##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 20-F
 
 (Mark One)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
 Commission file number: 000-51116
 
 HURRAY! HOLDING CO., LTD.
 (Exact name of Registrant as specified in its charter)
 
 N/A
(Translation of Registrants name into English)
 Cayman Islands
(Jurisdiction of incorporation or organization)
 15/F, Tower B, Gateway Plaza, No.18 Xia Guang Li, East Third Ring,
Chaoyang District, Beijing 100027, Peoples Republic of China
(Address of principal executive offices)
 
 Securities registered or to be registered pursuant to Section 12(b) of the Act.
NONE
 Securities registered or to be registered pursuant to Section 12(g) of the Act.
 Name of each exchange and Title of each class on which registered:
American Depositary Shares, each representing 100 ordinary shares, par value US$0.00005 per share,
Nasdaq Global Market
(Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)
 
  o þ
 o þ
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued
    
    Other oby the International Accounting Standards Board     o
  o o
 o þ




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##### 



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




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INTRODUCTION
  
    
    ADSs refers to our American depositary shares, each of which represents 100 ordinary shares;
    
    $, US$ and U.S. dollars refer to the legal currency of the United States;
    
    China and the PRC refer to the Peoples Republic of China, excluding, for the purposes of
this annual report on Form 20-F only, Taiwan and the special administrative regions of Hong Kong
and Macau;
    
    ordinary shares refers to our ordinary shares, par value US$0.00005 per share;
    
    RMB and Renminbi refer to the legal currency of China; and
    
    we, us, our company and our refer to Hurray! Holding Co., Ltd. and its subsidiaries,
affiliates and predecessor entities.
  Forward-Looking Information
   
 PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 A. Selected Financial Data
   1




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As of and for the Year Ended December 31,2007
    
    
    2006
    
    
    2005(1)
    
    
    2004(1)
    
    
    2003(1)(in thousands of U.S. dollars, except percentages)Historical Condensed Consolidated
Statement of Operations DataRevenues:Wireless value-added services
    
    $
    50,038
    
    
    $
    62,512
    
    
    $
    56,063
    
    
    $
    43,173
    
    
    $
    17,760Recorded music
    
    
    10,489
    
    
    
    6,203
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    60,527
    
    
    
    68,715
    
    
    
    56,063
    
    
    
    43,173
    
    
    
    17,760Cost of revenues:Wireless value-added services
    
    
    36,394
    
    
    
    40,672
    
    
    
    28,635
    
    
    
    18,053
    
    
    
    6,692Recorded music
    
    
    6,233
    
    
    
    3,553
    
    
    
    
    
    
    
    
    
    
    
    Total cost of revenues
    
    
    42,627
    
    
    
    44,225
    
    
    
    28,635
    
    
    
    18,053
    
    
    
    6,692Gross profit
    
    
    17,900
    
    
    
    24,490
    
    
    
    27,428
    
    
    
    25,120
    
    
    
    11,068Operating expenses
    
    
    61,462
    
    
    
    19,882
    
    
    
    14,277
    
    
    
    10,436
    
    
    
    7,338(Loss) income from continuing
operations
    
    
    (43,562
    )
    
    
    4,608
    
    
    
    13,151
    
    
    
    14,684
    
    
    
    3,730Interest income
    
    
    2,313
    
    
    
    2,529
    
    
    
    1,390
    
    
    
    28
    
    
    
    1Interest expense
    
    
    (179
    )
    
    
    (45
    )
    
    
    (27
    )
    
    
    (312
    )
    
    
    (390
    )Other income, net
    
    
    466
    
    
    
    315
    
    
    
    330
    
    
    
    
    
    
    
    (Loss) income before provision for
income taxes, earnings in equity
investments, gain from disposal of
subsidiary, minority interest and
discontinued operations
    
    
    (40,962
    )
    
    
    7,407
    
    
    
    14,844
    
    
    
    14,400
    
    
    
    3,341Income taxes (credit) expense
    
    
    (182
    )
    
    
    205
    
    
    
    (323
    )
    
    
    
    
    
    
    Net (loss) income from continuing
operations after income taxes
before minority interests
    
    
    (40,780
    )
    
    
    7,202
    
    
    
    14,521
    
    
    
    14,400
    
    
    
    3,341Equity in losses of affiliate
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interests
    
    
    (688
    )
    
    
    (562
    )
    
    
    
    
    
    
    
    
    
    
    Net (loss) income from continuing
operations
    
    
    (41,531
    )
    
    
    6,640
    
    
    
    14,521
    
    
    
    14,400
    
    
    
    3,341Discontinued operations:Net ((loss) income from
discontinued operations, net of tax
    
    
    (612
    )
    
    
    (836
    )
    
    
    4,098
    
    
    
    2,840
    
    
    
    1,204Gain from disposal of subsidiary
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income from discontinued
operations, net of tax
    
    
    (419
    )
    
    
    (836
    )
    
    
    4,098
    
    
    
    2,840
    
    
    
    1,204Net (loss) income
    
    
    (41,950
    )
    
    
    5,804
    
    
    
    18,619
    
    
    
    17,240
    
    
    
    4,545Deemed dividends on Series A
convertible preference shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (113
    )Net (Loss) income attributable to
holders of ordinary shares
    
    $
    (41,950
    )
    
    $
    5,804
    
    
    $
    18,619
    
    
    $
    17,200
    
    
    $
    4,432Net (Loss) income per share, basic
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.00Net (Loss) income per share, diluted
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.00Shares used in calculating basic
(loss) income per share
    
    
    2,172,208,190
    
    
    
    2,189,748,563
    
    
    
    2,092,089,848
    
    
    
    1,208,512,142
    
    
    
    1,088,810,959Shares used in calculating diluted
(loss) income per share
    
    
    2,172,208,190
    
    
    
    2,208,758,636
    
    
    
    2,129,228,961
    
    
    
    1,572,887,775
    
    
    
    1,343,606,622
 (1)
    
    The amounts of share-based compensation included in operating expenses for 2006 and 2007
reflect the adoption of Statement of Financial Accounting Standards (SFAS) No. 123 (revised
2004), Share-Based Payment effective January 1, 2006. Had we applied the fair value recognition
provisions of SFAS No. 123, Stock-Based
Compensation, in prior periods, we would have reported
net income of $4,318 thousands, $16,511 thousands and $17,007 thousands for 2003, 2004 and 2005,
respectively, and net income per share (diluted) of $0.00, $0.01 and $0.01 for 2003, 2004, and
2005, respectively.  2




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




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Exchange Rate Information
   Noon Buying RateRMB per US$1.00High
    
    
    LowDecember 2007
    
    
    7.4120
    
    
    
    7.2946January 2008
    
    
    7.2946
    
    
    
    7.1818February 2008
    
    
    7.1973
    
    
    
    7.1100March 2008
    
    
    7.1110
    
    
    
    7.0105April 2008
    
    
    7.0185
    
    
    
    6.9840May 2008
    
    
    7.0000
    
    
    
    6.9377
  Average Noon Buying RateRMB per US$1.002003
    
    
    8.27712004
    
    
    8.27682005
    
    
    8.18262006
    
    
    7.95792007
    
    
    7.58062008 (through May 30)
    
    
    7.0464
 B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  D. Risk Factors
  4




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RISKS RELATED TO OUR COMPANY
 Risks Related to Our Wireless Value-added Services
 We depend on China Mobile, China Unicom and China Telecom, three of the four major
telecommunications network operators in China, for the major portion of our revenue, and any loss
or deterioration of our relationship with China Mobile, China Unicom and China Telecom, due to
expected government imposed restructurings or otherwise, may result in severe disruptions to our
business operations and the loss of a major portion of our revenue.
     The termination or alteration of our various agreements with China Mobile, China Unicom, China
Telecom and their provincial affiliates would materially and adversely impact our revenue and
profitability.
    5




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Unilateral changes in the policies of the MII, China Mobile, China Unicom, and China Telecom and in
their enforcement of their policies have resulted in service suspensions and our having to pay
additional charges to the telecom operators, and further changes could materially and adversely
impact our revenue and profitability in the future.
     Our 2.5G revenues were negatively affected in 2007 by the slow growth of China Unicoms WAP
business. If this trend continues or the telecom operators in China experience slow or negative
growth in their WVAS user base, our revenue and profitability could be materially and adversely
affected.
  The Chinese government, China Mobile, China Unicom or China Telecom may prevent us from
distributing, and we may be subject to liability for, content that any of them believe is
inappropriate.
    6




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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.
   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.
  Our revenue from WVAS may be adversely affected by China Unicom or China Mobile providing their own
full portfolio of 2G and 2.5G services that compete with our services.
   7




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The popularity of our 2G and 2.5G services, and therefore revenues from these services and our
profitability, would be adversely affected if our competitors offer more attractive and engaging
services or our services are rendered obsolete by the introduction of newer technologies such as
3G.
  China Mobile and China Unicom allow us to offer our services over their networks only if we achieve
minimum customer usage, revenues and other criteria, and our revenues from 2.5G services depend in
particular on our ability to meet those criteria to keep our services among the most popular
offered through the telecom operators.
  We must rely on China Mobile and China Unicom to maintain accurate records of fees paid by users of
our services, deduct service and network fees due to them and pay us fees due to us. Errors in
record-keeping by the telecom operators could adversely affect our profitability and the market
price of our ADSs.
     8




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Our dependence on the billing records of China Mobile and China Unicom may adversely affect our
ability to record, process, summarize and report revenue and other information regarding our WVAS.
Any inaccuracies in our records and public reports could adversely affect our ability to
effectively manage our business and the market price of our ADSs.
  We recognize revenue for a portion of our 2G services on an accrual basis, based on an internal
estimation process which involves the use of estimates of monthly revenues to the extent we are
unable to obtain actual figures from the telecom operators before we finalize our financial
statements, which could in turn require us to make adjustments to our financial statements.
  Our 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.
  
    
    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.
    9




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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.
   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.
  Risks Related to Our Music Business
 The businesses of our affiliated music companies are subject to constantly changing consumer
tastes.
   10




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
    
    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.
  Our affiliated music companies may unknowingly purchase or license songs, which have already been,
or may in the future be, sold or licensed to third parties, which could create costly legal
disputes over intellectual property rights with such third parties and the songs authors or
composers.
   Our 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.
   11




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Revenue from our affiliated music companies may not grow as fast as expected due to continuing
problems of copyright enforcement in China and retention of popular artists.
  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.
   We face intense competition, which could cause us to lose market share and materially adversely
affect our business and results of operations.
     12




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We operate in rapidly evolving industries, which may make it difficult for investors to evaluate
our business.
  
    
    attract and retain users for our 2G and 2.5G services,
 
    
    expand the services that we offer,
 
    
    respond effectively to rapidly evolving competitive and market dynamics and address
the effects of mergers and acquisitions among our competitors,
 
    
    effectively manage our new music businesses and leverage our music library,
 
    
    continue to develop reliable, state-of-the-art mobile service provisioning and
management software for telecom operators,
 
    
    maintain, expand and enhance our relationships with telecom operators so that they
will allow us to offer our 2G and 2.5G services over their networks, and
 
    
    increase awareness of our brand and user loyalty.
  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.
   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.
  
    
    develop and quickly introduce new WVAS, adapt our existing services and maintain and
improve the quality of all of our services, particularly as the market for 2.5G services
evolves and matures,
 
    
    effectively maintain our relationships with China Mobile and China Unicom, enhance
our relationships with China Telecom and China Netcom and establish new relationships with
any other recipients of mobile licenses in China so that we are able to offer WVAS over
their networks,
 
    
    attract and retain popular artists for our music businesses,
 
    
    continue training, motivating and retaining our existing employees, including our
senior management, and attract and integrate new employees,
 
    
    develop and improve our operational, financial, accounting and other internal systems
and controls, and
 
    
    maintain adequate controls and procedures to ensure that our periodic public
disclosure under applicable laws, including U.S. securities laws, is complete and
accurate.
  13




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Any failures of the mobile telecommunications network, the Internet or our technology platform may
reduce use of our services and our revenues.
  Our 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.
   
    
    levying fines,
 
    
    confiscating the incomes of any of our company, Beijing Hurray! Times or our
affiliated Chinese entities,
 
    
    revoking the business licenses of any of our company, Beijing Hurray! Times or our
affiliated Chinese entities,
 
    
    shutting down servers or blocking websites maintained by any of our company, Beijing
Hurray! Times or our affiliated Chinese entities,
 
    
    restricting or prohibiting our use of our financial assets to finance our business
and operations in China,
 
    
    requiring any of us, Beijing Hurray! Times or our affiliated Chinese entities to
restructure our ownership structure or operations, and/or
 
    
    requiring any of us, Beijing Hurray! Times or our affiliated Chinese entities to
discontinue any portion of or all of their WVAS.
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We depend upon agreements with our affiliated Chinese entities for the success of our business.
These agreements may not be as effective in providing operational control as direct ownership of
these businesses and may be difficult to enforce.
   We generate our internal funds almost exclusively from Beijing Hurray! Times. If that company is
restricted from paying dividends to us, we may lose almost all of our internal source of funds.
   Our revenues may fluctuate significantly and may adversely affect the market price of our ADSs.
  
    
    attract and retain users in the increasingly competitive WVAS market in China,
 
    
    maintain and grow our 2G and 2.5G market share and revenues, and when launched,
successfully offer 3G services,
 
    
    successfully implement our business strategies, including integrating our recent
strategic acquisitions with our existing core business, and
 
    
    update and develop our services, technologies and content, which is highly complex.
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We may not be able to adequately protect our intellectual property, and we may be exposed to
infringement claims by third parties.
   We have limited business insurance coverage, which could expose us to significant costs and
business disruption.
  We believe that we were a passive foreign investment company (PFIC) for taxable years 2006 and
2007 and are likely a PFIC for the current taxable year of 2008, which could result in adverse U.S.
federal income tax consequences to U.S. investors.
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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.
  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.
  All participants of our existing equity compensation plans who are PRC citizens may be required to
register with the State Administration of Foreign Exchange of the PRC, or the SAFE. We may also
face regulatory uncertainties that could restrict our ability to adopt additional equity
compensation plans for our directors and employees and other parties under PRC law.
 Operating Procedures
for Administration of Domestic Individuals Participating in the Employee Stock Option Plan or Stock
Option Plan of an Overseas Listed Company Notice on Printing and Distributing the Operating Rules for the Notice of the State Administration
of Foreign Exchange on the Relevant Issues about Foreign Exchange Control over the Financing and
Return Investment of Domestic Residents through Overseas Special Purpose Companies
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Recent changes in PRC tax laws could have a material adverse effect on our operating results.
     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.
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
    
    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.
   RISKS RELATED TO DOING BUSINESS IN CHINA
 A slowdown in the Chinese economy may slow down our growth and profitability.
  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.
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Any occurrence of pandemic avian influenza or other widespread public health problem, or any
recurrence of severe acute respiratory syndrome, or SARS, could adversely affect our business and
results of operations.
  
    
    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.
  Changes in Chinas political and economic policies could harm our business.
  
    
    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.
  Restrictions on currency exchange may limit our ability to receive and use our cash resources
effectively.
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The value of our ordinary shares and ADSs will be affected by the foreign exchange rate between
U.S. dollars and Renminbi.
  
 Item 4.
Information On the Company
 A. History and Development of the Company
    
    
    In April 2007, we acquired Shanghai Saiyu, which provides WAP, multimedia messaging
service (MMS), IVR and SMS services on the China Mobile network throughout China, in
exchange for $3.2 million in cash.
 
    
    In April 2007, we completed our acquisition of a 30% equity interest in New Run,
which is a leading record label in China. We paid a total of $2.45 million in cash for
such interest, which consideration is subject to adjustments based on the financial
performance of New Runs business in the one-year period following the closing of the
acquisition.
 
    
    In April 2007, Freeland Music acquired a 51% equity interest in Fly Songs, a well
known performance and concert promotion company in Beijing, in exchange for $0.2 million
in cash. Our management believes that Fly Songs has established key relationships with
leading domestic and international music companies and music industry participants, which
has enabled it to organize various concerts and performances for leading artists. In
November 2007, for example, Fly Songs organized the financially successful The Year of
Jacky Cheung World Tour 2007 in Mianyang, a city located in Sichuan Province, China.
 
    
    In June 2007, we completed our acquisition of a 65% equity interest in Secular Bird,
which is a record label in China. We paid a total of $0.4 million in cash for this
interest, which is subject to adjustments based on the financial performance of Secular
Bird during the one-year period following the closing of the acquisition.
 
    
    In April 2007, we acquired Henan Yinshan, which provides SMS
services through China Mobile and China Unicom, in exchange for $0.9 million in cash.
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
    
    In 2007, we signed an agreement to sell our software and systems integration (SSI)
business unit, Hurray! Times Communications (Beijing) Co., Ltd.
( Hurray! Times Communications), to a subsidiary of
Taiwan Mobile, a leading telecomunications service provider in Taiwan.
With this sale we were able to focus on our music and other
entertainment services. We disposed the SSI business unit on
August 1, 2007, when Taiwan Mobile assumed control over the management
and assumed the risks of this business. The consideration we are
to receive for the sale is approximately $4.8 million, of which
a certain amount is contingent upon the collection of accounts receivable
of SSI business outstanding as of August 1, 2008.
 
    
    In November 2007, we announced the signing of an agreement to merge with Enlight
Media Ltd., a private entertainment content and distribution company in China, in an all
stock transaction. That agreement was subsequently terminated in March 2008 due to a
divergence in business strategies and a mutual determination that a combination would not
be in our mutual interests.
 B. Business Overview
 Introduction
    Our WVAS Services
   SMS Services
 IVR Services
 RBT Services
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WAP Services.
 MMS Services
 Java Games.     
 Our E-Marketing Services
  Our Offline Channel Business
  Our Digital Media Business
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Network
Service Agreements with Telecom Operators
 General
    Fee Arrangements and Other Payment Considerations
     24




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Obligations with Respect to Our Services
  Term and Termination and Other Material Provisions
   Music
Copyright Agreement with Telecom Operators and Service Providers
 General
  Fee Arrangements
  Term and Termination and Other Material Provisions
    25




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Product and Content Development
 Wireless Value-Added Services
    Music Production and Concert Promotion
        26




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Sales and Marketing
 Wireless Value-Added Services
   Online Sales and Marketing
  
    
    Internet Marketing Alliances.We began creating Internet marketing alliances in 2005.
Through these alliances, we work with tens of thousands of small, niche or vertical
websites in China to market, promote and distribute our WVAS products and content,
particularly our music-related products, to Internet and mobile users. We share a portion
of the revenues generated with the operators of these websites when their users access to
our website and subscribe for our services.
 
    
    Handset Manufacturers Partnerships. Starting in 2005, we began partnering with major
handset manufacturers to embed our services and service links into mobile handsets, which
enables mobile users to directly access our services without having to go through the
service portals operated by the telecom operators. We work with major global and domestic
handset manufacturers such as Motorola, Sony Ericsson, LG, Legend, TCL and Konka.
 
    
    Bundling of Products. We bundle certain of our products, primarily 2.5G products,
together for a single fixed fee that is lower than what would be payable if the user had
ordered those products separately. We often use bundled products together with a free
trial period to attract new users by giving them a free or low-cost 2.5G experience. We
also use bundled products to attract users that are price sensitive. In addition, bundling
can be an effective way to maintain user interest in our services because they can choose
from a number of services without incurring additional incremental cost and also to expose
users to the wide range of quality services that we offer. Because the content coverage
and product quality of individual products are better than those of the bundled products,
we have not experienced migration of high-use customers from individual services to the
bundled products.
 
    
    Cross-selling. We cross-sell among our various 2G and 2.5G services. Specific
cross-selling activities include placing a tool bar on the first page of all our games.
This enables users to easily try our other games without needing to return to the main
China Unicom WAP portal, as well as promoting our website to potential users as a fun,
easy-to-access place to learn about and request our wireless content and applications. We
also focus on cross-selling to users of our 2G services to migrate them to our
subscription-based, premium 2.5G services.
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Offline Sales and Marketing
  
    
    Direct Advertising. Starting in 2005, we began to increase our spending on direct
advertising in print, radio and TV media to market and promote our WVAS and music-related
products. We believe that direct advertising is one of the most effective ways to market
and promote our services to mobile users.
 
    
    Promotional Events.We maintain important marketing relationships with China Mobile
and China Unicom, through which a major portion of our services is provided. We host
promotional events throughout China featuring our pop singers or
latest releases with the telecom operators. At these events, we create brand awareness by interacting with consumers
to educate them about our mobile music services. In addition, our promotion of our
innovative services, such as our mobile novels which feature various popular PRC titles
in electronic format that are delivered to the mobile phones of subscribers in
installments, which service we believe was the first of its kind in China, has resulted in
significant media attention.
 
    
    Sales Co-promotion.We also focus on expanding our sales channels by developing
integrated sales campaigns with traditional media companies and multinational corporations
such as R.A. Baileys & Co., a beverage company best known for its liqueur, Baileys Irish
Cream.
 
    
    Retail Promotion.We have also entered into partnerships with retailers of mobile
handsets in some provinces, whereby the retailers sales staff introduces our services to
buyers of new handsets and offers them a free trial. In some cases, we share the revenues
generated through such promotions with the retailer.
 Our Music Business
  
    
    Online and mobile distribution.Our affiliated music companies have built dedicated
teams to focus on licensing music rights to Internet and mobile services providers. Such
licensing agreements typically involve an upfront minimum license fee, plus royalties paid
to the record companies by the services provider based on usage. With the recent
significant growth in the distribution of music via the Internet and WVAS and the
increased attention by the Chinese government and business community to intellectual
property protection, we believe that this new sales channel represents the largest growth
potential for our affiliated music companies.
 
    
    Concert tours.Record companies routinely organize concert tours from time to time
for their major artists, either independently or together with partners or corporate
sponsors. This is not only an effective way to raise the profile of our artists
nationwide, but also to generate revenues from concert ticket sales and corporate
sponsorship. We believe that we have enhanced our capacity to organize concert tours
through our acquisition of Fly Songs, a well known performance and concert promotion
company in Beijing that has successfully organized various concerts and performances for
leading artists including the The Year of Jacky Cheung World Tour 2007.
 
    
    Corporate sponsorship.Frequently, the artists of our affiliated music companies
appear in commercial advertising or serve as corporate image ambassadors on behalf of
consumer products and services companies. Our affiliated music companies proactively seek
out such opportunities to promote our artists and generate revenues from such corporate
sponsorship.
 
    
    Offline CD distribution.Upon launching a new album, our affiliated music companies
will distribute the album in CD format through traditional offline channels, which
primarily consists of the tens of thousands of retail stores in China specializing in
audio and video media products. As is customary in the industry, our affiliated music
companies enter into distribution agreements with major offline distributors or retail
chains. Such agreements typically include an upfront minimum license fee, plus royalties
paid to the record companies based on sales. Offline CD distribution channels in China
have been seriously affected, however, by piracy issues, and we believe that only a small
portion of all CD sales in China are from copyrighted sales which generate royalty
payments for the record companies.
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Customer Service
  Infrastructure and Technology
  
    
    develop and deliver our 2G and 2.5G services which are provided through networks of
China Mobile, China Unicom, China Telecom and China Netcom, and
    
    maintain our internal billing and transmission records.
     
 Competition
 Wireless Value-Added Services
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Our Music Business
   Government Regulation
  Regulation of Telecommunication Services
   
    
    Telecommunications Regulations(2000), or the Telecom Regulations, and the
Administrative Measures for Telecommunications Business Operating License(2002), or the
Telecom License Measures. The Telecom Regulations categorize all telecommunication
services businesses in China as either infrastructure telecommunication services
businesses or value-added telecommunication services businesses. The latter category
includes WAP, SMS and other 2G and 2.5G services. Under the Telecom Regulations, certain
services, including online data processing and transaction processing, call centers and
Internet access, are classified as being of a value-added nature and require a commercial
mobile operator to obtain an operating license in order to provide such services. The
Telecom Regulations also set forth extensive guidelines with respect to different aspects
of telecommunications operations in China. Under the Telecom License Measures, an approved
value-added telecommunication services provider must conduct its business in accordance
with the specifications recorded on its value-added telecommunication services operating
license. Certain of our affiliates, Hurray! Solutions, Beijing Palmsky, Beijing Network,
Beijing Hengji Weiye, Beijing Hutong, Shanghai Magma, Shanghai Saiyu and Henan Yinshan,
have been granted an inter-provincial value-added telecommunication services operating
license for mobile information services (excluding fixed line information and Internet
information services) by the MII that permits it to conduct nation-wide operations. Our
affiliate, WVAS Solutions, has been granted a value-added telecommunication services
operating license issued by the local Beijing Municipal Telecommunications Administration
Bureau. This license may not be sufficient to authorize WVAS Solutions to provide
value-added telecommunication services on a national basis.
    
    Regulations for the Administration of Foreign-Invested Telecommunications Enterprises
(2002), or the FI Telecom Regulations. The FI Telecom Regulations set forth detailed
requirements with respect to capitalization, investor qualifications and application
procedures in connection with the establishment of a foreign-invested telecom
enterprise. Under the FI Telecom Regulations, a foreign entity is prohibited from owning
more than 50% of the total equity in any value-added telecommunication services business in
China. To comply with these restrictions, we have entered into a series of agreements with
each of our affiliated Chinese entities and their respective shareholders. We hold no
ownership interest in any such affiliated Chinese entities.
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
    
    Notice on Intensifying the Administration of Foreign Investment in Value-added
Telecommunications Services(2006). Under this notice, an operating company holding a
value-added telecommunications license (and not its shareholders) must own all related
Internet domain names and registered trademarks. In addition, such companys business site
and equipment should comply with its approved licenses, and the company should establish
and audit its internal Internet and information security policies and standards and
emergency management procedures.
    
    Notice Concerning Short Message Services(2004), Under
this Notice, telecom operators
may only cooperate with licensed information service providers for SMS. This Notice sets
forth requirements for provision of SMS by information service providers with respect to
pricing, content and method of service provision. Certain types of SMS require customers
explicit confirmation on acceptance of charges before such services could be billed for.
This Notice also sets forth a high standard for customer services provided by information
service providers and requires the service providers to provide an easy and clear
cancellation mechanism for their customers to cancel subscribed services.
    
    Notice Concerning the Pricing and Billing of Mobile Information Services(2006).
Under this notice, the pricing and billing of WVAS must be accurate, clear and fair. In
addition, a wireless value-added service provider cannot charge a customer unless the
customer responds to two customer requests, and it must maintain detailed invoices for
each customer for more than five months. In turn, the telecom operators are required to
first deal with customer complaints, requests for refunds and related matters.
    
    Notice Concerning the Billing of Telecommunications Services(2007). Under this
notice, no telecommunication enterprise may activate any service or function directly
connected to their platforms, such as call reminder and voice inbox functions, unless the
customer affirmatively consents to subscribing to them. For any free trial service
subscribed by the mobile phone user, upon expiration of the free trial period, service
providers may not charge the mobile phone user any fee for such service or function until
the user re-confirms that it wishes to continue such service or function. When a customer
calls the customer support line of a service provider, the service provider is prohibited
from charging the customer a fee for such call unless the customer expressly confirms its
consent to such charge regardless of whether automated or live support is provided. If
automated support is provided, the customer is required to be furnished with pricing and
billing information through a free voice notice.
  Regulation for Internet Publication. Internet Publication Tentative
Administrative Measures  
 Regulation for Internet News Dissemination. 
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Regulation for Internet Games and Culture Activities. Internet Culture Administration Tentative Measures
 Regulation of Music Production
   Copyrights.
 Interim Provisions on
Compulsory License of Performance Regulations on
Protection of Information Network Transmission Right
 Certification and Licensing System. Regulations of the Phonographic Products and the Measures on
Wholesaling, Retailing and Renting of the Phonographic Products Opinions on
Regulation and Development of Music Transmitted via Network Regulations on
the Commercial Performance and its Implementing Provisions (2004) and Measures on the Professional
Intermediaries
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Other Laws and their Application
 Regulation of Internet content services.
  
    
    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.
  Regulation of advertisements.
   Foreign exchange controls.
 Intellectual Property and Proprietary Rights
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Hurray.com;
Hurray.net.cn; Hurray.com.cn; Hawa.cn; Hawa.com.cn; M2me.com; M2me.com.cn; 5200.cn; Icu.com.cn;
Icu.net.cn; sooglemusic.com; and hdmcms.com,.
    C. Organizational Structure
  1.
    
    Hurray! Solutions is 85% and 15% owned by our chairman and chief executive officer,
Qindai Wang, and one of our shareholders, Songzuo Xiang, respectively.2.
    
    Beijing Cool Young is 95% owned by Hurray! Solutions and 5% owned by Qindai Wang.
 3.
    
    Beijing Network is 50% owned by each of Li Xun and Hongmei Peng, two individuals in
China.
 4.
    
    WVAS Solutions is 99% owned by Beijing Network, with the remaining 1% equally owned
by Hao Sun and Xiaoping Wang.
 5.
    
    Beijing Palmsky is 50% and 50% owned by two individuals in China, Hong Liu and Haoyu
Yang.
 6.
    
    Beijing Hutong is 50% and 50% owned by two individuals in China, Wenqian Xu and Yi
Cai.
 7.
    
    Shanghai Magma is 50% and 50% owned by two individuals in China, Yi Zhang and Aiqin
Shang.
 8.
    
    Hengji Weiye is 50% and 50% owned by two individuals in China, Hong Pan and Xiaoqing
Guo.
 9.
    
    Shanghai Saiyu is 50% and 50% owned by two individuals in China, Liang Ruan and Yuqi
Shi.
 10.
    
    Henan Yinshan is 50% and 50% owned by two individuals in China, Hua Wei and Yidan
Jiang.
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D. Property, Plant and Equipment
   
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  A. OPERATING RESULTS
 Overview
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Factors Affecting Results of Operations and Financial Condition
  
    
    Growth of the WVAS Market in China and Changes in Mobile Operator Policies.Our
financial results have been, and we expect them to continue to be, largely dependent on
growth in the WVAS market in China. Historically, 2G services, such as SMS, have
represented the predominant portion of the WVAS market in China and of our revenues. Our
2G services, represented 75.9% of our total WVAS revenues in 2003, all of which were
derived from our SMS services. We commercially launched 2.5G services in September 2002
and began billing users for these services at the beginning of 2003. Since the launch of
these 2G and 2.5G services, we have experienced significant growth in revenues from these
services followed by a significant decline in revenues for these services in 2006 and
2007. The single most important factor causing this decline is the changes in mobile
operator policies or the manner in which they are enforced. Such policy changes and their
manner of enforcement have been frequent and unpredictable for the past three years and
have caused our revenues to be volatile. See Item 3. Risk Factors  Risks Related to Our
Company Unilateral changes in the policies of the MII, China Mobile and China Unicom and
in their enforcement of their policies have resulted in service suspensions and our having
to pay additional charges to the telecom operators, and further changes could materially
and adversely impact our revenue and profitability in the future. Although, we have been
adversely affected by recent changes in mobile operator policies and the delay in the
launch of 3G networks, we continue to believe that our financial success in the near-term
will depend on the growth of the market for our 2G and 2.5G services, especially services
utilizing music content, where we have a leading position and, in the longer-term, on our
ability to offer popular services on any new wireless technologies that are introduced in
China such as 3G.
    
    Positioning of Our Services on the WAP Portals of China Mobile and China Unicom.A
key component of our revenue growth is our ability to not only maintain access to China
Unicoms and China Mobiles networks, but also our ability to secure prominent positioning
for our services at the top of the menu of services for each major service category on the
telecom operators WAP portals so that users see our services first when opening the
service menus. However, Beijing Network, one of our affiliated operating companies
providing WAP services through China Mobile, was issued a sanction by China Mobile in
January 2006 for improper promotion of one of its WAP services. As part of the sanction,
China Mobile downgraded all of Beijing Networks WAP services to the bottom of the menu
and temporarily suspended the approval of new service applications on all platforms by Beijing Network and joint promotions
with Beijing Network. The sanction relating to downgrading Beijing Networks WAP services
to the bottom of China Mobiles menus is no longer in effect.
    
    Network Service Agreements with China Mobile, China Unicom and China Telecom.Our
results of operations are dependent on the terms of network service agreements with China
Mobile, China Unicom and China Telecom and the manner in which the
telecom operators
implement these agreements. Each of these agreements is non-exclusive, and has a limited
term, generally one or two years. Renewal of them on favorable terms depends on our
relationship with these telecom operators at both the national and provincial level, the
popularity of our services and our ability to maintain adequate levels of performance.
Any mobile operator could alter any of these terms or terminate the contracts for a
variety of reasons in the future, including, for example, to increase their own service or
network fees in order to enhance their profitability at the expense of service providers.
    
    Taxes.Certain of our subsidiaries and affiliated
Chinese entities enjoy tax exemptions and reduced tax rates. See
 Taxation below. Such tax treatment increases our
net income. Our future results could be materially adversely affected
if we are not able to maintain similar tax treatment, particularly as
a result of the recently adopted revisions to PRC income tax laws
which became effective on January 1, 2008.
    
    Billing and Transmission Failures. We do not recognize any revenues for services that
are characterized as billing and transmission failures. These failures occur when we do
not collect fees for our 2G services from mobile operators in a number of circumstances,
including when the delivery of our services to a customer is prevented because the
customers phone is off, the customers prepaid phone card has run out of value or a
telecom operator experiences technical problems with its network. These situations are
known in the industry as billing and transmission failures. The level of billing and
transmission failures significantly affects revenues we record. The failure rate for 2G
services has fluctuated significantly in the past, ranging on a monthly basis from 0.0% to
9.8% of the total billable messages which are reflected in our internal records during
2007. Although we do not experience the same type of billing and transmission errors for
our 2.5G services as we do for our 2G services, we do experience a discrepancy between the
revenues recorded by our internal system and the revenues that we
receive from the telecom operators. This difference has historically averaged approximately 2% per month and
relates to
services that are provided but for a variety of reasons are not billed to the user due to
the manner in which the telecom operators register new users or manage their internal billing
reconciliation process.
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
    
    Acquisitions and Strategic Investments.Selective acquisitions and strategic
investments, such as the ones described in Item 4.A. History and Development of
the Company above, form part of our strategy to further expand our business. These
acquisitions and investments may not produce the results that our management and board of
directors anticipate, and may subject our company to unforeseen liabilities. In
particular, our future revenue growth will depend on our ability to successfully operate
our music development, production and distribution business, with which we have relatively
limited experience.
    
    Developing Artists, Sustaining a Pipeline of New Song Releases and Keeping up with
Consumer Music Tastes.Through our acquisition of controlling and minority stakes in Huayi
Brothers Music, Freeland Music, New Run and Secular Bird, we have entered the business of
artist development and music production. Artist development and music production is
inherently a hit driven business, and its success depends to a large extent on our
ability to maintain a large portfolio of talented singing artists and build a strong
pipeline of new song releases. Further, the success of such new releases depends upon
their acceptance by consumers with various and changing tastes. If our affiliated music
companies fail to expand their portfolio of talented singing artists, sustain a
pipeline of new releases, or keep abreast of changes in consumer music tastes, our
business and financial condition may be adversely affected with respect to the financial
performance of our affiliated music companies.
 Revenues
   For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    PercentageAmount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues(in thousands of U.S. dollars, except percentages)Revenues:Wireless value-added services
    
    $
    50,038
    
    
    
    82.7
    %
    
    $
    62,512
    
    
    
    91
    %
    
    $
    56,063
    
    
    
    100.0
    %Recorded music
    
    
    10,489
    
    
    
    17.3
    
    
    
    6,203
    
    
    
    9
    
    
    
    
    
    
    
    Total revenues
    
    $
    60,527
    
    
    
    100.0
    %
    
    $
    68,715
    
    
    
    100.0
    %
    
    $
    56,063
    
    
    
    100.0
    %
  For the Year Ended December 31, 2007China
    
    
    China
    
    
    China
    
    
    ChinaMobile
    
    
    Unicom
    
    
    Telecom
    
    
    Netcom
    
    
    Others
    
    
    Total(in millions of U.S. dollars)SMS
    
    $
    7.0
    
    
    $
    2.5
    
    
    $
    0.2
    
    
    $
    0.3
    
    
    $
    1.0
    
    
    $
    11.0IVR
    
    
    13.3
    
    
    
    1.2
    
    
    
    2.4
    
    
    
    0.3
    
    
    
    
    
    
    
    17.2RBT
    
    
    1.6
    
    
    
    1.7
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    5.72G Revenues
    
    
    21.9
    
    
    
    5.4
    
    
    
    5.0
    
    
    
    0.6
    
    
    
    1.0
    
    
    
    33.9WAP
    
    
    5.9
    
    
    
    6.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.6MMS
    
    
    0.7
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4Java
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.42.5G revenues
    
    
    8.0
    
    
    
    7.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.4Other revenues
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    0.7Total
    
    $
    30.0
    
    
    $
    12.8
    
    
    $
    5.0
    
    
    $
    0.6
    
    
    $
    1.6
    
    
    $
    50.0
  39




---



##### Table of Contents



For the Year Ended December 31, 2006China
    
    
    China
    
    
    China
    
    
    ChinaMobile
    
    
    Unicom
    
    
    Telecom
    
    
    Netcom
    
    
    Total(in millions of U.S. dollars)SMS
    
    $
    11.3
    
    
    $
    5.7
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    17.1IVR
    
    
    5.2
    
    
    
    2.5
    
    
    
    2.5
    
    
    
    0.6
    
    
    
    10.8RBT
    
    
    2.0
    
    
    
    1.3
    
    
    
    1.4
    
    
    
    
    
    
    
    4.72G Revenues
    
    
    18.5
    
    
    
    9.5
    
    
    
    3.9
    
    
    
    0.7
    
    
    
    32.6WAP
    
    
    10.4
    
    
    
    11.1
    
    
    
    
    
    
    
    
    
    
    
    21.5MMS
    
    
    3.5
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    4.0Java
    
    
    4.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.42.5G revenues
    
    
    18.3
    
    
    
    11.6
    
    
    
    
    
    
    
    
    
    
    
    29.9Total
    
    $
    36.8
    
    
    $
    21.1
    
    
    $
    3.9
    
    
    $
    0.7
    
    
    $
    62.5
 For the Year Ended December 31, 2005China
    
    
    China
    
    
    China
    
    
    ChinaMobile
    
    
    Unicom
    
    
    Telecom
    
    
    Netcom
    
    
    Total(in millions of U.S. dollars)SMS
    
    $
    2.0
    
    
    $
    8.6
    
    
    $
    
    
    
    $
    
    
    
    $
    10.6IVR
    
    
    4.8
    
    
    
    2.9
    
    
    
    0.7
    
    
    
    0.2
    
    
    
    8.6RBT
    
    
    0.5
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.92G Revenues
    
    
    7.3
    
    
    
    11.9
    
    
    
    0.7
    
    
    
    0.2
    
    
    
    20.1WAP
    
    
    10.2
    
    
    
    24.1
    
    
    
    
    
    
    
    
    
    
    
    34.3MMS
    
    
    1.5
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    1.7Java
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5G revenues
    
    
    11.7
    
    
    
    24.3
    
    
    
    
    
    
    
    
    
    
    
    36.0Total
    
    $
    19.0
    
    
    $
    36.2
    
    
    $
    0.7
    
    
    $
    0.2
    
    
    $
    56.1
 Wireless Value-added Services
 Recorded Music
 Cost of Revenues
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands of U.S. dollars)Cost of Revenues:Wireless value-added services
    
    $
    36,394
    
    
    $
    40,672
    
    
    $
    28,635Recorded music
    
    
    6,233
    
    
    
    3,553
    
    
    
    Total cost of revenues
    
    $
    42,627
    
    
    $
    44,225
    
    
    $
    28,635
  40




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##### Table of Contents



Wireless value-added services.
  Gross Profit Margin
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands ofU.S. dollars, except percentages)Gross Profits:Wireless value-added services
    
    $
    13,644
    
    
    $
    21,840
    
    
    $
    27,428Recorded music
    
    
    4,256
    
    
    
    2,650
    
    
    
    Total gross profits
    
    $
    17,900
    
    
    $
    24,490
    
    
    $
    27,428
 For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Gross Profit Margin:Wireless value-added services
    
    
    27.3
    %
    
    
    34.9
    %
    
    
    48.9
    %Recorded music
    
    
    40.6
    
    
    
    42.7
    
    
    
    Total gross profit margin
    
    
    29.6
    %
    
    
    35.6
    %
    
    
    48.9
    %
  Operating Expenses
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    PercentageAmount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues(in thousands of U.S. dollars, except percentages)Operating Expenses:Product development expenses
(including stock-based
compensation expense of $1, $80
and $5 for the years ended
December 31, 2007, 2006 and
2005, respectively)
    
    $
    2,028
    
    
    
    3.0
    %
    
    $
    2,169
    
    
    
    3.2
    %
    
    $
    1,852
    
    
    
    3.3
    %Selling and marketing expenses
(including stock-based
compensation expense of $287,
$346 and $10 for the years ended
December 31, 2007, 2006 and
2005, respectively)
    
    
    11,514
    
    
    
    16.8
    
    
    
    11,014
    
    
    
    16.0
    
    
    
    8,982
    
    
    
    16.0General and administrative
expenses (including stock-based
compensation expense of $155,
$118 and $23 for the years ended
December 31, 2007, 2006 and
2005, respectively)
    
    
    9,141
    
    
    
    13.3
    
    
    
    6,699
    
    
    
    9.7
    
    
    
    3,443
    
    
    
    6.1Provision for goodwill impairment
    
    
    38,779
    
    
    
    56.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    $
    61,462
    
    
    
    89.4
    %
    
    $
    19,882
    
    
    
    28.9
    %
    
    $
    14,277
    
    
    
    25.5
    %
  41




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##### Table of Contents



Product Development Expenses
 Selling and Marketing Expenses
 General and Administrative Expenses
    Stock-based Compensation.
   42




---



##### Table of Contents



Provision for impairment of goodwill and intangible assets.
 Critical Accounting Policies
  Revenue Recognition
 Wireless
value-added services.
  43




---



##### Table of Contents



Recorded Music
     Stock-based Compensation Cost
   44




---



##### Table of Contents



Goodwill and Intangible Assets Impairment
   Income Taxes
    45




---



##### Table of Contents



Results of Operations
  Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
  Revenues.
 Wireless Value-added Services
 Recorded Music.
 Cost of Revenues.
 Wireless value-added Services
 Recorded Music.
 Gross Profits.
 Operating Expenses.
 Product Development Expenses.
 Selling and Marketing Expenses
 General and Administrative Expenses
 Provision
for Impairment of Goodwill and Intangible Assets.
  46




---



##### Table of Contents



(Loss)
Income from Continuing Operations.
 Interest
Income and Expense
 Other
Income
 Income Taxes.
 Equity in Losses of Affiliate
 Net
(Loss) Income from Continuing Operations.
 Net
Loss from Discontinued Operations.
 Net
(Loss) Income
 Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
  Revenues.
 Wireless
Value-Added Services
 Recorded Music.
 Cost of Revenues.
 Wireless
Value-Added Services
  47




---



##### Table of Contents



Gross Profits.
 Operating Expenses.
 Product Development Expenses.
 Selling and Marketing Expenses
 General and Administrative Expenses
 Income from Operations.
 Interest
Income and Expense
 Other
Income
 Income Taxes.
 Net
Income from Continuing Operations.
 Net
(Loss) Income from Discontinued Operations.
 Net
Income
 B. LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows and Working Capital
  For the Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands of U.S. dollars)Net cash (used in) provided by operating activities
    
    $
    (2,055
    )
    
    $
    17,636
    
    
    $
    13,980Net cash used in investing activities
    
    
    (8,120
    )
    
    
    (15,157
    )
    
    
    (6,591
    )Net cash provided by (used in) financing activities
    
    
    16
    
    
    
    (4,399
    )
    
    
    59,305Net (decrease) increase in cash and cash equivalents
    
    $
    (10,159
    )
    
    $
    (1,920
    )
    
    $
    66,694
  48




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##### Table of Contents



Indebtedness
   49




---



##### Table of Contents



C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
  D. TREND INFORMATION
  E. OFF-BALANCE SHEET ARRANGEMENTS
  F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  Payments Due by PeriodLess than
    
    
    1-3
    
    
    3-5Total
    
    
    1 year
    
    
    years
    
    
    years(in thousands of U.S. dollars)Operating lease commitments
    
    $
    3,125
    
    
    $
    1,725
    
    
    $
    1,379
    
    
    $
    21Other contractual commitments*
    
    
    5,086
    
    
    
    1, 974
    
    
    
    3,112
    
    
    
    Total contractual obligations
    
    $
    8,211
    
    
    $
    3,699
    
    
    $
    4,491
    
    
    $
    21
 
 *
    
    Represents non-cancelable agency agreements with certain artists that provide for minimum
payments.  Holding Company Structure
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   50




---



##### Table of Contents



Foreign Exchange Risk
   Inflation
  TAXATION
     51




---



##### Table of Contents



RECENTLY ISSUED ACCOUNTING STANDARDS
   52




---



##### Table of Contents



Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
  Name
    
    Age
    
    Position
    
    Class
    
    Term of OfficeQindai Wang
    
    
    43
    
    
    Chairman of the Board and Chief Executive Officer
    
    Class I
    
    2 yearsJesse Liu
    
    
    45
    
    
    Director
    
    Class I
    
    2 yearsRobert Mao(1)
    
    
    64
    
    
    Director
    
    Class I
    
    2 yearsAlan Powrie (1)
    
    
    57
    
    
    Director
    
    Class III
    
    1 yearSuberna Shringla(1)
    
    
    42
    
    
    Director
    
    Class II
    
    3 yearsSongzuo Xiang
    
    
    43
    
    
    Director
    
    Class II
    
    3 yearsShudan Zhang
    
    
    48
    
    
    Director
    
    Class III
    
    1 yearShaojian (Sean) Wang
    
    
    44
    
    
    President, Chief Operating Officer and Acting
Chief Financial Officer
    
    
    
    
 
 (1)
    
    Member of the audit committee, compensation committee and nominating committee.  53




---



##### Table of Contents



Biographical Information
 Qindai Wang.
 Jesse Liu.
 Robert Mao.
 Alan Powrie.
 Suberna Shringla.
 Songzuo Xiang.
  54




---



##### Table of Contents



Shudan Zhang.
 Shaojian (Sean) Wang.
 B. Compensation
 Compensation of Directors and Executive Officers
    Employment Agreements
    
    
    dishonesty,
    
    fraud,
    
    breach of trust,
    
    physical harm to any person,
    
    breach of the employment agreement, or
    
    other similar conduct.
 
  55




---



##### Table of Contents




    
    changes in the officers position, which materially reduce his level of
responsibilities, duties or stature, or
    
    a reduction in the officers compensation.
    Summary of Stock Plans
 2004 Share Incentive Plan
   
    
    our ordinary shares,
    
    options to purchase our ordinary shares,
    
    dividend equivalent rights, the value of which is measured by the dividends paid with
respect to our ordinary shares,
    
    nonvested shares,
    
    stock appreciation rights the value of which is measured by appreciation in the value
of our ordinary shares, and
    
    any other securities the value of which is derived from the value of our ordinary
 shares and which can be settled for cash, our ordinary shares or other securities or a
combination of cash, our ordinary shares or other securities.
  Plan Administration.
 Eligibility.
  56




---



##### Table of Contents



Acceleration of Awards upon Corporate Transactions or Changes in Control.
 Awards.
 Exercise or Purchase Price and Term of Awards.
   Transferability.
 Termination of Service.
 Amendment or Termination of 2004 Plan.
 2003 Stock Option Plan
   57




---



##### Table of Contents



Types of Awards.
 Plan Administration.
 Eligibility.
 Acceleration of Awards upon Corporate Transactions.
 Awards.
 Exercise or Purchase Price and Term of Awards.
  Transferability.
 Termination of Service.
 2002 Incentive Compensation Plan
   58




---



##### Table of Contents



C. Board Practices
        www.hurray.com
 D. Employees
   Department
    
    2007WVAS Business Unit (Wireless Value-Added Services)
    
    
    292E-Marketing Business Unit
    
    
    40Digital Media Business Unit
    
    
    13Offline Channel Business Unit
    
    
    16Marketing and New Business Development
    
    
    12Finance and Operation Planning
    
    
    38Human Resources and Administrative
    
    
    24Legal and Corporate Development
    
    
    5Office of Chief Executive Officer
    
    
    4Total
    
    
    444
  59




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##### Table of Contents



E. Share Ownership
  
    
    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.
  Number of SharesBeneficially OwnedName
    
    Number
    
    
    Percentage5% and above ShareholdersVenrock Associates
    
    
    257,377,900
    
    
    
    11.8
    %30 Rockefeller Plaza - 5508New York, NY 10112-0015, United States(1)Executive Officers and Directors(2)Pleasant Season Ltd./Qindai Wang(3)
    
    
    188,621,660
    
    
    
    8.6
    %Jesse Liu(4)
    
    
    80,443,560
    
    
    
    3.7
    %Robert Mao(5)
    
    
    2,000,000
    
    
    
    *Suberna Shringla
    
    
    
    
    
    
    *Xero Holdings Ltd./Songzuo Xiang(6)
    
    
    109,510,320
    
    
    
    5.0
    %Shudan Zhang
    
    
    110,712,840
    
    
    
    5.0
    %Alan Powrie(7)
    
    
    600,000
    
    
    
    *Shaojian (Sean) Wang
    
    
    9,799,900
    
    
    
    *All current directors and executive officers as a group (8 persons)
    
    
    501,688,280
    
    
    
    22.9
    %
 
 (1)
    
    Venrock Associates is an investment adviser. This share information is based solely on
information filed by such shareholder with the SEC.(2)
    
    The address of our executive officers and directors is c/o Hurray! Holding Co., Ltd., 15/F,
Tower B, Gateway Plaza, No.18 Xia Guang Li, East Third Ring, Chaoyang District, Beijing
100027, Peoples Republic of China.(3)
    
    Represents shares beneficially owned by Mr. Wang through a revocable trust in which he
retains voting and dispositive power over such shares.  60




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##### Table of Contents



(4)
    
    Includes 39,031,780 ordinary shares beneficially owned by Mr. Lius spouse, Carol Ng, through
an irrevocable trust in the name of Olympia Hills Ltd. Ms. Ng retains voting and dispositive
power over those shares in trust.(5)
    
    Represents ordinary shares issuable upon the exercise of stock options. All of the options
have an exercise price of $0.0705 per ordinary share and an expiration date of June 30, 2013.(6)
    
    Represents ordinary shares beneficially owned by Dr. Xiang through a revocable trust in which
he retains voting and dispositive power over such shares.(7)
    
    Represents ordinary shares issuable upon the exercise of stock options. All of the options
have an exercise price of $0.1025 per ordinary share and an expiration date of January 1,
2014.    
 Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  B. Related Party Transactions
 Related Party Transactions
   Powers of Attorney.
  61




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##### Table of Contents



Operating Agreements.
 Exclusive Technical Consulting and Services Agreements.
 Software Transfer Agreements and Software License Agreements.
 Contracts Relating to the Exclusive Purchase Right of Equity Interest.
 Equity Interests Pledge Agreements.
     62




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##### Table of Contents



C. Interests of Experts and Counsel
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information
  A.7 Legal Proceedings
  A.8 Dividend Policy
  B. Significant Changes
  
 Item 9. The Offer and Listing
    Sales PriceHigh
    
    
    LowAnnual highs and lows2005 (February 4, 2005 through December 31, 2005)
    
    $
    11.80
    
    
    $
    7.672006 (January 1, 2006 through December 31, 2006)
    
    $
    9.71
    
    
    $
    4.702007 (January 1, 2007 through December 31, 2007)
    
    $
    6.53
    
    
    $
    3.052008 (January 1, 2008 through May 30, 2008)
    
    $
    4.21
    
    
    $
    2.36Quarterly highs and lowsFirst Quarter 2006
    
    $
    9.68
    
    
    $
    7.51Second Quarter 2006
    
    $
    9.71
    
    
    $
    5.22Third Quarter 2006
    
    $
    6.74
    
    
    $
    4.70Fourth Quarter 2006
    
    $
    8.28
    
    
    $
    5.67First Quarter 2007
    
    $
    6.53
    
    
    $
    4.85Second Quarter 2007
    
    $
    5.62
    
    
    $
    4.36Third Quarter 2007
    
    $
    6.04
    
    
    $
    3.32Fourth Quarter 2007
    
    $
    6.04
    
    
    $
    3.05
  63




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##### Table of Contents



Sales PriceHigh
    
    
    LowFirst Quarter 2008
    
    $
    4.21
    
    
    $
    2.36Second Quarter 2008 (April 1, 2008 through May 30, 2008)
    
    $
    3.10
    
    
    $
    2.61Monthly highs and lowsDecember 2007
    
    $
    4.53
    
    
    $
    3.46January 2008
    
    $
    4.21
    
    
    $
    3.11February 2008
    
    $
    3.52
    
    
    $
    3.05March 2008
    
    $
    3.38
    
    
    $
    2.36April 2008
    
    $
    3.00
    
    
    $
    2.61May 2008
    
    $
    3.10
    
    
    $
    2.66
 
 Item 10. Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
  C. Material Contracts
  D. Exchange Controls
  
    
    Foreign Currency Administration Rules (1996), as amended, or the Exchange Rules; and
    
    Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or
the Administration Rules.
   E. Taxation
  Cayman Islands Taxation
   64




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##### Table of Contents



United States Federal Income Taxation
    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.
  
    
    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.
    65




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##### Table of Contents



ADSs
   TAXATION OF U.S. HOLDERS
 Passive Foreign Investment Company
     Default PFIC Rules under Section 1291 of the Code
   
    
    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.
  66




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##### Table of Contents




    
    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.
    QEF Election
 Mark-to-Market Election.
   U.S. Federal Income Tax Consequences If We Are Not Treated as a PFIC
  Distributions on Ordinary Shares or ADSs
 General
   67




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##### Table of Contents



Qualified Dividend Income
 Foreign Currency Distributions.
 In-Kind Distributions
 Foreign Tax Credits.
      Dispositions of Ordinary Shares or ADSs
   68




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##### Table of Contents



Information Reporting and Backup Withholding
   TAXATION OF NON-U.S. HOLDERS
 Distributions on Ordinary Shares or ADSs
   Dispositions of Ordinary Shares or ADSs
     69




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##### Table of Contents



Information Reporting and Backup Withholding
   Enforcement of Civil Liabilities
  
    
    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.
           F. Dividends and Paying Agents
  G. Statement by Experts
   70




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##### Table of Contents



H. Documents on Display
  www.sec.gov
   I. Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
   71




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##### Table of Contents



Item 12. Description of Securities Other than Equity Securities
  
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
 Use of Proceeds
     
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
      72




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 Item 16. Reserved
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  www.hurray.com
 
 Item 16C. Principal Accountant Fees and Services
 Disclosure of Fees Charged by Independent Accountants
  For the year endedDecember 31,2007
    
    
    2006Audit fees(1)
    
    $
    641,898
    
    
    $
    315,375Audit related fees(2)
    
    $
    6,362
    
    
    $
    4,696Tax fees(3)
    
    
    
    
    
    
    All other fees(4)
    
    
    
    
    
    
    
 
 (1)
    
    Audit fees means the aggregate fees incurred in each of the fiscal years listed for our
calendar year audits and reviews of financial statements.(2)
    
    Audit-related fees means the aggregate fees incurred in each of the fiscal years listed for
professional services related to the audit of our financial statements that are not reported
under Audit fees and consultation on accounting standards or transactions.  73




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##### Table of Contents



(3)
    
    Tax fees means the aggregate fees incurred in each of the fiscal years listed for
professional services rendered for tax compliance, tax advice and tax planning.(4)
    
    All other fees means the aggregate fees incurred in each of the fiscal years listed for
professional services rendered other than those reported under Audit fees, Audit-related
fees, and Tax fees. Audit Committee Pre-approval Policies and Procedures
  
    
    Any audit or non-audit service to be provided to us by the independent accountant
must be submitted to the audit committee for review and approval, with a description of
the services to be performed and the fees to be charged.
    
    The audit committee in its sole discretion then approves or disapproves the proposed
services and documents such approval, if given, through written resolutions or in the
minutes of meetings, as the case may be.
 
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 ExhibitNumber
    
    Document1.1
    
    
    Amended and Restated Memorandum and Articles of Association of the
Company (incorporated herein by reference to Exhibit 3.1 to our
registration statement on Form F-1 (Registration No. 333-121987)
filed with the Commission on January 12, 2005).2.1
    
    
    Specimen American Depositary Receipt of the Company (incorporated by
reference to Exhibit 4.1 to our registration statement on Form F-6
(Registration No. 333-122004) filed with the Commission on
January 13, 2005).2.2
    
    
    Specimen Share Certificate of the Company (incorporated herein by
reference to Exhibit 4.2 to our registration statement on Form F-1
(Registration No. 333-121987) filed with the Commission on January
12, 2005).2.3
    
    
    Deposit Agreement dated February 9, 2005 among the Company, Citibank
N.A. and holders of the American Depositary Receipts issued
thereunder (incorporated by reference to Exhibit 3(a) to our
registration statement on Form F-6 (Registration No. 333-122004)
filed with the Commission on January 13, 2005).
  74




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##### Table of Contents



ExhibitNumber
    
    Document4.1
    
    
    Amended and Restated Registration Rights Agreement dated as of June
16, 2003 by and among Hurray! Holding Co., Ltd., Fidelity Greater
China Ventures Fund L.P., Venture TDF Technology Fund III, L.P.,
Granite Global Ventures (Q.P.) L.P. and Granite Global Ventures L.P.
(incorporated by reference to Exhibit 10.1 of our registration
statement on Form F-1 (File No. 333-121987) filed with the Commission
on January 12, 2005).4.2
    
    
    2002 Incentive Compensation Plan (incorporated by reference to
Exhibit 10.2 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.3
    
    
    2003 Stock Option Plan (incorporated by reference to Exhibit 10.3 of
our registration statement on Form F-1 (File No. 333-121987) filed
with the Commission on January 12, 2005).4.4
    
    
    Form of Indemnification Agreement (incorporated by reference to
Exhibit 10.4 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.5
    
    
    Employment Agreement by and between Hurray! Holding Co., Ltd. and
Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit
10.5 of our registration statement on Form F-1 (File No. 333-121987)
filed with the Commission on January 12, 2005).4.6
    
    
    Employment Agreement by and between Hurray! Holding Co., Ltd. and
Shaojian (Sean) Wang on May 23, 2006 (incorporated by reference to
Exhibit 4.7of our annual report on Form 20-F (File No. 000-51116)
filed with the Commission on June 15, 2007).4.7
    
    
    Translation of Equity Transfer Agreement by and among Zhang Yi, Shang
Aiqin, Wang Jiang, Xu Hongyan, Xie Peifu, He Ming and Chen Yixiao
dated December 30, 2005 (incorporated by reference to Exhibit 4.13 of
our annual report on Form 20-F filed with the Commission on June 15,
2006).4.8
    
    
    Translation of Equity Transfer and Capital Increase Agreement by and
among Beijing Huayi Brothers Advertising Co., Ltd., Beijing Qixin
Weiye Culture Development Co., Ltd. and Hurray! Digital Music
Technology Co., Ltd. dated December 12, 2005 (incorporated by
reference to Exhibit 4.15 of our annual report on Form 20-F filed
with the Commission on June 15, 2006).4.9
    
    
    Translation of Cooperation Agreement by and among Hurray! Solutions,
Ltd., Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong
Wuxian Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland
Movie and Television Production Co., Ltd., Beijing Shiji Freeland
Movie and Television Distribution Co., Ltd., Shanghai Hai Le Audio &
Video Distribution Co., Ltd. and Hong Kong Freeland Movie Industry
Group Co., Ltd. dated November 14, 2005 (incorporated by reference to
Exhibit 4.16 of our annual report on Form 20-F filed with the
Commission on June 15, 2006).4.10
    
    
    Translation of Data Service Cooperation Agreement between Beijing Enlight Times Info Co., Ltd and Hurray!
Solutions Ltd. (incorporated by reference to Exhibit 10.21 of our registration statement on Form F-1 (File
No. 333-121987) filed with the Commission on January 12, 2005).4.11
    
    
    Translation of Contracts in Relation to Maximum Amount of Guarantee between Hua Xia Bank as creditor and
each of Hurray! Times Communications (Beijing) Ltd. and Beijing Enterprise Network Technology Co., Ltd. as
guarantor dated December 31, 2004 (incorporated by reference to Exhibit 10.23 of our registration statement
on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).4.12
    
    
    Translation of Agreement for Transfer of Entitlement to Dividends between Qindai Wang and Hurray! Holding
Co., Ltd. dated August 15, 2003 (incorporated by reference to Exhibit 10.24 of our registration statement
on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).4.13
    
    
    Translation of Software Assignment Agreement between Hurray! Solutions Ltd. and Hurray! Times
Communications (Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.27 of our
registration statement on Form F-1 (File No. 333 121987) filed with the Commission on January 12, 2005).
  75




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##### Table of Contents



ExhibitNumber
    
    Document4.14
    
    
    Translation of Software License Agreement between Hurray! Times Communications (Beijing) Ltd. and Hurray!
Solutions Ltd. dated May 5, 2004(incorporated by reference to Exhibit 10.28 of our registration statement
on Form F-1 (File No. 333 121987) filed with the Commission on January 12, 2005).4.15
    
    
    Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit
10.31 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January
12, 2005).4.16
    
    
    Translation of Authorization Agreement by Songzuo Xiang dated May 5, 2004 (incorporated by reference to
Exhibit 10.32 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on
January 12, 2005).4.17
    
    
    Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications
(Beijing) Ltd. and Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.33 of
our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12,
2005).4.18
    
    
    Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Hurray! Solutions
Ltd., Qindai Wang and Songzuo Xiang dated May 5, 2004 (incorporated by reference to Exhibit 10.34 of our
registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).4.19
    
    
    Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co.,
Ltd., Hurray! Solutions Ltd. and Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit 10.35
of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January 12,
2005).4.20
    
    
    Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co.,
Ltd., Hurray! Solutions Ltd. and Songzuo Xiang dated May 5, 2004 (incorporated by reference to Exhibit
10.36 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on
January 12, 2005).4.21
    
    
    Translation of Equity Interests Pledge Agreement between Qindai Wang and Hurray! Times Communications
(Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.37 of our registration statement
on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).4.22
    
    
    Translation of Equity Interests Pledge Agreement between Songzuo Xiang and Hurray! Times Communications
(Beijing) Ltd. dated May 5, 2004 (incorporated by reference to Exhibit 10.38 of our registration statement
on Form F-1 (File No. 333-121987) filed with the Commission on January 12, 2005).4.23
    
    
    Translation of Letter of Undertaking by Qindai Wang dated May 5, 2004 (incorporated by reference to Exhibit
10.39 of our registration statement on Form F-1 (File No. 333-121987) filed with the Commission on January
12, 2005).4.24
    
    
    Translation of Authorization Agreement by Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by
reference to Exhibit 10.40 of our registration statement on Form F-1 (File No. 333-121987) filed with the
Commission on January 12, 2005).4.25
    
    
    Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times Communications
(Beijing) Ltd. and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated by
reference to Exhibit 10.41 of our registration statement on Form F-1 (File No. 333-121987) filed with the
Commission on January 12, 2005).4.26
    
    
    Translation of Operating Agreement among Hurray! Times Communications (Beijing) Ltd., Beijing Cool Young
Information Technology Co., Ltd., Qindai Wang and Hurray! Solutions Ltd. dated May 5, 2004 (incorporated by
reference to Exhibit 10.42 of our registration statement on Form F-1 (File No. 333-121987) filed with the
Commission on January 12, 2005).
  76




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##### Table of Contents



ExhibitNumber
    
    Document4.27
    
    
    Translation of Contract Related to Exclusive Purchase Right of Equity Interest among Hurray! Holding Co.,
Ltd., Qindai Wang and Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004 (incorporated
by reference to Exhibit 10.43 of our registration statement on Form F-1 (File No. 333-121987) filed with
the Commission on January 12, 2005).4.28
    
    
    Translation of Contract Related to Exclusive Purchase Right of Equity
Interest among Hurray! Holding Co., Ltd., Hurray! Solutions Ltd. and
Beijing Cool Young Information Technology Co., Ltd. dated May 5, 2004
(incorporated by reference to Exhibit 10.44 of our registration
statement on Form F-1 (File No. 333-121987) filed with the Commission
on January 12, 2005).4.29
    
    
    Translation of Equity Interests Pledge Agreement between Hurray!
Times Communications (Beijing) Ltd. and Qindai Wang dated May 5, 2004
(incorporated by reference to Exhibit 10.45 of our registration
statement on Form F-1 (File No. 333-121987) filed with the Commission
on January 12, 2005).4.30
    
    
    Translation of Equity Interests Pledge Agreement between Hurray!
Times Communications (Beijing) Ltd. and Hurray! Solutions Ltd. dated
May 5, 2004 (incorporated by reference to Exhibit 10.46 of our
registration statement on Form F-1 (File No. 333-121987) filed with
the Commission on January 12, 2005).4.31
    
    
    Translation of Software License Agreement between Hurray! Times
Communications (Beijing) Ltd. and Beijing Cool Young Information
Technology Co., Ltd. dated May 5, 2004 (incorporated by reference to
Exhibit 10.49 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.32
    
    
    Translation of Software License Agreement between Hurray! Times
Communications (Beijing) Ltd. and Beijing WVAS Solutions Ltd. dated
May 5, 2004 (incorporated by reference to Exhibit 10.53 of our
registration statement on Form F-1 (File No. 333-121987) filed with
the Commission on January 12, 2005).4.33
    
    
    Translation of Authorization Agreements by each of Sun Hao and Wang
Xiaoping dated October 1, 2004 and October 1, 2004, respectively
(incorporated by reference to Exhibit 10.55 of our registration
statement on Form F-1 (File No. 333-121987) filed with the Commission
on January 12, 2005).4.34
    
    
    Translation of Authorization Agreement by Beijing Enterprise Network
Technology Co., Ltd. dated October 1, 2004 (incorporated by reference
to Exhibit 10.56 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.35
    
    
    Translation of Exclusive Technical Consulting and Services Agreement
between Hurray! Times Communications (Beijing) Ltd. and Beijing WVAS
Solutions Ltd. dated May 5, 2004 (incorporated by reference to
Exhibit 10.57 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.36
    
    
    Translation of Operating Agreement among Hurray! Times Communications
(Beijing) Ltd., Beijing WVAS Solutions Ltd., Beijing Enterprise
Network Technology Co., Ltd., Sun Hao and Wang Xiaoping dated October
1, 2004 (incorporated by reference to Exhibit 10.58 of our
registration statement on Form F-1 (File No. 333-121987) filed with
the Commission on January 12, 2005).4.37
    
    
    Translation of Contracts Relating to Exclusive Purchase Right of
Equity Interest between Hurray! Holding Co., Ltd., Beijing WVAS
Solutions Ltd. and each of Sun Hao and Wang Xiaoping dated October 1,
2004 and October 1, 2004, respectively (incorporated by reference to
Exhibit 10.59 of our registration statement on Form F-1 (File No.
333-121987) filed with the Commission on January 12, 2005).4.38
    
    
    Translation of Contract
Relating to Exclusive Purchase
Right of Equity Interest
between Hurray! Holding Co.,
Ltd., Beijing WVAS Solutions
Ltd. and Beijing Enterprise
Network Technology Co., Ltd.
dated October 1, 2004
(incorporated by reference to
Exhibit 10.60 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on
January 12, 2005).4.39
    
    
    Translation of Equity Interests
Pledge Agreements between
Hurray! Times Communications
(Beijing) Ltd. and each of Sun
Hao and Wang Xiaoping dated
October 1, 2004 and October 1,
2004, respectively
(incorporated by reference to
Exhibit 10.61 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).
  77




---



##### Table of Contents



ExhibitNumber
    
    Document4.40
    
    
    Translation of Equity Interests
Pledge Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Beijing
Enterprise Network Technology
Co., Ltd. dated October 1, 2004
(incorporated by reference to
Exhibit 10.62 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.41
    
    
    Translation of Software
Assignment Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Beijing
Palmsky Technology Co., Ltd.
dated May 5, 2004 (incorporated
by reference to Exhibit 10.65
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.42
    
    
    Translation of Software License
Agreement between Hurray! times
Communications (Beijing) Ltd.
and Beijing Palmsky Technology
Col, Ltd. dated May 5, 2004
(incorporated by reference to
Exhibit 10.66 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.43
    
    
    Translation of Authorization
Agreement by Yang Haoyu dated
October 1, 2004 (incorporated
by reference to Exhibit 10.69
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.44
    
    
    Translation of Authorization
Agreement by Wang Jianhua dated
October 1, 2004 (incorporated
by reference to Exhibit 10.70
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.45
    
    
    Translation of Exclusive
Technical Consulting and
Services Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Beijing
Palmsky Technology Co., Ltd.
dated May 5, 2004 (incorporated
by reference to Exhibit 10.71
of our registration statement
on Form F-1 (File No.
333-121987) filed with theCommission on January 12,
2005).4.46
    
    
    Translation of Operating
Agreement among Hurray! Times
Communications (Beijing) Ltd.,
Beijing Palmsky Technology Co.,
Ltd., Yang Haoyu and Wang
Jianhua dated October 1, 2004
(incorporated by reference to
Exhibit 10.72 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.47
    
    
    Translation of Contract
Relating to Exclusive Purchase
Right of Equity Interest among
Hurray! Holding Co., Ltd., Yang
Haoyu and Beijing Palmsky
Technology Co., Ltd. dated
October 1, 2004 (incorporated
by reference to Exhibit 10.73
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.48
    
    
    Translation of Contract
Relating to Exclusive Purchase
Right of Equity Interest among
Hurray! Holding Co., Ltd., Wang
Jianhua and Beijing Palmsky
Technology Co., Ltd. dated
October 1, 2004 (incorporated
by reference to Exhibit 10.74
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.49
    
    
    Translation of Equity Interests
Pledge Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Yang Haoyu
dated October 1, 2004
(incorporated by reference to
Exhibit 10.75 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on
January 12, 2005).4.50
    
    
    Translation of Equity Interests
Pledge Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Wang Jianhua
dated October 1, 2004
(incorporated by reference to
Exhibit 10.76 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.51
    
    
    Translation of Software License
Agreement between Hurray! Times
Communications (Beijing) Ltd.
and Beijing Enterprise Network
Technology Co., Ltd. dated May
5, 2004 (incorporated by
reference to Exhibit 10.79 of
our registration statement on
Form F-1 (file No. 333-121987)
filed with the Commission on
January 12, 2005).
  78




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##### Table of Contents



ExhibitNumber
    
    Document4.52
    
    
    Translation of Authorization
Agreement by Sun Hao dated
August 15, 2004 (incorporated
by reference to Exhibit 10.81
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.53
    
    
    Translation of Authorization
Agreement by Wang Xiaoping
dated August 15, 2004
(incorporated by reference to
Exhibit 10.82 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.54
    
    
    Translation of Exclusive
Technical Consulting and
Services Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Beijing
Enterprise Network Technology
Co., Ltd. dated May 5, 2004
(incorporated by reference to
Exhibit 10.83 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.55
    
    
    Translation of Operating
Agreement between Hurray! Times
Communications (Beijing) Ltd.,
Beijing Enterprise Network
Technology Co., Ltd., Sun Hao
and Wang Xiaoping dated
August 15, 2004 (incorporated
by reference to Exhibit 10.84
of our registration statement
on Form F-1 (File No.
333-121987) filed with the
Commission on January 12,
2005).4.56
    
    
    Translation of Contract
Relating to Exclusive Purchase
Right of Equity Interest among
Hurray! Holding Co., Ltd., Wang
Xiaoping and Beijing Enterprise
Network Technology Co., Ltd.
dated August 15, 2004
(incorporated by reference to
Exhibit 10.85 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.57
    
    
    Translation of Contract
Relating to Exclusive Purchase
Right of Equity Interest among
Hurray! Holding Co., Ltd., Sun
Hao and Beijing Enterprise
Network Technology Co., Ltd.
dated August 15, 2004
(incorporated by reference to
Exhibit 10.86 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.58
    
    
    Translation of Equity Interests
Pledge Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Sun Hao
dated October 1, 2004
(incorporated by reference to
Exhibit 10.87 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.59
    
    
    Translation of Equity Interests
Pledge Agreement between
Hurray! Times Communications
(Beijing) Ltd. and Wang
Xiaoping dated October 1, 2004
(incorporated by reference to
Exhibit 10.88 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.60
    
    
    Translation of Agreement on
Transfer of Shares of Beijing
Enterprise Network Technology
Co., Ltd. between Sun Hao and
Wang Xiaoping and Hurray!
Solutions Ltd. and Wang Qindai
dated July 19, 2004
(incorporated by reference to
Exhibit 10.89 of our
registration statement on Form
F-1 (File No. 333-121987) filed
with the Commission on January
12, 2005).4.61
    
    
    Translation of Software License
Agreement by and between
Hurray! Times Communications
(Beijing) Ltd. and Shanghai
Magma Digital Technology Co.
Ltd. dated January 12, 2006
(incorporated by reference to
Exhibit 4.97 of our annual
report on Form 20-F (File No.
000-51116) filed with theCommission on June 15, 2006).4.62
    
    
    Translation of Software
Assignment Agreement by and
between Shanghai Magma Digital
Technology Co. Ltd. and Hurray!
Times Communications (Beijing)
Ltd. dated January 12, 2006
(incorporated by reference to
Exhibit 4.98 of our annual
report on Form 20-F (File No.
000-51116) filed with the
Commission on June 15, 2006).4.63
    
    
    Translation of Authorization
Agreement by Shang Aiqin dated
January 12, 2006 (incorporated
by reference to Exhibit 4.101
of our annual report on Form
20-F (File No. 000 51116) filed
with the Commission on June 15,
2006).4.64
    
    
    Translation of Authorization
Agreement by Zhang Yi dated
January 12, 2006 (incorporated
by reference to Exhibit 4.102
of our annual report on Form
20-F (File No. 000 51116) filed
with the Commission on June 15, 2006).
  79




---



##### Table of Contents



ExhibitNumber
    
    Document4.65
    
    
    Translation of Exclusive
Technical Consulting and
Services Agreement by and
between Hurray! Times
Communications (Beijing) Ltd.
and Shanghai Magma Digital
Technology Co. Ltd. dated
January 12, 2006 (incorporated
by reference to Exhibit 4.103
of our annual report on Form
20-F (File No. 000 51116) filed
with the Commission on June 15,
2006).4.66
    
    
    Translation of Operating
Agreement by and among Hurray!
Times Communications (Beijing)
Ltd., Shanghai Magma Digital
Technology Co. Ltd., Zhang Yi
and Shang Aiqin dated January
12, 2006 (incorporated by
reference to Exhibit 4.104 of
our annual report on Form 20-F
(File No. 000 51116) filed with
the Commission on June 15,
2006).4.67
    
    
    Translation of Contract
Relating to the Exclusive
Purchase Right of an Equity
Interest by and among Hurray!
Holding Co., Ltd., Shang Aiqin
and Shanghai Magma Digital
Technology Co. Ltd. dated
January 12, 2006 (incorporated
by reference to Exhibit 4.105
of our annual report on Form
20-F (File No. 000 51116) filed
with the Commission on June 15,
2006).4.68
    
    
    Translation of Contract
Relating to the Exclusive
Purchase Right of an Equity
Interest by and among Hurray!
Holding Co., Ltd., Zhang Yi and
Shanghai Magma Digital
Technology Co. Ltd. dated
January 12, 2006 (incorporated
by reference to Exhibit 4.106
of our annual report on Form
20-F (File No. 000 51116) filed
with the Commission on June 15,
2006).4.69
    
    
    Translation of Equity Interests
Pledge Agreement by and between
Hurray! Times Communications
(Beijing) Ltd. and Zhang Yi
dated January 12, 2006
(incorporated by reference to
Exhibit 4.107 of our annual
report on Form 20-F (File No.
000 51116) filed with the
Commission on June 15, 2006).4.70
    
    
    Translation of Equity Interests
Pledge Agreement by and between
Hurray! Times Communications
(Beijing) Ltd. and Shang Aiqin
dated January 12, 2006
(incorporated by reference to
Exhibit 4.108 of our annual
report on Form 20-F (File No.
000 51116) filed with the
Commission on June 15, 2006).4.71
    
    
    2004 Share Incentive Plan (incorporated by reference to Exhibit 10.95
of our registration statement on Form F-1 (File No. 333-121987) filed
with the Commission on January 12, 2005).4.72
    
    
    Translation of Supplemental Agreement to Agreement on Transfer of
Shares of Beijing Enterprise Network Technology Co., Ltd. among
Hurray! Holding Co., Ltd., Qindai Wang, Yu Qin and Zhang Chen dated
November 4, 2004 (incorporated by reference to Exhibit 10.96 of our
registration statement on Form F-1 (File No. 333-121987) filed with
the Commission on January 12, 2005).4.73
    
    
    Translation of Supplemental Agreement to Agreement on Transfer of
Shares of Beijing Enterprise Mobile Technology Co., Ltd. among
Hurray! Holdings Co., Ltd., Funway Investment Holdings Ltd. and
I-mode Technology Ltd. dated November 4, 2004 (incorporated by
reference to Exhibit 10.97 of our registration statement on Form F-1
(File No. 333-121987) filed with the Commission on January 12, 2005).4.74
    
    
    Translation of Loan Agreement between Beijing Enterprise Network
Technology Co., Ltd. and Yu Qin dated November 4, 2004 (incorporated
by reference to Exhibit 10.98 of our registration statement on Form
F-1 (File No. 333-121987) filed with the Commission on January 12,
2005).4.75
    
    
    Translation of Loan Agreement between WVAS Solutions Ltd. and Yu Qin
dated November 4, 2004 (incorporated by reference to Exhibit 10.99 of
our registration statement on Form F-1 (File No. 333-121987) filed
with the Commission on January 12, 2005).4.76
    
    
    Translation of Supplemental Agreement dated January 25, 2005 to
certain Equity Interests Pledge Agreements (incorporated by reference
to the registration statement on Form F-1 (File No. 333-121987) filed
with the Commission on January 28, 2005).4.77
    
    
    Translation of Cooperation Agreement between Hurray! Digital Media
Technology Co., Ltd., Lan Gang, Chen Jianzhong, Hu Li, and Guangzhou
Hurray! Secular Bird Culture Communication Co., Ltd, dated March 12,
2007 (incorporated by reference to Exhibit 4.120 of our annual report
on Form 20-F (File No. 000-51116) filed with the Commission on June
15, 2007).
  80




---



##### Table of Contents



ExhibitNumber
    
    Document4.78
    
    
    Translation of Supplemental Agreement between Hurray Holdings Co.,
Ltd. and Magma Digital International Limited, dated September 1, 2006
(incorporated by reference to Exhibit 4.121 of our annual report on
Form 20-F (File No. 000-51116) filed with the Commission on June 15,
2007).4.79
    
    
    Translation of Supplemental Agreement between Hurray Solutions, Ltd.,
Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong Wuxian
Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland Movie and
Television Production Co., Ltd., Beijing Shiji Freeland Movie and
Television Distribution Co., Ltd., Shanghai Hai Le Audio and Video
Distribution Co., Ltd., Hong Kong Freeland Movie Industry Group Co.,
Ltd. and Beijing Freeland Wu Xian Digital Music Technology Co., Ltd.,
dated July 30, 2006 (incorporated by reference to Exhibit 4.122 of
our annual report on Form 20-F (File No. 000-51116) filed with the
Commission on June 15, 2007).4.80
    
    
    Translation of Supplemental Agreement between Hurray Solutions, Ltd.,
Beijing Enterprise Mobile Technology Co., Ltd., Beijing Hutong Wuxian
Technology Co., Ltd., Zhong Xiongbing, Guangdong Freeland Movie and
Television Production Co., Ltd., Beijing Shiji Freeland Movie and
Television Distribution Co., Ltd., Shanghai Hai Le Audio and Video
Distribution Co., Ltd. and Hong Kong Freeland Movie Industry Group
Co., Ltd, dated November 30, 2006 (incorporated by reference to
Exhibit 4.123 of our annual report on Form 20-F (File No. 000-51116)
filed with the Commission on June 15, 2007).4.81
    
    
    Translation of Cooperation Agreement between China Mobile
Communications Group Corporation and Monternet WAP Service Provider
between China Mobile Communications Group Corporation and Beijing
Hutong Wuxian Technology Co., Ltd, dated April 27, 2007.4.82
    
    
    Translation of Mobile Value-added Service Cooperation Agreement with China United Telecommunications Corporation
between China United Telecommunications Corporation and Beijing Hengjiweiye Electronic Commerce Co., Ltd., dated
August 30, 2007.4.83
    
    
    Share Purchase Agreement among Hurray! Holding Co., Ltd., Enlight Media Limited, Changtian Wang, Yinglian Du, Delai
Li, Xiaoping Li and Hongtian Wang (incorporated by reference to Exhibit 99.3 of our report of foreign issuer on Form
6-K (File No. 000-51116) filed with the Commission on November 23, 2007).4.84
    
    
    Translation of Equity Transfer Agreement between TWM Holding, Hurray! Holding Co., Ltd., and Hurray! Times
Communications (Beijing) Ltd. dated October 8, 2007.4.85
    
    
    Translation of Equity Transfer Agreement of Shanghai Saiyu Information Technology Co., Ltd. among Liang Ruan, Yuqi
Shi, Jie Li and Jianmei Wan, dated February 12, 2007.4.86
    
    
    Translation of Transfer Agreement between Hurray! Times Communications (Beijing) Co., Ltd., Beijing WVAS
Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd., Xiaoping Wang, Hao Sun and Beijing Hurray!
Times Technology Co., Ltd., dated May, 2007.8.1
    
    
    List of Significant Subsidiaries and Affiliates.
  81




---



##### Table of Contents



ExhibitNumber
    
    Document11.1
    
    
    Code of Business Conduct (incorporated by reference to Exhibit 11.1 of our annual report on Form 20-F filed
with the Commission on June 15, 2006).12.1
    
    
    Certification of Chief Executive Officer Required by Rule 13a-14(a).12.2
    
    
    Certification of Chief Financial Officer Required by Rule 13a-14(a).13.1
    
    
    Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title
18 of the United States Code.13.2
    
    
    Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title
18 of the United States Code.15.1
    
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd., Independent Registered Public Accounting Firm.
  82




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##### Table of Contents



SIGNATURES
  HURRAY! HOLDING CO., LTD.By:

/s/
Shaojian (Sean) WangShaojian (Sean) WangActing Chief Financial Officer   83




---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
HURRAY! HOLDING CO., LTD.
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005
    
    
    F-3Consolidated Statements of Shareholders Equity and Comprehensive Income for the years ended December 31, 2007, 2006 and 2005
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
    
    
    F-7Notes to the Consolidated Financial Statements
    
    
    F-8Additional Information  Financial Statement Schedule 1
    
    
    F-35
  84




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
         F-1




---



##### Table of Contents



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




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##### Table of Contents



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




---



##### Table of Contents



Year ended December 31,2007
    
    
    2006
    
    
    2005(in U.S. dollars, except share data)Net (loss) income from continuing
operations per share:Basic
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01Diluted
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01Net (loss) income from discontinued
operations per share:Basic
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    0.00Diluted
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    0.00Net (loss) income per shareBasic
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01Diluted
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01Weighted average shares used in calculating
basic (loss) income per share
    
    
    2,172,208,190
    
    
    
    2,189,748,563
    
    
    
    2,092,089,848Weighted average shares used in calculating
diluted (loss) income per share
    
    
    2,172,208,190
    
    
    
    2,208,758,636
    
    
    
    2,129,228,961
   F-4




---



##### Table of Contents



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




---



##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 and 2005
 (in U.S. dollars, unless otherwise stated)
 1. ORGANIZATION AND PRINCIPAL ACTIVITIES
   Percentage ofDate of
    
    
    
    effectiveincorporation or
    
    Place of
    
    ownership byName of Subsidiaries
    
    acquisition
    
    incorporation
    
    Hurray!
    
    Principal activitiesWireless value-added services
(WVAS) business segment:SubsidiariesBeijing Hurray! Times
Technology Co., Ltd. (Beijing
Hurray Times)
    
    June 27, 2002
    
    the PRC
    
    
    100
    %
    
    WVAS businessHurray Technologies (Hong Kong)
Ltd.
    
    July 23, 2003
    
    Hong Kong
    
    
    99
    %
    
    WVAS businessInvest China Group Limited
    
    April 1, 2007
    
    British Virgin Islands
    
    
    100
    %
    
    WVAS businessBeijing Hand in Hand Media
Technology Co., Ltd.
    
    April 1, 2007
    
    the PRC
    
    
    100
    %
    
    WVAS businessVariable Interest EntitiesHurray! Solutions Ltd.
    
    September 21, 1999
    
    the PRC
    
    
    100
    %
    
    WVAS businessBeijing Enterprise Network
Technology Co., Ltd.
    
    March, 31, 2004
    
    the PRC
    
    
    100
    %
    
    WVAS businessBeijing Hengji Weiye Electronic
Commerce Co., Ltd. (Hengji
Weiye)
    
    October 1, 2005
    
    the PRC
    
    
    100
    %
    
    WVAS businessBeijing Hutong Wuxian
Technology Co., Ltd. (Beijing
Hutong)
    
    April 1, 2005
    
    the PRC
    
    
    100
    %
    
    WVAS businessBeijing Palmsky Technology Co.,
Ltd.
    
    March, 31, 2004
    
    the PRC
    
    
    100
    %
    
    WVAS businessHenan Yinshan Digital Network
Technology Co., Ltd. (Henan
Yinshan)
    
    June 30, 2007
    
    the PRC
    
    
    100
    %
    
    WVAS businessShanghai Magma Digital
Technology Co., Ltd. (Shanghai
Magma)
    
    January 1, 2006
    
    the PRC
    
    
    100
    %
    
    WVAS businessShanghai Saiyu Information
Technology Co., Ltd. (Saiyu)
    
    April 1, 2007
    
    the PRC
    
    
    100
    %
    
    WVAS business
  F-8




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##### Table of Contents



Percentage ofDate of
    
    
    
    effectiveincorporation or
    
    Place of
    
    ownership byName of Subsidiaries
    
    acquisition
    
    incorporation
    
    Hurray!
    
    Principal activitiesSubsidiaries of Variable
Interest EntitiesBeijing Cool Young Information
Technology Co., Ltd.
    
    January 28, 2003
    
    the PRC
    
    
    100
    %
    
    WVAS businessBeijing WVAS Solutions Ltd.
    
    October 10, 2001
    
    the PRC
    
    
    100
    %
    
    WVAS businessRecorded music business segment:SubsidiariesHurray! Music Holding Co., Ltd.
    
    August 19, 2005
    
    Cayman Islands
    
    
    100
    %
    
    Recorded music
businessSubsidiaries of Variable
Interest EntitiesHurray! Digital Media
Technology Co., Ltd.
    
    November 10, 2005
    
    the PRC
    
    
    100
    %
    
    Recorded music
businessBeijing Huayi Brothers Music
Co., Ltd. (Huayi Brothers
Music)
    
    December 31, 2005
    
    the PRC
    
    
    51
    %
    
    Recorded music
businessBeijing Huayi Brothers Broker
Co., Ltd.
    
    April 17, 2007
    
    the PRC
    
    
    51
    %
    
    Recorded music
businessHurray! Freeland Digital Music
Technology Co., Ltd. (Freeland
Music)
    
    January 1, 2006
    
    the PRC
    
    
    60
    %
    
    Recorded music
businessHurray! Freeland Cultural Media
Co., Ltd.
    
    January 8, 2007
    
    the PRC
    
    
    60
    %
    
    Recorded music
businessBeijing Hurray! Fly Songs
International Culture Co., Ltd.
(Fly Songs)
    
    August 21, 2007
    
    the PRC
    
    
    30.6
    %
    
    Recorded music
businessGuangzhou Hurray! Secular Bird
Culture Communication Co., Ltd.
(Secular Bird)
    
    May 30, 2007
    
    the PRC
    
    
    65
    %
    
    Recorded music
business
    F-9




---



##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a) Basis of presentation
  (b) Basis of consolidation
  (c) Use of estimates
  (d) Significant risks and uncertainties
  (e) Cash and cash equivalents
  (f) Inventories
  (g) Property and equipment, net
  Furniture and office equipment
    
    3 yearsMotor vehicles
    
    5 yearsTelecommunications equipment
    
    3 yearsLeasehold improvements
    
    Lesser of original lease term or estimated
useful life
  F-10




---



##### Table of Contents



(h) Acquired intangible assets, net
  (i) Goodwill
    (j) Impairment of long-lived assets
  (k) Revenue recognition and cost of revenues
 Wireless value-added services
    F-11




---



##### Table of Contents



Recorded Music
      (l) Foreign currency translation
     F-12




---



##### Table of Contents



(m) Product development expenses
  (n) Stock-based compensation
     (o) Taxation
      F-13




---



##### Table of Contents



(p) Comprehensive income (loss)
  (q) Fair value of financial instruments
  (r) Advertising costs
  (s) Net (Loss) income per share
  (t) Recently issued accounting standards
     F-14




---



##### Table of Contents



(u) Reclassifications
  3. ACQUISITIONS
  (a) 2007 acquisitions
 Acquisition of Henan Yinshan and Saiyu
  Total purchase price:Cash consideration
    
    $
    4,035,739Transaction costs
    
    
    1,292,960$
    5,328,699
 AmortizationperiodAggregate purchase price allocation  Saiyu and Henan Yinshan:Cash and cash equivalents
    
    $
    1,311,572Accounts receivable
    
    
    45,451Other current assets
    
    
    1,226Acquired intangible assets:Agreements with China Mobile
    
    
    1,946,402
    
    
    
    5 yearsWVAS license
    
    
    24,763
    
    
    
    3 yearsGoodwill (allocated to WVAS segment)
    
    
    2,134,375
    
    
    
    N/AProperty and equipment, net
    
    
    9,496
    
    
    
    3  5 yearsOther assets
    
    
    17,751Current liabilities
    
    
    (71,652
    )Non-current deferred tax liabilities
    
    
    (90,685
    )Total
    
    $
    5,328,699
  F-15




---



##### Table of Contents



Acquisition of Secular Bird and Fly Songs
  AmortizationperiodAggregate purchase price allocation  Secular Bird and Fly Songs:Cash and cash equivalents
    
    $
    87,138Inventory
    
    
    10,747Other current assets
    
    
    116,559Acquired intangible assets:Artist management contract
    
    
    32,293
    
    
    
    4.6 yearsTrademarks
    
    
    24,644
    
    
    
    20 yearsCopyright for songs
    
    
    17,846
    
    
    
    1.9 yearsNon-complete contract
    
    
    4,249
    
    
    
    3.8 yearsGoodwill (allocated to recorded music segment)
    
    
    253,705
    
    
    
    N/AProperty and equipment, net
    
    
    53,375
    
    
    
    3  5 yearsOther assets
    
    
    1,402Current liabilities
    
    
    (11,108
    )Non-current deferred tax liabilities
    
    
    (14,784
    )Total
    
    $
    576,066
  Year ended December 31,2007
    
    
    2006(unaudited)
    
    
    (unaudited)Pro forma total revenue
    
    $
    60,897,824
    
    
    $
    69,617,966Pro forma net (loss) income attributable to holders of ordinary shares
    
    
    (42,565,473
    )
    
    
    5,783,149Pro forma net (loss) income per share:- basic
    
    $
    (0.02
    )
    
    $
    0.00- diluted
    
    $
    (0.02
    )
    
    $
    0.00Weighted average shares used in calculation of pro forma net (loss)
income per share:- basic
    
    
    2,172,208,190
    
    
    
    2,189,748,563- diluted
    
    
    2,172,208,190
    
    
    
    2,208,758,636
   F-16




---



##### Table of Contents



Acquisition of Beijing New Run Entertainment Development Co., Ltd. (New Run)
   (b) 2006 acquisitions
 Acquisition of Shanghai Magma
  Total purchase price:Cash consideration
    
    $
    14,246,746Fair value of share purchase right
    
    
    124,918Transaction costs
    
    
    438,263$
    14,809,927
 AmortizationperiodPurchase price allocation:Cash and cash equivalents
    
    $
    393,425Accounts receivable
    
    
    564,291Other current assets
    
    
    1,156,492Acquired intangible assets:Partnership agreement with China Mobile
    
    
    418,826
    
    
    
    4 yearsTrademarks
    
    
    147,456
    
    
    
    20 yearsSoftware
    
    
    59,478
    
    
    
    5 yearsWebsite
    
    
    21,065
    
    
    
    4.5 yearsWVAS license
    
    
    9,913
    
    
    
    4.5 yearsNon-compete agreement
    
    
    63,196
    
    
    
    4 yearsGame content
    
    
    76,826
    
    
    
    0.17 yearsGoodwill (allocated to WVAS segment)
    
    
    12,168,190
    
    
    
    N/AProperty and equipment, net
    
    
    25,289
    
    
    
    3  5 yearsCurrent liabilities
    
    
    (191,214
    )Non-current deferred tax liabilities
    
    
    (103,306
    )Total
    
    $
    14,809,927
 Acquisition of Freeland Music
   F-17




---



##### Table of Contents



Total purchase price:Cash consideration
    
    $
    4,320,000Transaction costs
    
    
    265,113$
    4,585,113
 AmortizationperiodPurchase price allocation:Cash and cash equivalents
    
    $
    47,722Accounts receivable
    
    
    43,568Acquired intangible assets:Artist contracts
    
    
    1,406,890
    
    
    
    5 yearsTrademarks
    
    
    215,932
    
    
    
    8 yearsExclusive WVAS agreement
    
    
    42,464
    
    
    
    5 yearsExclusive copyright agreement
    
    
    12,543
    
    
    
    3 yearsWVAS contracts
    
    
    249,845
    
    
    
    5 yearsCopyright contracts
    
    
    99,954
    
    
    
    4 yearsGoodwill (allocated to recorded music segment)
    
    
    2,538,962
    
    
    
    N/AProperty and equipment, net
    
    
    14,540
    
    
    
    3  5 yearsCurrent liabilities
    
    
    (57,469
    )Non-current deferred tax liabilities
    
    
    (29,838
    )Total
    
    $
    4,585,113
  Year endedDecember 31, 2005(unaudited)Pro forma total revenue
    
    $
    63,612,451Pro forma net income attributable to holders of ordinary shares
    
    
    18,756,840Pro forma net income per share:- basic
    
    $
    0.01- diluted
    
    $
    0.01Weighted average shares used in calculation of pro forma net income per share:- basic
    
    
    2,092,089,848- diluted
    
    
    2,129,228,961
   F-18




---



##### Table of Contents



(c) 2005 acquisitions
 Acquisition of Huayi Brothers Music
   Total purchase price:Cash consideration
    
    $
    4,262,000Transaction costs
    
    
    196,206$
    4,458,206
 AmortizationperiodPurchase price allocation at 51% of Huayi Brothers Music:Cash and cash equivalents
    
    $
    143,366Capital contribution receivable
    
    
    628,443Accounts receivable
    
    
    141,710Other current assets
    
    
    146,258Acquired intangible assets:Artist contracts
    
    
    1,020,420
    
    
    
    6.52 yearsTrademarks
    
    
    454,250
    
    
    
    20 yearsCopyright surrogate contract
    
    
    69,578
    
    
    
    5.67 yearsExisting record copyright
    
    
    17,189
    
    
    
    3 yearsExclusive WVAS agreement
    
    
    542,408
    
    
    
    20 yearsNon-compete agreement
    
    
    131,257
    
    
    
    20 yearsGoodwill (allocated to recorded music segment)
    
    
    2,331,239
    
    
    
    N/AProperty and equipment, net
    
    
    43,567
    
    
    
    3  5 yearsCurrent liabilities
    
    
    (473,895
    )Non-current deferred tax liabilities
    
    
    (737,584
    )Total
    
    $
    4,458,206
   F-19




---



##### Table of Contents



Year endedDecember 31, 2005(unaudited)Pro forma total revenue
    
    $
    62,944,870Pro forma net income attributable to holders of ordinary shares
    
    
    17,822,639Pro forma net income per share:- basic
    
    $
    0.01- diluted
    
    $
    0.01Weighted average shares used in calculation of pro forma net income per share:- basic
    
    
    2,092,089,848- diluted
    
    
    2,129,228,961
  Acquisition of Beijing Hutong, Guangzhou Piosan and Hengji Weiye
  AmortizationperiodAggregate purchase price allocation Beijing Hutong,
Guangzhou Piosan and Hengji Weiye:Cash and cash equivalents
    
    $
    2,035,565Prepaid expenses and other receivables
    
    
    12,451Acquired intangible assets:Telecommunication wireless value-added licenses
    
    
    113,062
    
    
    
    4  4.25 yearsAgreements with Telecom Operators
    
    
    348,150
    
    
    
    1.25  3 yearsBusiness transaction codes
    
    
    166,090
    
    
    
    3 yearsSMS platform
    
    
    156,822
    
    
    
    7 yearsGoodwill (allocated to WVAS segment)
    
    
    654,744
    
    
    
    N/AProperty and equipment, net
    
    
    105,424
    
    
    
    3  5 yearsCurrent liabilities
    
    
    (80,375
    )Non-current deferred tax liabilities
    
    
    (105,240
    )Total
    
    $
    3,406,693
  F-20




---



##### Table of Contents



Year endedDecember 31, 2005(unaudited)Pro forma revenue
    
    $
    63,051,933Pro forma net income attributable to holders of ordinary shares
    
    
    18,269,399Pro forma net income per share:- basic
    
    $
    0.01- diluted
    
    $
    0.01Weighted average shares used in calculation of pro forma net income per share:- basic
    
    
    2,092,089,848- diluted
    
    
    2,129,228,961
  4. DISCONTINUED OPERATIONS
    August 1,2007Unaudited(in U.S. dollars)Current assets of discontinued operationsCash
    
    $
    771,746Accounts receivable, net of allowance
    
    
    1,868,593Prepaid expenses and other current assets
    
    
    18,942Amount due from related parties
    
    
    4,918,631Inventories
    
    
    1,397$
    7,579,309Non-current assets of discontinued operations:Property and equipment, net
    
    
    49,842Rental deposits
    
    
    462$
    50,304Current liabilities of discontinued operationsAccounts payable
    
    
    270,843Accrued expenses and other current liabilities
    
    
    605,739Dividend payable
    
    
    3,002,588$
    3,879,170
  F-21




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##### Table of Contents



Year ended December 31,As at August 1, 2007
    
    
    2006
    
    
    2005(in U.S. dollars)Revenues
    
    $
    227,391
    
    
    $
    1,177,053
    
    
    $
    6,312,363Operating (loss) income
    
    
    (643,151
    )
    
    
    (1,173,424
    )
    
    
    3,470,108Income taxes
    
    
    178
    
    
    
    (83,650
    )
    
    
    70,546Net (loss) income from discontinued operations, net of tax
    
    
    (612,170
    )
    
    
    (836,448
    )
    
    
    4,097,608Gain from disposal of SSI segment
    
    
    192,943
    
    
    
    
    
    
    
    Total net (loss) income from discontinued operations
    
    $
    (419,227
    )
    
    $
    (836,448
    )
    
    $
    4,097,608
 5. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS
  6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
  December 31,2007
    
    
    2006Staff advances and other receivables
    
    $
    690,005
    
    
    $
    793,660Advances to suppliers
    
    
    1,042,427
    
    
    
    1,231,258Prepaid expenses
    
    
    632,893
    
    
    
    426,352Prepaid artist costs
    
    
    754,725
    
    
    
    249,434$
    3,120,050
    
    
    $
    2,700,704
 7. PROPERTY AND EQUIPMENT, NET
  December 31,2007
    
    
    2006Furniture and office equipment
    
    $
    2,924,803
    
    
    $
    2,755,139Motor vehicles
    
    
    244,813
    
    
    
    217,839Telecommunications equipment
    
    
    4,500,285
    
    
    
    3,965,885Leasehold improvements
    
    
    1,132,946
    
    
    
    1,048,2928,802,847
    
    
    
    7,987,155Less: accumulated depreciation and amortization
    
    
    (7,166,758
    )
    
    
    (6,032,954
    )$
    1,636,089
    
    
    $
    1,954,201
   F-22




---



##### Table of Contents



8. ACQUIRED INTANGIBLE ASSETS, NET
 December 31, 2007Gross carrying
    
    
    Accumulated
    
    
    Intangible assets
    
    
    Net carryingamount
    
    
    amortization
    
    
    impairment
    
    
    amountWVAS Segment:Amortizable intangible assetsWVAS licenses
    
    $
    482,551
    
    
    $
    332,564
    
    
    $
    52,010
    
    
    $
    97,977Customer agreements with Telecom Operators
    
    
    2,666,773
    
    
    
    705,785
    
    
    
    1,840,399
    
    
    
    120,589Non-compete agreement
    
    
    925,344
    
    
    
    323,870
    
    
    
    566,648
    
    
    
    34,826Business transaction codes
    
    
    184,246
    
    
    
    138,185
    
    
    
    
    
    
    
    46,061Platform
    
    
    443,343
    
    
    
    280,399
    
    
    
    36,828
    
    
    
    126,116Software
    
    
    89,107
    
    
    
    36,678
    
    
    
    
    
    
    
    52,429Trademarks
    
    
    163,135
    
    
    
    
    
    
    
    
    
    
    
    163,1354,954,499
    
    
    
    1,817,481
    
    
    
    2,495,885
    
    
    
    641,133Recorded Music Segment:Amortizable intangible assetsArtist contracts
    
    
    3,172,460
    
    
    
    1,027,576
    
    
    
    
    
    
    
    2,144,884Producing cost
    
    
    1,418,847
    
    
    
    853,993
    
    
    
    
    
    
    
    564,854Copyrights
    
    
    616,744
    
    
    
    348,738
    
    
    
    
    
    
    
    268,006Exclusive WVAS agreements
    
    
    584,872
    
    
    
    16,986
    
    
    
    
    
    
    
    567,886Exclusive copyright agreements
    
    
    12,543
    
    
    
    8,362
    
    
    
    
    
    
    
    4,181Non-compete agreement
    
    
    135,506
    
    
    
    652
    
    
    
    
    
    
    
    134,854Software
    
    
    6,018
    
    
    
    1,739
    
    
    
    
    
    
    
    4,279Trademarks
    
    
    694,826
    
    
    
    53,983
    
    
    
    
    
    
    
    640,8436,641,816
    
    
    
    2,312,029
    
    
    
    
    
    
    
    4,329,787$
    11,596,315
    
    
    $
    4,129,510
    
    
    $
    2,495,885
    
    
    $
    4,970,920
 December 31, 2006Gross carrying
    
    
    Accumulated
    
    
    Net carryingamount
    
    
    amortization
    
    
    amountWVAS Segment:Amortizable intangible assetsWVAS licenses
    
    $
    427,567
    
    
    $
    216,716
    
    
    $
    210,851Customer agreements with Telecom Operators
    
    
    918,473
    
    
    
    508,042
    
    
    
    410,431Non-compete agreement
    
    
    864,419
    
    
    
    129,663
    
    
    
    734,756Business transaction codes
    
    
    172,115
    
    
    
    71,715
    
    
    
    100,400Platform
    
    
    414,153
    
    
    
    154,841
    
    
    
    259,312Software
    
    
    84,003
    
    
    
    17,894
    
    
    
    66,109Trademarks
    
    
    152,394
    
    
    
    7,620
    
    
    
    144,774Game content
    
    
    79,398
    
    
    
    79,398
    
    
    
    3,112,522
    
    
    
    1,185,889
    
    
    
    1,926,633
  F-23




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##### Table of Contents



December 31, 2006Gross carrying
    
    
    Accumulated
    
    
    Net carryingamount
    
    
    amortization
    
    
    amountRecorded Music Segment:Amortizable intangible assetsArtist contracts
    
    
    2,427,310
    
    
    
    431,321
    
    
    
    1,995,989Copyrights
    
    
    1,071,861
    
    
    
    323,924
    
    
    
    747,937Exclusive WVAS agreements
    
    
    584,872
    
    
    
    8,493
    
    
    
    576,379Exclusive copyright agreements
    
    
    12,543
    
    
    
    4,181
    
    
    
    8,362WVAS contracts
    
    
    249,845
    
    
    
    249,845
    
    
    
    Non-compete agreement
    
    
    131,257
    
    
    
    6,563
    
    
    
    124,694Trademarks
    
    
    670,182
    
    
    
    26,993
    
    
    
    643,1895,147,870
    
    
    
    1,051,320
    
    
    
    4,096,550$
    8,260,392
    
    
    $
    2,237,209
    
    
    $
    6,023,183
  2008
    
    $
    1,771,9472009
    
    
    818,0922010
    
    
    621,8642011
    
    
    257,8982012 and later
    
    
    1,501,119$
    4,970,920
 9. GOODWILL
 Year ended December 31,WVAS
    
    
    Recorded Music
    
    
    TotalBalance as of January 1,2006
    
    $
    21,537,504
    
    
    $
    2,331,239
    
    
    $
    23,868,743Effect of exchange rate changes
    
    
    1,045,599
    
    
    
    
    
    
    
    1,045,599Goodwill arising from acquisitions during the year
    
    
    12,168,190
    
    
    
    2,538,962
    
    
    
    14,707,152Balance as of December 31, 2006
    
    
    34,751,293
    
    
    
    4,870,201
    
    
    
    39,621,494Effect of exchange rate changes
    
    
    2,389,916
    
    
    
    
    
    
    
    2,389,916Goodwill arising from acquisitions during the year
    
    
    2,134,375
    
    
    
    253,705
    
    
    
    2,388,080Goodwill impairment
    
    
    (38,778,584
    )
    
    
    
    
    
    
    (38,778,584
    )Balance as of December 31, 2007
    
    $
    497,000
    
    
    $
    5,123,906
    
    
    $
    5,620,906
  10. SHORT-TERM BORROWINGS
   F-24




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##### Table of Contents



11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  December 31,2007
    
    
    2006Accrued payroll
    
    $
    406,608
    
    
    $
    528,843Value-added tax payable
    
    
    177,556
    
    
    
    376,115Other accrued expenses
    
    
    1,231,384
    
    
    
    1,108,437Accrued welfare benefits
    
    
    119,957
    
    
    
    97,720Business tax payable
    
    
    857,062
    
    
    
    411,660Other taxes payable
    
    
    113,833
    
    
    
    90,538$
    2,906,400
    
    
    $
    2,613,313
 12. RELATED PARTY TRANSACTIONS AND BALANCES
   13. INCOME TAXES
     F-25




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##### Table of Contents



Year ended December 31,2007
    
    
    2006
    
    
    2005Current
    
    $
    576,774
    
    
    $
    685,597
    
    
    $
    286,372Deferred
    
    
    (759,144
    )
    
    
    (480,617
    )
    
    
    36,428$
    (182,370
    )
    
    $
    204,980
    
    
    $
    322,800
  December 31,2007
    
    
    2006Deferred tax assets:Cost and expenses accruals
    
    $
    748,049
    
    
    $
    295,755Current deferred tax assets
    
    $
    748,049
    
    
    $
    295,755Depreciation and amortization
    
    $
    347,877
    
    
    $
    203,149Net operating loss carry forwards
    
    
    1,051,308
    
    
    
    614,919Less: valuation allowance
    
    
    (749,094
    )
    
    
    (447,287
    )Non-current deferred tax assets
    
    $
    650,091
    
    
    $
    370,781Deferred tax liabilities:Revenue recognition
    
    $
    (416,835
    )
    
    $
    (344,802
    )Current deferred tax liabilities
    
    $
    (416,835
    )
    
    $
    (344,802
    )Intangible assets
    
    $
    (844,610
    )
    
    $
    (850,734
    )Non-current deferred tax liabilities
    
    $
    (844,610
    )
    
    $
    (850,734
    )
  Year Ended December 31,2007
    
    
    2006
    
    
    2005Statutory tax rate
    
    
    33.0
    %
    
    
    33.0
    %
    
    
    33.0
    %Effect of tax holidays
    
    
    0.3
    %
    
    
    (34.2
    )%
    
    
    (29.6
    )%Non-deductible expenses
    
    
    (38.3
    %)
    
    
    11.9
    %
    
    
    9.0
    %Non-taxable income
    
    
    45.0
    %
    
    
    (9.0
    )%
    
    
    (9.0
    )%Change in enterprise income tax rate
    
    
    (8.6
    %)
    
    
    
    
    
    
    Change in valuation allowance
    
    
    (13.8
    %)
    
    
    0.2
    %
    
    
    (1.3
    )%Impairment loss on intangibles
    
    
    (9.2
    %)
    
    
    
    
    
    
    Effective tax rate
    
    
    8.4
    %
    
    
    1.9
    %
    
    
    2.1
    %
    F-26




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##### Table of Contents



14. SHAREHOLDERS EQUITY
     15. STOCK PLANS
 Stock option
    F-27




---



##### Table of Contents



Ordinary sharesWeightedNumber of
    
    
    averageoptions
    
    
    exercise priceOptions outstanding at January 1, 2005
    
    
    151,374,220
    
    
    $
    0.075Granted
    
    
    16,228,000
    
    
    $
    0.102Exercised
    
    
    (42,158,500
    )
    
    $
    0.035Cancelled
    
    
    (25,870,020
    )
    
    $
    0.110Options outstanding at December 31, 2005
    
    
    99,573,700
    
    
    $
    0.088Exercised
    
    
    (2,582,200
    )
    
    $
    0.037Cancelled
    
    
    (15,484,900
    )
    
    $
    0.109Options outstanding at December 31, 2006
    
    
    81,506,600
    
    
    $
    0.085Exercised
    
    
    (653,400
    )
    
    $
    0.027Cancelled
    
    
    (5,587,000
    )
    
    $
    0.106Options outstanding at December 31, 2007
    
    
    75,266,200
    
    
    $
    0.084
  Options outstanding
    
    
    Options exercisableWeighted average
    
    
    Weighted
    
    
    Aggregated
    
    
    
    
    
    
    Weighted
    
    
    AggregatedNumber
    
    
    remaining
    
    
    average
    
    
    Intrinsic
    
    
    Number
    
    
    average
    
    
    intrinsicExercise Prices
    
    outstanding
    
    
    contractual life
    
    
    exercise price
    
    
    value
    
    
    exercisable
    
    
    exercise price
    
    
    valueOrdinary shares:$0.0250
    
    
    11,872,100
    
    
    
    4.75
    
    
    $
    0.03
    
    
    $
    296,803
    
    
    
    11,872,100
    
    
    $
    0.03
    
    
    $
    296,803$0.0705
    
    
    27,626,100
    
    
    
    5.5
    
    
    $
    0.07
    
    
    $
    1,947,640
    
    
    
    27,626,100
    
    
    $
    0.07
    
    
    $
    1,947,640$0.1170
    
    
    28,182,000
    
    
    
    6
    
    
    $
    0.12
    
    
    $
    3,297,294
    
    
    
    28,182,000
    
    
    $
    0.12
    
    
    $
    3,297,294$0.1405
    
    
    700,000
    
    
    
    6.25
    
    
    $
    0.14
    
    
    $
    98,350
    
    
    
    700,000
    
    
    $
    0.14
    
    
    $
    98,350$0.1025
    
    
    6,886,000
    
    
    
    7
    
    
    $
    0.10
    
    
    $
    705,815
    
    
    
    6,886,000
    
    
    $
    0.10
    
    
    $
    705,815Total
    
    
    75,266,200
    
    
    
    
    
    
    
    
    
    
    $
    6,345,902
    
    
    
    75,266,200
    
    
    
    
    
    
    $
    6,345,902
  F-28




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##### Table of Contents



Average risk free rate of return
    
    
    2.77
    %Weighted average expected option life
    
    7 monthsVolatility rate
    
    
    65
    %Dividend yield
    
    
    0
    %
 Stock-based compensation
   Net income, as reported
    
    $
    18,618,732Add: Employee stock-based compensation as reported
    
    
    16,804Less: Employee stock-based compensation determined using the
fair value method
    
    
    (1,628,723
    )Pro forma income attributable to ordinary shareholders
    
    $
    17,006,813Basic income per share:As reported
    
    $
    0.01Pro forma
    
    $
    0.01Diluted income per share:As reported
    
    $
    0.01Pro forma
    
    $
    0.01
  Option Grants
    
    2005Average risk-free rate of return
    
    
    3.27%  3.75
    %Weighted average expected option life
    
    
    3.25 yearsVolatility rate
    
    
    65
    %Dividend yield
    
    
    0
    %
 Nonvested shares
     F-29




---



##### Table of Contents



Nonvested sharesOutstandingNonvested shares outstanding at January 1, 2006
    
    
    Granted
    
    
    40,500,000Forfeited
    
    
    (8,666,700
    )Vested
    
    
    Nonvested shares outstanding at December 31, 2006
    
    
    31,833,300Granted
    
    
    39,500,000Forfeited
    
    
    (10,400,200
    )Vested
    
    
    (11,099,300
    )Nonvested shares outstanding at December 31, 2007
    
    
    49,833,800
  Nonvested shares outstandingNumber
    
    
    Aggregate intrinsicoutstanding
    
    
    valueGrant dateFebruary 7, 2006
    
    
    11,333,800
    
    
    $
    859,102June 20, 2006
    
    
    4,000,000
    
    
    $
    211,200March 14, 2007
    
    
    15,000,000
    
    
    $
    750,000November 23, 2007
    
    
    19,500,000
    
    
    $
    610,350Total
    
    
    49,833,800
    
    
    $
    2,430,652
   2008
    
    $
    762,9812009
    
    
    378,7802010
    
    
    148,170$
    1,289,931
   F-30




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##### Table of Contents



16. SEGMENT INFORMATION
   Year ended December 31,2007
    
    
    2006
    
    
    2005RevenuesWVAS
    
    $
    50,038,014
    
    
    $
    62,512,483
    
    
    $
    56,062,368Recorded Music
    
    
    10,488,613
    
    
    
    6,203,418
    
    
    
    Total revenue
    
    $
    60,526,627
    
    
    $
    68,715,901
    
    
    $
    56,062,368Cost of revenuesWVAS
    
    $
    36,394,300
    
    
    $
    40,672,113
    
    
    $
    28,634,488Recorded Music
    
    
    6,232,728
    
    
    
    3,553,144
    
    
    
    Total cost of revenues
    
    $
    42,627,028
    
    
    $
    44,225,257
    
    
    $
    28,634,488Gross profitWVAS
    
    $
    13,643,714
    
    
    $
    21,840,370
    
    
    $
    27,427,880Recorded Music
    
    
    4,255,885
    
    
    
    2,650,274
    
    
    
    Total gross profit
    
    $
    17,899,599
    
    
    $
    24,490,644
    
    
    $
    27,427,880
 Geographic Information
  17. NET (LOSS) INCOME PER SHARE
  Year ended December 31,2007
    
    
    2006
    
    
    2005Net (loss) income from continuing operations
(numerator), basic and diluted
    
    $
    (41,530,968
    )
    
    $
    6,640,393
    
    
    $
    14,521,124Net (loss) income from discontinued operations,
net of tax (numerator), basic and diluted
    
    
    (419,227
    )
    
    
    (836,448
    )
    
    
    4,097,608Net (loss) income (numerator), basic and diluted
    
    $
    (41,950,195
    )
    
    $
    5,803,945
    
    
    $
    18,618,732Weighted average shares (denominator):Weighted average ordinary shares
outstanding used in computing basic
income per share
    
    
    2,172,208,190
    
    
    
    2,189,748,563
    
    
    
    2,092,089,848Dilutive effect of nonvested shares,
stock options and warrants
    
    
    
    
    
    
    19,010,073
    
    
    
    37,139,113Weighted average ordinary shares
outstanding used in computing diluted
income per share
    
    
    2,172,208,190
    
    
    
    2,208,758,636
    
    
    
    2,129,228,961Net (loss) income from continuing operations
per share, basic and diluted
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01Net (loss) income from discontinued operations
per share, basic and diluted
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    0.00Net (loss) income per share, basic and diluted
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01
  F-31




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##### Table of Contents



18. CONCENTRATIONS
 (a) Dependence on Telecom Operators
   Year ended December 31,2007
    
    
    2006
    
    
    2005Revenues
    
    
    %
    
    
    Revenues
    
    
    %
    
    
    Revenues
    
    
    %China Unicom
    
    $
    12,789,026
    
    
    
    21
    %
    
    $
    21,144,096
    
    
    
    31
    %
    
    $
    36,267,213
    
    
    
    65
    %China Mobile
    
    
    29,921,502
    
    
    
    49
    %
    
    
    36,756,895
    
    
    
    53
    %
    
    
    18,946,035
    
    
    
    34
    %
  December 312007
    
    
    2006Accounts
    
    
    
    
    
    
    Accountsreceivable
    
    
    %
    
    
    receivable
    
    
    %China Unicom
    
    $
    5,289,178
    
    
    
    36
    %
    
    $
    6,246,702
    
    
    
    46
    %China Mobile
    
    
    4,699,399
    
    
    
    32
    %
    
    
    5,493,069
    
    
    
    41
    %
 (b) Credit risk
  Movement of allowance for doubtful accounts
 Year ended December 31,2007
    
    
    2006Balance at beginning of the period
    
    $
    284,402
    
    
    $
    15,167Provisions
    
    
    661,504
    
    
    
    269,235Reversed
    
    
    (233,057
    )
    
    
    Written off
    
    
    (13,324
    )
    
    
    Balance at the end of the period
    
    $
    699,525
    
    
    $
    284,402
  F-32




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##### Table of Contents



19. MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION
   20. COMMITMENTS AND CONTINGENCIES
 Operating leases as lessee
   December 31,2008
    
    $
    1,725,1472009
    
    
    1,378,9932010
    
    
    21,443Total
    
    $
    3,125,583
 Artist contracts
  December 31,2008
    
    $
    1,974,0672009
    
    
    1,974,0672010
    
    
    1,137,830Total
    
    $
    5,085,964
  F-33




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##### Table of Contents



21. SUBSEQUENT EVENTS
 Amendment to Shanghai Magma purchase agreement
  Termination of agreement with Enlight
    F-34




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
BALANCE SHEETS
(In U.S. dollars)
 December 31,2007
    
    
    2006(in U.S. dollars, except share data)AssetsCurrent assets:Cash
    
    $
    49,061,529
    
    
    $
    48,496,751Prepaid expenses and other current assets
    
    
    224,297
    
    
    
    450,298Amounts due from subsidiaries and variable interest entities
    
    
    
    
    
    
    12,404,359Total current assets
    
    
    49,285,826
    
    
    
    61,351,408Receivable on disposal of subsidiary
    
    
    4,151,400
    
    
    
    Investments in subsidiaries and variable interest entities
    
    
    39,681,837
    
    
    
    67,481,687Investment in equity affiliate
    
    
    150,000
    
    
    
    Total assets
    
    $
    93,269,063
    
    
    $
    128,833,095Liabilities and shareholders equityCurrent liabilities:Accrued expenses and other current liabilities
    
    $
    595,648
    
    
    $
    192,137Amounts due to subsidiaries and variable interest entities
    
    
    530,756
    
    
    
    Acquisitions payable
    
    
    6,560,000
    
    
    
    5,820,938Total current liabilities
    
    
    7,686,404
    
    
    
    6,013,075Shareholders equity:Ordinary shares ($0.00005 par value; 4,560,000,000 shares
authorized; 2,173,784,440 and 2,162,031,740 a shares issued
and outstanding as of December 31, 2007, and 2006,
respectively)
    
    
    108,689
    
    
    
    108,102Additional paid-in capital
    
    
    74,066,839
    
    
    
    73,608,117Retained earnings
    
    
    3,752,257
    
    
    
    45,702,452Accumulated other comprehensive income
    
    
    7,654,874
    
    
    
    3,401,349Total shareholders equity
    
    
    85,582,659
    
    
    
    122,820,020Total liabilities and shareholders equity
    
    $
    93,269,063
    
    
    $
    128,833,095
  F-35




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENT OF OPERATIONS
(In U.S. dollars)
 Year ended December 31,2007
    
    
    2006
    
    
    2005(in U.S. dollars, except share data)Operating expensesProduct development
(represents stock-based
compensation expense of
$921, $79,587 and
$4,886 for the years
ended December 31,
2007, 2006 and 2003,
respectively)
    
    $
    9,385
    
    
    $
    79,587
    
    
    $
    4,886Selling and marketing
(including stock-based
compensation expense of
$286,885, $346,456 and
$9,911 for the years
ended December 31,
2007, 2006 and 2005,
respectively)
    
    
    286,885
    
    
    
    346,211
    
    
    
    187,111General and
administrative
(including stock-based
compensation expense of
$155,169, $117,514 and
$22,775 for the years
ended December 31,
2007, 2006 and 2005,
respectively)
    
    
    2,440,417
    
    
    
    1,757,720
    
    
    
    1,411,309Total operating expenses
    
    
    2,736,687
    
    
    
    2,183,518
    
    
    
    1,603,306Loss from operations
    
    
    (2,736,687
    )
    
    
    (2,183,518
    )
    
    
    (1,603,306
    )Interest income
    
    
    2,082,629
    
    
    
    2,372,585
    
    
    
    1,291,258Interest expense
    
    
    (179,062
    )
    
    
    (44,765
    )
    
    
    Other income, net
    
    
    105,485
    
    
    
    
    
    
    
    Gain from disposal of subsidiary
    
    
    192,943
    
    
    
    
    
    
    
    Equity in earnings (loss) of
subsidiaries, variable interest
entities and affiliate
    
    
    (41,415,503
    )
    
    
    5,659,643
    
    
    
    18,930,780Net (loss) income
    
    $
    (41,950,195
    )
    
    $
    5,803,945
    
    
    $
    18,618,732
  F-36




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF CASH FLOWS
(In U.S. dollars)
 Year ended December 31,2007
    
    
    2006
    
    
    2005(in U.S. dollars)Cash flows from operating activities:Net (loss) income
    
    $
    (41,950,195
    )
    
    $
    5,803,945
    
    
    $
    18,618,732Adjustments to reconcile net (loss) income to net cash
provided by operating activities:Stock-based compensation expense
    
    
    442,975
    
    
    
    543,557
    
    
    
    37,572Equity in (losses) earnings of subsidiaries, variable
interest entities and affiliate
    
    
    41,415,503
    
    
    
    (5,659,643
    )
    
    
    (18,930,780
    )Gain from disposal of subsidiary
    
    
    (192,943
    )
    
    
    
    
    
    
    Receivable from disposal of subsidiary (net of cash
disposed of $771,570)
    
    
    (3,186,887
    )
    
    
    
    
    
    
    Changes in assets and liabilities:Prepaid expenses and other current assets
    
    
    226,001
    
    
    
    (19,649
    )
    
    
    (807,662
    )Amounts due from subsidiaries and variable
interest entities
    
    
    5,843,380
    
    
    
    792,290
    
    
    
    Accrued expenses and other current liabilities
    
    
    403,512
    
    
    
    (243,793
    )
    
    
    224,768Amounts due to subsidiaries and variable
interest entities
    
    
    530,756
    
    
    
    (1,243,090
    )
    
    
    (1,063,505
    )Payroll withholding taxes payable
    
    
    
    
    
    
    (504,945
    )
    
    
    504,945Net cash provided by (used in) operating activities
    
    
    3,532,102
    
    
    
    (531,328
    )
    
    
    (1,415,930
    )Investing activities:Investment in subsidiaries and variable interest entities
    
    
    (2,833,658
    )
    
    
    (7,475,860
    )
    
    
    (62,350
    )Purchase of equity affiliate
    
    
    (150,000
    )
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (2,983,658
    )
    
    
    (7,475,860
    )
    
    
    (62,350
    )Financing activities:Proceeds from the issuance of ordinary shares upon initial
public offering, net of offering costs of $7,578,637 (offering
costs of $7,399,844 and $178,793 were paid for the years ended
December 31, 2006 and 2005, respectively)
    
    
    
    
    
    
    540,000
    
    
    
    60,422,746Payment to repurchase ordinary shares
    
    
    
    
    
    
    (5,034,748
    )
    
    
    Collection of subscription receivable
    
    
    
    
    
    
    
    
    
    
    50,880Proceeds from exercise of stock options
    
    
    16,334
    
    
    
    95,472
    
    
    
    1,489,602Net cash provided by (used in) financing activities
    
    
    16,334
    
    
    
    (4,399,276
    )
    
    
    61,963,228Net increase (decrease) in cash and cash equivalents
    
    
    564,778
    
    
    
    (12,406,464
    )
    
    
    60,484,948Cash and cash equivalents, beginning of year
    
    
    48,496,751
    
    
    
    60,903,215
    
    
    
    418,267Cash and cash equivalents, end of year
    
    $
    49,061,529
    
    
    $
    48,496,751
    
    
    $
    60,903,215
 Note
    F-37




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Document4.81
    
    
    Translation of Cooperation Agreement between China Mobile Communications Group Corporation
and Monternet WAP Service Provider between China Mobile Communications Group Corporation and
Beijing Hutong Wuxian Technology Co., Ltd, dated April 27, 2007.4.82
    
    
    Translation of Mobile Value-added Service Cooperation Agreement with China United
Telecommunications Corporation between China United Telecommunications Corporation and
Beijing Hengjiweiye Electronic Commerce Co., Ltd., dated August 30, 2007.4.84
    
    
    Translation of Equity Transfer Agreement between TWM Holding, Hurray! Holding Co., Ltd., and
Hurray! Times Communications (Beijing) Ltd. dated October 8, 2007.4.85
    
    
    Translation of Equity Transfer Agreement of Shanghai Saiyu Information Technology Co., Ltd.
among Liang Ruan, Yuqi Shi, Jie Li and Jianmei Wan, dated February 12, 2007.4.86
    
    
    Translation of Transfer Agreement between Hurray! Times Communications (Beijing) Co., Ltd.,
Beijing WVAS Solutions Ltd., Beijing Enterprise Network Technology Co., Ltd., Xiaoping Wang,
Hao Sun and Beijing Hurray! Times Technology Co., Ltd., dated May, 2007.8.1
    
    
    List of Significant Subsidiaries and Affiliates.12.1
    
    
    Certification of Chief Executive Officer Required by Rule 13a-14(a).12.2
    
    
    Certification of Chief Financial Officer Required by Rule 13a-14(a).13.1
    
    
    Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code.13.2
    
    
    Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code.15.1
    
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd., Independent Registered Public Accounting Firm.