39,898,507           1,273,504         118,619,031 $        19,892,921
Issuance of
   ordinary
   shares related
   to
   acquisitions
   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
   expenses              —              —             —              —                 —             —            543,557            —                    —               543,557
Exercise of stock
   options               —              —        2,582,200           129               —             —             95,343            —                    —                95,472
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 $    45,702,452 $         3,401,349 $       122,820,020 $         7,931,790


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

                                                                                               F-5




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                                                          HURRAY! HOLDING CO., LTD.
                                                   CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                                Year ended December 31,
                                                                                                                    2006                  2005              2004
                                                                                                                                    (In U.S. dollars)
Operating activities:
Income attributable to holders of ordinary shares                                                             $    5,803,945        $ 18,618,732      $ 17,200,050
Deemed dividends on Series A convertible preference shares                                                               —                   —              39,917
Net income                                                                                                         5,803,945          18,618,732        17,239,967
Adjustments to reconcile net income to net cash provided by operating activities:
      Stock-based compensation                                                                                       543,557                37,572           281,186
      Depreciation and amortization                                                                                3,481,415             1,939,130         1,986,416
      Bad debt provision                                                                                             269,235                 2,783            12,384
      Minority interests                                                                                             562,189                   —                 —
      In-process research and development                                                                                —                     —              36,000
      Loss on disposal of property and equipment                                                                       1,155                16,920            34,051
      Changes in assets and liabilities net of effect of businesses acquired:
           Accounts receivable                                                                                     5,518,845            (5,799,209)       (3,513,973)
           Prepaid expenses and other current assets                                                               3,113,531              (528,260)            4,878
           Amount due from related parties                                                                          (164,008)                  —                 —
           Inventories                                                                                               268,556              (363,511)              —
           Current deferred tax assets                                                                              (289,651)                  —                 —
           Non-current deferred tax assets                                                                          (221,599)             (137,292)              —
           Accounts payable                                                                                         (222,881)             (282,045)          407,775
           Accrued expenses and other current liabilities                                                           (899,530)              203,030          (666,080)
           Amount due to related parties                                                                            (204,420)                  —                 —
           Income tax payable                                                                                        387,148                90,308               —
           Current deferred tax liabilities                                                                           86,212               246,431               —
           Non-current deferred tax liabilities                                                                     (139,229)               (2,165)              —
Net cash provided by operating activities                                                                         17,894,470            14,042,424        15,822,604
Investing activities:
Decrease in restricted cash                                                                                               —                    —            1,510,263
Purchases of property and equipment                                                                                  (956,972)          (1,288,698)        (1,871,335)
Proceeds from disposal of property and equipment                                                                       30,229                4,955                —
Acquisitions of intangible assets                                                                                  (1,714,198)          (4,161,788)               —
Deposits and other long-term assets                                                                                  (258,610)             (62,341)           (71,444)
Payments related to acquisitions of new businesses (net of cash acquired of $441,147, $2,316,674 and
   $921,914 for the years ended December 31, 2006, 2005 and 2004, respectively)                                   (12,515,544)          (1,145,472)       (16,727,447)
Net cash used in investing activities                                                                             (15,415,095)          (6,653,344)       (17,159,963)
Financing activities:
Proceeds from the issuance of ordinary shares                                                                         540,000                 —                   —
Repurchase of ordinary shares                                                                                      (5,034,748)                —                   —
Payment to repurchase Series A convertible preference shares                                                              —                   —                (1,122)
Proceeds from issuance of ordinary shares upon initial public offering, net of offering costs of $8,655,528
   (offering costs of $7,660,172 and $995,356 were paid for the years ended December 31, 2005 and 2004,
   respectively)                                                                                                       —              60,422,746          (995,356)
Proceeds from exercise of warrants to purchase Series A convertible preference shares                                  —                     —           3,999,955
Proceeds from exercise of options                                                                                   95,472             1,489,602               —
Collection of subscription receivable                                                                                  —                  50,880               —
Repayments of short-term borrowings                                                                                    —              (2,658,128)       (4,107,848)
Net cash (used in) provided by financing activities                                                             (4,399,276)           59,305,100        (1,104,371)
Net (decrease) increase in cash and cash equivalents                                                            (1,919,901)           66,694,180        (2,441,730)
Cash and cash equivalents, beginning of year                                                                    75,958,964             8,713,697        11,151,364
Effect of exchange rate changes                                                                                    557,915               551,087             4,063
Cash and cash equivalents, end of year                                                                        $ 74,596,978          $ 75,958,964      $ 8,713,697
Supplemental disclosure of cash flow information:
    Interest paid                                                                                             $             —       $      92,539     $      247,213
     Income taxes paid                                                                                        $      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.

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                                                          HURRAY! HOLDING CO., LTD.
                                               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 and 2004

                                                               (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 and its variable interest entities (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”). The Company also designs, develops,
sells and supports services provisioning and management software, and provides system integration services to a major Chinese mobile operator. In addition, in
late 2005 the Company began to focus on music production and distribution following agreements to acquire interests in several music companies. The Company
specializes in the development, marketing and distribution of music and entertainment oriented consumer wireless value-added services.

      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 variable interest entities: Hurray! Solutions Ltd. (“Hurray! Solutions”), a predecessor to Hurray!, Beijing
Cool Young Information Technology Co., Ltd., Beijing WVAS Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd. (“Beijing Network”), Beijing
Hurray! Times Technology Co., Ltd.(Previous name is Beijing Enterprise Mobile Technology Co., Ltd.), Beijing Palmsky Technology Co., Ltd. (“Beijing
Palmsky”), Beijing Hutong Wuxian Technology Co., Ltd. (“Beijing Hutong”), Beijing Hengji Weiye Electronic Commerce Co., Ltd. (“Hengji Weiye”),
Shanghai Magma Digital Technology Co., Ltd. (“Shanghai Magma”), and Hurray! Digital Media Technology Co., Ltd. (“Hurray! Digital Media”) (previous
name is Hurray! Digital Music Technology Co., Ltd.) (collectively the “Variable Interest Entities”).

       The Variable Interest Entities have entered into various agreements with Hurray! and one of its subsidiaries, including exclusive cooperation agreements.
Under these agreements, Hurray!, through a wholly owned PRC subsidiary, Hurray! Times Communications (Beijing) Ltd. (“Hurray! Times”), is the exclusive
provider of technical and consulting services to the Variable Interest Entities. In return, the Variable Interest Entities are required to pay Hurray! 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. Hurray! is entitled to receive service fees in an amount up to all of the net income of the Variable Interest Entities. In addition, Hurray! has
been assigned all voting rights by the direct and indirect owners of the Variable Interest Entities through agreements which are valid for ten years and cannot be
amended or terminated except by written consent of all parties. Finally, Hurray! has the option to acquire the equity interest of the Variable Interest Entities. The
Company also has extended loans without interest to the Registered Shareholders to finance their investments. Each of the registered shareholders is the 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 Variable Interest Entities because all the variable interests are held by Hurray! and its related parties. Accordingly,
the Company consolidates the Variable Interest Entities under Financial Accounting Standard Board (“FASB”) Interpretation (“FIN”) No.46 (revised),
“Consolidation of Variable Interest Entities,” which requires certain variable interest entities (“VIE”) 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.

       All of Hurray!’s subsidiaries and Variable Interest Entities are 100% controlled by Hurray! either through equity interests or through VIE arrangements,
with the exception of Beijing Huayi Brothers Music Co., Ltd. (“Huayi Music”) and Hurray! Freeland Digital Music Technology Co., Ltd. (“Freeland Music”), in
which Hurray! ‘s VIE companies hold a 51% and 60% equity interest, respectively.

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

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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 Variable Interest Entities. All inter-company
transactions and balances have been eliminated upon consolidation.

(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 and revenues and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the
Company’s financial statements include fair value of acquired intangible assets and goodwill and useful lives for intangible assets and property and equipment.

(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 employees necessary
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 maturities
of three months or less when purchased.

(f) Inventories
       Inventories include equipment purchased for use in system integration services and music CDs and related music products and are stated at the lower of
cost, determined using the first-in, first-out method, or market. At December 31, 2006, all inventories were related to recorded music business.

(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
                                 Telecommunication equipment                                                                 3 years
                                 Leasehold improvements                                                      Lesser of original lease
                                                                                                            term or estimated useful
                                                                                                                                  life

(h) Acquired intangible assets, net
       Acquired intangible assets consists of intangible assets, as detailed in Note 7, acquired through various acquisitions and are amortized on a straight-line
basis over their expected useful economic life.

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(i) Goodwill
      Goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities acquired 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 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 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 on December 31. Such change has no material effect on the Company’s financial statement.

(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
       The Company contracts with the Telecom Operators 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.

      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 (“China Telecom”) and China Netcom Communications Group Corporation (“China Netcom”) (collectively the
“Telecom Operators”). Prior to the year ended December 31, 2005, the Company had not derived any revenues from China Telecom or China Netcom. Fees,
negotiated by a network service agreement with the Telecom Operators and indicated in the message received on the mobile phone, for these services are charged
on a per-use basis or on a monthly subscription basis, and vary according to the type of services delivered. The Company recognizes all revenues in the period in
which the services are performed net of business taxes of $1,664,706, $1,397,538 and $1,149,873 for 2006, 2005 and 2004, respectively.

       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.

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       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 mobile phone customers, as it is the primary obligor in these
transactions since it has latitude in establishing prices, is involved in the determination of service specifications, selection of suppliers, and bears credit risk
relating to these transactions.

Software and system integration services
       Software and system integration services are a total customized solution, which includes software license fees, system design, planning, consulting and
integration, and in some cases hardware products and require significant modification and customization to meet the customers specifications outlined in the
revenue contract. Revenue from software and system integration services is recognized on the percentage-of-completion method in accordance with Statement of
Position (“SOP”) 81-1 based on its stage of completion, except for revenues associated with the procurement of hardware which are recognized upon delivery.
Provisions for estimated losses on contracts are made in the period in which the anticipated losses become known. The Company has segmented the revenue
generated from the sale of hardware products from the remaining software and system integration services. The Company submits separate proposals for each of
the deliverables and the customer may accept the software and integration services without accepting the hardware. Values assigned to the hardware revenue
segments are based on cost as the Company does not generate any profit from hardware sales.

       The Company evaluates the criteria outlined in EITF Issue 99-19 in determining whether it is appropriate to record the gross amount of hardware revenues
and related costs or the net amount earned after deducting the amounts paid to the supplier. The Company records the gross amounts billed to its customers as it
is the primary obligor in these transactions since it has latitude in establishing prices, is involved in the determination of service specifications and selection of
suppliers and bears inventory and credit risk relating to the transaction.

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 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 2006, the estimated sales returns rate is about 16% 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 principal in the transaction and are the primary obligors 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 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 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 an expense 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 ruling at the balance sheet date. Transactions in currencies other than U.S.
dollars during the year are converted into US 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.

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      The financial records of certain of Hurray!’s subsidiaries and Variable Interest Entities 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 7.8087, RMB 8.0702 and
RMB 8.2765 on December 31, 2006, 2005 and 2004, respectively.

(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 and costs for the development of new software products and substantial enhancements to existing software
products. 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). 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”). 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). See
Note 14 to the Consolidated Condensed 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 are subject to value-added tax at a rate of 17% on revenues from procurement of hardware on behalf
of customers and revenues from software and system integration services. Value-added tax payable on revenues is computed net of value-added tax paid on
purchases. In respect of revenue on software sales, however, if the net amount of value added tax payable exceeds 3% of software 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 software sales. This
government policy is effective until 2010. 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 2006 and 2005, the Company received rebates of $229,824 and $649,204, respectively, which are
included in other income.

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

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(p) Comprehensive income
      Comprehensive income includes foreign currency translation adjustments. Comprehensive income 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 $5,404,935, $969,122 and $361,923 in 2006, 2005 and 2004,
respectively, and have been included in selling and marketing expenses and cost of revenues.

(s) Income per share
      Basic 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 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.

(t) Recently issued accounting standards
        In February 2007, the FASB issued Statement of Financial Accounting Standards 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 Statement of Financial Accounting Standards 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. 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.

      In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires quantification of financial
statement errors based on the effects of each on a company’s balance sheet and statement of operations and the related financial statement disclosures. The
Company does not expect the adoption of SAB 108 to have a material impact on its consolidated results of operations and financial condition.

      In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”
(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or
expected to be taken on a tax return. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and

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transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48 to have a material
impact on its consolidated results of operations and financial condition.

       In June 2006, the FASB ratified the consensus on Emerging Issues Task Force (“EITF”) Issue No. 06-03 (“EITF 06-03”), “How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” EITF 06-03
provides that the presentation of taxes assessed by a governmental authority that is directly imposed on a revenue producing transaction between a seller and a
customer on either a gross basis (included in revenues and costs) or on a net basis (excluded from revenues) is an accounting policy decision that should be
disclosed. The provisions of EITF 06-03 will be effective for interim and annual reporting periods beginning after December 15, 2006. The Company does not
expect the adoption of EIFT 06-03 to have a material impact on its consolidated results of operations and financial condition

(u) Reclassifications
      Certain prior year amounts have been reclassified to conform to the 2006 financial statement presentation.

3. ACQUISITIONS
       During the three-year period ended December 31, 2006, the Company made a number of acquisitions of businesses. 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 the dates of their acquisitions. 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” method, considering, among other
factors, forecasted financial performance of the acquired business, market performance, and market potential of the acquired business in China.

(a) 2006 acquisitions
Acquisition of Shanghai Magma
       Effective January 1, 2006, the Company, through its VIE companies, 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 $15 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
revised 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, 2006, the amount payable under these agreements was $ 5.8 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.


             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
                        Trademark                                                                                           147,456             20 years
                        Software                                                                                             59,478              5 years
                        Website                                                                                              21,065            4.5 years
                        VAS license                                                                                           9,913            4.5 years
                        Non-compete agreement                                                                                63,196              4 years
                        Game content                                                                                         76,826           0.17 years
                  Goodwill                                                                                               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

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Acquisition of Freeland Music
        Effective January 1, 2006, the Company, through its VIE companies, 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, 2006, the purchase consideration of $2,700,000 was
unpaid.

       The final consideration payable by the Company and the respective ownership interests of the shareholders of Freeland Music was 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. If the actual net income of Freeland Music is less than $1.28 million, the Company will not be 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
                        Trademark                                                                                           215,932            8 years
                        Exclusive VAS agreement                                                                              42,464            5 years
                        Exclusive copyright agreement                                                                        12,543            3 years
                        VAS contracts                                                                                       249,845            5 years
                        Copyright contracts                                                                                  99,954            4 years
                  Goodwill                                                                                                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

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      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 of the Company and Shanghai Magma and Freeland Music prepared on the assumption that these acquisitions occurred on 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 income attributable to holders of ordinary shares                                                                     18,756,840
             Pro forma income per share:
             - basic                                                                                                             $                  0.01
             - diluted                                                                                                           $                  0.01

             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.

(b) 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 capital injection. As of December 31, 2006, all the cash consideration and transaction costs have been
paid.

      The final consideration payable by the Company and the respective ownership interests of the shareholders of Huayi Brothers Music are subject to
adjustment based on the financial performance of Huayi Brothers Music following the closing of the transaction. The adjustment is based on Huayi Brothers
Music’s performance in 2006 and 2007 by reference to a benchmark profit of $1,116,700. If the actual net income of Huayi Brothers Music is higher than the
benchmark profit, the Company will pay the existing shareholders cash equal to 41.5% of the excess based on the actual net profit multiplied by a factor of 6. No
adjustment is made if the difference is within 5% of the benchmark profit. The Company has the option to dilute its percentage of interest in Huayi Brothers
Music instead of paying the additional consideration but its equity interests cannot be lower than 30%. The actual net income of Huayi Brothers Music of 2006 is
$481,137.


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

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                                                                                                                                                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
                   Trademark                                                                                                  454,250              20 years
                   Copyright surrogate contract                                                                                69,578            5.67 years
                   Existing record copyright                                                                                   17,189                3 years
                   Exclusive VAS agreement                                                                                    542,408               20 years
                   Non-compete agreement                                                                                      131,257               20 years
             Goodwill                                                                                                       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.

       The following unaudited pro forma information summarizes the results of operations for the years ended December 31, 2005 and 2004 of the Company
and Huayi Music. It has been prepared on the assumption that the acquisition occurred as of January 1, 2004. 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 periods indicated, nor is it indicative
of future operating results:


                                                                                                                                  Year ended December 31,
                                                                                                                               2005                     2004
                                                                                                                            (unaudited)              (unaudited)
Pro forma total revenue                                                                                                $        62,944,870           $         53,440,357
Pro forma income attributable to holders of ordinary shares                                                                     17,822,639                     16,928,741
Pro forma income per share:
- basic                                                                                                                $                 0.01        $               0.01
- diluted                                                                                                              $                 0.01        $               0.01
Shares used in calculation of pro forma net income per share:
- basic                                                                                                                      2,092,089,848                1,208,512,142
- diluted                                                                                                                    2,129,228,961                1,572,887,775

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. Of the total consideration, an amount

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payable of $135,065 and $11,152 was outstanding as of December 31, 2005 and 2006. 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                                                                                                                    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

      The following unaudited pro forma information summarizes the results of operations for the years ended December 31, 2005 and 2004 of the Company,
Beijing Hutong, Guangzhou Piosan and Hengji Weiye. It has been prepared on the assumption that the acquisitions occurred as of January 1, 2004. 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 periods indicated, nor is it indicative of future operating results:


                                                                                                                                  Year ended December 31,
                                                                                                                               2005                     2004
                                                                                                                            (unaudited)              (unaudited)
Pro forma revenue                                                                                                      $        63,051,933       $        54,540,376
Pro forma income attributable to holders of ordinary shares                                                                     18,269,399                16,497,221
Pro forma income per share:
- basic                                                                                                                $               0.01      $                 0.01
- diluted                                                                                                              $               0.01      $                 0.01
Shares used in calculation of pro forma net income per share:
- basic                                                                                                                      2,092,089,848             1,208,512,142
- diluted                                                                                                                    2,129,228,961             1,572,887,775

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

(c) 2004 acquisitions
      The Company acquired certain assets of Beijing Palmsky, a wireless interactive entertainment, media and community value-added services provider, in
exchange for cash of $529,623 and 10,672,000 ordinary shares having a value of $1,502,467 and, separately, all of the equity interests of Beijing Enterprise,
providers of wireless interactive entertainment, media and community value-added services, in exchange for $12,421,091 cash and 42,688,780 ordinary shares
having a value of $6,000,000. Following an amendment to the acquisition agreement in respect of Beijing Enterprise dated November 4, 2004 the Company
repurchased and retired all of the 42,688,780 ordinary shares issued for $4,500,000. The repurchase reduced the purchase price and goodwill by $1,500,000. The
aggregate purchase price of these acquisitions of $19,151,828 consisted of the following:


Total purchase price:
Cash consideration                                                                                                                                      $ 17,450,714
Value of the ordinary shares issued                                                                                                                        1,502,467
Transaction costs                                                                                                                                            198,647
                                                                                                                                                        $ 19,151,828

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                                                                                                                                                           Amortization
                                                                                                                                                             period
Aggregate purchase price allocation –Beijing Palmsky and Beijing Enterprise:
Cash and cash equivalents                                                                                                           $     921,914
Accounts receivable                                                                                                                       489,883
Other current assets                                                                                                                      461,629
Acquired intangible assets:
      Software                                                                                                                           245,000             1 to 5 years
      Software content technology                                                                                                         19,000                3 months
      Telecommunication value-added service licenses                                                                                      59,000          3.5 - 4.5 years
      In-process technology                                                                                                               36,000                     —
      Non-compete agreements                                                                                                              58,000                  2 years
      Customer base                                                                                                                      623,000                   1 year
      Network service agreement                                                                                                           15,000                   1 year
Goodwill                                                                                                                              16,461,761                     N/A
Property and equipment, net                                                                                                              178,381              3 – 5 years
Current liabilities                                                                                                                     (416,740)
Total                                                                                                                               $ 19,151,828

      The Company recorded a charge of $36,000 at the date of acquisition in accordance with FASB Interpretation No. 4, “Applicability of FASB Statement
No. 2 to Business Combinations Accounted for by the Purchase Method”, for purchased in-process technology related to a development project that had not
reached technological feasibility, had no alternative future use, and for which successful development was uncertain.

4. ACCOUNTS RECEIVABLE
      Accounts receivable consist of:


                                                                                                                                  December 31,
                                                                                                                           2006                  2005
             Billed receivables                                                                                        $ 12,060,836       $ 16,457,248
             Unbilled receivables                                                                                         1,388,583          1,631,815
                                                                                                                       $ 13,449,419       $ 18,089,063

       Unbilled receivables represent amounts earned under software and system integration service contracts in progress but not billable at the respective balance
sheet dates. These amounts become billable according to the contract terms, which usually consider the passage of time or completion of the projects. The
Company anticipates that substantially all of such unbilled amounts will be billed within twelve months of the balance sheet date.

      Movement of allowance for doubtful accounts


                                                                                                                       Year ended December 31,
                                                                                                                2006            2005               2004
             Balance at beginning of the period                                                              $ 15,167        $ 12,384                 —
             Provisions                                                                                        269,235          15,167             12,384
             Reversed                                                                                              —           (12,384)               —
             Balance at the end of the period                                                                $ 284,402       $ 15,167            $ 12,384

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5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
     Prepaid expenses and other current assets consist of:


                                                                                                                                  December 31,
                                                                                                                           2006                  2005
           Staff advances and other receivables                                                                    $   793,660            $   986,881
           Advances to suppliers                                                                                     1,231,258                562,403
           Prepaid expenses                                                                                            426,352                183,709
           Prepaid artist costs                                                                                        249,434                126,006
                                                                                                                   $ 2,700,704            $ 1,858,999


6. PROPERTY AND EQUIPMENT, NET
     Property and equipment, net, consist of:


                                                                                                                            December 31,
                                                                                                                   2006                       2005
           Furniture and office equipment                                                                     $ 2,755,139                $ 2,777,529
           Motor vehicles                                                                                         217,839                    194,372
           Telecommunication equipment                                                                          3,965,885                  3,584,699
           Leasehold improvements                                                                               1,048,292                    488,485
                                                                                                                7,987,155                  7,045,085

           Less: accumulated depreciation and amortization                                                      (6,032,954)                (4,508,736)
                                                                                                              $ 1,954,201                $ 2,536,349


     Depreciation expense for the years ended December 31, 2006 and 2005 was $1,580,005 and $1,461,215, respectively.

7. ACQUIRED INTANGIBLE ASSETS, NET


                                                                                                                    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
     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 VAS agreements                                                                            584,872                      8,493               576,379
     Exclusive copyright agreements                                                                       12,543                      4,181                 8,362
     VAS 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

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                                                                                                                       December 31, 2005
                                                                                                      Gross carrying      Accumulated             Net carrying
                                                                                                         amount            amortization             amount
      WVAS Segment:
      Amortizable intangible assets
      WVAS licenses                                                                               $          426,887    $       142,190       $       284,697
      Customer agreements with Telecom Operators                                                             425,364            140,831               284,533
      Business transaction codes                                                                             166,539             13,878               152,661
      Platform                                                                                               857,023            502,455               354,568
      Customer base                                                                                          638,424            638,424                   —
                                                                                                           2,514,237          1,437,778             1,076,459
      Recorded Music Segment:
      Amortizable intangible assets
      Artist contracts                                                                                     1,020,420                —               1,020,420
      Trademarks                                                                                             454,250                —                 454,250
      Exclusive VAS agreements                                                                               542,408                —                 542,408
      Non-compete agreement                                                                                  131,257                —                 131,257
      Copyrights                                                                                              86,767                —                  86,767
                                                                                                           2,235,102                —               2,235,102
                                                                                                  $        4,749,339    $     1,437,778       $     3,311,561

For the years ended December 31, 2006 and 2005, there were no intangible assets recorded for the software and system integration segment.

     Assuming no subsequent impairment of the identified intangible assets recorded as of December 31, 2006, amortization expenses for the net carrying
amount of intangible assets is expected to be as follows in future years:


            2007                                                                                                                           $1,610,148
            2008                                                                                                                            1,099,358
            2009                                                                                                                              909,150
            2010                                                                                                                              707,771
            2011 and later                                                                                                                  1,696,756
                                                                                                                                           $6,023,183

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8. GOODWILL


                                                                                                                   Year ended December 31,
                                                                                                      WVAS              Recorded Music              Total
      Balance as of January 1, 2005                                                               $ 20,411,784        $            —           $ 20,411,784
      Effect of exchange rate changes                                                                  470,976                     —                470,976
      Goodwill arising from acquisitions during the year                                               654,744               2,331,239            2,985,983
      Balance as of December 31, 2005                                                               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


9. SHORT-TERM BORROWINGS
      At December 31, 2005, Hurray! Times and Beijing Network have provided guarantees for bank credit facilities totaling $24,782,534 (RMB200 million)
for Hurray! Solutions to satisfy its ongoing business requirements. There were no bank credit facilities in 2006.

      Interest expense and the average interest rate for 2006, 2005 and 2004 were $44,765 and 3.875%, $27,312 and 4.87%, and $312,440 and 5.84%,
respectively. Interest expense in 2006 represents the imputed interest on the amount payable on the balance owed for the acquisition of Shanghai Magma.

10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
      Accrued expenses and other current liabilities consist of:


                                                                                                                                        December 31,
                                                                                                                                 2006                  2005
      Accrued payroll                                                                                                        $   528,843        $   562,773
      Value-added tax payable                                                                                                    376,115            482,217
      Other accrued expenses                                                                                                   1,108,437          1,178,252
      Accrued welfare benefits                                                                                                    97,720            104,769
      Business tax payable                                                                                                       411,660            287,481
      Other taxes payable                                                                                                         90,538            594,740
                                                                                                                             $ 2,613,313        $ 3,210,232


11. RELATED PARTY TRANSACTIONS AND BALANCES
       As part of the acquisition agreements for the purchase of Huayi Brothers Music and Freeland Music, the Company 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 these companies and make royalty and other payments to Huayi Brothers Music or Freeland Music. These agreements are for
duration of one year but may be extended by the mutual agreements of both parties. During 2006 the Company received income of $449,638 and made payments
of $28,256 under these agreements. At December 31, 2006 the amounts payable to and receivable from related parties represent the outstanding amounts arising
from such transactions. As of December 31, 2005, the amount was due to a minority shareholder, Beijing Huayi Brothers Advertising Co., Ltd, and was
non-interest bearing, unsecured and repayable on demand.

       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.

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12. INCOME TAXES
       Hurray! is a tax-exempted company incorporated in the Cayman Islands. The subsidiaries incorporated in the PRC are governed by the Income Tax Law of
the PRC Concerning Foreign Investment and Foreign Enterprises and various local income tax laws (the “Income Tax Laws”). Pursuant to the PRC Income Tax
Laws, Hurray’s PRC subsidiaries and variable-interest entities (“VIES”) are generally subject to Enterprise Income Tax at a statutory rate of 33%, which
comprises a 30% national income tax and a 3% local income tax. Some of these subsidiaries and VIEs are qualified as high technology enterprises and under
PRC Income Tax Laws, they are subject to a preferential tax rate of 15%. In addition, some of Hurray’s subsidiaries are Foreign Invested Enterprises (“FIEs”)
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, or a two-year tax exemption followed by three years with a 50% reduction in tax rate, commencing the first profitable year. These
preferential tax arrangements will expire at various dates between 2006 and 2010. Due to these preferential tax treatments and cumulative tax loss carryforwards,
the Company was not subject to any current income tax expense in 2004. In 2005 and 2006 a number of VIEs became subject to tax as tax exemptions expired or
were reduced. The aggregate dollar and per share effect of the tax holidays in 2006, 2005 and 2004 were $2,218,713, $5,627,575 and $4,396,192 and $0.0010,
$0.0027 and $0.0036 per share, respectively.

      Provision for income taxes consists of:


                                                                                                                          Year ended December 31,
                                                                                                                          2006               2005
            Current                                                                                                   $ 685,597               $ 286,372
            Deferred                                                                                                    (564,267)               106,974
                                                                                                                      $ 121,330               $ 393,346

      The principal components of the deferred tax assets are as follows:


                                                                                                                                December 31,
                                                                                                                         2006                  2005
            Deferred tax assets:
                 Cost and expenses accruals                                                                           $ 295,755           $       —
                 Current deferred tax assets                                                                          $ 295,755           $       —

                  Depreciation and amortization                                                                       $ 203,149           $ 139,829
                  Net operating loss carry forwards                                                                      614,919             431,361
                  Less: Valuation allowance                                                                             (447,287)           (431,361)
                  Non-current deferred tax assets                                                                     $ 370,781           $ 139,829
            Deferred tax liabilities:
                 Revenue recognition                                                                                    (344,802)           (248,455)
                 Current deferred tax liabilities                                                                     $ (344,802)         $ (248,455)
                  Intangible assets                                                                                   $ (850,734)         $ (842,824)
                  Non-current deferred tax liabilities                                                                $ (850,734)         $ (842,824)

      A reconciliation between statutory income tax rate and the Company’s effective tax rate is as follows:


                                                                                                                             Year Ended December 31,
                                                                                                                      2006            2005           2004
      Statutory tax rate                                                                                               33.0%           33.0%           33.0%
      Effect of tax holidays                                                                                          (34.2)%         (29.6)%         (25.5)%
      Non-deductible expenses                                                                                          11.9%            9.0%            0.1%
      Non-taxable income                                                                                               (9.0)%          (9.0)%          (9.3)%
      Change in valuation allowance                                                                                     0.2%           (1.3)%           1.7%
      Effective tax rate                                                                                                1.9%            2.1%            —

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       At December 31, 2006, tax loss carry forwards amounted to approximately $3.7 million which will expire by 2011. A valuation allowance of $447,287 and
$431,361 has been established as of December 31, 2006 and 2005 in respect of certain deferred tax assets, respectively, as it is considered more likely than not
that the relevant deferred tax asset will not be realized in the foreseeable future.

13. SHAREHOLDERS’ EQUITY
Ordinary Shares
      On July 9, 2004, shareholders of Hurray! approved a 20-for-1 stock split of Hurray’s ordinary shares and an increase of 2,840,000,000 ordinary shares
authorized for issuance, with immediate effect. The ordinary share split and increase in authorized ordinary share capital have been retroactively applied to all
periods presented.

       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.

Preference Shares
      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. The accounting treatment required a beneficial conversion feature on the Series A convertible preference shares to be calculated.
The proceeds received in the Series A offerings were first allocated between the convertible instrument and the warrants on a relative fair value basis. A
calculation was then performed to determine the difference between the effective conversion price and the fair market value of the ordinary shares at the
commitment date resulting in the recognition of deemed dividends on Series A convertible preference shares of $153,250. The deemed dividends were amortized
from the commitment date to the earliest conversion date of March 31, 2004. Amortization of the deemed dividends was $39,917 for 2004.

      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.

Share Repurchase
      In February 2006, the Board approved a stock repurchase program whereby Hurray! may repurchase up to $15.0 million of its issued and outstanding
ADSs in open-market transactions. The timing and dollar amount of repurchase transactions will be determined by the Board depending on market conditions
and will be subject to regulatory requirements. 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.

14. 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. As of December 31, 2006, 78,558,440 ordinary shares were available for future grants.

       Under the terms of the Plans, options are generally granted at prices equal to or greater than the fair market value and expire 10 years from the date of
grant and generally vest over 3-4 years. There were 81,506,600 and 99,573,700 options outstanding as of December 31, 2006 and 2005, respectively.

       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 represents the
intrinsic value measured at the acceleration date in excess of the original intrinsic value on date of grant for the estimated number of option that, absent the
modification, would have expired unexercisable.

       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 terms
of the options. In 2006 Hurray! did not issue any stock options.

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       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. The Company has not recognized a compensation expense in the consolidated financial
statements for employee options since the exercise prices were equal to or greater than the fair market values at the dates of grant.

       A summary of the stock option activity is as follows:


                                                                                                                                           Ordinary shares
                                                                                                                                                        Weighted
                                                                                                                                    Number of            average
                                                                                                                                     options          exercise price
Options outstanding at January 1, 2004                                                                                              96,064,000         $      0.047
Granted                                                                                                                             65,498,000         $      0.120
Cancelled                                                                                                                          (10,187,780)        $      0.096
Options outstanding at December 31, 2004                                                                                           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

       The weighted average per-share fair value of options as of the grant dates was as follows:


                                                                                                                                        Year ended December 31,
                                                                                                                                      2006       2005      2004
Ordinary shares                                                                                                                      $ —       $ 0.01      $ 0.015

       The following table summarizes information with respect to stock options outstanding at December 31, 2006:


                                                                               Options outstanding                                       Options exercisable
                                                        Number           Weighted average remaining      Weighted average        Number            Weighted average
Exercise Prices                                        outstanding             contractual life           exercise price        exercisable           exercise price
Ordinary shares:
       $0.0250                                         12,496,100                             5.75       $        0.0250       12,496,100         $         0.0250
       $0.0705                                         28,724,500                             6.50       $        0.0705       28,724,500         $         0.0705
       $0.1170                                         30,484,000                             7.00       $        0.1170       30,484,000         $         0.1170
       $0.1405                                          1,284,000                             7.25       $        0.1405        1,284,000         $         0.1405
       $0.1025                                          8,518,000                             8.00       $        0.1025        8,518,000         $         0.1025
        Total                                          81,506,600                                                              81,506,600

     In January 2004, Hurray! granted 14,000,000 options to purchase ordinary shares to its external consultants in exchange for past services, which vested
immediately. Hurray! recorded compensation expense of $210,488 in 2004, estimated on the basis of the Black-Scholes Option Pricing model with the following
assumptions:


              Average risk free rate of return                                                                                               1.29%
              Weighted average expected option life                                                                                      9 months
              Volatility rate                                                                                                                  95%
              Dividend yield                                                                                                                    0%

                                                                               F-24




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      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, estimated on the basis of the Black-Scholes Option Pricing model with the
following assumptions:


      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. 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,
the Company’s pro forma income would have been as follows:


                                                                                                                              Year ended December 31,
                                                                                                                             2005                 2004
      Income attributable to ordinary shareholders as reported                                                         $ 18,618,732           $ 17,200,050
      Add: Employee stock-based compensation as reported                                                                     16,804                    —
      Less: Employee stock-based compensation determined using the fair value method                                     (1,628,723)              (689,087)
      Pro forma income attributable to ordinary shareholders                                                           $ 17,006,813           $ 16,510,963
      Basic income per share:
           As reported                                                                                                 $          0.01        $          0.01
           Pro forma                                                                                                   $          0.01        $          0.01

      Diluted income per share:
           As reported                                                                                                 $          0.01        $          0.01
           Pro forma                                                                                                   $          0.01        $          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 used for grants during the applicable period.


                                                                                                                             Year ended December 31,
      Option Grants                                                                                                        2005                   2004
      Average risk-free rate of return                                                                               3.27%-3.75%              3.36%-3.45%
      Weighted average expected option life                                                                           3.25 years                  4 years
      Volatility rate                                                                                                        65%                      95%
      Dividend yield                                                                                                           0%                       0%

      There were no options granted in 2006.

Restricted 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 restricted 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. These restricted shares vest on an annual basis equally over three years, 33.33% on
each anniversary of the grant date.

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

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     The stock-based compensation expense was $543,557 in 2006.

15. WARRANTS
      In conjunction with the Series A convertible preference share agreements, Hurray! granted warrants to purchase 5,699,077 Series A convertible preference
shares to a holder of such shares (the “Fidelity Warrants”). The Fidelity Warrants had an exercise price of $0.70186 per share and became exercisable on
March 31, 2004 or within 3 months after the publication of 2003 audited financials. The Fidelity Warrants were not subject to any reduction or cancellation
clause. On April 7, 2004, the holders of these warrants exercised them and purchased Series A convertible preference shares for a total purchase price of
$3,999,955.

      The fair value of the warrants was approximately $2.3 million at the grant date, estimated on the basis of the Black-Scholes Pricing model with the
following assumptions:


            Expected price volatility range                                                                                                     95%
            Risk-free interest rate                                                                                                           3.54%
            Expected dividend payment rate as a percentage of the stock price on the date of grant                                               0%
            Contractual life of the warrants                                                                                                1 year

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 three principal business segments: wireless value-added services (“WVAS”), recorded music and software and
system integration (“SI”) services. The wireless value-added services are delivered through the 2.5G mobile networks, which comprise Wireless Application
Protocol (“WAP”) services, Multimedia Messaging Services (“MMS”), and Java™ services, and through 2G technology platforms, which comprise 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. The software and system integration services include the design, development, licensing, hardware procurement,
installation and after-sale support of the Company’s VASPro services provisioning and management software platform. 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 Group has not made disclosure of total assets by reportable segment.

      Summarized information by business segment for the years ended December 31 2006, 2005 and 2004 is as follows:


                                                                                                                              Year ended December 31,
                                                                                                                       2006            2005             2004
Revenues
WVAS                                                                                                               $ 62,512,483    $ 56,062,368     $ 43,173,307
Recorded Music                                                                                                        6,203,418             —                —
Software and System Integration                                                                                       1,177,053       6,312,363       10,267,050
Total revenue                                                                                                      $ 69,892,954    $ 62,374,731     $ 53,440,357

Cost of revenues
WVAS                                                                                                               $ 40,672,113    $ 28,634,488     $ 18,053,243
Recorded Music                                                                                                        3,553,144             —                —
Software and System Integration                                                                                         946,046       1,302,028        6,276,761
Total cost of revenues                                                                                             $ 45,171,303    $ 29,936,516     $ 24,330,004

Gross profit
WVAS                                                                                                               $ 21,840,370    $ 27,427,880     $ 25,120,064
Recorded Music                                                                                                        2,650,274             —                —
Software and System Integration                                                                                         231,007       5,010,335        3,990,289
Total gross profit                                                                                                 $ 24,721,651    $ 32,438,215     $ 29,110,353

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Geographic Information
      The Company operates in the PRC and all of the Company’s long-lived assets are located in the PRC.

17. INCOME PER SHARE
      The following table sets forth the computation of basic and diluted income per share:


                                                                                                                           Year ended December 31,
                                                                                                            2006                    2005                         2004
Income attributable to holders of ordinary shares (numerator), basic and diluted                     $      5,803,945         $     18,618,732          $     17,200,050
Shares (denominator):
     Weighted average ordinary shares outstanding used in computing basic income per
        share                                                                                            2,189,748,563            2,092,089,848             1,208,512,142
     Dilutive effect of restricted shares, stock options and warrants                                       19,010,073               37,139,113               364,375,633
     Weighted average ordinary shares outstanding used in computing diluted income per
        share                                                                                            2,208,758,636            2,129,228,961             1,572,887,775
Income per share, basic                                                                              $             0.00       $            0.01         $               0.01
Income per share, diluted                                                                            $             0.00       $            0.01         $               0.01

      Ordinary share equivalents are calculated using the treasury stock method. Under the treasury stock method, the proceeds from the assumed conversion of
options and warrants are used to repurchase outstanding ordinary shares using the average fair value for the period.

      The Company had a weighted-average of 71,626,000, 66,481,587 and 64,458,142 ordinary share options outstanding during the years ended December 31,
2006, 2005 and 2004, 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, together with revenues from software and system
integration services provided to China Unicom, were as follows:


                                                                                                                    Year ended December 31,
                                                                                                 2006                        2005                         2004
                                                                                             Revenues        %           Revenues      %              Revenues          %
China Unicom                                                                             $   21,144,096      30%     $    42,557,321    68%       $   43,896,424        82%
China Mobile                                                                                 36,756,895      53%          18,969,630    30%            9,543,933        18%

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      Accounts receivable due from the mobile phone customers through China Mobile and China Unicom, together with receivables from China Unicom under
software and system integration contracts, were as follows:


                                                                                                                                   December 31
                                                                                                                           2006                      2005
                                                                                                                     Accounts                  Accounts
                                                                                                                     receivable    %           receivable      %
China Unicom                                                                                                     $    6,246,702    46%     $     12,289,221    68%
China Mobile                                                                                                          5,493,069    41%            5,278,674    29%

(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 Company has not experienced any significant
credit losses for any periods presented.

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
$2,396,079, $1,647,503 and $824,793 for the years ended December 31, 2006, 2005 and 2004, respectively.

       PRC legal restrictions permit payments of dividends by the Company’s PRC subsidiaries 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 variable interest entities 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 a (i) general reserve, (ii) enterprise expansion fund and (iii) 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 (“PRC GAAP”) 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 year ended December 31, 2006, 2005 and 2004, the Company’s PRC subsidiaries and variable interest entities made appropriations to the general reserve
fund of $374,004, $3,629,408, and $1,454,966, respectively. The PRC subsidiaries and variable interest entities 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
are restricted from transferring a portion of their net assets to the Company. Restricted net assets were approximately $69.1 million and $60.1 million, as of
December 31, 2006 and 2005, 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 2006, 2005 and 2004 was $1,455,640, $1,051,276 and $900,552, respectively.

      Future minimum lease payments under non-cancelable operating lease agreements were as follows:


      December 31,
      2007                                                                                                                                       $ 1,868,208
      2008                                                                                                                                         1,581,971
      2009                                                                                                                                         1,261,491
      Total                                                                                                                                      $ 4,711,670

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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,
      2007                                                                                                                                     $204,900
      2008                                                                                                                                      204,900
      2009                                                                                                                                      204,900
      Total                                                                                                                                    $614,700


21. SUBSEQUENT EVENTS
Acquisition of interest in New Run Entertainment
      In November 2006, the Company signed a set of definitive agreements to acquire 30% of the equity interest in Beijing New Run Entertainment Co. Ltd.
(“New Run Entertainment”), a leading independent record label in China. The Company will pay a total of $2.25 million in cash for a 30% interest in New Run
Entertainment, which is subject to adjustment based on the financial performance of New Run Entertainment’s business in the twelve months following the
closing of the acquisition. As of December 31, 2006, the Company had paid $4,125 acquisition costs for New Run. The acquisition was completed in April 2007
and New Run Entertainment will be accounted for on the equity basis from April 1, 2007.

Acquisition of Shanghai Saiyu
      In February 2007, the Company signed a set of agreements to acquire 100% of the equity interest in Shanghai Saiyu Information Technology Co., Ltd., a
provider of wireless value-added services in China, for a cash consideration of $3.1 million.

Acquisition of Secular Bird
      In 2007, the Company entered into agreements to acquire 65% equity interest in Beijing Secular Bird Culture and Art Development Center (“Secular
Bird”), which is an up-and-coming independent label in China. The Company paid total of $346,000 in cash for the 65% interest, which is subject to adjustment
based on the financial performance of Secular Bird during the one-year period following the closing of the acquisition. The acquisition was completed in June
2007.

Formation of joint venture with Beijing TV Media
       To further expand customer reach and diversify marketing, promotion and distribution channels, the Company entered into an agreement with Beijing TV
Media Co., Ltd (“BTVM”) to establish an equity joint venture in which Hurray! owns 49% interest for the development and delivery of mobile interactive
services to China Beijing TV (BTV)’s audience. BTVM is BTV’s wholly owned subsidiary which owns the exclusive right of mobile interactive services in
addition to other new media rights for BTV’s national satellite channel and 12 local channels.

Issuance of restricted shares
      On March 14, 2007, Hurray! granted 20,000,000 restricted shares to its employees pursuant to the 2004 Plan which resulted in stock-based compensation
expense of $0.65 million to be recognized over the three years for the applicable vesting period.

                                                                            *****

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                                                               HURRAY! HOLDING CO., LTD.

                                      ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I
                                             FINANCIAL INFORMATION OF PARENT COMPANY
                                                          BALANCE SHEETS
                                                            (In U.S. dollars)


                                                                                                                               December 31,
                                                                                                                     2006                         2005
                                                                                                                    (in U.S. dollars, except share data)
Assets
Current assets:
Cash                                                                                                           $    48,496,751           $       60,903,215
Prepaid expenses and other current assets                                                                              450,298                      430,649
Amounts due from subsidiaries and variable interest entities                                                        12,404,359                          —
Total current assets                                                                                                61,351,408                   61,333,864
Investments in subsidiaries and affiliates                                                                          67,481,687                   59,469,132
Total assets                                                                                                   $   128,833,095           $      120,802,996
Liabilities and shareholders’ equity
Current liabilities:
Accrued expenses and other current liabilities                                                                 $        192,137          $           435,929
Amounts due to subsidiaries and variable interest entities                                                                  —                      1,243,091
Acquisition payable                                                                                                   5,820,938                          —
Payroll withholding taxes payable                                                                                           —                        504,945
Total current liabilities                                                                                             6,013,075                    2,183,965
Shareholders’ equity:
Ordinary shares ($0.00005 par value; 4,560,000,000 shares authorized; 2,162,031,740 and 2,229,754,340 shares
  issued and outstanding as of December 31, 2006, and 2005, respectively)                                              108,102                      111,488
Additional paid-in capital                                                                                          73,608,117                   77,335,532
Retained earnings                                                                                                   45,702,452                   39,898,507
Accumulated other comprehensive income                                                                               3,401,349                    1,273,504
Total shareholders’ equity                                                                                         122,820,020                  118,619,031
Total liabilities and shareholders’ equity                                                                     $   128,833,095           $      120,802,996

                                                                           F-30




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                                                            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,
                                                                                                                2006                   2005                 2004
                                                                                                                       (in U.S. dollars, except share data)
Operating expenses
      Product development (represents stock-based compensation expense of $79,587, $4,886 and $60,140
         for the years ended December 31, 2006, 2005 and 2004, respectively)                                $    79,587         $        4,886       $       60,140
      Selling and marketing (including stock-based compensation expense of $346,456, $9,911 and $221,046
         for the years ended December 31, 2006, 2005 and 2004, respectively)                                    346,211               187,111              324,526
      General and administrative (including stock-based compensation expense of $117,514, $22,775 and nil
         for the years ended December 31, 2006, 2005 and 2004, respectively)                                   1,757,720           1,411,309              103,646
Total operating expenses                                                                                       2,183,518           1,603,306              488,312
Loss from operations                                                                                          (2,183,518)         (1,603,306)            (488,312)
Interest income                                                                                                2,372,585           1,291,258                  341
Interest expense                                                                                                 (44,765)                —                    —
Equity in earnings of subsidiaries and variable interest entities                                              5,659,643          18,930,780           17,727,938
Net income                                                                                                     5,803,945          18,618,732           17,239,967
Deemed dividends on Series A convertible preference shares                                                           —                   —                (39,917)
Net income attributable to holders of ordinary shares                                                       $ 5,803,945         $ 18,618,732         $ 17,200,050

                                                                           F-31




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                                                                HURRAY! HOLDING CO., LTD.

                                       ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I
                                              FINANCIAL INFORMATION OF PARENT COMPANY
                                                      STATEMENT OF CASH FLOWS
                                                             (In U.S. dollars)


                                                                                                                         Year ended December 31,
                                                                                                            2006                    2005               2004
                                                                                                                              (in U.S. dollars)
Cash flows from operating activities:
Net income attributable to holders of ordinary shares                                                  $   5,803,945         $ 18,618,732          $ 17,200,050
Deemed dividends on Series A convertible preference shares                                                       —                    —                  39,917
Net income                                                                                                 5,803,945           18,618,732            17,239,967
Adjustments to reconcile net income to net cash provided by operating activities:
     Stock-based compensation expense                                                                         543,557               37,572              281,186
     Equity in earnings of subsidiaries and affiliates                                                     (5,659,643)         (18,930,780)         (17,727,938)
     Changes in assets and liabilities:
          Prepaid expenses and other current assets                                                           (19,649)            (807,662)            (177,200)
          Amounts due from subsidiaries and variable interest entities                                        792,290                  —                183,144
          Accrued expenses and other current liabilities                                                     (243,793)             224,768              (26,113)
          Amounts due to subsidiaries and variable interest entities                                       (1,243,090)          (1,063,505)              56,596
          Payroll withholding taxes payable                                                                  (504,945)             504,945                  —
Net cash provided by operating activities                                                                    (531,328)          (1,415,930)            (170,358)
Investing activities:
Investment in subsidiaries and variable interest entities                                                  (7,475,860)              (62,350)         (8,612,448)
Net cash used in investing activities                                                                      (7,475,860)              (62,350)         (8,612,448)
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, $178,793 and $nil was paid for the years ended
  December 31, 2006, 2005 and 2004, respectively)                                                            540,000           60,422,746              (178,793)
Payment to repurchase ordinary shares                                                                     (5,034,748)                 —                     —
Payment to repurchase Series A convertible preference shares                                                     —                    —                  (1,122)
Proceeds from exercise of warrants to repurchase Series A convertible preference shares                          —                    —               3,999,955
Collection of subscription receivable                                                                            —                 50,880                   —
Proceeds from exercise of stock options                                                                       95,472            1,489,602                   —
Net cash (used in) provided by financing activities                                                       (4,399,276)          61,963,228             3,820,040
Net increase (decrease) in cash and cash equivalents                                                     (12,406,464)          60,484,948            (4,962,766)
Cash and cash equivalents, beginning of year                                                              60,903,215              418,267             5,381,033
Cash and cash equivalents, end of year                                                                 $ 48,496,751          $ 60,903,215          $    418,267

                                                                                F-32




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Note
Basis for Preparation
The Financial Information of 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-33




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                     Powered by Morningstar® Document Research℠
                                                                                                                                                    Exhibit 4.7

                                                     THIS EMPLOYMENT AGREEMENT (“Agreement”)
                                                              is made and entered into this

                                                                       23rd of May, 2006
                                                                     (the “Effective Date”)

                                                                        by and between

                                                                    Shaojian (Sean) Wang
                                                                      (the “Employee”)

                                                                              and

                                                      HURRAY! HOLDING CO. LTD. (the Company)

BACKGROUND
WHEREAS the Employee and the Company desire to enter into this Agreement for the purpose of retaining the services of the Employee, and wish to provide
the Employee with an inducement to remain with the Company;

WHEREAS the Employee has been employed by the Company.

NOW, THEREFORE, intending to be legally bound, and in consideration of the premises and the mutual promises set forth in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Employee agree as follows:

DEFINITIONS
“Affiliate” shall mean with respect to any Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.

“Board” shall mean Board of Directors.

“Cause” shall mean (i) Employee commits a crime involving dishonesty, breach of trust, or physical harm to any person; (ii) Employee willfully engages in
conduct that is in bad faith and materially injurious to the Company, including but not limited to, misappropriation of trade secrets, fraud or embezzlement;
(iii) Employee commits a material breach of this Agreement, which breach is not cured within twenty (20) days after written notice to Employee from the
Company; (iv) Employee willfully refuses to implement or follow a reasonable and lawful policy or directive of the Company, which breach is not cured within
twenty (20) days after written notice to Employee from the Company; or (v) Employee engages in malfeasance demonstrated by a pattern of failure to perform
job duties diligently and professionally.

“Change in Control” shall be as defined in Section 4.3.2.

“Company” shall be as defined in Preamble.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                       Powered by Morningstar® Document Research℠
“Control” (including the terms “Controlled by” and “under common Control with”) shall mean the possession, directly or indirectly or as a trustee or executor, of
the power to direct or cause the direction of the management of a Person, whether through the ownership of stock, as a trustee or executor, by contract or credit
agreement or otherwise.

“Effective Date” shall be as defined in Preamble.

“Employee” shall be as defined in Preamble.

“Employee Resignation” shall be as defined in Section 3.1.2.

“Employee Resignation Date” shall be as defined in Section 3.1.2.

“Employment Capacity” shall be President and Chief Operating Officer reporting to the Chief Executive Officer of the Company.

“Employment Change of Control Termination Date” shall mean the later of (i) 6 months from the date of a Change of Control; or (ii) the date on which either the
Company or the Employee elects not to extend the Agreement further by giving written notice to the other party.

“Employment Contract Termination Date” shall mean the later of the third anniversary of the Effective Date or the date on which either the Company or the
Employee elects not to extend the Agreement further by giving written notice to the other party.

“Employment Final Termination Date” shall mean the date upon which the Employee’s employment with the Company ceases for any reason.

“Employment Term” shall be as defined in Section 1.1.

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

“Good Reason” in the context of the employee’s resignation shall mean (a) a change in the employees position which materially reduces the employee’s level of
responsibilities, duties or stature; or (b) reduction in the employee’s compensation.

“Person” shall mean an individual, corporation, partnership, limited liability company, limited partnership, association, trust, unincorporated organization or
other entity or group (as defined in Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended).

“Qualified Public Transaction” shall mean an underwritten public offering of Ordinary Shares of the Company at a public offering price that values the Company
as a whole at no less than US $150,000,000 and yields gross proceeds to the Company in excess of US$30,000,000.

“Subsidiary” shall mean, with respect to any Person, any entity which securities or other ownership interests having ordinary voting power to elect a majority of
the Board of Directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
ARTICLE I. EMPLOYMENT AND TERM
The Company employs Employee and the Employee hereby agrees to such employment by the Company during the Employment Term to serve as the President
and COO of the Company, with the customary duties, authorities and responsibilities of such position and such other duties, authorities and responsibilities
relative to the Company that may from time to time be delegated to Employee by the Chief Executive Officer of the Company. Employee shall perform such
duties and responsibilities as are normally related to such position in accordance with the standards of the industry and any additional duties now or hereafter
assigned to Employee by the Chief Executive Officer. Employee shall abide by the Company’s rules, regulations, and practices as they may from time-to-time be
adopted or modified.


1.1     Employment Term. The Employment Term of this Agreement shall commence on the Effective Date and shall continue until the earlier of the
        Employment Contract Termination Date or the Employment Final Termination Date, except in the event that a Change in Control occurs prior to the
        Employment Contract Termination Date.


1.2     Full Working Time. During the Employment Term, the Employee shall devote Employee’s attention, experience and efforts during normal business
        hours to the proper performance of Employee’s duties hereunder and to the business and affairs of the Company.


1.3     Change in Control. If a Change in Control occurs prior to the Employment Contract Termination Date, then the terms outlined in Section 4.3 shall apply.

ARTICLE 2. COMPENSATION PACKAGE AMOUNT


2.1     Compensation Package Amount plus Benefits in Kind. During the Employment Term, Employee should be paid the annual compensation set forth on
        Exhibit A, or such greater compensation as may from time to time be approved by the Board.


2.2     Benefits in Kinds. During the Employment Term, the Employee will be paid the Benefits and Benefits in Kind set forth on Exhibit A.


2.3     Vacation. The Employee shall be entitled to the amount of vacation each calendar year of the Employment Term set forth in Exhibit A, which must be
        taken in accordance with the Company’s vacation policy then in effect.


2.4     Expenses. The Company shall pay or reimburse the Employee for reasonable business expenses actually incurred or paid by the Employee during the
        Employment Term, in the performance of her services hereunder.

ARTICLE 3. TERMINATION


3.1        General.


3.1.1      Company Right to Terminate. The Company shall have the right to terminate the employment of the Employee at any time with or without Cause but
           the relative rights and obligations of the parties in the event of any such termination or resignation shall be determined under this Agreement.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
3.1.2      Employee Right to Terminate. The Employee shall have the right to resign for any reason with 30 days notice to the Company, but the relative rights
           and obligations of the parties in the event of any such resignation shall be determined under this agreement (“Employee Resignation”, and the date of
           notice by the Employee to the Company of which shall be the “Employee Resignation Date”).


3.2        Termination Under Certain Circumstances.


            3.2.1       Termination Without Severance Benefits. In the event the Employee’s employment with the Company is terminated prior to the
                        expiration of the Employment Term by reason of (i) the Employee’s resignation other than for Good Reason, or (ii) the Employee’s
                        discharge by the Company for Cause or gross negligence, as determined by a majority of the Board, this Agreement shall terminate
                        including, without limitation, the Company’s obligations to provide any compensation, benefits or severance to the Employee under
                        Article 2 of this Agreement or otherwise, other than the Standard Termination Entitlements as defined in Section 4.1.


            3.2.2       Termination Without Cause or Resignation for Good Reason. Except in the event of a Change in Control, the Company will be
                        obligated to provide the Standard Termination Entitlements as defined in Section 4.1 and Severance Benefits as defined in Section 4.2, if
                        either the Company terminates the employee’s employment without Cause or the Employee resigns for Good Reason, subject to the
                        Employee’s compliance with Articles 5, 8, 9 and 10.


            3.2.3       Termination upon a Change in Control. In the event of a Change in Control, the terms of Section 4.3 shall apply.

ARTICLE 4. Standard Termination Entitlements; Severance Benefits.


4.1     Standard Termination Entitlements. For all purposes of this Agreement, the Employee’s “Standard Termination Entitlements” shall mean and include,
        subject to the provisions of Article 8: (a) the Employee’s earned but unpaid compensation (including, without limitation, salary, bonus, and all other items
        which constitute wages under applicable law) as of the date of Employee’s termination of employment. This payment shall be made at the time and in the
        manner prescribed by law applicable to the payment of wages but in no event later than 30 days after the date of the Employee’s termination of
        employment; and (b) the benefits, if any, due to the Employee (and the Employee’s estate, surviving dependents or her designated beneficiaries) under the
        employee benefit plans and programs and compensation plans and programs maintained for the benefit of the employees of the Company and in which the
        Employee participated as an Employee. The time and manner of payment or other delivery of these benefits and the recipients of such benefits shall be
        determined according to the terms and conditions of the applicable plans and programs.


4.2     Severance Benefits. For all purposes of this Agreement, the Employee’s “Severance Benefits” shall mean and include the payment of a lump sum amount
        equal to 6 multiplied by the Employee’s monthly rate of annual gross base salary in effect immediately prior to Employee’s termination of employment.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
4.3   Change in Control


      4.3.1      Change in Control Adjustments and Compensation. The “Change in Control Adjustments and Compensation” shall mean the following:


              4.3.1.1       Change in Control Employment Term. If a Change in Control occurs prior to the Employment Contract Termination Date, then the
                            Employment Term shall continue until the earlier of the Employment Final Termination Date or the Employment Change of Control
                            Termination Date.


              4.3.1.2       Change in Control Severance Payment Amount. If a Change in Control occurs prior to the Employment Contract Termination
                            Date, and the Company terminates the employee’s employment without Cause or the Employee resigns for Good Reason, then the
                            Employee shall receive Severance Benefits as defined in Section 4.2 and the Company shall be obligated to provide the Standard
                            Termination Entitlements as defined in Section 4.1 subject to the Employee’s compliance with Articles 5, 8, 9 and 10.


      4.3.2      Definition. Change in Control shall mean any one of the following:


              4.3.2.1       the consummation of a reorganization, merger or consolidation of the Company with one or more other persons, other than a
                            transaction following which:
                            at least 49% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning
                            of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior
                            to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 100% of the
                            outstanding equity ownership interests in the Company; and
                            at least 49% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are
                            beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative
                            proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3
                            promulgated under the Exchange Act) 100% of the securities entitled to vote generally in the election of directors of the Company.


              4.3.2.2       a complete liquidation or dissolution of the Company; or


              4.3.2.3       the occurrence of any event if, immediately following such event, at least 49% of the members of the Board of Directors of the
                            Company do not belong to any of the following groups: (a) individuals who were members of the




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                     Board of Directors of the Company on the date hereof; or (b) individuals who first became members of the Board of Directors of the
                     Company after the date hereof either: (i) upon election to serve as a member of the Board of Directors of the Company by affirmative vote
                     of three-quarters of the members of such board, or of a nominating committee thereof, in office at the time of such first election; or (ii) upon
                     election by the stockholders of the Company to serve as a member of such board, but only if nominated for election by affirmative vote of
                     three-quarters of the members of the Board of Directors of the Company, or of a nominating committee thereof, in office at the time of such
                     first nomination; provided, however, that such individual’s election or nomination did not result from an actual or threatened contest for the
                     election of directors or other actual or threatened solicitation of proxies or consents other than by or on behalf of the Board of Directors of
                     the Company.


      4.3.2.4        In no event, however, shall a Change in Control be deemed to have occurred as a result of (i) any acquisition of securities or assets of the
                     Company or any subsidiary thereof, by the Company or any subsidiary thereof, or by any employee benefit plan maintained by the
                     Company or any subsidiary thereof or (ii) any Qualified Public Transaction of the securities of the Company. For purposes of this section,
                     the term “person” shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

ARTICLE 5. NON-COMPETITION AND NON-SOLICITATION; PROPRIETARY INFORMATION
The Employee shall enter into a Key Employee Invention Assignment and Confidentiality Agreement attached herein as Exhibit B and a Non-Compete
Agreement attached herein as Exhibit C and shall act in accordance with the terms of such agreements. The Employee agrees that the provisions of this Article 5,
Exhibit B and Exhibit C are necessary to protect the interests of the Company or its Subsidiaries or Affiliates and are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that the provisions of this Article 5 or any part thereof are unenforceable because of the duration
or geographical scope of such provision, such court will have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision will be enforceable.

ARTICLE 6. THIS ARTICLE INTENTIONALLY OMITTED
ARTICE 7. REMEDIES
7.1 Remedies for Certain Breaches. If the Employee commits a breach, or threatens to commit a breach, of any of the provisions of Article 5, the Company
shall have the following rights and remedies: forfeiture of stock options, forfeiture of any severance or other termination benefits and damages associated with
the Breach, each of which rights and remedies shall be independent of the others,




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
and shall be severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available under
law or in equity to the Company, the right and remedy to have the provisions of Article 5 enforced by any court in the State of New York, USA, it being
acknowledged and agreed that any breach or threatened breach of Article 5 hereof by the Employee will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.

ARTICLE 8. DISPUTE RESOLUTION
8.1 Dispute Resolution. Any dispute, controversy or claim, at any time arising out of this or relating to this Agreement, or the breach, termination or invalidity
thereof (other than any dispute, controversy or claim pursuant to Article 5 hereof, which may, at the option of the Company, be submitted to any court having
jurisdiction), shall be referred to the Hong Kong courts for final and binding arbitration. Any arbitral award may be enforced through a judgment rendered in any
court of competent jurisdiction.

ARTICLE 9. GENERAL PROVISIONS
9.1 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been
duly received if so given) by hand delivery, telegram, telex, or telecopy, or facsimile transmission, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the
following addresses or to such other address as the party to whom notice is given may have previously furnished to the other parties hereto in writing in the
manner set forth above:


       If to the Employee:      Shaojian (Sean) Wang
                                [ADDRESS]


       If to the Company:       Hurray! Holding Co., Ltd.
                                [ADDRESS]


10.1      Entire Agreement. This Agreement, including the provisions of Exhibit A and the agreements on Exhibit B and Exhibit C, shall constitute the entire
          agreement between the Employee and the Company with respect to the Company’s employment of the Employee and supersedes any and all prior
          agreements and understandings.


10.2      Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
          generally or in a particular instance and either retroactively or prospectively), only by an instrument in writing and signed by the party against whom
          such amendment or waiver is sought to be enforced.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
10.3    Successors and Assigns. The personal services of the Employee are the subject of this Agreement and no part of the Employee’s or the Company’s
        rights or obligations hereunder may be assigned, transferred, pledged or encumbered by the Employee or the Company. This Agreement shall inure to
        the benefit of, and be binding upon (a) the parties hereto, (b) the heirs, administrators, executors and personal representatives of the Employee and
        (c) the successors and assigns of the Company as provided herein.


10.4    Governing Law and Venue. This Agreement, including the validity hereof and the rights and obligations of the parties hereunder, and all amendments
        and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the laws of the State of New
        York, USA, without giving effect to any conflicts of law provisions or rule, that would cause the application of the laws of any other jurisdiction.


10.5    Severability. If any provisions of this Agreement, as applied to any part or to any circumstance, shall be adjudged by a court to be invalid or
        unenforceable, the same shall in no way affect any other provision of this Agreement, the application of such provision in any other circumstances or
        the validity or enforceability of this Agreement.


10.6    Survival. The rights and obligations of the Company and Employee pursuant to Articles 3, 4, 5, 8 and 9 shall survive the termination of the Employee’s
        employment with the Company and the expiration of the Employment Term.


10.7    Captions. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting
        this Agreement.


10.8    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
        constitute one and the same instrument.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                      Powered by Morningstar® Document Research℠
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.


EMPLOYEE


By:           /s/ Shaojian Wang
Name:         Shaojian (Sean) Wang
Title:        President and COO


COMPANY


By:           /s/ Qindai Wang
Name:         Qindai Wang
Title:        Chief Executive Officer


ATTEST


By:           /s/ May Pang
Name:         May Pang
Address:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                           Powered by Morningstar® Document Research℠
Exhibit A


                                                                           Compensation

Annual Base Salary
The annual gross base salary will be US$150,000.00 which will be paid in twelve (12) monthly installments each year. The salary will be reviewed in January
2007 and annually thereafter

Annual Target Bonus
As determined by CEO of the Company.

Commission
The commission will be calculated and paid according to the Company’s incentive program policy.

Restricted Share
Restricted share award for an aggregate of 6,000,000 ordinary shares of the Company will be granted. The purchase price per share shall be US$0.00005 per
ordinary share (which is the par value per share. And 100 ordinary shares represent one American Depositary Receipt on Nasdaq). One third of the restricted
shares shall vest twelve months after the date of award, and an additional one-third of the restricted shares shall vest on each yearly anniversary of the date of
award.

Health Insurance
As provided in the Company’s standard insurance policy for executive officers.

In addition, the Company will reimburse the Employee up to US$10,000 for actual costs incurred by the Employee, in every twelve-month period from the
Effective Date, for international health insurance coverage for Employee’s family members (the Employee’s wife and three daughters) who will be based in
California, USA.

The Company will also reimburse the Employee up to US$5,000 for actual costs incurred by the Employee, in every twelve-month period from the Effective
Date, for one roundtrip, economy-class airline ticket from Los Angeles to Beijing for each of the Employee’s family members (the Employee’s wife and three
daughters) to visit the Employee. If the Company selects a corporate travel agent, the Employee will be expected to make his reservations through the travel
agent. Until that time, the Employee will be reimbursed upon presentation of receipts in accordance with the Company’s expense reimbursement practices.

Annual Paid Vacation
During the first service year, 15 days of annual paid vacation. For each year of service thereafter, one (1) additional day of paid vacation on a cumulative basis.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
Exhibit B


                                              Key Employee Invention Assignment and Confidentiality Agreement

      In consideration of, and as a condition of my continued employment with Hurray! Holding Co. Ltd., a Cayman Islands company (as contemplated in the
employment agreement between Hurray! Holding Co. Ltd. and me (the “Employment Agreement”)), or with any of its Subsidiaries or Affiliates (as defined in
the Employment Agreement, Hurray! Holding Co., Ltd. and its Subsidiaries and Affiliates, collectively, the “Company”), I hereby represent to, and agree with,
the Company as follows:
      I hereby represent to, and agree with the Company as follows:


1.    Purpose of Agreement. I understand that the Company is engaged in a continuous program of research, development, production and marketing in
      connection with its business and that it is critical for the Company to preserve and protect its Proprietary Information (as defined in Section 3 below), its
      rights in Inventions (as defined in Section 2 below) and in any other intellectual property rights. Accordingly, I am entering into this Employee Invention
      Assignment and Confidentiality Agreement (this “Agreement”) as a condition of my continued employment with the Company, whether or not I am
      expected to create inventions of value for the Company.


2.    Disclosure of Inventions. I will promptly disclose in confidence to the Company all inventions, improvements, designs, original works of authorship,
      derivative works, formulas, processes, compositions of matter, techniques, know-how, computer software programs, databases, mask works and trade
      secrets (the “Inventions”) that I make or conceive or first reduce to practice or create, either alone or jointly with others, during the period of my
      employment, whether or not in the course of my employment, and whether or not such Inventions are patentable, copyrightable or protectible as trade
      secrets or mask works.


3.    Proprietary Information. I understand that my employment by the Company creates a relationship of confidence and trust with respect to any information
      of a confidential or secret nature that may be disclosed to me by the Company that relates to the business of the Company or to the business of any parent,
      subsidiary, affiliate, customer or supplier of the Company or any other party with whom the Company agrees to hold information of such party in
      confidence (the “Proprietary Information”). Such Proprietary Information includes but is not limited to any confidential and/or proprietary knowledge, data
      or information, any past, present or future Inventions, marketing plans, product plans, business strategies, financial information (including budgets and
      unpublished financial statements), licenses, prices and costs, forecasts, personal information, suppliers, customers and lists of either, information, trade
      secrets, patents, mask works, ideas, confidential knowledge, data or other proprietary information relating to new and existing products, processes,
      know-how, designs, formulas, developmental or experimental work, improvements, discoveries, designs and techniques, computer programs, data bases,
      other original works of authorship, employee information including the skills and compensation of other employees of Company, or other subject matter
      pertaining to any business of Company. I agree that Company may from time to time create a list of specific Proprietary Information and I will
      acknowledge any such lists in writing upon request.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
4.   Confidentiality. At all times, both during my employment and after its termination, I will keep and hold all such Proprietary Information in strict
     confidence and trust. I will not use or disclose any Proprietary Information without the prior written consent of the Company, except as may be necessary
     to perform my duties as an employee of the Company for the benefit of the Company. Upon termination of my employment with the Company, I will
     promptly deliver to the Company all documents and materials of any nature pertaining to my work with the Company. I will not take with me any
     documents or materials or copies thereof containing any Proprietary Information.


5.   Work for Hire; Assignment of Inventions. I acknowledge and agree that any copyrightable works prepared by me either alone or jointly with others, within
     the scope of my employment are “works for hire” under the United States Copyright Act and that the Company will be considered the author and owner of
     such copyrightable works. In the event that any such copyrightable works are not deemed to be “works made for hire,” I hereby irrevocably assign all of
     my right, title and interest in and to such copyrightable works to Company. I agree that all Inventions that (i) are developed using equipment, supplies,
     facilities or trade secrets of the Company, (ii) result from work performed by me for the Company, or (iii) relate to the Company’s business or current or
     anticipated research and development (collectively, “Company Inventions”), will be the sole and exclusive property of the Company and are hereby
     irrevocably assigned by me to the Company.


6.   Assignment of Other Rights. In addition to the foregoing assignment of Company Inventions to the Company, I hereby irrevocably transfer and assign to
     the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Company
     Invention; and (ii) any and all Moral Rights (as defined below) that I may have in or with respect to any Company Invention. I also hereby forever waive
     and agree never to assert any and all Moral Rights I may have in or with respect to any Company Invention, even after termination of my work on behalf
     of the Company. “Moral Rights” mean any rights to claim authorship of a Company Invention, to object to or prevent the modification of any Company
     Invention, or to withdraw from circulation or control the publication or distribution of any Company Invention, and any similar right, existing under
     judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as
     a “moral right”.


7.   Assistance. For no consideration in addition to my salary or wages during my employment, I agree to assist the Company in every proper way to obtain for
     the Company and enforce patents, copyrights, mask work rights, trade secret rights and other legal protections for the Company’s Inventions in any and all
     countries. I will execute any documents that the Company may reasonably request for use in obtaining or enforcing such patents, copyrights, mask work
     rights, trade secrets and other legal protections. My obligations under this paragraph will continue beyond the termination of my employment with the
     Company, provided that the Company will compensate me at a reasonable rate after such termination for time or expenses actually spent by me at the
     Company’s request on such assistance. I appoint the Secretary of the Company as my attorney-in-fact to execute documents on my behalf for this purpose.
     I hereby waive and quitclaim to Company any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any
     proprietary rights assigned hereunder to Company.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
8.    No Breach of Prior Agreement. I represent that my performance of all the terms of this Agreement and my duties as an employee of the Company will not
      breach any invention assignment, proprietary information, confidentiality or similar agreement with any former employer or other party. I represent that I
      did not bring with me to the Company or use in the performance of my duties for the Company any documents or materials or intangibles of a former
      employer or third party that are not generally available to the public or have not been legally transferred to the Company.


9.    Efforts; Duty Not to Compete. I understand that my employment with the Company requires my undivided attention and effort during normal business
      hours. While I am employed by the Company, I will not, without the Company’s express prior written consent, provide services to, or assist in any manner,
      any business or third party which compete with the current or planned business of the Company.


10.   Notification. I hereby authorize the Company to notify my actual or future employers of the terms of this Agreement and my responsibilities hereunder.


11.   Non-Solicitation of Employees/Consultants. During my employment with the Company and for a period of one (1) year thereafter, I will not directly or
      indirectly solicit away employees or consultants of the Company for my own benefit or for the benefit of any other person or entity. “Solicit” shall not
      include the placement of an advertisement in a publication of general circulation.


12.   Non-Solicitation of Suppliers/Customers. During my employment with the Company and after termination of my employment, I will not directly or
      indirectly solicit or take away suppliers or customers of the Company if the identity of the supplier or customer or information about the supplier or
      customer relationship is a trade secret or is otherwise deemed confidential information within the meaning of Chinese law.


13.   Injunctive Relief. I understand that in the event of a breach or threatened breach of this Agreement by me the Company may suffer irreparable harm
      and will therefore be entitled to injunctive relief to enforce this Agreement, without prejudice to any other rights or remedies that Company may
      have for a breach of this Agreement.


14.   Governing Law; Severability. This Agreement will be governed by and construed in accordance with the laws of New York, without giving effect to that
      body of laws pertaining to conflict of laws. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be
      invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If
      such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be
      enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement.
      Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which
      determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then this Agreement will not be enforceable against
      such affected party and both parties agree to renegotiate such provision(s) in good faith.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
15.   Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original,
      and all of which together shall constitute one and the same agreement.


16.   Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or
      construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to
      this Agreement.


17.   Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to
      the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto
      with respect to the specific subject matter hereof.


18.   Amendment and Waivers. This Agreement may be amended only by a written agreement executed by each of the parties hereto. No amendment of or
      waiver of, or modification of any obligation under this Agreement will be enforceable unless set forth in a writing signed by the party against which
      enforcement is sought. Any amendment effected in accordance with this section will be binding upon all parties hereto and each of their respective
      successors and assigns. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that
      or any other instance. No waiver granted under this Agreement as to any one provision herein shall constitute a subsequent waiver of such provision or of
      any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.


19.   Successors and Assigns; Assignment. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
      hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.
      The Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by
      operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.


20.   Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary
      to carry out the purposes and intent of this Agreement.


21.   Not Employment Contract. I understand that this Agreement does not constitute a contract of employment or obligate the Company to employ me for any
      stated period of time.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
This Agreement shall be effective as of Effective Date.


Company                                                   Employee:


By:
Name:                                                     Name:
Position:                                                 Position:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                       Powered by Morningstar® Document Research℠
Exhibit C


                                                                    Non Compete Agreement

Dear Shaojian (Sean) Wang,
       As an employee of Hurray! Holding Co. Ltd., a Cayman Islands company (as contemplated in the employment agreement between Hurray! Holding Co.
Ltd. and me (the “Employment Agreement”)), or with any of its Subsidiaries and Affiliates (as defined in the Employment Agreement, Hurray! Holding Co., Ltd.
and its Subsidiaries and Affiliates, collectively, the “Company”), you must execute and deliver a covenant not to compete with the Company during your
employment and for 12 months thereafter. The terms and conditions set forth below, as applicable, shall, upon your acceptance thereof, become an agreement
between you and the Company.

Covenant Not to Compete
       It is hereby agreed that, from the date hereof and so long as you are an employee, consultant or serve in a similar capacity with the Company, you shall
devote substantially all of your professional time to the Company and shall not participate in any manner in the management or operation of any business other
than that of the Company or serving on the board of directors of the Company.

       If you are no longer employed by or acting as a consultant for the Company, you shall not be employed by or participate in any manner in the management
or operation of any business or entity that is or may reasonably become a competitor of the Company until 12 months after the date of termination of employment
with the Company.

Company Rights if You Violate this Agreement
       In the event that you do not comply with the terms of this Agreement, any profit sharing or stock options to which you would otherwise be entitled will be
forfeited.

       In the event you do not comply with the terms of this Agreement, we also reserve the right to discharge you as an employee. Furthermore, we reserve the
right to recover monetary damages from you, and we may also recover punitive damages to the extent permitted by law. In the event that monetary damages are
an inadequate remedy for any harm suffered by us as a result of a breach of this Agreement by you, we may also seek other relief, including an order of specific
performance or injunctive relief. You will not seek, and you agree to waive any requirement for, the securing or posting of a bond in connection with our seeking
or obtaining such relief.

     You further agree to indemnify and hold us harmless from any damages, losses, costs or liabilities (including legal fees and the costs of enforcing this
indemnity agreement) arising out of or resulting from your failure to abide by the terms of this Agreement.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
At-Will Employment
       You agree and understand that, except as may be provided in any employment agreement between you and the Company, your employment with the
Company is “at-will,” meaning that it is not for any specified period of time and can be terminated by you or by the Company at any time, with or without
advance notice, and for any or no particular reason or cause. You agree and understand that it also means that job duties, title and responsibility and reporting
level, compensation and benefits, as well as the Company’s personnel policies and procedures, may be changed at any time at-will by the Company. You
understand and agree that nothing about the fact or the content of this Agreement is intended to, nor should be construed to, alter the at-will nature of your
employment with the Company. You also understand and agree that the at-will nature of employment with the Company can only be changed by the Chief
Executive Officer of the Company in an express writing signed and dated by him and by you.

Acknowledgment
       You agree that, in light of the substantial benefits you will receive as our employee, the terms contained in this Agreement are necessary and reasonable in
all respects and that the restrictions imposed on you are reasonable and necessary to protect our legitimate business interests. Additionally, you hereby
acknowledge and agree that the restrictions imposed on you by this Agreement will not prevent you from obtaining employment in your field of expertise or
cause you undue hardship.

Governing Law
      This Agreement shall be governed by and construed in accordance with the laws of the New York, without regard to any conflicts of laws provision
thereof.

       By accepting this Agreement, you acknowledge that, given the nature of the Company’s business, the provisions contained in this Agreement contain
reasonable limitations as to time, geographical area and scope of activity to be restrained, and do not impose a greater restraint than is necessary to protect and
preserve the Company and to protect the Company’s legitimate interests. If, however, the provisions of this Agreement are determined by any court of competent
jurisdiction or any arbitrator to be unenforceable by reason of its extending for too long a period of time or over too large a geographic area or by reason of its
being too extensive in any other respect, or for any other reason, it will be interpreted to extend only over the longest period of time for which it may be
enforceable and over the largest geographical area as to which it may be enforceable and to the maximum extent in all other aspects as to which it may be
enforceable, all as determined by such court or arbitrator in such action.

      Please confirm your agreement with the foregoing by signing and returning directly to the undersigned the duplicate copy of this letter enclosed herewith.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
Very truly yours,

COMPANY


By:
Name:          Shaojian (Sean) Wang
Position:      President and COO

Accepted and Agreed to as
of the date first above written:




Employee
Name: Qindai Wang
Position: Chief Executive Officer




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007   Powered by Morningstar® Document Research℠
                                                                                                                                                     Exhibit 4.8

                                                                  Employment Agreement

                                                                               of

                                                       Hurray! Times Communications (Beijing) Ltd.

Party A: Hurray! Times Communications (Beijing) Ltd. (the “Company”)
Registered Address:
Legal Representative: Xiang Songzuo

Party B: Wang Jiang (Employee)
Gender: Male;         Ethnic Nationality: Han;   Education: Bachelor’s Degree;
Nationality: Chinese;
Birthday: January 17, 1973
Number of Identity card: 610113197301177612
Home Address:
Place of Registered Permanent Residence (“Hukou”): Room 02, Lane 8, Linyi Street, Pudong District, Shanghai
Mobile Phone: 13801789410

This employment agreement (“Agreement”) is entered into by and between Party A and Party B on the basis of equality, voluntariness and mutual consent
through consultation and in accordance with the Labor Law of the People’s Republic of China (the “Labor Law”) and other relevant laws and regulations.


            Chapter 1 Work Duties, Labor Disciplines and Term


Article 1   Party B agrees to assume the position of Senior Vice President of the President Office with such duties as Party A may, from time to time, determine
            during the term of employment. Party B shall accomplish the work on Party A’s demand in a timely manner and in compliance with the related
            standards, which are set forth in the Position Description and Performance Evaluation Form. Both the Position Description and the Performance
            Evaluation Form shall have equal legal force.

Article 2   This contract shall take effect on September 1, 2006 and expire August 31, 2008, with a probation period of      months. Based on evaluation of
            Party B’s performance during the probation period, such period may be curtailed or prolonged, provided that the prolonged period, if any, may be
            restricted to one month at the maximum. Upon the end of such probation period, the term of this Agreement shall accrue from the date when Party B
            reports to work.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                       Powered by Morningstar® Document Research℠
Article 3   Party B shall make its best efforts to cooperate with other relevant departments of the company in performing his duties and shall comply with all
            the precepts and work disciplines set forth by Party A.

Article 4   In the event that Party B violates any provision of work disciplines and regulations, Party A may in its sole discretion, considering the severity of
            consequences, change Party B’s position or cut his salary or otherwise terminate this Agreement.

Article 5   In no circumstances shall Party B engage himself in any activities impairing Party A’s legitimate interests or part-time work of any nature. If Party B
            is found to have taken up any part-time work, Party B may be deemed to have materially breached Party A’s work disciplines, which may result in
            termination of this Agreement in accordance with the Labor Law.


            Chapter 2 Work Time, Remuneration and Benefits


Article 6   Party B shall observe a standard work time requirement, namely 8 hours per day and five days per week and shall be entitled to statutory holidays
            and vacations. Overtime may be worked on the demand of Party A on the condition that the total overtime worked may not exceed 36 hours a
            month.

Article 7   Party A shall provide Party B with occupational safety and health conditions conforming to the provisions of the state and necessary articles of labor
            protection, and with the items necessary for Party B to perform his work.

Article 8   Party B shall be paid on the 25th day of each month the salary of           yuan RMB (before taxes). Party B’s salary shall be subject to the related
            wage system of Party A. Party A shall have the right to adjust Party B’s salary according to Party B’s performance, changes in his duties, Party A’s
            business results and Party A’s related rules. If Party B decides that such adjustment to his salary is unacceptable, he/she may apply to Party A for
            termination of this Agreement.

Article 9   Party A may deduct the following amounts from Party B’s salary:

            1.         Individualincome tax payable by Party B;

            2.         The portion of the social insurance, commercial insurance and housing accumulation fund that Party B shall contribute;

            3.         Any and all damages or fines payable by Party B in accordance with any court judgment or arbitration award;




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
             4.     Any and all fines or compensation payable by Party B to Party A in accordance with any stipulations in this Agreement and/or any court
                    judgment or arbitration award.

Article 10 Party A shall cover all the social insurance as required by the law and the Parties shall contribute their shares to the premium of such insurance.
           Upon termination or expiry of this Agreement, related procedures shall be followed to transfer such social insurance as Party B may be entitled to.

Article 11   In the event that Party B suffers from occupational disease or work-related injuries, Party B shall be paid his salary and reimbursed the medical
             expenses incurred in accordance with relevant state and local regulations.

Article 12 In the event that Party B suffers from any other disease or non work-related injuries, Party B shall be entitled to a medical treatment period and
           medical treatment benefits in accordance with relevant state and local regulations, with the exception of the injuries or illnesses caused due to Party
           B’s willful acts or his violation of laws and regulations.

Article 13 Party B shall be liable for all the expenses caused by any diseases having arisen prior to the employment hereunder or as a result of his withholding
           of any health information that may have fallen short of the criteria for the position he applies for.


             Chapter 3 Modification, Termination and Cancellation


Article 14 If changes have taken place in the laws and regulations serving as the basis of the conclusion of this Agreement, this Agreement shall be modified
           accordingly.

Article 15 If major changes have taken place in the objective conditions serving as the basis of the conclusion of this Agreement to the extent that this
           Agreement becomes non-executable, the Parties hereto may alter the provisions of this Agreement or otherwise terminate this Agreement.

Article 16 Party A may terminate this Agreement at its absolute discretion under any of the following circumstances:

             1.     Party B has been proved not competent for the employment requirements of Party A during the probation period;

             2.     Party B severely violates any of Party A’s work disciplines or regulations;

             3.     Party B neglects any of his duties or commits any malpractice which causes significant loss to Party A’s interests;




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
            4.      Party B divulges Party A’s trade secrets or engages himself in any business impairing Part A’s interests to the extent that economic losses to
                    Party A arise;

            5.      Party B is held accountable for criminal behavior in accordance with law.

            Under the circumstances as stated in the aforesaid sub-paragraph 2, 3, 4 and 5, Party A shall have the right to claim against Party B for
            compensation or bring him to the competent authorities for criminal responsibility.

Article 17 In any of the following events, this Agreement may be terminated by Party A giving a written notice to Party B thirty days in advance:

            1.      Party B after the completion of the medical treatment for illness or injury not suffered at work is unable to take up his original work or any
                    new work arranged by Party A ;

            2.      Party B falls short of the quality and quantity of work set forth in the Agreement and has been proven incompetent for the work after
                    training or redeployed into a new job role;

            3.      Both parties fail to reach an agreement on the modification of this Agreement as stipulated in Article 17;

            4.      Party A has obtained approval from the labor administrative department of termination of this Agreement on the grounds that Party A runs
                    into serious difficulties in production and management.

            If Party A terminates this Agreement without giving a prior notice to Party B, Party A shall pay Party B a penalty in the amount equal to one day’s
            salary for the immediately previous month for each day of delay in giving such a notice.

Article 18 In any of the following events, Party A shall not terminate this Agreement:

            1.      Party B is receiving treatment during the prescribed period of time for his vocational diseases or injuries;

            2.      Party B is a female employee during her pregnancy, puerperal, or nursing periods;

Article 19 Party B shall not make a resignation before the expiry of this Agreement, if:

            •       Party B is a person in charge of a department or with important duties whose work hasn’t been accomplished or whose replacement hasn’t
                    been found;




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
            •       Party B has any pending disputes related to intellectual property rights or results of R&D;

            •       Party A or its customers have suffered from such losses as caused by Party B’s violation of this Agreement, and Party B’s involvement is
                    called for in corrective actions or he may be held liable for the consequences therefrom;

            •       Any other events provided in relevant laws and regulations that occur.

Article 20 This Agreement may be terminated after the Parties have reached an agreement through consultation.

Article 21 Party B shall give a written notice to Party A thirty days prior to termination of this Agreement. During the probation period, Party B may terminate
           this Agreement by giving a notice to Party A seven days in advance.

Article 22 Party B may notify Party A of his decision to terminate this Agreement under any of the following circumstances:

            1.      He is on probation;

            2.      Party A forces Party B to work by resorting to violence, intimidation or illegal restriction of personal freedom;

            3.      Party A fails to perform this Agreement or infringe on Party B’s legitimate rights and interest as a result of violation of laws and regulations;

            4.      Party A fails to pay Party B remuneration as agreed hereunder;

Article 23 This Agreement shall automatically terminate upon its expiration. The parties may renew this Agreement through consultations.


            Chapter 4 Compensation and Indemnification


Article 24 Under the following circumstances where Party A breaches this Agreement, Party A shall compensate Party B as specified below:

            •       If Party A deducts wages or delays in paying wages to Party B without reason, Party A shall pay Party B an amount equal to 25% of his
                    salary in addition to payment of his salary in full on the dates specified above;

            •       If Party A pays Party B wages below the local standard on minimum wages, Party A shall make up for the deficiency for Party B and pay an
                    additional 25% of the amount of the deficiency to Party B as economic compensation.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
Article 25 Under the following circumstance, Party A shall pay Party B an amount equivalent to Party B’s average one-month salary within the previous
           twelve months for each full year Party B has worked, provided that the total amount should not exceed the total salary of twelve months:

            Party B is unable to perform his work given training or transfer and Party A terminates this Agreement.

Article 26 Under any of the following circumstances where Party A terminates this Agreement, Party A shall pay Party B an amount equivalent to Party B’s
           one-month salary within the previous year for each full year Party B has worked, provided that Party B should be paid based on his average monthly
           salary if his monthly salary within the twelve months prior to termination of this Agreement is higher than the average monthly salary of Party A.

            1.        This Agreement is terminated on the ground that Party B suffers from illnesses or work-related injury and has been verified by the labor
                      administrative agency as unable to perform the original work or other work arranged by Party A;

            2.        Party A terminates this Agreement on the ground that major changes have taken place in the objective conditions serving as the basis of
                      the conclusion of this Agreement to the extent that this Agreement becomes non-executable and the Parties fail to modify this Agreement
                      through consultations;

            3.        Party A reaches to the brink of bankruptcy or encounters difficulties in production and management, and reduction of its personnel
                      becomes necessary.

Article 27 If the Parties agree to terminate this Agreement, the compensation shall be determined by the Parties through consultations.

Article 28 If Party B fails to complete the hand-over formalities before leaving his work (including but not limited to resignation and dismissal), Party A shall
           pay Party B an amount equivalent to Party B’s average one-month salary within the previous twelve months for each full year Party B has worked,
           provided that the total amount should not exceed the total salary of twelve months. If Party B hasn’t worked for Party A for a year, the compensation
           shall be calculated as if he has worked for a full year.

Article 29 In the event of any losses on the part of Party B by reason that Party A terminates this Agreement in violation of the terms hereof or if this
           Agreement is or becomes a void contract, Party A shall compensate Party B in accordance with law and to the extent of losses arising as such.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
Article 30 In the event that Party B receives any training at the cost of Party A and Party B terminates this Agreement in violation of the stipulations hereof,
           Party B shall compensate Party A in accordance with the Training Agreement.

Article 31 In the event that Party A makes payment for Party B to obtain a Hukou for the purpose of working for Party A who is a new graduate, Party B shall
           compensate Party A in accordance with any agreement in respect of arrangement for Hukou formalities if he terminate this Agreement in violation
           of the terms hereof.

Article 32 In the event that Party B terminates this Agreement in violation of the terms hereof or fails to observe confidentiality duties set forth in this
           Agreement, Party B shall compensate Party A for its economic losses or any other losses in the amount as determined in accordance with the law
           and to the extent of such losses.

Article 33 In the event that Party B terminates this Agreement, Party B shall compensate Party A for any expenses arising from the training offered to Party B
           and from the recruitment of Party B, provided that such expenses have been borne by Party A.


             Chapter 5 Trade Secrets and Intellectual Property Right


Article 34 Party B shall undertake to keep confidential Party A’s trade secrets.

Article 35 Party B shall undertake neither to degrade or damage the trademark, enterprise name and domain name, etc. owned or to be owned by Party A
           during the employment period and after the expiration hereof, nor to degrade, copy, distort, destroy or damage the internet web pages or web site of
           Party A. Party B shall, during the term of the contract, endeavor to safeguard and promote the value of such trademark, enterprise name and domain
           name, etc.

Article 36 Party B shall undertake to transfer to Party A the technologies and software, etc. developed by it by use of the information, data, materials,
           equipments and tools, etc. of Party A within the term of this Agreement and within one year after the termination or cancellation of this Agreement
           concluded between the two parties. Should Party B apply, without the consent of Party A, for patent or copyright registration of such technologies or
           software in its own name and/or in the name of any third party, Party B shall agree to exclusively transfer such technologies, software, copyright,
           patent right




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
             and patent application right to Party A in consideration of the transfer fees of RMB one yuan per piece. Party B further undertakes that it will not,
             without Party A’s written consent, use the technology achievements, works, software and patents, etc. for commercial use or license others to use the
             same for commercial use.

Article 37 Party B shall undertake to observe the professional ethics and guidelines widely recognized in the commercial world.

Article 38 Party B shall neither engage in any business directly competitive with that carried on by Party A during the term hereof, nor hold any share, stock
           option or other form of right (except for those held for a short period of time due to sales and purchase of the shares of listed companies) of the
           enterprise, commercial institution or organization that are in competition with Party A.


             Chapter 6 Miscellaneous


Article 39 Party B shall ensure the cancellation of its employment agreement with its former employer upon execution of this Agreement and furnish relevant
           certifying documents. Party B shall be held responsible for any and all results arising from his acts of concealing the truth and making falsifications.

Article 40 This Agreement shall become null and void should Party B, upon his engagement, conceal or cover up his disease, marriage, pregnancy, disability or
           failure to be competent for the engaged position, and Party A shall bear no responsibility therefor; In case of any losses incurred by Party B to Party
           A, Party B shall indemnify Party A for such losses thereby incurred.

Article 41 During the performance hereof, should Party A find any fraudulent behavior by Party B when entering into this Agreement, Party A shall have the
           right to cancel this Agreement.

Article 42 Party A and Party B covenant that, the Confidential Agreement shall be an integral part of this Agreement, both parties shall jointly comply with the
           relevant provisions of the Confidentiality Agreement.

Article 43 Party B shall not, within one year after the cancellation (or termination) hereof, engage in any business directly competitive with Party A’s business,
           and shall not hold a position in the company, commercial institution or organization that directly competes with Party A’s business.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
            Chapter 7 Labor Dispute


Article 44 In case of any labor dispute arising from the performance hereof, both parties shall solve such dispute through consultation. In case of failure of the
           consultation and at the request of one party for arbitration, such party shall, pursuant to relevant provisions of the Labor Law of the PRC and within
           the statutory period, file an application for arbitration to the competent labor dispute arbitration committee; in case one party objects to the
           arbitration award, such party may lodge an action with the competent people’s court.

Article 45 No termination, cancellation and invalidation of this Agreement concluded between Party A and Party B shall affect the validity of this Agreement
           to such provisions as trade secrets, intellectual property right, etc.


            Chapter 8 Supplementary Provisions


Article 46 Anything not covered in this Agreement shall be dealt with in the supplementary agreement, subordinated agreement otherwise entered into between
           Party A and Party B. The supplemental agreement, subordinated agreement and exhibits hereto shall have the same legal effect as this Agreement.

Article 47 Should anything not covered in this Agreement contradict relevant provisions of any country or region where parties hereto are domiciled, the
           relevant provisions thereof shall prevail.

Article 48 This Agreement shall be made in two counterparts, with each party holding one counterpart, all of which shall have the same legal effect. This
           Agreement shall become effective upon the signature and seal of Party A and its representative and the signature of Party B.

Article 49 No employee shall, within one year (two years for vice president or person at a higher position) after his or her termination of employment with the
           Company, seek, solicit, cause, allow or provide assistance or contact information for any other person in respect of the same, cause or attempt to
           make any employee to terminate his employment relationship with the Company, nor become employed with any competitor of the Company or
           Party B’s own company.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
Party A : Hurray! Times Communications (Beijing) Ltd. (Seal)

Legal Representative and authorized representative: (signature)

Date of Execution: September 1, 2006

Party B: (signature)

Date of Execution: September 1, 2006 :




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                   Powered by Morningstar® Document Research℠
Exhibit A:


                                                                     Letter of Declaration

      I am                            (name) working in the              (department), hereby declare that:

       I have terminated or have no employment agreement with any other employer when I become a formal employee of Hurray! Times Communications
(Beijing) Ltd. on             . In case of any labor dispute arising therefrom, I will assume any and all responsibility and liability resulting therefrom.

      My personnel record is currently kept at               , and my social insurance record is currently kept at       , as my personnel record and social
insurance record can not be transferred to the agency designated by Hurray! Times Communications (Beijing) Ltd. due to my personal reason, after consultation
with Hurray! Times Communications (Beijing) Ltd., we agree as follows: I will pay my insurance premium at my original agency, while Hurray! Times
Communications (Beijing) Ltd. shall add its share of my premium under the social insurance scheme to my salary as compensation on a monthly basis, such
compensation is already included in the remuneration package as set forth in the employment agreement between Hurray! Times Communications (Beijing) Ltd.
and me. (this paragraph shall be deleted in case the said personnel record has already been transferred to the Company.)

      Declarer (signature and seal)     date:




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Exhibit B:


                                                          Modifications to Employment Agreement

The Parties hereby agree to make the following changes to this Agreement on the basis of equality, willingness, and mutual consent through consultation:


Party A (signature and seal)                                                         Party B (signature and seal)


Legal Representative or
authorized representative (signature and seal)


Date:                                                                                Date:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                       Powered by Morningstar® Document Research℠
Exhibit C:


                                                           Employment Agreement Renewal Form

      This renewal agreement shall be an agreement of a        term, commencing from              (date) and ending on             (date). The parties
hereto shall continue to perform the original Agreement.


Party A (signature and seal)                                                    Party B (signature and seal)


Legal Representative or
authorized representative (signature and seal)


Date:                                                                           Date:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                  Powered by Morningstar® Document Research℠
                                                                    Confidentiality Agreement

Party A: Hurray! Times Communications (Beijing) Ltd.
Legal Representative: Xiang Songzuo

Party B: Wang Jiang
ID Card No.: 610113197301177612
(Party A and Party B are hereinafter referred to individually as a “Party” and collectively as “Parties”.)

      WHEREAS:


             1.      The Parties have entered into a legally binding Employment Agreement, pursuant to which Party B shall comply with and accept all the
                     confidentiality rules adopted by Party A;


             2.      Party A has performed its obligations in strict compliance with the Employment Agreement, to which Party B has never raised any
                     objection;


             3.      Party B will have unavoidable access to certain intellectual property, trade secret, technological achievements, etc. in connection with the
                     business operations of Party A while working for Party A in the capacity of Party A’s employee;


             4.      In signing this Confidentiality Agreement (“Agreement”), Party B has made a written notice to Party A of all the patented technologies,
                     authorship rights and trade secrets already in the possession of Party B and the intellectual property rights, trade secrets or technological
                     achievements which Party B has undertaken to keep in confidentiality to any third party under laws or contracts;


             5.      Each of the Parties fully understands the rights and obligations under this Agreement, and understands accurately the legal meaning of all
                     the terms hereunder.




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      In order to protect Party A’s intellectual property rights and legitimate interests and define Party B’s responsibilities to keep in confidence the intellectual
property rights and trade secrets of Party A, the Parties have entered into this Agreement for mutual observance on the basis of equality, willingness, mutual
consent through consultation and in accordance with the relevant laws and regulations of the State and the particularities of the industry.


                                                                        Chapter 1 Definitions


Section 1Intellectual Property Rights
      For the purpose of this Agreement, the Intellectual Property Rights include but are not limited to the following, of which Party A has the ownership:


      1.     Patented technologies such as inventions approved by the State;


      2.     New technologies or intermediate achievements in the process of research and development that may become patents such as inventions;


      3.     Significant scientific and technological research achievements of which there is a lack or which have already existed but are required to be kept in
             confidence in any other country;


      4.     Special know-how and traditional techniques, including the design drawings and manufacturing techniques of products, etc.;


      5.     Confidential data or parameters available to Party B, including system configuration, system security and users with access, etc.


      6.     Proprietary rights to registered trademarks, shop names, and other marks;


      7.     Technological information, including but not limited to floppy disk, thesis, report, brochure, photographic picture, design drawing, technology
             document, achievement authentication, etc;


      8.     Proprietary technology or any information that is a trade secret of Party A;


      9.     Proprietary rights of Party A to the intellectual products of Party B, etc.



Section 2Trade Secrets
       The term “Trade Secrets” used in this Agreement refer to technology information, business information, management information, and legal information,
etc. of commercial value and outside of the public domain in accordance with the laws and regulations or owned, used, controlled or provided by Party A,
including but not limited to:
      1. Technology information




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
       Including but not limited to designs, programs, product formulas, manufacturing techniques, manufacturing methods, such as any existing product design,
data, target programs, brochures, files, development plans, computer software and its algorithm and design information, etc. or any such information in the
process of development or contemplation by Party A.

      2. Business information

     Including but not limited to client lists, supply information, production and marketing strategies, minimum bids and contents of tendering and bidding
documents, etc. such as Party A’s business plans, production bases, experiment bases, lists of engineers, selling methods, suppliers, agents and client lists, special
demands of clients, unopened service networks and Party A’s existing or proposed business project plans, etc.

      3. Management information

      Including but not limited to Party A’s work plans, organization structure, management pattern, management technique, personnel, financial affairs, salary
and benefits, property and equipment, training materials, etc., any existing or proposed internal business regulations, work process, management system and
documents about management policies of Party A.

      4. Legal information

      Including but not limited to: Party A’s projects, negotiations about contracts and contract performance, patent application, licensing and transfer,
trademark registration and application, the major contents of the contracts to be performed, or under performance by Party A or already performed but with latent
disputes, foreign contracts of security, overseas investment, property right dispute, pending or predictable actions, arbitrations and administrative punishments,
etc.

      5. Any other information relating to Party A or its clients that are required to be kept in confidence by Party A.

       Including but not limited to the information received directly or indirectly by Party B from Party A, Party A’s employee and any client that was, is or will
be in any business relationship with Party A.



Section 3   Technological Development Achievement for Hire
      The term “Technological Development Achievement for Hire” used in this Agreement shall mean all the research and development achievements
completed or contemplated by Party B in the performance of his duties during the term of his employment with Party A by utilizing the technologies, equipment
and resources of Party A, including mainly:


                1.        Project design and technology archives of products;




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              2.        Computer software and its algorithm, design plan, etc.


                                                        Chapter 2 Ownership of Intellectual Property


Section 4     Party B is obliged to notify Party A in writing of the details of such inventions, new works, creation, design, copyright works (including
              computer software, database), improvement, discovery, process, know-how and any other information or event generating any Intellectual
              Property as a result of the research, manufacturing, creation, design by Party B or otherwise received by Party B, individually or together with
              any other person during the term of Party B’s employment with Party A.


Section 5     Party A has the ownership of all the inventions obtained by Party B due to his capacity as Party A’s employee during the term of Party B’s
              employment with Party A, including but not limited to rights under domestic and overseas patent applications, and titles to computer software,
              trademark and logo design, and know-how. Party A has the first use right to the non employment-related inventions and works for hire of Party
              B, including but not limited to the right of priority to licensing and right to use for free, etc. Party B consents that he shall upon Party A’s request
              take any legal means as Party A deems necessary to obtain and protect all the foregoing achievements and Intellectual Property.


Section 6     Party A shall have the ownership of the Intellectual Property Rights to the following research and development achievements obtained by Party
              B outside of his employment relationship with Party A:


              1.        Such achievements that are competitive with the business of Party A;


              2.        Such achievements that are obtained through preempting or utilizing the achievements of research or development of Party A;


              3.        Such achievements that are related in nature, contents and form with Party B’s work for Party A.


Section 7     Any newly hired employee may transfer to Party A the Intellectual Property Right to the achievement that he brings with himself if with consent
              from Party A, and Party A shall pay a reasonable price therefor, provided that Party B shall warrant in writing that he shall be entitled to the
              Intellectual Property Right to such achievement, and, if Party B is not




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              fully entitled to the Intellectual Property Right to such achievement, Party B shall return the price received for the transfer and bear all the losses
              suffered by Party A as a result thereof.


Section 8     If Party B is an Officer (i.e. employee at the rank of manager or above, including key technical staff, the same hereinafter) of Party A, Party A
              shall have the ownership of all the research and development achievements in connection with Party B’s jobs or tasks assigned by Party A
              obtained by Party B during the term of his employment with Party A, and within two years after he has left, resigned from, been removed, or has
              been dismissed by Party A or otherwise left Party A. Without Party A’s consent, Party B shall not further improve or enhance the technological
              achievements obtained during his employment with Party A and owned by Party A. Party A shall have the first use right to any achievements
              resulting therefrom, including the right of priority to licensing and to use for free, etc.


Section 9     If Party B is an Ordinary Employee (including managerial staff, technical staff, salesmen, etc., the same hereinafter) of Party A, Party A
              shall have the ownership of all the research and development achievements in connection with Party B’s jobs or tasks assigned by Party A
              obtained by Party B during the term of his employment with Party A, and within one year after he has left, resigned from, been removed,
              or has been dismissed by Party A or otherwise left Party A. Without Party A’s consent, Party B shall not further improve or enhance the
              technological achievements obtained during his employment with Party A and owned by Party A. Party A shall have the first use right to
              any achievements resulting therefrom, including the right of priority to licensing and to use for free, etc.


Section 10    Party B shall not infringe upon any Intellectual Property Rights of Party A during the term of his employment with Party A, and after he has left,
              resigned from, or has been removed or dismissed by Party A or otherwise left Party A.




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                                                             Chapter 3 Protection of Trade Secrets


Section 11    During the term of his employment with Party A, Party B shall take seriously and scrupulously comply with all the confidentiality policies
              adopted by Party A, and perform the confidentiality responsibilities appropriate to his position. Party B shall not use or disclose all the Trade
              Secrets of Party A unless authorized by Party A in writing.


Section 12    Party B shall use the Trade Secrets of Party A that Party B has access to or uses due to his work during the term of his employment with Party A
              to the extent and under the procedure as required by Party A. Without Party A’s written consent, Party B shall not take the relevant materials out
              of the offices of Party A, or duplicate, relocate or distribute the materials containing Party A’s Trade Secrets, nor shall Party B disclose Party A’s
              Trade Secrets in conferences such as academic conference and technology authentication meeting, and in the media such as newspaper,
              magazines, or information networks.


Section 13    Party B shall not use Party A’s Trade Secrets to work for Party A’s competitor or disclose such Trade Secrets to any third party by any means.
              During the term of his employment with Party A and after resignation for any reason, Party B shall not take advantage of Party A’s Trade Secrets
              to seek profits for his own, or for Party A’s competitors or any third party. Party A shall not directly or indirectly use, distribute, transmit, publish
              or issue Party B’s Trade Secrets for any other purpose or even without any purpose.


Section 14    Party B shall return to Party A all the company files, records, notes, data, program lists, floppy disks, and information in any other media
              available to him within 30 days before he leaves his post for the purpose of work or any other reason. A special handover shall be conducted for
              the information on software development and such information shall not be duplicated or retained by Party B. All the business information shall
              be returned to Party A, whether containing or related to Party A’s information, and whether obtained by Party B through his own collection and
              processing or provided to Party B by any other person. Otherwise, in addition to the right of recourse retained by Party A, Party B shall
              indemnify for any losses thereby incurred to Party A.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
Section 15    If Party B’s employment relationship with Party A has terminated, Party B shall not take advantage of Party A’s Trade Secrets to do new
              research and development without the consent from Party A until such Trade Secrets have been released into the public domain of the industry.


Section 16    If it is found that Party A’s Trade Secrets has been infringed upon or illegally used or divulged, Party B has the obligation to assist Party A in
              taking actions to prevent further spread of such infringement or illegal use or the further transmission of such Trade Secrets.


Section 17    Party B undertakes to abide by the code of ethics and the generally accepted standards in the business community. Party B consents to and
              complies with the requirements and agreements in respect of non-competition. Party B undertakes that, without Party A’s consent, he shall in no
              case take up any related position in any company, commercial institution or organization that competes with Party A, including but not limited to
              such posts as may have adverse effects on the operations, technologies, management and financial affairs of Party A, nor provide to such
              company, commercial institution or organization and any third party with information or data regarding Party A’s Trade Secrets, or directly or
              indirectly conduct any business in competition with Party A, within one year after this Agreement expires, terminates or is cancelled.


Section 18    The company, commercial institution or organization that competes with Party A shall refer to such company, commercial institution or
              organization in any of the following circumstances or deemed to be in competition with Party A under laws and regulations:


              (1)       Operates in the same or similar field of business or technology as Party A;


              (2)       Operates in the same or similar business scope as Party A;


              (3)       Provides the same or similar products or services to the same customer base as Party A;


              (4)       Any other circumstances as provided for in laws and regulations.



Section 19    Party A consents to pay an amount equal to 20% of Party B’s salary as the compensation for Party B to perform his




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
              confidentiality and non-compete obligation in connection with Party A’s Trade Secrets. Such compensation has been included in the
              compensation package as set forth in the Employment Agreement entered into by and between the Parties.


Section 20    Party B undertakes that during his employment with Party A, he shall not use any trade secret of any other person, nor shall he do any act of
              infringement of any other person’s trade secrets. In the event that Party B’s breach of such undertakings has resulted in any action against Party
              A, Party B shall be responsible for any loss, costs and expenses incurred by Party A in its response to such action and shall assume any related
              legal responsibility.


                                                                Chapter 4 Default Liabilities


Section 21    Party A shall indemnify Party B for any loss suffered by Party B by reason of Party A’s breach of any provision of this Agreement.


Section 22    In the event that Party B breaches any provision of this Agreement, or Party B proposes to early terminate or cancel his employment relationship
              with Party A or this Agreement, or causes any damage to Party A in any other manner other than approved by Party A, Party B shall be deemed
              to be in breach of this Agreement, and shall compensate Party A in the amount equal to twice of the monthly salary of Party B. If such amount is
              insufficient to compensate any and all the losses suffered by Party as a result thereof, Party B shall indemnify Party A for all such losses.


Section 23    In the event that Party A suffers any significant loss by reason of Party B’s material breach of this Agreement, Party A may petition to relevant
              administrative and judicial authorities for investigation of Party B’s criminal or economic liabilities.


Section 24    In the event that Party B breaches any provision hereof, Party B shall continue performing this Agreement in addition to the foregoing liabilities.




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                                                      Chapter 5 Dispute Resolution and Miscellaneous


Section 25    This Agreement shall be construed and interpreted according to the original intents and purpose of this Agreement. In case any dispute arises out
              of anything herein or the performance of this Agreement, the Parties shall try to resolve such dispute through consultations. In case such
              consultations fail, the Parties agree to deal with such dispute in accordance with the relevant provisions of the Employment Agreement or submit
              such dispute to the labor dispute arbitration body as specified in the Employment Agreement for arbitration or bring a lawsuit before the People’s
              Court.


Section 26    The invalidity or termination of the employment relationship between the Parties or this Agreement shall not affect the validity of provisions for
              interpretation of this Agreement, confidentiality, non-competition and dispute resolution in this Agreement.


Section 27    In case this Agreement conflicts with any newly issued law or regulations during the performance hereof, the Parties shall amend relevant
              provisions in the light of such law or regulations, provided that such amendments here to shall not affect the validity of the balance of this
              Agreement.


Section 28    No failure of either Party in executing its rights or taking any acts against any default liability of the other Party shall be deemed to be a waiver
              of such rights or such default liability, save for any right not executed by one Party within two years from the date it is or shall be aware of such
              right (the “one year” requirement may be inconsistent with the period as required in laws. Any dispute arising from such inconsistency shall be
              governed by the provisions of laws, other than this provision). No waiver by either Party of any right against the other Party or of any default of
              the other Party shall be deemed the waiver of any other right or any other default of the other Party.


Section 29    This Agreement is attached as an exhibit to the Employment Agreement executed by the Parties, and shall be an integral part of the Employment
              Agreement.




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Section 30      Anything not covered in this Agreement shall be dealt with in a supplementary agreement executed by the Parties through consultations. Neither
                Party shall modify this Agreement without the written consent by both Parties.


Section 31      This Agreement is made in two originals, with each Party holding one thereof, both of which shall be equally authentic.


Section 32      This Agreement shall take effect upon signature and seal by the Parties.

(The remainder of this page intentionally left blank)




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Party A: Hurray! Times Communications (Beijing) Ltd. (Seal)
Legal representative or authorized representative: (Signature)
Date: September 1, 2006

Party B: (Signature)
Date: September 1, 2006




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                  Powered by Morningstar® Document Research℠
                                                                                                                                                       Exhibit 4.118

                                               Cooperation Agreement Between China Mobile Communications
                                                 Group Corporation and Monternet WAP Service Provider

Party A: China Mobile Communications Group Corporation (“China Mobile”)
Party B: Beijing Enterprise Network 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 this agreement 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 permission 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 the 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 the Monternet WAP main website, and be responsible to address any technical breakdown caused by
Party A, so as to ensure the smooth operation of application services.




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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 the
Monternet WAP main website.

8. Party A shall be responsible for 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 the 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 the 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 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 the main Monternet WAP website. Without the prior written consent of Party
A, Party B shall not use the name “China Mobile” or “Monternet” to conduct promotional activity unrelated to the Monternet WAP business in the 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 of not less than 98%;




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
      b.     networking period (time for round-trip from WTBS Ping SP Server) not exceeding 0.1 second;


      c.     SP response time (from the issuance of a business request from WTBS to the receipt of such 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 are in line with applicable State policies and regulations, and do not infringe upon consumers’ interests, intellectual property
rights or relevant interests 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 to the Monternet WAP main website to undertake registration or verification, or to require the users to
undertake prior registration outside of the Monternet WAP main website.

9. Party B shall ensure the contents it provides are 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 the 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 websites 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 the Monternet WAP main website (http://wap.monternet.com) at its own WAP website, and recommend
the Monternet application services to users.




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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 operation permit (an Operational Internet Information Service License) approved and issued by the Ministry of Information Industry
of People’s Republic of China (MII). The scope of Party B’s services shall be in compliance with the term and geographic coverage set forth in Party B’s
operation permit 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 sole 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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
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 receive 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 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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
VI.   Revenue Sharing and Fee Settlement
1. Party A and Party B 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, but not applicable 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 the Monternet WAP main website, of which 15% shall
be Party A’s revenue as information fee, and the remaining 85% be paid to Party B.

6. Prior to the 20th day of each month, Party A shall notify Party B of the information fee payable to Party B in the preceding month, and Party B shall issue an
invoice in the category of service fee to Party A.

7. Within 5 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.

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: China Construction Bank

Account No. 2610026225



VII. Force Majeure
1. If an event of Force Majeure occurs, (including 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,




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
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.



VIII. 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.



IX.   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.



X.    Term of this Agreement
1. This Agreement shall become effective as of the date on January 1, 2006, and expires on September 31, 2006.

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 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.



XI.   Miscellaneous
1. As the attachment to this Agreement, Monternet SP Cooperation Administrative Measures, WAP Handbook has the same legal effect as this Agreement.




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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: Xiangdong LU

Date: January 1, 2006

Party B: Beijing Enterprise Network Technology Co., Ltd. (seal)
Representative: Xunguang Xu

Date: January 1, 2006




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                                                                                                                                    Exhibit 4.119

                                                  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 Hutong Wuxian Technology Co., Ltd.

                                                                  Date: April 13, 2006




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                                                  CONTENTS


PREAMBLE                                                                                             3

CHAPTER 1 RECITALS                                                                                   3

CHAPTER 2 DEFINITIONS                                                                                4

CHAPTER 3 WAYS OF COOPERATION                                                                        5

CHAPTER 4 RIGHTS AND OBLIGATIONS OF PARTIES                                                          6

CHAPTER 5 WORK INTERFACE AND MAINTENANCE                                                            10

CHAPTER 6 COOPERATIVE SERVICES                                                                      12

CHAPTER 7 BUSINESS OPERATION                                                                        14

CHAPTER 8 CREDIT RATING SYSTEM                                                                      17

CHAPTER 9 INTELLECTUAL PROPERTY                                                                     19

CHAPTER 10 BILLING, SETTLEMENT AND COLLECTION                                                       20

CHAPTER 11 MODIFICATION OR TERMINATION OF AGREEMENT                                                 23

CHAPTER 12 CONFIDENTIALITY                                                                          25

CHAPTER 13 OTHER LIABILITIES FOR BREACH                                                             26

CHAPTER 14 FORCE MAJEURE                                                                            27

CHAPTER 15 GOVERNING LAW AND DISPUTE RESOLUTION                                                     27

CHAPTER 16 MISCELLANEOUS                                                                            27

ANNEX I DEFINITIONS                                                                                 30

ANNEX II LIST OF ACTS IN BREACH                                                                     34

ANNEX III CREDIT RATING                                                                             38

ANNEX IV SCHEDULE OF PROFIT DISTRIBUTION PERCENTAGES                                                40




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                                                                         PREAMBLE


1.   This Cooperation Agreement (hereinafter referred to as this “Agreement”) is entered into as of April 13, 2006 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 Hutong Wuxian Technology 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 3/F, China Resources Building, 8 Jianguomen North Street, Dongcheng District, Beijing, PRC. Its legal representative is
     Huang Xinzi.


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. Unless otherwise explicitly agreed in writing, the Parties shall be governed by the applicable
     provisions hereof with respect to the Value-added Services carried out on a cooperative basis.


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.   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.




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2.    Party B is a service provider (SP) content provider (CP) that lawfully provides Mobile Value-added Services. It is qualified to operate the cooperation
      services hereunder and has duly obtained the following certificates:


      a.     Business License for Incorporated Enterprise No. 1101082682003;


      b.     Operation License for Cross-region Telecom VAS No. B2-20040121;


      c.     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


      d.     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.


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.


4.    Party B has duly executed the Information Security Guarantee 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.


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.




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                                                       CHAPTER 3 WAYS OF COOPERATION


3.1        Party A provides to Party B the network and user resources for a charge and, by using its own client service, billing and Service Supporting
           Systems, provides to Party B the access service, client service, billing and fee collection service for a charge.


3.2        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.


3.3        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 (which can be modified by Party B in its discretion). 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 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. Party A shall be responsible for the normal operation of the SP Service System. 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.


3.4        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.


3.5        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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3.6        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.


3.7        Party B agrees to strictly observe in its operation of Mobile Value-added Services the “business standards” and the China Unicom Mobile
           Value-added Service Cooperation Management Measures stipulated by Party A, and management measures, service quality standards, customer
           service standards and other relevant documentation that Party A has stipulated or will stipulate from time to time. Party A will inform Party B in an
           appropriate manner the aforesaid business standards, management measures, service quality standards and/or service standards prior to the formal
           issuance thereof, and will release such business standards, management measures, service quality standards and/or service standards in the SP
           Service System for observance by Party B.


                                              CHAPTER 4        RIGHTS AND OBLIGATIONS OF PARTIES


4.1        By using Party A’s Mobile Communication Network and Value-added Service Platform, the Parties provide the Subscribers with services and/or
           contents in connection with the Mobile Value-added Services. 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, and Party A will be responsible
           for billing and fee collection on behalf of Party B.


4.2        “Organization and provision of contents” refers to the provision of specific services and/or contents of the customized Mobile Value-added Services.


4.2.1      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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4.2.2      Party B shall be responsible for resolving any disputes arising in connection with the security and lawfulness of the contents and services that it
           provides.


4.2.3      Party B shall ensure that the services that it provided have no material hidden defect per se, or that will be exploited by individual Subscriber or any
           third party, to cause damage to Party A’s Mobile Communication Network, Value-added Service Platform or the interests of other Subscribers.


4.3        The term “product development” referred to in Clause 4.1 hereof shall mean to process the characters, voice, picture, video, or all of them, by means
           of lawful technological means or scientific methods, to change them into the Value-added Service products which can be provided to Subscribers
           through the Value-added Service Platform.


4.4        The term “establishment and maintenance of the Value-added Service Platform” referred to in Clause 4.1 hereof shall mean the provision of the
           software and hardware facilitates for the implementation of Value-added Services hereunder and the provision of daily maintenance and debugging
           as required for the normal operation of such software and hardware facilities. The working interface and maintenance responsibilities with respect to
           the provision of the Value-added Service by the Parties are set forth in Chapter 5 herein.


4.5        “Marketing” referred to in Clause 4.1 hereof shall mean the organization and implementation of marketing activities such as marketing, planning,
           etc. with respect to the Value-added Service.


4.5.1      If necessary, Party A and Party B may separately or jointly promote in various ways the Value-added Services, and will enter into a separate
           agreement with respect to cooperation in promotion of the Value-added Services.


4.5.2      The Parties may negotiate for the use of the name, trademark, service mark or logo of Party A or any service in the Value-added Services jointly
           provided by the Parties, provided however, without Party A’s request or confirmation, Party B shall not use Party A’s name, trademark, service
           mark or logo to the effect that Subscribers misunderstand such content provided by Party B only is provided by Party A, or jointly provided by the
           Parties.


4.5.3      Party B shall not use the name, trademark, service mark, logo and relative materials of Party A in the marketing activities with respect to the
           Value-added Services conducted by Party B separately unless as required by Party A or with the written consent from Party A. Party B shall use the
           name, trademark, service mark or logo of Party A in strict compliance with the China Unicom Visual Identity Control Manual and other relevant
           rules of Party A. Meanwhile, Party B shall ensure that no infringement upon Party A’s title to its trademark or other property shall be allowed.


4.5.4      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.




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4.5.5      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. Without Party A’s
           prior consent in writing, Party B shall not request Subscribers to accept such Customization and collect corresponding fees from Subscribers in any
           way to the effect that “Subscribers’ acquiescence will be deemed as acceptance” or “Customization can only be cancelled by making a phone call or
           sending a short message, otherwise it shall be deemed as accepted”, nor 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.


4.5.6      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. With the consent from Party A, Party B may provide on-demand services embedded in mobile
           terminals or UTK/STK, OTA cards, and shall explicitly describe the details, methods of provision, rates and withdrawal from subscription in
           relation thereto, for which Party B shall not collect the fees directly from the Subscribers.


4.6        “Client service” referred to in Clause 4.1 hereof shall mean the provision of services as necessary for the Subscribers to use the Value-added service
           on a normal and reasonable basis, including but not limited to services before, during and after the use of Value-added Services by the Subscribers
           such as responding to service inquiries, and handling complaints. 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 but not limited to the following obligations:


           (1)     The Parties shall establish 7×24 hours customer service hotline.


           (2)     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.




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           (3)     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.


           (4)     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.


           (5)     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.


           (6)     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.


           (7)     Party B shall make detailed description of services that it intends to provide to the Subscribers in its application for the activation of services
                   according to the type of services under cooperation.


           (8)     Party B shall provide Party A’s customer service staff with the network interface and authorization for service inquiry and withdrawal.


           (9)     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.


4.7        The “billing and fee collection on behalf of Party B” as referred to in Clause 4.1 hereof shall be conducted in accordance with Chapter 10 “Billing,
           Settlement and Collection” hereof.




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4.8        In providing the Value-added Services hereunder, the Parties shall take its own responsibilities of establishment and maintenance in accordance with
           Chapter 5 “Work Interface and Maintenance” hereof.


4.9        Party B may entrust Party A with hosting for the purpose of cooperation in developing business, and the specific matters such as rights and
           obligations of the Parties, and costs and expenses in relation thereto shall be separately agreed upon by the Parties.


                                              CHAPTER 5 WORK INTERFACE AND MAINTENANCE


5.1        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


5.2        Party A’s Maintenance Responsibilities


5.2.1      Party A shall contribute the software and hardware systems as necessary for its Mobile Communication Network and Value-added Service Platform.


5.2.2      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.




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5.2.3      Party A shall be responsible for providing Party B with its standards for technology protocol and interface with respect to the Value-added Service.


5.2.4      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.


5.2.5      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.


5.2.6      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.


5.2.7      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.


5.2.8      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.


5.2.9      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.


5.3        Party B’s Maintenance Responsibilities


5.3.1      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.


5.3.2      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.


5.3.3      Party B shall ensure that no debugging, activation and maintenance of its system shall be conducted at Party A’s busy




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           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.


5.3.4      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.


5.3.5      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.


5.3.6      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.


5.3.7      Party B shall provide 24-hour uninterrupted System Maintenance.


                                                       CHAPTER 6        COOPERATIVE SERVICES


6.1        The Mobile Value-added Services of China Unicom referred to hereunder 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 Platform. The Mobile Value-added Services of China Unicom, with “UNI” as the single brand name, includes seven
           broad categories, 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.


6.2        If Party B desires to conduct the businesses as set forth in Clause 6.1 jointly with Party A, Party B shall make application to Party A through the SP
           Service System. Activation shall be made upon satisfaction of conditions to activation.


6.3        In conducting the Value-added Services on a joint basis, Party B shall pay Party A the Resource Use Charge in a certain amount with respect to the
           occupancy of Party A’s access numbers and/or E1 Port resources, and administration costs in relation thereto:


           (1)      The Resource Use Charge is RMB5000 per month for Uni-Info; and RMB5000/E1 port/month for the Uni-Voice 10159;




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           (2)      The Resource Use Charge will be calculated by month, and collected annually on an advance basis;


           (3)      In case of activation after March 31, 2006, Party B shall make payment of Resource Use Charge from the next calendar month after the
                    date of activation through March 31, 2007 in a lump sum prior to the date of activation; in case of activation of Uni-Info or Uni-Voice
                    prior to March 31, 2006, Party B shall make payment of Resource Use Charge prior to March 31, 2006; any delay in such payment shall be
                    deemed to be objection to continue cooperation with Party A in such Value-added Service, upon which the cooperation in such
                    Value-added Service will be terminated; During the term hereof, given that the Parties terminate the cooperation or Party B ceases to
                    conduct certain service for any reason, the remaining Resource Use Charge (calculated according to the number of full calendar months
                    remaining) paid by Party B in advance shall be refunded without interest.


6.4        The Parties will collect from the Subscribers the Communication Fees and Information Service Fees with respect to the Value-added Services
           provided jointly by the Parties. The collection methods, profit distribution percentage, billing, settlement and collection on an agency basis in
           connection with Communication Fees and Information Service Fees are set out in Chapter 10 and Annex IV to this Agreement.


6.5        The Parties shall make advance compensation with respect to the complaints from Subscribers in strict compliance with the provisions of the
           Ministry of Information Industry and the competent authorities, that is, refunding the amount involved in the complaint or dispute raised by the
           Subscribers in advance of ascertainment of whether such complaint falls in the responsibility of Party A or Party B. Such amount shall be deducted
           from the Information Service Fees after the deduction of 8% allowance for bad account when the Parties settle the Information Service Fees. The
           remaining Information Service Fees (if without other amount deductible hereunder) shall serve as the basis for profit distribution between the Parties
           and be distributed in accordance with the terms hereof. If Such complaint or dispute raised by the Subscribers arise from Party B’s activities that
           breach this Agreement, Party B shall take its responsibilities with respect to the breach.


6.6        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. 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.




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6.7        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.


6.8        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.


6.9        Unless otherwise agreed by the Parties, Party B shall accept any change in the business pattern proposed by Party A for the purpose of business
           development, and shall assist Party A in effecting such change.


6.10       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. 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. 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.


                                                         CHAPTER 7        BUSINESS OPERATION


7.1        In connection with the Value-added Services jointly conducted by the Parties, in addition to the payment of Resource Use Charge under Clause 6.3
           hereof, 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.


7.2        The time for formal activation of service shall be subject to the time when Party A formally activates billing of such service.


7.3        After the end of the three-month Business Support Period, Party A will do a semiannual assessment of the revenue or volume of the businesses for
           the current half year period, and will withdraw from such service as in lower ranking or in a business volume less than required. Such assessment
           shall be done within the first month of the half year period n+1 on




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
             each of Service Categories for the half year period n. Withdraw Mechanism shall be applied to such Service Category as having been assessed to
             meet the conditions of withdrawal below, that is, Party A will adopt the Business Closedown procedure for such Service Category at 24:00:00 of the
             last day of the half year period n+1, and will not accept the application for such Service Category from Party B within the next six months. The
             assessment criteria and conditions to withdrawal are as follows:
                (1) In connection with Uni-Wap, Uni-Mail, Uni-Magic, Uni-Tone, and Uni-Video, Withdrawal Mechanism shall be applied to such SP ranking at
                the last 10% in terms of the proceeds of Information Service Fees;
                (2) In connection with Uni-Info, Withdrawal Mechanism shall be applied to SP which has handled less than 300,000 messages effectively
                originated (MO number) each half year (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);
                (3) In connection with Uni-Voice, Withdrawal Mechanism shall be applied to the SP which has handled less than 300,000 minutes of calls
                effectively made (the “effectively” herein shall refer to the use of the relevant service by a normal Subscriber on its own initiative through the
                normal process, which results in a bill).


7.4          The Business Support Period shall be three months, during which SP shall not participate in the above assessment and withdrawal.


7.5          The assessment and withdrawal with respect to Service Categories shall be conducted once every half a year.


7.6          The Parties define the events of default into three classes (Class A, B, C, namely, the minor, major and material defaults) according to the degree of
             severity (specific description of events of default is set forth in Annex II hereto), and each class of default shall receive corresponding sanctions.

       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. 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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
       Class B default: Closedown of the service in breach; 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. 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.

      Class C default: termination of cooperation on the service in breach; 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 collected at 50% of the total 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.


7.7          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.


7.8          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. For Information Service Fee proceeds that has not yet been settled, Chapter 10 shall apply.


7.9          During the term of this Agreement, any act of Party B in breach of the business standards or China Unicom Mobile Value-added Service
             Cooperation Management Measures as mentioned in Clause 3.7 hereof, other than the provisions of this Agreement and the Annexes, shall be
             deemed to be a breach of rules and 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. If there is any discrepancy
             between the provisions of this Agreement and those of the aforesaid standards or measures with respect to any act in breach of rules, the provisions
             of this Agreement shall prevail.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
7.10       Given 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.


7.11       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 8        CREDIT RATING SYSTEM


8.1        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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
8.2        A scoring system for measuring the credit rating shall be adopted as follows:


                                                                                                                                        Policies of Incentives and
             Credit Rating                                Credit Score                               Responses                                 Restrictions
             Excellent                                 Above 90 points                         Development support               Grant appropriate incentives.

                                                                                         Implement standard cooperation
               Good                                 80 points to 89 points
                                                                                                    policies                     N/A

                                                                                                                                 Reduce profit distribution
                                                                                                                                 percentage by 5%, and such 5%
                Fair                                70 points to 79 points                    Increase in credit costs           profit shall be used as additional
                                                                                                                                 costs of client service and
                                                                                                                                 management beyond the budget.

                                                                                                                                 Reduce profit distribution
                                                                                                                                 percentage by 10%, and such 10%
                                                                                                                                 profit shall be used as additional
                                                                                                                                 costs of client service and
               Poor                                 60 points to 69 points                   Development restriction             management beyond the budget;
                                                                                                                                 Suspend the acceptance of
                                                                                                                                 applications for new businesses
                                                                                                                                 and Service Categories;
                                                                                                                                 Suspend revenue settlement.

                                                                                                                                 Terminate cooperation in all
                                                                                                                                 businesses;
            Unqualified                                Below 59 points                      Termination of cooperation
                                                                                                                                 Reserve relevant rights to recover
                                                                                                                                 payments.

Notes:


(1)        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. The details and methods of implementation of development
           support policy shall be stipulated separately by Party A in due course and shall be implemented after notice of the same has been given to Party B.


(2)        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;


(3)        Increase in credit costs shall refer to that due to the lower credit rating of Party B, the Parties shall adjust the profit distribution percentage as
           provided for in Chapter 10 and Annex IV during settlement. The specific adjustments shall be: 5% down from SP’s original profit distribution
           percentage for SP with a credit score ranging from 70 points to 79 points; 10% down from SP’s original profit distribution percentage for SP with a
           credit score ranging from 60 points to 69 points.


(4)        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. The details and methods of implementation of development restriction policy shall be stipulated
           separately by Party A in due course and shall be implemented after notice of the same has been given to Party B.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
(5)        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.


8.3        The basic score for credit rating shall be 80 points; scores may be increased semiannually, but not to exceed 100 points, and may be reduced by
           month.


8.4        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 9         INTELLECTUAL PROPERTY


9.1        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.


9.2        Party B shall be solely responsible to solve all the disputes in connection with the security and lawfulness of the information it provided, and
           undertake the economic losses arising from lawsuit, claims, administrative punishment arising hereof.


9.3        Party A may design, produce and register trademark, service mark or logo for its Mobile Value-added Services, and use such trademark, service
           mark or logo for marketing promotion. If both parties are jointly engaged in such marketing promotions (hereinafter “Joint Promotion”), both parties
           shall agree on details of the Joint Promotion in exhibits with respect to relevant Mobile Value-added Service, or enter into separate cooperation
           agreements concerning the Joint Promotion according to actual needs. The parties hereby agree that, the purpose of Joint Promotion is to better
           operate such Mobile Value-added Service, the Joint Promotion or any activities related thereto shall 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. 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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                            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.


10.2.2     Proceeds of the Information Service Fee shall be distributed between Party A and Party B in certain percentage after deduction of 8% allowance 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, unified customer service 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 Exhibit 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)       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 10 days after the beginning of the second month.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
           (3)      Party B may reconcile accounts with Party A on the Information Service Fee receivables prior to the 15th day of the second month, and
                    shall submit the reconciliation and invoice affixed with its seal to the contact person of Party A no later than the 25th day of the second
                    month.


           (4)      Party A shall make payment to the bank account designed by Party B no later than the 28th day of the third month.


           (5)      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 second
                    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.


           (6)      If Party B fails to submit the reconciliation to Party A within one (1) year, commencing from the 15th day of the second 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.


           (7)      During the settlement process, Party B shall at the request of Party A to submit formal invoice to Party A.


10.2.6     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 5%, the billing shall be based on Party A’s data; if the discrepancy is more than 5%, 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.


10.2.7     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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
10.2.8     If after reconciliation the amount of the Settled Information Service is negative, Party B shall make up the amount to Party A, the cycle and
           procedure for Party B’s payment shall be the same as Party A’s settlement cycle and settlement procedure hereunder. After payment, Party B shall
           promptly obtain formal invoices from Party A.


10.2.9     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.


10.2.10    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 10.2.9 hereof.


10.2.11    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.


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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
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, and Party A cannot prove that the amount to be collected is
           correct at the time of such dispute, Party A shall only collect the portion of fees other than that is under dispute, and timely notify Party B of the
           case. Thereafter, Party B shall be responsible to settle the dispute with Subscribers.


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         MODIFICATION OR TERMINATION OF AGREEMENT


11.1       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.


11.2       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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
11.3       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.


11.4       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.


11.5       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.


11.6       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.


11.7       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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
11.8       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.


                                                            CHAPTER 12         CONFIDENTIALITY


12.1       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.


12.2       During the term of this Agreement and five years thereafter, neither Party shall disclose, reveal or provide any Confidential Information to any third
           party.


12.3       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.


12.4       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.


12.5       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.


12.6       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;




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
           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;


           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.


12.7       Both Parties shall keep the content of this Agreement in strict confidence.


12.8       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 13         OTHER LIABILITIES FOR BREACH


13.1       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.


13.2       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.


13.3       In addition to liabilities for breach provided in this chapter, each Party hereto shall also be held liable for any breach resulting from the application
           of the Withdrawal Mechanism and/or business management rules.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
                                                            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.


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




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
           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 April 1, 2006, and expire on March 31, 2007, 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.


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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
Party A: China United Telecommunications Corporation

Legal representative/Authorized representative:
Date of signature: April 13, 2006

Party B: Beijing Hutong Wuxian Technology Co., Ltd.

Legal representative/Authorized representative:
Date of signature: April 13, 2006




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007        Powered by Morningstar® Document Research℠
Annex I Definitions
Unless otherwise stated in this Agreement or required in the context, the following terms shall have meanings as below:
1. “SP/ CP”
      “CP”, is the abbreviation for “Content Provider”. For the purpose of this Agreement, “CP” shall only refer to the provider of information sources for the
services.

      “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/CP” collectively, or “SP” independently 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);




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
      (6)    Uni-Video: High quality video and audio services via stream media technology.

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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
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.

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




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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. “Percentage of Compensation for Complaints”, means the percentage of compensation in connection with complaints as to the proceeds of information
service fee in RMB100,000 (100% of information service fee).

35. “Ratio of Compensation to Income”, means the percentage of compensation in connection with complaints as to the proceeds of information service fee
(100% of information service fee).




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
Annex II List of Acts in Breach


Item    Acts in Breach                                                                                                                                         Class
1       After the service is available on line, arbitrarily adjust the explanations or content of services declared by itself or required by the norms,          A
        which results in a deviation from the content approved by Party A

2       Name of actual service provider is not the same as that identified (and approved by Party A) in the service explanations or introductions                A
        submitted by Party B in its service application

3       Uni-Info service: the contents of any short message sent in the customized service or delivery-on-demand service charged per message is not              A
        consistent with the contents of such services declared by Party B, or there is any short message containing the contents of other services, or
        containing the contents of promotions of other services

4       Uni-Voice service: fail to explicitly notify the Subscriber of any of the following items within the first 15 seconds after the Subscriber is            A
        connected: the name of Party B, the name of the service and billing rate

5       Due to service design or system problems on the part of Party B, services cannot be provided to the Subscribers or the customization is                  A
        cancelled

6       In the promotion of services: fail to explicitly notify Subscribers in proper way of any of the following items: the contents of service, the rate       A
        of Information Service Fee

7       Promotions or marketing contain vulgar information or similar information                                                                                A

8       In case Party B promotes services by providing free trial service to Subscribers, Party B fails to notify Subscriber explicitly of the period or         A
        conditions for free trial before Subscribers begin free trail.

9       Without approval by Party A, send PUSH message, group short message, group mail to Subscriber or alter the scope or contents of PUSH                     A

10      Use the service itself, or produce fraudulent data by various means, or make the statistics unable to reflect the true conditions of the market          A
        through a certain method

11      In service promotion: without the consent from Party A, use the name, logo and other related materials of Party A in violation of this                   A
        Agreement

12      In free services: connect the Subscribers to the webpage with charge by using technical methods; or make changes to the normal link of the               A
        services in violation of the logics of services through technical methods




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13      Due to Party B’s technical problems, the Subscribers cannot withdraw as usual from the service for which he/she has subscribed                         A

14      Service suspension for over 24 hours without prior notice to Party A, due to reasons of Party B                                                        A

15      Fail to offer client support service in line with this Agreement and service management procedures, evade or fail to respond to client service         A
        complaints of Party A in the promised time limit

16      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        A
        number cannot be connected or there is no response for a long time; or information indicated by party B to clients is inconsistent with that in
        Party A’s SP service system

17      Clients’ complaints resulting from Party B’s problem, leading to social/economic adverse affect to Party A or Party A’s business                       B

18      Uni-info service: delivery-on-demand service: as to multiple MTs caused by a single MO, charge for messages other than the first MT, in                B
        violation of requirements of the Ministry of Information Industry

19      Uni-Voice service: begin the billing within the first 15 seconds after the Subscriber is connected                                                     B

20      Service names, service explanations, service content or content of service links contain vulgar information                                            B

21      Provide the contents without the authorization of the rights holder, which violates the State regulations concerning intellectual property rights      B

22      Conduct services without approval                                                                                                                      B

23      Uni-Info service: for the delivery-on-demand service, the maximum charge to Subscribers per month or the frequency of message sending                  B
        exceeds the standards as approved by Party A

24      Delivery-on-demand service embedded in the mobile terminals or UTK/STK and OTA card: fail to send a free message specifying the billing                B
        rate to the Subscriber when the Subscriber select such service

25      There is no description of billing rate and instructions to withdraw embedded together with the delivery-on-demand service embedded, or such           B
        description is embedded in an unreasonable way

26      Collect fees from the Subscriber without providing any service                                                                                         B

27      After the service is available online, significantly adjust the contents of service without authorization                                              B

28      Provide collection service for the service or contents of Internet website in violation of the business standards of Party A                           B

29      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      B
        of fee collection, Party B fails to explicitly notify the Subscribers of the billing rate; or Party B begins Customization without receipt of
        confirmation of Customization from the Subscriber




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30      Conduct unfair competition in the marketing process, disrupt market order                                                                                 B

31      Lure the Subscriber into Customization without knowledge or willingness, or there is any fraud including enticing the Subscriber into the                 B
        fee-based service without knowledge or willingness

32      Arbitrarily conduct call transfers or outbound calls                                                                                                      B

33      Due to problems of security mechanism, a third party causes significant malfunction of party A’s service platforms or networks through party              B
        B’s system, affecting services in a part of or the entire network

34      Client complaints resulting from SPs problem, which have been made before the Ministry of Information Industry and filed for investigation,               B
        leading to major media’s adverse report of Party A or its business

35      Without the consent from Party A, make services embedded in mobile terminals together with the producers of such mobile terminals                         C

36      Maliciously send to Unicom service platform the call bills in absence of Customization relations                                                          C

37      Provide fee collection service in respect of illegal services or contents of Internet websites in violation of relevant regulations of the State          C

38      Deduct the fees from the Subscriber without opened account or an unused phone number, or by technical means simulate the Subscribers                      C
        without opened account or an unused phone number in order to effect Customization

39      Illegally obtain benefits from Party A by technical means, or engage in acts for the purpose of illegally obtaining benefits from Party A                 C

40      By using technical means, cheat or force the Subscriber into Customization, or make Customization without authorization, or maliciously                   C
        excessive or incorrect fees from Subscribers

41      Party B maliciously causes significant malfunction of party A’s service platforms or networks, affecting services in a part of or the entire              C
        network, or party B can not show evidence that the problem was caused by a third party

42      Due to Party B’s reason, Party A has been criticized publicly for three times in the aggregate within one year, and for each time, the                    C
        Percentage of Compensation for Complaints is above “10 complaints compensated /RMB100,000 of Information Service Fee proceeds”

43      Due to Party B’s reason, Party A has been criticized publicly for three times in the aggregate within one year and for each time, the Ratio of            C
        Compensation to Income is above 1%

44      Uni-Voice service: Party A has been criticized publicly for three times in the aggregate within one year and the number of complaints from                C
        Subscribers are above 1000 each month

45      Uni-Voice service: more than 3000 complaints from Subscribers each month                                                                                  C




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46       Due to Party B’s reason, the Percentage of Compensation for Complaints are more than or equal to “50 complaints compensated                           C
         /RMB100,000 of Information Service Fee proceeds”

47       Due to Party B’s reason, the Ratio of Compensation to Income is higher than or equal to 2%                                                            C

48       Due to Party B’s reason, the Percentage of Compensation for Complaints rank in the top 5 across the country, and more than 10 provinces are           C
         involved

49       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         C
         been deemed to be responsible for such complaints

50       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           C
         provincial level

51       Lots of Class A acts occurring at the same time, or successively                                                                                      B

52       Lots of Class B acts occurring at the same time, or successively                                                                                      C

53       Engage in any other activities with prejudice to the interests of Party A and/or Subscribers, or provide contents of service with prejudice to      A-C
         the interests of Party A and/or Subscribers

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.


         2.     “Classes” are divided into Class A, B and C, 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-B, B-C or A-C) 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 8 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 semi-annual basis. 5 points will be added to the score if there has been 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.


             (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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                             Powered by Morningstar® Document Research℠
Criteria for score reduction: reduction in score shall be conducted according to the table below.


                                                                                                        Points to                                   Time for
Factors in Credit Rating                                      Details                                  be Reduced               Unit                Execution
Default                     Class A                                                                        5        Per each time                  Real time

                            Class B                                                                       10        Per each time                  Real time

                            Class C                                                                       20        Per each time                  Real time

Breach of rules             Breach of business standards and cooperation management measures               5        Per each time                  Real time

Client complaints           Top 5 in terms of Ratio of Compensation to Income (no repeated                 5        Per each time                  By month
                            reduction shall apply to Class C default)

                            Top 5 in terms of Percentage of Compensation for Complaints (no                5        Per each time                  By month
                            repeated reduction shall apply to Class C default)

                            More than 1000 items of Complaints from Subscribers with respect to            5        Per each time                  By month
                            Uni-Voice

Cooperation                 Failure to make payment the expenses payable to Party A as required            3        Per each item of payment       By month

                            Failure to promptly update SP Service System                                   2        Per each time                  By month

                            Failure to punctually submit the materials and settlement statements for       2        Per each time                  Real time
                            confirmation, and failure to attend the meetings at the agreed time

                            Response in a bad manner to the solution for default, provision of             5        Per each time                  Real time
                            fraudulent statements, failure to cooperate with evidence collection in
                            respect of events of default




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                      Powered by Morningstar® Document Research℠
Annex IV Schedule of Profit Distribution Percentages


                                                                                         Profit Distribution Percentage
                              Service Category                                                  (Party A/Party B)
                              Uni-Info                                                              20 : 80

                              Uni-Wap                                                               20 : 80

                              Uni-Mail                                                              20 : 80

                              Uni-Tone                                                              20 : 80

                              Uni-Magic                                                             15 : 85

                              Uni-Voice                                                             35 : 65

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 ×( 1 - 8% allowance for bad account )× 80% as the profit
                   distribution percentage of Party B - WAP PUSH Communication Fee


           (3)     Uni-Mail, Uni-Video, and Uni-Tone: Settled expenses of Party B = Total amount of Information Service Fee × ( 1 - 8% allowance for bad
                   account ) × 80% as the profit distribution percentage of Party B




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           (4)     Unija under the Service Category of Uni-Magic : Settled expenses of Party B = Total amount of Information Service Fee × ( 1 - 8%
                   allowance for bad account ) × 85% as the profit distribution percentage of Party B


           (5)     BREW under the Service Category of Uni-Magic : Settled expenses of Party B = ( Total amount of Information Service Fee - Developer
                   application fee )×( 1-8% allowance for bad account ) × 85% as the profit distribution percentage of Party B


                   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)



           (6)     Uni-Voice :Settled expenses of Party B =Total amount of Information Service Fee ×( 1 - 8% allowance for bad account)× 65% 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.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                      Powered by Morningstar® Document Research℠
                                                                                                                                                 Exhibit 4.120

                                                                     Cooperation Agreement

     This Cooperation Agreement (“this Agreement”) is entered into among the following parties on March 12, 2007, in Beijing, People’s Republic of China.

     Party A: Hurray! Digital Media Technology Co., Ltd.

     Party B1: LAN Gang
     Nationality: PRC

     Party B2: CHEN Jianzhong
     Nationality: PRC

     Hereinafter, Party B1, Party B2 are referred to collectively as “Party B”.

     Party C: HU Li
     Nationality: PRC

     Party D: Beijing Secular Bird Culture and Art Development Centre

     Hereinafter, Party A, Party B, Party C and Party D are referred to collectively as the “Parties”.

WHEREAS:


1.   Party D is a limited liability company duly incorporated and existing under the PRC laws, with a registered capital of RMB1.3 million, in which, Party B
     made a contribution of RMB0.69 million, representing a 67% equity interest in the Company, and




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                      Powered by Morningstar® Document Research℠
      Party C RMB0.34 million, a 33% equity interest. The business scope of the Company is mainly on music production, distribution, and copyright
      management and artist agent services.


2.    Party A is a limited liability company duly incorporated and existing under the PRC laws. Party A and Party D wish to cooperate with each other, so as to
      jointly establish a limited liability company conducting businesses in the music production and distribution.


3.    Party B and Party C, as the controlling shareholders of Party D, agree unanimously to support the cooperation thereof.

      NOW, THEREFORE, the Parties have entered into the following agreement concerning the cooperation above mentioned:

ARTICLE 2 CORPORATION FRAMEWORK
      Party D shall be responsible to establish a Joint Venture, Guangzhou Hurray! Secular Bird Culture Co., Ltd. (proposed name), the registered capital of
which shall be RMB 1 million, in which Party A holds 65% equity interest with capital contribution of RMB0.65 million, and Party D holds 35% equity interest
with capital contribution of RMB0.35 million. Party A will separately contribute capital RMB2.05 million as capital reserve.

ARTICLE 3 CORPORATION ORGANIZATION AND MANAGEMENT


3.1   Upon establishment, the board of directors shall consist of five directors, three of which (including the Chairman) shall be nominated by Party A,
      two of which shall be nominated by Party D.


3.2   The board of directors shall adopt resolutions as to the following issues by unanimous approval of all directors:


      (1)   Decrease of the registered capital of the company;


      (2)   Increase of the registered capital of the company;


      (3)   Bankruptcy, application for bankruptcy or application for bankruptcy protection of the company;


      (4)   Dissolution or application for dissolution of the company;


      (5)   Liquidation or application for liquidation of the company;


      (6)   Alteration of the Articles of Association of the company;
      Except as issues thereof, effective approval of any other issues shall be voted by a simple majority.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
3.3   The Joint Venture shall establish and organize its management to be responsible for the daily operation and management. The management shall consist of
      one general manager, nominated by Party D; one deputy managing director by Party A, and one Chief Financial Officer by Party A. All of the nominees
      shall be employed by the Board of Directors with a term of no less than three years.


3.4   The Parties agree that, disposal of the daily expenditures at a value higher than RMB 100,000 shall be subject to written approval of a Director appointed
      by Party A.


3.5   The financial system of Joint Venture shall be in compliance with the relevant provisions of the GAAP of PRC and the United States. Financial statements
      of Joint Venture shall be reported to the Board of Director on a quarterly basis. Joint Venture shall appoint one of the “Big Four” accounting firms to
      conduct the financial audit for the company, which audit shall be conducted on quarterly and annual basis. The fees and expenses of the audit shall be
      borne by the Joint Venture.

ARTICLE 4 CAPITAL RESERVE BY PARTY A


4.1   Except the registered capital, Party A agrees to contribute certain amount of capital as capital reserve according to the performance of the Company on
      conditions that its actual amount of net income (which shall be the net profit after tax audited according to the US GAAP by one of the “Big Four”
      accounting firms approved by Party A) is up to Benchmark Profit. Specified arrangement set forth as indicated by the following table:


                         Net Income (N: in millions of RMB)                                               Capital Reserve (C: in millions of RMB)
                  If N> = 0.05, (proposed within 4 months)                                                                C=0

                  If N> = 0.09, (proposed within 6 months)                                                              C = 1.75

                   If N> = 1.3, (proposed within 9 months)                                                              C = 1.80

                  If N> = 1.8, (proposed within 12 months)                                                              C = 4.18


4.2   Each Party acknowledges and agrees that, if the actual net profit of the Company is less than RMB0.9 million for the 12 months, no capital shall be
      contributed by Party A into the Company at all; if the actual net profit of the Company is less than RMB0.1 million, Party A shall have the option either to:
      (1) separately negotiate with Party D or (2) to require Party D to dilute its 35% equity interest and transfer for free to Party A as well as ceasing to
      contribute any more. Party D shall unconditionally assist and could accept a retransfer of the assets transferred by Party D to Joint Venture upon
      establishment free of charge.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
4.3   If the performance requirement has been achieved and net profit of the Company is equal to or higher than RMB3.2 million for the second 12 months, then
      5% equity interest held by Party A will be allocated to its employees as rewards. The specific rewarding arrangement shall be specified by the management
      of the Company.

ARTICLE 5 TRANSFER OF ASSETS, BUSINESS AND PERSONNEL


5.1   Party B, Party C and Party D shall ensure that the Company shall be able to engage in the lawful operations of music production, copyright management,
      audio & video products distribution and sales, and artist agent services, and to obtain the licenses necessary for such operations. Licenses mentioned herein
      shall include without limitation the following:


      (1)   Audio & Video Recordings Production License


      (2)   Audio & Video Recordings Operation License


      (3)   Commercial Performance License



5.2   Business Restructuring
      All the Parties acknowledge, after the establishment of Joint Venture, Party D shall enter into the Personnel, Business and Asset Transfer Agreement with
      Joint Venture (Party A and Party D shall represent for Joint Venture as its shareholders before its establishment), to transfer all of assets, businesses and
      personnel relating to music production, copyright management, distribution and artist agent service controlled or possessed by Party D to Joint Venture.
      Specific issues relating to the transfer of assets, businesses and personnel are set forth in Exhibit I attached hereto. In addition, Party B and Party C shall
      transfer other music-related assets, including without limitations to their owned copyrights, copyrights in lyrics and/or music, right of domain name, music
      website, trademarks and other related equity interests in music, to Joint Venture free of charge as Exhibit II attached hereto.
      Party B, Party C and Party D warrant to transfer all of assets, businesses and personnel relating to music (Party D’s equity interests held by Party B and
      Party C excluded) to Joint Venture, and handle relevant formalities for amendment of registration. The businesses to be transferred shall include without
      limitation music production, on-ground distribution management, digital distribution and artist agent services. The assets to be transferred shall include all
      the tangible and intangible assets, including




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
      without limitation the copyrights and adjunct rights in and to all the music products, artist agent services contracts, employee’s labour contracts,
      franchising agreements and recording facilities relating to music.

ARTICLE 6 EXCLUSIVE BUSINESS COOPERATION AGREEMENT
      After the formation of the Joint Venture, the Parties warrant that the Joint Venture shall enter into the Exclusive Business Cooperation Agreement with
Party A as Exhibit III attached hereto, and to assign and transfer the exclusive distribution right of digital music to Party A. Before the execution of the aforesaid
Agreement, Party B, Party C and Party D shall provide the written Acknowledgement to Party A enabling it to conduct the digital distribution businesses with
Party B, Party C and Party D’s copyrightable musical works.

ARTICLE 7 NON-COMPETITION UNDERTAKINGS
       In consideration of the vital role to be played by Party B, Party C and Party D to the development of the company, Party B, Party C and Party D hereby
jointly or separately make the following irrevocable covenants: The term of Party B and Party C’s services to the Company hereunder shall be no less than three
years commencing from the execution date hereof. None of Party B and/or Party C and/or Party D, or other companies under the direct or indirect control of
Party B and/or Party C and/or Party D, will establish or take direct or indirect control of any enterprise or other entity that is a competitor of the Company
conducting music or recording production, distribution and artist agent services or other operating businesses by the Company, either through investment or
shareholding or any other means. Specific issues relating to the non-competition are set forth in the Non-Competition Agreement signed by Party B, Party C and
Party D with Joint Venture as Exhibit IV attached hereto.

ARTICLE 8 REPRESENTATIONS AND WARRANTIES


8.1   For the purpose of this Agreement, Party B, Party C and Party D jointly and separately make the following irrevocable representations and warranties to
      Party A:


      (1)    Prior to the execution hereof, Party B and/or Party C and/or Party D warrant that all documents, materials and information provided by them to Party
             A or professional agencies designated by Party A are true, correct and complete and do not contain any false or misleading information.


      (2)    Except as disclosed truthfully in writing by Party B and/or Party C and/or Party D in detail, as of the Benchmark Date, there does not exist any other
             litigation or arbitration, or any act of any other judicial or law enforcement authority constituting a legal impediment for the execution and
             performance of this Agreement.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
      (3)   The execution and performance of this Agreement by Party B, Party C and Party D do not contravene any law or contractual obligations binding on
            or affecting them, or violate the relevant rules, restrictions or verdicts.


      (4)   The execution, delivery and performance of this Agreement by Party B and Party C have been duly authorized by all necessary corporate action for
            proper authorization.


      (5)   Party B, Party C and Party D shall severally and jointly perform and assume obligations of Party B or Party C or Party D hereunder.


      (6)   After the establishment of Joint Venture, the artists of Joint Venture will not terminate their recording and performance management contracts with
            the company due to any reason on the part of Party B and/or Party C and/or Party D (including without limitation by way of soliciting, inducing,
            urging the artist or providing the artist with facilitations). In the event of any such termination, Party B, Party C and Party D shall indemnify Party A
            and Joint Venture for their direct and indirect economic loss.


8.2   For the purpose of this Agreement, Party A irrevocably represents and warrants to Party B, Party C and Party D:


      (1)   Party A is a company duly incorporated and existing under the laws of the PRC, and has the right to execute this Agreement.


      (2)   Party A will assist the Company in its business development.

ARTICLE 9 TAXES


9.1   All the fees and expenses in connection with the establishment of the Company hereunder (including government fees and CPA capital verification fees,
      etc.) shall be paid or advanced by the respective Party incurring such expenses. Of such expenses, the start-up expenses for Freeland Music shall be billed
      as the start-up expense of the Company.


9.2   Any other tax in connection with the transaction hereunder shall be borne by the Parties in accordance with the applicable laws and regulations.

ARTICLE 10 CONFIDENTIALITY


10.1 The Parties agree and acknowledge that any oral or written materials communicated between and among the Parties are confidential information (including
     without limitation the material provisions hereof and the Transaction hereunder). The Parties




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
      shall keep all such confidential information in strict confidence, and shall not disclose such information to any third parties without the consent of the other
      parties, except the following information:


      (1)    information known or to be known by the general public (other than through unauthorized disclose by a party bound by the confidential obligation
             as to such information);


      (2)    disclosure required under the applicable laws or regulations (including without limitation listing rules);


      (3)    disclosure by any Party hereto to its legal counsel or financial consultant in relation to the transaction mentioned in the material provisions hereof,
             provided that such legal counsel or financial consultant shall also be bound by the confidential obligations herein; or


      (4)    Confidential obligations specified in this Article 10.1 shall survive the termination of this Agreement for any reason.


10.2 Party B, Party C and Party D acknowledge and covenant that they shall not disclose any information as to the transaction hereunder in any way without
     Party A’s prior consent. Once Party A’s consent is obtained, Party B, Party C and Party D shall disclose such information in accordance with guidelines
     laid down by Party A.

ARTICLE 11 LIABILITIES FOR BREACH


11.1 Any party hereto in breach of its representations, warranties, covenants or other obligations hereunder shall assume liabilities in line with applicable law
     and this Agreement.


11.2 In the event that Party B and/or Party C and/or Party D breach their representations, warranties, covenants or other obligations hereunder (including
     without limitation providing other parties with false or misleading information), which makes it impossible to achieve the purpose of Party A hereunder,
     then Party A shall have the right to withdraw from this Transaction at any time. In addition, Party A shall be entitled to indemnification of RMB0.5 million
     by Party B, Party C and Party D for each and every activity or event thereof.


11.3 In the event that Party A breaches other obligations hereunder, it shall indemnify Party B and/or Party C and/or Party D for their loss directly resulting
     from Party A’s breach.


11.4 In the event that the Company suffers damage due to breach of any party hereto, other Parties may claim compensation against the breaching party on
     behalf of the Company.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
ARTICLE 12 FORCE MAJEURE


12.1 For the purpose of this Agreement, “force majeure” refers to any event beyond the control of the Parties that can not be reasonably 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, landslide, subsidence, flood, typhoon and fire, explosion, accident, war, riot,
     insurgence, mutiny, turmoil, destructive behaviors or any other similar or dissimilar incidents.


12.2 If any Party fails to perform any or all of its obligations hereunder due to a force majeure event, then it shall be relieved from performing such obligation
     during the period when the force majeure exists and the term of this Agreement shall be extended accordingly. In such event the Party affected by the force
     majeure event shall not be liable for its failure to perform this Agreement during the period when the force majeure exists.


12.3 The Party affected by the force majeure event shall immediately notify the other Parties of the occurrence of force majeure event in writing, and provide
     the other Parties with appropriate evidence of such force majeure and its influence notarized by the local notary. Moreover, such Party shall also take all
     necessary actions to prevent or alleviate the influence of such force majeure event.


12.4 If any force majeure event happens, the Parties shall consult with each other to seek equitable solutions and take all reasonable actions to minimize the
     influence of such force majeure event.


12.5 In the event that the force majeure event or its influence has sustained for more than three months and caused failure of any Party hereto to perform this
     Agreement, then any Party hereto shall have the right to request the termination of obligations of the Parties hereunder. When this Agreement is so
     terminated, the Parties shall deal with their creditor-debtor relationships in an equitable and reasonable manner.

ARTICLE 13 GOVERNING LAW AND DISPUTE RESOLUTION


13.1 The validity, interpretation and enforcement of this Agreement shall be governed by the laws, regulations and government rules of China currently in
     effect and amended from time to time.


13.2 Any disputes between or among the Parties shall be first solved by the Parties through amicable consultation. If consultation fails, then the dispute shall be
     submitted to Beijing Arbitration Committee for arbitration pursuant to its rules. The arbitration award is final and binding upon Parties.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
13.3 The Parties shall continue to perform this Agreement during the period when the dispute exists, except for the terms under dispute.

ARTICLE 14 EFFECTIVENESS OF THE AGREEMENT
      This agreement shall take effect when executed by duly authorized representatives of the Parties and affixed with the company chop (or the chop specially
for contract) of the Parties.

ARTICLE 15 EXHIBITS


15.1 This Agreement includes the following attachments:
      Exhibit I: Agreement on Transfer of Assets, Businesses and Personnel;
      Exhibit II: List of Personal Assets to be Transferred
      Exhibit III: Exclusive Business Cooperation Agreement
      Exhibit IV: Non-competition Agreement


15.2 All the Exhibits and Schedules hereto are integral parts of this Agreement.

ARTICLE 16 MISCELLANEOUS


16.1 If any provision of this Agreement shall be found invalid, illegal, or unenforceable, the validity, legality and enforceability of other provisions hereof shall
     not be affected.


16.2 Failure or delay in performing any right hereunder shall not constitute a waiver of such right or remedy or a waiver of any other right. Performance of any
     single or portion of any rights hereunder shall not impede any further performance of such rights or any other rights or remedies.


16.3 Unless otherwise expressly provided in this Agreement, all the rights and remedies provided for hereunder are cumulative to any other rights and remedies
     that may available under the laws.


16.4 No revision, amendment or modification to this Agreement shall be effective unless made in writing and duly executed by the relevant Parties hereto. And
     such revision, amendment or modification shall take effect in the same way as the Agreement.


16.5 Any agreement, document, authorization, report, list, consent, covenant and waiver formed, made, executed or supplemented in accordance with terms of
     this Agreement shall be deemed a supplement hereto and constitute an integral part hereof. In case of any inconsistency between such supplemental
     documents and this Agreement, the document completed at a later time shall prevail.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
16.6 This Agreement shall be signed in six (6) originals, with each of Party A, Party B, Party C and Party D holding one original, and the remaining one shall
     be filed with Joint Venture for the records. Each copy hereof shall be deemed original upon execution by all the Parties hereto.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠
(Signature page)
In witness whereof, this Agreement is signed by following Parties on the date first written above.


           Hurray! Hurray! Digital Media Technology Co., Ltd.
     Party A:


     Authorized Representative:


           LAN
     Party B1: Gang


           /s/ Lan
     Signature: Gang


           CHEN Jianzhong
     Party B2:


           /s/ Chen Jianzhong
     Signature:


           HU
     Party C: Li


           /s/ Hu
     Signature: Li


           Beijing Secular Bird Culture and Art Development Center
     Party D:


     Authorized Representative:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                      Powered by Morningstar® Document Research℠
                                                                                                                                                    Exhibit 4.121

                                                                     Supplemental Agreement

This Supplemental Agreement (“this Agreement”) is entered into by and between the following parties on September 1, 2006, in Beijing.

Party A: Hurray! Holdings Co., Ltd.
Party B: Magma Digital International Limited
Party A and Party B are hereinafter referred to collectively as “Both Parties”, and individually as a “Party”.

Party A and Party B entered into the Equity Transfer Agreement of Shanghai Fuming Information Technology Co., Ltd. (hereinafter referred to as the “Original
Agreement”) on December 30, 2005, and entered into the Supplemental Agreement I on June , 2006. During the performance of the above agreements, Both
Parties reach a supplemental agreement with respect to the following matters and hereby enter into this Agreement:


I.    Both Parties agree that, as of the effective date of this Agreement, Article 2 “Consideration for Equity Transfer and Terms of Payment” of the Original
      Agreement, “Guidelines for Evaluating Performance” of Exhibit 1 of the Original Agreement and the Supplemental Agreement I shall cease to be binding
      upon either Party. The determination and payment of equity transfer price (“Consideration for Equity Transfer”) shall be subject to the following
      changes:
The equity transfer price is US$ 13,500,000, and shall be paid by Party A to Party B in three installments as follows:


      ( 1 ) Party A shall, within 10 working days after the execution of the Original Agreement, pay US$ 3,000,000.00 as the initial installment of the
            Consideration for Equity Transfer. Both Parties acknowledge that Party A has already paid such amounts to Party B pursuant to the Original
            Agreement;


      ( 2 ) Party A shall pay US$ 4,500,000.00 to Party B as the second installment of the Consideration for Equity Transfer on October 1, 2006;


      ( 3 ) Party A shall pay US$ 6,000,000.00 to Party B as the third installment of the Consideration for Equity Transfer on December 31, 2007.


II.   Both Parties jointly acknowledge that, Party B shall cause and ensure that its shareholders Wang Jiang, Xie Peifu, He Ming and Chen Yixiao will enter
      into a three-year Service Agreement with Hurray! Solutions, Ltd., an affiliated company designated by




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
       Party A, on the execution date of this Agreement in a form as prescribed in Exhibit 2. As of the effective date of such Service Agreement, the previous
       Service Agreement entered into by and among Wang Jiang, Xie Peifu, He Ming, Chen Yixiao and Shanghai Magma Digital Technology on
       December 30,2005 shall be terminated, and be of no further force and effect.


III.   Party A and Party B jointly represent and warrant that their respective Board of Directors has unanimously approved the execution of this Agreement after
       careful discussion.


IV.    This Agreement is supplemental to the Original Agreement and the Supplemental Agreement I thereof. In case of any inconsistency between this
       Agreement and the Original Agreement and the Supplemental Agreement I thereof, this Agreement shall prevail.


V.     This Agreement shall be executed in four ( 4 ) originals with each party holding two of them, all originals shall have equal legal effects.


VI.    This Agreement will go into effect as of the date first written above upon being executed and sealed by Both Parties.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
This Agreement shall be duly executed by the following parties:
Party A: Hurray! Holdings Co., Ltd.

Authorized Representative:
Party B: Magma Digital International Limited

Authorized Representative:




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                   Powered by Morningstar® Document Research℠
                                                                                                                                                      Exhibit 4.122

                                                                   Supplemental Agreement

     This Supplemental Agreement (this “Agreement”) is entered into by and among the following parties on July 30, 2006, in Beijing.


     Party A 1:     Hurray! Solutions, Ltd.


     Party A 2:     Beijing Enterprise Mobile Technology Co., Ltd.


     Party A 3:     Beijing Hutong Wuxian Technology Co., Ltd.

     All the parties above are referred to collectively as “Party A”.


     Party B:       Zhong Xiongbing


     Party C 1:     Guangdong Freeland Movie and Television Production Co., Ltd.


     Party C 2:     Beijing Shiji Freeland Movie and Television Distribution Co.,


     Party C 3:     Shanghai Hai Le Audio & Video Distribution Co., Ltd.

     Hereinafter, Party C 1, Party C 2 and Party C 3 are referred to collectively as “Party C”.


     Party D:       Hong Kong Freeland Movie Industry Group Co., Ltd.

     Authorized Representative: Zhong Xiongbing


     Party E:       Beijing Freeland Wu Xian Digital Music Technology Co., Ltd., (hereinafter referred to as “Freeland Wu Xian”)

WHEREAS:


1.   Party A, Party B, Party C and Party D entered into the Cooperation Agreement on November 15, 2005; entered into the Supplemental Agreement I on
     November 15, 2005;entered into the Supplemental Agreement II on November 23, 2005; entered into the Supplemental Agreement III on               ,
     2005 (hereinafter referred to collectively as the “Original Agreement”).


2.   In accordance with the provisions of the Original Agreement, Party C shall transfer into Freeland Wu Xian all its assets, businesses and personnel relating
     to music production after the establishment of Freeland Wu Xian. However, in view of the pending litigation (hereinafter referred to as “Copyright
     Litigation” ) of Party C brought to the Beijing Haidian People’s Court for copyright infringement of the song titled “Mice Love Rice”( or in Chinese “

     ” ), both parties hereby agree that assets and businesses relating to the song titled “Mice Love Rice” will not be transferred to Freeland Wu Xian until the
     final judgment is made; after the final judgement of the Copyright Litigation is made, the parties will consult on the transfer of assets and contract relating
     to the song titled “Mice Love Rice”, provided that, the conditions for such transfer shall still be subject to the Original Agreement.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                          Powered by Morningstar® Document Research℠
3.    The final judgement of the Copyright Litigation was made on                 , 2006, and the plaintiff’s Copyright Litigation was dismissed.

NOW, THEREFORE, the Parties have, through friendly consultations, entered into the following supplemental agreements on the transfer of assets and contract
relating to the song titled “Mice Love Rice”:


A.    The Parties jointly acknowledge that the final judgement of the Copyright Litigation has been made, and the plaintiff’s Copyright Litigation was
      dismissed. The parties agree and acknowledge that Party C shall transfer into Freeland Wu Xian the copyright of lyrics & music and copyright of audio &
      video products relating to the song titled “Mice Love Rice” pursuant to the transfer conditions specified in the Original Agreement.


B.    Party C warrants that it has the ownership of lyrics & music copyright and copyright or license of the audio & video products relating to the song titled
      “Mice Love Rice”, and is in a position to enter into and perform this Agreement to transfer into Freeland Wu Xian the lyrics & music copyright and
      copyright of audio & video products relating to the song titled “Mice Love Rice”. In the event that Freeland Wu Xian prejudices other person’s legitimate
      right and interests as a result of exploiting the lyrics & music copyright and copyright of audio & video products relating to the song titled “Mice Love
      Rice” in a reasonable manner pursuant to this Agreement, Party C shall be subject to corresponding legal liabilities; in case Freeland Wu Xian thereby
      suffers any losses or damages, Freeland Wu Xian shall be entitled to be fully compensated.


C.    Party C shall in no event transfer or license to any third party the lyrics & music copyright and copyright of audio & video products relating to the song
      titled “Mice Love Rice”. When Freeland Wu Xian is in exercise of its lyrics & music copyright and copyright of audio & video products thereof relating to
      the song titled “Mice Love Rice”, for any disputes or controversy arising from the use of the song’s copyright and/or the copyright of audio & video
      products, Party C shall assume full responsibility and indemnify Freeland Wu Xian for losses incurred thereby.


D.    After Party C has transferred into Freeland Wu Xian the lyrics & music copyright and copyright of audio & video products relating to the song titled
      “Mice Love Rice”, Freeland Wu Xian shall be entitled to the lyrics & music copyright and copyright of audio & video products relating to the song
      titled “Mice Love Rice”, and entitled to license other party (or parties) to reproduce, distribute, lease, transmit to the public via information network
      and get rewarded.


E.    The parties jointly acknowledge that, such transfer shall be effected after the execution of this Agreement, and Party C shall be responsible to deal with
      matters concerned with such transfer.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
F.    This Agreement is supplemental to the Original Agreement. In case of any inconsistency between this Agreement and the Original Agreement, this
      Agreement shall prevail.


G.    This Agreement shall be signed in eight ( 8 ) originals with each party holding one of them, all originals shall have equal legal effects.


H.    In witness whereof, this Agreement shall become effective as of the date first written above after affixed with the seal of Party A, Party C and Party D, and
      signed by Party B.

This Agreement shall be duly executed by the following parties:


Party A 1:      Hurray! Solutions, Ltd.


Party A 2:      Beijing Enterprise Mobile Technology Co., Ltd.


Party A 3:      Beijing Hutong Wuxian Technology Co., Ltd.


Party B:        Zhong Xiongbing


Party C 1:      Guangdong Freeland Movie and Television Production Co., Ltd.


Party C 2:      Beijing Shiji Freeland Movie and Television Distribution Co.,


Party C 3:      Shanghai Hai Le Audio & Video Distribution Co., Ltd.


Party D:        Hong Kong Freeland Movie Industry Group Co., Ltd.


Party E:        Beijing Freeland Wu Xian Digital Music Technology Co., Ltd., (hereinafter referred to as “Freeland Wu Xian”)




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
                                                                                                                                                    Exhibit 4.123

                                                                    Supplemental Agreement

This Supplemental Agreement (“This Agreement”) has been entered into on November 30, 2006 by and among the following parties in Beijing:
Party A 1: Hurray! Solutions, Ltd.

Party A 2: Beijing Enterprise Mobile Technology Co., Ltd.

Party A 3: Beijing Hutong Wuxian Technology Co,. Ltd.

All the parties above are referred to collectively as “Party A”.

Party B: Zhong Xiongbing

Party C 1: Guangdong Freeland Movie and Television Production Co., Ltd.

Party C 2: Beijing Shiji Freeland Movie and Television Distribution Co., Ltd.

Party C 3: Shanghai Hai Le Audio & Video Distribution Co., Ltd.

      Hereinafter, Party C 1, Party C 2 and Party C 3 are referred to collectively as “Party C”.

Party D: Hong Kong Freeland Movie Industry Group Co., Ltd.

      Authorized Representative: Zhong Xiongbing

Whereas:


1.    On the date of November 15, 2005, Party A, B, C and D entered into a Cooperation Agreement on establishment of a joint venture named Beijing Hurray!
      Freeland Digital Music Technology Co., Ltd. (hereinafter referred to as “Hurray! Freeland”). All the above-mentioned parties further signed the
      Supplemental Agreement I on November 18, 2005, the Supplemental Agreement II on November 23, 2005, the Supplemental Agreement III on              ,
      2005, and the Supplemental Agreement IV on          , 2006. (hereinafter all these agreements are referred to as the “Original Agreement”)


2.    Under Article 5.1.4 of the Original Agreement, one year after the Industrial and Commercial Registration Date of Hurray! Freeland, the Parties will
      adjust the consideration for equity transfer based on the Benchmark Profit of Hurray! Freeland.


3.    Under Article 5.2.2 of the Original Agreement, the Parties will pay up the Capital Increase in installments subject to the operational condition of Hurray!
      Freeland after its Industrial and Commercial Registration. Up to date, 2.7 million US dollars have been paid, while the outstanding 2.7 million US dollars
      (hereinafter referred to as “Outstanding Capital Increase”) remains unpaid due to Hurray! Freeland’s failure to satisfy the requirement set forth in the
      Original Agreement on Hurray! Freeland’s performance.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                         Powered by Morningstar® Document Research℠
4.    Under Article 5.2.3 of the Original Agreement, the Parties will adjust the Capital Increase based on the actual Benchmark Profit of Hurray! Freeland
      during the calendar year after its Industrial and Commercial Registration Date.

NOW THEREFORE, through amicable consultations, the Parties have reached the following supplemental agreements in connection with the issues such as
adjustment to equity transfer consideration, payment of Capital Increase and adjustment to Capital Increase as specified in the Original Agreement:
I. Notwithstanding the Original Agreement provides that the Parties shall adjust the consideration for equity transfer based on the Benchmark Profit of Hurray!
Freeland one year after the Industrial and Commercial Registration Date of Hurray! Freeland, and adjust the Capital Increase based on the actual Benchmark
Profit of Hurray! Freeland during the calendar year after its Industrial and Commercial Registration Date, the Parties have agreed to, for the sake of simplicity in
conducting such adjustments, adjust the consideration for equity transfer and the amount of Capital Increase based on the actual Benchmark Profit of Hurray!
Freeland during the calendar year (from January 1 through December 31, 2006; the same below) after the Industrial and Commercial Registration Date of
Hurray! Freeland.

II. The Parties have agreed and confirmed that the actual Benchmark Profit of Hurray! Freeland during the calendar year after the Industrial and Commercial
Registration Date of Hurray! Freeland shall be subject to the amount audited by one of four major accounting firms approved by Party A, which shall adopt the
American Generally Accepted Accounting Principles. Moreover, the Parties have agreed that the above-mentioned amount shall be applied in adjusting the
consideration for equity transfer and the Capital Increase, provided that the stipulations of 4.3 of this Agreement are satisfied.

III. The Parties have agreed and confirmed that on a temporary basis no adjustment will be made to the consideration for equity transfer and Capital Increase, and
that, subject to the after-tax profit (“New Profit”) of Hurray! Freeland during the period from January 1 to December 31, 2007, which shall be audited by one of
four major accounting firms approved by Party A in line with the American Generally Accepted Accounting Principles, they will determine whether to make
adjustment to the consideration for equity transfer and Capital Increase based on the actual Benchmark Profit specified in Article 2 of this Supplemental
Agreement and pursuant to Article 5.1.4 and 5.2.3 of the Original Agreement.
      1. If the New Profit exceeds (not inclusive of) 12 million yuan RMB, the Parties agree not to make further adjustment to the consideration for equity
      transfer and Capital Increase and invest the Outstanding Capital Increase, equally 2.7 million US dollars, in Freeland Capital as additional investment.
      2. If the New Profit exceeds (inclusive of )10 million yuan RMB but stands less than (inclusive of )12 million yuan RMB, the Parties agree not to make
      further adjustment to the consideration for equity transfer and Capital Increase and invest 50% of the Outstanding Capital Increase, equally 1.35 million
      US dollars, in Freeland Capital as additional investment.
      3. If the New Profit stands less than 10 million yuan RMB, the Parties agree to make adjustment to the consideration for equity transfer and Capital
      Increase based on the actual Benchmark Profit specified in Article 2 of this Agreement and pursuant to Article 5.1.4 and 5.2.3 of the Original Agreement,
      with the Outstanding Capital Increase not to be invested in Freeland Capital as additional investment.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
IV. The exercise of all the rights specified in Article 5.3, 5.4 and 7.9 of the Original Agreement shall be postponed for one year.

V. This Agreement is additional to the Original Agreement. In the event of any discrepancy between this Agreement and the Original Agreement, this Agreement
shall prevail.

VI. This Agreement is made in eight (8) copies, with each party holding one copy. Each copy has the same binding force.

VII. This Agreement shall take effect after being stamped by Party A, C and D and signed by Party B on the date first written above.

In witness whereof, this Agreement has been executed by the following Parties:
Party A 1: Hurray! Solutions, Ltd.

Party A 2: Beijing Enterprise Mobile Technology Co., Ltd.

Party A 3: Beijing Hutong Wuxian Technology Co., Ltd.

Party B: Zhong Xiongbing

Party C 1: Guangdong Freeland Movie and Television Production Co., Ltd.

Party C 2: Beijing Shiji Freeland Movie and Television Distribution Co., Ltd.

Party C 3: Shanghai Hai Le Audio & Video Distribution Co., Ltd.

Party D: Hong Kong Freeland Movie Industry Group Co., Ltd.




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                                                                                                                                        Exhibit 8.1

                                             List of Subsidiaries and Affiliates of Hurray! Holding Co., Ltd.


Name of Subsidiary or Affiliate                                                  State or Jurisdiction of Incorporation
Hurray! Times Communications (Beijing) 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
Hurray! Digital Music Technology Co., Ltd.                                       People’s Republic of China
Beijing Huayi Brothers Music Co., Ltd.                                           People’s Republic of China
Beijing Hurray! Freeland Digital Music Technology Co., Ltd.                      People’s Republic of China
New Run Entertainment Co., Ltd.                                                  People’s Republic of China
Beijing Secular Bird Culture and Art Development Center                          People’s Republic of China




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                           Powered by Morningstar® Document Research℠
                                                                                                                                                         Exhibit 12.1

                                                                        CERTIFICATION

      I, Qindai Wang, Chief Executive Officer of Hurray! Holding Co., Ltd., 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)) 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)     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


             (c)     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 15, 2007


By:    /s/ Qingdai Wang
       Qindai Wang
       Chief Executive Officer




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                                                                                                                                         Exhibit 12.2

                                                                        CERTIFICATION

      I, Jesse Liu, Chief Financial Officer of Hurray! Holding Co., Ltd., 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)) 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)     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


             (c)     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 15, 2007


By:    /s/ Jesse Liu
       Jesse Liu
       Chief Financial Officer




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                                                                                                                                         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, 2006 as 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 15, 2007


/s/ Qindai Wang
Qindai Wang
Chief Executive Officer




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                                                                                                                                         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, 2006 as filed with the
Securities and Exchange Commission (the “Report”), I, Jesse Liu, 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 15, 2007


/s/ Jesse Liu
Jesse Liu
Chief Financial Officer




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                            Powered by Morningstar® Document Research℠
                                                                                                                                                 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 8,
2007 (which expressed an unqualified opinion and included an explanatory paragraph relating to the change of accounting method for stock-based compensation
to conform to statement of Financial Accounting Standard No.123 (revised 2004), “Share-Based Payment”), 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 15, 2007




Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                     Powered by Morningstar® Document Research℠
                                                                                                                                                    Exhibit 15.2

                                                                           [Appleby]

                                                                         June 12, 2007

Hurray! Holding Co., Ltd.
15/F, Tower B, Gateway Plaza,
No. 18 Xia Guang Li, North Road,
East Third Ring Chaoyang District,
Beijing, 100027 P.R. China

Dear Sirs:
      We hereby consent to the reference to our firm under the heading “Enforcement of Civil Liabilities” in the annual report on Form 20-F for the fiscal year
ended December 31, 2006 of Hurray! Holding Co., Ltd. (the “Company”) to be filed with the Securities and Exchange Commission in the month of June 2007.

Yours faithfully,

/s/ Appleby

Appleby




_____________________________________

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Source: Ku6 Media Co., Ltd, 20-F, June 15, 2007                                                                        Powered by Morningstar® Document Research℠

				
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