XcelMobility Inc.: Exhibit 10.1- Filed by newsfilecorp.com





SECURITIES PURCHASE AGREEMENT 
(Signature Page)

	XCELMOBILITY INC. 
	303 TWIN DOLPHINS DRIVE, SUITE 600 
	REDWOOD CITY, CA 94065 


Ladies & Gentlemen: 

          The
undersigned (the “Investor”), hereby confirms its agreement with you as
follows:

1.       This Securities Purchase
Agreement, including the Terms and Conditions set forth in Annex I (the
“Terms and Conditions”), the Risk Factors set forth in Annex II (the
“Risk Factors”), and exhibits, which are all attached hereto and incorporated
herein by reference as if fully set forth herein (the “Agreement”), is made as
of the date set forth below between XcelMobility Inc., a Nevada corporation (the
“Company”), and the Investor.

2.       The Company has
authorized the sale and issuance of up to 6,000,000 shares of the Company’s
Common Stock, $0.001 par value, at $0.05 per share (the “Shares”) to the
Investor in a private placement (the “Offering”).

3.       Pursuant to the Terms and
Conditions, the Company and the Investor agree that the Investor will purchase
from the Company and the Company will issue and sell to the Investor [ ] Shares,
for a purchase price of $0.05 per Share, for an aggregate purchase price of
$[ ]. Unless otherwise requested by the Investor, certificates
representing the Common Stock purchased by the Investor will be registered in
the Investor’s name and address as set forth below. 

4.       The Investor represents
that, except as set forth below, (a) it has had no position, office or other
material relationship within the past three years with the Company or persons
known to it to be affiliates of the Company, (b) neither it, nor any group of
which it is a member or to which it is related, beneficially owns (including the
right to acquire or vote) any securities of the Company and (c) it has no direct
or indirect affiliation or association with any NASD member as of the date
hereof. Exceptions:

	 
	(If no exceptions, write “none.” If left blank, response
      will be deemed to be “none.”) 


5.       The Investor agrees that
it shall not sell, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale of the Shares during the 180-day period following the
effective date of the closing of the Offering. 

          Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose. By executing this
Agreement, you acknowledge that the Company may use the information in paragraph
4 above and the name and address information below in preparation of the
Registration Statement (as defined in Annex 1).

Date: ______________, 2013

	 	Investor: _______________________________
	 	 
	 	By: ___________________________________
	 	 
	 	Print Name: _____________________________
	 	 
	 	Title: __________________________________
	 	 
	 	Address: _______________________________
	 	______________________________________
	 	______________________________________


1





	 	_______________________________________
	 	 
	 	Phone: _________________________________
	 	Fax: ___________________________________
	 	  
	 	Social Security Number or TIN (if applicable):
    
	 	_______________________________________






ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES 

Investment in the Company involves a high degree of risk.
Investor should carefully consider the risk factors set forth in
Annex II in addition to the other information
set forth in this Annex I before purchasing
securities of the Company.

     1.     
Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 6,000,000 shares of the
Company’s common stock, par value $0.001, at a purchase price of $0.05 per share
(“Shares”). The Company reserves the right to increase or decrease this number.
All references to currency in this Securities Purchase Agreement shall refer to
the lawful currency of the United States of America.

     2.     
Agreement to Sell and Purchase the Shares.

               2.1     
At the Closing (as defined in Section 3 of this Annex I), the Company
will sell to the Investor, and the Investor will purchase from the Company, upon
the terms and conditions hereinafter set forth, the number of Shares, if
applicable, set forth in Section 3 of the Signature Page to the Securities
Purchase Agreement at the purchase price set forth thereon.

               2.2     
The Company may enter into the same form of Securities Purchase Agreement
(“Agreement”), including these Terms and Conditions, with other Investors and
expects to complete sales of subsequent Shares to other Investors.

     3.     
Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the “Closing”) shall occur at the offices of the Company
upon receipt of cleared funds and fully executed documents for the purchase of
the Shares on each date set by the Company, provided that a closing shall occur
no later than March 15, 2013, which date may be extended by mutual agreement of
both parties. Within seven (7) days after each Closing, the Company shall
deliver to the Investor one or more stock certificates representing the number
of Shares as set forth in Section 3 of the Signature Page to the Securities
Purchase Agreement, each such certificate or certificates to be registered in
the name of the Investor, as set forth in Section 3 of the Signature Page to the
Securities Purchase Agreement.

     The Company’s obligation to issue
the Shares to the Investor shall be subject to the following conditions, any one
or more of which may be waived by the Company: (a) receipt by the Company of a
certified or official bank check or wire transfer of funds in the full amount of
the purchase price for the Shares being purchased hereunder as set forth in
Section 3 of Signature Page to the Securities Purchase Agreement; and (b) the
accuracy of the representations and warranties made by the Investor and the
fulfillment of those undertakings of the Investor to be fulfilled prior to the
Closing.

     The Investor’s obligation to
purchase the Shares shall be subject to the following conditions, any one or
more of which may be waived by the Investor: (1) the representations and
warranties of the Company set forth herein shall be true and correct as of the
Closing Date in all material respects and (2) the Investor shall have received
such documents as such Investor shall reasonably have requested in connection
with its due diligence. 

     4.     
Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as
follows:

               4.1     
Organization. The Company is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization. The Company has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently contemplated and is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business or business prospects, properties or operations of the Company (a “Material Adverse
Effect”), and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.




               4.2     
Due Authorization and Valid Issuance. The Company has all requisite power
and authority to execute, deliver and perform its obligations under the
Agreement, and the Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with their terms,
except as rights to indemnity and contribution may be limited by state or
federal securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Shares. The Shares being purchased by the Investor
hereunder will, upon issuance and payment therefore pursuant to the terms
hereof, be duly authorized, validly issued, fully-paid and nonassessable. 

               4.3     
Non-Contravention. The execution and delivery of the Agreement, the
issuance and sale of the Shares under the Agreement, the fulfillment of the
terms of the Agreement and the consummation of the transactions contemplated
thereby will not (A) conflict with or constitute a violation of, or default
under, (i) any material bond, debenture, note or other evidence of indebtedness,
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company is a party or by
which it or its properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or its properties, except in the
case of clauses (i) and (iii) for any such conflicts, violations or defaults
which are not reasonably likely to have a Material Adverse Effect or (B) result
in the creation or imposition of any lien, encumbrance, claim, security interest
or restriction whatsoever upon any of the material properties or assets of the
Company or an acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any material bond, debenture, note or any other
evidence of indebtedness or any material indenture, mortgage, deed of trust or
any other agreement or instrument to which the Company is a party or by which
any of them is bound or to which any of the material property or assets of the
Company is subject. 

               4.4     
Capitalization. As of March 1, 2013, there were 60,000,000 shares of the
Company’s common stock issued and outstanding. Except as set forth herein or
contemplated by documents filed by the Company with the Securities and Exchange
Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), since such date through the date hereof (the “Exchange Act
Documents”), there are no other outstanding rights (including, without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company or any contract, commitment, agreement,
understanding or arrangement of any kind to which the Company is a party or of
which the Company has knowledge and relating to the issuance or sale of any
capital stock of the Company, any such convertible or exchangeable securities or
any such rights, warrants or options. 

               4.5     
Legal Proceedings. There is no material legal or governmental proceeding
pending or, to the knowledge of the Company, threatened to which the Company is
or may be a party or of which the business or property of the Company is subject
that is not disclosed in the Exchange Act Documents.

               4.6     
No Violations. The Company is not in violation of its charter, bylaws, or
other organizational document, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company, which violation, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect,
or is in default (and there exists no condition which, with the passage of time
or otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company is a party or by which the Company is bound or
by which the properties of the Company are bound, which would be reasonably
likely to have a Material Adverse Effect.




               4.7     
Piggyback Registration Rights. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering for
its own account of any class of its equity securities (other than a registration
statement on Form S-8 (or any successor form) or any other registration
statement relating solely to employee benefit plans or filed in connection with
an exchange offer, a transaction to which Rule 145 (or any successor provision)
under the Securities Act applies or an offering of securities solely to the
Company’s existing shareholders), then the Company shall in each case give
written notice of such proposed filing to the Investor as soon as practicable
(but no later than 20 business days) before the anticipated filing date, and
such notice shall offer each Investor the opportunity to register such number of
Shares as such Investor may request. Each Investor desiring to have Shares
included in such registration statement shall so advise the Company in writing
within 10 business days after the date on which the Company’s notice is so
given, setting forth the number of Shares for which registration is requested.
All expenses (other than underwriting discounts and commissions and the fees and
expenses of Investor’s counsel) incurred in connection with registrations,
filings or qualifications pursuant to this Section 4.7, including, without
limitation, all registration, listing, and qualifications fees, printing and
engraving fees, accounting fees, and the fees and disbursements of counsel for
the Company, shall be borne by the Company. The registration rights granted in
this Section 4.7 shall terminate with respect to the Shares upon the date the
Shares are first eligible to be resold pursuant to Rule 144 of the Securities
Act.

     5.     
Representations, Warranties and Covenants of the Investor.

               5.1     
The Investor represents and warrants to, and covenants with, the Company that:
(i) the Investor is an “accredited investor” as defined in Rule 501 of
Regulation D under the Securities Act and the Investor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor has
carefully read and fully understands the risks involved with an investment in
the Company including, without limitation, the risks identified on Annex
II, attached hereto, (iii) the Investor is acquiring the number of Shares
set forth in Section 3 of the Signature Page to the Securities Purchase
Agreement in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such Shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares; (iv) the Investor will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares except
in compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; (v) all of the
representations made by the Investor are true, correct and complete as of the
date hereof and will be true, correct and complete as of the Closing Date; and
(vi) the Investor has, in connection with its decision to purchase the number of
Shares set forth in Section 3 of the Signature Page to the Securities Purchase
Agreement, relied only upon the Exchange Act Documents and the representations
and warranties of the Company contained herein. There are no suits, pending
litigation, or claims against the undersigned that could materially affect the
net worth of the Investor.

               5.2     
The Investor acknowledges that it has had access to the Exchange Act Documents
and has carefully reviewed the same. The Investor further acknowledges that the
Company has made available to it the opportunity to ask questions of and receive
answers from the Company’s officers and directors concerning the terms and
conditions of this Agreement and the business and financial condition of the
Company, and the Investor has received to its satisfaction, such information
about the business and financial condition of the Company and the terms and
conditions of the Agreement as it has requested. The Investor has carefully
considered the potential risks relating to the Company and a purchase of the
Shares, and fully understands that the Shares are speculative investments, which
involve a high degree of risk of loss of the Investor’s entire investment. Among
others, the undersigned has carefully considered each of the risks identified
under the caption “Risk Factors” in the Exchange Act Documents and Annex
II.

               5.3     
The Investor acknowledges, represents and agrees that no action has been or will
be taken in any jurisdiction outside the United States by the Company that would
permit an offering of the Shares, or possession or distribution of offering
materials in connection with the issuance of the Shares, in any jurisdiction
outside the United States where legal action by the Company for that purpose is
required. Investor will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has in
its possession or distributes any offering material, in all cases at its own
expense.




               5.4     
The Investor hereby covenants with the Company not to make any sale of the
Shares without complying with the provisions of this Agreement, and the Investor
acknowledges that the certificates evidencing the Shares will be imprinted with
a legend that prohibits their transfer except in accordance therewith. The
overall commitment of the Investor to investments, which are not readily
marketable, is not excessive in view of the Investor’s net worth and financial
circumstances, and any purchase of the Shares will not cause such commitment to
become excessive. The Investor is able to bear the economic risk of an
investment in the Shares.

               5.5     
The Investor further represents and warrants to, and covenants with, the Company
that (i) the Investor has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).

               5.6     
Investor will not use any of the restricted Shares acquired pursuant to this
Agreement to cover any short position in the Common Stock of the Company if
doing so would be in violation of applicable securities laws.

               5.7     
The Investor understands that nothing in the Exchange Act Documents, this
Agreement or any other materials presented to the Investor in connection with
the purchase and sale of the Shares constitutes legal, tax or investment advice.
The Investor has consulted such legal, tax and investment advisors, as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares.

               5.8     
The Investor understands that the issuance of the Shares to the Investor has not
been registered under the Securities Act in reliance upon one or more specific
exemptions therefrom, including Regulation D and/or Regulation S, which
exemption depends upon, among other things, the accuracy of the Investor’s
representations made in this Agreement. The Investor understands that the Shares
must be held indefinitely unless subsequently registered under the Securities
Act and qualified under applicable state securities laws, or unless an exemption
from such registration and qualification requirements is otherwise available.
Other than “piggyback” registration rights set forth in Section 4.7, which are
afforded to the Investor only until the Shares are eligible for re-sale pursuant
to Rule 144 of the Securities Act of 1933, as amended, the Investor acknowledges
that the Company has no obligation to register or qualify the Shares for resale.
The Investor acknowledges that the Company will refuse to register any transfer
of Shares that is not made in accordance with the provisions of Regulation S,
registered pursuant to the Securities Act or otherwise exempt from such
registration. The Investor further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Shares, and requirements relating to the Company which
are outside of the Investor’s control, and which the Company is under no
obligation and may not be able to satisfy. The Investor has been independently
advised as to the applicable holding period imposed in respect of the Shares by
securities legislation in the jurisdiction in which the undersigned resides and
confirms that no representation has been made respecting the applicable holding
periods for the Shares in such jurisdiction and it is aware of the risks and
other characteristics of the Shares and of the fact that the undersigned may not
resell the Shares except in accordance with applicable securities legislation
and regulatory policy.

               5.9     
A copy of the Company’s annual report on Form 10-K, its quarterly reports on
Form 10-Q, current reports on Form 8-K and information statements are available
on the SEC’s website at www.sec.gov.

               5.10  
 For purposes of compliance with the Regulation S exemption for the offer
and sale of the Shares to non-U.S. Persons, if the Investor is not a “U.S.
Person,” as such term is defined in Rule 902(k) of Regulation S,1 the Investor represents and warrants
they are a person or entity that is outside the United Sates, and further
represents and warrants as follows: 




                         (a)     
The Investor is not acquiring the Shares for the account or benefit of a U.S.
Person.

                         (b)     
If the Investor is a legal entity, it has not been formed specifically for the
purpose of investing in the Company.

                         (c)     
The Investor hereby represents that he, she or it has satisfied and fully
observed the laws of the jurisdiction in which he, she or it is located or
domiciled, in connection with the acquisition of the Shares, including (i) the
legal requirements of the Investor’s jurisdiction for the acquisition of the
Shares, (ii) any foreign exchange restrictions applicable to such acquisition,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, which may be relevant to the
holding, redemption, sale, or transfer of the Shares; and further, the Investor
agrees to continue to comply with such laws as long as he, she or it shall hold
the Shares.

                         (d)     
To the knowledge of the Investor, without having made any independent
investigation, neither the Company nor any person acting for the Company, has
conducted any “directed selling efforts” in the United States as the term
“directed selling efforts” is defined in Rule 902 of Regulation S, which, in
general, means any activity undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the marketing in the
United States for any of the Shares being offered. Such activity includes,
without limitation, the mailing of printed material to investors residing in the
United States, the holding of promotional seminars in the United States, and the
placement of advertisements with radio or television stations broadcasting in
the United States or in publications with a general circulation in the United
States, which discuss the offering of the Shares. To the knowledge of the
Investor, the Shares were not offered to the undersigned through, and the
undersigned is not aware of, any form of general solicitation or general
advertising, including without limitation, (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, and (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.

__________________________________
1 Regulation S
provides in part as follows:

	1. 	
      “U.S. person” means: (i) any natural person resident in
      the United States; (ii) any partnership or corporation organized or
      incorporated under the laws of the United States; (iii) any estate of
      which any executor or administrator is a U.S. person; (iv) any trust of
      which any trustee is a U.S. person; (v) any agency or branch of a foreign
      entity located in the United States; (vi) any non-discretionary account or
      similar account (other than an estate or trust) held by a dealer or other
      fiduciary for the benefit or account of a U.S. person; (vii) any
      discretionary account or similar account (other than an estate or trust)
      held by a dealer or other fiduciary organized, incorporated, or (if an
      individual) resident in the United States; and (viii) any partnership or
      corporation if: (A) organized or incorporated under the laws of any
      foreign jurisdiction; and (B) formed by a U.S. person principally for the
      purpose of investing in securities not registered under the Securities Act
      of 1933, as amended, unless it is organized or incorporated, and owned, by
      accredited investors (as defined in Rule 501(a)) who are not natural
      persons, estates or trusts.

	 	 
	2. 	
      The following are not “U.S. persons”: (i) any
      discretionary account or similar account (other than an estate or trust)
      held for the benefit or account of a non-U.S. person by a dealer or other
      professional fiduciary organized, incorporated, or (if an individual)
      resident in the United States; (ii) any estate of which any professional
      fiduciary acting as executor or administrator is a U.S. person if: (A) an
      executor or administrator of the estate who is not a U.S. person has sole
      or shared investment discretion with respect to the assets of the estate;
      and (B) the estate is governed by foreign law; (iii) any trust of which
      any professional fiduciary acting as trustee is a U.S. person, if a
      trustee who is not a U.S. person has sole or shared investment discretion
      with respect to the trust assets, and no beneficiary of the trust (and no
      settlor if the trust is revocable) is a U.S. person; (iv) an employee
      benefit plan established and administered in accordance with the law of a
      country other than the United States and customary practices and
      documentation of such country; (v) any agency or branch of a U.S. person
      located outside the United States if: (A) the agency or branch operates
      for valid business reasons; and (B) the agency or branch is engaged in the
      business of insurance or banking and is subject to substantive insurance
      or banking regulation, respectively, in the jurisdiction where located;
      and (vi) the International Monetary Fund, the International Bank for
      Reconstruction and Development, the Inter-American Development Bank, the
      Asian Development Bank, the African Development Bank, the United Nations,
      and their agencies, affiliates and pension plans, and any other similar
      international organizations, their agencies, affiliates and pension
      plans.







                         (e)     
The Investor will offer, sell or otherwise transfer the Shares, only (A)
pursuant to a registration statement that has been declared effective under the
Securities Act, (B) pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S in a transaction meeting the
requirements of Rule 904 (or other applicable Rule) under the Securities Act, or
(C) pursuant to another available exemption from the registration requirements
of the Securities Act, subject to the Company’s right prior to any offer, sale
or transfer pursuant to clauses (B) or (C) to require the delivery of an opinion
of counsel, certificates or other information reasonably satisfactory to the
Company for the purpose of determining the availability of an exemption.

                         (f)     
The Investor will not engage in hedging transactions involving the Shares unless
such transactions are in compliance with the Securities Act.

                         (g)     
The Investor represents and warrants that the undersigned is not a citizen of
the United States and is not, and has no present intention of becoming, a
resident of the United States (defined as being any natural person physically
present within the United States for at least 183 days in a 12-month consecutive
period or any entity who maintained an office in the United States at any time
during a 12-month consecutive period). The Investor understands that the Company
may rely upon the representations and warranty of this paragraph as a basis for
an exemption from registration of the Shares under the Securities Act of 1933,
as amended, and the provisions of relevant state securities laws. 

               5.11     
The Investor is not a “disqualified organization.” “Disqualified organization”
means (i) the federal government of the United States; (ii) any state or
political subdivision of the United States; (iii) any foreign government; (iv)
any international organization; (v) any agency or instrumentality of any of the
organizations listed in clauses (i), (ii), (iii) or (iv) above; (vi) any other
tax exempt organization, other than a farmer’s cooperative described in Section
521 of the Code that is exempt from both income taxation and from taxation under
the unrelated business taxable income provisions of the Code; or (vii) any rural
electrical or telephone cooperative.

               5.12     
The Investor represents that neither it nor, to the Investor’s knowledge, any
person or entity controlling, controlled by or under common control with the
Investor, nor any person or entity having a beneficial interest in the Investor,
nor any other person or entity on whose behalf the undersigned is acting (i) is
a person or entity listed in the annex to Executive Order No. 13224 (2001)
issued by the President of the United States (Executive Order Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism); (ii) is named on the List of Specially Designated Nationals
and Blocked Persons maintained by the U.S. Office of Foreign Assets Control
(OFAC); (iii) is a non-U.S. shell bank or is providing banking services
indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure
or an immediate family member or close associate of such figure; or (v) is
otherwise prohibited from investing in the Company pursuant to applicable U.S.
anti-money laundering, antiterrorist and asset control laws, regulations, rules
or orders (categories (i) through (v) collectively, a “Prohibited Investor”).
The Investor agrees to provide the Company, promptly upon request, all
information that the Company reasonably deems necessary or appropriate to comply
with applicable U.S. anti-money laundering, antiterrorist and asset control
laws, regulations, rules and orders. The Investor consents to the disclosure to
U.S. regulators and law enforcement authorities by the Company and its
affiliates and agents of such information about the Investor as the Company
reasonably deems necessary or appropriate to comply with applicable U.S.
anti-money laundering, antiterrorist and asset control laws, regulations, rules
and orders. If the Investor is a financial institution that is subject to the
PATRIOT Act, Public Law No. 107-56 (Oct. 26, 2001) (the “Patriot Act”), the
Investor represents that the Investor has met all of its respective obligations
under the Patriot Act. The Investor acknowledges that if, following the
investment in the Company by the Investor, the Company reasonably believes that
the Investor is a Prohibited Investor or is otherwise engaged in suspicious
activity or refuses to provide promptly information that the Company requests,
the Company has the right or may be obligated to prohibit additional
investments, segregate the assets constituting the investment in accordance with
applicable regulations or immediately require Investor to transfer the Shares.
The Investor further acknowledges that the Investor will not have any claim
against the Company or any of its affiliates or agents for any form of damages
as a result of any of the foregoing actions.




     6.      Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express, two business days after so mailed, (iv) if
delivered by facsimile, upon electronic confirmation of receipt and shall be
delivered as addressed as follows:

	 	(a) 	if to the Company, to: 
	 	  	  
	 	 	                  
      XcelMobility, Inc  
	 	  	           
             303 Twin Dolphins Drive, Suite 600 
	 	  	           
             Redwood City, CA 94065 
	 	  	           
             Attn: Chief Executive Officer 
	 	  	           
             Phone: (650) 632-4210 
	 	  	  
	 	(b) 	with a copy to: 
	 	  	  
	 	  	           
             Greenberg Traurig LLP 
	 	  	           
             1201 K Street, Suite 1100 
	 	  	           
             Sacramento, CA 95814 
	 		                  
      Attn: Mark C Lee  
	 	  	           
             Phone: (916) 442-1111 
	 	  	           
             Fax: (916) 448-1709 



	 	(c) 	
      if to the Investor, at its address on the signature page
      hereto, or at such other address or addresses as may have been furnished
      to the Company in writing.



     7.     
Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Investor.

     8.     
Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.

     9.     
Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

     10.   
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Nevada, without giving effect
to the principles of conflicts of law.

     11.  
 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.

     12.    Rule
144. The Company covenants that it will timely file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of the Investor holding Shares
purchased hereunder made after the first anniversary of the Closing Date, make
publicly available such information as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will take such further action as the
Investor may reasonably request, all to the extent required from time to time to
enable such Investor to sell Shares purchased hereunder without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of the Investor, the Company will deliver to such holder a written
statement as to whether it has complied with such information and
requirements.




     13.     
Confidential Information. The Investor represents to the Company that, at
all times during the Company’s offering of the Shares, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, and covenants that it
will continue to maintain in confidence such information and shall not use such
information for any purpose other than to evaluate the purchase of the Shares
until such information (a) becomes generally publicly available other than
through a violation of this provision by the Investor or its agents or (b) is
required to be disclosed in legal proceedings (such as by deposition,
interrogatory, request for documents, subpoena, civil investigation demand,
filing with any governmental authority or similar process), provided, however,
that before making any use or disclosure in reliance on this subparagraph (b)
the Investor shall give the Company at least fifteen (15) days prior written
notice (or such shorter period as required by law) specifying the circumstances
giving rise thereto and will furnish only that portion of the non-public
information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded any
non-public information so furnished.




ANNEX II 

RISK FACTORS

The risks described below are the ones the Company believes
are the most important for the Investor to consider, although these risks are
not the only ones that the Company faces. If events anticipated by any of the
following risks actually occur, the Company’s business, operating results or
financial condition could suffer and the trading price of the Company’s common
stock could decline.

Risks Related to Our Business and Industry

Our operating results are difficult to predict, and we may
experience significant fluctuations in our operating results.

Our operating results may fluctuate significantly. As a result,
you may not be able to rely on period to period comparisons of our operating
results as an indication of our future performance. Factors causing these
fluctuations include, among others:

	our ability to maintain and increase sales to existing customers, attract
  new customers and satisfy our customers’ demands;
  
	our ability to monetize our products;
  
	the cooperation and access to our partners’ customer bases;
  
	the price we charge for our products or changes in our pricing strategies
  or the pricing strategies of our competitors;
  
	timing and costs of marketing and promotional programs organized by us
  and/or our partners, including the extent to which we or our partners offer
  promotional discounts to their customers;
  
	technical difficulties, system downtime or interruptions of our computer
  system, which we use to support our products;
  
	the introduction by our competitors of new products and services;
  
	the effects of strategic alliances, potential acquisitions and other
  business combinations, and our ability to successfully and timely integrate
  them into our business;
  
	changes in government regulations with respect to the mobile internet
  industry; and
  
	economic and geopolitical conditions in China, Japan and elsewhere.



In addition, a significant percentage of our operating expenses
are fixed in the short term. As a result, a delay in generating or recognizing
revenue for any reason could result in substantial operating losses.

The commercial success of our products depends upon the
degree of their market acceptance among the mobile internet community. If our
products do not attain market acceptance among the mobile internet community,
our operations and profitability would be adversely affected. 

The commercial success of our products depends, in large part,
upon the degree of market acceptance they achieve among the mobile internet
community, particularly among cellular carriers, phone manufacturers, and phone
retailers. Cellular carriers may not offer our products to their customers and
phone manufacturers may not embed our software into their phones if the products
are not attractive and desired by consumers. The acceptance and use of our
products among the mobile internet community will depend upon a number of
factors including: 

	perceptions by consumers, cellular carriers, phone manufacturers and
  retailers that our products are leading edge and enable faster use of the
  mobile Internet;
  
	perceptions by cellular carriers that the use of our products are
  efficient and enable them to provide more data to their customers through
  existing infrastructure;
  
	the efficacy and potential advantages relative to competing products and
  products under development;
  
	relative convenience and ease of administration of installing our products
  and collecting payment;
  
	effectiveness of our product education, marketing and distribution
  efforts; 





	publicity concerning our products or competing products and treatments;
  and
  
	the price for our products and competing products. 


If our products fail to attain and sustain market acceptance
among the mobile internet community, or if our currently marketed products
cannot maintain market acceptance, our results of operations and profitability
would be adversely affected.

Our success is dependent upon our ability to maintain our
relationships with cellular carriers, phone manufacturers and phone retailers
and to expand such relationships and develop new relationships.

Our business depends significantly on our relationships with
cellular carriers, phone manufacturers and phone retailers. No assurance can be
given that any such distribution channels will continue their relationships with
us, and the loss of one or more of these distribution channel partners could
have a material adverse effect on our business, results of operations and
financial condition. Our ability to grow our business will therefore depend to a
significant degree upon our ability to expand existing relationships and develop
new relationships with such distribution channel partners and to expand existing
relationships. No assurance can be given that new partners will be found, that
any such new relationships will be successful when they are in place, or that
business with current distribution channel partners will increase. Failure to
develop and expand such relationships could have a material adverse effect on
our business, results of operations and financial condition.

Concerns about health risks associated with wireless
equipment may reduce the demand for our services. 

Portable communications devices have been alleged to pose
health risks, including cancer, due to radio frequency emissions from these
devices. The actual or perceived risk of mobile communications devices could
adversely affect us through a reduction in mobile communication devise users,
thereby reducing potential users of our services.

Our failure to retain and attract qualified personnel could
harm our business.

We believe that our success depends in part on our ability to
attract, train and retain qualified personnel. Competition for qualified
personnel is intense and we may not be able to hire sufficient personnel to
achieve our goals or support the anticipated growth in our business. If we fail
to attract and retain qualified personnel, our business will suffer.

If we are not able to adequately protect our intellectual
property, we may not be able to compete effectively. 

Our ability to compete depends in part upon the strength of our
proprietary rights in our technologies, brands and content. We expect to rely on
a combination of Chinese, U.S. and other foreign patents, copyrights, trademark,
trade secret laws and license agreements to establish and protect our
intellectual property and proprietary rights. The efforts we have taken and
expect to take to protect our intellectual property and proprietary rights may
not be sufficient or effective at stopping unauthorized use of our intellectual
property and proprietary rights. In addition, effective trademark, patent,
copyright and trade secret protection may not be available or cost-effective in
every country in which our products are made available. There may be instances
where we are not able to fully protect or utilize our intellectual property in a
manner that maximizes competitive advantage. Our inability to obtain appropriate
protections for our intellectual property may also allow competitors to enter
our markets and produce or sell the same or similar products. In addition,
protecting our intellectual property and other proprietary rights is expensive
and diverts critical managerial resources. If we are otherwise unable to protect
our intellectual property and proprietary rights from unauthorized use, the
value of our products may be reduced, and our business and financial results
could be adversely affected. 

If we are forced to resort to legal proceedings to enforce our
intellectual property rights, the proceedings could be burdensome and expensive.
In addition, our proprietary rights could be at risk if we are unsuccessful in,
or cannot afford to pursue, those proceedings. In addition, the possibility of
extensive delays in the patent issuance process could effectively reduce the
term during which a marketed product is protected by patents. 




We may also need to obtain licenses to patents or other
proprietary rights from third parties. We may not be able to obtain the licenses
required under any patents or proprietary rights or they may not be available on
acceptable terms. If we do not obtain required licenses, we may encounter delays
in product development or find that the development, manufacture or sale of
products requiring licenses could be foreclosed. We may, from time to time,
support and collaborate in research conducted by universities and governmental
research organizations. We may not be able to acquire exclusive rights to the
inventions or technical information derived from these collaborations, and
disputes may arise over rights in derivative or related research programs
conducted by us or our collaborators. 

We may be exposed to intellectual property infringement and
other claims by third parties which, if successful, could disrupt our business
and have a material adverse effect on our financial condition and results of
operations.

There is significant litigation in the telecommunications
technology field regarding patents and other intellectual property rights. Other
companies with greater financial and other resources than us have gone out of
business from costs related to patent litigation and from losing a patent
litigation. Our success depends, in large part, on our ability to use our
proprietary information and know-how without infringing third party intellectual
property rights. As we increase sales of our products, and as litigation becomes
more common in China and throughout Asia, we face a higher risk of being the
subject of claims for intellectual property infringement, invalidity or
indemnification relating to other parties’ proprietary rights. Our current or
potential competitors, many of which have substantial resources, may have or may
obtain intellectual property protection that may prevent, limit or interfere
with our ability to make, use or sell our products in China and elsewhere.
Moreover, the defense of intellectual property suits, including patent
infringement suits, and related legal and administrative proceedings can be both
costly and time consuming and may significantly divert the efforts and resources
of our management personnel. Resolving intellectual property infringement claims
may also require us to enter into license agreements. No assurances can be given
that we would be able to obtain license agreements on commercially reasonable
terms. A successful claim of intellectual property infringement could subject us
to significant damages and may prevent us from developing or licensing the
affected product. Any of these events could have a material adverse effect on
our profitability and financial condition. 

Confidentiality agreements with employees and others may not
adequately prevent disclosure of our trade secrets and other proprietary
information.

Our success depends upon the skills, knowledge and experience
of our technical personnel, our consultants and advisors as well as our
licensors and contractors. Because we operate in a highly competitive field, we
rely almost wholly on trade secrets to protect our proprietary technology and
processes. However, trade secrets are difficult to protect. We enter into
confidentiality and intellectual property assignment agreements with our
corporate partners, employees, consultants, outside scientific collaborators,
developers and other advisors. These agreements generally require that the
receiving party keep confidential and not disclose to third parties confidential
information developed by us during the course of the receiving party’s
relationship with us. These agreements also generally provide that inventions
conceived by the receiving party in the course of rendering services to us will
be our exclusive property. However, these agreements may be breached and may not
effectively assign intellectual property rights to us. Our trade secrets also
could be independently discovered by competitors, in which case we would not be
able to prevent use of such trade secrets by our competitors. The enforcement of
a claim alleging that a party illegally obtained and was using our trade secrets
could be difficult, expensive and time consuming and the outcome would be
unpredictable. In addition, courts outside the United States may be less willing
to protect trade secrets. The failure to obtain or maintain meaningful trade
secret protection could adversely affect our competitive position.

We depend substantially on the continuing efforts of our
executive officers, and our business and prospects may be severely disrupted if
we lose their services.

Our future success is dependent on the continued services of
the key members of our management team, including Ronald Edward Strauss, Renyan
Ge, Gregory Tse and Xili Wang. We do not maintain key man life insurance on any
of our executive officers and directors. If one or more of our executive
officers are unable or unwilling to continue in their present positions, we may
not be able to replace them readily, if at all. Therefore, our business may be
severely disrupted, and we may incur additional expenses to recruit and retain
new management. The process of hiring suitably qualified personnel is also often lengthy. If
our recruitment and retention efforts are unsuccessful in the future, it may be
more difficult for us to execute our business strategy.




Increasing government regulation of the internet could
affect our business.

We are subject not only to regulations applicable to businesses
generally but also to laws and regulations directly applicable to electronic
commerce. The PRC government may adopt new laws and regulations applicable to
electronic commerce. Currently, there are no specific internet regulations
adopted by the PRC government pertaining to our industry. However, in the future
the PRC government may decide to regulate electronic commerce as pertains to our
industry. Any such legislation or regulation could dampen the growth of the
internet and decrease its acceptance. If such a decline occurs, customers may
decide in the future not to use the internet to purchase our products. Any new
laws or regulations in the following areas could affect our business: 

	user privacy;
  
	the pricing and taxation of products offered over the internet;
  
	the content of websites;
  
	copyrights;
  
	the online distribution of specific material or content over the internet;
  and
  
	the characteristics and quality of services offered over the internet.
  


We may not be able to manage our expansion of operations
effectively and failure to do so could strain our management, operational and
other resources, which could materially and adversely affect our business and
growth potential.

We have grown since our inception and we anticipate continued
expansion of our business to address growth in demand for our products, as well
as to capture new market opportunities. The continued growth of our business has
resulted in, and will continue to result in, substantial demands on our
management, operational and other resources. In particular, we believe that the
management of our growth will require, among other things:

	our ability to expand our market reach in China, Japan and elsewhere;
  
	our ability to continue to identify new customers and distribution
  channels;
  
	our ability to control operating expenses;
  
	strengthening of financial and management controls;
  
	increased marketing, sales and sales support activities; and
  
	hiring, training and managing of new personnel, including sales personnel.
  


If we are not able to manage our growth successfully, our
business and prospects would be materially and adversely affected.

We may need additional capital and may not be able to obtain
it on acceptable terms or at all, which could adversely affect our liquidity and
financial position; the issuance of additional equity would result in dilution
to our shareholders.

We may need to raise additional capital if our expenditures
exceed our current expectations due to changed business conditions or other
future developments. Our future liquidity needs and other business reasons may
require us to sell additional equity or debt securities or obtain a credit
facility. The sale of additional equity securities or securities convertible or
exchangeable to our equity securities would result in additional dilution to our
shareholders. The incurrence of additional indebtedness would result in
increased debt service obligations and could result in operating and financing
covenants that restrict our operational flexibility. Our ability to raise
additional funds in the future is subject to a variety of uncertainties,
including:

	our future financial condition, results of operations and cash flows;
  
	general market conditions for capital-raising activities by technology
  companies; and
  
	economic, political and other conditions in China, Japan and elsewhere.
  





No assurances can be given that we will be able to obtain
additional capital in a timely manner or on commercially acceptable terms or at
all. 

Future acquisitions are expected to be a part of our growth
strategy, and could expose us to significant business risks.

The technology used in the mobile internet industry
continues to change rapidly and if we are unable to modify our products to adapt
to future changes in the mobile communication industry, we will be unable to
attract or retain customers.

One of our strategies is to grow our business through
acquisition of other mobile communication and software companies. However, no
assurances can be given that we will be able to identify and secure suitable
acquisition opportunities. Our ability to consummate and integrate effectively
any future acquisitions on terms that are favorable to us may be limited by the
number of attractive acquisition targets, internal demands on our resources and,
to the extent necessary, our ability to obtain financing on satisfactory terms
for larger acquisitions, if at all.

Moreover, if an acquisition candidate is identified, the third
parties with whom we seek to cooperate may not select us as a potential partner
or we may not be able to enter into arrangements on commercially reasonable
terms or at all. The negotiation and completion of potential acquisitions,
whether or not ultimately consummated, could also require significant diversion
of management’s time and resources and potential disruption of our existing
business. Furthermore, no assurances can be given that the expected synergies
from future acquisitions will actually materialize. In addition, future
acquisitions could result in the incurrence of additional indebtedness, costs,
and contingent liabilities. Future acquisitions may also expose us to potential
risks, including risks associated with:

	the integration of new operations, products, services and personnel;
  
	unforeseen or hidden liabilities;
  
	the diversion of financial or other resources from our existing
  businesses;
  
	our inability to generate sufficient revenue to recover costs and expenses
  of the acquisitions; and
  
	the potential loss of, or harm to, relationships with employees or
  customers. 


Any of the above could significantly disrupt our ability to
manage our business and materially and adversely affect our business, financial
condition and results of operations.

The technology used in the mobile internet industry
continues to change rapidly and if we are unable to modify our products to adapt
to future changes in the mobile communication industry, we will be unable to
attract or retain customers.

The mobile internet industry has been characterized by a rapid
rate of development of new technologies and manufacturing processes, rapid
changes in customer requirements, frequent product introductions and ongoing
demands for greater functionality. Our future success will likely depend on our
ability to develop new products and to adjust our product specifications in
response to these developments in a timely manner. If our development efforts
are not successful or are delayed, or if our newly developed products do not
achieve market acceptance, we may be unable to attract or retain customers and
our operating results could be harmed.

Our efforts to develop new products involve several risks,
including:

	
  our ability to anticipate and respond in a timely manner to changes in
  customer requirements; 

  
	
  the significant research and development investment that we may be required
  to make before market acceptance of a particular new or enhanced product; 

  
	
  the possibility that the mobile internet industry may not accept our
  products after we have invested a significant amount of resources in
  development; and 






	competition from new technologies, processes and products introduced by
  our current or future competitors. 


We intend to make significant investments in research and
development and new mobile Internet products that may not be profitable.

Companies in our industry are under pressure to develop new
software and new product innovations to support changing consumer tastes and
regulatory requirements. We have engaged in research and development activities
and we believe that substantial additional research and development activities
are necessary to allow us to offer technologically-advanced products. We expect
that our research and development budget will increase significantly as we
attempt to create new products and as we have access to additional working
capital to fund these activities. Research and development and investments in
new technology are inherently speculative and commercial success depends on many
factors including technological innovation, novelty, service and support, and
effective sales and marketing.

We may not achieve significant revenue from new product and
service investments for a number of years, if at all. Moreover, new products and
services may not be profitable, and even if they are profitable, operating
margins for new products and businesses may be minimal.

Risks Related to Our Corporate Structure

Transactions among our affiliates are subject to scrutiny by
the PRC tax authorities and a finding that we or any of our consolidated
entities owe additional taxes could have a material adverse impact on our net
income and the value of an investment in our common stock.

Under PRC law, arrangements and transactions among related
parties may be subject to audit or challenge by the PRC tax authorities. If any
of the transactions we have entered into among our consolidated entities are
challenged by the PRC tax authorities to be not on an arm’s-length basis, or to
result in an unreasonable reduction in our PRC tax obligations, the PRC tax
authorities have the authority to disallow our tax deduction claims, adjust the
profits and losses of our respective PRC consolidated entities and assess late
payment fees and other penalties. Our net income may be materially reduced if
our tax liabilities increase or if we are otherwise assessed late payment fees
or other penalties.

PRC regulations relating to acquisitions of PRC companies by
foreign entities may create regulatory uncertainties that could restrict or
limit our ability to operate. Our failure to obtain the prior approval of the
listing and trading of our common stock could have a material adverse effect on
our business, operating results, reputation and trading price of our common
stock.

On August 8, 2006, the PRC Ministry of Commerce (“MOFCOM”),
joined by the State-owned Assets Supervision and Administration Commission of
the State Council, the State Administration of Taxation, the State
Administration for Industry and Commerce, the China Securities Regulatory
Commission and SAFE, released a substantially amended version of the Provisions
for Foreign Investors to Merge with or Acquire Domestic Enterprises (the
“Revised M&A Regulations”), which took effect September 8, 2006. Among other
things, the Revised M&A Regulations include provisions that purport to
require that an offshore special purpose vehicle, or “SPV,” formed for listing
purposes and controlled directly or indirectly by PRC companies or individuals
must obtain the approval of the CSRC prior to the listing and trading of such
SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC
published on its official website procedures specifying documents and materials
required to be submitted to it by SPVs seeking CSRC approval of their overseas
listings. We believe that (i) CC Investment was incorporated as a foreign owned
enterprise and that there was no acquisition of the equity or assets of a “PRC
domestic company” as such term is defined under the Revised M&A Regulations
and (ii) that no provision in the Revised M&A Regulations clearly classifies
the contractual arrangements between CC Investment and CC Power as a type of
transaction falling within such rules. Therefore, we were and are not required
to obtain the approval of CSRC under the Revised M&A Regulations in
connection with the Exchange Transaction. 

If the CSRC or another PRC regulatory agency subsequently
determines that CSRC approval was required for the Exchange Transaction, we may
face regulatory actions or other sanctions from the CSRC or other PRC regulatory
agencies. These regulatory agencies may impose fines and
penalties on our operations in the PRC, limit our operating privileges in the
PRC, or take other actions that could have a material adverse effect on our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our common stock. Also, if the CSRC later
requires that we obtain its approval, we may be unable to obtain a waiver of the
CSRC approval requirements, if and when procedures are established to obtain
such a waiver. Any uncertainties and/or negative publicity regarding this CSRC
approval requirement could have a material adverse effect on the trading price
of our common stock. 




It is uncertain how our business operations or future strategy
will be affected by the interpretations and implementation of the Revised
M&A Regulations. It is anticipated that application of the rules will be
subject to significant administrative interpretation, and we will need to
closely monitor how MOFCOM and other ministries apply the rules to ensure that
our domestic and offshore activities continue to comply with PRC law. Given the
uncertainties regarding interpretation and application of the rules, we may need
to expend significant time and resources to maintain compliance.

We currently conduct of our business primarily through
contractually controlled PRC operating entities, and our control of the
day-to-day operations of such PRC entities pursuant to contracts, to comply with
Chinese law, may not be as effective as conducting business through direct
equity ownership of such PRC entities due to uncertainties with respect to the
PRC legal system which could materially and adversely affect our results of
operations.

We currently conduct a substantial portion of our business
primarily through our contractually controlled PRC operating entities. PRC laws
and regulations govern our operations in the PRC. Our contractually controlled
PRC operating entities are generally subject to laws and regulations applicable
to foreign investments in the PRC and, in particular, laws applicable to wholly
foreign-owned enterprises (“WFOEs”). Although members of our executive
management team and our shareholders include the executive officers and owners
of our contractually controlled PRC operating entities, because we do not
directly own our contractually controlled PRC operating entities, we may
encounter problems enforcing our rights to control the business affairs and
day-to-day operations of such entities. If we find it necessary to take legal
action in the PRC to enforce our rights under our contracts with the PRC
operating entities, we will be subject to the uncertainties of the PRC legal
system, where prior court decisions have limited precedential value. Since 1979,
PRC legislation and regulations have significantly enhanced the protections
afforded to various forms of foreign investments in PRC. However, the PRC has
not developed a fully integrated legal system and recently enacted laws and
regulations may not sufficiently cover all aspects of economic activities in the
PRC. In particular, because these laws and regulations are relatively new, and
because of the limited volume of published decisions and their non-binding
nature, the interpretation and enforcement of these laws and regulations involve
uncertainties. In addition, the PRC legal system is based in part on government
policies and internal rules (some of which are not published on a timely basis
or at all) that may have a retroactive effect. As a result, we may not be aware
of our violation, if any, of these policies and rules until sometime after the
violation. In addition, any litigation in the PRC, regardless of outcome, may be
protracted and result in substantial costs and diversion of resources and
management attention. Accordingly, notwithstanding our contractual control over
our PRC operating entities, such control may not be as effective as if we
conducted our business through direct equity owned PRC entities which could
materially and adversely affect our results of operations.

Our contractual arrangements with CC Power and its
shareholder may not be as effective in providing control over these entities as
direct ownership.

We have no equity ownership interest in CC Power as we rely on
the contractual arrangements of the VIE agreements to control and operate CC
Power. These contractual arrangements may not be as effective in providing
control over CC Power as direct ownership. For example, CC Power could fail to
take actions required for our business or fail to pay dividends to CC Investment
despite its contractual obligation to do so. If CC Power fails to perform its
obligation under the VIE agreements, we may have to rely on legal remedies under
PRC law, which may not be effective.

Risks Related to Doing Business Internationally and in
China

We are subject to market risk through our sales to
international markets.




A portion of our sales are or will be derived from
international markets. These operations are subject to risks that are inherent
in operating in foreign countries, including the following:

	
  foreign countries could change regulations or impose currency restrictions
  and other restraints; 

  
	
  changes in foreign currency exchange rates and hyperinflation or deflation
  in the foreign countries in which we operate; 

  
	
  exchange controls; 

  
	
  some countries impose burdensome tariffs and quotas; 

  
	
  political changes and economic crises may lead to changes in the business
  environment in which we operate; 

  
	
  international conflict, including terrorist acts, could significantly
  impact our financial condition and results of operations; and 

  
	
  economic downturns, political instability and war or civil disturbances may
  disrupt distribution logistics or limit sales in individual markets.




No assurance can be given that we will be able to continue
selling our products in any of the foreign countries in which we currently or
plan to do business. Any of the above-mentioned factors could detrimentally
affect our sales, and impact our financial condition and results of
operations.

Current global economic conditions may adversely affect our
industry, business and results of operations.

The recent disruptions in the current global credit and
financial markets have included diminished liquidity and credit availability, a
decline in consumer confidence, a decline in economic growth, an increased
unemployment rate, and uncertainty about economic stability. There can be no
assurance that there will not be further deterioration in credit and financial
markets and confidence in economic conditions. These economic uncertainties
affect businesses such as ours in a number of ways, making it difficult to
accurately forecast and plan our future business activities. The current adverse
global economic conditions and tightening of credit in financial markets may
lead consumers to postpone spending. We are unable to predict the likely
duration and severity of the current disruptions in the credit and financial
markets and adverse global economic conditions. If the current uncertain
economic conditions continue or further deteriorate, our business and results of
operations could be materially and adversely affected.

Our international operations subject us to risks associated
with the legislative, judicial, accounting, regulatory, political and economic
risks and conditions specific to the countries or regions in which we operate,
which could adversely affect our financial performance. 

We currently conduct operations in the PRC and Japan, and plan
on expanding our operations to additional international markets. Our future
operating results in international markets could be negatively affected by a
variety of factors, most of which are beyond our control. These factors include
political conditions, including political instability, economic conditions,
legal and regulatory constraints, trade policies, currency regulations, and
other matters in any of the countries or regions in which we operate, now or in
the future.

Moreover, the economies of some of the countries in which we
currently have, or plan to have operations, have in the past suffered from high
rates of inflation and currency devaluations, which, if they occurred again,
could adversely affect our financial performance. Other factors which may impact
our operations include foreign trade, monetary and fiscal policies both of the
United States and of other countries, laws, regulations and other activities of
foreign governments, agencies and similar organizations, and risks associated
with having numerous officers located in countries which have historically been
less stable than the United States. Additional risks inherent in our
international operations generally include, among others, the costs and
difficulties of managing international operations, adverse tax consequences and greater difficulty in
enforcing intellectual property rights in countries other than the United
States.




Adverse changes in political and economic policies of the
PRC government could have a material adverse effect on the overall economic
growth of China, which could reduce the demand for our products and materially
and adversely affect our competitive position.

A significant portion of our current business operations are
conducted in China and we anticipate that a majority of our sales will be made
in China. Accordingly, our business, financial condition, results of operations
and prospects are affected significantly by economic, political and legal
developments in China. The Chinese economy differs from the economies of most
developed countries in many respects, including:

	the degree of government involvement;
  
	the level of development;
  
	the growth rate;
  
	the control of foreign exchange;
  
	access to financing; and
  
	the allocation of resources. 


While the Chinese economy has grown significantly in the past
25 years, the growth has been uneven, both geographically and among various
sectors of the economy. The PRC government has implemented various measures to
encourage economic growth and guide the allocation of resources. Some of these
measures benefit the overall Chinese economy, but may also have a negative
effect on us. The Chinese government may not continue to pursue these policies
or may significantly alter them to our detriment from time to time with little,
if any, prior notice. Changes in policies, laws and regulations or in their
interpretation or the imposition of confiscatory taxation, restrictions on
currency conversion, restrictions or prohibitions on dividend payments to
shareholders, governmental control over capital investments or changes in tax
regulations applicable to us, devaluations of currency or the nationalization or
other expropriation of private enterprises could have a material adverse effect
on our business.

The Chinese economy has been transitioning from a planned
economy to a more market-oriented economy. Although the PRC government has in
recent years implemented measures emphasizing the utilization of market forces
for economic reform, the reduction of state ownership of productive assets and
the establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in China is still owned by the PRC
government. The continued control of these assets and other aspects of the
national economy by the PRC government could materially and adversely affect our
business. The PRC government also exercises significant control over China’s
economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies. Since late 2003,
the PRC government implemented a number of measures, such as raising bank
reserves against deposit rates to place additional limitations on the ability of
commercial banks to make loans and raise interest rates, in order to decrease
the growth rate of specific segments of China’s economy which it believed to be
overheating. These actions, as well as future actions and policies of the PRC
government, could materially affect our liquidity and access to capital and our
ability to operate our business. Nationalization or expropriation could even
result in the total loss of our investment in China and in the total loss of our
shareholders’ investment.

New labor laws in the PRC may adversely affect our results
of operations.

On January 1, 2008, the PRC government promulgated the Labor
Contract Law of the PRC, or the New Labor Contract Law. The New Labor Contract
Law imposes greater liabilities on employers and significantly impacts the cost
of an employer’s decision to reduce its workforce. Further, it requires certain
terminations to be based upon seniority and not merit. In the event we decide to
significantly change or decrease our workforce, the New Labor Contract Law could
adversely affect our ability to enact such changes in a manner that is most
advantageous to our business or in a timely and cost effective manner, thus
materially and adversely affecting our financial condition and results of
operations.




If political relations between the United States and China
worsen, our stock price may decrease and we may have difficulty accessing U.S.
capital markets.

At various times during recent years, the United States and
China have had significant disagreements over political and economic issues.
Controversies may arise in the future between these two countries. Any political
or trade controversies between the United States and China, whether or not
directly related to our business, could adversely affect the market price of our
common stock and our ability to access U.S. capital markets.

Uncertainties with respect to the PRC legal system could
limit the protections available to you and us.

The PRC legal system is a civil law system based on written
statutes. Unlike the common law system in the United States, prior court
decisions may be cited for reference but have limited precedential value. Since
1979, PRC legislation and regulations have significantly enhanced the
protections afforded to various forms of foreign investments in China. We
conduct a significant portion of our current business through our subsidiary
established in China. Thus we are generally subject to laws and regulations
applicable to foreign investment in China and, in particular, laws applicable to
wholly foreign-owned enterprises. However, since many laws, rules and
regulations are relatively new and the PRC legal system continues to rapidly
evolve, the interpretations of many laws, regulations and rules are not always
uniform and enforcement of these laws, regulations and rules involve
uncertainties, which may limit legal protections available to us. For example,
we may have to resort to administrative and court proceedings to enforce the
legal protection that we enjoy either by law or contract. However, since PRC
administrative and court authorities have significant discretion in interpreting
and implementing statutory and contractual terms, it may be more difficult to
evaluate the outcome of Chinese administrative and court proceedings and the
level of legal protection we enjoy in China than in more developed legal
systems. These uncertainties may impede our ability to enforce the contracts we
have entered into with our business partners, customers and suppliers. In
addition, such uncertainties, including the inability to enforce our contracts,
could materially and adversely affect our business and operations. Furthermore,
intellectual property rights and confidentiality protections in China may not be
as effective as in the United States or other countries. Accordingly, we cannot
predict the effect of future developments in the PRC legal system, particularly
with regard to the Chinese telecommunications industry and software technology
industry, including the promulgation of new laws, changes to existing laws or
the interpretation or enforcement thereof, or the preemption of local
regulations by national laws. These uncertainties could limit the legal
protections available to us and our investors. In addition, any litigation in
China may be protracted and result in substantial costs and diversion of our
resources and management attention.

The fluctuation of foreign currency exchange rates could
materially impact our financial results.

Since we currently conduct a significant portion our operations
in China, our business is subject to foreign currency risks, including currency
exchange rates fluctuations and difficulties in converting Renminbis (RMB) into
U.S. dollars. The exchange rates between the Renminbi and the U.S. dollar, Euro
and other foreign currencies is affected by, among other things, changes in
China’s political and economic conditions. On July 21, 2005, the PRC government
changed its decade-old policy of pegging the value of the Renminbi to the U.S.
dollar. Under the new policy, the Renminbi is permitted to fluctuate within a
narrow and managed band against a basket of foreign currencies. There remains
significant international pressure on the PRC government to adopt a more
flexible currency policy, which could result in a further and more significant
appreciation of the Renminbi against the U.S. dollar. In addition, appreciation
or depreciation in the value of the Renminbi relative to the U.S. dollar would
affect our financial results reported in U.S. dollar terms without giving effect
to any underlying change in our business, financial condition and results of
operations.

Because our assets are located outside of the United States
and all of our directors and officers reside outside of the United States, it
may be difficult for investors to enforce their rights based on United States
federal securities laws or any United States court judgments against us and our
officers and directors.

Our operating company and all of our assets are currently
located in the PRC and Hong Kong. In addition, all of our current directors and
officers reside outside of the United States. It may therefore be difficult for
investors in the United States to enforce their legal rights based on the civil
liability provisions of the United States federal securities laws against us in
the courts of either the United States, PRC or Hong Kong and, even if civil
judgments are obtained in United States courts, to enforce such judgments in
PRC or Hong Kong courts. Further, it is unclear if extradition treaties now in
effect between the United States and the PRC and Hong Kong would permit
effective enforcement against us or our officers and directors of criminal
penalties, under the United States federal securities laws or other United
States laws.




Restrictions under PRC law on our PRC operating subsidiary’s
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or complete acquisitions that could
benefit our business, pay dividends to, and otherwise fund and conduct our
businesses.

Substantially all of our revenues are currently earned by our
PRC operating subsidiary. However, PRC regulations restrict the ability of our
PRC subsidiary to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiary only out of its accumulated after-tax profits, if any, determined in
accordance with PRC accounting standards and regulations. Our PRC subsidiary is
also required under PRC laws and regulations to allocate at least 10% of our
annual after-tax profits determined in accordance with PRC GAAP to a statutory
general reserve fund until the amounts in said fund reaches 50% of our
registered capital. Allocations to these statutory reserve funds can only be
used for specific purposes and are not transferable to us in the form of loans,
advances or cash dividends. Any limitations on the ability of our PRC subsidiary
to transfer funds to us could materially and adversely limit our ability to
grow, make investments or acquisitions that could be beneficial to our business,
pay dividends and otherwise fund and conduct our business.

Restrictions on currency exchange may limit our ability to
receive and use our sales revenue effectively.

All of CC Power’s sales revenue and expenses are denominated in
RMB. Under PRC law, the RMB is currently convertible under the “current
account,” which includes dividends and trade and service-related foreign
exchange transactions, but not under the “capital account,” which includes
foreign direct investment and loans. Currently, CC Power may purchase foreign
currencies for settlement of current account transactions, including payments of
dividends to the Company, without the approval of the State Administration of
Foreign Exchange, or SAFE, by complying with certain procedural requirements.
However, the relevant PRC government authorities may limit or eliminate our
ability to purchase foreign currencies in the future. Since a significant amount
of our future revenue will be denominated in RMB, any existing and future
restrictions on currency exchange may limit our ability to utilize revenue
generated in RMB to fund our business activities outside China that are
denominated in foreign currencies.

Foreign exchange transactions by our PRC operating subsidiary
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiary
borrows foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiary by means of
additional capital contributions, these capital contributions must be approved
by certain government authorities, including the Ministry of Commerce, or
MOFCOM, or their respective local counterparts. These limitations could affect
their ability to obtain foreign exchange through debt or equity financing.

There are significant uncertainties under the EIT relating
to the withholding tax liabilities of CC Investment, and dividends payable by CC
Investment to CC Mobility may not qualify to enjoy the treaty benefits. 

Under the EIT and its implementing rules, the profits of a
foreign invested enterprise which are distributed to its immediate holding
company outside the PRC will be subject to a withholding tax rate of 10%.
Pursuant to a tax arrangement between Hong Kong and the PRC, such rate may be
lowered to 5% if a Hong Kong resident enterprise owns over 25% of a PRC company.
CC Investment is currently wholly-owned by CC Mobility. However, the 5%
withholding tax rate does not automatically apply and approvals from competent
local tax authorities are required before an enterprise can enjoy any benefits
under the relevant taxation treaties. Moreover, according to the Notice of
the State Administration of Taxation on Issues regarding the Administration of
the Dividend Provision in Tax Treaties promulgated on February 20, 2009, for
a tax treaty to be applicable, certain requirements must be satisfied,
including: (1) the taxpayer must be the beneficial owner of the relevant
dividends; (2) for corporate recipients to enjoy the favorable tax treatment
under the tax treaty as direct owners of a PRC enterprise, such corporate
recipients must satisfy the direct ownership thresholds at all times during the
12 consecutive months preceding the receipt of the dividends. On August 24, 2009, the State Administration of
Taxation issued the Administrative Measures for Non-resident Enterprises to
Enjoy Treatments under Tax Treaties (For Trial Implementation), which became
effective on October 1, 2009, requiring non-resident enterprises to obtain an
approval from the competent tax authority in order to enjoy the treatments under
tax treaties. Further, the State Administration of Taxation promulgated the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax
Treaties on October 27, 2009, which limits the “beneficial owner” to
individuals, enterprises or other organizations normally engaged in substantive
operations, and set forth certain adverse factors on the recognition of such
“Beneficial Owner.” CC Investment has not yet applied for such approvals because
it has not declared or paid dividends, and does not intend to declare or pay
dividends. CC Investment will apply for such approvals when it intends to
declare and pay dividends. There is no assurance that the PRC tax authorities
will approve the 5% withholding tax rate on dividends received by CC Mobility
from CC Investment.




Changes in economic conditions and consumer confidence in
China may influence the industry in which we operate, consumer preferences and
spending patterns.

A significant portion of our business and revenue growth
depends on the size of the retail market of mobile internet products in China.
As a result, our revenue and profitability may be negatively affected by changes
in national, regional or local economic conditions and consumer confidence in
China. We are susceptible to changes in economic conditions, consumer confidence
and customer preferences of the Chinese population. External factors beyond our
control that affect consumer confidence include unemployment rates, levels of
personal disposable income, national, regional or local economic conditions,
natural disasters, extreme weather conditions, disease outbreaks and acts of war
or terrorism. Changes in economic conditions and consumer confidence could
adversely affect consumer preferences, purchasing power and spending patterns.
In addition, natural disasters, extreme weather conditions, disease outbreaks
and acts of war or terrorism may cause damage to our facilities, disrupt the
supply of the products we offer or adversely impact consumer demand. Any of
these factors could have a material adverse effect on our business, financial
condition and results of operations.

Risks Relating to our Common Stock and our Status as a
Public Company

The relative lack of public company experience of our
management team may put us at a competitive disadvantage.

Our management team lacks public company experience and is
generally unfamiliar with the requirements of the United States securities laws
and U.S. Generally Accepted Accounting Principles, which could impair our
ability to comply with legal and regulatory requirements such as those imposed
by Sarbanes-Oxley Act of 2002. The individuals who now constitute our senior
management team have never had responsibility for managing a publicly traded
company. Such responsibilities include complying with federal securities laws
and making required disclosures on a timely basis. Our senior management may not
be able to implement programs and policies in an effective and timely manner
that adequately responds to such increased legal, regulatory compliance and
reporting requirements. Our failure to comply with all applicable requirements
could lead to the imposition of fines and penalties and distract our management
from attending to the growth of our business. 

We will be required to incur significant costs and require
significant management resources to evaluate our internal control over financial
reporting as required under Section 404 of the Sarbanes-Oxley Act, and any
failure to comply or any adverse result from such evaluation may have an adverse
effect on our stock price. 




As a smaller reporting company as defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, we are required to evaluate our
internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include
an internal control report with the Annual Report on Form 10-K. This report must
include management’s assessment of the effectiveness of our internal control
over financial reporting as of the end of the fiscal year. This report must also
include disclosure of any material weaknesses in internal control over financial
reporting that we have identified. Failure to comply, or any adverse results
from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the trading price of our equity
securities. Management believes that its internal controls and procedures are
currently not effective to detect the inappropriate application of U.S. GAAP
rules. Management realize there are deficiencies in the design or operation of our internal control
that adversely affect our internal controls which management considers to be
material weaknesses including those described below: 

	 	i) 	
      We have insufficient quantity of dedicated resources and
      experienced personnel involved in reviewing and designing internal
      controls. As a result, a material misstatement of the interim and annual
      financial statements could occur and not be prevented or detected on a
      timely basis.

	 	 	 
	 	ii) 	
      We do not have an audit committee. While not being
      legally obligated to have an audit committee, it is the management’s view
      that to have an audit committee, comprised of independent board members,
      is an important entity-level control over our financial
  statements.

	 	 	 
	 	iii) 	
      We did not perform an entity level risk assessment to
      evaluate the implication of relevant risks on financial reporting,
      including the impact of potential fraud-related risks and the risks
      related to non- routine transactions, if any, on our internal control over
      financial reporting. Lack of an entity-level risk assessment constituted
      an internal control design deficiency which resulted in more than a remote
      likelihood that a material error would not have been prevented or
      detected, and constituted a material weakness.

	 	 	 
	 	iv) 	
      We lack personnel with formal training to properly
      analyze and record complex transactions in accordance with U.S. GAAP. Our
      current Chief Financial Officer, Ms. Wang, has 18 years of experience in
      financial management in private and public companies in China. She
      graduated from Huazhong Technical and Science University in 1990 with a
      Bachelor of Science degree in accounting and finance management; however,
      she is not familiar with U.S. GAAP.

	 	 	 
	 	v) 	
      We have not achieved the optimal level of segregation of
      duties relative to key financial reporting
functions.



Achieving continued compliance with Section 404 may require us
to incur significant costs and expend significant time and management resources.
We cannot assure you that we will be able to fully comply with Section 404 or
that we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at
fiscal year end. As a result, investors could lose confidence in our reported
financial information, which could have an adverse effect on the trading price
of our securities, as well as subject us to civil or criminal investigations and
penalties. In addition, our independent registered public accounting firm may
not agree with our management’s assessment or conclude that our internal control
over financial reporting is operating effectively.

A limited public trading market exists for our common stock,
which makes it more difficult for our stockholders to sell their common stock in
the public markets.

Our common stock is currently traded under the symbol “XCLL,”
but currently with low or no volume, based on quotations on the OTCQB, meaning
that the number of persons interested in purchasing our common stock at or near
bid prices at any given time may be relatively small or non-existent. This
situation is attributable to a number of factors, including the fact that we are
a small company which is still relatively unknown to stock analysts, stock
brokers, institutional investors, and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of
such persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our stock
until such time as we became more viable. Additionally, many brokerage firms may
not be willing to effect transactions in the securities. As a consequence, there
may be periods of several days or more when trading activity in our stock is
minimal or nonexistent, as compared to a seasoned issuer which has a large and
steady volume of trading activity that will generally support continuous sales
without an adverse effect on share price. We cannot give you any assurance that
a broader or more active public trading market for our common stock will develop
or be sustained, or that trading levels will be sustained.




In the past, securities class action litigation has often been
brought against a company following periods of volatility in the market price of
its securities. Due to the volatility of our common stock price, we may be the
target of securities litigation in the future. Securities litigation
could result in substantial costs and divert management’s attention and
resources.

Shareholders should also be aware that, according to SEC
Release No. 34-29093, the market for “penny stock,” such as our common stock,
has suffered in recent years from patterns of fraud and abuse. Such patterns
include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the future volatility of our share price.

We do not anticipate paying any dividends in the foreseeable
future. If and when we decide to pay dividends, any dividends or proceeds from
liquidation will be subject to the approval of the relevant Chinese government
agencies.

We currently intend to retain any future earnings for funding
growth. We do not anticipate paying any dividends in the foreseeable future. As
a result, shareholders should not rely on an investment in our securities if
they require dividend income. A significant portion of our assets are located
inside China. Under the laws governing foreign-invested enterprises in China,
dividend distribution and liquidation are allowed but subject to special
procedures under the relevant laws and rules. If and when made, any dividend
payment will be subject to the decision of the board of directors of our Chinese
operating company, CC Investment, and subject to foreign exchange rules
governing such repatriation. Any liquidation is subject to both the relevant
government agency’s approval and supervision as well the foreign exchange
control. This may generate additional risk for our investors in case of dividend
payment and liquidation.

Our stock is categorized as a penny stock. Trading of our
stock may be restricted by the SEC’s penny stock regulations which may limit a
shareholder’s ability to buy and sell our stock.

Our stock is categorized as a “penny stock.” The SEC has
adopted Rule 15g-9 which generally defines “penny stock” to be any equity
security that has a market price (as defined) less than $4.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and accredited investors. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer’s account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer’s confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.




FINRA sales practice requirements may also limit a
shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the
Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. The FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

The elimination of monetary liability against our directors,
officers and employees under Nevada law and the existence of indemnification
rights to our directors, officers and employees may result in substantial
expenditures by our company and may discourage lawsuits against our directors,
officers and employees.

Our Articles of Incorporation and Bylaws contain a provision
permitting us to eliminate the personal liability of our directors to our
company and shareholders for damages for breach of fiduciary duty as a director
or officer to the extent provided by Nevada law. We may also have contractual
indemnification obligations under our employment agreements with our officers.
The foregoing indemnification obligations could result in the Company incurring
substantial expenditures to cover the cost of settlement or damage awards
against directors and officers, which we may be unable to recoup. These
provisions and resultant costs may also discourage our Company from bringing a
lawsuit against directors and officers for breaches of their fiduciary duties,
and may similarly discourage the filing of derivative litigation by our
shareholders against our directors and officers even though such actions, if
successful, might otherwise benefit our company and shareholders.

If we issue additional shares in the future, whether in
connection with a financing or in exchange for services or rights, it will
result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to
100,000,000 shares of common stock with a par value of $0.001 per share, and up
to 20,000,000 shares of preferred stock at a par value of $0.001. Our Board of
Directors may choose to issue some or all of such shares to acquire one or more
companies or properties, to fund our overhead and general operating requirements
and in exchange for services rendered to the Company. Such issuances may not
require the approval of our shareholders. We have previously issued shares of
our common stock in exchange for services provided to the Company. Any future
issuances may reduce the book value per share and may contribute to a reduction
in the market price of the outstanding shares of our common stock or preferred
stock. If we issue any such additional shares in the future, such issuance will
reduce the proportionate ownership and voting power of all current
shareholders.

THE FOREGOING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE
EXPLANATION OF ALL OF THE RISKS INVOLVED IN PURCHASING THE SHARES OFFERED
HEREIN. POTENTIAL INVESTORS SHOULD READ THIS MEMORANDUM IN ITS ENTIRETY AND
REVIEW THE COMPANY’S EXCHANGE ACT DOCUMENTS BEFORE DETERMINING WHETHER TO
PURCHASE THE SHARES.