##### 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, 2008
 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.
 Title of each class
    
    Name of each exchange and on which registeredAmerican Depositary Shares,
each representing 100
ordinary shares,  par value
US$0.00005 per share
    
    Nasdaq Global Market
 Securities registered or to be registered pursuant to Section 12(g) of the Act.
 NONE
(Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)
  Yes o No þ
 o þ
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued 
by the International Accounting Standards Board o
    
    Other o
 o o
 o þ




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##### 



TABLE OF CONTENTS
 INTRODUCTIONPART IItem 1. Identity of Directors, Senior Management and Advisers
    
    
    3Item 2. Offer Statistics and Expected Timetable
    
    
    3Item 3. Key Information
    
    
    4Item 4. Information on the Company
    
    
    25Item 4A. Unresolved Staff Comments
    
    
    41Item 5. Operating and Financial Review and Prospects
    
    
    41Item 6. Directors, Senior Management and Employees
    
    
    61Item 7. Major Shareholders and Related Party Transactions
    
    
    67Item 8. Financial Information
    
    
    69Item 9. The Offer and Listing
    
    
    69Item 10. Additional Information
    
    
    70Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    78Item 12. Description of Securities Other than Equity Securities
    
    
    79PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    79Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    79Item 15. Controls and Procedures
    
    
    79Item 16. Reserved
    
    
    80Item 16A. Audit Committee Financial Expert
    
    
    80Item 16B. Code of Ethics
    
    
    80Item 16C. Principal Accountant Fees and Services
    
    
    81Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    81Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    81Item 16F. Changes in Registrants Certifying Accountant
    
    
    81Item 16G. Corporate Governance
    
    
    81PART IIIItem 17. Financial Statements
    
    
    82Item 18. Financial Statements
    
    
    82Item 19. Exhibits
    
    
    82Exhibit 4.70Exhibit 4.71Exhibit 4.72Exhibit 4.73Exhibit 4.74Exhibit 4.75Exhibit 4.76Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2Exhibit 15.1Exhibit 15.2
   2




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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;
    
    telecom operators refer to China Mobile, China Unicom and China Telecom, the three principal
telecommunication network operators in 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
   3




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Item 3. Key Information
 A. Selected Financial Data
  For the Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005 (1)
    
    
    2004 (1)(in thousands of U.S. dollars, except percentages)Historical Condensed
Consolidated Statement
of Operations DataRevenues:Wireless value-added
services
    
    $
    42,672
    
    
    $
    50,038
    
    
    $
    62,512
    
    
    $
    56,063
    
    
    $
    43,173Recorded music
    
    
    11,287
    
    
    
    10,489
    
    
    
    6,203
    
    
    
    
    
    
    
    Total revenues
    
    
    53,959
    
    
    
    60,527
    
    
    
    68,715
    
    
    
    56,063
    
    
    
    43,173Cost of revenues:Wireless value-added
services
    
    
    32,840
    
    
    
    36,394
    
    
    
    40,672
    
    
    
    28,635
    
    
    
    18,053Recorded music
    
    
    6,730
    
    
    
    6,233
    
    
    
    3,553
    
    
    
    
    
    
    
    Total cost of revenues
    
    
    39,570
    
    
    
    42,627
    
    
    
    44,225
    
    
    
    28,635
    
    
    
    18,053Gross profit
    
    
    14,389
    
    
    
    17,900
    
    
    
    24,490
    
    
    
    27,428
    
    
    
    25,120Operating expenses
    
    
    22,669
    
    
    
    61,462
    
    
    
    19,882
    
    
    
    14,277
    
    
    
    10,436Operating (loss) income
from continuing
operations
    
    
    (8,280
    )
    
    
    (43,562
    )
    
    
    4,608
    
    
    
    13,151
    
    
    
    14,684Interest income
    
    
    1,613
    
    
    
    2,313
    
    
    
    2,529
    
    
    
    1,390
    
    
    
    28Interest expense
    
    
    
    
    
    
    (179
    )
    
    
    (45
    )
    
    
    (27
    )
    
    
    (312
    )Gain on reduction of
acquisition payable
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange loss
    
    
    (8,990
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income, net
    
    
    247
    
    
    
    466
    
    
    
    315
    
    
    
    330(Loss) income before
provision for income
taxes, earnings in
equity investments,
minority interest and
discontinued operations
    
    
    (10,410
    )
    
    
    (40,962
    )
    
    
    7,407
    
    
    
    14,844
    
    
    
    14,400Income tax expense
(credit)
    
    
    486
    
    
    
    (182
    )
    
    
    205
    
    
    
    (323
    )
    
    
    Net (loss) income from
continuing operations
after income taxes
before minority
interests
    
    
    (10,896
    )
    
    
    (40,780
    )
    
    
    7,202
    
    
    
    14,521
    
    
    
    14,400Minority interests
    
    
    337
    
    
    
    (688
    )
    
    
    (562
    )
    
    
    
    
    
    
    Equity in earnings
(losses) of affiliate
    
    
    64
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    Impairment for
Investment in equity
affiliate
    
    
    (1,871
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income from
continuing operations
    
    
    (12,366
    )
    
    
    (41,531
    )
    
    
    6,640
    
    
    
    14,521
    
    
    
    14,400
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For the Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005 (1)
    
    
    2004 (1)(in thousands of U.S. dollars, except percentages)Discontinued operations:Net (loss) income from
discontinued
operations, net of tax
    
    
    
    
    
    
    (612
    )
    
    
    (836
    )
    
    
    4,098
    
    
    
    2,840Gain from disposal of
discontinued operations
    
    
    413
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) from
discontinued
operations, net of tax
    
    
    413
    
    
    
    (419
    )
    
    
    (836
    )
    
    
    4,098
    
    
    
    2,840Net (loss) income
    
    
    (11,953
    )
    
    
    (41,950
    )
    
    
    5,804
    
    
    
    18,619
    
    
    
    17,240Deemed dividends on
Series A convertible
preference shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )Net (loss) income
attributable to holders
of ordinary shares
    
    $
    (11,953
    )
    
    $
    (41,950
    )
    
    $
    5,804
    
    
    $
    18,619
    
    
    $
    17,200Net (loss) income per
share, basic
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01
    
    
    $
    0.01Net (loss) income per
share, diluted
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    0.01
    
    
    $
    0.01Shares used in
calculating basic
(loss) income per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,189,748,563
    
    
    
    2,092,089,848
    
    
    
    1,208,512,142Shares used in
calculating diluted
(loss) income per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,208,758,636
    
    
    
    2,129,228,961
    
    
    
    1,572,887,775
 (1)
    
    The amounts of share-based compensation included in operating expenses for 2006, 2007 and 2008
reflect the adoption of Statement of Financial Accounting Standards (SFAS) No. 123 (revised
2004), Share-Based Payment (SFAS 123(R)) effective January 1, 2006. Had we applied the fair
value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, in prior
periods, we would have reported net income of $16,511 thousand and $17,007 thousand for 2004 and
2005, respectively, and net income per share (diluted) of $0.01 for both 2004 and 2005. As of and for the Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands of U.S. dollars, except percentages)Historical Condensed Consolidated
Balance Sheet DataCash
    
    $
    59,473
    
    
    $
    65,979
    
    
    $
    74,597
    
    
    $
    75,959
    
    
    $
    8,714Accounts receivable, net
    
    
    12,658
    
    
    
    14,691
    
    
    
    13,449
    
    
    
    18,089
    
    
    
    11,883Other current assets
    
    
    5,580
    
    
    
    8,777
    
    
    
    3,342
    
    
    
    2,297
    
    
    
    2,133Property and equipment, net
    
    
    980
    
    
    
    1,636
    
    
    
    1,954
    
    
    
    2,536
    
    
    
    2,617Goodwill
    
    
    3,157
    
    
    
    5,621
    
    
    
    39,621
    
    
    
    23,869
    
    
    
    20,412Other assets
    
    
    6,476
    
    
    
    8,890
    
    
    
    7,027
    
    
    
    4,953
    
    
    
    705Total assets
    
    $
    88,324
    
    
    $
    105,594
    
    
    $
    139,990
    
    
    $
    127,703
    
    
    $
    46,464
  5




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As of and for the Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands of U.S. dollars, except percentages)Current liabilities
    
    $
    6,316
    
    
    $
    14,467
    
    
    $
    12,960
    
    
    $
    7,636
    
    
    $
    8,743Non-current liabilities
    
    
    316
    
    
    
    877
    
    
    
    851
    
    
    
    843
    
    
    
    Total liabilities
    
    $
    6,632
    
    
    $
    15,344
    
    
    $
    13,811
    
    
    $
    8,479
    
    
    $
    8,743Minority interests
    
    $
    4,783
    
    
    $
    4,667
    
    
    $
    3,359
    
    
    $
    605
    
    
    $
    Series A convertible preference
shares (16,924,497 shares issued and
outstanding as of December 31, 2004,
and nil issued and outstanding as of
December 31, 2005 to 2008)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Ordinary shares (2,193,343,740,
2,174,784,440, 2,163,031,740,
2,229,754,340 and 1,186,672,000
shares issued and outstanding as of
December 31, 2008, 2007, 2006, 2005
and 2004, respectively)
    
    
    110
    
    
    
    109
    
    
    
    108
    
    
    
    111
    
    
    
    59Other shareholders equity
    
    
    76,799
    
    
    
    85,474
    
    
    
    122,712
    
    
    
    118,508
    
    
    
    37,645Total liabilities, minority interests
and shareholders equity
    
    $
    88,324
    
    
    $
    105,594
    
    
    $
    139,990
    
    
    $
    127,703
    
    
    $
    46,464Other Historical Condensed
Consolidated Financial Data:Gross profit marginWireless value-added services
    
    
    23.0
    %
    
    
    27.3
    %
    
    
    34.9
    %
    
    
    48.9
    %
    
    
    58.2
    %Recorded music
    
    
    40.4
    %
    
    
    40.6
    %
    
    
    42.7
    %
    
    
    
    
    
    
    Total gross profit margin
    
    
    26.7
    %
    
    
    29.6
    %
    
    
    35.6
    %
    
    
    48.9
    %
    
    
    58.2
    %(Loss) income from continuing
operations margin(1)
    
    
    (15.3
    %)
    
    
    (72.0
    %)
    
    
    6.7
    %
    
    
    23.5
    %
    
    
    34.0
    %Net (loss) income from continuing operations margin(1)
    
    
    (22.9
    %)
    
    
    (68.6
    %)
    
    
    9.7
    %
    
    
    25.9
    %
    
    
    33.4
    %Net (loss) income margin(1)
    
    
    (22.2
    %)
    
    
    (69.3
    %)
    
    
    8.4
    %
    
    
    33.2
    %
    
    
    39.9
    %Depreciation
    
    
    990
    
    
    
    1,269
    
    
    
    1,580
    
    
    
    1,461
    
    
    
    1,335Amortization
    
    
    2,338
    
    
    
    2,375
    
    
    
    1,901
    
    
    
    478
    
    
    
    651Capital expenditure
    
    
    349
    
    
    
    864
    
    
    
    957
    
    
    
    1,289
    
    
    
    1,871
 (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. Exchange Rate Information
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Noon Buying RateRMB per US$1.00High
    
    
    LowDecember 2008
    
    
    6.8842
    
    
    
    6.8225January 2009
    
    
    6.8403
    
    
    
    6.8225February 2009
    
    
    6.8470
    
    
    
    6.8241March 2009
    
    
    6.8438
    
    
    
    6.8240April 2009
    
    
    6.8361
    
    
    
    6.8180May 2009
    
    
    6.8265
    
    
    
    6.8176
  Average Noon Buying RateRMB per US$1.002004
    
    
    8.27682005
    
    
    8.18262006
    
    
    7.95792007
    
    
    7.58062008
    
    
    6.91932009 (through May 30)
    
    
    6.8326
 B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  D. Risk Factors
 RISKS RELATED TO OUR COMPANY
 Risks Related to Our Wireless Value-added Services
 We depend on China Mobile, China Unicom and China Telecom, the three principal 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 the recent government
imposed restructurings or otherwise, may result in severe disruptions to our business operations
and the loss of a major portion of our revenue.
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We incurred net losses in 2007, 2008 and the first quarter of 2009 and may incur additional losses
in future periods.
  The termination or alteration of our various agreements with the telecom operators and their
provincial affiliates would materially and adversely impact our revenue and profitability.
    8




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Unilateral changes in the policies of the MIIT and the telecom operators 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 2008 by the delayed expansion of 2.5G mobile networks
by the telecom operators. If this trend continues our revenue and profitability could be further
materially and adversely affected.
  The Chinese government and the telecom operators may prevent us from distributing, and we may be
subject to liability for, content that any of them believe is inappropriate.
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The telecom operators 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 any of the telecom operators 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 the telecom operators providing their own full
portfolio of 2G , 2.5G and any upcoming 3G services that compete with our services.
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The popularity of our WVAS services, and therefore revenues from these services and our
profitability, would be adversely affected if our competitors offer more attractive and engaging
services or we are unsuccessful in developing and offering attractive and engaging services on 3G
mobile networks, which are in the process of being launched.
  The telecom operators 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 the telecom operators 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.
    Our dependence on the billing records of the telecom operators 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.
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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;
 
    
    any telecom operator experiences technical problems with its network, thus preventing
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.
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The telecom operators 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 the telecom operators,
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.
    13




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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.
  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.
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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.
    We operate in rapidly evolving industries, which may make it difficult for investors to evaluate
our business.
  
    
    attract and retain users for our 2G, 2.5G and any upcoming 3G 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,
 
    
    maintain, expand and enhance our relationships with telecom operators so that they
will allow us to offer our 2G, 2.5G and any upcoming 3G services over their networks, and
 
    
    increase awareness of our brand and user loyalty.
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We depend on key personnel for the success of our business. Our business may be severely disrupted
if we lose the services of our key executives and employees or fail to add new senior and middle
managers to our management.
  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 and 3G
services evolves and matures,
 
    
    effectively maintain our relationships with China Mobile and China Unicom, enhance
our relationships with China Telecom 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 and artist agency businesses,
 
    
    continue training, motivating and retaining our existing employees, including our
senior management, and attract and integrate new employees,
 
    
    develop and improve our operational, financial, accounting and other internal systems
and controls, and
 
    
    maintain adequate controls and procedures to ensure that our periodic public
disclosure under applicable laws, including U.S. securities laws, is complete and
accurate.
 Any failures of the mobile telecommunications network, the Internet or our technology platform may
reduce use of our services and our revenues.
   16




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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.
  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.
    17




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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 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.
  We may not be able to adequately protect our intellectual property, and we may be exposed to
infringement claims by third parties.
   18




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We have limited business insurance coverage, which could expose us to significant costs and
business disruption.
  We have a material weakness in our internal control over financial reporting. If we fail to
maintain an effective system of internal control over financial reporting, we may not be able to
accurately report our financial results or prevent fraud.
     19




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We believe that we were a passive foreign investment company (PFIC) for taxable years 2006, 2007
and 2008 and are likely a PFIC for the current taxable year of 2009, which could result in adverse
U.S. federal income tax consequences to U.S. investors.
   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.
   20




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We believe that all participants of our existing equity compensation plans who are PRC citizens are
currently required to register with the State Administration of Foreign Exchange of the PRC, or
SAFE, and the failure to so comply could subject us and such participants to penalties. 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
 Recent changes in PRC tax laws could have a material adverse effect on our operating results.
    21




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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.
    
    
    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 WVAS services business.
  22




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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
 The recent 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.
  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.
   23




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We may incur substantial increases in labor cost due to the promulgation of the new labor contract
law.
  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.
  Governmental control of currency conversion may affect the value of our ordinary shares and ADSs.
  We face foreign exchange and conversion risks, and fluctuation in the value of the Renminbi may
have a material adverse effect on the value of our ordinary shares and ADSs.
    24




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##### Table of Contents



Item 4. Information on the Company
 A. History and Development of the Company
        B. Business Overview
 Introduction
   25




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Our WVAS Services
  SMS Services
 IVR Services
 RBT Services
 WAP Services.
 MMS Services
 Java Games.     
  26




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Our Music and Artist Agency Business
      Network Service Agreements with Telecom Operators
 General
   27




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Fee Arrangements and Other Payment Considerations
    Obligations with Respect to Our Services
  Term and Termination and Other Material Provisions
   Music Copyright Agreements with the Telecom Operators and Service Providers
 General
  Fee Arrangements
   28




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Term and Termination and Other Material Provisions
   Recording and Artist Agency Agreements with Artists
 General
  Fee Arrangements
  Term and Termination and Other Material Provisions
   Performance Agreements with Third Parties
 General
  Fee Arrangements
  Other Material Provisions
   29




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Product and Content Development
 Wireless Value-Added Services
    Music Production, Concert Promotion and Artist Agency Services
        30




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##### Table of Contents



Sales and Marketing
 Wireless Value-Added Services
   Online Sales and Marketing
  
    
    Internet Marketing Alliances.We create Internet marketing alliances 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. We partner 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. We engage in 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,
China Unicom and China Telecom, including hosting 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 develop integrated sales campaigns with traditional media
companies and multinational corporations.
 
    
    Retail Promotion.We enter into partnerships with retailers of mobile handsets in
certain provinces, whereby the retailers sales personnel recommend our services to
customers and, in certain instances, offer free trials to these customers. In certain
cases, we share the revenues generated through such promotions with the retailer.
 Our Music and Artist Agency 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.We organize concert tours for our artists through our well-known
concert promotion company, Fly Songs, and our other affiliated music companies. This is
not only an effective way to raise the profile of our artists nationwide, but also to
generate revenues from concert ticket sales and corporate sponsorship.
 
    
    Corporate sponsorship.Frequently, the artists of our affiliated music companies
appear in commercial advertising or serve as corporate image ambassadors on behalf of
consumer products and services companies. Our affiliated music companies proactively seek
out such opportunities to promote our artists and generate revenues from such corporate
sponsorship.
 
    
    Offline CD distribution.Upon launching a new album, our affiliated music companies
will distribute the album in CD format through traditional offline channels, 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.
 
    
    Music and Artist Agency Services.We endeavor through our music artist agency
business to find, develop and retain recording artists who will achieve long-term
profitable success.
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Customer Service
  Infrastructure and Technology
  
    
    develop and deliver our 2G, 2.5G and any upcoming 3G services which are (or may in
the future be) provided through networks of China Mobile, China Unicom and China Telecom
and
 
    
    maintain our internal billing and transmission records.
     
 Competition
 Wireless Value-Added Services
      33




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Our Music and Artist Agency 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 MIIT 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
(2008, revised), 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.
 
    
    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.
  34




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
    
    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. 
  35




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Regulation for Internet Games and Culture Activities. Internet Culture Administration Tentative Measures
 Regulation for Internet Audiovisual Program Services Rules for
the Administration of Internet Audiovisual Program Services
 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
   36




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##### Table of Contents



Regulation of Artist Agency
 Regulations for the
Administration of Commercial Performances
 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.
   37




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##### Table of Contents



Foreign exchange controls.
 Intellectual Property and Proprietary Rights
  Hurraymedia.com; Hurrayagency.com; Hurraymusic.com;Hurraygame.com; Hurraydigital.com Hurraywireless.com
      38




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##### Table of Contents



C. Organizational Structure
  1.
    
    Hurray! Solutions is 85% and 15% owned by our chairman, Qindai Wang, and one of our
directors and our chief executive officer, Songzuo Xiang, respectively.
 2.
    
    Beijing Network is 50% owned by each of Li Xun and Hongmei Peng, two individuals in
China.
 3.
    
    WVAS Solutions is 99% owned by Beijing Network, with the remaining 1% equally owned
by Hao Sun and Xiaoping Wang.4.
    
    Beijing Palmsky is 50% and 50% owned by two individuals in China, Hong Liu and Haoyu Yang.5.
    
    Beijing Hutong is 50% and 50% owned by two individuals in China, Wenqian Xu and Yi Cai.6.
    
    Shanghai Magma is 50% and 50% owned by two individuals in China, Yi Zhang and Aiqin Shang.7.
    
    Hengji Weiye is 50% and 50% owned by two individuals in China, Hong Pan and Xiaoqing Guo.
 8.
    
    Shanghai Saiyu is 50% and 50% owned by two individuals in China, Liang Ruan and Yuqi
Shi.
 9.
    
    Henan Yinshan is 50% and 50% owned by two individuals in China, Hua Wei and Yidan
Jiang.
      39




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40




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##### Table of Contents



D. Property, Plant and Equipment
   
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  A. OPERATING RESULTS
 Overview
        41




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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. 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
initially experienced significant growth in revenues from these services, followed by a
significant decline in revenues for these services over the past three years. The
important factors causing this decline have been the changes in the telecom operator
policies or the manner in which they are enforced in 2008. 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 telecom operator policies and the delay in the
expansion of 2.5G networks by the telecom operators in 2008 and in the launch of 3G
networks in China, 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 the Telecom Operators.A key
component of our revenue growth is our ability to not only maintain access to China
Unicoms and China Mobiles networks and now to China Telecoms networks following that
companys acquisition of one of China Unicom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 effect 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. Our WAP
revenue was adversely affected during this period.
 
    
    Network Service Agreements with the Telecom Operators.Our results of operations are
dependent on the terms of network service agreements with the telecom operators 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.
 
    
    Billing and Transmission Failures. We do not recognize any revenues for services that
are characterized as billing and transmission failures. We can not collect fees when these
failures occur for our 2G services from telecom operators, which arise in a number of
circumstances, including when the delivery of our services to a customer is prevented
because the customers phone is off, the customers prepaid phone card has run out of
value or a mobile operator experiences technical problems with its network. 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, including in recent
quarters, due in part to the recent restructuring of the telecom operators. The failure
rate ranged on a monthly basis from 0.0% to 19.1% of the total billable messages which are
reflected in our internal records during 2008. 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 for 2.5G services
ranged from 0.4% to 27.5% per month in 2008 and related to services that were provided but
for a variety of reasons were not billed to the user due to the manner in which the
telecom operators register new users or manage their internal billing reconciliation
process, an issue that the 2008 telecom operator restructuring exacerbated.
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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, and Seed Music Group, 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 31,2008
    
    
    2007
    
    
    2006Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    PercentageAmount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues
    
    
    Amount
    
    
    of revenues(in thousands of U.S. dollars, except percentages)Revenues:Wireless value-added services
    
    $
    42,672
    
    
    
    79.1
    %
    
    $
    50,038
    
    
    
    82.7
    %
    
    $
    62,512
    
    
    
    91
    %Recorded music
    
    
    11,287
    
    
    
    20.9
    %
    
    
    10,489
    
    
    
    17.3
    %
    
    
    6,203
    
    
    
    9
    %Total revenues
    
    $
    53,959
    
    
    
    100.0
    %
    
    $
    60,527
    
    
    
    100.0
    %
    
    $
    68,715
    
    
    
    100.0
    %
  43




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For the Year Ended December 31, 2008China
    
    
    China
    
    
    China
    
    
    ChinaMobile
    
    
    Unicom
    
    
    Telecom
    
    
    Netcom
    
    
    Others
    
    
    Total(in millions of U.S. dollars)SMS
    
    $
    9.5
    
    
    $
    2.4
    
    
    $
    0.4
    
    
    $
    0.1
    
    
    $
    0.9
    
    
    $
    13.3IVR
    
    
    7.2
    
    
    
    1.3
    
    
    
    3.2
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    12.2RBT
    
    
    2.6
    
    
    
    1.9
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    5.02G Revenues
    
    
    19.3
    
    
    
    5.6
    
    
    
    4.1
    
    
    
    0.3
    
    
    
    1.2
    
    
    
    30.5WAP
    
    
    2.1
    
    
    
    4.7
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    7.4MMS
    
    
    0.8
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    1.4Java
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    2.3WEB
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.22.5G revenues
    
    
    5.1
    
    
    
    5.2
    
    
    
    0.9
    
    
    
    
    
    
    
    0.1
    
    
    
    11.3Other revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    0.9Total
    
    $
    24.4
    
    
    $
    10.8
    
    
    $
    5.0
    
    
    $
    0.3
    
    
    $
    2.2
    
    
    $
    42.7
 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
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    3.72G Revenues
    
    
    21.9
    
    
    
    5.4
    
    
    
    3.0
    
    
    
    0.6
    
    
    
    1.0
    
    
    
    31.9WAP
    
    
    5.9
    
    
    
    6.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.6MMS
    
    
    0.7
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4Java
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4WEB
    
    
    
    
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    2.02.5G revenues
    
    
    8.0
    
    
    
    7.4
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    17.4Other revenues
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    0.7Total
    
    $
    30.0
    
    
    $
    12.8
    
    
    $
    5.0
    
    
    $
    0.6
    
    
    $
    1.6
    
    
    $
    50.0
 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
    
    
    
    0.1
    
    
    
    
    
    
    
    3.42G Revenues
    
    
    18.5
    
    
    
    9.5
    
    
    
    2.6
    
    
    
    0.7
    
    
    
    31.3WAP
    
    
    10.4
    
    
    
    11.1
    
    
    
    
    
    
    
    
    
    
    
    21.5MMS
    
    
    3.5
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    4.0Java
    
    
    4.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.4WEB
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.32.5G revenues
    
    
    18.3
    
    
    
    11.6
    
    
    
    1.3
    
    
    
    
    
    
    
    31.2Total
    
    $
    36.8
    
    
    $
    21.1
    
    
    $
    3.9
    
    
    $
    0.7
    
    
    $
    62.5
  44




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##### Table of Contents



Wireless Value-added Services
 Recorded Music
 Cost of Revenues
  For the Year Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands of U.S. dollars)Cost of Revenues:Wireless value-added services
    
    $
    32,840
    
    
    $
    36,394
    
    
    $
    40,672Recorded music
    
    
    6,730
    
    
    
    6,233
    
    
    
    3,553Total cost of revenues
    
    $
    39,570
    
    
    $
    42,627
    
    
    $
    44,225
 Wireless value-added services.
 Recorded Music
 Gross Profit Margin
  For the Year Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands of U.S. dollars, except percentages)Gross Profits:Wireless value-added services
    
    $
    9,832
    
    
    $
    13,644
    
    
    $
    21,840Recorded music
    
    
    4,557
    
    
    
    4,256
    
    
    
    2,650Total gross profits
    
    $
    14,389
    
    
    $
    17,900
    
    
    $
    24,490
  45




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##### Table of Contents



For the Year Ended December 31,2008
    
    
    2007
    
    
    2006Gross Profit Margin:Wireless value-added services
    
    
    23.0
    %
    
    
    27.3
    %
    
    
    34.9
    %Recorded music
    
    
    40.4
    
    
    
    40.6
    
    
    
    42.7Total gross profit margin
    
    
    26.7
    %
    
    
    29.6
    %
    
    
    35.6
    %
  Operating Expenses
  For the Year Ended December 31,2008
    
    
    2007
    
    
    2006Percentage
    
    
    
    
    
    
    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 $40, $1 and $80 for the
years ended December 31, 2008, 2007
and 2006, respectively)
    
    $
    992
    
    
    
    1.8
    %
    
    $
    2,028
    
    
    
    3.4
    %
    
    $
    2,169
    
    
    
    3.2
    %Selling and marketing expenses
(including stock-based compensation
expense of $621, $287 and $346 for
the years ended December 31, 2008,
2007 and 2006, respectively)
    
    
    9,132
    
    
    
    16.9
    
    
    
    11,514
    
    
    
    19.0
    
    
    
    11,014
    
    
    
    16.0General and administrative expenses
(including stock-based compensation
expense of $284, $155 and $118 for
the years ended December 31, 2008,
2007 and 2006, respectively)
    
    
    11,984
    
    
    
    22.2
    
    
    
    9,141
    
    
    
    15.1
    
    
    
    6,699
    
    
    
    9.7Provision for goodwill impairment
    
    
    2,675
    
    
    
    5.0
    
    
    
    38,779
    
    
    
    64.1
    
    
    
    
    
    
    
    Gain on reduction of Unicom liability
    
    
    (1,557
    )
    
    
    (2.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain from reversed litigation expenses
    
    
    (557
    )
    
    
    (1.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    $
    22,669
    
    
    
    42.0
    %
    
    $
    61,462
    
    
    
    101.6
    %
    
    $
    19,882
    
    
    
    28.9
    %
 Product Development Expenses
 Selling and Marketing Expenses
  46




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##### Table of Contents



General and Administrative Expenses
   Stock-based Compensation.
      Provision for Impairment of Goodwill and Intangible Assets.
   47




---



##### Table of Contents



Gain on Reduction of Unicom Liability.
 Gain from Reversed Litigation Expenses.
 Critical Accounting Policies
  Revenue Recognition
 Wireless value-added services.
    
    
    we are the primary obligor in the arrangement;
 
    
    we are able to establish prices within price caps prescribed by
the telecom operators to reflect or react to changes in the
market;
  48




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##### Table of Contents




    
    we determine the service specifications of the services we will be rendering;
 
    
    we are able to control the selection of our content suppliers; and
 
    
    the telecom operators usually will not pay us if users cannot be
billed or if users do not pay the telecom operators for services
delivered and, as a result, we bear the delivery and billing risks
for the revenues generated with respect to our services.
   Recorded Music
      49




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##### Table of Contents



Stock-based Compensation Cost
    Goodwill and Intangible Assets Impairment
   Income Taxes
    50




---



##### Table of Contents



Results of Operations
  Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenues.
 Wireless Value-added Services
  51




---



##### Table of Contents



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.
 Loss from Continuing Operations.
 Interest Income and Expense
 Foreign Exchange loss.
 Other Income
 Income Taxes.
 Equity in Results of Affiliate
 Impairment of Investment in Music Affiliate.
  52




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##### Table of Contents



Net Loss from Continuing Operations. .
 Net Income from Discontinued Operations
 Net Loss
 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
  53




---



##### Table of Contents



General and Administrative Expenses
 Provision for Impairment of Goodwill and Intangible Assets.
 (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
 B. LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows and Working Capital
  For the Year Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands of U.S. dollars)Net cash (used in) provided by operating activities
    
    $
    (5,553
    )
    
    $
    (2,055
    )
    
    $
    17,636Net cash used in investing activities
    
    
    (2,265
    )
    
    
    (8,120
    )
    
    
    (15,157
    )Net cash provided by (used in) financing activities
    
    
    2
    
    
    
    16
    
    
    
    (4,399
    )Net (decrease) in cash and cash equivalents
    
    $
    (7,816
    )
    
    $
    (10,159
    )
    
    $
    (1,920
    )
   54




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##### Table of Contents



Indebtedness
   55




---



##### 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
    
    $
    1,568
    
    
    $
    1,452
    
    
    $
    116
    
    
    $
    Other contractual commitments*
    
    
    3,078
    
    
    
    1,671
    
    
    
    1,407
    
    
    
    Total contractual obligations
    
    $
    4,646
    
    
    $
    3,123
    
    
    $
    1,523
    
    
    $
    
 
 *
    
    Represents non-cancelable agency agreements with certain artists that provide for minimum
payments.  Contingent Acquisition Payments
  Holding Company Structure
   56




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##### Table of Contents



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  Foreign Exchange Risk
   Inflation
  TAXATION
   57




---



##### Table of Contents



58




---



##### Table of Contents



RECENTLY ISSUED ACCOUNTING STANDARDS
         59




---



##### Table of Contents



60




---



##### Table of Contents



Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
  Name
    
    Age
    
    Position
    
    Class
    
    Term of OfficeQindai Wang
    
    
    44
    
    
    Director and Chairman of the Board
    
    Class I
    
    1 yearsSongzuo Xiang
    
    
    44
    
    
    Director and Chief Executive Officer
    
    Class II
    
    2 yearsThomas Ng
    
    
    55
    
    
    Director
    
    Class I
    
    1 yearsRobert Mao (1)
    
    
    65
    
    
    Director
    
    Class I
    
    1 yearsSuberna Shringla (1)
    
    
    43
    
    
    Director
    
    Class II
    
    2 yearsAlan Russell Powrie (1)
    
    
    58
    
    
    Director
    
    Class III
    
    3 yearsShudan Zhang
    
    
    49
    
    
    Director
    
    Class III
    
    3 yearsXiaoqing Guo
    
    
    38
    
    
    Chief Financial Officer and Vice President
    
    
    
    Ping Ji
    
    
    50
    
    
    Senior Executive Vice President
    
    
    
    Fan Yang
    
    
    44
    
    
    Senior Executive Vice President
    
    
    
    Haoyu Yang
    
    
    36
    
    
    Senior Executive Vice President
    
    
    
    
 
 (1)
    
    Member of the audit committee, compensation committee and nominating committee.  Biographical Information
 Qindai Wang.
 Songzuo Xiang.
 Thomas Ng.
 Robert Mao.
  61




---



##### Table of Contents



Alan
Russell Powrie.
 Suberna Shringla.
 Shudan Zhang.
 Xiaoqing Guo.
 Ping Ji
 Fan Yang.
 Haoyu Yang.
 B. Compensation
 Compensation of Directors and Executive Officers
    62




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##### Table of Contents



Employment Agreements
    
    
    dishonesty,
 
    
    fraud,
 
    
    breach of trust,
 
    
    physical harm to any person,
 
    
    breach of the employment agreement, or
 
    
    other similar conduct.
  
    
    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,
  63




---



##### Table of Contents




    
    dividend equivalent rights, the value of which is measured by the dividends paid with
respect to our ordinary shares,
 
    
    non-vested 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.
 Acceleration of Awards upon Corporate Transactions or Changes in Control.
 Awards.
 Exercise or Purchase Price and Term of Awards.
   Transferability.
 Termination of Service.
  64




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##### Table of Contents



Amendment or Termination of 2004 Plan.
 C. Board Practices
        www.hurray.com
 D. Employees
  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.
  65




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##### Table of Contents



Number of SharesBeneficially OwnedName
    
    Number
    
    
    Percentage5% and above ShareholdersGranite Global Ventures
    
    
    265,115,480
    
    
    
    12.07
    %2494 Sand Hill Road
Suite 100 Menlo Park, CA 94025 United States(1)China Rock Capital Management
    
    
    210,891,000
    
    
    
    9.60
    %2804 One Exchange, 8 Connaught Place Central Hong Kong
SAR(2)Executive Officers and Directors(3)Pleasant Season Ltd./Qindai Wang(4)
    
    
    214,221,660
    
    
    
    9.75
    %Thomas Ng (5)
    
    
    265,115,480
    
    
    
    12.07
    %Robert Mao(6)
    
    
    2,000,000
    
    
    
    *Suberna Shringla
    
    
    
    
    
    
    *Xero Holdings Ltd./Songzuo Xiang(7)
    
    
    106,859,620
    
    
    
    4.87
    %Shudan Zhang
    
    
    1,074,128
    
    
    
    4.89
    %Alan Powrie(8)
    
    
    600,000
    
    
    
    *P.N.L. Ltd./Ping Ji(9)
    
    
    15,607,200
    
    
    
    *JJF International Ltd./Fan Yang(10)
    
    
    45,600,000
    
    
    
    2.08
    %Harrison Youth Ltd./Haoyu Yang((11)
    
    
    77,791,300
    
    
    
    3.54
    %Xiaoqing Guo(12)
    
    
    1,653,400
    
    
    
    *All current directors and executive officers as a group
(11 persons)
    
    
    836,871,500
    
    
    
    64.70
    %
 
 (1)
    
    Granite Global Ventures is an investment adviser.(2)
    
    China Rock Capital Management is an investment adviser. This share information is based
solely on information filed by such shareholder with the SEC.(3)
    
    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.(4)
    
    Represents shares beneficially owned by Mr. Wang through a revocable trust in which he
retains voting and dispositive power over such shares.(5)
    
    Represents 1,244,929 ADSs and 60 ordinary shares, 21,272 ADSs and 20 ordinary shares,
1,355,248 ADSs, and 29,705 ADSs held by Granite Global Ventures (Q.P.) L.P., Granite Global
Ventures L.P., Granite Global Ventures III L.P., and GGV III Entrepreneurs Fund L.P.,
respectively. Mr. Ng is a managing director of Granite Global Ventures L.L.C., which is the
general partner of Granite Global Ventures (Q.P.) L.P. and Granite Global Ventures L.P., and a
managing director of Granite Global Ventures III L.L.C., which is the general partner of
Granite Global Ventures III L.P. and GGV III Entrepreneurs Fund L.P. Mr. Ng disclaims
beneficial ownership of ADSs and ordinary shares held by Granite Global Ventures (Q.P.) L.P.,
Granite Global Ventures L.P., Granite Global Ventures III L.P., and GGV III Entrepreneurs Fund
L.P. except to the extent of his pecuniary interests in those ADSs and ordinary shares.(6)
    
    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.(7)
    
    Represents ordinary shares beneficially owned by Dr. Xiang through a revocable trust in which
he retains voting and dispositive power over such shares.  66




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##### Table of Contents



(8)
    
    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.(9)
    
    Represents ordinary shares beneficially owned by Mr. Ji through a revocable trust in which he
retains voting and dispositive power over such shares.(10)
    
    Represents ordinary shares beneficially owned by Mr. Yang through a revocable trust in which
he retains voting and dispositive power over such shares.(11)
    
    Represents ordinary shares beneficially owned by Mr. Yang through a revocable trust in which
he retains voting and dispositive power over such shares.(12)
    
    Represents 1,205,400 ordinary shares issuable upon exercise of stock option, which have a
purchase price of $0.00005 per ordinary share, and an expiration date of November 23, 2010,
and 4,480,000 ordinary shares issuable upon exercise of stock options, which have an exercise
price of $0.1025 and $0.1175 per ordinary share and an expiration date of January 1, 2015, and
January 1, 2014, respectively.    
 Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  B. Related Party Transactions
 Related Party Transactions
   Powers of Attorney.
   67




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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.
      68




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##### Table of Contents



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
    
    $
    9.71
    
    
    $
    4.702007
    
    $
    6.53
    
    
    $
    3.052008
    
    $
    4.21
    
    
    $
    1.082009
    
    $
    2.28
    
    
    $
    0.93Quarterly highs and lowsFirst Quarter 2007
    
    $
    6.53
    
    
    $
    4.85Second Quarter 2007
    
    $
    5.62
    
    
    $
    4.36Third Quarter 2007
    
    $
    6.04
    
    
    $
    3.32Fourth Quarter 2007
    
    $
    6.04
    
    
    $
    3.05First Quarter 2008
    
    $
    4.21
    
    
    $
    2.36Second Quarter 2008
    
    $
    3.30
    
    
    $
    2.61Third Quarter 2008
    
    $
    3.19
    
    
    $
    2.21Fourth Quarter 2008
    
    $
    2.75
    
    
    $
    1.08First Quarter 2009
    
    $
    2.04
    
    
    $
    0.93Second Quarter 2009 (April 1, 2009 through May 31, 2009)
    
    $
    3.10
    
    
    $
    0.95Monthly highs and lowsDecember 2008
    
    $
    2.75
    
    
    $
    1.19January 2009
    
    $
    2.04
    
    
    $
    1.55February 2009
    
    $
    1.95
    
    
    $
    1.07March 2009
    
    $
    1.50
    
    
    $
    0.93April 2009
    
    $
    2.28
    
    
    $
    0.95May 2009
    
    $
    3.10
    
    
    $
    1.98
  69




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##### Table of Contents



Item 10. Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
  C. Material Contracts
  D. Exchange Controls
  
    
    Notice on Issues Relating to the Administration of Foreign Exchange in Fundraising and
Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose
Companies;
 
    
    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.
     70




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##### Table of Contents



E. Taxation
  Cayman Islands Taxation and Exchange Control
  (i)
    
    that no law which is enacted in the Cayman Islands imposing any tax to be
levied on profits or income or gains or appreciation shall apply to our company or its
operations; and(ii)
    
    in addition, that no tax be levied on profits, income gains or appreciations or
which is in the nature of estate duty or inheritance tax shall be payable by our
company:
 (a)
    
    on or in respect of the shares, debentures or other obligations of our
company; or(b)
    
    by way of withholding in whole or in part of any relevant payment as
defined in section 6(3) of the Tax Concessions Law (1999 Revision).
    71




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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.
    72




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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.
  73




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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.
      74




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##### Table of Contents



U.S. Federal Income Tax Consequences If We Are Not Treated as a PFIC
  Distributions on Ordinary Shares or ADSs
 General
   Qualified Dividend Income
 Foreign Currency Distributions.
 In-Kind Distributions
 Foreign Tax Credits.
   75




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##### Table of Contents



Dispositions of Ordinary Shares or ADSs
     Information Reporting and Backup Withholding
   TAXATION OF NON-U.S. HOLDERS
 Distributions on Ordinary Shares or ADSs
    76




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##### Table of Contents



Dispositions of Ordinary Shares or ADSs
    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.
       77




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##### Table of Contents



F. Dividends and Paying Agents
  G. Statement by Experts
  H. Documents on Display
  www.sec.gov
   I. Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
   78




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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
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  (1)
    
    pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of a companys assets,(2)
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of consolidated financial statements in accordance with generally
accepted accounting principles and that a companys receipts and expenditures are being
made only in accordance with authorizations of a companys management and directors,
and(3)
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of a companys assets that could have a
material effect on the consolidated financial statements.
  79




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##### Table of Contents



(1)
    
    establishing general guidelines based on aging of trade receivables within the
music companies as to when an allowance should be made (as we have in our other
operations); and
 (2)
    
    developing a list of criteria that management should consider when determining
whether other allowances are required against specific accounts.
    Changes in Internal Control Over Financial Reporting
  
 Item 16. Reserved
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  www.hurray.com
  80




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##### Table of Contents



Item 16C. Principal Accountant Fees and Services
 Disclosure of Fees Charged by Independent Accountants
  For the year endedDecember 31,2008
    
    
    2007Audit fees (1)
    
    $
    437,132
    
    
    $
    648,260Audit related fees (2)
    
    
    
    
    
    
    Tax fees (3)
    
    $
    96,455
    
    
    
    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.(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
  
 Item 16F. Changes in Registrants Certifying Accountant
  
 Item 16G. Corporate Governance
   81




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##### Table of Contents



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).4.1
    
    
    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).4.2
    
    
    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).4.3
    
    
    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).4.4
    
    
    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).4.5
    
    
    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).
  82




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##### Table of Contents



ExhibitNumber
    
    Document4.6
    
    
    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).4.7
    
    
    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).4.8
    
    
    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).4.9
    
    
    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).4.10
    
    
    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).4.11
    
    
    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).4.12
    
    
    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).4.13
    
    
    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).4.14
    
    
    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).4.15
    
    
    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).4.16
    
    
    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).4.17
    
    
    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).4.18
    
    
    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).
  83




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ExhibitNumber
    
    Document4.19
    
    
    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).4.20
    
    
    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).4.21
    
    
    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).4.22
    
    
    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).4.23
    
    
    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).4.24
    
    
    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).4.25
    
    
    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).4.26
    
    
    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).4.27
    
    
    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).4.28
    
    
    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).4.29
    
    
    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).4.30
    
    
    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).
  84




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ExhibitNumber
    
    Document4.31
    
    
    Translation of Exclusive Technical Consulting and Services Agreement between Hurray! Times
Communications (Beijing) Ltd. and Beijing Palmsky Technology Co., Ltd. dated May 5, 2004
(incorporated by reference to Exhibit 10.71 of our registration statement on Form F-1 (File
No. 333-121987) filed with the Commission on January 12, 2005).4.32
    
    
    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).4.33
    
    
    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).4.34
    
    
    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).4.35
    
    
    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).4.36
    
    
    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).4.37
    
    
    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).4.38
    
    
    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).4.39
    
    
    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).4.40
    
    
    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).4.41
    
    
    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).4.42
    
    
    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).
  85




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ExhibitNumber
    
    Document4.43
    
    
    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).4.44
    
    
    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).4.45
    
    
    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).4.46
    
    
    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).4.47
    
    
    Translation of Software License Agreement by and between Hurray! Times Communications
(Beijing) Ltd. and Shanghai Magma Digital Technology Co. Ltd. dated January 12, 2006
(incorporated by reference to Exhibit 4.97 of our annual report on Form 20-F (File No.
000-51116) filed with the Commission on June 15, 2006).4.48
    
    
    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).4.49
    
    
    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).4.50
    
    
    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).4.51
    
    
    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).4.52
    
    
    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).4.53
    
    
    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).4.54
    
    
    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).
  86




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ExhibitNumber
    
    Document4.55
    
    
    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).4.56
    
    
    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).4.57
    
    
    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).4.58
    
    
    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).4.59
    
    
    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).4.60
    
    
    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).4.61
    
    
    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).4.62
    
    
    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).4.63
    
    
    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).4.64
    
    
    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).4.65
    
    
    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).
  87




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##### Table of Contents



ExhibitNumber
    
    Document4.66
    
    
    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).4.67
    
    
    Translation of Share Transfer Agreement between TWM Holding, Hurray! Holding Co., Ltd., and
Hurray! Times Communications (Beijing) Ltd. dated October 8, 2007 (incorporated by reference
to Exhibit 4.84 of our annual report on Form 20-F (File No. 000-51116) filed with the
Commission on June 19, 2008).4.68
    
    
    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 (incorporated by
reference to Exhibit 4.85 of our annual report on Form 20-F (File No. 000-51116) filed with
the Commission on June 19, 2008).4.69
    
    
    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 (incorporated by
reference to Exhibit 4.86 of our annual report on Form 20-F (File No. 000-51116) filed with
the Commission on June 19, 2008).4.70
    
    
    Translation of Cooperation Agreement on Monternet WAP Services between China Mobile
Communications Group Corporation and Beijing Enterprise Network Technology Co., Ltd. dated
June 18, 2008.4.71
    
    
    Translation of Mobile Value-added Service (WAP1.2) Cooperation Agreement between China
Telecommunications Corporation and Beijing Hengji Weiye Electronic Commerce Co., Ltd. dated
October 1, 2008.4.72
    
    
    Investment and Shareholders Agreement between, among others, Seed Music Group Limited and
Hurray! Music Holding Co., Ltd. dated September 24, 2008.4.73
    
    
    Translation of Supplemental Agreement of Asset, Business and Personnel Transfer Agreement
between Beijing Secular Bird Culture and Art Development Centre and Guangzhou Secular Bird
Culture Communication Co., Ltd. dated August 2008.4.74
    
    
    Translation of Supplemental Agreement between Hurray! Digital Media Technology Co., Ltd. and
Beijing Secular Bird Culture and Art Development Centre dated August 2008.4.75
    
    
    Translation of Supplemental Agreement among Seed Music Group Limited, Hurray! Media Holding
Co., Ltd., Tien, Ting-Feng, and Huang, Tien-Zan dated 2009.4.76
    
    
    Translation of Supplemental Agreement among Hurray! Media Technologies Co., Ltd., Xiongbing
Zhong, 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 Hongkong Freeland Movie Industry Group Co., Ltd. dated 2008.8.1
    
    
    List of Significant Subsidiaries and Affiliates.
  88




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##### 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.15.2
    
    
    Consent of Appleby.
  89




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##### Table of Contents



SIGNATURES
  HURRAY! HOLDING CO., LTD.By:
    /s/ Songzuo XiangDr. Songzuo XiangChief Executive OfficerDate: June 25, 2009  90




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##### 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, 2008 and 2007
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006
    
    
    F-3Consolidated Statements of Shareholders Equity and Comprehensive Income for the years
ended December 31, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-7Additional Information  Financial Statement Schedule 1
    
    
    F-36
  91




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
          F-1




---



##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2008
    
    
    2007(in U.S. dollars, except number of shares)AssetsCurrent assets:Cash
    
    $
    59,472,703
    
    
    $
    65,978,884Accounts receivable, net of allowance of $826,026 and
$699,525 as of December 31, 2008 and 2007, respectively
    
    
    12,658,287
    
    
    
    14,691,160Prepaid expenses and other current assets
    
    
    4,170,323
    
    
    
    3,120,050Amount due from related parties
    
    
    745,351
    
    
    
    464,410Inventories
    
    
    254,589
    
    
    
    292,655Current deferred tax assets
    
    
    363,330
    
    
    
    748,049Receivable on disposal of subsidiary
    
    
    46,860
    
    
    
    4,151,400Total current assets
    
    
    77,711,443
    
    
    
    89,446,608Property and equipment, net
    
    
    980,060
    
    
    
    1,636,089Acquired intangible assets, net
    
    
    1,945,322
    
    
    
    4,970,920Investment in equity affiliate
    
    
    824,579
    
    
    
    2,420,522Goodwill
    
    
    3,156,664
    
    
    
    5,620,906Deposits and other long-term assets
    
    
    719,977
    
    
    
    848,588Prepaid acquisition costs
    
    
    1,907,400
    
    
    
    Investment at cost
    
    
    600,038
    
    
    
    Non-current deferred tax assets
    
    
    478,919
    
    
    
    650,091Total assets
    
    $
    88,324,402
    
    
    $
    105,593,724Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    
    2,454,064
    
    
    
    3,575,410Acquisitions payable
    
    
    14,657
    
    
    
    7,101,498Accrued expenses and other current liabilities
    
    
    3,018,203
    
    
    
    2,906,400Amount due to related parties
    
    
    207,879
    
    
    
    256,058Income tax payable
    
    
    123,626
    
    
    
    210,548Current deferred tax liabilities
    
    
    497,283
    
    
    
    416,835Total current liabilities
    
    
    6,315,712
    
    
    
    14,466,749Long-term payable
    
    
    24,002
    
    
    
    32,304Non-current deferred tax liabilities
    
    
    292,194
    
    
    
    844,610Total liabilities
    
    
    6,631,908
    
    
    
    15,343,663Commitments and contingencies (Note 22)Minority interests
    
    
    4,783,209
    
    
    
    4,667,402Shareholders equity:Ordinary shares ($0.00005 par value; 4,560,000,000 shares
authorized; 2,193,343,740 and 2,174,784,440 shares issued and
outstanding as of December 31, 2008 and 2007, respectively)
    
    
    109,617
    
    
    
    108,689Additional paid-in capital
    
    
    75,012,693
    
    
    
    74,066,839Statutory reserve
    
    
    1,791,324
    
    
    
    6,502,849Accumulated deficit
    
    
    (9,991,663
    )
    
    
    (2,750,592
    )Accumulated other comprehensive income
    
    
    9,987,314
    
    
    
    7,654,874Total shareholders equity
    
    
    76,909,285
    
    
    
    85,582,659Total liabilities, minority interests and shareholders equity
    
    $
    88,324,402
    
    
    $
    105,593,724
   F-2




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year ended December 31,2008
    
    
    2007
    
    
    2006(in U.S. dollars, except number of shares)Revenues:Wireless value-added services
    
    $
    42,671,588
    
    
    $
    50,038,014
    
    
    $
    62,512,483Recorded music
    
    
    11,286,812
    
    
    
    10,488,613
    
    
    
    6,203,418Total revenues
    
    
    53,958,400
    
    
    
    60,526,627
    
    
    
    68,715,901Cost of revenues:Wireless value-added services
    
    
    32,839,642
    
    
    
    36,394,300
    
    
    
    40,672,113Recorded music
    
    
    6,729,725
    
    
    
    6,232,728
    
    
    
    3,553,144Total cost of revenues
    
    
    39,569,367
    
    
    
    42,627,028
    
    
    
    44,225,257Gross profit
    
    
    14,389,033
    
    
    
    17,899,599
    
    
    
    24,490,644Operating expenses:Product development
(including stock-based
compensation expense of
$40,102, $921 and $79,587
for the years ended
December 31, 2008, 2007 and
2006, respectively)
    
    
    991,689
    
    
    
    2,028,265
    
    
    
    2,169,124Selling and marketing
(including stock-based
compensation expense of
$621,094, $286,885 and
$346,456 for the years ended
December 31, 2008, 2007 and
2006, respectively)
    
    
    9,132,374
    
    
    
    11,513,850
    
    
    
    11,014,215General and administrative
(including stock-based
compensation expense of
$284,086, $155,169 and
$117,514 for the years ended
December 31, 2008, 2007 and
2006, respectively)
    
    
    11,983,973
    
    
    
    9,141,381
    
    
    
    6,699,607Provision for goodwill
impairment
    
    
    2,675,211
    
    
    
    38,778,584
    
    
    
    Gain on reduction of Unicom
liability
    
    
    (1,557,153
    )
    
    
    
    
    
    
    Gain from reversed
litigation expenses
    
    
    (557,167
    )
    
    
    
    
    
    
    Total operating expenses
    
    
    22,668,927
    
    
    
    61,462,080
    
    
    
    19,882,946Operating (loss) income from continuing
operations
    
    
    (8,279,894
    )
    
    
    (43,562,481
    )
    
    
    4,607,698Interest income
    
    
    1,613,078
    
    
    
    2,313,576
    
    
    
    2,529,419Interest expense
    
    
    
    
    
    
    (179,062
    )
    
    
    (44,765
    )Other income, net
    
    
    247,156
    
    
    
    465,825
    
    
    
    315,210Gain on reduction of acquisition payable
    
    
    5,000,000
    
    
    
    
    
    
    
    Foreign exchange loss
    
    
    (8,990,067
    )
    
    
    
    
    
    
    (Loss) income before provision for
income taxes, earnings in equity
investments, gain from disposal of
subsidiary, minority interest and
discontinued operations
    
    
    (10,409,727
    )
    
    
    (40,962,142
    )
    
    
    7,407,562Income tax expense (credit)
    
    
    486,250
    
    
    
    (182,370
    )
    
    
    204,980
  F-3




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##### Table of Contents



Year ended December 31,2008
    
    
    2007
    
    
    2006(in U.S. dollars, except number of shares)Net (loss) income from
continuing operations
after income taxes
before minority
interests
    
    
    (10,895,977
    )
    
    
    (40,779,772
    )
    
    
    7,202,582Minority interests
    
    
    (337,455
    )
    
    
    688,440
    
    
    
    562,189Equity in income (loss)
of affiliate
    
    
    64,293
    
    
    
    (62,756
    )
    
    
    Impairment for
investment in equity
affiliate
    
    
    1,870,897
    
    
    
    
    
    
    
    Net (loss) income from
continuing operations
    
    
    (12,365,126
    )
    
    
    (41,530,968
    )
    
    
    6,640,393Discontinued operations:Net (loss) income from
discontinued
operations, net of tax
    
    
    
    
    
    
    (612,170
    )
    
    
    (836,448
    )Gain from disposal of
discontinued operations
    
    
    412,530
    
    
    
    192,943
    
    
    
    Net income (loss) from
discontinued
operations, net of tax
    
    
    412,530
    
    
    
    (419,227
    )
    
    
    (836,448
    )Net (loss) income
    
    $
    (11,952,596
    )
    
    $
    (41,950,195
    )
    
    $
    5,803,945(Loss) income from
continuing operations
per ADSs:Basic
    
    $
    (0.57
    )
    
    $
    (1.91
    )
    
    $
    0.30Diluted
    
    $
    (0.57
    )
    
    $
    (1.91
    )
    
    $
    0.30Income (loss) from
discontinued
operations per ADSs:Basic
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    (0.04
    )Diluted
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    (0.04
    )(Loss) income per ADSsBasic
    
    $
    (0.55
    )
    
    $
    (1.93
    )
    
    $
    0.26Diluted
    
    $
    (0.55
    )
    
    $
    (1.93
    )
    
    $
    0.26Weighted average shares
used in calculating
basic (loss) income
per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,189,748,563Weighted average ADSs
used in calculating
basic (loss) income
per ADS
    
    
    21,856,151
    
    
    
    21,722,082
    
    
    
    21,897,486Weighted average shares
used in calculating
diluted (loss) income
per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,208,758,636Weighted average ADSs
used in calculating
diluted (loss) income
per ADS
    
    
    21,856,151
    
    
    
    21,722,082
    
    
    
    22,087,586
  F-4




---



##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
AND COMPREHENSIVE INCOME
 Retained earnings
    
    
    Accumulated other
    
    
    TotalOrdinary shares
    
    
    Additional
    
    
    Statutory
    
    
    (Accumulated
    
    
    comprehensive
    
    
    shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    paid-in capital
    
    
    reserve
    
    
    deficit)
    
    
    income (loss)
    
    
    equity
    
    
    income (loss)(in U.S. dollars, except shares data)Balance as of January 1, 2006
    
    
    2,229,754,340
    
    
    $
    111,488
    
    
    $
    77,335,532
    
    
    $
    5,287,057
    
    
    $
    34,611,450
    
    
    $
    1,273,504
    
    
    $
    118,619,031Issuance 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
    
    
    3,582,200
    
    
    
    129
    
    
    
    95,343
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,472Provision for statutory reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    374,004
    
    
    
    (374,004
    )
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,661,061
    
    
    
    40,041,391
    
    
    
    3,401,349
    
    
    
    122,820,020
    
    
    $
    7,931,790Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    442,975Exercise of stock options
    
    
    653,400
    
    
    
    33
    
    
    
    16,301
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,334Provision for statutory 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
    
    
    2,174,784,440
    
    
    
    108,689
    
    
    
    74,066,839
    
    
    
    6,502,849
    
    
    
    (2,750,592
    )
    
    
    7,654,874
    
    
    
    85,582,659
    
    
    $
    (37,696,670
    )Stock-based compensation expense
    
    
    18,499,300
    
    
    
    925
    
    
    
    944,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    945,282Exercise of stock options
    
    
    60,000
    
    
    
    3
    
    
    
    1,497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500Transfer statutory reserve to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,711,525
    )
    
    
    4,711,525
    
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,332,440
    
    
    
    2,332,440
    
    
    $
    2,332,440Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,952,596
    )
    
    
    
    
    
    
    (11,952,596
    )
    
    
    (11,952,596
    )Balance as of December 31, 2008
    
    
    2,193,343,740
    
    
    $
    109,617
    
    
    $
    75,012,693
    
    
    $
    1,791,324
    
    
    $
    (9,991,663
    )
    
    $
    9,987,314
    
    
    $
    76,909,285
    
    
    $
    (9,620,156
    )
   F-5




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2008
    
    
    2007
    
    
    2006(In U.S. dollars)Operating activities:Net (loss) income
    
    $
    (11,952,596
    )
    
    $
    (41,950,195
    )
    
    $
    5,803,945Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:Impairment of goodwill
    
    
    2,675,211
    
    
    
    38,778,584
    
    
    
    Loss on impairment of investment in music affiliate
    
    
    1,870,897
    
    
    
    
    
    
    
    Impairment of acquired intangible assets
    
    
    2,850,714
    
    
    
    2,480,253
    
    
    
    Stock-based compensation
    
    
    945,282
    
    
    
    442,975
    
    
    
    543,557Depreciation and amortization
    
    
    3,327,798
    
    
    
    3,644,095
    
    
    
    3,481,415Bad debt provision
    
    
    1,012,738
    
    
    
    453,674
    
    
    
    269,235Minority interests
    
    
    (337,455
    )
    
    
    688,440
    
    
    
    562,189Equity in (income) loss of affiliate
    
    
    (64,293
    )
    
    
    62,756
    
    
    
    Gain from disposal of subsidiary
    
    
    (412,530
    )
    
    
    (192,943
    )
    
    
    Receivable from disposal of subsidiary (net of cash disposed of $771,570 in
2007)
    
    
    
    
    
    
    (3,186,887
    )
    
    
    Loss on disposal of property and equipment
    
    
    112,745
    
    
    
    74,300
    
    
    
    1,155Gain on reduction of acquisition payable
    
    
    (5,000,000
    )
    
    
    
    
    
    
    Gain on reduction of Unicom liability
    
    
    (1,557,153
    )
    
    
    
    
    
    
    Gain from reversed litigation expenses
    
    
    (557,167
    )
    
    
    
    
    
    
    Changes in assets and liabilities net of effect of businesses acquired and sold:Accounts receivable
    
    
    3,492,068
    
    
    
    (2,069,378
    )
    
    
    5,518,845Prepaid expenses and other current assets
    
    
    (1,142,954
    )
    
    
    (138,548
    )
    
    
    3,113,531Amount due from related parties
    
    
    (245,724
    )
    
    
    (273,618
    )
    
    
    (164,008
    )Deposits and other long-term assets
    
    
    183,003
    
    
    
    (147,543
    )
    
    
    (258,610
    )Inventories
    
    
    56,833
    
    
    
    (81,422
    )
    
    
    268,556Current deferred tax assets
    
    
    412,916
    
    
    
    (414,011
    )
    
    
    (289,651
    )Non-current deferred tax assets
    
    
    210,257
    
    
    
    (285,660
    )
    
    
    (221,599
    )Accounts payable
    
    
    (761,068
    )
    
    
    (140,809
    )
    
    
    (222,881
    )Accrued expenses and other current liabilities
    
    
    (71,705
    )
    
    
    305,097
    
    
    
    (899,530
    )Amount due to related parties
    
    
    (63,140
    )
    
    
    245,379
    
    
    
    (204,420
    )Income tax payable
    
    
    (102,057
    )
    
    
    (299,897
    )
    
    
    387,148Current deferred tax liabilities
    
    
    41,653
    
    
    
    64,060
    
    
    
    86,212Non-current deferred tax liabilities
    
    
    (477,155
    )
    
    
    (114,325
    )
    
    
    (139,229
    )Net cash (used in) provided by operating activities
    
    
    (5,552,882
    )
    
    
    (2,055,623
    )
    
    
    17,635,860Investing activities:Purchases of property and equipment
    
    
    (349,233
    )
    
    
    (863,603
    )
    
    
    (956,972
    )Proceeds from disposal of property and equipment
    
    
    
    
    
    
    
    
    
    
    30,229Acquisitions of intangible assets
    
    
    (1,718,340
    )
    
    
    (1,535,436
    )
    
    
    (1,714,198
    )Proceeds from disposal of subsidiary
    
    
    4,517,070
    
    
    
    
    
    
    
    Payments related to acquisitions consummated (net of cash acquired of nil,
$1,398,709, and $441,147 for the years ended December 31, 2008, 2007 and 2006,
respectively)
    
    
    (2,207,132
    )
    
    
    (3,237,834
    )
    
    
    (12,515,544
    )Payments related to acquisition not yet consummated
    
    
    (1,907,400
    )
    
    
    
    
    
    
    Investment in cost affiliate
    
    
    (600,038
    )
    
    
    
    
    
    
    Investment in equity affiliate
    
    
    
    
    
    
    (2,483,277
    )
    
    
    Net cash used in investing activities
    
    
    (2,265,073
    )
    
    
    (8,120,150
    )
    
    
    (15,156,485
    )Financing activities:Proceeds from exercise of options
    
    
    1,500
    
    
    
    16,334
    
    
    
    95,472Proceeds from the issuance of ordinary shares
    
    
    
    
    
    
    
    
    
    
    540,000Repurchase of ordinary shares
    
    
    
    
    
    
    
    
    
    
    (5,034,748
    )Net cash provided by (used in) financing activities
    
    
    1,500
    
    
    
    16,334
    
    
    
    (4,399,276
    )Net decrease in cash
    
    
    (7,816,455
    )
    
    
    (10,159,439
    )
    
    
    (1,919,901
    )Cash, beginning of year
    
    
    65,978,884
    
    
    
    74,596,978
    
    
    
    75,958,964Effect of exchange rate changes
    
    
    1,310,274
    
    
    
    1,541,345
    
    
    
    557,915Cash, end of the year
    
    $
    59,472,703
    
    
    $
    65,978,884
    
    
    $
    74,596,978Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    385,501
    
    
    $
    854,864
    
    
    $
    287,266
   F-6




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##### Table of Contents



HURRAY! HOLDING CO., LTD.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 and 2006
 (in U.S. dollars, unless otherwise stated)
 1. ORGANIZATION AND PRINCIPAL ACTIVITIES
   Date of
    
    Percentage ofincorporation or
    
    effective ownershipName of Subsidiaries
    
    establishment
    
    by Hurray!Wireless value-added services (WVAS) business segment:SubsidiariesBeijing Hurray! Times Technology Co., Ltd. (Beijing Hurray Times)
    
    June 27, 2002
    
    
    100
    %Hurray Technologies (Hong Kong) Ltd.(incorporated in Hong Kong)
    
    July 23, 2003
    
    
    99
    %Invest China Group Limited (incorporated in the British Virgin Islands)
    
    April 1, 2007
    
    
    100
    %Beijing Hand-in-Hand Media Technology Co., Ltd.
    
    April 1, 2007
    
    
    100
    %Shanghai Fuming Information Technology Co., Ltd.
    
    January 1, 2006
    
    
    100
    %Variable Interest EntitiesHurray! Solutions Ltd.
    
    September 21, 1999
    
    
    100
    %Beijing Enterprise Network Technology Co., Ltd.
    
    March, 31, 2004
    
    
    100
    %Beijing Hengji Weiye Electronic Commerce Co., Ltd. (Hengji Weiye)
    
    October 1, 2005
    
    
    100
    %Beijing Hutong Wuxian Technology Co., Ltd. (Beijing Hutong)
    
    April 1, 2005
    
    
    100
    %Beijing Palmsky Technology Co., Ltd.
    
    March, 31, 2004
    
    
    100
    %Henan Yinshan Digital Network Technology Co., Ltd. (Henan Yinshan)
    
    June 30, 2007
    
    
    100
    %Shanghai Magma Digital Technology Co., Ltd. (Shanghai Magma)
    
    January 1, 2006
    
    
    100
    %Shanghai Saiyu Information Technology Co., Ltd. (Saiyu)
    
    April 1, 2007
    
    
    100
    %Subsidiaries of Variable Interest EntitiesBeijing WVAS Solutions Ltd.
    
    October 10, 2001
    
    
    100
    %Recorded music business segment:SubsidiaryHurray! Media Co., Ltd. ( incorporated in the Cayman Islands)
    
    August 19, 2005
    
    
    100
    %Subsidiaries of Variable Interest EntitiesHurray! Digital Media Technology Co., Ltd. (Hurray Digital Media)
    
    November 10, 2005
    
    
    100
    %Beijing Huayi Brothers Music Co., Ltd. (Huayi Brothers Music)
    
    December 31, 2005
    
    
    51
    %Beijing Huayi Brothers Music Broker Co., Ltd.
    
    April 17, 2007
    
    
    51
    %Hurray! Freeland Digital Music Technology Co., Ltd. (Freeland Music)
    
    January 1, 2006
    
    
    60
    %Beijing Hurray! Freeland Culture Development Co., Ltd.
    
    January 8, 2007
    
    
    60
    %Beijing Hurray! Fly Songs International Culture Co., Ltd. (Beijing
Hurray! Fly Songs)
    
    August 21, 2007
    
    
    30.6
    %(1)Guangzhou Hurray! Secular Bird Art Co., Ltd. (Secular Bird)
    
    May 30, 2007
    
    
    65
    %
 
 (1)
    
    Hurray holds a 30.6% effective interest in Beijing Hurray! Fly Songs through a holding of 60%
interest in Freeland Music. Freeland Music owns a 51% of equity interest in Beijing Hurray! Fly
Songs. Therefore, Beijing Hurray! Fly Songs is a consolidated entity of the Company.  F-7




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##### Table of Contents



December 31,2008
    
    
    2007Total assets
    
    $
    47,698,645
    
    
    $
    53,453,523Total liabilities
    
    $
    6,342,451
    
    
    $
    8,187,804
 Years ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    53,958,400
    
    
    $
    60,526,627
    
    
    $
    68,715,901Net (loss) income
    
    
    (6,876,064
    )
    
    
    (40,902,941
    )
    
    
    6,320,966
   F-8




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a) Basis of presentation
  (b) Basis of consolidation
  (c) Fair value
           (d) Use of estimates
   F-9




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##### Table of Contents



(e) Significant risks and uncertainties
  (f) Cash and cash equivalents
  (g) Inventories
  (h) 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
 (i) Acquired intangible assets, net
  (j) Goodwill
    F-10




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##### Table of Contents



(k) Impairment of long-lived assets
  (l) Revenue recognition and cost of revenues
 Wireless value-added services
     
    
    the Company is the primary obligor in the arrangement;
    
    the Company is able to establish prices within price caps
prescribed by the telecommunications operators to reflect or react
to changes in the market;
    
    the Company determines the service specifications of the services it will be rendering;
    
    the Company is able to control the selection of its content suppliers; and
    
    the Telecom Operators usually will not pay the Company if users
cannot be billed or if users do not pay the Telecom Operators for
services delivered and, as a result, the Company bears the
delivery and billing risks for the revenues generated with respect
to its services.
   F-11




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##### Table of Contents



Recorded Music
      (m) Foreign currency translation
    (n) Product development expenses
   F-12




---



##### Table of Contents



(o) Stock-based compensation
     (p) Taxation
      (q) Comprehensive income (loss)
   F-13




---



##### Table of Contents



(r) Fair value of financial instruments
  (s) Advertising costs
  (t) (Loss) income per share
  (u) Recently issued accounting standards
       F-14




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##### Table of Contents



F-15




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##### Table of Contents



3. ACQUISITIONS
   (a) 2007 acquisitions
 Acquisition of Henan Yinshan and Saiyu
  Total purchase price:Cash consideration
    
    $
    5,307,678Transaction costs
    
    
    21,021$
    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-16




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##### Table of Contents



Acquisition of Secular Bird and Beijing Hurray! Fly Songs
  AmortizationperiodAggregate purchase price allocation  Secular Bird
and Beijing Hurray! Fly SongsCash 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-17




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##### Table of Contents



(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-18




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##### Table of Contents



Total purchase price:Cash consideration
    
    $
    4,320,000
    (1)Transaction 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
 
 (1)
    
    The initial consideration was $7,560,000 in cash, of which $5,400,000 was payable into Freeland
Music as a capital injection to fund its operation. Since the Company owned 60% of total shares in
Freeland, only the capital injection shared by minorities was treated as consideration. 4. DISCONTINUED OPERATIONS
    F-19




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##### Table of Contents



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
 Year ended December 31,2008
    
    
    2007
    
    
    2006(in U.S. dollars)Revenues
    
    $
    
    
    
    $
    227,391
    
    
    $
    1,177,053Operating loss
    
    
    
    
    
    
    (643,151
    )
    
    
    (1,173,424
    )Income taxes
    
    
    
    
    
    
    178
    
    
    
    (83,650
    )Net loss from discontinued operations, net of tax
    
    
    
    
    
    
    (612,170
    )
    
    
    (836,448
    )Gain from disposal of SSI
    
    
    412,530
    
    
    
    192,943
    
    
    
    Total net income (loss) from discontinued operations
    
    $
    412,530
    
    
    $
    (419,227
    )
    
    $
    (836,448
    )
 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
  December 31,2008
    
    
    2007Staff advances and other receivables
    
    $
    1,174,104
    
    
    $
    690,005Advances to suppliers
    
    
    1,492,019
    
    
    
    1,042,427Prepaid expenses
    
    
    1,406,157
    
    
    
    632,893Prepaid artist costs
    
    
    98,043
    
    
    
    754,725$
    4,170,323
    
    
    $
    3,120,050
  F-20




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##### Table of Contents



6. PROPERTY AND EQUIPMENT, NET
  December 31,2008
    
    
    2007Furniture and office equipment
    
    $
    3,066,923
    
    
    $
    2,924,803Motor vehicles
    
    
    290,335
    
    
    
    244,813Telecommunications equipment
    
    
    4,556,290
    
    
    
    4,500,285Leasehold improvements
    
    
    663,307
    
    
    
    1,132,9468,576,855
    
    
    
    8,802,847Less: accumulated depreciation and amortization
    
    
    (7,596,795
    )
    
    
    (7,166,758
    )$
    980,060
    
    
    $
    1,636,089
  7. ACQUIRED INTANGIBLE ASSETS, NET
 December 31, 2008Gross carrying
    
    
    Accumulated
    
    
    Intangible assets
    
    
    Net carryingamount
    
    
    amortization
    
    
    impairment
    
    
    amountWVAS Segment:Amortizable intangible assetsWVAS licenses
    
    $
    514,765
    
    
    $
    397,440
    
    
    $
    117,325
    
    
    $
    Customer agreements with
Telecom Operators
    
    
    2,851,304
    
    
    
    780,518
    
    
    
    2,070,786
    
    
    
    Non-compete agreement
    
    
    989,375
    
    
    
    355,590
    
    
    
    633,785
    
    
    
    Business transaction codes
    
    
    196,995
    
    
    
    164,163
    
    
    
    32,832
    
    
    
    Platform(1)
    
    
    474,020
    
    
    
    434,643
    
    
    
    39,377
    
    
    
    Software
    
    
    95,273
    
    
    
    95,273
    
    
    
    
    
    
    
    Trademarks
    
    
    174,423
    
    
    
    9,690
    
    
    
    164,733
    
    
    
    5,296,155
    
    
    
    2,237,317
    
    
    
    3,058,838
    
    
    
    Recorded Music Segment:Amortizable intangible assetsArtist contracts(2)
    
    
    4,917,694
    
    
    
    1,938,859
    
    
    
    1,739,848
    
    
    
    1,238,987Copyrights
    
    
    692,435
    
    
    
    527,163
    
    
    
    145,147
    
    
    
    20,125Exclusive WVAS agreements
    
    
    584,873
    
    
    
    52,465
    
    
    
    214,000
    
    
    
    318,408Exclusive copyright agreements
    
    
    12,543
    
    
    
    11,497
    
    
    
    1,046
    
    
    
    VAS contracts
    
    
    249,845
    
    
    
    249,845
    
    
    
    
    
    
    
    Non-compete agreement
    
    
    135,506
    
    
    
    8,117
    
    
    
    65,000
    
    
    
    62,389Software
    
    
    6,434
    
    
    
    3,146
    
    
    
    
    
    
    
    3,288Trademarks
    
    
    694,826
    
    
    
    100,701
    
    
    
    292,000
    
    
    
    302,1257,294,156
    
    
    
    2,891,793
    
    
    
    2,457,041
    
    
    
    1,945,322$
    12,590,311
    
    
    $
    5,129,110
    
    
    $
    5,515,879
    
    
    $
    1,945,322
  F-21




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##### Table of Contents



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
 
 (1)
    
    The Platform represents the Wireless Application Protocol site owned by Hurray! Solutions
and the SMS Platform owned by Hengji Weiye.(2)
    
    The carrying amount of artist contracts represents the payments for agency agreements with
certain artists.     2009
    
    $
    755,4942010
    
    
    473,2472011
    
    
    167,5442012
    
    
    76,1602013 and later
    
    
    472,877$
    1,945,322
  F-22




---



##### Table of Contents



8. INVESTMENT IN EQUITY AFFILIATE
 (
  As of December 31,2008
    
    
    2007(unaudited)
    
    
    (unaudited)Current assets
    
    $
    2,435,157
    
    
    $
    1,706,961Non-current assets
    
    
    309,529
    
    
    
    397,886Total assets
    
    $
    2,744,686
    
    
    $
    2,104,847Current liabilities
    
    
    490,841
    
    
    
    211,536Non-current liabilities
    
    
    
    
    
    
    Total liabilities
    
    $
    490,841
    
    
    $
    211,536
 Year ended December 31,2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenue
    
    $
    2,612,019
    
    
    $
    1,419,969Cost of sales
    
    
    936,595
    
    
    
    901,212Gross profit
    
    $
    1,675,424
    
    
    $
    518,756Net (loss) income
    
    $
    225,438
    
    
    $
    (209,441
    )
   9. GOODWILL
 Year ended December 31, 2008WVAS
    
    
    Recorded Music
    
    
    TotalBalance as of January 1,2007
    
    $
    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
    
    
    
    5,620,906Effect of exchange rate changes
    
    
    (58,790
    )
    
    
    
    
    
    
    (58,790
    )Goodwill arising from
additional payments for
acquisitions made in prior
years
    
    
    80,504
    
    
    
    189,255
    
    
    
    269,759Goodwill impairment
    
    
    (518,714
    )
    
    
    (2,156,497
    )
    
    
    (2,675,211
    )Balance as of December 31, 2008
    
    $
    
    
    
    $
    3,156,664
    
    
    $
    3,156,664
  F-23




---



##### Table of Contents



10. PREPAID ACQUISITION COST
    F-24




---



##### Table of Contents



Total purchase price:Cash consideration
    
    $
    1,907,400Carrying value of the Companys investment at cost
    
    
    600,038Variable (contingent payable net receivable )
    
    
    352,217
 AmortizationperiodAggregate purchase price allocation -Seed Music:Cash and cash equivalents
    
    $
    1,034,308Inventory
    
    
    53,504Other current assets
    
    
    891,723Acquired intangible assets:Artist management contract
    
    
    1,717,846
    
    
    7.1~9.0 yearsTrademarks
    
    
    1,569,808
    
    
    20 yearsCopyright for songs
    
    
    5,863
    
    
    0.4 yearsNon-compete contract
    
    
    183,218
    
    
    4.5 yearsGoodwill (allocated to music segment)
    
    
    1,710,312
    
    
    N/AProperty and equipment, net
    
    
    50,084
    
    
    3-5 yearsOther assets
    
    
    876,737Current liabilities
    
    
    (2,216,292
    )Non-current deferred tax liability
    
    
    (869,184
    )Other non-current liabilities
    
    
    (578,464
    )Non-controlling interest in Seed Music
    
    
    (1,569,808
    )Total
    
    $
    2,859,655
 11. SHORT-TERM BORROWINGS
  12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  December 31,2008
    
    
    2007Accrued payroll
    
    $
    157,714
    
    
    $
    406,608Value-added tax payable
    
    
    104,435
    
    
    
    177,556Other accrued expenses
    
    
    1,494,616
    
    
    
    1,231,384Accrued welfare benefits
    
    
    165,402
    
    
    
    119,957Business tax payable
    
    
    955,901
    
    
    
    857,062Other taxes payable
    
    
    140,135
    
    
    
    113,833$
    3,018,203
    
    
    $
    2,906,400
 13. RELATED PARTY TRANSACTIONS AND BALANCES
   F-25




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##### Table of Contents



14. FOREIGN EXCHANGE LOSS
  15. INCOME TAXES
       F-26




---



##### Table of Contents



Chinese
    
    Concession from
    
    Year ofincome tax
    
    Chinese Statutory
    
    commencementPRC Entities
    
    rate
    
    income tax
    
    of tax holiday(%)Beijing Hurray Times
    
    25
    
    None
    
    N/ABeijing Hand-in-Hand Media Technology Co., Ltd.
    
    25
    
    None
    
    N/AShanghai Fuming information technology Co., Ltd.
    
    25
    
    None
    
    N/AHurray! Solutions Ltd.
    
    15
    
    qualified high and new technology enterprise
    
    2008Beijing Enterprise Network Technology Co., Ltd.
    
    7.5
    
    qualified high and new technology enterprise, 50% tax relief in 2008
    
    2003Hengji Weiye
    
    25
    
    None
    
    N/ABeijing Hutong
    
    7.5
    
    qualified high and new technology enterprise, 50% tax relief in 2008
    
    2004Beijing Palmsky Technology Co., Ltd.
    
    7.5
    
    qualified high and new technology enterprise, 50% tax relief in 2008
    
    2004Henan Yinshan
    
    25
    
    None
    
    N/AShanghai Magma
    
    25
    
    None
    
    N/ASaiyu
    
    25
    
    None
    
    N/ABeijing WVAS Solutions Ltd.
    
    25
    
    None
    
    N/AHurray! Digital Media
    
    25
    
    None
    
    N/AHuayi Brothers Music
    
    25
    
    None
    
    N/ABeijing Huayi Brothers Music Broker Co., Ltd.
    
    0
    
    qualified new cultural enterprise exempt in 2008
    
    2007Freeland Music
    
    25
    
    None
    
    N/ABeijing Hurray! Freeland Culture Development Co., Ltd.
    
    0
    
    qualified new cultural enterprise exempt in 2008
    
    2007Beijing Fly Songs
    
    25
    
    None
    
    N/ASecular Bird
    
    0
    
    qualified new cultural enterprise exempt in 2008
    
    2007
  Year ended December 31,2008
    
    
    2007
    
    
    2006Current
    
    $
    298,579
    
    
    $
    576,774
    
    
    $
    685,597Deferred
    
    
    187,671
    
    
    
    (759,144
    )
    
    
    (480,617
    )$
    486,250
    
    
    $
    (182,370
    )
    
    $
    204,980
  December 31,2008
    
    
    2007Deferred tax assets:Cost and expenses accruals
    
    $
    363,330
    
    
    $
    748,049Current deferred tax assets
    
    $
    363,330
    
    
    $
    748,049Depreciation and amortization
    
    $
    330,035
    
    
    $
    347,877Net operating loss carry forwards
    
    
    2,690,142
    
    
    
    1,051,308Less: valuation allowance
    
    
    (2,541,258
    )
    
    
    (749,094
    )Non-current deferred tax assets
    
    $
    478,919
    
    
    $
    650,091Deferred tax liabilities:Revenue recognition
    
    $
    (497,283
    )
    
    $
    (416,835
    )Current deferred tax liabilities
    
    $
    (497,283
    )
    
    $
    (416,835
    )Intangible assets
    
    $
    (292,194
    )
    
    $
    (844,610
    )Non-current deferred tax liabilities
    
    $
    (292,194
    )
    
    $
    (844,610
    )
  F-27




---



##### Table of Contents



Year Ended December 31,2008
    
    
    2007
    
    
    2006Statutory tax rate
    
    
    25.0
    %
    
    
    33.0
    %
    
    
    33.0
    %Effect of tax holidays
    
    
    10.1
    %
    
    
    0.3
    %
    
    
    (34.2
    )%Non-deductible expenses
    
    
    (19.9
    %)
    
    
    (38.3
    %)
    
    
    11.9
    %Non-taxable income
    
    
    15.9
    %
    
    
    45.0
    %
    
    
    (9.0
    )%Change in enterprise income tax rate
    
    
    0.0
    %
    
    
    (8.6
    %)
    
    
    Change in valuation allowance
    
    
    (37.3
    %)
    
    
    (13.8
    %)
    
    
    0.2
    %Impairment loss on intangibles
    
    
    (6.8
    %)
    
    
    (9.2
    %)
    
    
    Effective tax rate
    
    
    (13.0
    %)
    
    
    8.4
    %
    
    
    1.9
    %
       F-28




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##### Table of Contents



16. SHAREHOLDERS EQUITY
   17. STOCK PLANS
 Stock option
    Ordinary sharesWeighted averageNumber of options
    
    
    exercise priceOptions outstanding at January 1, 2006
    
    
    99,573,700
    
    
    $
    0.088Exercised
    
    
    (3,582,200
    )
    
    $
    0.037Forfeited
    
    
    (15,484,900
    )
    
    $
    0.109Options outstanding at December 31, 2006
    
    
    80,506,600
    
    
    $
    0.085Exercised
    
    
    (653,400
    )
    
    $
    0.027Forfeited
    
    
    (5,587,000
    )
    
    $
    0.106Options outstanding at December 31, 2007
    
    
    74,266,200
    
    
    $
    0.084Exercised
    
    
    (60,000
    )
    
    $
    0.025Forfeited
    
    
    (26,838,500
    )
    
    $
    0.094Options outstanding at December 31, 2008
    
    
    47,367,700
    
    
    $
    0.080
  F-29




---



##### Table of Contents



Options outstandingWeightedaverageremaining
    
    
    Weighted average exerciseExercise Prices
    
    Number outstanding
    
    
    contractual life
    
    
    price
    
    
    Aggregated Intrinsic valueOrdinary shares:$0.0250
    
    
    9,864,700
    
    
    
    3.75
    
    
    $
    0.03
    
    
    $
    246,618$0.0705
    
    
    16,433,000
    
    
    
    4.5
    
    
    $
    0.07
    
    
    $
    1,158,527$0.1170
    
    
    15,354,000
    
    
    
    5
    
    
    $
    0.12
    
    
    $
    1,796,418$0.1405
    
    
    350,000
    
    
    
    5.25
    
    
    $
    0.14
    
    
    $
    49,175$0.1025
    
    
    5,366,000
    
    
    
    6
    
    
    $
    0.10
    
    
    $
    550,015Total
    
    
    47,367,700
    
    
    
    
    
    
    
    
    
    
    $
    3,800,753
 Non-vested shares
       Non-vested sharesOutstandingNon-vested stock units outstanding at January 1, 2006
    
    
    Granted
    
    
    40,500,000Forfeited
    
    
    (8,666,700
    )Non-vested stock units outstanding at December 31, 2006
    
    
    31,833,300Granted
    
    
    39,500,000Forfeited
    
    
    (10,400,200
    )Vested
    
    
    (11,099,300
    )Non-vested stock units outstanding at December 31, 2007
    
    
    49,833,800Forfeited
    
    
    (17,834,200
    )Vested
    
    
    (18,499,300
    )Non-vested stock units outstanding at December 31, 2008
    
    
    13,500,300
  F-30




---



##### Table of Contents



Non-vested shares outstandingNumber
    
    
    Aggregateoutstanding
    
    
    intrinsic valueGrant dateFebruary 7, 2006
    
    
    2,834,200
    
    
    $
    214,832November 23, 2007
    
    
    10,666,100
    
    
    
    333,849Total
    
    
    13,500,300
    
    
    $
    548,681
  2009
    
    $
    223,7092010
    
    
    144,616$
    368,325
  18. SEGMENT INFORMATION
    December 31,2008
    
    
    2007AssetsWVAS
    
    $
    28,952,925
    
    
    $
    30,285,978Recorded music
    
    
    16,977,258
    
    
    
    21,718,157Reconciling amounts
    
    
    42,394,219
    
    
    
    53,589,589Total assets
    
    $
    88,324,402
    
    
    $
    105,593,724Reconciling assets :Corporate assets
    
    $
    42,394,219
    
    
    $
    53,589,589Investment in equity method investee
    
    $
    824,579
    
    
    $
    2,420,522
  F-31




---



##### Table of Contents



Year ended December 31,2008
    
    
    2007
    
    
    2006Total expenditures for
additions to long-lived
assetsWVAS
    
    $
    228,431
    
    
    $
    755,921
    
    
    $
    712,363Recorded music
    
    
    120,802
    
    
    
    107,682
    
    
    
    244,609Total capital expenditure
    
    $
    349,233
    
    
    $
    863,603
    
    
    $
    956,972
 Year ended December 31,2008
    
    
    2007
    
    
    2006RevenuesWVAS
    
    $
    42,671,588
    
    
    $
    50,038,014
    
    
    $
    62,512,483Recorded music
    
    
    11,286,812
    
    
    
    10,488,613
    
    
    
    6,203,418Total revenue
    
    $
    53,958,400
    
    
    $
    60,526,627
    
    
    $
    68,715,901Cost of revenuesWVAS
    
    $
    32,839,642
    
    
    $
    36,394,300
    
    
    $
    40,672,113Recorded music
    
    
    6,729,725
    
    
    
    6,232,728
    
    
    
    3,553,144Total cost of revenues
    
    $
    39,569,367
    
    
    $
    42,627,028
    
    
    $
    44,225,257Gross profitWVAS
    
    $
    9,831,946
    
    
    $
    13,643,714
    
    
    $
    21,840,370Recorded music
    
    
    4,557,087
    
    
    
    4,255,885
    
    
    
    2,650,274Total gross profit
    
    $
    14,389,033
    
    
    $
    17,899,599
    
    
    $
    24,490,644
  Year ended December 31,2008
    
    
    2007
    
    
    2006RevenuesSMS
    
    $
    13,319,011
    
    
    $
    10,948,524
    
    
    $
    17,088,669IVR
    
    
    12,207,136
    
    
    
    17,325,223
    
    
    
    10,830,530RBT
    
    
    4,960,624
    
    
    
    3,719,470
    
    
    
    3,379,6432G revenues
    
    $
    30,486,771
    
    
    $
    31,993,217
    
    
    $
    31,298,842WAP
    
    
    7,434,197
    
    
    
    12,530,200
    
    
    
    21,534,724MMS
    
    
    1,355,441
    
    
    
    1,313,397
    
    
    
    4,011,527JAVA
    
    
    2,244,010
    
    
    
    1,399,193
    
    
    
    4,400,083WEB
    
    
    218,810
    
    
    
    2,029,298
    
    
    
    1,267,3072.5G revenues
    
    $
    11,252,458
    
    
    $
    17,272,088
    
    
    $
    31,213,641Other revenues
    
    
    932,359
    
    
    
    772,709
    
    
    
    Total WVAS revenue
    
    $
    42,671,588
    
    
    $
    50,038,014
    
    
    $
    62,512,483Recorded music revenue
    
    
    11,286,812
    
    
    
    10,488,613
    
    
    
    6,203,418Total revenues
    
    $
    53,958,400
    
    
    $
    60,526,627
    
    
    $
    68,715,901
   F-32




---



##### Table of Contents



Geographic Information
  19. (LOSS) INCOME PER SHARE
  Year ended December 31,2008
    
    
    2007
    
    
    2006Net (loss) income from continuing operations
(numerator), basic and diluted
    
    $
    (12,365,126
    )
    
    $
    (41,530,968
    )
    
    $
    6,640,393Net income (loss) from discontinued
operations, net of tax (numerator), basic and
diluted
    
    
    412,530
    
    
    
    (419,227
    )
    
    
    (836,448
    )Net (loss) income (numerator), basic and diluted
    
    $
    (11,952,596
    )
    
    $
    (41,950,195
    )
    
    $
    5,803,945Weighted average shares (denominator):Weighted average ordinary shares outstanding
used in computing basic income per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,189,748,563Dilutive effect of non-vested shares, stock
options and warrants
    
    
    
    
    
    
    
    
    
    
    19,010,073Weighted average ordinary shares outstanding
used in computing diluted income per share
    
    
    2,185,615,129
    
    
    
    2,172,208,190
    
    
    
    2,208,758,636Net (loss) income from continuing operations
per share, basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.00Net income (loss) from discontinued operations
per share, basic and diluted
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    (0.00
    )Net (loss) income per share, basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.00
   20. CONCENTRATIONS
 (a) Dependence on Telecom Operators
   Year ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    
    %
    
    
    Revenues
    
    
    %
    
    
    Revenues
    
    
    %China Unicom
    
    $
    10,775,358
    
    
    
    20
    %
    
    $
    12,789,026
    
    
    
    21
    %
    
    $
    21,144,096
    
    
    
    31
    %China Mobile
    
    
    24,352,344
    
    
    
    45
    %
    
    
    29,921,502
    
    
    
    49
    %
    
    
    36,756,895
    
    
    
    53
    %
  F-33




---



##### Table of Contents



December 312008
    
    
    2007Accounts receivable
    
    
    %
    
    
    Accounts receivable
    
    
    %China Unicom
    
    $
    2,632,764
    
    
    
    21
    %
    
    $
    5,289,178
    
    
    
    36
    %China Mobile
    
    
    5,458,929
    
    
    
    43
    %
    
    
    4,699,399
    
    
    
    32
    %
 (b) Credit risk
  Movement of allowance for doubtful accounts
 Year ended December 31,2008
    
    
    2007Balance at beginning of the period
    
    $
    699,525
    
    
    $
    284,402Provisions
    
    
    1,087,565
    
    
    
    661,504Reversed
    
    
    (190,860
    )
    
    
    (233,057
    )Written off
    
    
    (770,204
    )
    
    
    (13,324
    )Balance at the end of the period
    
    $
    826,026
    
    
    $
    699,525
 21. MAINLAND CHINA CONTRIBUTION PLAN AND STATUTORY RESERVE
    F-34




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##### Table of Contents



22. COMMITMENTS AND CONTINGENCIES
 Operating leases as lessee
   December 31,2009
    
    $
    1,452,1832010
    
    
    96,8522011
    
    
    18,756Total
    
    $
    1,567,791
 Artist contracts
  December 31,2009
    
    $
    1,670,9442010
    
    
    703,5552011
    
    
    703,555Total
    
    $
    3,078,054
 Contingent considerations for business acquisitions
   23. SUBSEQUENT EVENTS
 Restructuring plan
  Shanda to Purchase Majority Share Stake of the Company
   F-35




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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 31,2008
    
    
    2007(in U.S. dollars, except share data)AssetsCurrent assets:Cash
    
    $
    39,519,423
    
    
    $
    49,061,529Prepaid expenses and other current assets
    
    
    168,233
    
    
    
    224,297Total current assets
    
    
    39,687,656
    
    
    
    49,285,826Receivable on disposal of subsidiary
    
    
    46,860
    
    
    
    4,151,400Prepaid investment cost
    
    
    1,907,400
    
    
    
    Investment at cost
    
    
    600,038
    
    
    
    Investments in subsidiaries and variable interest entities
    
    
    35,131,851
    
    
    
    39,681,837Investment in equity affiliate
    
    
    150,000
    
    
    
    150,000Total assets
    
    
    77,523,805
    
    
    
    93,269,063Liabilities and shareholders equityCurrent liabilities:Accrued expenses and other current liabilities
    
    
    272,844
    
    
    
    595,648Amounts due to subsidiaries and variable interest entities
    
    
    341,676
    
    
    
    530,756Acquisitions payable
    
    
    
    
    
    
    6,560,000Total current liabilities
    
    
    614,520
    
    
    
    7,686,404Shareholders equity:Ordinary shares ($0.00005 par value; 4,560,000,000 shares
authorized; 2,193,343,740 and 2,174,784,440 shares
issued and outstanding as of December 31, 2008, and 2007,
respectively)
    
    
    109,617
    
    
    
    108,689Additional paid-in capital
    
    
    75,012,693
    
    
    
    74,066,839Statutory reserve
    
    
    1,791,324
    
    
    
    6,502,849Accumulated deficit
    
    
    (9,991,663
    )
    
    
    (2,750,592
    )Accumulated other comprehensive income
    
    
    9,987,314
    
    
    
    7,654,874Total shareholders equity
    
    
    76,909,285
    
    
    
    85,582,659Total liabilities and shareholders equity
    
    $
    77,523,805
    
    
    $
    93,269,063
  F-36




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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 31,2008
    
    
    2007
    
    
    2006(in U.S. dollars, except share data)Operating expensesProduct development
(represents stock-based
compensation expense of
$40,102, $921 and $79,587
for the years ended
December 31, 2008, 2007 and
2006, respectively)
    
    $
    105,283
    
    
    $
    9,385
    
    
    $
    79,587Selling and marketing
(including stock-based
compensation expense of
$621,094, $286,885 and
$346,456 for the years ended
December 31, 2008, 2007 and
2006, respectively)
    
    
    622,846
    
    
    
    286,885
    
    
    
    346,211General and administrative
(including stock-based
compensation expense
of $284,086, $155,169
and $117,514 for the years
ended December 31, 2008,
2007 and 2006, respectively)
    
    
    1,666,532
    
    
    
    2,440,417
    
    
    
    1,757,720Total operating expenses
    
    
    2,394,661
    
    
    
    2,736,687
    
    
    
    2,183,518Loss from operations
    
    
    (2,394,661
    )
    
    
    (2,736,687
    )
    
    
    (2,183,518
    )Interest income
    
    
    1,429,837
    
    
    
    2,082,629
    
    
    
    2,372,585Interest expense
    
    
    
    
    
    
    (179,062
    )
    
    
    (44,765
    )Other income, net
    
    
    5,000,000
    
    
    
    105,485
    
    
    
    Foreign exchange loss
    
    
    (8,990,067
    )
    
    
    
    
    
    
    Gain from disposal of subsidiary
    
    
    412,530
    
    
    
    192,943
    
    
    
    Equity in earnings (loss) of
subsidiaries, variable interest
entities and affiliate
    
    
    (7,410,235
    )
    
    
    (41,415,503
    )
    
    
    5,659,643Net (loss) income
    
    $
    (11,952,596
    )
    
    $
    (41,950,195
    )
    
    $
    5,803,945
  F-37




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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 31,2008
    
    
    2007
    
    
    2006(in U.S. dollars)Cash flows from operating activities:Net (loss) income
    
    $
    (11,952,596
    )
    
    $
    (41,950,195
    )
    
    $
    5,803,945Adjustments to reconcile net (loss) income to net
cash provided by operating activities:Stock-based compensation expense
    
    
    945,282
    
    
    
    442,975
    
    
    
    543,557Equity in (losses) earnings of subsidiaries,
variable interest entities and affiliate
    
    
    7,410,235
    
    
    
    41,415,503
    
    
    
    (5,659,643
    )Gain from disposal of subsidiary
    
    
    (412,530
    )
    
    
    (192,943
    )
    
    
    Receivable from disposal of subsidiary (net of
cash disposed of $771,570)
    
    
    
    
    
    
    (3,186,887
    )
    
    
    Gain on reduction of acquisition payable
    
    
    (5,000,000
    )
    
    
    
    
    
    
    Changes in assets and liabilities:Prepaid expenses and other current assets
    
    
    56,064
    
    
    
    226,001
    
    
    
    (19,649
    )Amounts due from subsidiaries and variable
interest entities
    
    
    
    
    
    
    5,843,380
    
    
    
    792,290Accrued expenses and other current liabilities
    
    
    (322,804
    )
    
    
    403,512
    
    
    
    (243,793
    )Amounts due to subsidiaries and variable
interest entities
    
    
    (189,080
    )
    
    
    530,756
    
    
    
    (1,243,090
    )Payroll withholding taxes payable
    
    
    
    
    
    
    
    
    
    
    (504,945
    )Net cash (used in) provided by operating activities
    
    
    (9,465,429
    )
    
    
    3,532,102
    
    
    
    (531,328
    )Investing activities:Payments related to acquisitions consummated
    
    
    (1,987,930
    )
    
    
    (2,833,658
    )
    
    
    (7,475,860
    )Payments related to acquisitions not yet consummated
    
    
    (1,907,400
    )
    
    
    
    
    
    
    Proceeds from disposal of subsidiary
    
    
    4,517,070
    
    
    
    
    
    
    
    Investment in cost affiliate
    
    
    (600,038
    )
    
    
    
    
    
    
    Purchase of equity affiliate
    
    
    
    
    
    
    (150,000
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    21,702
    
    
    
    (2,983,658
    )
    
    
    (7,475,860
    )Financing activities:Proceeds from exercise of stock options
    
    
    1,500
    
    
    
    16,334
    
    
    
    95,472Proceeds from the issuance of ordinary shares
    
    
    
    
    
    
    
    
    
    
    540,000Payment to repurchase ordinary shares
    
    
    
    
    
    
    
    
    
    
    (5,034,748
    )Net cash provided by (used in) financing activities
    
    
    1,500
    
    
    
    16,334
    
    
    
    (4,399,276
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (9,442,227
    )
    
    
    564,778
    
    
    
    (12,406,464
    )Effect of change in exchange rate
    
    
    (99,879
    )
    
    
    
    
    
    
    Cash and cash equivalents, beginning of year
    
    
    49,061,529
    
    
    
    48,496,751
    
    
    
    60,903,215Cash and cash equivalents, end of year
    
    $
    39,519,423
    
    
    $
    49,061,529
    
    
    $
    48,496,751
 Note
    F-38




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Document4.70
    
    
    Translation of Cooperation Agreement on Monternet WAP Services between China Mobile
Communications Group Corporation and Beijing Enterprise Network Technology Co., Ltd. dated
June 18, 2008.4.71
    
    
    Translation of Mobile Value-added Service (WAP1.2) Cooperation Agreement between China
Telecommunications Corporation and Beijing Hengji Weiye Electronic Commerce Co., Ltd. dated
October 1, 2008.4.72
    
    
    Investment and Shareholders Agreement between, among others, Seed Music Group Limited and
Hurray! Music Holding Co., Ltd. dated September 24, 2008.4.73
    
    
    Translation of Supplemental Agreement of Asset, Business and Personnel Transfer Agreement
between Beijing Secular Bird Culture and Art Development Centre and Guangzhou Secular Bird
Culture Communication Co., Ltd. dated August 2008.4.74
    
    
    Translation of Supplemental Agreement between Hurray! Digital Media Technology Co., Ltd. and
Beijing Secular Bird Culture and Art Development Centre dated August 2008.4.75
    
    
    Translation of Supplemental Agreement among Seed Music Group Limited, Hurray! Media Holding
Co., Ltd., Tien, Ting-Feng, and Huang, Tien-Zan dated 2009.4.76
    
    
    Translation of Supplemental Agreement among Hurray! Media Technologies Co., Ltd., Xiongbing
Zhong, 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 Hongkong Freeland Movie Industry Group Co., Ltd. dated 2008.8.1
    
    
    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.15.2
    
    
    Consent of Appleby.